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

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

                                   FORM 10-Q

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


      (Mark one)
         [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934
               For the quarterly period ended September 30, 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 1-7757


                        BELL ATLANTIC - DELAWARE, INC.


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


                901 Tatnall Street, Wilmington, Delaware 19801


                        Telephone Number (302) 576-5420

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




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

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
                                  (Unaudited)
                            (Dollars in Thousands)
<TABLE>
<CAPTION>
 
 
                                                       Three months ended         Nine months ended           
                                                          September 30,             September 30,             
                                                      ---------------------     ---------------------       
                                                        1996         1995         1996         1995            
                                                      --------     --------     --------     --------         
<S>                                                   <C>        <C>           <C>          <C>               
OPERATING REVENUES (including $2,724, $3,625,                                                                                   
  $8,391 and $10,653 to affiliates)...............     $72,256      $66,944     $209,756     $196,228         
                                                      --------     --------     --------     --------         
                                                                                                              
OPERATING EXPENSES                                                                                            
  Employee costs, including benefits and taxes....      14,272       14,735       43,070       43,115         
  Depreciation and amortization...................      14,274       14,122       41,954       43,666         
  Other (including $16,393, $14,643, $45,918                                                                                
       and $40,211 to affiliates).................      24,101       22,369       70,040       60,864         
                                                      --------     --------     --------     --------         
                                                        52,647       51,226      155,064      147,645         
                                                      --------     --------     --------     --------         
                                                                                                              
OPERATING INCOME..................................      19,609       15,718       54,692       48,583         
                                                                                                              
OTHER EXPENSE, NET................................         435          164          703          318         
                                                                                                              
INTEREST EXPENSE (including $475, $441, $1,270                                                                                      
     and $1,145 to affiliates)....................       1,984        1,886        5,906        5,764         
                                                      --------     --------     --------     --------         
                                                                                                              
INCOME BEFORE PROVISION FOR INCOME TAXES..........      17,190       13,668       48,083       42,501         
PROVISION FOR INCOME TAXES........................       6,886        5,488       19,981       16,994         
                                                      --------     --------     --------     --------         
                                                                                                              
NET INCOME........................................     $10,304      $ 8,180     $ 28,102     $ 25,507         
                                                      ========     ========     ========     ========         
                                                                                                              
                                                                                                              
REINVESTED EARNINGS                                                                                           
     At beginning of period.......................     $23,908      $15,791     $ 22,449     $ 16,564         
     Add:  net income.............................      10,304        8,180       28,102       25,507         
                                                      --------     --------     --------     --------         
                                                        34,212       23,971       50,551       42,071         
     Deduct:  dividends...........................       9,300        5,000       24,800       23,100         
              other changes.......................         ---           12          839           12         
                                                      --------     --------     --------     --------         
     At end of period.............................     $24,912      $18,959     $ 24,912     $ 18,959         
                                                      ========     ========     ========     ========          
</TABLE>


                       See Notes to Financial Statements.

                                       1
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

                                 BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in Thousands)


                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
 
                                                           September 30,      December 31,  
                                                               1996               1995      
                                                           -------------      ------------  
<S>                                                        <C>                <C>           
                                                                                            
CURRENT ASSETS                                                                              
Short-term investments................................          $    605          $    ---  
Accounts receivable:                                                                        
     Trade and other, net of allowances for                                                 
          uncollectibles of $4,047 and $3,260.........            44,651            43,263  
     Affiliates.......................................             4,234             4,158  
Material and supplies.................................             2,848             1,738  
Prepaid expenses......................................            14,585            17,651  
Deferred income taxes.................................               ---               316  
Other.................................................               388                75  
                                                                --------          --------  
                                                                  67,311            67,201  
                                                                --------          --------  
                                                                                            
PLANT, PROPERTY AND EQUIPMENT.........................           742,831           710,216  
Less accumulated depreciation.........................           373,441           349,239  
                                                                --------          --------  
                                                                 369,390           360,977  
                                                                --------          --------  
                                                                                            
OTHER ASSETS..........................................             2,583            10,020  
                                                                --------          --------  
                                                                                            
TOTAL ASSETS..........................................          $439,284          $438,198  
                                                                ========          ========   
</TABLE>


                       See Notes to Financial Statements.

                                       2
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

                                 BALANCE SHEETS
                                  (Unaudited)
                (Dollars in Thousands, Except Per Share Amount)


                    LIABILITIES AND SHAREOWNER'S INVESTMENT
                    ---------------------------------------
<TABLE>
<CAPTION>
 
                                                          September 30,  December 31,
                                                              1996           1995
                                                          -------------  ------------
<S>                                                           <C>            <C>
                                               
CURRENT LIABILITIES                            
Debt maturing within one year:
     Note payable to affiliate.............................    $ 16,810      $  8,720
Accounts payable and accrued liabilities:
     Affiliates............................................      25,914        25,961
     Other.................................................      32,112        41,426
Other liabilities..........................................      11,401         8,702
                                                               --------      --------
                                                                 86,237        84,809
                                                               --------      --------

LONG-TERM DEBT
Note payable to affiliate..................................      20,000        20,000
Other......................................................     101,165       101,147
                                                               --------      --------
                                                                121,165       121,147
                                                               --------      --------

EMPLOYEE BENEFIT OBLIGATIONS...............................      51,455        50,386
                                                               --------      --------

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes......................................      14,029        15,657
Unamortized investment tax credits.........................       2,992         3,421
Other......................................................      20,052        21,887
                                                               --------      --------
                                                                 37,073        40,965
                                                               --------      --------

SHAREOWNER'S INVESTMENT
Common stock, $25 par value per share......................     118,442       118,442
     Authorized shares:  5,262,280
     Outstanding shares: 4,737,686
Reinvested earnings........................................      24,912        22,449
                                                               --------      --------
                                                                143,354       140,891
                                                               --------      --------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT..............    $439,284      $438,198
                                                               ========      ========
</TABLE>

                       See Notes to Financial Statements.

                                       3
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

                            STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                             (Dollars in Thousands)

<TABLE> 
<CAPTION> 
                                                                      Nine months ended            
                                                                         September 30,             
                                                                  -------------------------
                                                                     1996            1995
                                                                  ---------       ---------
<S>                                                                 <C>           <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES...............          $  69,677       $  63,447
                                                                  ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments....................               (605)           (728)
Additions to plant, property and equipment..............            (51,762)        (59,688)
Other, net..............................................              1,395             867
                                                                  ---------       ---------
Net cash used in investing activities...................            (50,972)        (59,549)
                                                                  ---------       ---------


CASH FLOWS FROM FINANCING ACTIVITIES
Net change in note payable to affiliate.................              8,090          21,520
Dividends paid..........................................            (24,800)        (23,100)
Net change in outstanding checks drawn
     on controlled disbursement accounts................             (1,995)         (2,318)
                                                                  ---------       ---------
Net cash used in financing activities...................            (18,705)         (3,898)
                                                                  ---------       ---------

NET CHANGE IN CASH......................................                 --              --


CASH, BEGINNING OF PERIOD...............................                 --              --
                                                                  ---------       ---------


CASH, END OF PERIOD.....................................          $      --       $      --
                                                                  =========       =========
</TABLE> 


                       See Notes to Financial Statements.

                                       4
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

1.     Basis of Presentation

       The accompanying financial statements are unaudited and have been
prepared by Bell Atlantic - Delaware, Inc. (the Company) pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). The December
31, 1995 balance sheet was derived from audited financial statements, but does
not include all disclosures required by generally accepted accounting
principles. In the opinion of management, these financial statements include all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the results of operations, financial position and cash flows.
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 SEC rules and regulations. The
Company believes that the disclosures made are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.

2.     Dividend

       On November 1, 1996, the Company declared and paid a dividend in the
amount of $9,000,000 to Bell Atlantic Corporation (Bell Atlantic).

3.     Reclassifications

       Certain reclassifications of the prior year's data have been made to
conform to 1996 classifications.

4.     Proposed Bell Atlantic - NYNEX Merger

       Bell Atlantic and NYNEX Corporation have announced a proposed merger of
equals under a definitive merger agreement entered into on April 21, 1996, and
amended on July 2, 1996. Under the terms of the amended agreement, a newly-
formed subsidiary will merge with NYNEX, with NYNEX becoming a subsidiary of
Bell Atlantic. As a result of the merger, NYNEX stockholders will receive 0.768
of a share of Bell Atlantic common stock for each share of NYNEX common stock
that they own. Bell Atlantic stockholders will continue to own their existing
shares after the merger.

       The merger is expected to qualify as a "pooling of interests," which
means 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 regulatory approvals, receipt of
opinions that the merger will be tax free, and the approval of the shareholders
of both Bell Atlantic and NYNEX. The companies expect to close the merger in the
first quarter of 1997.



                                       5
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

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

         This discussion should be read in conjunction with the Financial
Statements and Notes to Financial Statements.

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

         The Company reported net income for the first nine months of 1996 of
$28,102,000, compared to net income of $25,507,000 for the same period in 1995.

         Items affecting the comparison of operating results between the nine
month periods ended September 30, 1996 and 1995 are discussed in the following
sections.

<TABLE>
<CAPTION>
 
 
OPERATING REVENUES
------------------
(Dollars in Thousands)
 
For the Nine Month Period Ended September 30              1996        1995
--------------------------------------------------------------------------------
<S>                                                     <C>         <C>    
Transport Services
    Local service.............................          $ 78,245    $ 73,207
    Network access............................            49,267      46,768
    Toll service..............................            24,194      24,146
Ancillary Services
    Directory publishing......................            25,896      24,320
    Other.....................................             4,825       3,361
Value-added Services..........................            27,329      24,426
                                                        --------    --------
Total.........................................          $209,756    $196,228
                                                        ========    ========
 
 
TRANSPORT SERVICES OPERATING STATISTICS
---------------------------------------
                                                                  Percentage
                                                 1996     1995     Increase
--------------------------------------------------------------------------------
<S>                                              <C>       <C>        <C>  
At September 30
---------------
  Access Lines in Service (In thousands)
     Residence................................   324       314         3.2%
     Business.................................   183       171         7.0
     Public...................................     6         6          --
                                                 ---       ---      
                                                 513       491         4.5
                                                 ===       ===
 
 
For the Nine Month Period Ended September 30
--------------------------------------------
  Access Minutes of Use (In millions)
     Interstate...............................   1,385     1,225      13.1
     Intrastate...............................      59        45      31.1
                                                 -----     -----
                                                 1,444     1,270      13.7
                                                 =====     =====
<CAPTION> 
 
  Toll Messages (In thousands)
     Intrastate...............................  27,919    24,970      11.8
     Interstate...............................  20,368    18,838       8.1
                                                ------    ------
                                                48,287    43,808      10.2
                                                ======    ======
</TABLE>
                                          6
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

LOCAL SERVICE REVENUES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $5,038          6.9%
--------------------------------------------------------------------------------

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

      Higher network usage by both business and residential customers increased
local service revenues during 1996. Access lines in service grew by 4.5% from
September 30, 1995.

      For a discussion of the Telecommunications Act of 1996, which opens the
local exchange market to competition, see "Factors That May Impact Future
Results" beginning on page 10.


NETWORK ACCESS REVENUES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $2,499          5.3%
--------------------------------------------------------------------------------

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

      Network access revenues increased principally due to higher customer
demand for access services, as reflected by growth in access minutes of use of
13.7% over the same period in 1995. Revenues were further increased by lower
obligations to affiliated companies pursuant to an interstate revenue sharing
agreement. Revenue growth was partially offset by the effect of price reductions
under the Federal Communications Commission's (FCC) Interim Price Cap Plan
implemented in 1995. On July 20, 1996, the Company implemented price increases
as part of Bell Atlantic's annual price cap filing with the FCC. These price
increases did not have a significant impact on network access revenues in the
third quarter of 1996.

      Continued strong growth in network usage and the FCC rate increases
effective on July 20, 1996 are expected to positively impact network access
revenues for the remainder of 1996, relative to the same period last year. See
also "Factors That May Impact Future Results - FCC Interim Price Cap Plan" on
page 12 for a discussion of Bell Atlantic's FCC price cap filing.


TOLL SERVICE REVENUES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                 $  48          .2%
--------------------------------------------------------------------------------

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

      Toll service revenues increased primarily due to higher network usage, as
reflected by a 10.2% increase in toll message volumes. This revenue growth was
substantially offset by company-initiated price reductions on certain toll
services in response to competition.

      See "Factors That May Impact Future Results" beginning on page 10 for a
further discussion of toll service revenue issues.

                                       7
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

DIRECTORY PUBLISHING REVENUES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $1,576          6.5%
--------------------------------------------------------------------------------

      Directory publishing revenues are earned primarily from local advertising
and marketing services provided to businesses in White and Yellow Pages
directories. Other directory publishing services include database and foreign
directory marketing.

      Growth in directory publishing revenues was principally due to higher
rates charged for these services.


OTHER ANCILLARY SERVICES REVENUES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $1,464          43.6%
--------------------------------------------------------------------------------

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

      Other ancillary services revenues increased in 1996 principally due to
higher facilities rental revenues from affiliates and higher pole attachment
rental revenues from non-affiliates.


VALUE-ADDED SERVICES REVENUES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $2,903          11.9%
--------------------------------------------------------------------------------

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

      The increase in value-added services revenues during 1996 was primarily
attributable to continued growth in the network customer base and higher demand
for certain central office and voice messaging services.


                                       8
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

<TABLE>
<CAPTION>
 
 
OPERATING EXPENSES
------------------
(Dollars in Thousands)
 
For the Nine Month Period Ended September 30             1996            1995
--------------------------------------------------------------------------------
<S>                                                    <C>             <C> 
Employee costs, including benefits and taxes......     $ 43,070        $ 43,115
Depreciation and amortization.....................       41,954          43,666
Other operating expenses..........................       70,040          60,864
                                                       --------        --------
Total.............................................     $155,064        $147,645
                                                       ========        ========
</TABLE>

EMPLOYEE COSTS

      1996-1995                      (Decrease)
--------------------------------------------------------------------------------
      Nine Months               $   (45)         (.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.

      The decrease in employee costs was attributable to savings associated with
lower work force levels in 1996.  The effect of employees transferred from the
Company to NSI in July 1996 also contributed to the decrease in employee costs.
These cost reductions were substantially offset by annual salary and wage
increases, as well as increased overtime pay for repair and maintenance
activity, principally as a result of higher business volumes.


DEPRECIATION AND AMORTIZATION

      1996-1995                      (Decrease)
--------------------------------------------------------------------------------
      Nine Months                $(1,712)        (3.9)%
--------------------------------------------------------------------------------

      Depreciation and amortization decreased principally due to lower rates of
depreciation and amortization.  This decrease was partially offset by growth in
depreciable telephone plant.  The composite depreciation rate was 7.9% for the
nine month period ended September 30, 1996, compared to 8.5% for the same period
in 1995.


OTHER OPERATING EXPENSES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $ 9,176         15.1%
--------------------------------------------------------------------------------

      Other operating expenses consist primarily of contract services including
centralized services expenses allocated from NSI, rent, network software costs,
operating taxes other than income, 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. This increase was due,
in part, to higher employee costs incurred in that organization as a result of
annual salary and wage increases, as well as the transfer of employees from the
Company to NSI in July 1996. Additional operating costs incurred to enhance
billing and operating systems and market value-added services also contributed
to the increase in centralized services expenses in 1996. Other operating
expenses were further increased by higher costs for contract labor and
engineering and additional costs to upgrade network software and comply with the
Telecommunications Act of 1996.


                                       9
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

OTHER EXPENSE, NET

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                     $  385
--------------------------------------------------------------------------------

      The increase in other expense, net was attributable to a loss related to
the disposition of certain property in the third quarter of 1996.


INTEREST EXPENSE

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months                $  142          2.5%
--------------------------------------------------------------------------------

      Interest expense increased principally due to the recognition of
additional expense related to a long-term note payable with an affiliate.
Substantially offsetting this increase was a reduction in interest expense
resulting from lower levels of average short-term debt in 1996.


PROVISION FOR INCOME TAXES

      1996-1995                       Increase
--------------------------------------------------------------------------------
      Nine Months               $2,987           17.6%
--------------------------------------------------------------------------------


EFFECTIVE INCOME TAX RATES

      For the Nine Months Ended September 30
--------------------------------------------------------------------------------
      1996                     41.6%
--------------------------------------------------------------------------------
      1995                     40.0%
--------------------------------------------------------------------------------

      The Company's effective income tax rate was higher as a result of
adjustments to tax liabilities recorded in 1996.


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

Federal Legislation

      The Telecommunications Act of 1996 (the Act) became law on February 8,
1996 and takes the place of the Modification of Final Judgment (MFJ). In
general, the Act includes provisions that open the local exchange market to
competition and permit Bell Atlantic to provide interLATA services (long
distance) 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. The following is a brief
discussion regarding certain provisions of the Act.

      With regard to the rules governing competition in the long distance
market, the Act takes a two-fold approach. Effective February 8, 1996, Bell
Atlantic's operating telephone subsidiaries, such as the Company, and affiliates
were permitted to offer long distance services outside of the geographic region
in which they currently operate as a local exchange carrier. On July 31, 1996, a
subsidiary of Bell Atlantic began marketing such services in three states
outside its region and plans to offer such services in several other states. In
addition, Bell Atlantic's wireless businesses are now permitted to offer long
distance services without having to comply with the conditions imposed in
waivers granted under the MFJ.

      Within Bell Atlantic's geographic region, each of the operating telephone
subsidiaries, including the Company, must demonstrate to the FCC that it has
satisfied certain requirements in order for Bell Atlantic to offer new long
distance services. Among the requirements with which the Company must comply is
a 14-point "competitive checklist" which will enable competitors to offer
competitive local service, either through resale, through the purchase of
unbundled network elements, or



                                      10
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

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 Act also imposes specific requirements that are intended to promote
competition in the local exchange markets.  These requirements (collectively
known as interconnection requirements) include the duty to: (i) provide
interconnection to any other carrier for the transmission and routing of
telephone exchange service at any technically feasible point; (ii) provide
unbundled access to network elements at any technically feasible point; (iii)
provide retail services at wholesale prices for resale; (iv) establish
reciprocal compensation arrangements for the origination and termination of
telecommunications; and (v) provide physical collocation.  The specific terms
under which the carriers interconnect are to be negotiated with those carriers,
or determined through state arbitrations when negotiations fail.

      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.  The FCC stated that
it plans to issue regulations regarding universal service obligations and access
charges in subsequent orders.

      Bell Atlantic and others appealed the interconnection order to the U.S.
Court of Appeals. That case is currently pending. On October 14, 1996, the Court
issued a partial stay of the FCC's interconnection order. The Court's order
stays the effectiveness of the uniform national pricing rules adopted by the
FCC. The order also stays the FCC rule that permitted competitors to "pick and
choose" isolated terms out of negotiated interconnection agreements. Private
negotiations and state arbitrations will continue while the stay is in effect,
pending the Court's final determinations of the issues raised by the pending
petitions for review.

      No definitive prediction can be made as to the specific impact of the Act
on the business 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, as well as the timing, extent
and success of the Company's pursuit of new business opportunities resulting
from the Act, the provisions of the FCC's regulations that survive judicial
review, and the outcome of state interconnection proceedings.

Competition

      IntraLATA Toll Services

      IntraLATA toll services are calls that both originate and terminate within
the same LATA (Local Access and Transport Area), but cover a greater distance
than a local call. These revenues are generally regulated by the Delaware Public
Service Commission (PSC) rather than federal authorities. Competition to offer
intrastate intraLATA toll services is currently permitted in the Company's
jurisdiction.

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

      The recent telecommunications legislation 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 interLATA long distance services
or until February 8, 1999. This prohibition does not apply to those states
considered to be single-LATA states under the Act. However, the Company does not
believe that Delaware is a single-LATA state under the Act.

      On March 26, 1996, the PSC considered the issue of implementation of
presubscription in Delaware and deferred any decision for six months.  In the
interim, an additional phase of this docket was initiated to consider various
unresolved implementation issues such as customer notification and
implementation cost recovery.  A final decision is expected in the fourth
quarter of 1996.

      Implementation of presubscription for intraLATA toll services could have a
material negative effect on toll service revenues, especially if the Company is
not permitted contemporaneously to offer interLATA services.  The ability to
offset the impact of presubscription will depend, in part, upon how quickly the
Company meets the requirements of the "competitive checklist."


                                      11
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

      Local Exchange Services

      Local exchange services have historically been subject to regulation by
the PSC. Since July 1996, applications from competitors to provide local
exchange services have been conditionally approved by the PSC, subject to the
outcome of a proceeding to consider interim rules for local exchange competition
or approval of an interconnection agreement. PSC interim rules are anticipated
to be approved in early 1997.

      The Act is expected to significantly increase the level of competition in
the Company's local exchange market.

FCC Interim Price Cap Plan

      The FCC regulates the rates that the Company can charge IXCs 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 their Interim Price Cap
Plan.  In June of 1996, Bell Atlantic filed its Annual Access Tariff plan with
the FCC, which contained new access services rates for the period from July 1996
through June 1997.  The rates included in the filing resulted in price increases
for the Company totaling approximately $1,000,000 on an annual basis.  The new
rates became effective on July 20 ,1996.

      The FCC is expected to adopt a revised price cap plan effective with the
1997 Annual Access Tariff Filing.


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

      Environmental Issues

      The Company is subject to a number of environmental proceedings as a
result of its operations and the shared liability provisions in the Plan of
Reorganization related to the MFJ. Certain of these environmental matters relate
to a Superfund site for which the Company has been joined as a third-party
defendant in pending Superfund litigation. Such joinder subjects the Company to
potential liability for costs relating to cleanup of the affected site. The
Company is also responsible for the remediation of sites with underground fuel
storage tanks and other expenses associated with environmental compliance.

      The Company continually monitors its operations with respect to potential
environmental issues, including changes in legally mandated standards and
remediation technologies.  The Company's recorded liabilities reflect those
specific situations where remediation activities are currently deemed to be
probable and where the cost of remediation is estimable.  Management believes
that the aggregate amount of any additional potential liability would not have a
material effect on the Company's results of operations or financial condition.

      Proposed Bell Atlantic - NYNEX Merger

      Bell Atlantic and NYNEX Corporation have announced a proposed merger of
equals under a definitive merger agreement entered into on April 21, 1996, and
amended on July 2, 1996. Under the terms of the amended agreement, a newly-
formed subsidiary will merge with NYNEX, with NYNEX becoming a subsidiary of
Bell Atlantic. As a result of the merger, NYNEX stockholders will receive 0.768
of a share of Bell Atlantic common stock for each share of NYNEX common stock
that they own. Bell Atlantic stockholders will continue to own their existing
shares after the merger.

      The merger is expected to qualify as a "pooling of interests," which means
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 regulatory approvals, receipt of opinions that
the merger will be tax free, and the approval of the shareholders of both Bell
Atlantic and NYNEX. The companies expect to close the merger in the first
quarter of 1997.

      As a result of the merger, Bell Atlantic expects to record a one-time
charge for employee severance costs in the quarter in which the merger is
completed. Such pretax charge 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. The Company expects to
incur a portion of the charge for these costs.



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<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

     During the remainder of 1997, 1998 and 1999, Bell Atlantic expects to incur
an additional $300 million to $400 million of merger-related transition costs, a
portion of which may be borne by the Company.


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

     The Company uses the net cash generated from operations and external
financing to fund capital expenditures for network expansion and modernization,
and pay dividends. While current liabilities exceeded current assets at both
September 30, 1996 and 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
and to maintain the Company's capital structure within management's guidelines.

     As of September 30, 1996, the Company had $23,190,000 of an unused line of
credit with an affiliate, Bell Atlantic Network Funding Corporation.

     The Company's debt ratio was 49.0% at September 30, 1996, compared to 48.0%
at December 31, 1995.

     On November 1, 1996, the Company declared and paid a dividend in the amount
of $9,000,000 to Bell Atlantic Corporation.


                                      13

<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

                          PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

           For background concerning the Company's contingent liabilities under
           the Plan of Reorganization governing the divestiture by AT&T Corp.
           (formerly American Telephone and Telegraph Company) of certain assets
           of the former Bell System Operating Companies with respect to private
           actions relating to pre-divestiture events, including pending
           antitrust cases, see Item 3 of the Company's Annual Report on 
           Form 10-K for the year ended December 31, 1995.


Item 6.    Exhibits and Reports on Form 8-K


           (a)  Exhibits:

                Exhibit Number
 
                27   Financial Data Schedule.


           (b)  Report on Form 8-K filed during the quarter ended September 30,
                1996:

                A Current Report on Form 8-K, dated July 2, 1996, was filed
                regarding the Amended and Restated Agreement and Plan of Merger,
                dated as of April 21, 1996, as amended and restated on July 2,
                1996, by and between Bell Atlantic Corporation and NYNEX
                Corporation.


                                      14
<PAGE>
 
                        Bell Atlantic - Delaware, Inc.

                                   SIGNATURES


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.



                                         BELL ATLANTIC - DELAWARE, INC.



Date: November 7, 1996                   By /s/John J. Parker
                                            --------------------
                                               John J. Parker
                                               Controller and Treasurer



     UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF NOVEMBER 4, 1996.



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