<PAGE>

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

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

                                   FORM 10-Q

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



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

                                      OR

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


                         Commission file number 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 September 30,  Nine Months Ended September 30,
                                                            ---------------------------------------------------------------------
  (Dollars in Millions) (Unaudited)                                    2001            2000             2001              2000
  -------------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                 <C>           <C>             <C>
OPERATING REVENUES
   (including $15.1, $.1, $40.9 and $.2 from affiliates)            $303.4           $308.6           $942.2            $915.4
                                                            ---------------------------------------------------------------------

OPERATING EXPENSES
Operations and support (including $30.9, $61.0, $80.6 and
  $119.6 to affiliates)                                              135.4            147.6            409.3             407.7
Depreciation and amortization                                         63.9             60.4            185.1             175.3
                                                            ---------------------------------------------------------------------
                                                                     199.3            208.0            594.4             583.0
                                                            ---------------------------------------------------------------------
OPERATING INCOME                                                     104.1            100.6            347.8             332.4

OTHER INCOME AND (EXPENSE), NET
  (including $(4.6), $.1, $(13.0) and $.1 from affiliates)            (4.6)              .1            (13.0)               .1

INTEREST EXPENSE
  (including $3.3, $1.3, $8.8, and $2.8 to affiliate)                 12.7             13.9             40.8              41.1
                                                            ---------------------------------------------------------------------
Income before provision for income taxes                              86.8             86.8            294.0             291.4

PROVISION FOR INCOME TAXES                                            33.8             29.8            113.5             107.6
                                                            ---------------------------------------------------------------------
NET INCOME                                                         $  53.0          $  57.0           $180.5            $183.8
                                                            =====================================================================
</TABLE>


           See Notes to Condensed Consolidated Financial Statements.

                                       1
<PAGE>

                            Verizon Northwest Inc.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                    ASSETS
                                    ------
<TABLE>
<CAPTION>

(Dollars in Millions)                                                               September 30, 2001       December 31, 2000
------------------------------------------------------------------------------------------------------------------------------
                                                                                        (Unaudited)
<S>                                                                                    <C>                            <C>
CURRENT ASSETS
Cash                                                                                              $   .1                 $   .4
Short-term investments                                                                               8.7                   30.1
Accounts receivable:
    Trade and other, net of allowances for uncollectibles of $11.3 and $13.2                       200.7                  209.2
    Affiliates                                                                                      49.2                   33.0
Material and supplies                                                                               19.9                   18.0
Prepaid expenses                                                                                     6.7                   12.4
Deferred income taxes                                                                                5.7                    2.4
Net assets held for sale                                                                            18.3                   16.6
Other                                                                                               22.4                   15.6
                                                                                    ---------------------------------------------
                                                                                                   331.7                  337.7
                                                                                    ---------------------------------------------

PLANT, PROPERTY AND EQUIPMENT                                                                    4,009.6                3,851.3
Less accumulated depreciation                                                                    2,503.6                2,387.7
                                                                                    ---------------------------------------------
                                                                                                 1,506.0                1,463.6
                                                                                    ---------------------------------------------

PREPAID PENSION ASSET                                                                              288.1                  266.7
                                                                                    ---------------------------------------------
OTHER ASSETS                                                                                        55.8                   64.7
                                                                                    ---------------------------------------------

TOTAL ASSETS                                                                                    $2,181.6               $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, Except Per Share Amount)                                       September 30, 2001    December 31, 2000
-------------------------------------------------------------------------------------------------------------------------------
                                                                                            (Unaudited)
<S>                                                                                     <C>                  <C>
CURRENT LIABILITIES
Debt maturing within one year:
    Note payable to affiliate                                                                    $ 284.2               $ 152.5
    Other                                                                                            1.3                 201.6
Accounts payable and accrued liabilities:
    Affiliates                                                                                      38.4                  42.4
    Other                                                                                          161.3                 143.9
Other liabilities                                                                                   68.0                  59.5
                                                                                    ---------------------------------------------
                                                                                                   553.2                 599.9
                                                                                    ---------------------------------------------

LONG-TERM DEBT                                                                                     564.2                 564.7
                                                                                    ---------------------------------------------

EMPLOYEE BENEFIT OBLIGATIONS                                                                        69.4                  31.5
                                                                                    ---------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes                                                                              220.4                 202.9
Other                                                                                               48.2                  52.1
                                                                                    ---------------------------------------------
                                                                                                   268.6                 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                                                                                137.9                 137.8
Reinvested earnings                                                                                140.3                  95.8
                                                                                    ---------------------------------------------
                                                                                                   726.2                 681.6
                                                                                    ---------------------------------------------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT                                                   $2,181.6              $2,132.7
                                                                                    =============================================

</TABLE>


           See Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>

                            Verizon Northwest Inc.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                            Nine Months Ended September 30,
                                                                                    ---------------------------------------------
(Dollars in Millions) (Unaudited)                                                              2001                  2000
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>                    <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                    $ 409.7                $ 419.0
                                                                                    ---------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments                                                            21.4                    ---
Capital expenditures                                                                          (227.4)                (241.8)
Other, net                                                                                       1.4                    (.1)
                                                                                    ---------------------------------------------
Net cash used in investing activities                                                         (204.6)                (241.9)
                                                                                    ---------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of borrowings and capital lease obligations                              (201.1)                   (.9)
Net change in note payable to affiliate                                                        131.7                    8.5
Dividends paid                                                                                (136.0)                (186.0)
                                                                                    ---------------------------------------------
Net cash used in financing activities                                                         (205.4)                (178.4)
                                                                                    ---------------------------------------------
NET CHANGE IN CASH                                                                               (.3)                  (1.3)

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

CASH, END OF PERIOD                                                                            $  .1                  $  .1
                                                                                    =============================================

</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 November 1, 2001, we declared and paid a dividend in the amount of $45.0
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.

                                       5
<PAGE>

                            Verizon Northwest Inc.

6.   Recent Accounting Pronouncements

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

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

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

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

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

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 $9.9
million in the first nine 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 $12.7 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 nine 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,
depreciation and amortization expense decreased $2.4 million for the nine month
period ended September 30, 2000.

                                       6
<PAGE>

                            Verizon Northwest Inc.

8.    Shareowner's Investment

<TABLE>
<CAPTION>
                                                                                               Contributed          Reinvested
(Dollars in Millions)                                                       Common Stock           Capital            Earnings
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                   <C>                <C>
Balance at December 31, 2000                                                    $448.0              $137.8              $ 95.8
Net income                                                                                                               180.5
Dividends declared                                                                                                      (136.0)
Other                                                                                                   .1
                                                                      ----------------------------------------------------------
Balance at September 30, 2001                                                   $448.0              $137.9              $140.3
                                                                      ==========================================================
</TABLE>

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

9.   Net Assets Held for Sale

      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 at the end of the first quarter of 2002. The associated net assets, which
approximate $18.3 million and $16.6 million at September 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 $2.0 million for the three and nine months ended September 30,
2001 and $.7 million and $2.0 million for the three and nine months ended
September 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.

10.   Commitments and Contingencies

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

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

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

                                       7
<PAGE>

                            Verizon 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 $180.5 million for the nine month period ended
September 30, 2001, compared to net income of $183.8 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 condensed
consolidated statements of income for each period:

<TABLE>
<CAPTION>
                                                                                                        (Dollars in Millions)
Nine Months Ended September 30,                                                                     2001                 2000
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>                  <C>
Operating Revenues
   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                                                        9.9                  ---
  Bell Atlantic-GTE merger related costs                                                          ---                    .5
  Other charges and special items                                                                 ---                    .3
                                                                                      -----------------------------------------
                                                                                                   9.9                 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                                                                    $  9.9                $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 $9.9
million in the first nine 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 nine 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,
depreciation and amortization expense decreased $2.4 million for the nine month
period ended September 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. Of this
amount, $1.0 million was recorded as a reduction to operating revenue and $.3
million was recorded as a charge to operations and support expenses.

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

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

Nine Months Ended September 30,                    2001                 2000
-------------------------------------------------------------------------------
Local services                                     $424.1               $413.1
Network access services                             414.2                394.8
Long distance services                               28.3                 30.1
Other services                                       75.6                 77.4
                                          -------------------------------------
Total                                              $942.2               $915.4
                                          =====================================


LOCAL SERVICES

      2001 - 2000                                            Increase
--------------------------------------------------------------------------------
      Nine Months                                      $11.0         2.7%
--------------------------------------------------------------------------------

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

      Local service revenues increased in the first nine months of 2001
primarily as a result of higher payments received from competitive local
exchange carriers for interconnection of their network with our network and for
the purchase of unbundled network elements. The implementation of the Oregon
Universal Service Fund (USF) order also contributed to the increase of local
service revenues.

      These increases were partially offset by the effect of regulatory matters
in the state of Washington. Local service revenues were also impacted by the
effect of an economic slowdown and competition, as reflected by a decline in our
switched access lines in service from September 30, 2000. In addition, the
effect of technology substitution is increasing, as more customers are choosing
wireless and Internet services in place of certain basic wireline services.

                                       9
<PAGE>

                            Verizon Northwest Inc.

NETWORK ACCESS SERVICES

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Nine Months                                          $19.4         4.9%
--------------------------------------------------------------------------------

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

       Network access revenue growth in the first nine months of 2001 was mainly
attributable to higher customer demand for special access services, particularly
for high-capacity, high-speed digital services.

       This increase was partially offset by mandated price reductions on
certain intrastate and interstate access services and other regulatory
decisions. State public utility commissions regulate us with respect to certain
intrastate rates and services and certain other matters. The FCC regulates rates
that we charge long distance carriers and end-user subscribers for interstate
access services. We are required to file new access rates with the FCC each
year. In July 2000, we implemented the Coalition for Affordable Local and Long
Distance Service (CALLS) plan. Rates included in the July 2000 CALLS plan were
in effect through June 2001. Effective July 3, 2001, we implemented further rate
reductions in accordance with the plan. The impact of the slowing economy also
affected network access revenues in 2001.

LONG DISTANCE SERVICES

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      Nine Months                                          $(1.8)       (6.0)%
--------------------------------------------------------------------------------

       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 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). We also earn revenue from private line and operator
services associated with long distance calls.

       Long distance service revenues declined in the first nine months of 2001
primarily due to the effects of competition and technology substitution.

OTHER SERVICES

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      Nine Months                                          $(1.8)       (2.3)%
--------------------------------------------------------------------------------

      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, fees paid by an affiliate
for usage of our directory listings and fees paid by an affiliate for the
provision of sales agent services.

      Other service revenues decreased in the first nine months of 2001
primarily due to a decline in revenue from CPE sales. This decrease was
partially offset by increased sales and services from affiliates.


                                      10
<PAGE>

                            Verizon Northwest Inc.

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


OPERATIONS AND SUPPORT

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Nine Months                                           $1.6          .4%
--------------------------------------------------------------------------------

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

      The increase in operations and support expenses was primarily attributable
to the effect of pre-tax gains recorded in 2000 associated with lump-sum
settlements of pension obligations for certain active and former employees. This
increase was substantially offset by the effect of merger-related costs and
other special items recorded in 2000 and 2001, as described in Results of
Operations. Operating costs have also decreased due to declining work force
levels, business integration activities and effective cost control measures.

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

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

DEPRECIATION AND AMORTIZATION

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      Nine Months                                           $9.8         5.6%
--------------------------------------------------------------------------------

      Depreciation and amortization expense increased in the first nine months
of 2001 principally due to growth in depreciable telephone plant and increased
software amortization costs. These factors were 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 INCOME AND (EXPENSE), NET

      2001 - 2000                                          (Decrease)
--------------------------------------------------------------------------------
      Nine Months                                         $(13.1)
--------------------------------------------------------------------------------

      The change in other income and (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 September 30, 2001, our ownership in
VADI was 2.99%.

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<PAGE>

                            Verizon Northwest Inc.

INTEREST EXPENSE

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      Nine Months                                         $(.3)          (.7)%
--------------------------------------------------------------------------------

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

      Interest expense decreased in the first nine months of 2001, compared to
the same period in 2000, primarily as a result of refinancing long term debt
with short term debt with an affiliate at a more favorable interest rate.

EFFECTIVE INCOME TAX RATES

      Nine Months Ended September 30,
----------------------------------------------------------------------------
      2001                                                      38.6%
----------------------------------------------------------------------------
      2000                                                      36.9%
----------------------------------------------------------------------------

      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 nine months ended September 30, 2001 principally due to
the effect of equity losses associated with our investment in VADI for which we
do not recognize income tax benefits.

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

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

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

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

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

                                      12
<PAGE>

                            Verizon Northwest Inc.

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


                                      13
<PAGE>

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

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

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