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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





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FORM 10-Q



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|(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, 2003    |  | 
|           |  |                                                                                                                                        
|           |  | 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





VERIZON 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





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THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT
PURSUANT TO GENERAL INSTRUCTION H(2).



Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant
is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ̈No   x



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TABLE OF CONTENTS



|              |  |                                                               |  | Page
|------------- |  | ------------------------------------------------------------- |  | ----
|             
|              |  |                                                              
|PART I        |  | Financial Information                                         |  |     
|              |  |                                                              
|Item 1.       |  | Financial Statements                                          |  |     
|              |  |                                                              
|              |  | Condensed Statements of Income                                |  |     
|              |  | Three and Six Months Ended June 30, 2003 and 2002             |  | 1   
|              |  |                                                              
|              |  | Condensed Balance Sheets                                      |  |     
|              |  | June 30, 2003 and December 31, 2002                           |  | 2   
|              |  |                                                              
|              |  | Condensed Statements of Cash Flows                            |  |     
|              |  | Six Months Ended June 30, 2003 and 2002                       |  | 4   
|              |  |                                                              
|              |  | Notes to Condensed Financial Statements                       |  | 5   
|              |  |                                                              
|Item 2.       |  | Managements Discussion and Analysis of Results of Operations |  | 9   
|              |  |                                                              
|Item 4.       |  | Controls and Procedures                                       |  | 16  
|              |  |                                                              
|PART II       |  | Other Information                                             |  |     
|              |  |                                                              
|Item 6.       |  | Exhibits and Reports on Form 8-K                              |  | 17  
|              | 
|Signatures    |  | 18                                                           
|              | 
|Exhibit Index |  | 19                                                           



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PART I  FINANCIAL INFORMATION



|Item 1. |  | Financial Statements
|------- |  | --------------------



CONDENSED STATEMENTS OF INCOME



|                                                                                                 |  | Three MonthsEnded June 30, |       | Six Months EndedJune 30,
|------------------------------------------------------------------------------------------------ |  | -------------------------- | ----- | ------------------------
|(Dollars in Millions) (Unaudited)                                                                |  | 2003                       |       |                         
|                                                                                                
|Operating Revenues (including $42.3, $33.5, $75.3 and $60.5 from affiliates)                     |  | $                          | 565.6 |                         
|                                                                                                 |  |                            |       |                         
|                                                                                                 |  |                            |       |                         
|Operating Expenses(including $147.9, $142.9, $278.8 and $263.0 to affiliates)                    |  |                            |       |                         
|Cost of services and sales (exclusive of items shown below)                                      |  |                            | 142.8 |                         
|Selling, general and administrative expense                                                      |  |                            | 149.1 |                         
|Depreciation and amortization                                                                    |  |                            | 129.5 |                         
|                                                                                                 |  |                            |       |                         
|Total Operating Expenses                                                                         |  |                            | 421.4 |                         
|                                                                                                 |  |                            |       |                         
|                                                                                                 |  |                            |       |                         
|Operating Income                                                                                 |  |                            | 144.2 |                         
|                                                                                                 |  |                            |       |                         
|Other income and (expense), net (including $(1.5), $0, $(24.5) and $.1 from affiliates)          |  |                            | (4.6  | )                       
|                                                                                                 |  |                            |       |                         
|Interest expense (including $0, $4.3, $2.1 and $8.0 to affiliate)                                |  |                            | 22.9  |                         
|                                                                                                 |  |                            |       |                         
|                                                                                                 |  |                            |       |                         
|Income before provision for income taxes and cumulative effect of change in accounting principle |  |                            | 116.7 |                         
|                                                                                                 |  |                            |       |                         
|Provision for income taxes                                                                       |  |                            | 46.3  |                         
|                                                                                                 |  |                            |       |                         
|                                                                                                 |  |                            |       |                         
|Income Before Cumulative Effect of Change in Accounting Principle                                |  |                            | 70.4  |                         
|                                                                                                 |  |                            |       |                         
|Cumulative effect of change in accounting principle, net of tax                                  |  |                            |      |                         
|                                                                                                 |  |                            |       |                         
|                                                                                                 |  |                            |       |                         
|Net Income                                                                                       |  | $                          | 70.4  |                         
|                                                                                                 |  |                            |       |                         



See Notes to Condensed
Financial Statements.



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CONDENSED BALANCE SHEETS



ASSETS



|(Dollars in Millions)                                                      |  | June 30,2003 |         | December 31,2002
|-------------------------------------------------------------------------- |  | ------------ | ------- | ----------------
|                                                                          
|                                                                           |  | (Unaudited)  |         |                 
|Current assets                                                             |  |              |         |                 
|Short-term investments                                                     |  | $            | 22.4    |                 
|Note receivable from affiliate                                             |  |              | 185.4   |                 
|Accounts receivable:                                                       |  |              |         |                 
|Trade and other, net of allowances for uncollectibles of $144.2 and $150.0 |  |              | 430.8   |                 
|Affiliates                                                                 |  |              | 64.4    |                 
|Material and supplies                                                      |  |              | 8.1     |                 
|Prepaid expenses                                                           |  |              | 18.7    |                 
|Deferred income taxes                                                      |  |              | 73.5    |                 
|Other                                                                      |  |              | 61.8    |                 
|                                                                           |  |              |         |                 
|                                                                           |  |              | 865.1   |                 
|                                                                           |  |              |         |                 
|Plant, property and equipment                                              |  |              | 8,215.5 |                 
|Less accumulated depreciation                                              |  |              | 4,967.9 |                 
|                                                                           |  |              |         |                 
|                                                                           |  |              | 3,247.6 |                 
|                                                                           |  |              |         |                 
|Intangible assets, net                                                     |  |              | 64.4    |                 
|                                                                           |  |              |         |                 
|Prepaid pension asset                                                      |  |              | 286.1   |                 
|                                                                           |  |              |         |                 
|Other assets                                                               |  |              | 139.6   |                 
|                                                                           |  |              |         |                 
|Total assets                                                               |  | $            | 4,602.8 |                 
|                                                                           |  |              |         |                 



See Notes to Condensed
Financial Statements.



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CONDENSED BALANCE SHEETS



LIABILITIES AND SHAREOWNERS INVESTMENT



|(Dollars in Millions)                         |  | June 30,2003 |         |   | December 31,2002
|--------------------------------------------- |  | ------------ | ------- | - | ----------------
|                                             
|                                              |  | (Unaudited)  |         |   |                 
|Current liabilities                           |  |              |         |   |                 
|Debt maturing within one year:                |  |              |         |   |                 
|Note payable to affiliate                     |  | $            |        |   |                 
|Other                                         |  |              | 1.8     |   |                 
|Accounts payable and accrued liabilities:     |  |              |         |   |                 
|Affiliates                                    |  |              | 105.0   |   |                 
|Other                                         |  |              | 296.8   |   |                 
|Other current liabilities                     |  |              | 150.5   |   |                 
|                                              |  |              |         |   |                 
|                                              |  |              | 554.1   |   |                 
|                                              |  |              |         |   |                 
|                                              |  |             
|Long-term debt                                |  |              | 1,532.7 |   |                 
|                                              |  |              |         |   |                 
|                                              |  |             
|Employee benefit obligations                  |  |              | 335.6   |   |                 
|                                              |  |              |         |   |                 
|                                              |  |             
|Deferred credits and other liabilities        |  |              |         |   |                 
|Deferred income taxes                         |  |              | 494.0   |   |                 
|Unamortized investment tax credits            |  |              | 9.3     |   |                 
|Other                                         |  |              | 112.6   |   |                 
|                                              |  |              |         |   |                 
|                                              |  |              | 615.9   |   |                 
|                                              |  |              |         |   |                 
|                                              |  |             
|Shareowners investment                       |  |              |         |   |                 
|Common stock  one share, without par value   |  |              | 873.7   |   |                 
|Capital surplus                               |  |              | 97.5    |   |                 
|Reinvested earnings                           |  |              | 597.9   |   |                 
|Accumulated other comprehensive loss          |  |              | (4.6    | ) |                 
|                                              |  |              |         |   |                 
|                                              |  |              | 1,564.5 |   |                 
|                                              |  |              |         |   |                 
|                                              |  |             
|Total liabilities and shareowners investment |  | $            | 4,602.8 |   |                 
|                                              |  |              |         |   |                 



See Notes to Condensed
Financial Statements.



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CONDENSED STATEMENTS OF CASH FLOWS



|                                                                              |  | Six Months Ended June 30, |       
|----------------------------------------------------------------------------- |  | ------------------------- | ------
|(Dollars in Millions) (Unaudited)                                             |  | 2003                      |       
|                                                                             
|Net Cash Provided by Operating Activities                                     |  | $                         | 398.3 
|                                                                              |  |                           |       
|                                                                              |  |                          
|Cash Flows from Investing Activities                                          |  |                           |       
|Capital expenditures (including capitalized network and non-network software) |  |                           | (138.3
|Net change in short-term investments                                          |  |                           | 42.5  
|Change in note receivable from affiliate                                      |  |                           | (185.4
|Investment in unconsolidated business                                         |  |                           | (25.4 
|Other, net                                                                    |  |                           | .3    
|                                                                              |  |                           |       
|Net cash used in investing activities                                         |  |                           | (306.3
|                                                                              |  |                           |       
|                                                                              |  |                          
|Cash Flows from Financing Activities                                          |  |                           |       
|Proceeds from borrowings                                                      |  |                           | 989.0 
|Early extinguishment of debt                                                  |  |                           | (140.0
|Principal repayments of borrowings and capital lease obligations              |  |                           | (.9   
|Change in note payable to affiliate                                           |  |                           | (780.0
|Dividends paid                                                                |  |                           | (181.0
|Capital contribution from parent                                              |  |                           | 25.4  
|Net change in outstanding checks drawn on controlled disbursement accounts    |  |                           | (4.5  
|                                                                              |  |                           |       
|Net cash used in financing activities                                         |  |                           | (92.0 
|                                                                              |  |                           |       
|                                                                              |  |                          
|Net change in cash                                                            |  |                           |      
|                                                                              |  |                          
|Cash, beginning of period                                                     |  |                           |      
|                                                                              |  |                           |       
|                                                                              |  |                          
|Cash, end of period                                                           |  | $                         |      
|                                                                              |  |                           |       



See Notes to Condensed
Financial Statements.



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NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)



1.    Basis of Presentation



Verizon Virginia Inc. is a wholly owned subsidiary of Verizon Communications Inc. (Verizon). The accompanying unaudited condensed financial
statements have been prepared based upon Securities and Exchange Commission (SEC) rules that permit reduced disclosure for interim periods. These financial statements reflect all adjustments that are necessary for a fair presentation of results of
operations and financial position for the interim periods shown including normal recurring accruals. The results for the interim periods are not necessarily indicative of results for the full year. The balance sheet at December 31, 2002 has been
derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For a more complete discussion of
significant accounting policies and certain other information, you should refer to the financial statements included in our 2002 Annual Report on Form 10-K.



We have reclassified certain amounts from prior years data to conform to the 2003 presentation.



2.    Adoption of New Accounting Standards



Stock-Based Compensation



We participate in employee compensation plans sponsored by Verizon with awards of Verizon common stock. Prior to 2003, Verizon accounted for stock-based employee
compensation under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and followed the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation. In accordance with APB Opinion No. 25, no stock-based employee compensation expense for our fixed stock option plans is reflected in our 2002 net income as all options granted under those
plans had an exercise price equal to the market value of the underlying common stock on the date of grant.



Effective January 1, 2003, Verizon adopted the fair value recognition provisions of SFAS No. 123, using the prospective method (as permitted under SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure) to all new awards granted, modified or settled after January 1, 2003. Under the prospective method, employee compensation expense in the first year will be recognized for new awards granted,
modified, or settled. The options generally vest over a term of three years, therefore the expenses related to stock-based employee compensation included in the determination of net income for the three and six months ended June 30, 2003 are less
than what would have been recorded if the fair value method was also applied to previously issued awards. The following table illustrates the effect on net income if the fair value method had been applied to all outstanding and unvested options in
each period:



|                                                                                                                                                     |  | Three Months EndedJune 30, |      |   |      |   |      |   |  |  | Six Months Ended June 30, | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---- | - | ---- | - | ---- | - |  |  | ------------------------- | 
|(Dollars in Millions)                                                                                                                                |  | 2003                       |      |   | 2002 |   |      |   |  |  |                           | 
|                                                                                                                                                    
|Net income, as reported                                                                                                                              |  | $                          | 70.4 |   |      | $ | 64.8 |   |  |  |                           | 
|Add: Stock option-related employee compensation expense included in reported net income, net of related tax
effects                                  |  |                            |     |   |      |   |     |   |  |  |                           | 
|Deduct: Total stock option-related employee compensation expense determined under fair value based method for all awards, net of
related tax effects |  |                            | (.1  | ) |      |   | (.9  | ) |  |  |                           | 
|                                                                                                                                                     |  |                            |      |   |      |   |      |   |  |  |                           | 
|Pro forma net income                                                                                                                                 |  | $                          | 70.3 |   |      | $ | 63.9 |   |  |  |                           | 
|                                                                                                                                                     |  |                            |      |   |      |   |      |   |  |  |                           | 



After-tax compensation expense for
other stock-based compensation included in net income as reported for the three and six months ended June 30, 2003 and 2002 was not material.



Asset Retirement Obligations



Effective January 1, 2003, we adopted SFAS No. 143, Accounting for Asset Retirement Obligations. This standard provides the accounting for the cost of legal
obligations associated with the retirement of long-lived assets. SFAS No. 143 requires that companies recognize the fair value of a liability for asset retirement obligations in the period in which the obligations are incurred and capitalize that
amount as part of the book value of the long-lived asset. We have determined that we do not have a



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material legal obligation to remove long-lived assets as described by this statement. However, prior to the adoption
of SFAS No. 143, we included estimated removal costs in our group depreciation models. These costs have increased depreciation expense and accumulated depreciation for future removal costs for existing assets. These removal costs were recorded as a
reduction to accumulated depreciation when the assets were retired and removal costs were incurred.



For some assets, such as telephone poles, the removal costs exceeded salvage value. Under the provisions of SFAS No. 143, we are required to exclude costs of removal from our depreciation rates for assets for which
the removal costs exceed salvage. Accordingly, in connection with the initial adoption of this standard on January 1, 2003, we have reversed accrued costs of removal in excess of salvage from our accumulated depreciation accounts for these assets.
The adjustment was recorded as a cumulative effect of an accounting change, resulting in the recognition of a gain of $142.6 million ($87.1 million after-tax). Effective January 1, 2003, we began expensing costs of removal in excess of salvage for
these assets as incurred. The ongoing impact of this change in accounting resulted in a decrease in depreciation expense and an increase in cost of services and sales, which was not material to our total operating expenses for the three and six
month periods ended June 30, 2003.



Debt Extinguishment



In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS No. 145, among other things, eliminates the requirement that all gains and losses on the extinguishment of debt must be
classified as extraordinary items on the income statement, thereby permitting the classification of such gains and losses as extraordinary items only if they meet the criteria of APB Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. We adopted this provision of SFAS No. 145 effective January 1, 2003 and,
upon adoption, reclassified the losses on the early extinguishment of debt and related tax benefits that were previously reported in our statements of income as extraordinary items to Other expense and Provision for income taxes.





3.    Dividend



On August 1, 2003, we
declared and paid a dividend in the amount of $106.0 million to our parent, Verizon.





4.    Note Receivable from Affiliate



The Financial Services Agreement between Verizon Network Funding Corp. (VNFC) and us specifies that we are permitted to borrow or advance
funds on a day-to-day (demand) basis to finance our ordinary business and capital requirements. These funds are assigned a variable interest rate and demand note basis; therefore, the carrying value of the note receivable approximates its fair
market value. As of June 30, 2003, we had a note receivable from VNFC for $185.4 million. We did not have a note receivable balance with VNFC as of December 31, 2002.





5.    Debt



On June 30, 2003, we redeemed the entire outstanding principal amount of our $75.0 million
71/4% debentures due on April 15, 2024. We recorded a loss of $3.2 million to other income and (expense), net
due to this redemption.



On March 14, 2003, we issued $1,000.0 million
in 4.625% debentures due on March 15, 2013. The proceeds from this sale of $989.0 million, net of discounts and related costs (including a payment related to a hedge on the interest rate for the anticipated financing), were used to repay a portion
of our existing short-term indebtedness and for general corporate purposes.



On
March 6, 2003, we redeemed the entire outstanding principal amount of our $65.0 million 55/8% debentures due
March 1, 2007. There was no material impact to our results of operations due to this redemption.



On March 1, 2002, we redeemed the entire outstanding principal amount of our $70.0 million 63/4% debentures due on May 1, 2008, $50.0 million 51/4% debentures due on May 1, 2005, and $50.0
million 71/4% debentures due on June 1, 2012. We recorded a loss of $1.0 million to other income and (expense),
net, as a result of these redemptions.



On January 1,
2002, $100.0 million of 71/8% debentures matured.



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6.    Shareowners Investment



|(Dollars in Millions)                              |  | Common Stock |       | Capital Surplus |   | Reinvested Earnings |  |   | AccumulatedOther ComprehensiveLoss |  
|-------------------------------------------------- |  | ------------ | ----- | --------------- | - | ------------------- |  | - | ---------------------------------- | -
|                                                  
|Balance at December 31, 2002                       |  | $            | 873.7 |                 | $ | 72.1                |  | $ | 564.7                              |  
|Net income                                         |  |              |       |                 |   |                     |  |   | 214.2                              |  
|Dividends declared                                 |  |              |       |                 |   |                     |  |   | (181.0                             | )
|Capital contribution from parent                   |  |              |       |                 |   | 25.4                |  |   |                                    |  
|Unrealized derivative loss on cash flow hedge, net |  |              |       |                 |   |                     |  |   |                                    |  
|                                                   |  |              |       |                 |   |                     |  |   |                                    |  
|Balance at June 30, 2003                           |  | $            | 873.7 |                 | $ | 97.5                |  | $ | 597.9                              |  
|                                                   |  |              |       |                 |   |                     |  |   |                                    |  





7.    Comprehensive Income



Comprehensive income consists of net income and other gains and losses affecting shareowners investment that, under generally accepted accounting principles, are
excluded from net income.



The components of comprehensive income are as
follows:





|                                                               |  | Three Months EndedJune 30, |      |      |   |      |  | Six Months Ended June 30,
|-------------------------------------------------------------- |  | -------------------------- | ---- | ---- | - | ---- |  | -------------------------
|(Dollars in Millions)                                          |  | 2003                       |      | 2002 |   |      |  |                          
|                                                              
|Net income                                                     |  | $                          | 70.4 |      | $ | 64.8 |  |                          
|Other comprehensive income (loss):                             |  |                            |      |      |   |      |  |                          
|Unrealized derivative loss and amortization of cash flow hedge |  |                            | .1   |      |   |     |  |                          
|                                                               |  |                            |      |      |   |      |  |                          
|Total comprehensive income                                     |  | $                          | 70.5 |      | $ | 64.8 |  |                          
|                                                               |  |                            |      |      |   |      |  |                          



Accumulated other comprehensive loss
is comprised of the following:





|(Dollars in Millions)                                              |  | June 30,2003 |      |   | December 31,2002
|------------------------------------------------------------------ |  | ------------ | ---- | - | ----------------
|                                                                  
|Unrealized derivative loss on cash flow hedge, net of amortization |  | $            | (4.6 | ) |                 
|                                                                   |  |              |      |   |                 
|Accumulated other comprehensive loss                               |  | $            | (4.6 | ) |                 
|                                                                   |  |              |      |   |                 



In March 2003, we entered into a
treasury lock agreement with Verizon Global Funding Corp., an affiliate, in anticipation of the issuance of fixed-rated debt. This transaction, which met the requirements of a cash flow hedge under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, mitigated the interest rate risk associated with the subsequent issuance, on March 14, 2003, of $1,000.0 million in 4.625% debentures due on March 15, 2013 (see Note 5). The loss on the settlement of the
treasury lock transaction was recorded as an accumulated other comprehensive loss and, beginning in March 2003, is being amortized to interest expense over the 10-year term of the related debt.





8.    Investment in Verizon Ventures III Inc.



In December 2000, we transferred certain advanced data assets to an affiliated company, Verizon Ventures III Inc. (Ventures III) in exchange for common stock of Ventures III. This transfer was done to satisfy a condition of the Federal
Communications Commissions (FCC) approval of the Bell Atlantic  GTE merger, which required the provision of advanced data services through a separate affiliate. Throughout 2000 and 2001, we continued to invest in Ventures III through the
transfer of additional assets. As a result of the transfers, we acquired an ownership interest in Ventures III, which we accounted for under the equity method of accounting.



In September 2001, the FCC issued an order eliminating this merger condition. Following the FCC order, we made necessary filings with our
state regulatory commission for approval of the transfer of these assets back to us. During the fourth quarter of 2001, after required state regulatory approvals were obtained, Ventures III transferred a portion of these assets to us with an
aggregate net book value of $18.4 million. Ventures III currently expects to complete the remaining asset transfers in the fourth quarter of 2003. In consideration of the transfer of these assets, we have or will surrender our common stock in
Ventures III and remit cash compensation.



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In connection with the reintegration, we received a capital contribution from our parent of $25.4 million in the
first quarter of 2003. This equity was immediately contributed to Ventures III. No gain or loss was recognized as a result of the reintegration of the advanced data assets to us. We do not expect that the reintegration will have a material effect on
our total results of operations or financial condition.





9.    Employee Severance and Other Benefit Costs



We maintain ongoing severance plans for both management and associate employees, which provide benefits to employees that are terminated. The costs for these plans are
accounted for under SFAS No. 112, Employers Accounting for Postemployment Benefits. We accrue for severance benefits based on the terms of our severance plan over the estimated service periods of the employees. The accruals are
also based on the historical run-rate of actual severances and expectations for future severances. From time to time, because Verizons severance programs are implemented across its subsidiaries, Verizon must redistribute the amount of
severance liability based on actual experience at the companies.



In the fourth
quarter of 2001, it was determined that our severance liability was not sufficient as a result of new downsizing plans and we recorded a special charge of $28.5 million. In the second quarters of 2002 and 2003, again, it was determined that the
severance liability was not sufficient because of further downsizing plans and we recorded special charges of $11.5 million and $5.8 million, respectively. As of June 30, 2003, approximately 810 employees have been separated under the 2001, 2002 and
2003 severance programs. Nearly all of the separations under the 2001 and 2002 severance activity have occurred. As of June 30, 2003, our severance liability was $39.3 million, which includes future payments to employees previously separated under
the 2001, 2002 and 2003 severance programs. During the first six months of 2003, the companys severance liability was increased by $21.0 million for special charges, the redistribution of severance liabilities across Verizons
subsidiaries and ongoing severance costs and decreased by $8.3 million for payments. Severance costs are included in selling, general and administrative expense in our statements of income. We continually evaluate employee levels, and accordingly,
we may incur future severance costs.



In addition, we recorded special charges
of $9.7 million and $4.9 million in the second quarters of 2003 and 2002, respectively, in connection with pension enhancements. Further, in the second quarter of 2002, we recorded a pension settlement gain of $12.4 million as lump-sum payments
exceeded the threshold of service and interest costs. The special termination benefits and settlement of pension obligations are recorded in accordance with SFAS No. 88, Employers Accounting for Settlements and Curtailments of Defined
Pension Plans and for Termination Benefits. Special termination benefits and settlement of pension obligations are included in selling, general and administrative expense in our statements of income.





10.    Commitments and Contingencies



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



From time to time, regulatory decisions require us to assure customers that we will provide a level of service performance that falls within prescribed parameters. There are penalties associated with failing to meet those service parameters
and we, from time to time, pay such penalties. We do not expect these penalties to have a material effect on our financial condition, but they could have a material effect on our results of operations.



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|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 Condensed Financial Statements and Condensed Notes to Financial Statements.





RESULTS OF
OPERATIONS



We reported net income of $214.2 million for the six month
period ended June 30, 2003, compared to net income of $165.5 million for the same period in 2002. Our reported results included the following special items:





Cumulative Effect of Change in Accounting Principle



Effective January 1, 2003, we adopted Statement of Financial Accounting Standards (SFAS) No.
143, Accounting for Asset Retirement Obligations. This standard provides the accounting for the cost of legal obligations associated with the retirement of long-lived assets. SFAS No. 143 requires that companies recognize the fair value
of a liability for asset retirement obligations in the period in which the obligations are incurred and capitalize that amount as part of the book value of the long-lived asset. We have determined that we do not have a material legal obligation to
remove long-lived assets as described by this statement. However, prior to the adoption of SFAS No. 143, we included estimated removal costs in our group depreciation models. These costs have increased depreciation expense and accumulated
depreciation for future removal costs for existing assets. These removal costs were recorded as a reduction to accumulated depreciation when the assets were retired and removal costs were incurred.



For some assets, such as telephone poles, the removal costs exceeded salvage value. Under the
provisions of SFAS No. 143, we are required to exclude costs of removal from our depreciation rates for assets for which the removal costs exceed salvage. Accordingly, in connection with the initial adoption of this standard on January 1, 2003, we
have reversed accrued costs of removal in excess of salvage from our accumulated depreciation accounts for these assets. The adjustment was recorded as a cumulative effect of an accounting change, resulting in the recognition of a gain of $142.6
million ($87.1 million after-tax). Effective January 1, 2003, we began expensing costs of removal in excess of salvage for these assets as incurred. The ongoing impact of this change in accounting resulted in a decrease in depreciation expense and
an increase in cost of services and sales, which was not material to our total operating expenses for the three and six month periods ended June 30, 2003.





Employee Severance and Other Benefit Costs



We maintain ongoing severance plans for both management and associate employees, which
provide benefits to employees that are terminated. In the second quarters of 2003 and 2002, we recorded severance costs of $5.8 million and $11.5 million, respectively. Severance costs are included in selling, general and administrative expense in
our statements of income.



In addition, we recorded special charges of $9.7
million and $4.9 million in the second quarters of 2003 and 2002, respectively, in connection with pension enhancements. Further, in the second quarter of 2002, we recorded a pension settlement gain of $12.4 million as lump-sum payments exceeded the
threshold of service and interest costs. Special termination benefits and settlement of pension obligations are included in selling, general and administrative expense in our statements of income.



See Note 9 to the condensed financial statements for additional information.



These and other items affecting the comparison of our results of operations for the six month
periods ending June 30, 2003 and 2002 are discussed in the following sections.



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OPERATING REVENUES

(Dollars in Millions)



|                        |  | Six Months Ended June 30,
|----------------------- |  | -------------------------
|                        |  | 2003                     
|                       
|Local services          |  | $                        
|Network access services |  |                          
|Long distance services  |  |                          
|Other services          |  |                          
|                        |  |                          
|Total                   |  | $                        
|                        |  |                          





LOCAL SERVICES



|2003-2002  |  | (Decrease) |      
|---------- |  | ---------- | -----
|          
|Six Months |  | $          | (36.6



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



Local service revenues declined in the first six months of 2003 primarily due to lower demand and usage of our basic local wireline services. The effects of technology substitution from wireless services and the lagging economy largely
drove the decline in local service revenue growth, as reflected by a decline in switched access lines in service of .7% from a year ago. Regulatory pricing rules for UNEs are shifting the mix of access lines from retail to wholesale resulting in
more competition for local exchange services. These decreases were partially offset by the effect of higher billings to CLECs for the purchase of UNEs and for interconnection of their network with our network and by increased sales of packaged
wireline services as a result of expanded new products and pricing plans.





NETWORK ACCESS SERVICES



|2003-2002  |  | (Decrease) |      
|---------- |  | ---------- | -----
|          
|Six Months |  | $          | (14.7



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



The decrease in network access revenues in the first six months of 2003 was mainly attributable to declines in switched minutes of use and switched access lines of 13.6% and .7%, respectively, from June 30, 2002, reflecting the impact of
the soft economy and wireless substitution. Federal and state mandated price reductions also contributed to the decrease in network access revenues.



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LONG DISTANCE SERVICES



|2003-2002  |  | Increase
|---------- |  | --------
|          
|Six Months |  | $3.0    



Long distance revenues are earned
primarily from calls made to points outside a customers local calling area, but within our service area (intraLATA toll). IntraLATA toll calls originate and terminate within the same LATA, but generally cover a greater distance than a local
call. These services are regulated by the Virginia State Corporate Commission except where they cross state lines. Other long distance services that we provide include 800 services and Wide Area Telephone Service (WATS). We also earn revenue from
private line and operator services associated with long distance calls.



Long
distance service revenues increased in the first six months of 2003 primarily due to increased sales of packaged wireline services which include expanded product offerings and pricing plans, resulting in customer win-backs. This increase was
partially offset by the effects of competition, technology substitution and lower access line growth due to the soft economy.





OTHER SERVICES



|2003-2002  |  | (Decrease)
|---------- |  | ----------
|          
|Six Months |  | $(11.7)   



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



Other service revenues declined in the first six months of 2003 primarily due a decrease in
revenue from affiliate sales and services and a decrease in customer late payment fees.



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OPERATING EXPENSES

(Dollars in Millions)





COST OF SERVICES AND SALES



|2003-2002  |  | (Decrease)
|---------- |  | ----------
|          
|Six Months |  | $(25.1)   



Cost of services and sales includes
the following costs directly attributable to a service or product: salaries and wages, benefits, materials and supplies, contracted services, network access and transport costs, customer provisioning costs, computer systems support and cost of
products sold. Aggregate customer care costs, which include billing and service provisioning, are allocated between cost of services and sales and selling, general and administrative expense.



The decrease in cost of services and sales in the first six months of 2003 was primarily due
to lower access and transport costs. As part of our ongoing review of local interconnection expense charged by CLECs, we determined that selected charges from CLECs, previously recorded as expense but not paid, were no longer required and,
accordingly, we adjusted our first quarter 2003 operating expenses. In addition, effective in 2003, we recognize as local interconnection expense no more than the amount payable under the April 27, 2001 Federal Communications Commission (FCC) order
addressing intercarrier compensation for dial-up connections for Internet-bound traffic. The decline in cost of services and sales in the first six months of 2003 was also due, in part, to reduced spending for contracted services and the effect of
work force reductions over the past year.



These cost decreases were partially
offset by lower net pension and other post-retirement benefit income. The company participates in Verizon Communications Inc.s (Verizon) defined pension plan and postretirement healthcare and life insurance plans. As of December 31, 2002,
Verizon changed key employee benefit plan assumptions in response to current conditions in the securities markets and medical and prescription drug costs trends. The expected rate of return on pension plan assets has been changed from 9.25% in 2002
to 8.50% in 2003 and the expected rate of return on other postretirement benefit plan assets has been changed from 9.10% in 2002 to 8.50% in 2003. The discount rate assumption has been lowered from 7.25% in 2002 to 6.75% in 2003 and the medical cost
trend rate assumption has been increased from 10.00% in 2002 to 11.00% in 2003. For the six month period ended June 30, 2003, the company recorded pension income, net of postretirement benefit expenses (after consideration of capitalized costs) of
$15.5 million, compared to $39.6 million for the same period in 2002.



See
Other Matters  Compensation for Internet Traffic for additional information on FCC rulemakings and other court decisions addressing intercarrier compensation for dial-up connections for Internet-bound traffic.





SELLING,
GENERAL AND ADMINISTRATIVE EXPENSE



|2003-2002  |  | (Decrease)
|---------- |  | ----------
|          
|Six Months |  | $(2.4)    



Selling, general and administrative
expense (SG&A) includes salaries and wages and benefits not directly attributable to a service or product, bad debt charges, taxes other than income, advertising and sales commission costs, customer billing, call center and information
technology costs, professional service fees, and rent for administrative space. Aggregate customer care costs, which include billing and service provisioning, are allocated between cost of services and sales and selling, general and administrative
expense.



The decrease in SG&A expense in the first six months of 2003 was
primarily driven by lower bad debt expense principally due to a reduction in uncollectible accounts receivable, improved collections and additional customer deposit requirements. In the second quarter of 2002, we recorded an impairment charge of
$29.6 million driven by our financial statement exposure to WorldCom. This decrease was substantially offset by higher general and administrative costs allocated from affiliates and the effect of a pension settlement gain recorded in the second
quarter of 2002.



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DEPRECIATION AND AMORTIZATION



|2003-2002  |  | (Decrease)
|---------- |  | ----------
|          
|Six Months |  | $         



Depreciation and amortization expense
decreased principally due to the effect of lower rates of depreciation, as well as the favorable impact of adopting SFAS No. 143, effective January 1, 2003. Under SFAS No. 143, we began expensing costs of removal in excess of salvage for outside
plant assets as incurred. Previously, we had included costs of removal for these assets in our depreciation rates. These decreases were partially offset by increased software amortization costs and, to a lesser extent, growth in depreciable
telephone plant.





OTHER RESULTS

(Dollars in Millions)





OTHER INCOME AND (EXPENSE), NET



|                                     |  | Six Months Ended June 30, |       |   |      |          
|------------------------------------ |  | ------------------------- | ----- | - | ---- | ---------
|                                     |  | 2003                      |       |   | 2002 |          
|                                    
|Interest income                      |  | $                         | 1.4   |   |      | $      .8
|Equity loss                          |  |                           | (25.4 | ) |      |         
|Loss on early extinguishment of debt |  |                           | (3.2  | ) |      | (1.0     
|Other, net                           |  |                           |      |   |      | .4       
|                                     |  |                           |       |   |      |          
|Total                                |  | $                         | (27.2 | ) |      | $      .2
|                                     |  |                           |       |   |      |          

nmNot meaningful



The decrease in other income and (expense), net was primarily attributable to equity losses recognized in the first six months of 2003, as
compared to the same period in 2002, from our investment in Verizon Ventures III (Ventures III), an affiliated company. We have an investment in Ventures III, which we account for under the equity method. (See Note 8 to the condensed financial
statements.)





INTEREST EXPENSE



|                                      |  | Six Months Ended June 30, |         |      |  
|------------------------------------- |  | ------------------------- | ------- | ---- | -
|                                      |  | 2003                      |         | 2002 |  
|                                     
|Interest expense                      |  | $                         | 38.5    |      | $
|Capitalized interest costs            |  |                           | 1.3     |      |  
|                                      |  |                           |         |      |  
|Total interest costs on debt balances |  | $                         | 39.8    |      | $
|                                      |  |                           |         |      |  
|Debt outstanding                      |  | $                         | 1,534.5 |      | $
|                                      |  |                           |         |      |  



Interest expense increased in the
first six months of 2003, over the same period in 2002, primarily due to changes in the mix of short- and long-term interest rates and changes in the levels of debt during each period.



See Note 5 to the condensed financial statements for additional information.



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PROVISION FOR INCOME TAXES



|                           |  | Six Months Ended June 30, |  |       
|-------------------------- |  | ------------------------- |  | ------
|                           |  | 2003                      |  | 2002  
|                          
|Provision for income taxes |  | $96.5                     |  | $105.7
|Effective income tax rate  |  | 43.2%                     |  | 39.0% 



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. Our effective income tax rate was higher for the six months ended June 30, 2003, compared to the same
period in 2002, primarily due to the effect of equity losses associated with our investment in Ventures III, which were recorded in the first six months of 2003, for which we do not recognize income tax benefits.





OTHER
MATTERS



FCC Regulation and Interstate Rates



We are subject to the jurisdiction of the FCC with respect to interstate services and
related matters. In 2002, the FCC continued to implement reforms to the interstate access charge system and to implement the universal service and other requirements of the Telecommunications Act of 1996 (the 1996 Act).



Access Charges and Universal Service



On May 31, 2000, the FCC adopted the Coalition for Affordable Local and Long Distance
Services (CALLS) plan as a comprehensive five-year plan for regulation of interstate access charges. The CALLS plan has three main components. First, it establishes a portable interstate access universal service support of $650 million for the
industry. This explicit support replaces implicit support embedded in interstate access charges. Second, the plan simplifies the patchwork of common line charges into one subscriber line charge (SLC) and provides for de-averaging of the SLC by zones
and class of customers in a manner that will not undermine comparable and affordable universal service. Third, the plan sets into place a mechanism to transition to a set target of $0.0055 per minute for switched access services. Once that target
rate is reached, local exchange carriers are no longer required to make further annual price cap reductions to their switched access prices. The annual reductions leading to the target rate, as well as annual reductions for the subset of special
access services that remain subject to price cap regulation was set at 6.5% per year.



On September 10, 2001, the U.S. Court of Appeals for the Fifth Circuit ruled on an appeal of the FCC order adopting the plan. The court upheld the FCC on several challenges to the order, but remanded two aspects of the decision back to the
FCC on the grounds that they lacked sufficient justification. The court remanded back to the FCC for further consideration its decision setting the annual reduction factor at 6.5% minus an inflation factor and the size of the new universal service
fund at $650 million. The entire plan continued in effect pending the FCCs further consideration of its justification of these components. On July 10, 2003, the FCC released an order on remand reaffirming these aspects of its plan. As a result
of tariff adjustments which became effective in July 2003, we reached the $0.0055 benchmark.



The FCC has adopted rules for special access services that provide for pricing flexibility and ultimately the removal of services from price regulation when prescribed competitive thresholds are met. In order to use
these rules, carriers must forego the ability to take advantage of provisions in the current rules that provide relief in the event earnings fall below prescribed thresholds. Verizon has been authorized to remove special access and dedicated
transport services from price caps in 56 Metropolitan Statistical Areas (MSAs). In addition, the FCC has found that in 24 MSAs Verizon has met the stricter standards to remove special access connections to end-user customers from price caps.



In November 1999, the FCC adopted a new mechanism for providing universal
service support to high cost areas served by large local telephone companies. This funding mechanism provides additional support for local telephone services in several states served by Verizons telephone operations. This system has been
supplemented by the new FCC access charge plan described above. On July 31, 2001, the U.S. Court of Appeals for the Tenth Circuit reversed and remanded to the FCC for further proceedings. The court concluded that the FCC had failed to adequately
explain some aspects of its decision and had failed to address any need for a state universal service mechanism. The current universal service mechanism remains in place pending the outcome of any FCC review as a result of these appeals. The FCC
also has proceedings underway to evaluate



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possible changes to its current rules for assessing contributions to the universal service fund. Any change in the
current assessment mechanism could result in a change in the contribution that local telephone companies must make and that would have to be collected from customers.



Unbundling of Network Elements



In November 1999, the FCC announced its decision setting forth new unbundling requirements, eliminating elements that it had previously required to be unbundled, limiting
the obligation to provide others and adding new elements.



In addition to the
unbundling requirements released in November 1999, the FCC released an order in a separate proceeding in December 1999, requiring incumbent local exchange companies also to unbundle and provide to competitors the higher frequency portion of their
local loop. This provides competitors with the ability to provision data services on top of incumbent carriers voice services.



On May 24, 2002, the U.S. Court of Appeals for the D.C. Circuit released an order that overturned the most recent FCC decision establishing which network elements were
required to be unbundled. In particular, the court found that the FCC did not adequately consider the limitations of the necessary and impair standards of the 1996 Act when it chose national rules for unbundling and that it failed to
consider the relevance of competition from other types of service providers, including cable and satellite. The court also vacated a separate order that had authorized an unbundling requirement for line sharing where a competing carrier
purchases only a portion of the copper connection to the end-user in order to provide high-speed broadband services using DSL technology. The U.S. Supreme Court subsequently declined to review that decision.



On October 25, 2002, the U.S. Court of Appeals for the D.C. Circuit released an order
upholding the FCCs decisions that established interim limits on the availability of combinations of UNEs known as enhanced extended links or EELs. EELs consist of unbundled loops and transport elements. The FCC decisions limited
access to EELs to carriers that would use them to provide a significant amount of local traffic, and not just use them as substitutes for special access services.



Prior to the issuance of these orders from the U.S. Court of Appeals for the D.C. Circuit, the FCC had already begun a review of the scope
of its unbundling requirement through a rulemaking referred to as the triennial review of UNEs. This rulemaking reopened the question of what network elements must be made available on an unbundled basis under the 1996 Act, and will address the
impact of the order by the U.S. Court of Appeals for the D.C. Circuit overturning its previous rules, as well as other pending issues relating to unbundled elements, including the question of whether competing carriers may substitute combinations of
unbundled loops and transport for already competitive special access services. On February 20, 2003, the FCC announced a decision in its triennial review, but the order has not yet been released.



Compensation for Internet Traffic



On April 27, 2001, the FCC released an order addressing intercarrier compensation for
dial-up connections for Internet-bound traffic. The FCC found that Internet-bound traffic is interstate and subject to the FCCs jurisdiction. Moreover, the FCC again found that Internet-bound traffic is not subject to reciprocal compensation
under Section 251(b)(5) of the 1996 Act. Instead, the FCC established federal rates per minute for this traffic that decline from $0.0015 to $0.0007 over a three-year period. The FCC order also sets caps on the total minutes of this traffic that may
be subject to any intercarrier compensation and requires that incumbent local exchange carriers must offer to both bill and pay reciprocal compensation for local traffic at the same rate as they are required to pay on Internet-bound traffic. On May
3, 2002, the U.S. Court of Appeals for the D.C. Circuit rejected part of the FCCs rationale for its April 27, 2001 order, but declined to vacate the order while it is on remand.



Several parties requested rehearing, asking the court to vacate the underlying order. Those requests were denied in a series of orders
released on September 24, 2002 and September 25, 2002. The U.S. Supreme Court has declined to review that denial. In the meantime, pending further action by the FCC, the FCCs underlying order remains in effect.



Collective Bargaining Agreement



Associate employees wages, pension and other benefits are determined under contract with a
union representing our associate employees. Approximately 90% of our employees are covered by a collective bargaining agreement. On August 2, 2003, the collective bargaining agreement with the union representing our employees expired. As of 8:00
a.m. on August 12, 2003, those employees have worked without a new contract since the previous contract expired and we continued to negotiate a new agreement with the union. Once a proposed settlement is reached, it is subject to ratification by the
union members.



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|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



| | (a) |  | Evaluation of Disclosure Controls and Procedures
| | --- |  | ------------------------------------------------



| |  |  | Our chief executive officer and chief financial officer have evaluated the effectiveness of the registrants disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report, that ensure that information relating to the registrant which is required to be disclosed in this report is recorded, processed,
summarized and reported, within required time periods. They have concluded that the registrants disclosure controls and procedures were adequate and effective to ensure that material information relating to the registrant and its consolidated
subsidiaries would be made known to them by others within those entities, particularly during the period in which this quarterly report was being prepared.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Changes in Internal Control over Financial Reporting
| | --- |  | ----------------------------------------------------



| |  |  | There were no significant changes in the registrants internal control over financial reporting during the period covered by this quarterly report, nor were there any
significant deficiencies or material weaknesses in these controls requiring corrective actions.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II  OTHER INFORMATION



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



|(a) |  | Exhibits:                                                                               |  |                                                                                                    
|--- |  | --------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------
|    |  |                                                                                        
|    |  | ExhibitNumber                                                                           |  |                                                                                                    
|    |  |                                                                                        
|    |  | 12                                                                                      |  | Computation of Ratio of Earnings to Fixed Charges.                                                 
|    |  |                                                                                        
|    |  | 31.1                                                                                    |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|    |  |                                                                                        
|    |  | 31.2                                                                                    |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|    |  |                                                                                        
|    |  | 32                                                                                      |  | Officer Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                  
|    | 
|(b) |  | There were no Current Reports on Form 8-K filed during the quarter ended June 30, 2003.



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SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





|                      |  |  |  | VERIZON VIRGINIA INC.
|--------------------- |  |  |  | ---------------------
|                      |  |  | 
|Date: August 12, 2003 |  |  |  | By:                  
|                      |  |  |  |                      





UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF AUGUST 7, 2003.



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EXHIBIT INDEX



|ExhibitNumber |  |                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------
|              | 
|12            |  | Computation of Ratio of Earnings to Fixed Charges.                                                 
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|              | 
|32            |  | Officer Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                  



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