<PAGE>

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

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

                                    FORM 10-Q

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


(Mark one)
   [X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2001

                                       OR

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


                          Commission file number 0-2908


                             VERIZON NORTHWEST INC.


  A Washington Corporation     I.R.S. Employer Identification No. 91-0466810


        1095 Avenue of the Americas, Room 3868, New York, New York 10036


                         Telephone Number (212) 395-2121

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



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


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

                             Verizon Northwest Inc.

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,       Six Months Ended June 30,
                                                           -----------------------------------------------------------------
(Dollars in Millions) (Unaudited)                                      2001            2000            2001            2000
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>             <C>             <C>
OPERATING REVENUES
   (including $.1, $.1, $.2 and $.1 from affiliates)                 $323.6          $305.3          $638.8          $606.8
                                                             -----------------------------------------------------------------
OPERATING EXPENSES
Operations and support (including $25.3, $28.9, $49.4 and
  $58.5 to affiliates)                                                136.3           136.7           273.9           260.1
Depreciation and amortization                                          61.4            59.3           121.2           114.9
                                                             -----------------------------------------------------------------
                                                                      197.7           196.0           395.1           375.0
                                                             -----------------------------------------------------------------

OPERATING INCOME                                                      125.9           109.3           243.7           231.8

OTHER EXPENSE, NET
  (including $5.0, $0, $8.4 and $0 from affiliates)                     5.0             ---             8.4             ---

INTEREST EXPENSE
  (including $3.9, $.9, $5.5 and $1.5 to affiliate)                    14.2            13.7            28.1            27.2
                                                             -----------------------------------------------------------------

INCOME BEFORE PROVISION FOR INCOME TAXES                              106.7            95.6           207.2           204.6

PROVISION FOR INCOME TAXES                                             41.3            37.6            79.7            77.8
                                                             -----------------------------------------------------------------

NET INCOME                                                           $ 65.4          $ 58.0          $127.5          $126.8
                                                             =================================================================
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       1
<PAGE>

                             Verizon Northwest Inc.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                     ------

<TABLE>
<CAPTION>
(Dollars in Millions)                                                                      June 30, 2001      December 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
                                                                                             (Unaudited)
<S>                                                                                             <C>                    <C>
CURRENT ASSETS
Cash                                                                                            $    9.1               $     .4
Short-term investments                                                                              17.1                   30.1
Accounts receivable:
    Trade and other, net of allowances for uncollectibles of $12.9 and $13.2                       211.5                  209.2
    Affiliates                                                                                      43.2                   33.0
Material and supplies                                                                               23.3                   18.0
Prepaid expenses                                                                                     5.7                   12.4
Deferred income taxes                                                                                4.6                    2.4
Net assets held for sale                                                                            17.2                   16.6
Other                                                                                               22.5                   15.6
                                                                                    ---------------------------------------------
                                                                                                   354.2                  337.7
                                                                                    ---------------------------------------------

PLANT, PROPERTY AND EQUIPMENT                                                                    3,965.6                3,851.3
Less accumulated depreciation                                                                    2,463.9                2,387.7
                                                                                    ---------------------------------------------
                                                                                                 1,501.7                1,463.6
                                                                                    ---------------------------------------------

PREPAID PENSION ASSET                                                                              281.2                  266.7
                                                                                    ---------------------------------------------

OTHER ASSETS                                                                                        51.0                   64.7
                                                                                    ---------------------------------------------

TOTAL ASSETS                                                                                    $2,188.1               $2,132.7
                                                                                    =============================================
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>

                             Verizon Northwest Inc.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

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

<TABLE>
<CAPTION>

(Dollars in Millions)                                                                      June 30, 2001     December 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
                                                                                             (Unaudited)
<S>                                                                                              <C>                   <C>
CURRENT LIABILITIES
Debt maturing within one year:
    Note payable to affiliate                                                                    $ 335.3               $ 152.5
    Other                                                                                            1.6                 201.6
Accounts payable and accrued liabilities:
    Affiliates                                                                                      30.9                  42.4
    Other                                                                                          142.9                 143.9
Other liabilities                                                                                   65.9                  59.5
                                                                                    ---------------------------------------------
                                                                                                   576.6                 599.9
                                                                                    ---------------------------------------------

LONG-TERM DEBT                                                                                     565.0                 564.7
                                                                                    ---------------------------------------------

EMPLOYEE BENEFIT OBLIGATIONS                                                                        67.0                  31.5
                                                                                    ---------------------------------------------

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes                                                                              214.6                 202.9
Other                                                                                               43.8                  52.1
                                                                                    ---------------------------------------------
                                                                                                   258.4                 255.0
                                                                                    ---------------------------------------------

SHAREOWNER'S INVESTMENT
Common stock $25 - stated value per share                                                          448.0                 448.0
  Authorized shares:   20,000,000
  Outstanding shares:  17,920,000
Contributed capital                                                                                137.8                 137.8
Reinvested earnings                                                                                135.3                  95.8
                                                                                    ---------------------------------------------
                                                                                                   721.1                 681.6
                                                                                    ---------------------------------------------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT                                                   $2,188.1              $2,132.7
                                                                                    =============================================
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>

                             Verizon Northwest Inc.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                  Six Months Ended June 30,
                                                                                    ---------------------------------------------
(Dollars in Millions) (Unaudited)                                                               2001                   2000
---------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                          <C>                    <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                    $ 259.5                $ 317.6
                                                                                    ---------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments                                                            13.0                    ---
Capital expenditures                                                                          (163.6)                (155.8)
Other, net                                                                                       5.0                    (.1)
                                                                                    ---------------------------------------------
Net cash used in investing activities                                                         (145.6)                (155.9)
                                                                                    ---------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of borrowings and capital lease obligations                              (200.0)                   ---
Net change in note payable to affiliate                                                        182.8                  (32.9)
Dividends paid                                                                                 (88.0)                (130.0)
                                                                                    ---------------------------------------------
Net cash used in financing activities                                                         (105.2)                (162.9)
                                                                                    ---------------------------------------------

NET CHANGE IN CASH                                                                               8.7                   (1.2)

CASH, BEGINNING OF PERIOD                                                                         .4                    1.4
                                                                                    ---------------------------------------------

CASH, END OF PERIOD                                                                          $   9.1                $    .2
                                                                                    =============================================
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>

                             Verizon Northwest Inc.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.       Basis of Presentation

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

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

2.    Revenue Recognition

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

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

3.    Long-Lived Assets

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

4.    Dividend

      On August 1, 2001, we declared and paid a dividend in the amount of $48.0
million to GTE.

5.    Derivatives and Hedging Activities

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

6.    Recent Accounting Pronouncements

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

      SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is no longer permitted. SFAS No. 141 also includes
guidance on the initial

                                       5
<PAGE>

                            Verizon Northwest Inc.

recognition and measurement of goodwill and other intangible assets acquired in
a business combination that is completed after June 30, 2001.

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

7.     Merger Charges

       In connection with the merger of Bell Atlantic and GTE on June 30, 2000,
we incurred charges associated with employee severance of $16.7 million pre-tax.
Employee severance costs, as recorded under SFAS No. 112, "Employers' Accounting
for Postemployment Benefits," represent the benefit costs for the separation of
management employees who were entitled to benefits under pre-existing separation
plans, as well as an accrual for ongoing SFAS No. 112 obligations for former GTE
employees. During the second quarter of 2000, in connection with the merger, we
also recorded a pre-tax charge of $10.5 million for direct, incremental
merger-related costs, including compensation, professional services and other
direct costs.

       In addition, we recorded pre-tax merger-related transition costs of $5.3
million in the first six months of 2001. Transition costs consisted of costs to
integrate systems, consolidate real estate, relocate employees and meet certain
regulatory conditions of the merger. They also included costs for advertising
and other costs to establish the Verizon brand. Transition costs since the date
of the merger totaled $8.1 million. Transition costs are expensed as incurred.
During the second quarter of 2000, we also recorded a $.5 million pre-tax charge
for other actions in relation to the Bell Atlantic - GTE merger.

      Results of operations for the first six months of 2000 also included
adjustments that were required to conform our accounting methods and
presentation to that of Verizon Communications. These conforming adjustments are
differences in capitalization policies. As a result of these adjustments,
operating income increased $2.4 million for the six month period ended June 30,
2000.

8.    Shareowner's Investment

<TABLE>
<CAPTION>
                                                            Common          Contributed          Reinvested
(Dollars in Millions)                                        Stock              Capital            Earnings
------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                  <C>                 <C>
Balance at December 31, 2000                                $448.0               $137.8              $ 95.8
Net income                                                                                            127.5
Dividends declared                                                                                    (88.0)
                                                  ----------------------------------------------------------
Balance at June 30, 2001                                    $448.0               $137.8              $135.3
                                                  ==========================================================
</TABLE>

      Net income and comprehensive income were the same for the six months ended
June 30, 2001 and 2000.

9.    Net Assets Held for Sales

      During May 1999, we entered into an agreement to sell approximately 14,000
switched access lines located in California to Citizens Utilities Company. This
agreement consummates our previously announced 1998 plan to sell selected access
lines located in California. The sale is contingent upon final agreements and
regulatory approval, the latter of which has been obtained, and is expected to
close during 2001. The associated net assets, which approximate $17.2 million
and $16.6 million at June 30, 2001 and December 31, 2000, respectively, consist
of property, plant and equipment, and have been classified as "Net assets held
for sale" in the balance sheets. We intend to continue to operate all of these
assets until sold. Given the decision to sell, no depreciation expense was
recorded for these assets during 2001 or 2000 in accordance with SFAS No. 121.
Accordingly, depreciation expense was lowered by $.7 million and $1.3 million
for the three and six months ended June 30, 2001 and $.7 million and $1.3
million for the three and six months ended June 30, 2000, respectively. No
charges were recorded for the access lines to be sold because their estimated
fair values were in excess of their carrying values. The access line agreement
represents approximately 1.0% of the switched access lines that we had in
service at the end of 2000, and contributed approximately 1.0% to 2000 operating
revenues and approximately 1.0% to 2000 operating income.

                                       6
<PAGE>

                             Verizon Northwest Inc.

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 which we currently deem to be probable and estimable. We do
not expect that the ultimate resolution of pending regulatory and legal matters
in future periods will have a material effect on our financial condition, but it
could have a material effect on our results of operations.

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

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

                                       7
<PAGE>

                             Verizon Northwest Inc.

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

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


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

      We reported net income of $127.5 million for the six month period ended
June 30, 2001, compared to net income of $126.8 million for the same period in
2000.

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

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

<TABLE>
<CAPTION>
                                                                                                      (Dollars in Millions)
Six Months Ended June 30,                                                                        2001                  2000
-------------------------------------------------------------------------------------------------------------------------------
Operating Revenues
<S>                                                                                             <C>                  <C>
   Regulatory contingency                                                                       $ ---                $   .4
   Other charges and special items                                                                ---                   1.0
                                                                                      -----------------------------------------
                                                                                                  ---                   1.4
                                                                                      -----------------------------------------
Operations and Support Expenses
  Bell Atlantic-GTE merger direct incremental costs                                               ---                  10.5
  Bell Atlantic-GTE merger severance costs                                                        ---                  16.7
  Bell Atlantic-GTE merger transition costs                                                       5.3                   ---
  Bell Atlantic-GTE merger related costs                                                          ---                    .5
  Other charges and special items                                                                 ---                    .3
                                                                                      -----------------------------------------
                                                                                                  5.3                  28.0
                                                                                      -----------------------------------------
Depreciation and Amortization Expenses
   Bell Atlantic-GTE merger accounting conformity adjustments                                     ---                  (2.4)
                                                                                      -----------------------------------------
Interest Expense
   Regulatory contingency                                                                         ---                    .1
                                                                                      -----------------------------------------
Net impact on pre-tax income                                                                    $ 5.3                $ 27.1
                                                                                      =========================================
</TABLE>

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

Merger Charges

       In connection with the merger of Bell Atlantic and GTE on June 30, 2000,
we incurred charges associated with employee severance of $16.7 million pre-tax.
Employee severance costs, as recorded under SFAS No. 112, "Employers' Accounting
for Postemployment Benefits," represent the benefit costs for the separation of
management employees who were entitled to benefits under pre-existing separation
plans, as well as an accrual for ongoing SFAS No. 112 obligations for former GTE
employees. During the second quarter of 2000, in connection with the merger, we
also recorded a pre-tax charge of $10.5 million for direct, incremental
merger-related costs, including compensation, professional services and other
direct costs.

      In addition, we recorded pre-tax merger-related transition costs of $5.3
million in the first six months of 2001. Transition costs consisted of costs to
integrate systems, consolidate real estate, relocate employees and meet certain
regulatory conditions of the merger. They also included costs for advertising
and other costs to establish the Verizon brand. Transition costs are expensed as
incurred. During the second quarter of 2000, we also recorded a $.5 million
pre-tax charge for other actions in relation to the Bell Atlantic - GTE merger.

      Results of operations for the first six months of 2000 also included
adjustments that were required to conform our accounting methods and
presentation to that of Verizon Communications. These conforming adjustments are
differences in capitalization policies. As a result of these adjustments,
operating income increased $2.4 million for the six month period ended June 30,
2000.

                                       8
<PAGE>

                             Verizon Northwest Inc.

Other Charges and Special Items

      In the second quarter of 2000, we recognized a pre-tax charge for a
regulatory matter totaling $.5 million. We recorded a reduction to operating
revenue in the amount of $.4 million and a charge to interest expense of $.1
million. This matter relates to a specific issue currently under investigation
by the Federal Communications Commission (FCC). We believe that it is probable
that the ultimate resolution of this matter will result in refunds to customers,
including interest. In the second quarter of 2000, we also recorded other
charges and special items totaling approximately $1.3 million pre-tax.

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


OPERATING REVENUES
------------------
(Dollars in Millions)

<TABLE>
<CAPTION>

Six Months Ended June 30,                                            2001                 2000
------------------------------------------------------------------------------------------------
<S>                                                               <C>                  <C>
Local services                                                     $290.5               $273.9
Network access services                                             278.8                263.7
Long distance services                                               18.4                 20.2
Other services                                                       51.1                 49.0
                                                       -----------------------------------------
Total                                                              $638.8               $606.8
                                                       =========================================
</TABLE>

LOCAL SERVICES

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Six Months                                           $16.6         6.1%
--------------------------------------------------------------------------------

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

      Growth in local service revenues was driven primarily by higher payments
received from competitive local exchange carriers for interconnection of their
networks with our network and for the purchase of unbundled network elements,
increased demand for our value-added services as a result of new packaging of
services, and the implementation of the Oregon Universal Service Fund (USF)
order. These increases were partially offset by the effect of regulatory matters
in the state of Washington in 2000. Local service revenues also reflect the
impact of an economic slowdown during the first half of 2001.


NETWORK ACCESS SERVICES

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Six Months                                           $15.1         5.7%
--------------------------------------------------------------------------------

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

       The growth in network access revenues was mainly attributable to higher
customer demand, primarily for special access services. This growth reflects a
continuing expansion of the business market, particularly for high-capacity,
high-speed digital services. To a lesser extent, the effect of a regulatory
matter in 2000 also contributed to the increase in network access revenues.

                                       9
<PAGE>

                             Verizon Northwest Inc.

       Volume-related growth was partially offset by mandated price reductions
on certain intrastate and interstate access services and other regulatory
decisions. The FCC regulates rates that we charge long distance carriers and
end-user subscribers for interstate access services. We are required to file new
access rates with the FCC each year. In July 2000, we implemented the Coalition
for Affordable Local and Long Distance Service (CALLS) plan. Rates included in
the July 2000 CALLS plan were in effect through June 2001. The impact of the
slowing economy also affected network access revenues in 2001.


LONG DISTANCE SERVICES

      2001 - 2000                                              (Decrease)
--------------------------------------------------------------------------------
      Six Months                                           $(1.8)       (8.9)%
--------------------------------------------------------------------------------

       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 state regulatory commissions except where they cross state lines.
Other long distance services that we provide include 800 services and Wide Area
Telephone Service (WATS).

       The decline in long distance revenues was principally caused by the
competitive effects of other providers of long distance services.


OTHER SERVICES

      2001 - 2000                                                Increase
--------------------------------------------------------------------------------
      Six Months                                            $2.1         4.3%
--------------------------------------------------------------------------------

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

      The growth in other service revenues was primarily attributable to higher
revenues received from affiliates and from our billing and collection services.


OPERATING EXPENSES
------------------
(Dollars in Millions)


OPERATIONS AND SUPPORT

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Six Months                                           $13.8         5.3%
--------------------------------------------------------------------------------

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

      Operations and support expenses increased primarily due to the effect of
pre-tax gains recorded in the first half of 2000 associated with lump-sum
settlements of pension obligations for certain active and former employees.

      This cost increase was partially offset by the effect of merger-related
costs and other special items recorded in 2000 and 2001, as described in the
Results of Operations section. Operating costs have also decreased due to
declining work force levels, business integration activities and a reduction in
materials and supplies. The first six months of 2001 reflects a reduction in


                                      10
<PAGE>

                             Verizon Northwest Inc.

directory publishing expenses allocated from an affiliate and lower
interconnection and related costs associated with reciprocal compensation
arrangements with competitive local exchange and other carriers to terminate
calls on their networks.

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

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


DEPRECIATION AND AMORTIZATION

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Six Months                                            $6.3         5.5%
--------------------------------------------------------------------------------

      Depreciation and amortization expense increased principally due to growth
in depreciable telephone plant as a result of increased capital expenditures for
higher growth services. This factor was partially offset by the effect of
lower rates of depreciation. Partially affecting the change in depreciation and
amortization expense were adjustments made to conform the accounting policies of
Bell Atlantic and GTE as a result of the merger, as described in Results of
Operations.


OTHER EXPENSE, NET

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Six Months                                            $8.4       ---
--------------------------------------------------------------------------------

      The change in other expense, net, is primarily attributable to equity
losses recognized from our investment in Verizon Advanced Data Inc. (VADI). VADI
is a wholly owned subsidiary of Verizon Communications that provides new
exchange access services. At June 30, 2001, our ownership in VADI was 2.99%.


INTEREST EXPENSE

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Six Months                                           $.9           3.3%
--------------------------------------------------------------------------------

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

      Interest expense increased in the first six months of 2001, compared to
the same period in 2000, primarily due to higher levels of average borrowings
with an affiliate, partially offset by higher capitalized interest costs
associated with telephone plant under construction.

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<PAGE>

                             Verizon Northwest Inc.

EFFECTIVE INCOME TAX RATES

      Six Months Ended June 30,
--------------------------------------------------------------------------------
      2001                                                      38.5%
--------------------------------------------------------------------------------
      2000                                                      38.0%
--------------------------------------------------------------------------------

       The effective income tax rate is the provision for income taxes as a
percentage of income before provision for income taxes. Our effective income
tax rate was higher for the six months ended June 30, 2001, compared to the
same period in 2000, primarily due to the effect of equity losses associated
with our investment in VADI, for which we do not recognize income tax benefits.
This factor was partially offset by a decrease in non-recurring income tax
expense.


OTHER MATTERS
-------------
Recent Accounting Pronouncements

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

       SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is no longer permitted. SFAS No. 141 also includes
guidance on the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination that is completed after
June 30, 2001.

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

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<PAGE>

                             Verizon Northwest Inc.

                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

              There were no proceedings reportable under this Item.


Item 6.       Exhibits and Reports on Form 8-K


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


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<PAGE>

                            Verizon Northwest Inc.

                                   SIGNATURES


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


                                       Verizon Northwest Inc.



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


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

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