<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 June 30, 1997

                                      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 1-6875


                        BELL ATLANTIC - MARYLAND, INC.


A Maryland Corporation            I.R.S. Employer Identification No. 52-0270070


               One East Pratt Street, Baltimore, Maryland 21202


                        Telephone Number (410) 539-9900

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


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 - Maryland, Inc.

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                 STATEMENTS OF INCOME AND REINVESTED EARNINGS
                                  (Unaudited)
                            (Dollars in Thousands)
<TABLE>
<CAPTION>
 
 
                                                           Three months ended           Six months ended
                                                                June 30,                    June 30,
                                                          ---------------------    ------------------------
                                                            1997        1996           1997          1996
                                                          ---------  ----------    ----------    ----------
<S>                                                       <C>        <C>           <C>           <C>
OPERATING REVENUES (including $9,044, $6,085, 
     $17,957 and $11,818 from affiliates)..........        $511,872   $501,242     $1,018,343    $1,011,657
                                                           --------   --------     ----------    ----------
                            
OPERATING EXPENSES          
     Employee costs, including benefits and taxes..          87,898     94,523        172,516       190,979
     Depreciation and amortization.................         108,346    106,364        214,509       212,487
     Other (including $122,710, $123,349, $244,143,             
          and $247,980 to affiliates)..............         196,117    184,560        377,708       366,128
                                                           --------   --------     ----------    ----------
                                                            392,361    385,447        764,733       769,594
                                                           --------   --------     ----------    ----------
                            
OPERATING INCOME...................................         119,511    115,795        253,610       242,063
                            
OTHER INCOME AND EXPENSE, NET (including $43, $170,  
     $48 and $319 from affiliate)..................             234       (753)        (1,089)       (1,645)
                            
INTEREST EXPENSE            
     (including $831, $309, $1,521 and $673 to 
          affiliate)...............................          16,602     15,663         33,139        31,675
                                                           --------   --------     ----------    ----------
                            
Income Before Provision for Income Taxes and       
     Cumulative Effect of Change in Accounting  
          Principle................................         103,143     99,379        219,382       208,743

PROVISION FOR INCOME TAXES.........................          43,942     34,103         86,059        73,290
                                                           --------   --------     ----------    ----------
                            
Income Before Cumulative Effect of Change           
     in Accounting Principle.......................          59,201     65,276        133,323       135,453
                            
CUMULATIVE EFFECT OF CHANGE IN                  
     ACCOUNTING PRINCIPLE   
     Directory Publishing, Net of Tax..............             ---        ---            ---        28,565
                                                           --------   --------     ----------    ----------
                            
NET INCOME.........................................        $ 59,201   $ 65,276     $  133,323    $  164,018
                                                           ========   ========     ==========    ==========
                            
                            
REINVESTED EARNINGS         
     At beginning of period........................        $110,109   $176,786     $  133,260    $  130,732
     Add:  net income..............................          59,201     65,276        133,323       164,018
                                                           --------   --------     ----------    ----------
                                                            169,310    242,062        266,583       294,750
     Deduct:  dividend.............................          93,700    100,447        185,053       152,967
              other changes........................             261         20          6,181           188
                                                           --------   --------     ----------    ----------
     At end of period..............................        $ 75,349   $141,595     $   75,349    $  141,595
                                                           ========   ========     ==========    ==========
</TABLE>


                      See Notes to Financial Statements.

                                       1
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                                BALANCE SHEETS
                                  (Unaudited)
                            (Dollars in Thousands)


                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
 
                                                    June 30,   December 31,
                                                      1997         1996
                                                   ----------  ------------
<S>                                                <C>         <C>
 
CURRENT ASSETS
Short-term investments...........................  $   24,931    $   35,102
Accounts receivable:
     Trade and other, net of allowances for
          uncollectibles of $32,528 and $38,039..     409,799       470,684
     Affiliates..................................      37,655        42,305
Material and supplies............................       8,897         7,422
Prepaid expenses.................................      35,257        71,787
Deferred income taxes............................         212           ---
                                                   ----------    ----------
                                                      516,751       627,300
                                                   ----------    ----------
 
PLANT, PROPERTY AND EQUIPMENT....................   5,753,089     5,576,923
Less accumulated depreciation....................   3,138,688     2,978,841
                                                   ----------    ----------
                                                    2,614,401     2,598,082
                                                   ----------    ----------
 
OTHER ASSETS.....................................      29,778        29,036
                                                   ----------    ----------
 
TOTAL ASSETS.....................................  $3,160,930    $3,254,418
                                                   ==========    ==========
</TABLE>


                      See Notes to Financial Statements.

                                       2
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                                BALANCE SHEETS
                                  (Unaudited)
                            (Dollars in Thousands)


                    LIABILITIES AND SHAREOWNER'S INVESTMENT
                    ---------------------------------------
<TABLE>
<CAPTION>
 
                                                        June 30,    December 31,
                                                          1997          1996
                                                      ------------  ------------
<S>                                                   <C>           <C>
 
CURRENT LIABILITIES
Debt maturing within one year:
     Note payable to affiliate......................    $   79,270    $   75,255
     Other..........................................         8,105         7,806
Accounts payable and accrued liabilities:
     Affiliates.....................................       194,070       222,888
     Other..........................................       281,397       291,362
Other liabilities...................................        57,782        60,051
                                                        ----------    ----------
                                                           620,624       657,362
                                                        ----------    ----------
 
LONG-TERM DEBT......................................       959,210       962,969
                                                        ----------    ----------
 
EMPLOYEE BENEFIT OBLIGATIONS........................       447,482       459,202
                                                        ----------    ----------
 
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes...............................       112,073       104,080
Unamortized investment tax credits..................        15,692        17,244
Other...............................................       105,080        94,881
                                                        ----------    ----------
                                                           232,845       216,205
                                                        ----------    ----------
SHAREOWNER'S INVESTMENT
Common stock - one share, without par value, 
 owned by parent....................................       825,420       825,420
Reinvested earnings.................................        75,349       133,260
                                                        ----------    ----------
                                                           900,769       958,680
                                                        ----------    ----------
 
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT.......    $3,160,930    $3,254,418
                                                        ==========    ==========
</TABLE>


                      See Notes to Financial Statements.

                                       3
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

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

<TABLE> 
<CAPTION> 
                                                        Six months ended 
                                                            June 30, 
                                                     ---------------------
                                                       1997         1996
                                                     ---------   ---------
<S>                                                  <C>         <C>   
NET CASH PROVIDED BY OPERATING ACTIVITIES.......     $ 410,271   $ 374,978
                                                     ---------   ---------
 
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments............        10,171     (10,846)
Additions to plant, property and equipment......      (238,205)   (168,906)
Other, net......................................         4,857      30,340
                                                      --------    --------
Net cash used in investing activities...........      (223,177)   (149,412)
                                                      --------    --------
                                                               
                                                               
CASH FLOWS FROM FINANCING ACTIVITIES                           
Principal repayments of borrowings and capital                 
     lease obligations..........................        (3,717)     (3,485)
Net change in note payable to affiliate.........         4,015     (66,052)
Dividends paid..................................      (185,053)   (152,967)
Net change in outstanding checks drawn                         
     on controlled disbursement accounts........        (2,339)     (3,062)
                                                      --------    --------
Net cash used in financing activities...........      (187,094)   (225,566)
                                                      --------    -------- 
 
NET CHANGE IN CASH..............................           ---         ---


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


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


                      See Notes to Financial Statements.

                                       4
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

1.   Basis of Presentation

     The Company has prepared the accompanying unaudited financial statements
based upon Securities and Exchange Commission rules that permit reduced
disclosure for interim periods. Management believes that these financial
statements reflect all adjustments which are necessary for a fair presentation
of the Company's results of operations and financial position, which consist of
only normal recurring accruals. For a more complete discussion of significant
accounting policies and certain other information, refer to the financial
statements filed with the Company's 1996 Form 10-K.

2.   Dividend

     On August 1, 1997, the Company declared and paid a dividend in the amount
of $93,700,000 to Bell Atlantic Corporation (Bell Atlantic).

3.   Transfer of Directory Publishing Activities

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

     Net assets transferred by the Company totaled approximately $5,600,000, and
consisted of deferred directory production costs (included in prepaid expenses),
fixed assets, and related deferred tax liabilities.

     Revenues and direct expenses related to the Company's directory publishing
activities transferred were approximately $33,500,000 and $25,200,000,
respectively, for the six month period ended June 30, 1996.  The Company does
not separately identify indirect expenses attributable to the directory
publishing activities, including expenses related to billing and data management
and processing services, legal, external affairs, depreciation, interest expense
and any corresponding tax expense.

4.   Change in State Income Tax Law

     On May 22, 1997, the State of Maryland enacted a law which changes the
determination of taxable income for telecommunications companies. The new law is
effective January 1, 1998. Under current income tax law, operating gross
receipts (and allocable expenses) are not subject to the Maryland income tax.
The new law eliminates this deduction and replaces it with a tax credit for real
property taxes. This change effectively increased the state income tax rate for
the Company from 2.4% to 7%. The Company anticipates that its future annual
income tax liability will be approximately equal to its current income tax
liability and therefore, the impact of the new law will not be material to
ongoing results of operations. As required under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," the effect of this
tax law change on deferred tax assets/liabilities must be included in income
from continuing operations for the period that includes the enactment date. This
one-time adjustment of deferred taxes generated an estimated $8,300,000 state
income tax expense (net of federal income tax benefit), which is reflected in
the income tax provision for the period ended June 30, 1997.
 
5.   Proposed Bell Atlantic - NYNEX Merger

     Bell Atlantic and NYNEX Corporation announced a proposed merger of equals
under a definitive merger agreement entered into on April 21, 1996 and amended
on July 2, 1996.  At special meetings held in November 1996, stockholders of
both companies approved the merger.  The completion of the merger is subject to
the Federal Communications Commission's approval, which is expected to be
received shortly.

                                       5
<PAGE>
 
                        Bell Atlantic - Maryland, 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 of $133,323,000 for the six month period
ended June 30, 1997, compared to net income of $164,018,000 for the same period
in 1996.

Transfer of Directory Publishing Activities                    
--------------------------------------------------------------------------------

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

     Net assets transferred by the Company totaled approximately $5,600,000, and
consisted of deferred directory production costs (included in prepaid expenses),
fixed assets, and related deferred tax liabilities.

     Revenues and direct expenses related to the Company's directory publishing
activities transferred were approximately $33,500,000 and $25,200,000,
respectively, for the six month period ended June 30, 1996.  The Company does
not separately identify indirect expenses attributable to the directory
publishing activities, including expenses related to billing and data management
and processing services, legal, external affairs, depreciation, interest expense
and any corresponding tax expense.

     Effective January 1, 1997, revenues from directory publishing activities
transferred are no longer earned, and the related expenses are no longer
incurred, by the Company.  Certain other revenues, primarily fees for non-
publication of telephone numbers and multiple white page listings continue to be
earned by the Company.  Additionally, contracts between the Company and another
affiliate of Bell Atlantic for billing and collection services related to the
directory activities, use of directory listings, and rental charges have created
new revenue sources for the Company.

Cumulative Effect of Change in Accounting - Directory Publishing
--------------------------------------------------------------------------------

     The Company changed its method of accounting for directory publishing
revenues and expenses, effective January 1, 1996. The Company adopted the point-
of-publication method, which requires directory revenues and expenses to be
recognized upon publication rather than over the lives of the directories. The
Company recorded an after-tax increase in income of $28,565,000 in the first
quarter of 1996, representing the cumulative effect of this accounting change.
Results of operations for the first three quarters of 1996 were restated to
reflect the impact of this change.

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

     Certain other items affecting the comparison of the Company's results of
operations for the six month periods ended June 30, 1997 and 1996 are discussed
in the following sections.  This Management's Discussion and Analysis should
also be read in conjunction with the Company's 1996 Annual Report on Form 10-K.

                                       6
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

<TABLE>
<CAPTION>
 
OPERATING REVENUES
------------------
(Dollars in Thousands)
 
Six Month Period Ended June 30                              1997            1996
--------------------------------------------------------------------------------
                                                                   
<S>                                                   <C>             <C>
Transport services                                                 
    Local service..........................           $  497,683      $  483,681
    Network access.........................              277,602         280,395
    Toll service...........................               48,109          50,408
Ancillary services                                                 
    Directory publishing...................                6,771          39,165
    Other..................................               48,620          41,773
Value-added services.......................              139,558         116,235
                                                      ----------      ----------
Total......................................           $1,018,343      $1,011,657
                                                      ==========      ==========
</TABLE> 

<TABLE> 
<CAPTION> 

TRANSPORT SERVICES OPERATING STATISTICS
---------------------------------------
                                                                      Percentage
                                               1997         1996       Increase
--------------------------------------------------------------------------------
<S>                                          <C>          <C>         <C>   
                                                                 
At June 30                                                       
----------                                                       
  Access Lines in Service (in thousands)*                        
     Residence.............................   2,225        2,140            4.0%
     Business..............................   1,203        1,152            4.4
     Public................................      40           40            ---
                                             ------       ------               
                                              3,468        3,332            4.1
                                             ======       ======               
                                                                               
Six Month Period Ended June 30                                                 
------------------------------                                   
  Access Minutes of Use (in millions)                                          
     Interstate............................   5,518        5,210            5.9
     Intrastate............................   1,656        1,609            2.9
                                             ------       ------               
                                              7,174        6,819            5.2
                                             ======       ======               
                                                                               
  Toll Messages (in thousands)                                                 
     Intrastate............................  66,164       62,786            5.4
     Interstate............................  11,928       11,442            4.2
                                             ------       ------               
                                             78,092       74,228            5.2 
                                             ======       ====== 
</TABLE> 

* 1996 reflects a restatement of access lines in service


LOCAL SERVICE REVENUES

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months              $14,002             2.9%
--------------------------------------------------------------------------------

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

     Higher usage of the Company's network facilities was the primary reason for
the increase in local service revenues in the first six months of 1997.  This
growth was generated by an increase in access lines in service of 4.1% from June
30, 1996.  This access line growth primarily reflects higher demand for Centrex
services and an increase in second residential lines.  Higher revenues from
private line and switched data services also contributed to the revenue growth
in 1997.

     For a discussion of the Telecommunications Act of 1996, which will open the
local exchange market to competition, see "Factors That May Impact Future
Results" beginning on page 12.

                                       7
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

NETWORK ACCESS REVENUES

     1997-1996                         (Decrease)
--------------------------------------------------------------------------------
     Six Months              $(2,793)            (1.0)%
--------------------------------------------------------------------------------

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

     Network access revenues decreased principally due to the effect of a price
cap plan approved by the Public Service Commission of Maryland (PSC) in November
1996. The PSC ordered the Company to reduce access rates by $32,100,000
annually. The decrease in network access revenues was substantially offset by
higher customer demand as reflected by growth in access minutes of use of 5.2%
from June 30, 1996. Volume growth was boosted by the expansion of the business
market, particularly for high capacity services. Reported growth in access
minutes of use and revenues was negatively affected by increased calling volumes
during the first quarter of 1996 caused by severe winter storms.

     Effective July 1, 1997, the Company implemented price decreases of
approximately $35,300,000 on an annual basis for interstate services, in
connection with the Federal Communications Commission's (FCC) price cap plan.
It is expected that these price decreases will be partially offset by volume
increases.  However, the PSC's price cap plan is expected to continue to
negatively impact network access revenues in 1997.  For a further discussion of
FCC rulemakings concerning price caps, access charges and universal service, see
"Factors That May Impact Future Results - Recent Developments - FCC Orders"
beginning on page 12.


TOLL SERVICE REVENUES

     1997-1996                         (Decrease)
--------------------------------------------------------------------------------
     Six Months              $(2,299)            (4.6)%
--------------------------------------------------------------------------------

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

     The decrease in toll service revenues in the first six months of 1997 was
principally caused by company-initiated price reductions and discount offerings
on certain toll services implemented through revenue neutral rate change filings
in 1996 in response to competition.  The impact of increased competition for
WATS and private line services also contributed to the reduction in toll service
revenues in 1997.  Higher network usage, as reflected by growth in toll message
volumes of 5.2% in 1997, partially offset these decreases.  Toll message volume
growth in 1997 was negatively affected by storm-driven usage in the first
quarter of 1996.

     The Company believes that competition for toll services will continue to
impact future revenue trends. See "Factors That May Impact Future Results -
Competition - IntraLATA Toll Services" on page 14 for a further discussion of
toll service revenue issues.

                                       8
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

DIRECTORY PUBLISHING REVENUES

     1997-1996                         (Decrease)
--------------------------------------------------------------------------------
     Six Months              $(32,394)           (82.7)%
--------------------------------------------------------------------------------

     As described earlier, the Company transferred certain assets and
liabilities associated with its directory publishing activities to a newly
formed, wholly owned subsidiary, effective January 1, 1997. As a result,
revenues associated with directory publishing activities transferred are no
longer earned by the Company. The Company's directory publishing revenues in
1997 are earned primarily from fees for non-publication of telephone numbers,
multiple white page listings and usage of directory listings.

     The decrease in directory publishing revenues in the first six months of
1997 was principally due to the transfer of directory publishing activities.


OTHER ANCILLARY SERVICES REVENUES

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months              $6,847              16.4%
--------------------------------------------------------------------------------

     The Company provides other ancillary services which include billing and
collection services for long distance carriers, facilities rental services for
affiliates and non-affiliates, and sales of materials and supplies to
affiliates.

     Higher other ancillary services revenues in the first six months of 1997
were due to increased facilities rental revenues from affiliates and increased
revenues from customer late payment charges. The Company began assessing
residential late payment charges in February 1996 pursuant to a revenue neutral
rate change filing.


VALUE-ADDED SERVICES REVENUES

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months              $23,323             20.1%
--------------------------------------------------------------------------------

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

     Revenue growth from value-added services is principally the result of
increased marketing and promotional efforts which have stimulated customer
demand and usage.  Demand for these services also has been fueled by the
introduction of new and enhanced optional features.  Value-added services
revenues were also higher in the first six months of 1997 as a result of an
increase in federal government contract billing for customer premises services.

                                       9
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

<TABLE>
<CAPTION>
 
OPERATING EXPENSES
------------------
(Dollars in Thousands)
 
Six Month Period Ended June 30                                  1997      1996
--------------------------------------------------------------------------------
<S>                                                           <C>       <C>
Employee costs, including benefits and taxes.......           $172,516  $190,979
Depreciation and amortization......................            214,509   212,487
Other operating expenses...........................            377,708   366,128
                                                              --------  --------
Total..............................................           $764,733  $769,594
                                                              ========  ========
</TABLE>

EMPLOYEE COSTS

     1997-1996                         (Decrease)
--------------------------------------------------------------------------------
     Six Months              $(18,463)           (9.7)%
--------------------------------------------------------------------------------

     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 primarily due to lower benefit costs.
The reduction in benefit costs was caused by a number of factors, including an
increase in the discount rate used to develop pension and postretirement benefit
costs, favorable pension plan asset returns and lower than expected medical
claims. The Company expects the lower level of benefit costs to continue through
the third quarter of 1997. A decline in the level of employee costs incurred for
repair and maintenance activity also contributed to the expense reduction in
1997. This decline was partially due to the impact of the severe weather
experienced in the first quarter of 1996 which caused a higher level of costs to
be expensed during that period. These cost reductions were partially offset by
annual salary and wage increases and by higher overtime pay and the effect of
increased work force levels principally as a result of higher business volumes.


DEPRECIATION AND AMORTIZATION

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months              $2,022              1.0%
--------------------------------------------------------------------------------

     The Company uses the composite group remaining life method to depreciate
plant assets. Under this method, the Company periodically revises depreciation
rates based on a number of factors. The composite depreciation rate was 7.7% for
the six month period ended June 30, 1997 compared to 8.1% for the same period in
1996.

     Depreciation and amortization increased in the first six months of 1997
principally due to growth in depreciable telephone plant.  This increase was
almost entirely offset by the effect of lower rates of depreciation and
amortization.

OTHER OPERATING EXPENSES

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months              $11,580             3.2%
--------------------------------------------------------------------------------

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

     As a result of the transfer of directory publishing activities, certain
direct and allocated expenses related to the activities transferred are no
longer incurred by the Company.

                                       10
<PAGE>
 
                        Bell Atlantic - Maryland, Inc. 

     The increase in other operating expenses was largely attributable to higher
costs for materials, rent, contract services and taxes other than income.  These
increases were substantially offset by the transfer of directory publishing
activities and lower centralized services expenses allocated from NSI.  The
decline in centralized services expenses was primarily due to lower benefit
costs and lower software and systems costs, partially offset by higher rent
expense and higher marketing and advertising costs.


OTHER INCOME AND EXPENSE, NET

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months                          $556
--------------------------------------------------------------------------------

     The change in other income and expense, net, was attributable to additional
interest income primarily resulting from the purchase of short-term investments
in December 1996 to prefund a trust for the payment of certain employee
benefits.


INTEREST EXPENSE

     1997-1996                         Increase
--------------------------------------------------------------------------------
     Six Months              $1,464              4.6%
--------------------------------------------------------------------------------

     Interest expense increased principally due to a reduction in capitalized
interest costs resulting from lower levels of telephone plant under construction
and additional expense resulting from higher levels of average short-term debt.


EFFECTIVE INCOME TAX RATES

     Six Months Ended June 30
--------------------------------------------------------------------------------
     1997                                39.2%
--------------------------------------------------------------------------------
     1996                                35.1%
--------------------------------------------------------------------------------

     The effective income tax rate is the provision for income taxes as a
percentage of income before provision for income taxes and cumulative effect of
change in accounting principle.  The Company's effective income tax rate was
higher in the first six months of 1997 principally as a result of a change in
the Maryland state income tax law as it applies to certain telecommunications
companies.

     On May 22, 1997, the State of Maryland enacted a law which changes the 
determination of taxable income for telecommunications companies. The new law
is effective January 1, 1998. Under current income tax law, operating gross 
receipts (and allocable expenses) are not subject to the Maryland income tax. 
The new law eliminates this deduction and replaces it with a tax credit for real
property taxes. This change effectively increased the state income tax rate for
the Company from 2.4% to 7%. The Company anticipates that its future annual
income tax liability will be approximately equal to its current income tax
liability and therefore, the impact of the new law will not be material to
ongoing results of operations. As required under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," the effect of this
tax law change on deferred tax assets/liabilities must be included in income
from continuing operations for the period that includes the enactment date. This
one-time adjustment of deferred taxes generated an estimated $8,300,000 state
income tax expense (net of federal income tax benefit), which is reflected in
the income tax provision for the period ended June 30, 1997.

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

     The Company uses the net cash generated from operations and from external
financing to fund capital expenditures for network expansion and modernization,
and pay dividends.  While current liabilities exceeded current assets at both
June 30, 1997 and December 31, 1996, 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 debt may be needed to fund development activities or to maintain the
Company's capital structure to ensure financial flexibility.


                                       11
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

     As of June 30, 1997, the Company had $168,930,000 of an unused line of
credit with an affiliate, Bell Atlantic Network Funding Corporation. In
addition, the Company had $50,000,000 remaining under a shelf registration
statement filed with the Securities and Exchange Commission for the issuance of
unsecured debt securities.

     The Company's debt ratio was 53.7% as of June 30, 1997, compared to 50.5%
as of June 30, 1996 and 52.2% as of December 31, 1996.

     On August 1, 1997, the Company declared and paid a dividend in the amount
of $93,700,000 to Bell Atlantic.

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

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

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

     A U.S. Court of Appeals recently found that the FCC unlawfully attempted to
preempt state authority in implementing key provisions of the Act. It also found
that several particularly objectionable provisions of the FCC's rules were
inconsistent with the statutory requirements. In particular, it affirmed that
states have exclusive jurisdiction over the pricing of interconnection elements
and that the FCC could not lawfully allow competitors to "pick and choose"
isolated terms out of negotiated interconnection agreements. This decision
should not delay the advent of local competition, since, under the previous stay
of the FCC's rules, a number of interconnection agreements have been concluded
and a PSC decision is pending regarding the adoption of pricing and other
standards for local interconnection.

     Pursuant to the Act, the Company filed its "Statement of Generally
Available Terms and Conditions for Interconnection, Unbundled Network Elements,
Ancillary Services and Resale of Telecommunications Services" with the PSC. The
Company expects a decision on this filing before the end of the year.

     The Company is unable to predict definitively the impact that the Act will
have on its business, results of operations or financial condition. The
financial impact will depend on several factors, including the timing, extent
and success of competition in the Company's markets, and the timing, extent and
success of Bell Atlantic's pursuit of new business opportunities resulting from
the Act.

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

     Recent Developments - FCC Orders

     On May 7, 1997, the FCC adopted orders to reform the interstate access
charge system, to modify its price cap system and to implement the "universal
service" requirements of the Act. While there are additional decisions pending
on Universal Service and Access Reform, based on the decisions to date the
Company does not believe that these proceedings will result in a material
adverse impact on its results of operations or financial condition.


                                       12
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

     Access Charges

     Access charges are the rates long distance carriers pay for use and
availability of the Company's facilities for the origination and termination of
interstate interLATA service.  On May 7, 1997, the FCC adopted changes to the
tariff structures it has prescribed for such charges in order to permit the
Company to recover its costs through rates which reflect the manner in which
those costs are incurred.  As of January 1, 1998, the FCC will require, in
general, that interstate costs of the Company which do not vary based on usage
be recovered from long distance carriers through flat rate charges, and those
interstate costs that do vary based on usage be recovered from long distance
carriers through usage-based rates.  In addition, the FCC will require
establishment of separate usage-based charges for originating and for
terminating interstate interLATA traffic.

     A portion of the Company's interstate costs are also recovered through flat
monthly charges to subscribers (subscriber line charges). Under the FCC's order,
subscriber line charges for primary residential and single line businesses will
remain unchanged, but such charges for additional residential lines and multi-
line businesses will rise.

     The restructuring of access charges in January 1998 is expected to be
revenue neutral to the Company.

     Price Caps

     The FCC also adopted modifications to its price cap rules that affect
access rate levels. Under the FCC's price cap rules, the Company's price cap
index is adjusted annually by an inflation index (GDP-PI) less a fixed
percentage intended to reflect increases in productivity (Productivity Factor).
In the prior year, the Company's Productivity Factor was 5.3%. Effective July 1,
1997, the FCC created a single Productivity Factor for all price cap companies
of 6.5%, and eliminated requirements to share a portion of future interstate
earnings. The FCC required that rates be set as if the higher Productivity
Factor had been in effect since July 1996. Any local exchange company that earns
a rate of return on its interstate services of less than 10.25% in any calendar
year will be permitted to increase its interstate rates in the following year.
The FCC also ordered elimination of recovery for amortized costs associated with
reconfiguration of the Company's network to provide equal access to facilities
for all long distance carriers.

     On June 30, 1997, Bell Atlantic made its Annual Access Tariff Filing of
Interstate Rates, which became effective on July 1, 1997.  The rates included in
the filing resulted in annual price decreases for the Company totaling
approximately $35,300,000, of which $8,500,000 is a result of one-time
adjustments which will only be in effect until July 1998.

     The FCC is expected to adopt an order later this year to address the
conditions under which the FCC would relax or remove existing access rate
structure requirements and price cap restrictions as increased local market
competition develops.  The Company is unable to predict the results of this
further proceeding.

     Universal Service

     The FCC also adopted rules designed to preserve "universal service" by
ensuring that a basket of designated services are widely available and
affordable to all customers, including low-income customers and customers in
areas that are expensive to serve.  The FCC's universal service support will
approximate $1.5 billion for high cost areas pending completion of further FCC
proceedings.  By the third quarter of 1998, the FCC, in conjunction with the
Federal-State Joint Board on Universal Service, will determine the methodology
for determining high cost areas for non-rural carriers, the proper amount of
federal universal service support for high cost areas, and how to assess the
appropriate level of federal financial support required to continue to ensure
affordable local telephone service.  Any new high cost universal service support
mechanism will become effective January 1, 1999.

     The FCC also adopted rules to implement the Act's requirements to provide
discounted telecommunications services to schools and libraries, beginning
January 1, 1998, and to ensure that not-for-profit rural health care providers
have access to such services at rates comparable to those charged their urban
counterparts.

                                       13
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

     All telecommunications carriers will be required to contribute funding for
these universal service programs.  The federal universal service funding needs
as of January 1, 1998 will require the Company to contribute approximately 1% to
2% of its revenues for high cost and low income subsidies.  The Company will
also be contributing about 5% for schools, libraries and not-for-profit health
care.  The Company will, however, be afforded the opportunity to recover its
universal service contributions through higher interstate charges to long
distance carriers and end users.

Competition

     IntraLATA Toll Services

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

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

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

     The Company expects to offer intraLATA presubscription coincident with Bell
Atlantic's offering of long distance services within the state, as required by
the Act.  Bell Atlantic expects to petition the FCC for permission to enter the
in-region long distance market in one or more states in its jurisdiction in
1997.  Bell Atlantic is unable to predict when it will receive such permission.
The adverse impact on toll service revenues is expected to be partially offset
by an increase in intraLATA access revenues.

     Local Exchange Services

     Local exchange services have historically been subject to regulation by the
PSC.  Since 1994, applications from competitors to provide and resell local
exchange services have been approved by the PSC.  Additional applications from
competitors are currently pending.

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

Other State Regulatory Matters

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

     In November 1996, the PSC approved a price cap plan for regulating the
intrastate services provided by the Company. Under the plan, services are
divided into six categories: Access; Basic-Residential; Basic-Business;
Discretionary; Competitive; and Miscellaneous. The PSC ordered rates for Access
to be reduced by $32,100,000. These reduced rates and rates for Basic-
Residential and Basic-Business are capped for a period of three years. After the
cap period, rates for services in these three categories can be increased or
decreased annually under a formula that is based upon changes in the rate of
inflation (GDP-PI) minus a productivity offset based upon changes in the rate of
inflation (CPI). Rates for Discretionary services may be increased under the
same formula. Rates for Competitive services may be increased without regulatory
limits. Regulation of profits is eliminated.

     Certain parties have appealed the PSC's decision in state court.


                                       14
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

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

     Proposed Bell Atlantic - NYNEX Merger

     Bell Atlantic and NYNEX Corporation (NYNEX) announced a proposed merger of
equals under a definitive merger agreement entered into on April 21, 1996 and
amended on July 2, 1996.  At special meetings held in November 1996,
stockholders of both companies approved the merger.  The completion of the
merger is subject to the FCC's approval, which is expected to be received
shortly.  In connection with the FCC's review of the proposed merger, Bell
Atlantic and NYNEX submitted a list of commitments they will follow to assure
competition in their local exchange markets.  The Company does not expect these
commitments to have a material impact on its results of operations or financial
condition.

     As a result of the merger, Bell Atlantic will incur special transition and
integration costs in connection with completing the transaction and integrating
the operations of Bell Atlantic and NYNEX.  It is anticipated that the Company
will bear a portion of the transition and integration costs.

     Bell Atlantic also expects to recognize recurring expense savings following
completion of the merger as a result of consolidating operating systems and
other administrative functions and reducing management positions.  It is
anticipated that the Company will recognize a portion of these savings.

     Cautionary Statement Concerning Forward-Looking Statements

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

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

                                       15
<PAGE>
 
                        Bell Atlantic - Maryland, 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, see Item 3 of the
          Company's Annual Report on Form 10-K for the year ended December 31,
          1996.


Item 6.   Exhibits and Reports on Form 8-K


          (a)  Exhibits:

               Exhibit Number

               27 Financial Data Schedule.


          (b)  There were no Current Reports on Form 8-K filed during the 
               quarter ended June 30, 1997.

                                       16
<PAGE>
 
                        Bell Atlantic - Maryland, 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 - MARYLAND, INC.



Date:  August 8, 1997           By  /s/ Edwin F. Hall
                                   ---------------------------------------------
                                        Edwin F. Hall
                                        Controller



     UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF AUGUST 5, 1997.

                                       17