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


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

                                   FORM 10-Q

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


     (Mark one)
        [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 1996

                                      OR

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


                         Commission File Number 1-6964


                        BELL ATLANTIC - VIRGINIA, INC.


    A Virginia Corporation     I.R.S. Employer Identification No. 54-0167060


                600 East Main Street, Richmond, Virginia  23219


                        Telephone Number (804) 225-6300

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



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 - Virginia, Inc.

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
                                  (Unaudited)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                         Three months ended          Nine months ended
                                                                            September 30,              September 30,
                                                                         --------------------      ---------------------
                                                                           1996       1995           1996         1995
                                                                         ---------  ---------      --------     --------
<S>                                                                     <C>        <C>            <C>          <C>
OPERATING REVENUES (including $2,439, $675, $2,626                 
  and $1,440 from affiliates)......................................       $546,041   $499,278     $1,612,604   $1,484,372
                                                                          --------   --------     ----------   ----------
                                                                                              
OPERATING EXPENSES                                                                        
  Employee costs, including benefits and taxes.....................         97,016    100,435        278,046      294,755
  Depreciation and amortization....................................        104,654    104,008        309,499      307,806
  Other (including $128,720, $105,904, $370,618                     
    and $304,212 to affiliates)....................................        206,323    167,723        579,989      472,057
                                                                          --------   --------     ----------   ----------
                                                                           407,993    372,166      1,167,534    1,074,618
                                                                          --------   --------     ----------   ----------
                                                                                              
OPERATING INCOME...................................................        138,048    127,112        445,070      409,754
                                                                                              
OTHER EXPENSE, NET (including $0, $0, $356                         
  and $0 from affiliate)...........................................             78        246          1,008        1,118
                                                                                              
INTEREST EXPENSE (including $659, $1,866, $1,268                   
  and $4,617 to affiliate).........................................         16,158     16,941         46,503       52,859
                                                                          --------   --------     ----------   ----------
                                                                                              
INCOME BEFORE PROVISION FOR INCOME TAXES...........................        121,812    109,925        397,559      355,777
PROVISION FOR INCOME TAXES.........................................         46,002     41,900        151,261      135,615
                                                                          --------   --------     ----------   ----------
                                                                                              
NET INCOME.........................................................       $ 75,810   $ 68,025     $  246,298   $  220,162
                                                                          ========   ========     ==========   ==========
                                                                                              
REINVESTED EARNINGS                                                                       
  At beginning of period...........................................       $227,372   $192,723     $  169,629   $  156,709
  Add:  net income.................................................         75,810     68,025        246,298      220,162
                                                                          --------   --------     ----------   ----------
                                                                           303,182    260,748        415,927      376,871
  Deduct:  dividends...............................................         80,000     93,202        192,466      209,260
           other changes...........................................             10         40            289          105
                                                                          --------   --------     ----------   ----------
  At end of period.................................................       $223,172   $167,506     $  223,172   $  167,506
                                                                          ========   ========     ==========   ==========
</TABLE>

                      See Notes to Financial Statements.

                                       1
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

                                BALANCE SHEETS
                                  (Unaudited)
                            (Dollars in Thousands)


                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
                                                   September 30,  December 31,
                                                       1996           1995
                                                   -------------  ------------
<S>                                                <C>            <C>
 
CURRENT ASSETS
Short-term investments...........................     $    3,580    $      ---
Accounts receivable:
  Trade and other, net of allowances for
    uncollectibles of $23,134 and $19,072........        401,086       375,872
  Affiliates.....................................         26,596        28,973
Material and supplies............................         11,783         9,156
Prepaid expenses.................................         81,971        67,987
Deferred income taxes............................         18,188        30,364
Other............................................            252           217
                                                      ----------    ----------
                                                         543,456       512,569
                                                      ----------    ----------
 
PLANT, PROPERTY AND EQUIPMENT....................      5,560,648     5,383,444
Less accumulated depreciation....................      2,913,146     2,716,713
                                                      ----------    ----------
                                                       2,647,502     2,666,731
                                                      ----------    ----------
 
OTHER ASSETS.....................................         54,366        55,202
                                                      ----------    ----------
 
TOTAL ASSETS.....................................     $3,245,324    $3,234,502
                                                      ==========    ==========
</TABLE>

                      See Notes to Financial Statements.

                                       2
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

                                BALANCE SHEETS
                                  (Unaudited)
                            (Dollars in Thousands)


                    LIABILITIES AND SHAREOWNER'S INVESTMENT
                    ---------------------------------------
<TABLE>
<CAPTION>
                                                                       September 30,   December 31,
                                                                           1996            1995
                                                                       -------------   ------------
<S>                                                                    <C>             <C>
CURRENT LIABILITIES                                                                  
Debt maturing within one year:                                                       
  Note payable to affiliate.......................................        $    2,372     $   53,590
  Other...........................................................               947          2,033
Accounts payable and accrued liabilities:                                            
  Affiliates......................................................           195,131        174,113
  Other...........................................................           305,880        328,352
Advance billings and customer deposits............................            75,763         68,055
                                                                          ----------     ----------
                                                                             580,093        626,143
                                                                          ----------     ----------

LONG-TERM DEBT....................................................           946,164        946,730
                                                                          ----------     ----------
                                                                                     
EMPLOYEE BENEFIT OBLIGATIONS......................................           420,906        411,942
                                                                          ----------     ----------

DEFERRED CREDITS AND OTHER LIABILITIES                                               
Deferred income taxes.............................................           115,759        119,175
Unamortized investment tax credits................................            21,506         24,810
Other.............................................................            64,039         62,388
                                                                          ----------     ----------
                                                                             201,304        206,373
                                                                          ----------     ----------
SHAREOWNER'S INVESTMENT                                                              
Common stock - one share, without par value, owned by parent......           873,685        873,685
Reinvested earnings...............................................           223,172        169,629
                                                                          ----------     ----------
                                                                           1,096,857      1,043,314
                                                                          ----------     ----------
                                                                                     
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT.....................        $3,245,324     $3,234,502
                                                                          ==========     ==========
</TABLE>

                      See Notes to Financial Statements.

                                       3
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

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

<TABLE> 
<CAPTION> 
                                                         Nine months ended
                                                            September 30,
                                                     -------------------------
                                                        1996           1995
                                                     -----------  ------------ 

<S>                                                  <C>            <C> 
NET CASH PROVIDED BY OPERATING ACTIVITIES..........   $ 533,491      $ 489,989
                                                      ---------      ---------

 
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments...............      (3,580)        (5,814)
Additions to plant, property and equipment.........    (302,018)      (382,660)
Other, net.........................................      11,821         (2,059)
                                                      ---------      ---------
Net cash used in investing activities..............    (293,777)      (390,533)
                                                      ---------      ---------
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of capital lease obligations..      (1,853)          (659)
Net change in note payable to affiliate............     (51,218)       102,346
Dividends paid.....................................    (192,466)      (209,260)
Net change in outstanding checks drawn
     on controlled disbursement accounts...........       5,823          8,117
                                                      ---------      ---------
Net cash used in financing activities..............    (239,714)       (99,456)
                                                      ---------      ---------

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


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


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


                      See Notes to Financial Statements.

                                       4
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

1.   Basis of Presentation

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

2.   Dividend

     On November 1, 1996, the Company declared and paid a dividend in the amount
of $95,700,000 to Bell Atlantic Corporation (Bell Atlantic).

3.   Reclassifications

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

4.   Proposed Bell Atlantic - NYNEX Merger

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

     The merger is expected to qualify as a "pooling of interests," which means
for accounting and financial reporting purposes, the companies will be treated
as if they had always been combined. The completion of the merger is subject to
a number of conditions, including regulatory approvals, receipt of opinions that
the merger will be tax free, and the approval of the shareholders of both Bell
Atlantic and NYNEX. The companies expect to close the merger in the first
quarter of 1997.

                                       5
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

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

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

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

     The Company reported net income for the first nine months of 1996 of
$246,298,000, compared to net income of $220,162,000 for the same period in
1995.

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

<TABLE>
<CAPTION>

OPERATING REVENUES
------------------
(Dollars in Thousands)
 
For the Nine Month Period Ended September 30                  1996         1995
-------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Transport Services
    Local service.............................          $  655,501   $  612,434
    Network access............................             455,347      444,895
    Toll service..............................              67,760       73,433
Ancillary Services
    Directory publishing......................             139,567      130,003
    Other.....................................              72,114       64,410
Value-added Services..........................             222,315      159,197
                                                        ----------   ----------
Total.........................................          $1,612,604   $1,484,372
                                                        ==========   ==========
 
<CAPTION> 
 
TRANSPORT SERVICES OPERATING STATISTICS
---------------------------------------
                                                                      Percentage
                                                                       Increase
                                                  1996        1995    (Decrease)
-------------------------------------------------------------------------------
<S>                                             <C>        <C>            <C> 
At September 30
---------------
  Access Lines in Service (In thousands)
     Residence................................   1,960       1,902          3.0%
     Business.................................   1,160       1,090          6.4
     Public...................................      41          41          ---
                                                 -----       -----
                                                 3,161       3,033          4.2
                                                 =====       =====
 
 
For the Nine Month Period Ended September 30
--------------------------------------------
  Access Minutes of Use (In millions)
     Interstate...............................   8,404       7,707*         9.0
     Intrastate...............................   2,250       2,113*         6.5
                                                ------       -----
                                                10,654       9,820*         8.5
                                                ======       =====
 
  Toll Messages (In thousands)
     Intrastate...............................  74,455      81,428         (8.6)
     Interstate...............................  10,761       8,830         21.9
                                                ------      ------
                                                85,216      90,258         (5.6)
                                                ======      ======
</TABLE>

*Revised from previously reported amounts

                                       6
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

LOCAL SERVICE REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $43,067       7.0%
--------------------------------------------------------------------------------


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

     Higher network usage by business and residential customers increased local
service revenues during 1996.  Access lines in service grew by 4.2% from
September 30, 1995.  Local service revenues also increased due to the favorable
settlement of issues related to an audit by the Virginia State Corporation
Commission (SCC) in June 1996.  A refund accrual for such matters was recorded
in the fourth quarter of 1995.  See "Factors That May Impact Future Results -
Other State Regulatory Matters" on page 12 for a further discussion of this
issue.

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


NETWORK ACCESS REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $10,452       2.3%
--------------------------------------------------------------------------------


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

     Network access revenues increased due to higher customer demand for access
services, as reflected by growth in access minutes of use of 8.5% over the same
period in 1995.  Revenue growth from volume increases was partially offset by
the effect of price reductions under the Federal Communications Commission's
(FCC) Interim Price Cap Plan implemented in 1995 and higher obligations to
affiliated companies pursuant to an interstate revenue sharing agreement.  On
July 20, 1996, the Company implemented price increases as part of Bell
Atlantic's annual price cap filing with the FCC.  These price increases did not
have a significant impact on network access revenues in the third quarter of
1996.

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


TOLL SERVICE REVENUES

     1996-1995                       (Decrease)
--------------------------------------------------------------------------------
     Nine Months               $(5,673)      (7.7)%
--------------------------------------------------------------------------------


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

     The decrease in toll service revenues was due to the effects of extended
local calling areas and increased competition for intraLATA toll and WATS
services. IntraLATA toll competition was introduced in Virginia beginning on
October 1, 1995. Toll message volumes in 1996 declined by 5.6% as compared to
the same period in 1995.

                                       7
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

     The Company expects competition for toll services and the extension of
local calling areas will continue to negatively impact toll service revenues for
the remainder of 1996. See "Factors That May Impact Future Results" beginning on
page 10 for a further discussion of toll service revenue issues.


DIRECTORY PUBLISHING REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $9,564        7.4%
--------------------------------------------------------------------------------


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

     Growth in directory publishing revenues was principally due to higher rates
charged for these services, as well as growth in advertising volumes.


OTHER ANCILLARY SERVICES REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $7,704        12.0%
--------------------------------------------------------------------------------


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

     Other ancillary services revenues increased due to higher facilities rental
revenues from affiliates, higher sales of materials and supplies to affiliates
and increased revenues from customer late payment charges.


VALUE-ADDED SERVICES REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $63,118       39.6%
--------------------------------------------------------------------------------


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

     The increase in value-added services revenues during 1996 was primarily
attributable to continued growth in the network customer base and higher demand
for certain central office and voice messaging services.  An increase in federal
government contract billing for customer premises services and equipment also
contributed to revenue growth in 1996.

                                       8
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.


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

<TABLE> 
<CAPTION> 

For the Nine Month Period Ended September 30                 1996        1995
--------------------------------------------------------------------------------
<S>                                                      <C>         <C>
Employee costs, including benefits and taxes......       $  278,046  $  294,755
Depreciation and amortization.....................          309,499     307,806
Other operating expenses..........................          579,989     472,057
                                                         ----------  ----------
Total.............................................       $1,167,534  $1,074,618
                                                         ==========  ==========
</TABLE>

EMPLOYEE COSTS

     1996-1995                       (Decrease)
--------------------------------------------------------------------------------
     Nine Months               $(16,709)     (5.7)%
--------------------------------------------------------------------------------


     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 attributable to savings associated with
lower work force levels in 1996.  The effect of employees transferred from the
Company to NSI in December 1995 also contributed to the decrease in employee
costs.  These cost reductions were partially offset by annual salary and wage
increases, as well as increased overtime pay for repair and maintenance
activity, principally as a result of higher business volumes.


DEPRECIATION AND AMORTIZATION

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $  1,693      .6%
--------------------------------------------------------------------------------


     Depreciation and amortization increased due to growth in depreciable
telephone plant. This increase was substantially offset by lower rates of
depreciation and amortization. The composite depreciation rate was 7.7% for the
nine month period ended September 30, 1996, compared to 8.1% for the same period
in 1995.


OTHER OPERATING EXPENSES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months               $107,932      22.9%
--------------------------------------------------------------------------------


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

     The increase in other operating expenses was largely attributable to higher
centralized services expenses allocated from NSI. This increase was due, in
part, to higher employee costs incurred in that organization as a result of
annual salary and wage increases, as well as the transfer of employees from
certain network operations subsidiaries to NSI in December 1995.  Additional
operating costs incurred to enhance billing and operating systems and market
value-added services also contributed to the increase in centralized services
expenses in 1996.  Other operating expenses were further increased by higher
costs for contract services and additional costs to upgrade network software and
comply with the Telecommunications Act of 1996.

                                       9
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

OTHER EXPENSE, NET

     1996-1995                       (Decrease)
--------------------------------------------------------------------------------
     Nine Months                     $  (110)
--------------------------------------------------------------------------------


     The decrease in other expense, net was attributable to lower nonoperating
costs and additional interest income in 1996.


INTEREST EXPENSE

     1996-1995                       (Decrease)
--------------------------------------------------------------------------------
     Nine Months             $ (6,356)        (12.0)%
--------------------------------------------------------------------------------


     Interest expense decreased principally due to the effects of lower levels
of average short-term debt in 1996 and the favorable settlement of issues
related to an audit by the SCC in June 1996.


PROVISION FOR INCOME TAXES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months             $ 15,646        11.5%
--------------------------------------------------------------------------------


EFFECTIVE INCOME TAX RATES

     For the Nine Months Ended September 30
--------------------------------------------------------------------------------
     1996                        38.0%
--------------------------------------------------------------------------------
     1995                        38.1%
--------------------------------------------------------------------------------


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


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

Federal Legislation

     The Telecommunications Act of 1996 (the Act) became law on February 8, 1996
and takes the place of the Modification of Final Judgment (MFJ).  In general,
the Act includes provisions that open the local exchange market to competition
and permit Bell Atlantic to provide interLATA services (long distance) and to
engage in manufacturing. However, the ability of Bell Atlantic to engage in
businesses previously prohibited by the MFJ is largely dependent on satisfying
certain conditions contained in the Act. The following is a brief discussion
regarding certain provisions of the Act.

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

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

                                       10
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

through their own networks. The Company must also demonstrate to the FCC that
its entry into the long distance market would be in the public interest.

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

     On August 1, 1996, the FCC adopted an order establishing rules for
implementation of the interconnection requirements set forth in the Act.  The
FCC's order establishes rules to govern interconnection agreements that are
reached through state arbitrations, when negotiations fail.  The FCC stated that
it plans to issue regulations regarding universal service obligations and access
charges in subsequent orders.

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

     No definitive prediction can be made as to the specific impact of the Act
on the business or financial condition of the Company. The financial impact on
the Company will depend on several factors, including the timing, extent and
success of competition in the Company's markets, as well as the timing, extent
and success of the Company's pursuit of new business opportunities resulting
from the Act, the provisions of the FCC's regulations that survive judicial
review, and the outcome of state interconnection proceedings.

Competition

     IntraLATA Toll Services

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

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

     The recent telecommunications legislation addressed the issue of
presubscription by prohibiting a state from requiring presubscription or
"dialing parity" until the earlier of such time as an operating telephone
company in the state is authorized to provide long distance services within 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.

     In Virginia, the SCC issued an order on July 24, 1995 denying intraLATA
toll presubscription.

     Local Exchange Services

     Local exchange services have historically been subject to regulation by the
SCC.  Since April 30, 1996, several telephone service providers have been
certified by the SCC to provide local exchange services in Virginia, pending SCC
approval of their tariffs.  Applications from other competitors to provide local
exchange services are currently pending and the SCC has set several hearings to
resolve issues raised by companies that desire to provide local exchange
services pursuant to the Act.

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

                                       11
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

FCC Interim Price Cap Plan

     The FCC regulates the rates that the Company can charge IXCs and end-user
subscribers for interstate access services.  Each year, new access rates are
required to be filed with the FCC under the rules of their Interim Price Cap
Plan.  In June of 1996, Bell Atlantic filed its Annual Access Tariff plan with
the FCC, which contained new access services rates for the period from July 1996
through June 1997.  The rates included in the filing resulted in price increases
for the Company totaling approximately $3,100,000 on an annual basis.  The new
rates became effective on July 20, 1996.

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

Other State Regulatory Matters

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

     Under legislation passed in the 1993 session of the Virginia General
Assembly, the SCC is no longer statutorily required to regulate telephone
companies on the basis of rate of return regulation. In February 1994, the
Company filed a proposal to have its non-competitive services regulated on a
price cap basis; competitive services would not be regulated.

     Following public hearings, the SCC approved a new optional regulatory plan,
effective January 1, 1995, which allows the Company to replace traditional cost-
based regulation with a plan that relies on price constraints.  The new plan,
which eliminates regulation of profits, includes a temporary moratorium on rate
increases for basic local telephone service until 2001, eliminates the monthly
charge for Touch-Tone service and expands universal telephone service to the
poor.  In November 1994, the Company notified the SCC of its election to
participate in the new regulatory plan.  Following an appeal, the new plan was
upheld by the Virginia Supreme Court.

     The Company has filed financial results with the SCC for the years 1989
through 1994.  The SCC issued orders making the Company's rates final and no
longer subject to refund for the years 1989, 1990, 1991 and 1993.  The SCC has
not completed its review of the Company's 1994 financial results.

     With respect to the 1992 review period, the SCC staff issued its report in
January 1996 and presented alternative treatment for two issues concerning
expenses to be recognized in 1992.  Following consideration of all comments, the
SCC modified its staff's treatment of these issues and ordered the Company on
June 11, 1996 to refund to customers $10,200,000 plus interest for the 1992
review period.  On July 17, 1996, the SCC issued a final order requiring the
refund to customers be completed on or before November 29, 1996.


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

     Environmental Issues

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

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

                                       12
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.

     Proposed Bell Atlantic - NYNEX Merger

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

     The merger is expected to qualify as a "pooling of interests," which means
for accounting and financial reporting purposes, the companies will be treated
as if they had always been combined. The completion of the merger is subject to
a number of conditions, including regulatory approvals, receipt of opinions that
the merger will be tax free, and the approval of the shareholders of both Bell
Atlantic and NYNEX. The companies expect to close the merger in the first
quarter of 1997.

     As a result of the merger, Bell Atlantic expects to record a one-time
charge for employee severance costs in the quarter in which the merger is
completed. Such pretax charge is currently estimated to be in the range of $200
million to $300 million. The amount of the charge will vary depending on a
number of factors including: (i) the number of employees that will be terminated
under severance arrangements, (ii) the timing of employee terminations, and
(iii) changes, if any, to severance plan provisions. The Company expects to
incur a portion of the charge for these costs.

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


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

     The Company uses the net cash generated from operations and external
financing to fund capital expenditures for network expansion and modernization,
and pay dividends. While current liabilities exceeded current assets at both
September 30, 1996 and December 31, 1995, the Company's sources of funds,
primarily from operations and to the extent necessary, from readily available
financing arrangements with an affiliate, are sufficient to meet ongoing
operating requirements. Management expects that presently foreseeable capital
requirements will continue to be financed primarily through internally generated
funds. Additional long-term debt may be needed to fund development activities
and to maintain the Company's capital structure within management's guidelines.

     As of September 30, 1996, the Company had $197,628,000 of an unused line of
credit with an affiliate, Bell Atlantic Network Funding Corporation.  In
addition, the Company had $100,000,000 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 46.4% at September 30, 1996, compared to 49.0%
at December 31, 1995.

     On November 1, 1996, the Company declared and paid a dividend in the amount
of $95,700,000 to Bell Atlantic Corporation.

                                       13
<PAGE>
 
                        Bell Atlantic - Virginia, Inc.


                          PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

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


Item 6.   Exhibits and Reports on Form 8-K


          (a)  Exhibits:

               Exhibit Number

                27   Financial Data Schedule.


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

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

                                       14
<PAGE>
 
                        Bell Atlantic - Virginia, 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 - VIRGINIA, INC.



Date:  November 7, 1996         By  /s/   O. Riley Young, Jr.
                                   ----------------------------------
                                          O. Riley Young, Jr.
                                          Controller



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

                                       15