<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, 2001

                                       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


                              VERIZON DELAWARE INC.


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


                 901 Tatnall Street, Wilmington, Delaware 19801


                         Telephone Number (302) 576-5416

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



THE REGISTRANT 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>

                              Verizon Delaware Inc.

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                 Three Months Ended September 30,  Nine Months Ended September 30,
                                                                 -------------------------------------------------------------------

(Dollars in Thousands) (Unaudited)                                         2001          2000              2001           2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>               <C>            <C>
OPERATING REVENUES
   (including $1,024, $(472), $149 and $(2,955) from affiliates)        $  81,035     $  79,415         $ 242,461      $ 233,923
                                                                 -------------------------------------------------------------------
OPERATING EXPENSES
Operations and support (including $16,748, $17,774, $49,599 and
   $50,523 to affiliates)                                                  39,629        41,540           119,197        123,717
Depreciation and amortization                                              18,405        18,576            54,476         54,551
                                                                 -------------------------------------------------------------------
                                                                           58,034        60,116           173,673        178,268
                                                                 -------------------------------------------------------------------

OPERATING INCOME                                                           23,001        19,299           68,788          55,655

OTHER INCOME AND (EXPENSE), NET
  (including $(14), $24, $(3,475) and $130 from affiliates)                    54            99            (3,250)           650

INTEREST EXPENSE
  (including $890, $1,176, $3,256 and $3,053 to affiliates)                 2,169         2,592             7,128          7,291
                                                                 -------------------------------------------------------------------

INCOME BEFORE PROVISION FOR INCOME TAXES                                   20,886        16,806            58,410         49,014

PROVISION FOR INCOME TAXES                                                  8,467         6,819            25,119         20,383
                                                                 -------------------------------------------------------------------

NET INCOME                                                              $  12,419     $   9,987         $  33,291      $  28,631
                                                                 ===================================================================

</TABLE>

                  See Notes to Condensed Financial Statements.

                                       1
<PAGE>

                              Verizon Delaware Inc.

                            CONDENSED BALANCE SHEETS

                                     ASSETS
                                     ------

<TABLE>
<CAPTION>

(Dollars in Thousands)                                                              September 30, 2001      December 31, 2000
--------------------------------------------------------------------------------------------------------------------------------
                                                                                           (Unaudited)
<S>                                                                                        <C>                     <C>
CURRENT ASSETS
Short-term investments                                                                      $      ---             $    5,304
Accounts receivable:
   Trade and other, net of allowances for uncollectibles of $6,579 and $5,382                   53,116                 54,816
   Affiliates                                                                                   11,294                  5,499
Material and supplies                                                                            2,055                  1,987
Prepaid expenses                                                                                 5,079                  3,390
Deferred income taxes                                                                            3,106                  2,328
Other                                                                                           10,102                  9,892
                                                                                       -----------------------------------------
                                                                                                84,752                 83,216
                                                                                       -----------------------------------------

PLANT, PROPERTY AND EQUIPMENT                                                                1,085,929              1,022,528
Less accumulated depreciation                                                                  631,107                587,168
                                                                                       -----------------------------------------
                                                                                               454,822                435,360
                                                                                       -----------------------------------------

PREPAID PENSION ASSET                                                                           28,746                 14,767
                                                                                       -----------------------------------------

OTHER ASSETS                                                                                    30,859                 39,402
                                                                                       -----------------------------------------

TOTAL ASSETS                                                                                $  599,179             $  572,745
                                                                                       =========================================
</TABLE>

                  See Notes to Condensed Financial Statements.

                                       2
<PAGE>

                              Verizon Delaware Inc.

                            CONDENSED BALANCE SHEETS


                     LIABILITIES AND SHAREOWNER'S INVESTMENT
                     ---------------------------------------

<TABLE>
<CAPTION>

(Dollars in Thousands, Except Per Share Amount)                         September 30, 2001     December 31, 2000
-------------------------------------------------------------------------------------------------------------------
                                                                               (Unaudited)
<S>                                                                             <C>                  <C>
CURRENT LIABILITIES
Debt maturing within one year:
   Note payable to affiliate                                                     $  28,302            $   17,850
   Other                                                                                29                   ---
Accounts payable and accrued liabilities:
   Affiliates                                                                       23,438                19,515
   Other                                                                            44,650                46,556
Other liabilities                                                                   19,686                18,939
                                                                           ----------------------------------------
                                                                                   116,105               102,860
                                                                           ----------------------------------------
LONG-TERM DEBT
Note payable to affiliates                                                          75,000                75,000
Other                                                                               86,518                86,345
                                                                           ----------------------------------------
                                                                                   161,518               161,345
                                                                           ----------------------------------------

EMPLOYEE BENEFIT OBLIGATIONS                                                        38,780                38,427
                                                                           ----------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes                                                               54,647                44,271
Unamortized investment tax credits                                                   1,564                 1,675
Other                                                                               25,771                24,164
                                                                           ----------------------------------------
                                                                                    81,982                70,110
                                                                           ----------------------------------------
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                                                                 82,352                81,561
                                                                           ----------------------------------------
                                                                                   200,794               200,003
                                                                           ----------------------------------------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT                                    $ 599,179             $ 572,745
                                                                           ========================================
</TABLE>

                  See Notes to Condensed Financial Statements.

                                       3
<PAGE>

                              Verizon Delaware Inc.

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                             Nine Months Ended September 30,
                                                                         ------------------------------------
(Dollars in Thousands) (Unaudited)                                                  2001              2000
-------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES                                       $ 91,417          $ 81,288
                                                                         ------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments                                               5,304             4,800
Capital expenditures                                                             (72,241)          (67,737)
Other, net                                                                          (628)           (5,980)
                                                                         ------------------------------------
Net cash used in investing activities                                            (67,565)          (68,917)
                                                                         ------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of capital lease obligations                                    (13)              (33)
Net change in short-term note payable to affiliate                                10,452               259
Proceeds from medium-term note payable to affiliate                                   --            30,000
Dividends paid                                                                   (32,500)          (44,000)
Net change in outstanding checks drawn
     on controlled disbursement accounts                                          (1,791)            1,403
                                                                         ------------------------------------
Net cash used in financing activities                                            (23,852)          (12,371)
                                                                         ------------------------------------
NET CHANGE IN CASH                                                                   ---               ---

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

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

                  See Notes to Condensed Financial Statements.

                                       4
<PAGE>

                              Verizon Delaware Inc.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   Basis of Presentation

     Verizon Delaware Inc. is a wholly owned subsidiary of Verizon
Communications Inc. (Verizon Communications). The accompanying unaudited
condensed financial statements have been prepared based upon Securities and
Exchange Commission (SEC) rules that permit reduced disclosure for interim
periods. These financial statements reflect all adjustments that are necessary
for a fair presentation of results of operations and financial position for the
interim periods shown including normal recurring accruals. The results for the
interim periods are not necessarily indicative of results for the full year. The
balance sheet at December 31, 2000 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For a more complete discussion of significant accounting
policies and certain other information, you should refer to the financial
statements included in our 2000 Annual Report on Form 10-K.

     We have reclassified certain amounts from prior year's data to conform to
the 2001 presentation.

2.   Revenue Recognition

     We recognize revenue when services are rendered based on usage of our local
exchange network and facilities. For other products and services, revenues are
generally recognized when services are rendered or products are delivered to
customers.

     We defer nonrecurring service activation revenues and costs and amortize
them over the expected term of the customer relationship. The deferred costs are
equal to the activation fee revenue and any excess cost is expensed immediately.
The deferred costs represent incremental direct costs associated with certain
nonrecurring fees, such as service activation and installation fees.

3.   Long-Lived Assets

     We assess the impairment of long-lived assets under Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" whenever events
or changes in circumstances indicate that the carrying value may not be
recoverable. A determination of impairment (if any) is made based on estimates
of future cash flows.

4.   Dividend

     On November 1, 2001, we declared and paid a dividend in the amount of
$10,000,000 to Verizon Communications.

5.   Debt

     On January 30, 2001, we established a $45,000,000 promissory note with an
affiliated company, Verizon NSI Holdings, Inc. (VNSHI). The term is five years,
maturing on January 30, 2006. The note carries a floating interest rate priced
at 3 month LIBOR plus 45bps, reset and paid quarterly. The proceeds from this
issuance were used to pay down $45,000,000 of our note payable with Verizon
Network Funding Corporation (VNFC).

6.   Derivatives and Hedging Activities

     Effective January 1, 2001, we adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities." SFAS No. 133
requires that all derivatives, including derivatives embedded in other financial
instruments, be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of derivative
instruments not qualifying as hedges under SFAS No. 133 or any ineffective
portion of hedges are recognized in earnings in the current period. Changes in
the fair values of derivative instruments used effectively as fair value hedges
are recognized in earnings, along with changes in the fair value of the hedged
item. Changes in the fair value of the effective portions of cash flow hedges
are reported in other comprehensive income (loss), and recognized in earnings
when the hedged item is recognized in earnings. We presently do not have any
derivative instruments or hedging activities and, consequently, SFAS No. 133 did
not have an impact on our financial statements.

                                       5
<PAGE>

                              Verizon Delaware Inc.

7.   Recent Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets."

     SFAS No. 141, which applies to business combinations occurring after June
30, 2001, requires that the purchase method of accounting be used and includes
guidance on the initial recognition and measurement of goodwill and other
intangible assets acquired in the combination.

     SFAS No. 142 no longer permits the amortization of goodwill and
indefinite-lived intangible assets. Instead, these assets must be reviewed
annually (or more frequently under certain conditions) for impairment in
accordance with this statement. This impairment test uses a fair value approach
rather than the undiscounted cash flows approach previously required by SFAS No.
121. The new statement also applies to goodwill and indefinite-lived intangible
assets of investments accounted for under the equity method of accounting.
Intangible assets that do not have indefinite lives will continue to be
amortized over their useful lives and reviewed for impairment in accordance with
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
We are required to adopt SFAS No. 142 effective January 1, 2002. We are
currently evaluating our intangible assets to determine the impact, if any, the
adoption of SFAS No. 142 will have on our results of operations or financial
position.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This standard provides the accounting for the cost of
legal obligations associated with the retirement of long-lived assets. SFAS No.
143 requires that companies recognize the fair value of a liability for asset
retirement obligations in the period in which the obligations are incurred and
capitalize that amount as a part of the book value of the long-lived asset. That
cost is then depreciated over the remaining life of the underlying long-lived
asset. We are required to adopt SFAS No. 143 effective January 1, 2003. We are
currently evaluating the impact this new standard will have on our future
results of operations or financial position.

     In August 2001, the FASB issued SFAS No. 144. This standard supersedes SFAS
No. 121 and the provisions of Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," with regard to reporting the effects of a disposal of
a segment of a business. SFAS No. 144 establishes a single accounting model for
assets to be disposed of by sale and addresses several SFAS No. 121
implementation issues. We are required to adopt SFAS No. 144 effective January
1, 2002. We do not expect the impact of the adoption of SFAS No. 144 to have a
material effect on our results of operations or financial position.

8.   Merger Charges

     In connection with the merger of Bell Atlantic and GTE on June 30, 2000, we
incurred charges associated with employee severance of $1,499,000 pre-tax.
Employee severance costs, as recorded under SFAS No. 112, "Employers' Accounting
for Postemployment Benefits," represent the benefit costs for the separation of
management employees who were entitled to benefits under pre-existing separation
plans. During the second quarter of 2000, in connection with the merger, we also
recorded a pre-tax charge of $1,736,000 for direct, incremental merger-related
costs, including compensation, professional services and other direct costs.

     In addition, we recorded pre-tax merger-related transition costs of
$2,582,000 in the first nine months of 2001 and $329,000 in the first nine
months of 2000. Transition costs consisted of costs to integrate systems,
consolidate real estate, relocate employees and meet certain regulatory
conditions of the merger. They also included costs for advertising and other
costs to establish the Verizon brand. Transition costs since the date of the
merger totaled $3,554,000 million. Transition costs are expensed as incurred.
During the second quarter of 2000, we also recorded a $27,000 pre-tax charge for
other actions in relation to the Bell Atlantic-GTE merger. This charge was
related to the write-off of duplicate assets.

                                       6
<PAGE>

                              Verizon Delaware Inc.

9.   Shareowner's Investment


<TABLE>
<CAPTION>

                                                                                   Reinvested
(Dollars in Thousands)                                         Common Stock          Earnings
-----------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>
Balance at December 31, 2000                                       $118,442          $ 81,561
Net income                                                                             33,291
Dividends declared to Verizon Communications                                          (32,500)
                                                             ----------------------------------
Balance at September 30, 2001                                      $118,442          $ 82,352
                                                             ==================================
</TABLE>

     Net income and comprehensive income were the same for the nine months ended
September 30, 2001 and 2000.

10.  Commitments and Contingencies

     Various legal actions and regulatory proceedings are pending to which we
are a party and claims which, if asserted, may lead to other legal actions. We
have established reserves for specific liabilities in connection with regulatory
and legal matters that we currently deem to be probable and estimable. We do not
expect that the ultimate resolution of pending regulatory and legal matters in
future periods will have a material effect on our financial condition, but it
could have a material effect on our results of operations.

     Several regulatory matters may require us to refund a portion of the
revenues collected in the current and prior periods. The outcome of each pending
matter, as well as the time frame within which each matter will be resolved, is
not presently determinable.

     Regulatory conditions to the Bell Atlantic - GTE merger include certain
commitments to, among other things, promote competition and the widespread
deployment of advanced services, while helping to ensure that consumers continue
to receive high-quality, low cost telephone services. In some cases, there are
significant penalties associated with not meeting these commitments. The cost of
satisfying these commitments could have a significant impact on net income in
future periods.

                                       7
<PAGE>

                              Verizon 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
---------------------

     We reported net income of $33,291,000 for the nine month period ended
September 30, 2001, compared to net income of $28,631,000 for the same period in
2000.

     Our results for 2001 and 2000 were affected by special items. The special
items in both periods include our allocated share of charges from affiliates
that provide various centralized services on behalf of Verizon Communications
Inc. subsidiaries.

     The following table shows how special items are reflected in our condensed
statements of income for each period:

<TABLE>
<CAPTION>
                                                                                 (Dollars in Thousands)
Nine Months Ended September 30                                                    2001            2000
----------------------------------------------------------------------------------------------------------
<S>                                                                            <C>            <C>
Operating Revenues
   Regulatory contingency                                                       $   --          $   62
                                                                             -----------------------------

Operations and Support Expenses
   Bell Atlantic-GTE merger direct incremental costs                                --           1,736
   Bell Atlantic-GTE merger severance costs                                         --           1,499
   Bell Atlantic-GTE merger transition costs                                     2,582             329
   Bell Atlantic-GTE merger related costs                                           --              27
   Other charges and special items                                                  --           1,398
                                                                             -----------------------------
                                                                                 2,582           4,989
                                                                             -----------------------------

Interest Expense
   Regulatory contingency                                                           --              22
                                                                             -----------------------------
Net impact on pre-tax income                                                    $2,582          $5,073
                                                                             =============================
</TABLE>

     What follows is a further explanation of the nature of these special items.

Merger Charges

     In connection with the merger of Bell Atlantic and GTE on June 30, 2000, we
incurred charges associated with employee severance of $1,499,000 pre-tax.
Employee severance costs, as recorded under SFAS No. 112, "Employers' Accounting
for Postemployment Benefits," represent the benefit costs for the separation of
management employees who were entitled to benefits under pre-existing separation
plans. During the second quarter of 2000, in connection with the merger, we also
recorded a pre-tax charge of $1,736,000 for direct, incremental merger-related
costs, including compensation, professional services and other direct costs.

     In addition, we recorded pre-tax merger-related transition costs of
$2,582,000 in the first nine months of 2001 and $329,000 in the first nine
months of 2000. Transition costs consisted of costs to integrate systems,
consolidate real estate, relocate employees and meet certain regulatory
conditions of the merger. They also included costs for advertising and other
costs to establish the Verizon brand. Transition costs are expensed as incurred.
During the second quarter of 2000, we also recorded a $27,000 pre-tax charge for
other actions in relation to the Bell Atlantic-GTE merger. This charge was
related to the write-off of duplicate assets.

Other Charges and Special Items

     In the second quarter of 2000, we recognized a pre-tax charge for a
regulatory matter totaling $84,000. We recorded a reduction to operating revenue
in the amount of $62,000 and a charge to interest expense of $22,000. This
matter relates to a specific issue currently under investigation by the Federal
Communications Commission (FCC). We believe that it is probable that the
ultimate resolution of this matter will result in refunds to our customers,
including interest. In the second quarter of 2000, we

                                       8
<PAGE>

                             Verizon Delaware Inc.

also recorded other charges and special items totaling approximately $1,398,000.
These charges included costs for the write-off of accounts receivable and other
miscellaneous items.

     These and other items affecting the comparison of our results of operations
for the nine month periods ended September 30, 2001 and 2000 are discussed in
the following sections.


OPERATING REVENUES
------------------
(Dollars in Thousands)

Nine Months Ended September 30,                    2001                  2000
--------------------------------------------------------------------------------
Local services                                 $144,467              $142,632
Network access services                          76,711                65,335
Long distance services                            9,153                12,583
Other services                                   12,130                13,373
                                            ------------------------------------
Total                                          $242,461              $233,923
                                            ====================================


LOCAL SERVICES

     2001 - 2000                                              Increase
--------------------------------------------------------------------------------
     Nine Months                                       $1,835          1.3%
--------------------------------------------------------------------------------

     Local service revenues are earned from the provision of local exchange,
local private line, wire maintenance, voice messaging and value-added services.
Value-added services are a family of services that expand the utilization of the
network, including products such as Caller ID, Call Waiting and Return Call. The
provision of local exchange services not only includes retail revenues, but also
includes local wholesale revenues from unbundled network elements (UNEs),
interconnection revenues from competitive local exchange carriers, certain data
transport revenues and wireless interconnection revenues.

     Local service revenues increased in the first nine months of 2001 primarily
as a result of higher customer demand and usage of our wire-maintenance services
and our value-added services as a result of new packaging of services. Higher
payments received from competitive local exchange carriers for the purchase of
unbundled network elements also contributed to the increase in local service
revenues.

     These increases were partially offset by the effect of lower demand and
usage of our basic wireline and private line services, as reflected by a
decrease in the rate of growth in our switched access lines in service from
September 30, 2000. This decrease primarily reflects the impact of an economic
slowdown and competition. In addition, the effect of technology substitution is
increasing, as more customers are choosing wireless and Internet services over
certain basic wireline and private line services.


NETWORK ACCESS SERVICES

     2001 - 2000                                              Increase
--------------------------------------------------------------------------------
     Nine Months                                       $11,376         17.4%
--------------------------------------------------------------------------------

     Network access revenues are earned from end-user subscribers and from long
distance and other competing carriers who use our local exchange facilities to
provide usage services to their customers. Switched access revenues are derived
from fixed and usage-based charges paid by carriers for access to our local
network. Special access revenues originate from carriers and end-users that buy
dedicated local exchange capacity to support their private networks. End-user
access revenues are earned from our customers and from resellers who purchase
dial-tone services.

     Network access revenue growth in the first nine months of 2001 was mainly
attributable to higher customer demand for special access services, particularly
for high-capacity, high-speed digital services. Network access revenue was also
impacted by the effect of a special charge recorded in 2000, as described in the
Results of Operations section.

                                       9
<PAGE>

                             Verizon Delaware Inc.

     These increases were partially offset by price reductions associated with a
federal price cap filing and other regulatory decisions. The Delaware Public
Service Commission (DPSC) regulates us with respect to certain intrastate rates
and services and certain other matters. The FCC regulates rates that we charge
long distance carriers and end-user subscribers for interstate access services.
We are required to file new access rates with the FCC each year. In July 2000,
we implemented the Coalition for Affordable Local and Long Distance Service
(CALLS) plan. Rates included in the July 2000 CALLS plan were in effect through
June 2001. Effective July 3, 2001, we implemented further rate reductions in
accordance with the plan. The impact of the slowing economy also affected
network access revenues in 2001.


LONG DISTANCE SERVICES

     2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
     Nine Months                                       $(3,430)       (27.3)%
--------------------------------------------------------------------------------

     Long distance revenues are earned primarily from calls made to points
outside a customer's local calling area, but within our service area (intraLATA
toll). IntraLATA toll calls originate and terminate within the same LATA, but
generally cover a greater distance than a local call. These services are
regulated by the DPSC except where they cross state lines. Other long distance
services that we provide include 800 services and Wide Area Telephone Service
(WATS).

     Long distance service revenues declined in the first nine months of 2001
primarily due to competition and the effects of toll calling discount packages
and product bundling offers of our intraLATA toll services. Long distance
revenues also included an accrual in the first quarter of 2001 for refunds to
customers.


OTHER SERVICES

     2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
     Nine Months                                       $(1,243)        (9.3)%
--------------------------------------------------------------------------------

     Our other services include such services as billing and collections for
long distance carriers and affiliates, facilities rentals to affiliates and
nonaffiliates, public (pay) telephone, customer premises equipment (CPE) and
sales of materials and supplies to affiliates. Other service revenues also
include fees paid by customers for nonpublication of telephone numbers and
multiple white page listings and fees paid by an affiliate for usage of our
directory listings.

     Other service revenues decreased in the first nine months of 2001 primarily
due to lower billing and collection revenues, reflecting the take-back of these
services by interexchange carriers. In addition, public telephone revenues
declined, as more customers substituted wireless communications for pay phone
services.

                                       10
<PAGE>

                              Verizon Delaware Inc.

OPERATING EXPENSES
------------------
(Dollars in Thousands)


OPERATIONS AND SUPPORT

     2001 - 2000                                              (Decrease)
--------------------------------------------------------------------------------
     Nine Months                                       $(4,520)        (3.7)%
--------------------------------------------------------------------------------

     Operations and support expenses consist of employee costs and other
operating expenses. Employee costs consist of salaries, wages and other employee
compensation, employee benefits and payroll taxes. Other operating expenses
consist of contract services including centralized services expenses allocated
from affiliates, rent, network software costs, operating taxes other than
income, the provision for uncollectible accounts receivable, reciprocal
compensation, and other costs.

     The decrease in operations and support expenses was primarily attributable
to the effect of merger-related costs and other special items recorded in 2000
and 2001, as described in the Results of Operations section. Operations and
support expenses were further reduced by lower pension and benefit costs
related to the amortization of actuarial gains and by reduced employee overtime
pay. Operating costs have also decreased due to business integration activities
and effective cost control measures. These decreases were partially offset by
annual salary and wage increases for management and non-management employees.

     We continue to incur expenditures related to reciprocal compensation
arrangements with competitive local exchange carriers and other carriers to
terminate calls on their network. In March 2000, the United States Court of
Appeals for the District of Columbia Circuit reversed and remanded the FCC's
February 1999 order that concluded that calls to the Internet through Internet
service providers (ISP) do not terminate at the ISP but are single interstate
calls. The FCC had concluded that calls to the Internet are not therefore
subject to reciprocal compensation under section 251(b)(5) of the
Telecommunications Act, but left it to state regulatory commissions to determine
whether local interconnection agreements entered into with competing carriers
required the payment of compensation on such calls.

     On April 27, 2001, the FCC released an order responding to the court's
remand. The FCC found that Internet-bound traffic is interstate and subject to
the FCC's jurisdiction. Moreover, the FCC again found that Internet-bound
traffic is not subject to reciprocal compensation under section 251(b)(5) of the
Telecommunications Act. Instead, the FCC established federal rates that decline
from $0.0015 to $0.0007 per minute over a three year period. The FCC order also
sets caps on the total minutes that may be subject to any intercarrier
compensation and requires that incumbent local exchange carriers must offer to
pay reciprocal compensation for local traffic at the same rate as they are
required to pay on Internet-bound traffic.


DEPRECIATION AND AMORTIZATION

     2001 - 2000                                              (Decrease)
--------------------------------------------------------------------------------
     Nine Months                                          $(75)         (.1)%
--------------------------------------------------------------------------------

     Depreciation and amortization expense decreased in the first nine months of
2001 primarily as a result of lower rates of depreciation. This decrease was
substantially offset by growth in depreciable telephone plant and increased
software amortization costs.

OTHER INCOME AND (EXPENSE), NET

     2001 - 2000                                            (Decrease)
--------------------------------------------------------------------------------
     Nine Months                                       $(3,900)      (600.0)%
--------------------------------------------------------------------------------

     The change in other income and (expense), net, was primarily attributable
to equity losses recognized from our investment in Verizon Advanced Data Inc.
(VADI). VADI is a wholly owned subsidiary of Verizon Communications that
provides new exchange access services. At September 30, 2001, our ownership
interest in VADI was 2.69%.

                                       11
<PAGE>

                             Verizon Delaware Inc.

INTEREST EXPENSE

     2001 - 2000                                             (Decrease)
-------------------------------------------------------------------------------
     Nine Months                                        $(163)        (2.2)%
-------------------------------------------------------------------------------

     Interest expense includes costs associated with borrowings and capital
leases, net of interest capitalized as a cost of acquiring or constructing plant
assets.

     Interest expense decreased in the first nine months of 2001, over the same
period in 2000, primarily due to higher capitalized interest costs resulting
from higher levels of average telephone plant under construction and the effect
of lower rates of interest. In addition, the effect of additional interest costs
in 2000 associated with a regulatory contingency, as described in the Results of
Operations section, also contributed to the decrease in expense, but to a lesser
extent. These factors were partially offset by higher levels of average
borrowings with affiliates.


EFFECTIVE INCOME TAX RATES

     Nine Months Ended September 30,
--------------------------------------------------------------------------------
     2001                                                               43.0%
--------------------------------------------------------------------------------
     2000                                                               41.6%
--------------------------------------------------------------------------------

     The effective income tax rate is the provision for income taxes as a
percentage of income before the provision for income taxes. Our effective income
tax rate was higher in the first nine months of 2001 principally due to equity
losses associated with our investment in VADI, for which we do not recognize
income tax benefits.



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

Recent Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets."

     SFAS No. 141, which applies to business combinations occurring after June
30, 2001, requires that the purchase method of accounting be used and includes
guidance on the initial recognition and measurement of goodwill and other
intangible assets acquired in the combination.

     SFAS No. 142 no longer permits the amortization of goodwill and
indefinite-lived intangible assets. Instead, these assets must be reviewed
annually (or more frequently under certain conditions) for impairment in
accordance with this statement. This impairment test uses a fair value approach
rather than the undiscounted cash flows approach previously required by SFAS No.
121. The new statement also applies to goodwill and indefinite-lived intangible
assets of investments accounted for under the equity method of accounting.
Intangible assets that do not have indefinite lives will continue to be
amortized over their useful lives and reviewed for impairment in accordance with
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
We are required to adopt SFAS No. 142 effective January 1, 2002. We are
currently evaluating our intangible assets to determine the impact, if any, the
adoption of SFAS No. 142 will have on our results of operations or financial
position.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This standard provides the accounting for the cost of
legal obligations associated with the retirement of long-lived assets. SFAS No.
143 requires that companies recognize the fair value of a liability for asset
retirement obligations in the period in which the obligations are incurred and
capitalize that amount as a part of the book value of the long-lived asset. That
cost is then depreciated over the remaining life of the underlying long-lived
asset. We are required to adopt SFAS No. 143 effective January 1, 2003. We are
currently evaluating the impact this new standard will have on our future
results of operations or financial position.

                                       12
<PAGE>

                              Verizon Delaware Inc.

     In August 2001, the FASB issued SFAS No. 144. This standard supersedes SFAS
No. 121 and the provisions of Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," with regard to reporting the effects of a disposal of
a segment of a business. SFAS No. 144 establishes a single accounting model for
assets to be disposed of by sale and addresses several SFAS No. 121
implementation issues. We are required to adopt SFAS No. 144 effective January
1, 2002. We do not expect the impact of the adoption of SFAS No. 144 to have a
material effect on our results of operations or financial position.

                                       13
<PAGE>

                              Verizon Delaware Inc.

                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

           There were no proceedings reportable under this Item.

Item 6.    Exhibits and Reports on Form 8-K


           (a) Exhibits:

               Exhibit
               Number
               ------

                 12         Computation of Ratio of Earnings to Fixed Charges.


           (b) There were no Current Reports on Form 8-K filed during the
               quarter ended September 30, 2001.

                                       14
<PAGE>

                              Verizon 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.



                                             Verizon Delaware Inc.




Date:  November 13, 2001                     By  /s/ Edwin F. Hall
                                                --------------------------------
                                                     Edwin F. Hall
                                                     Controller




     UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF NOVEMBER 8, 2001.

                                       15
<PAGE>

                              Verizon Delaware Inc.

                                  EXHIBIT INDEX


Exhibit
Number       Description
------       -----------

   12        Computation of Ratio of Earnings to Fixed Charges.

                                       16