<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                   FORM 10-K

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the fiscal year ended    December 31, 2000
                          ------------------------------------------------------

                                      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                0-13716
                      -------------------------------------------------------

                        North Pittsburgh Systems, Inc.
--------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


             Pennsylvania                              25-1485389
----------------------------------         ---------------------------------
  (State or other jurisdiction of          (IRS Employer Identification No.)
  incorporation or organization)


4008 Gibsonia Road, Gibsonia, Pennsylvania              15044-9311
------------------------------------------    ------------------------------
 (Address of Principal Executive Offices)               (Zip Code)


Registrant's telephone number, including area code         724/443-9600
                                                    ------------------------


Securities registered pursuant to Section 12(b) of the Act:


     Title of Each Class           Name of each exchange on which registered
-----------------------------      -----------------------------------------
         None                                     Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

                   Common Stock, par value $.15625 per share
-------------------------------------------------------------------------------
                               (Title of Class)


                    SECTION 13 OR 15(d) FILING REQUIREMENTS
                    ---------------------------------------

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_____
   -----

                        DISCLOSURE PURSUANT TO ITEM 405
                        -------------------------------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

         AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES
         -------------------------------------------------------------

Based on the average of the bid and asked prices on March 12, 2001, the
aggregate market value of the voting stock held by non-affiliates of the
Registrant is $152,863,000.  (Includes 1,501,224 shares beneficially owned by
Directors and Officers as a group.)

         OUTSTANDING SHARES OF EACH CLASS OF REGISTRANT'S COMMON STOCK
         -------------------------------------------------------------


               Class                         Outstanding at March 12, 2001
               -----                         -----------------------------

Common Stock, Par Value $.15625 per share           15,005,000 shares

                      DOCUMENTS INCORPORATED BY REFERENCE
                      -----------------------------------

The information for Item 10, Directors and Executive Officers of the Registrant;
Item 11, Executive Compensation; Item 12, Security Ownership of Certain
Beneficial Owners and Management; and Item 13, Certain Relationships and Related
Transactions, has been incorporated into Part III of this Form 10-K by reference
to Registrant's Definitive Proxy Statement to be filed pursuant to Regulation
14A within 120 days after December 31, 2000.

                                          (End of cover page)
<PAGE>

                                    PART I


Item 1.   Description of Business.
-------   -----------------------

      (a) General Development of Business:
          -------------------------------

      North Pittsburgh Systems, Inc. (the Registrant), organized May 31, 1985,
is a holding company and has no operating function.  Its predecessor, North
Pittsburgh Telephone Company (North Pittsburgh or NPTC), a telephone public
utility incorporated in 1906, became a wholly-owned subsidiary of the Registrant
on May 31, 1985.  Penn Telecom, Inc. (Penn Telecom) became a wholly-owned
subsidiary of the Registrant on January 30, 1988.  Prior to this date, Penn
Telecom was a wholly-owned subsidiary of North Pittsburgh.  Penn Telecom is
certificated as a Competitive Access Provider (CAP) and a Competitive Local
Exchange Carrier (CLEC) and has entered into these businesses.  Other principal
business activities of Penn Telecom consist of the sale, rental and servicing of
telecommunication equipment to end users, the resale of bulk billed message toll
services and high capacity intercity facilities.  Pinnatech, Inc. (Pinnatech), a
wholly-owned subsidiary of the Registrant formed in 1995, provides Internet
related services including dial up access, Web design and Web hosting.  The
Registrant, NPTC, Penn Telecom and Pinnatech operate under the provisions of the
Pennsylvania Business Corporation Law.  Except for the closing of Pinnatech's
Nauticom Sports Network (NSN) discussed in paragraph (c)(1) of Item 7, no
significant changes in the mode of conducting business by the Registrant or its
subsidiaries have occurred since the beginning of the fiscal year ended December
31, 2000.

      (b) Financial Information About Industry Segments:
          ---------------------------------------------

      This paragraph is not applicable.  The Registrant, through North
Pittsburgh, Penn Telecom and Pinnatech, is engaged in the business of providing
telecommunication services and equipment, which is not considered separable into
industry segments.

      (c) Narrative Description of Business:
          ---------------------------------

      (1) Business Done and Intended To Be Done:
          -------------------------------------

          (i) Principal Services Rendered.
              ---------------------------

          The Registrant, through North Pittsburgh, Penn Telecom and Pinnatech,
is engaged in providing the following telecommunication services and equipment
to customers generally located in Western Pennsylvania.

              Local Network Services.  North Pittsburgh is an independent local
              ----------------------
exchange carrier (ILEC) that furnishes wireline telecommunication services in
parts of Allegheny, Armstrong, Butler and Westmoreland Counties.  Penn Telecom
furnishes local network services throughout Western Pennsylvania as a CLEC.
Both North Pittsburgh and Penn Telecom are subject to the jurisdiction of the
Pennsylvania Public Utility Commission (PA PUC) under the provisions of the
Pennsylvania Public Utility Code which confers upon that Commission broad powers
of supervision and regulation over public utilities with respect to

                                       1
<PAGE>

service and facilities, rates and charges, securities, the encumbering or
disposition of public utility properties, accounting and various other matters.

              The federal Telecommunication Act of 1996 (the 1996 Act) prohibits
state legislative or regulatory restrictions or barriers to entry regarding the
provision of local telephone service.  It also requires most incumbent local
exchange carriers to interconnect with the networks of other telecommunications
carriers, unbundle their services into network elements, offer their
telecommunications services at wholesale rates to allow the resale of such
services and allow other telecommunications carriers to locate equipment on
their premises.  Local exchange telephone carriers are also required to
compensate each other for the transport and termination of calls.

              North Pittsburgh's wireline operations are considered Rural under
the 1996 Act and are exempt from certain of the foregoing obligations unless, in
response to a bona fide request for interconnection, the PA PUC removes that
exemption. North Pittsburgh along with 17 other rural companies in Pennsylvania
was granted a temporary suspension to July 10, 2001 of the interconnection
requirements in the 1996 Act applicable to incumbent local exchange carriers.
North Pittsburgh and other rural telephone companies recently filed a petition
with the PA PUC seeking a further extension of the suspension until July 10,
2002. A decision by the PA PUC on the suspension extension is expected in the
second quarter of 2001.

              Historically, North Pittsburgh's wireline operations have not
experienced significant competition in its franchised service area.  However, as
a result of the passage of the 1996 Act, North Pittsburgh's local wireline
operations are experiencing increased competition from various sources,
including, but not limited to, resellers of their local exchange services, large
end users installing their own networks, Interexchange Carriers (IXCs),
satellite transmission services, cellular communications providers, cable
television companies, radio-based personal communications companies, CAPs and
other systems capable of completely or partially bypassing local telephone
facilities.  North Pittsburgh cannot predict the specific effects of competition
on its local telephone business, but is intent on taking advantage of the
various opportunities that competition should provide.  North Pittsburgh is
currently addressing potential competition by focusing on improved customer
satisfaction, reducing costs, increasing efficiency, restructuring rates and
examining new product offerings and new markets for entry.

              At the same time, Penn Telecom is actively expanding its CLEC
operations outside of North Pittsburgh's service territory with customers having
been added in Verizon's (formerly Bell Atlantic) and Sprint's traditional
service territories.

              Toll and Access Services. North Pittsburgh and Penn Telecom
              ------------------------
furnish Long Distance Toll Services to their customers through company-owned
facilities and facilities leased from other telecommunications companies. North
Pittsburgh and Penn Telecom also provide other local and interexchange carriers
with the use of their local networks to complete long distance calls. North
Pittsburgh and Penn Telecom also provide facilities for private line services
commonly referred to as special access services. Special access services are
typically non-switched services used to transport data between customer
locations. Charges

                                       2
<PAGE>

for toll and access services are filed in tariffs with the PA PUC and Federal
Communications Commission (FCC).

              Access charges concerning interstate services are regulated by the
FCC.  On January 5, 2001, the FCC released a Notice of Proposed Rulemaking
regarding a combined universal service and access reform proposal that would be
applicable to incumbent local exchange carriers such as North Pittsburgh, which
are currently regulated under rate-of-return (ROR).  The proposed rules would
allow a gradual and optional transition from ROR regulation to an incentive-
based form of regulation over a five-year period.  The goal of the plan is to
accommodate the vast differences in size and competitive market threat
experienced by rural companies while providing service and rate comparability
between rural and urban areas.  Because the final disposition of the proposed
rulemaking is uncertain at this time, North Pittsburgh is unable to determine
the final effect it will have on its operations and revenues.

              Until recently, North Pittsburgh was under ROR regulation within
the intrastate jurisdiction. However, in July of 1998, North Pittsburgh joined
with 18 other companies and filed for an alternative form of regulation to
replace traditional rate base/rate-of-return regulation. In the filing, North
Pittsburgh proposed a price cap plan whereby rates for noncompetitive services
are allowed to be increased based on an index that measures general economy wide
price increases. Under the proposed plan, services might also be declared
competitive and thereby freed from all rate regulation. In return for regulation
under the price cap plan, North Pittsburgh also proposed a network modernization
plan. The PA PUC entered a final Order on December 21, 2000 approving, with some
modifications, including a productivity offset, North Pittsburgh's proposed
Chapter 30 Price Cap Plan. On January 22, 2001, North Pittsburgh accepted the
modifications proposed by the PA PUC and filed a revised plan. While there is no
immediate impact to North Pittsburgh's operations and revenues under the price
cap plan, it is North Pittsburgh's view that the plan as approved will aid North
Pittsburgh in meeting competition in the future. Various parties to the
proceeding have filed exceptions still seeking minor modifications in the final
plan which exceptions remain pending.

              On September 30, 1999, the PA PUC issued an Order dealing with a
variety of issues impacting Local Exchange Carriers in Pennsylvania.  Referred
to as the Global Proceeding, the Order dealt with certain issues that affected
North Pittsburgh.  Specifically, the Order allowed North Pittsburgh to rebalance
and lower access charges in order to prepare North Pittsburgh to meet
competition in its serving area.  The reduction in access charges was offset by
reimbursements from an interim state universal service fund that is funded by
all telecommunication providers (excluding wireless) in the state. Because the
rebalancing and reduction of access charges was offset by reimbursement from the
fund, North Pittsburgh has not experienced any significant impact on operations
or revenues in regard to the Global Order.  The PA PUC, in the Global Order,
indicated that it will commence another proceeding on or after January 2, 2001
to examine further changes to the universal service fund and possible additional
access charge reform.

              North Pittsburgh's unique location in a growing
commercial/residential suburban traffic corridor to the north of the City of
Pittsburgh, its state-of-the-art switching transmission and transport facilities
and its extensive fiber network place it in a solid position to meet competition
and minimize any loss of revenues. In addition, North Pittsburgh continues to
make its network flexible and responsive to the needs of its customers to meet
competitive

                                       3
<PAGE>

threats.  New services, access line growth and anticipated usage growth will
lessen or offset any reductions in North Pittsburgh's revenue sources.

                Directory Advertising, Billing and Other Services. North
                -------------------------------------------------
Pittsburgh receives revenues from the sale of advertising space in telephone
directories and from billing and collection activities. Directory Advertising is
subject to competition from a number of sources and, to date, efforts to meet
such competition have been successful. Billing and collection services are
provided to various IXCs, including Penn Telecom.

                Telecommunication Equipment. Penn Telecom sells, rents and
                ---------------------------
services telecommunication equipment to customers generally in the Western
Pennsylvania area. Penn Telecom has been able to sustain its business activities
in a strong, competitive market. Penn Telecom is certified by the PA PUC to
offer toll resale services and has a tariff on file with the FCC to provide
interstate toll services and has authority to operate as a CLEC. As a reseller
of both interstate and intrastate toll services, Penn Telecom is in direct
competition with other IXCs.

                Operating Revenues. The respective amounts of operating revenues
                ------------------
contributed by local network services, long distance and access services,
telecommunication equipment sales, directory advertising and billing and
collection services during each of the last three fiscal years are set forth in
the Financial Statements and Schedules provided in response to Item 8 and are
incorporated herein by reference.

          (ii)  Other Services.
                --------------

                Cellular Partnerships. North Pittsburgh and Alltel Cellular
                ---------------------
Association of South Carolina, L.P. are Limited Partners with a partnership
interest of 3.6 percent each and Cellco Partnership, d.b.a. Bell Atlantic Mobile
is both a General and a Limited Partner with partnership interests of 40.0 and
52.8 percent, respectively, in the Pittsburgh SMSA Limited Partnership which
provides cellular radio service (Cellular Service) in and around the Pittsburgh
Standard Metropolitan Statistical Area (SMSA) as authorized by the FCC.

                North Pittsburgh, Centennial Cellular Telephone Company of
Lawrence (Centennial) and Venus Cellular Telephone Company, Inc. (Venus) are
Limited Partners, each with a partnership interest of 14.29 percent, and ALLTEL
Communications, Inc. (Alltel), successor to 360(degrees) Communications Inc., is
the General Partner with a partnership interest of 57.13 percent in Pennsylvania
RSA 6(I) Limited Partnership, which provides Cellular Service in a Rural Service
Area (RSA) consisting of Clarion and Lawrence Counties and the Northern portions
of Armstrong and Butler Counties. Alltel's proposed sale of its general
partnership interest to Verizon Wireless is presently in litigation with Venus
attempting to exercise a right of first refusal for the purchase of Alltel's
entire interest. Earlier, North Pittsburgh and Centennial had declined to
exercise their rights of first refusal.

                North Pittsburgh and Venus are Limited Partners with partnership
interests of 23.67 and 16.67 percent, respectively, and Cellco Partnership,
d.b.a. Bell Atlantic Mobile, is the General Partner with a partnership interest
of 59.66 percent in Pennsylvania RSA 6(II) Limited Partnership which provides
Cellular Service in a RSA consisting of the Southern portions of Armstrong and
Butler Counties. In September of 2000, Centennial, a former

                                       4
<PAGE>

Limited Partner, sold its 14.29 percent partnership interest in a proportionate
manner to North Pittsburgh, Venus and Cellco Partnership. North Pittsburgh paid
$1,003,000 for an additional 3.38 percent partnership interest, which increased
its overall partnership interest from 20.29 percent to 23.67 percent.

                 Boulevard Communications. Boulevard Communications, L.L.P.
                 ------------------------
(Boulevard) is a Pennsylvania Limited Liability Partnership Competitive Access
Provider (CAP) equally owned by the Registrant and a company in the Armstrong
Group.  It provides point-to-point data services to businesses in Western
Pennsylvania including access to Internet Service Providers, connections to
interexchange companies and high-speed data transmission.

                 Internet Access and Services. Pinnatech provides dial up and
                 ----------------------------
dedicated Internet access to business and residential customers in Western
Pennsylvania.  Pinnatech also provides virtual hosting services, high speed
Internet connectivity using Digital Subscriber Line (DSL) circuits, frame relay
and Asynchronous Transfer Mode (ATM) technologies.  Pinnatech provides web page
design and creation along with e-commerce enabling technologies to customers.

          (iii)  Status of New Products.
                 ----------------------

                 As mentioned in this section in the prior year, Pinnatech had
begun to provide streaming media broadcasts of sporting events through its NSN
division. In the fourth quarter of 2000, the Registrant decided to close the
NSN. The shutdown of the NSN and its associated restructuring expenses are fully
discussed under paragraph (c)(1) of Item 7.

                 With the exception of matters related to the NSN, the
Registrant and its subsidiaries have not made public any information concerning
new products or services that would require the investment of a material amount
of the assets of the Registrant or that otherwise would be material.

          (iv)   Equipment Availability.
                 ----------------------

                 The Registrant and its subsidiaries have not encountered, nor
do they anticipate, any difficulty in obtaining a ready supply of
telecommunication equipment from manufacturer suppliers. Although certain
individual suppliers may each supply more than 10 percent of their equipment
requirements, the Registrant and its subsidiaries are not primarily dependent
upon any one supplier with alternative suppliers of telecommunication equipment
being readily available.

          (v)    Certificates, Franchises, Etc. and Licenses.
                 -------------------------------------------

                 North Pittsburgh holds valid, continuing and subsisting rights,
certificates, franchises, licenses (other than those mentioned in the following
paragraph) and renewable permits adequate for the conduct of its business in the
territory it serves, none of which contain any burdensome restrictions.
However, see Local Network Services under paragraph (c)(1)(i) of this Item 1
concerning, inter alia, the impact of the 1996 Act.
            ----- ----

                                       5
<PAGE>

          A renewal license application was filed on February 13, 2001 with the
FCC for the continued operation by North Pittsburgh of a private operational
telephone maintenance radio service station (WIK 838 will expire, after renewal,
on March 20, 2011) and a non-commercial private license for its own maintenance
radio service and other purposes (call sign WPCD 845 expiring on April 29,
2003).  North Pittsburgh has not encountered in the past, nor does it anticipate
in the future, any difficulty in renewing these FCC licenses.

          (vi)   Seasonality of Business.
                 -----------------------

                 None of the business activities of the Registrant or its
subsidiaries are seasonal.

          (vii)  Practices Relating to Working Capital.
                 -------------------------------------

                 This paragraph is not applicable. No special practices relating
to working capital have been adopted by the Registrant or its subsidiaries. (See
Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operations.)

          (viii) Customers.
                 ---------

                 No material part of the overall business of the Registrant or
its subsidiaries is dependent upon a single customer or a few customers, the
loss of any one or more of whom would have a materially adverse effect on its
business.

          (ix)   Backlog of Orders.
                 -----------------

                 The Registrant and its subsidiaries do not have a significant
backlog of service and installation orders. Improvements and expansion of their
facilities are, to the extent possible, made in anticipation of demands for
service and a reasonable and adequate inventory is maintained to meet the
requirements of customers.

          (x)    Renegotiation of Profits or Termination of Contracts.
                 ----------------------------------------------------

                 The Registrant and its subsidiaries do not have a material
portion of their business subject to renegotiation of profits or termination of
contracts or subcontracts at the election of the Government.

          (xi)   Competition.
                 -----------

                 The competitive environment faced by the Registrant in respect
to the services provided by it or by its subsidiaries is fully discussed under
paragraph (c)(1)(i) of this Item 1.

          (xii)  Research Activities.
                 -------------------

                 The Registrant and its subsidiaries do not engage in any
research activities relating to the development of new products or services or
the improvement of existing
                                       6
<PAGE>

products or services and no amounts have been expended in the past three years
for such activities.

          (xiii) Environmental Matters.
                 ---------------------

                 Compliance with federal, state and local provisions which have
been adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment have not materially
affected the capital expenditures, earnings and competitive position of the
Registrant and its subsidiaries.

          (xiv)  Employees.
                 ---------

                 At December 31, 2000, the Registrant, through all of its
subsidiaries, employed 431 persons.

      (d) Financial Information About Geographic Areas. All of the Registrant's
          --------------------------------------------
operations are located in the United States.  See financial information provided
in Item 14.


Item 2.   Properties.
------    ----------

      The Registrant owns in fee one of the office/warehouse buildings, which
houses the operations of Penn Telecom, and Penn Telecom owns the other.

      The materially important physical properties of North Pittsburgh, all
owned in fee (except some rights-of-way) and most of which are held subject to
certain mortgage and security agreements executed in connection with loans
through the Rural Utilities Service, consist principally of land, buildings,
central office equipment, long distance switching facilities, transmission
facilities, pole lines, aerial cable, underground cable, aerial wire, buried
cable, buried wire, distribution wire, underground conduit, furniture, office
and computer equipment, garage facilities, vehicles and work equipment generally
any and all property required to operate a modern telecommunications network.
Such facilities are fully utilized except that improvement and expansion of
those facilities are, to the extent possible, made in anticipation of the demand
for service.  All of the foregoing properties are located within Allegheny,
Armstrong, Butler and Westmoreland Counties in Western Pennsylvania.

      From January 1, 1996 to December 31, 2000, the Registrant made gross
property additions of approximately $103,018,000 (which is about 51.0% of the
original cost of the present telephone plant) and property retirements of
approximately $9,860,000.  The Registrant's 2001 construction program, subject
to adjustment for economic conditions, postponements of housing developments,
etc. is projected to be in excess of $18 million and will permit expansion or
improvement of the Registrant's telecommunications services.

                                       7
<PAGE>

Item 3.   Legal Proceedings.
------    -----------------

      As of the date hereof, except for regulatory matters before the PA PUC and
FCC, including matters which could result in the expansion of competition, there
were no material pending legal or governmental proceedings directly involving
the Registrant or its subsidiaries, other than ordinary routine litigation or
ordinary routine utility matters incidental to the business and matters as to
which the Registrant and its subsidiaries are insured.

Item 4.   Submission of Matters to a Vote of Security Holders.
------    ---------------------------------------------------

      No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2000.

                                       8
<PAGE>

       ADDITIONAL ITEM FOR PART I - EXECUTIVE OFFICERS OF THE REGISTRANT
       -----------------------------------------------------------------

      Information regarding the Registrant's Executive Officers is provided
below.  In addition to the positions and business experience related to the
Registrant, additional information related to North Pittsburgh Telephone
Company, the Registrant's predecessor and principal subsidiary, is also
presented.

Executive Officers of the Registrant:
------------------------------------

<TABLE>
<CAPTION>
                                                                      Positions and Offices
  Name and Business Experience                         Age       with Registrant (1), (2) & (3)
  ----------------------------                         ---       ------------------------------
<S>                                                    <C>       <C>
Charles E. Thomas, Jr.                                 58           Chairman, Board of
  Registrant and North Pittsburgh                                         Directors
  Telephone Company:  Chairman of the
  Board of Directors since 1998;
  Director since 1993; Partner in the law
  firm of Thomas, Thomas, Armstrong &
  Niesen, Harrisburg, PA, which is
  retained as general counsel to the
  Registrant since the formation of this
  firm in 1991; Partner in the law firm of
  Thomas & Thomas from 1977 to 1990.

Harry R. Brown                                         64           Director and President
  Registrant:  Director since 1989; President
  since 1998; Vice President from 1992 to
  1998. North Pittsburgh Telephone Company:
  Director since 1989; President and General
  Manager since 1998; Vice President -
  Operations from 1987 to 1998; Assistant
  Vice President - Operations from 1986 to
  1987; Network Engineering Manager from
  1984 to 1986; Equipment Supervisor from
  1975 to 1984.
</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                      Positions and Offices
  Name and Business Experience                         Age       with Registrant (1), (2) & (3)
  ----------------------------                         ---       ------------------------------
<S>                                                    <C>       <C>
Allen P. Kimble                                        54           Director, Vice President
  Registrant:  Director since 1998; Vice                            and Treasurer
  President since 1989; Treasurer since
  incorporation in 1985; Secretary from
  1993 to 1998.  North Pittsburgh
  Telephone Company:  Director since
  1998; Vice President since 1989;
  Treasurer since 1979; Secretary from
  1993 to 1998; Assistant Vice President
  from 1987 to 1989; Assistant Secretary
  from 1977 to 1993.

N. William Barthlow                                    46           Vice President and
  Registrant:  Vice President since 1994;                           Secretary
  Secretary since 1998; Assistant
  Secretary from 1993 to 1998; Assistant
  Vice President from 1990 to 1994.  North
  Pittsburgh Telephone Company:  Vice
  President - Marketing and Revenues
  since 1994; Secretary since 1998; Assistant
  Secretary from 1993 to 1998; Assistant Vice
  President - Revenue Requirements from
  1989 to 1994; Revenue Requirements
  Manager from 1987 to 1989.

Kevin J. Albaugh                                       49           Vice President
  Registrant:  Vice President since
  1999.  North Pittsburgh Telephone Company:
  Vice President - Regulatory Affairs since
  1999; Manager and Assistant
  Vice    President - Revenues from 1997 to
  1998; Revenue Requirements Supervisor
  from 1993 to 1997.
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                      Positions and Offices
  Name and Business Experience                         Age       with Registrant (1), (2) & (3)
  ----------------------------                         ---       ------------------------------
<S>                                                    <C>       <C>
Frank A. Macefe                                        52           Vice President
  Registrant:  Vice President since
  1999.  North Pittsburgh Telephone Company:
  Vice President - Sales since
  1999; Assistant Vice President - Marketing
  from 1989 to 1998; Marketing Manager from
  1979 to 1989; Marketing Supervisor from
  1978 to 1979.

Albert W. Weigand                                      42           Vice President
  Registrant:  Vice President since
  1999.  North Pittsburgh Telephone Company:
  Vice President - Operations since
  1999; Assistant Vice President - Operations
  from 1997 to 1998; Sr. Planning Engineer
  from 1995 to 1997; Planning Engineer from
  1986 to 1995; Customer Equipment Supervisor
  from 1984 to 1986; Customer Equipment
  Engineer from 1979 to 1984.
</TABLE>

(1)  Directors.  Messrs. Thomas, Brown and Kimble were elected as Directors at
     ---------
     the 2000 Annual Meeting of Shareholders held May 19, 2000 to serve until
     the 2001 Annual Meeting of Shareholders.  Messrs. Thomas, Brown and Kimble
     will be nominees for reelection as Directors at the Annual Meeting of
     Shareholders to be held May 18, 2001.

(2)  Officers.  All of the foregoing officers were elected to their respective
     --------
     offices at a Board of Directors' Organizational Meeting which followed the
     May 19, 2000 Annual Meeting of Shareholders.  In September, 1999, the
     Registrant entered into executive employment agreements with each of its
     executive officers, except Mr. Thomas, which, inter alia, specify the
                                                   ----- ----
     offices and duties for each executive.

(3)  Arrangements.  There are no arrangements or understandings between any of
     ------------
     the above executive officers and any other person pursuant to which they
     were elected as an officer.

                                       11
<PAGE>

                                    PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholders
------    --------------------------------------------------------------
Matters.
-------

     (a)  Market Information:
          ------------------


     The Registrant's Common Stock is registered with the Securities and
Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of
1934 and, effective January 10, 1997, the Registrant's Common Stock commenced
trading on the Nasdaq National Market tier of the Nasdaq Stock Market under the
Symbol `NPSI'.  Prior thereto, the stock was not listed on any Stock Exchange
and was considered as being traded on the OTC (Over-the-Counter) market.  The
Nasdaq High and Low sales prices for the Registrant's Common Stock for each
quarter of 2000 and 1999 are listed below:

                         2000     2000     1999     1999
                         High      Low     High      Low
                         ----     ----     ----     ----

     First Quarter     $15.063  $12.563  $14.000  $12.063
     Second Quarter     14.750   11.750   17.063   12.750
     Third Quarter      14.750   12.250   18.500   12.969
     Fourth Quarter     14.250   10.563   19.250   14.563

     (b) Approximate Number of Holders of Common Stock:
         ---------------------------------------------

     Calculated on the basis of the number of shareholder accounts, the
Registrant had approximately 2,767 common shareholders on March 12, 2001.

                                       12
<PAGE>

     (c) Common Stock Dividends:
         ----------------------

     Cash dividends declared per share by the Registrant on the outstanding
shares of Common Stock in 2000 and 1999 were as follows:

                                       2000      1999
                                       ----      ----

          First Quarter               $  .16    $  .16
          Second Quarter                 .17       .16
          Third Quarter                  .17       .16
          Fourth Quarter                 .17       .16
                                      ------    ------

                                      $  .67    $  .64
                                      ======    ======

     (d) Sale of Equity Securities:
         -------------------------

     There were no sales of equity securities by the Registrant during the
twelve months ended December 31, 2000.


Item 6.   Selected Financial Data (Amounts in Thousands Except Per Share Data).
------    --------------------------------------------------------------------

     The following summary of Selected Financial Data for the years 2000 - 1996
should be read in conjunction with the consolidated financial statements and
notes included elsewhere in this report.

                                       13
<PAGE>
<TABLE>
<CAPTION>
                                   2000      1999       1998       1997      1996
                                   ----      ----       ----       ----      ----
<S>                             <C>        <C>        <C>        <C>        <C>
Operating revenues              $ 79,021   $ 70,888   $ 66,375   $ 65,554   $59,933
Operating expenses                66,176     51,344     44,377     44,090    40,349
                                --------   --------   --------   --------   -------
  Net operating revenues          12,845     19,544     21,998     21,464    19,584
Interest expense                  (3,140)    (2,263)    (1,884)    (1,710)   (1,549)
Interest income                    1,367        976      1,308        608       764
Sundry income, net                 2,825      3,261      2,360      1,493       840
Net gain on sale of
  investment*                          -          -          -     14,516         -
                                --------   --------   --------   --------   -------
Earnings before income
  taxes                           13,897     21,518     23,782     36,371    19,639
Income tax expense                 6,008      8,833      9,264     14,186     7,909
                                --------   --------   --------   --------   -------
Net earnings                    $  7,889   $ 12,685   $ 14,518   $ 22,185   $11,730
                                ========   ========   ========   ========   =======
Average common shares
  outstanding                     15,005     15,005     15,005     15,019    15,040
                                ========   ========   ========   ========   =======
Basic and diluted earnings
  per share                         $.53       $.85       $.97      $1.48      $.78
                                ========   ========   ========   ========   =======
Dividends declared per share
  of Common Stock                   $.67       $.64       $.65       $.56      $.52
                                ========   ========   ========   ========   =======
Total assets                    $160,954   $147,792   $135,315   $127,833   $99,523
                                ========   ========   ========   ========   =======
Long-term debt                  $ 45,377   $ 38,940   $ 32,196   $ 27,037   $21,311
                                ========   ========   ========   ========   =======
Long-term obligations under
  capital lease                 $  7,137      $-         $-         $-        $-
                                ========   ========   ========   ========   =======
</TABLE>
*Net gain on sale of investment in 1997 was a result of a gain recognized in
conjunction with the sale of the Registrant's investment in the common stock of
Conquest Telecommunications Services Corporation.
<PAGE>

Item 7.   Management's Discussion and Analysis of Financial Condition and
------    ---------------------------------------------------------------
          Results of Operations (Amounts in Thousands).
          --------------------------------------------

      The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements.  Certain information included in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere in this annual report is forward-looking, such as
information relating to the effects of regulation and competition.  Such
forward-looking statements are based on the estimates and assumptions of
management and are subject to risks and uncertainties.  The Registrant's actual
results, performance or achievements could differ materially from the results
expressed in or implied by these forward-looking statements.

          (a) Results of Operations.
              ---------------------

          Net earnings for 2000 were $7,889, or $.53 per share compared to net
earnings of $12,685 or $.85 per share for 1999 and $14,518 or $.97 per share for
1998. These fluctuations were attributable to the following factors:

              (1) Operating Revenues.
                  ------------------

                  2000/1999
                  ---------

                  Total operating revenues increased $8,133 (11.5%) during 2000.
This increase was primarily the result of increases in local network services of
$1,667 (12.1%), long distance and access services of $6,645 (14.1%) and other
operating revenues of $624 (14.5%), offset partially by a decrease in
telecommunication equipment sales of $865 (29.0%). Increased local network
service revenues were attributable to customer growth for both the ILEC and
CLEC, growth in second lines and expanded penetration of enhanced services.
Higher long distance and access services were attributable to an increase in the
number of customers and minutes of use for both the ILEC and CLEC, an increase
in both wholesale and retail DSL lines, and an increase in high capacity
circuits sold. The increase in other operating revenues was primarily due to the
growth of Internet access customers. Telecommunication equipment sales decreased
as a result of less key system, private branch exchange and additional equipment
sales.

                  1999/1998
                  ---------

                  Total operating revenues increased $4,513 (6.8%) during 1999.
This increase was primarily the result of increases in local network services of
$1,353 (10.9%) and long distance and access services of $2,331 (5.2%) and an
increase in other operating revenues of $557 (14.9%). Increased local network
service revenues were attributable to customer growth, growth in second lines
and expanded penetration of enhanced services. Higher long distance and access
services were generally the result of an increase in number of customers and
minutes of use. The increase in other operating revenues was primarily due to
growth of Internet access customers.

                                       15
<PAGE>

              (2) Operating Expenses and Net Revenues.
                  -----------------------------------

                  2000/1999
                  ---------

                  Total operating expenses for 2000 increased $14,832 (28.9%)
over the preceding year. The change was primarily the result of increases in
network and other operating expenses of $12,342 (38.7%) and depreciation and
amortization expenses of $3,063 (22.4%), offset partially by a decrease in
telecommunication equipment expenses of $626 (24.0%). The increase in network
and other operating expenses was due to several factors. First, there was an
increase in personnel and operating costs due to an expansion of the existing
ILEC business to service the needs of its territory which is located within a
growing commercial and residential market. CLEC operating expenses also grew
larger with an increase in personnel and other expenses due to start-up
activities associated with the growth of the CLEC in its foothold north of the
city of Pittsburgh as well as an expansion into the city of Pittsburgh and all
surrounding areas. This expansion was facilitated through the implementation of
a long-term strategic relationship with an electric utility to lease fiber optic
loops throughout the entire Pittsburgh region. The operating expense of
Pinnatech also increased as a result of the expansion in its Internet-related
activities and attempted expansion of its NSN. The NSN was closed in the fourth
quarter of 2000 (as discussed in more detail in paragraph (c)(1) of this
section), resulting in a pre-tax restructuring charge of $972 in network and
other operating expenses. Finally, advertising expense increased approximately
$2 million from 1999 to promote the expansion efforts described above for all
companies of the Registrant and contributed to the overall revenue growth of
$8,133 (11.5%) in 2000 as compared to revenue growth of $4,513 (6.8%) in 1999.

                  The growth in depreciation and amortization expenses of $3,063
(22.4%) was the direct result of the growth in fixed assets to service current
and future customer needs. The Registrant has made gross property additions of
$103 million over the past five years to implement state-of-the-art switching
transmission and transport facilities, an extensive fiber network, broadband
capability via DSL technology to 96% of North Pittsburgh's lines and to support
the build-out of the CLEC operations.

                  The decrease in telecommunication and equipment expenses of
$626 (24.0%) was a direct result of the decrease in telecommunication equipment
sales of 29.0%. Overall, the increase in total operating revenues of $8,133
discussed above, coupled with the increase in total operating expenses of
$14,832, resulted in a 34.3% decrease in net operating revenues in 2000 as
compared to 1999.

                  1999/1998
                  ---------

                  Total operating expenses for 1999 increased $6,967 (15.7%)
over the preceding year. That change was principally the result of increases in
network and other operating expenses of $5,422 (20.5%) and depreciation and
amortization expenses of $1,736 (14.5%). The increase in network and other
operating expense consisted of an increase in personnel costs due to an
expansion of existing business, and an increase in personnel and other expenses
due to start-up activities of CLEC and Internet-related activities. The growth
in depreciation and amortization expenses was the direct result of the growth in
fixed assets to serve current and future customer needs. The increase in total
operating revenues of $4,513

                                       16
<PAGE>

discussed above, coupled with the increase in total operating expenses of
$6,967, resulted in an 11.2% decrease in net operating revenues in 1999 as
compared to 1998.

              (3) Other Items.
                  -----------

                  2000/1999
                  ---------

                  Interest expense increased in 2000 due to increased debt
borrowings. Interest income increased $391 in 2000 primarily due to increased
investments in temporary fixed investments as opposed to equity securities. The
net decrease in sundry income of $436 was primarily due to one-time gains
recorded in 1999 from a cellular partnership transaction and the sale of North
Pittsburgh's remaining pay phone business, offset in part by higher realized
gains on the sale of available for sale securities in 2000.

                  1999/1998
                  ---------

                  Interest expense increased in 1999 due to increased debt
borrowings. Interest income decreased $332 in 1999 primarily due to decreased
levels of temporary fixed investments. The net increase in Sundry income of $901
was primarily due to receipts from a one-time insurance settlement in 1998 and a
decrease in cellular partnership income from 1998 to 1999, offset by net
realized gains on available for sale securities, one-time gains from a cellular
partnership transaction recorded in the third quarter of 1999 and the sale of
North Pittsburgh's remaining pay phone business in the fourth quarter of 1999.

          (b) Liquidity and Capital Resources.
              -------------------------------

<TABLE>
<CAPTION>
                                                               December 31,
                                                             2000       1999
                                                           --------   --------
     <S>                                                   <C>        <C>
     Cash and temporary investments                        $ 19,240   $ 12,480
     Working capital                                       $ 26,569   $ 32,741
     Long-term debt (including current maturities)         $ 48,896   $ 41,569
 </TABLE>

          Cash and temporary investments were $19,240 at December 31, 2000 as
compared to $12,480 at December 31, 1999.  The increase is due to the strong
cash flows from operations of $22,632 as well as the liquidation of available
for sale securities throughout the year, with the proceeds being reinvested into
temporary investments.  These temporary excess funds are invested in short-term
cash equivalents with maturity dates scheduled to coincide with tax payment due
dates, debt principal payments, etc.  Management expects to continue the
investment of such excess funds in 2001, which should enable the Registrant to
satisfactorily meet all short-term obligations.

          Working capital was $26,569 at December 31, 2000 as compared to
$32,741 at December 31, 1999.  The decrease in working capital is a result of
the Registrant continuing to finance over 50% of capital additions and all
dividend payments through internally generated cash, the start-up costs involved
in the development and expansion of the CLEC business and

                                       17
<PAGE>

the NSN in the current year, and restructuring costs involved in the eventual
shut-down of the NSN in the fourth quarter of 2000.

          The increase in long-term debt is a result of $10,309 of funds
advanced to finance capital additions, offset by the scheduled $2,982 of
principal repayments in 2000.  In 1996, North Pittsburgh was granted approval
for a loan from the Federal Financing Bank (FFB) guaranteed by the Rural
Utilities Service in the maximum principal amount of $75 million.  The maximum
principal amount will be advanced periodically over a five-year period, which
began on January 2, 1997, for the purpose of furnishing or improving telephone
service in rural areas.  All advances have a maturity date of December 31, 2012.
The total amount outstanding at December 31, 2000 to the FFB under this loan was
$30,533.  In addition, North Pittsburgh has principal payments outstanding of
$18,363 at December 31, 2000 from loan advances made from 1977 through 1987 from
the Rural Telephone Bank (RTB).  The advances from the RTB have maturity dates
ranging from 2009 through 2019.  Principal payments required over the next five
years calculated on the outstanding indebtedness under both loans at December
31, 2000 are:  $3,519 in 2001; $3,584 in 2002; $3,653 in 2003; $3,727 in 2004;
and $3,806 in 2005.

          The notes payable to the RTB are secured by a supplemental Mortgage
Agreement executed by North Pittsburgh, which provides that substantially all of
the property, plant and equipment of North Pittsburgh are subject to a lien or a
security interest.  Such agreement contains restrictions regarding dividends and
other distributions by North Pittsburgh.  Under these restrictions, unless
certain working capital and net worth levels are maintained, North Pittsburgh is
not permitted to pay dividends on its capital stock (other than in shares of
capital stock), or to make any other distributions to its shareholders or
purchase, redeem or retire any of its capital stock or make any investment in
affiliated companies.  As a result of these restrictions, $1,080 of North
Pittsburgh's retained earnings were available for dividends to the Registrant as
of December 31, 2000.  Taking into consideration the North Pittsburgh
restrictions, consolidated retained earnings of the Registrant of approximately
$23,206 were available for dividends and other distributions to shareholders as
of December 31, 2000.

          North Pittsburgh established a line of credit in 1994 in the amount of
$10 million with the Rural Telephone Finance Cooperative that is available for
general business purposes.  No borrowings have taken place against the line of
credit.

          Capital expenditure commitments for the purchase and installation of
new equipment at December 31, 2000 amounted to approximately $4.1 million, with
such amount being part of the 2001 construction program, which is projected to
be in excess of $18 million.  Management expects cash flows provided by
operating activities and cash reserves in 2001 to be sufficient to service long-
term debt, to pay dividends and to finance approximately 40% to 60% of capital
additions.  The balance of capital additions will be financed from new
borrowings.  It is anticipated that future payments for long-term debt service
will be made from the same sources of internally generated funds.  With North
Pittsburgh's current loan advancement period from the FFB expiring on January 1,
2002, capital additions beyond 2001 are anticipated to be 100% internally
financed, unless alternative external financing arrangements are made.  The
Registrant does not anticipate any difficulties in securing

                                       18
<PAGE>

additional long-term financing under terms similar to its existing agreement in
order to meet future business conditions.

          (c) Other Information.
              -----------------

              (1) NSN Restructuring.
                  -----------------

              In the fourth quarter of 2000, the Registrant shutdown the NSN.
The sports network division of Pinnatech had been providing broadcasts of high
school and small college sporting events as well as other sports programming.
During 2000, the NSN had expanded its coverage from Western Pennsylvania into
several other states. Although the growth in the popularity of the site and
concept met management's expectations, the revenue generating model, based
mostly on advertising revenues, failed to support the projected level of
continued capital investment and operating expenses.

              A pretax charge of $972 was recorded in network and other
operating expenses to cover the restructuring costs associated with the shutdown
of the NSN. The total charges reduced net income by $632.

              The business restructuring charge of $972 included restructuring
liabilities of $671 and asset impairments of $301.  The restructuring
liabilities consisted of $432 for employee severance payments and related taxes
for 30 people who were involuntarily terminated, $122 for future operating lease
expense associated with a leased facility under contract which will no longer be
used and $117 for other charges associated with the restructuring.  As of
December 31, 2000, all employees had been terminated and all severance payments
and related taxes had been paid.

              (2) Inflation and Changing Prices.
                  -----------------------------

              During the three most recent fiscal years, inflation and changing
prices did not have a significant impact on net sales and on income from
continuing operations.

              (3) Regulatory Assets.
                  -----------------

              Management does not believe that the Registrant has any
significant regulatory assets or liabilities under Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation." Historically, the Registrant has monitored closely the economic
lives of plant in service and has adjusted depreciable lives as necessary to
conform to generally accepted accounting principles.

              (4) Alternative Form of Regulation Petition.
                  ---------------------------------------

              Access charges concerning interstate services are regulated by the
FCC.  On January 5, 2001, the FCC released a Notice of Proposed Rulemaking
regarding a combined universal service and access reform proposal that would be
applicable to incumbent local exchange carriers such as North Pittsburgh, which
are currently regulated under rate-of-return (ROR).  The proposed rules would
allow a gradual and optional transition from ROR regulation to an incentive-
based form of regulation over a five-year period.  The goal of the

                                       19
<PAGE>

plan is to accommodate the vast differences in size and competitive market
threat experienced by rural companies while providing service and rate
comparability between rural and urban areas. Because the final disposition of
the proposed rulemaking is uncertain at this time, North Pittsburgh is unable to
determine the final effect it will have on its operations and revenues.

              Until recently, North Pittsburgh was under ROR regulation within
the intrastate jurisdiction. However, in July of 1998, North Pittsburgh joined
with 18 other companies and filed for an alternative form of regulation to
replace traditional rate base/rate-of-return regulation. In the filing, North
Pittsburgh proposed a price cap plan whereby rates for noncompetitive services
are allowed to be increased based on an index that measures general economy wide
price increases. Under the proposed plan, services might also be declared
competitive and thereby freed from all rate regulation. In return for regulation
under the price cap plan, North Pittsburgh also proposed a network modernization
plan. The PA PUC entered a final Order on December 21, 2000 approving, with some
modifications, including a productivity offset, North Pittsburgh's proposed
Chapter 30 Price Cap Plan. On January 22, 2001, North Pittsburgh accepted the
modifications proposed by the PA PUC and filed a final revised plan. While there
is no immediate impact to North Pittsburgh's operations and revenues under the
price cap plan, it is North Pittsburgh's view that the plan as approved will aid
North Pittsburgh in meeting competition in the future. Various parties to the
proceeding have filed exceptions still seeking minor modifications in the final
plan which exceptions remain pending.

              (5) Federal and State Regulatory Proceedings.
                  ----------------------------------------

              The FCC continues to work on Rulemakings that will further spell
out the specifics of the Telecommunications Act of 1996 (the 1996 Act). The PA
PUC must then finalize its course of action to fully implement the 1996 Act, or
to the extent possible and permissible, change the manner in which such
regulations are implemented in Pennsylvania before the impact on North
Pittsburgh, a Rural Telephone Company under the 1996 Act, can be fully
understood and measured. However, the clear intent of the 1996 Act is to open up
the local exchange market to competition. The 1996 Act appears to mandate, among
other items, that North Pittsburgh, at some point in time, permit the resale of
its services at wholesale rates, provide number portability, if feasible,
provide dialing parity, provide interconnection to any requesting carrier for
the transmission and routing of telephone exchange service and exchange access
and provide access to network elements. North Pittsburgh along with 17 other
rural companies in Pennsylvania was granted a temporary suspension of the
interconnection requirements in the 1996 Act that expires on July 10, 2001.
North Pittsburgh recently filed a petition seeking a further extension of the
suspension until July 10, 2002. A decision by the PA PUC on the suspension
extension is expected in the second quarter of 2001.

              The 1996 Act, FCC and PA PUC regulatory proceedings and the thrust
towards a fully competitive marketplace have created some uncertainty in respect
to the levels of North Pittsburgh's revenue growth in the future.  However, its
unique location in a growing commercial/residential suburban traffic corridor to
the north of the City of Pittsburgh, its state-of-the-art switching transmission
and transport facilities and its extensive fiber network place North Pittsburgh
in a solid position to meet competition and minimize any loss of revenues.  In
addition, North Pittsburgh continues to make its network flexible and responsive
to the needs of its customers to meet competitive threats.  New services, access
line growth and anticipated

                                       20
<PAGE>

usage growth are expected to lessen or offset any reductions in North
Pittsburgh's revenue sources.

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk.
-------   ---------------------------------------------------------


          The Registrant's exposure to market risk for changes in interest rates
relates primarily to the Registrant's debt securities investment portfolio and
long-term debt obligations.  The Registrant does not use derivative financial
instruments in its investment portfolio.  The Registrant places its investments
with high credit quality issuers and, by policy, limits the amount of credit
exposure from any one issuer.  The portfolio includes only marketable securities
with active secondary or resale markets to ensure portfolio liquidity.  As of
December 31, 2000, the Registrant has available for sale debt securities of
$4,940 with an average interest rate of 6.13%.  The Registrant has no cash flow
exposure due to rate changes for long-term debt obligations as all obligations
contain fixed rates.  As of December 31, 2000, the Registrant has debt
obligations of $48,896 with an average rate of 5.89%.  Based on borrowing rates
currently available to the Registrant for loans with similar terms and
maturities, the estimated fair value of long-term debt as of December 31, 2000
is $41,431.  The Registrant primarily enters into debt obligations to support
capital expenditures.

Item 8.   Financial Statements and Supplementary Data.
------    -------------------------------------------

          Financial statements meeting the requirements of Regulation S-X and
the supplementary financial information specified by Item 302 of Regulation S-K
are attached to this document.

Item 9.   Changes in and Disagreements with Accountants on Accounting and
------    ---------------------------------------------------------------
          Financial Disclosure.
          --------------------

          This paragraph is not applicable. There has not been a change of
accountants in the past 24 months nor has any disagreement on any matter of
accounting principles or practices been reported on Form 8-K during the same
time period.

                                       21
<PAGE>

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant.
-------   --------------------------------------------------

          and



Item 11.  Executive Compensation.
-------   ----------------------

          and

Item 12.  Security Ownership of Certain Beneficial Owners and Management.
-------   --------------------------------------------------------------

          and


Item 13.  Certain Relationships and Related Transactions.
-------   ----------------------------------------------

          Information in respect to executive officers of the Registrant is
included herein as a separate Additional Item for Part I under the caption
"Executive Officers of the Registrant" and follows Item 4.  The other
information required by Items 10, 11, 12 and 13 has been omitted from this
report since the Registrant expects to file a Definitive Proxy Statement
pursuant to Regulation 14A involving, inter alia, the election of Directors not
                                      ----- ----
later than 120 days after the end of the fiscal year covered by this report and
such information is incorporated into Part III of this Form 10-K by reference
thereto.

                                       22
<PAGE>

                                    PART IV



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.
-------   ---------------------------------------------------------------

          (a) The following documents of the Registrant and its subsidiaries are
filed as part of this report:

          1.  Financial Statements:
              --------------------

              Consolidated Balance Sheets as of December 31, 2000 and 1999

              Consolidated Statements of Earnings for the Years Ended December
              31, 2000, 1999 and 1998

              Consolidated Statements of Shareholders' Equity and Comprehensive
              Income for the Years Ended December 31, 2000, 1999 and 1998

              Consolidated Statements of Cash Flows for the Years Ended December
              31, 2000, 1999 and 1998

              Notes to Consolidated Financial Statements

          2.  Financial Statement Schedules:
              -----------------------------

              Condensed Financial Information of Registrant for the Years Ended
              December 31, 2000, 1999 and 1998

              All schedules other than those listed above have been omitted
              because the information is either not required or is set forth in
              the financial statements or notes thereto.

          3.  Exhibits:
              ---------

              The Exhibit Index for Annual Reports on Form 10-K and the
              applicable Exhibits for this report may be found under the caption
              OTHER INFORMATION, which follows the signature pages.

          (b) Reports on Form 8-K.  No reports on Form 8-K were filed during the
              -------------------
quarter ended December 31, 2000.

          (c) Exhibits Required by Item 601 of Regulation S-K.  See (a)(3)
              -----------------------------------------------
above.

          (d) Financial Statement Schedules.  The financial statement schedules
              -----------------------------
listed in Item 14(a)(2) are hereby filed as part of this Form 10-K.

                                       23
<PAGE>

                        NORTH PITTSBURGH SYSTEMS, INC.
                               AND SUBSIDIARIES

                       Consolidated Financial Statements
                           and Schedule (Form 10-K)

                       December 31, 2000, 1999 and 1998

                  (With Independent Auditors' Report Thereon)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                               Table of Contents

<TABLE>
<CAPTION>
                                                                           Page
<S>                                                                        <C>
Independent Auditors' Report                                                1

Consolidated Financial Statements:
 Consolidated Balance Sheets as of December 31, 2000 and 1999               2
 Consolidated Statements of Earnings for the Years Ended
   December 31, 2000, 1999 and 1998                                         4
 Consolidated Statements of Shareholders' Equity and Comprehensive
   Income for the Years Ended December 31, 2000, 1999 and 1998              5
 Consolidated Statements of Cash Flows for the Years Ended
   December 31, 2000, 1999 and 1998                                         7
 Notes to Consolidated Financial Statements                                 9

Consolidated Financial Statement Schedule:

I Condensed Financial Information of Registrant for the
 Years Ended December 31, 2000, 1999 and 1998                               24
</TABLE>
<PAGE>

                         Independent Auditors' Report

The Board of Directors
North Pittsburgh Systems, Inc.:

We have audited the consolidated financial statements of North Pittsburgh
Systems, Inc. and subsidiaries (the Company) as listed in the accompanying table
of contents.  In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed in
the accompanying table of contents.  These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of North Pittsburgh
Systems, Inc. and subsidiaries at December 31, 2000 and 1999, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.  Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.



/s/ KPMG LLP

Pittsburgh, Pennsylvania
February 26, 2001
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                          December 31, 2000 and 1999

                 (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                                  2000                1999
                                                                            ----------------    ----------------
<S>                                                                         <C>                 <C>
                            Assets
Current assets:
    Cash and temporary investments                                          $         19,240              12,480
    Marketable securities available for sale (note 2)                                  5,026              17,022
    Accounts receivable:
       Customers, net of allowance for doubtful accounts
          of $559 and $356, respectively                                               5,077               4,975
       Access service settlements and other                                            8,159               7,842
    Prepaid expenses                                                                     462                 614
    Inventories of construction and operating
       materials and supplies                                                          4,783               4,754
    Federal and state income taxes (note 7)                                               16                 --
    Deferred income taxes (note 7)                                                       933                 199
                                                                            ----------------    ----------------
                   Total current assets                                               43,696              47,886
Property, plant and equipment (note 4):
    Land                                                                                 475                 475
    Buildings                                                                         13,071              11,622
    Equipment                                                                        173,293             154,061
    Assets held under capital lease                                                    8,875                  --
                                                                            ----------------    ----------------
                                                                                     195,714             166,158

       Less accumulated depreciation and amortization                                 99,176              86,688
                                                                            ----------------    ----------------
                                                                                      96,538              79,470
    Construction-in-progress                                                           7,540               8,279
                                                                            ----------------    ----------------
                   Total property, plant and equipment, net                          104,078              87,749

Investments (note 3)                                                                  11,170               9,615
Deferred financing cost                                                                  675                 764
Prepaid pension cost (note 6)                                                             --                 465
Other assets                                                                           1,335               1,313
                                                                            ----------------    ----------------
                                                                            $        160,954             147,792
                                                                            ================    ================
</TABLE>

                                       2                             (Continued)
<PAGE>

                 NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                          December 31, 2000 and 1999

                 (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                 Liabilities and Shareholders' Equity                          2000                1999
                                                                           -------------       -------------
<S>                                                                        <C>                 <C>
Current liabilities:
    Current portion of long-term debt (note 4)                             $       3,519               2,629
    Obligation under capital lease (note 5)                                          747                  --
    Accounts payable                                                               6,992               7,086
    Dividend payable                                                               2,551               2,401
    Other accrued liabilities                                                      3,318               2,724
    Federal and state income taxes (note 7)                                           --                 305
                                                                           -------------       -------------
                   Total current liabilities                                      17,127              15,145

Long-term debt (note 4)                                                           45,377              38,940

Obligation under capital lease (note 5)                                            7,137                  --
Deferred income taxes (note 7)                                                     9,645               9,526
Accrued pension and postretirement benefits (note 6)                               5,781               5,122
Other liabilities                                                                  1,693               1,812

Shareholders' equity:
    Capital stock - common stock, par value $.15625;
       authorized 50,000 shares; issued and
       outstanding 15,005 shares                                                   2,350               2,350
    Capital in excess of par value                                                 2,215               2,215
    Retained earnings (note 4)                                                    70,183              72,347
    Less cost of treasury stock (35 shares)                                         (508)               (508)
    Accumulated other comprehensive income - unrealized
       gain (loss) on available for sale securities, net (notes 2 and 7)             (46)                843
                                                                           -------------       -------------

                   Total shareholders' equity                                     74,194              77,247
                                                                           -------------       -------------
                                                                           $     160,954             147,792
                                                                           =============       =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                      Consolidated Statements of Earnings

             For the Years Ended December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                              2000              1999              1998
                                                            --------          --------          --------
<S>                                                         <C>               <C>               <C>
Operating revenues:
    Local network services                                  $ 15,432            13,765            12,412
    Long distance and access services                         53,815            47,170            44,839
    Directory advertising, billing
       and other services                                      2,726             2,664             2,471
    Telecommunication equipment sales                          2,120             2,985             2,906
    Other operating revenues                                   4,928             4,304             3,747
                                                            --------          --------          --------
                                                              79,021            70,888            66,375
Operating expenses:
    Network and other operating expenses (note 8)             44,253            31,911            26,489
    Depreciation and amortization (note 1)                    16,754            13,691            11,955
    State and local taxes                                      3,190             3,137             3,098
    Telecommunication equipment expenses                       1,979             2,605             2,835
                                                            --------          --------          --------

                                                              66,176            51,344            44,377
                                                            --------          --------          --------
                   Net operating revenues                     12,845            19,544            21,998

Other expense (income), net:
    Interest expense                                           3,140             2,263             1,884
    Interest income                                           (1,367)             (976)           (1,308)
    Sundry income, net                                        (2,825)           (3,261)           (2,360)
                                                            --------          --------          --------

                                                              (1,052)           (1,974)           (1,784)
                                                            --------          --------          --------
                   Earnings before income taxes               13,897            21,518            23,782

Provision for income taxes (note 7)                            6,008             8,833             9,264
                                                            --------          --------          --------
                   Net earnings                             $  7,889            12,685            14,518
                                                            ========          ========          ========
Average common shares outstanding                             15,005            15,005            15,005
                                                            ========          ========          ========
Basic and diluted earnings per share                        $    .53               .85               .97
                                                            ========          ========          ========
Dividends per share                                         $    .67               .64               .65
                                                            ========          ========          ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

   Consolidated Statements of Shareholders' Equity and Comprehensive Income

             For the Years Ended December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                    Capital in                            other          Total
                                                         Common      excess of   Retained   Treasury   comprehensive  shareholders'
                                                          stock      par value   earnings    stock        income         equity
                                                        ---------   ----------   --------   --------   -------------  -------------
<S>                                                     <C>         <C>          <C>        <C>        <C>            <C>
Balances at December 31, 1997                           $   2,350        2,215     64,501       (508)              2         68,560

Comprehensive income:
    Net income                                                 --           --     14,518         --              --         14,518
    Other comprehensive income:
       Unrealized holding gains (losses) arising
          during the period                                                                                      489
       Less:  Reclassification adjustments for
               net gains included in net income                                                                   (7)
                                                                                                       -------------
       Net unrealized change in investment
          securities, net of tax effect of $330                                                                  482            482
                                                                                                                      -------------
Comprehensive income                                                                                                         15,000

Dividends declared on common stock                             --           --     (9,754)        --              --         (9,754)
                                                        ---------   ----------   --------   --------   -------------  -------------
Balances at December 31, 1998                               2,350        2,215     69,265       (508)            484         73,806

Comprehensive income:
    Net income                                                 --           --     12,685         --              --         12,685
    Other comprehensive income:
       Unrealized holding gains (losses) arising
          during the period                                                                                      484
       Less:  Reclassification adjustments for
               net gains included in net income                                                                 (125)
                                                                                                       -------------
       Net unrealized change in investment
          securities, net of tax effect of $267                                                                  359            359
                                                                                                                      -------------
Comprehensive income                                                                                                         13,044

Dividends declared on common stock                             --           --     (9,603)        --              --         (9,603)
                                                        ---------   ----------   --------   --------   -------------  -------------
Balances at December 31, 1999                               2,350        2,215     72,347       (508)            843         77,247
</TABLE>

                                       5                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

   Consolidated Statements of Shareholders' Equity and Comprehensive Income

             For the Years Ended December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                    Capital in                            other          Total
                                                         Common      excess of   Retained   Treasury   comprehensive  shareholders'
                                                          stock      par value   earnings    stock        income         equity
                                                        ---------   ----------   --------   --------   -------------  -------------
<S>                                                     <C>         <C>          <C>        <C>        <C>            <C>
Comprehensive income:
    Net income                                          $      --           --      7,889         --              --          7,889
    Other comprehensive income:
       Unrealized holding gains (losses) arising
          during the period                                                                                      344
       Less:  Reclassification adjustments for
               net gains included in net income                                                               (1,233)
                                                                                                       -------------
       Net unrealized change in investment
          securities, net of tax effect of $(631)                                                               (889)          (889)
                                                                                                                      -------------
Comprehensive income                                                                                                          7,000

Dividends declared on common stock                             --           --    (10,053)        --              --        (10,053)
                                                        ---------   ----------   --------   --------   -------------  -------------

Balances at December 31, 2000                           $   2,350        2,215     70,183       (508)            (46)        74,194
                                                        =========   ==========   ========   ========   =============  =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows

             For the Years Ended December 31, 2000, 1999 and 1998

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                                        2000              1999             1998
                                                                                  ----------------  ----------------   -------------
<S>                                                                               <C>               <C>                <C>
Cash from operating activities:
    Net earnings                                                                       $  7,889            12,685            14,518
    Adjustments to reconcile net earnings
       to net cash provided by operating activities:
          Depreciation and amortization                                                  16,754            13,691            11,955
          Gain on sale of marketable securities                                          (2,056)             (208)              (12)
          Equity income of affiliated companies                                            (926)             (921)           (1,332)
          Investment tax credit amortization                                                (29)              (69)              (91)
          Deferred income taxes                                                              16               999            (4,120)
          Changes in assets and liabilities:
            Accounts receivable                                                            (419)           (1,908)           (1,513)
            Inventories of construction and
               operating materials and supplies                                             (29)             (735)             (659)
            Deferred financing costs, prepaid
               expenses and other assets                                                    219              (325)              651
            Accounts payable                                                                (94)              330             1,962
            Other accrued liabilities                                                       504               132            (2,972)
            Accrued pension and postretirement benefits                                   1,124               253               220
            Federal and state income taxes                                                 (321)             (615)              531
                                                                                       --------          --------          --------
                   Total adjustments                                                     14,743            10,624             4,620
                                                                                       --------          --------          --------
                   Net cash provided by operating activities                             22,632            23,309            19,138

Cash used for investing activities:
    Expenditures for property and equipment                                             (24,577)          (25,378)          (17,847)
    Net salvage on retirements                                                              369               268               759
                                                                                       --------          --------          --------
                   Net capital additions                                                (24,208)          (25,110)          (17,088)

    Purchase of marketable securities available for sale                                 (6,983)           (9,968)          (18,060)
    Proceeds from sale of marketable securities
       available for sale                                                                19,515             8,450            21,061
    Investments in affiliated entities                                                   (1,003)               --              (880)
    Distributions from affiliated entities                                                  374               943                74
                                                                                       --------          --------          --------
                   Net cash used for investing activities                               (12,305)          (25,685)          (14,893)
</TABLE>

                                       7                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows

             For the Years Ended December 31, 2000, 1999 and 1998

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                       2000              1999               1998
                                                                  ----------------  ----------------   ----------------
<S>                                                               <C>               <C>                <C>
Cash used for financing activities:
    Cash dividends                                                $      (9,903)           (9,453)            (9,603)
    Retirement of debt                                                   (2,982)           (1,990)            (1,052)
    Proceeds from issuance of debt                                       10,309             9,513              7,258
    Payment of capital lease obligation                                    (991)               --                 --
                                                                  -------------     -------------      -------------
                   Net cash used for financing activities                (3,567)           (1,930)            (3,397)
                                                                  -------------     -------------      -------------
                   Net increase (decrease) in cash and
                     temporary investments                                6,760            (4,306)               848

Cash and temporary investments at beginning of year                      12,480            16,786             15,938
                                                                  -------------     -------------      -------------
Cash and temporary investments at end of year                     $      19,240            12,480             16,786
                                                                  =============     =============      =============
Supplemental disclosures of cash flow information:
    Interest paid                                                 $       2,910             2,175              1,791
                                                                  =============     =============      =============
    Income taxes paid                                             $       6,342             8,250             12,853
                                                                  =============     =============      =============
Supplemental disclosure of noncash financing activities:

    A capital lease obligation of $8,875 was incurred
       when a subsidiary of the Company entered into a
       lease for new equipment during the third quarter
       of 2000.
</TABLE>

See accompanying notes to consolidated financial statements.

                                       8
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


(1) Summary of Significant Accounting Policies

    (a) Basis of Presentation and Consolidation

        The consolidated financial statements include the accounts of North
        Pittsburgh Systems, Inc. (the Company) and its subsidiaries, North
        Pittsburgh Telephone Company (NPTC), Penn Telecom, Inc. (PTI) and
        Pinnatech, Inc. The Company provides telecommunication services and
        equipment to its customers generally located in western Pennsylvania.
        All significant intercompany accounts and transactions have been
        eliminated in consolidation.

        The preparation of the consolidated financial statements in conformity
        with accounting principles generally accepted in the United States of
        America requires management to make estimates and assumptions that
        affect the reported amounts of assets, liabilities, revenues and
        expenses and disclosure of contingent assets and liabilities. The
        estimates and assumptions used in the accompanying consolidated
        financial statements are based upon management's evaluation of the
        relevant facts and circumstances as of the date of the financial
        statements. Actual results may differ from the estimates and assumptions
        used in preparing the accompanying consolidated financial statements.

    (b) Revenue Recognition

        Revenues are recognized when service is provided or equipment is
        installed. Local service and intralata long distance revenues are
        subject to the jurisdiction of the Pennsylvania Public Utility
        Commission (PUC). The Company participates in interstate pooling
        arrangements with other telephone companies. Such pools are funded by
        access service charges regulated by the Federal Communications
        Commission. Revenue earned through pooling is initially recorded based
        on estimates. The Company has settled substantially all access service
        arrangements through 1998.

        Nonrefundable up-front activation fees associated with the provisioning
        of telephone service, when material, are deferred and recognized over
        the expected term of the customer relationship.

    (c) Marketable Securities

        Marketable securities available for sale are recorded at fair value,
        based on quoted market prices. Changes in value of available for sale
        securities are included as a separate component of shareholders' equity
        and comprehensive income. Costs of investments sold are determined on
        the basis of specific identification.

                                       9                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    (d) Investments

        The Company's investments in limited partnerships are carried at cost
        plus equity in accumulated net profits or losses.

    (e) Property, Plant and Equipment

        Property, plant and equipment is recorded at cost. Retirements relating
        to replacements of telephone plant and equipment are accounted for in
        accordance with applicable regulations of the PUC. Accordingly, the
        original costs of facilities retired, plus costs of removal, net of
        salvage or other credits, are charged to accumulated depreciation. When
        other property is retired or otherwise disposed of, any gain or loss is
        recognized in income.

        Depreciation on telephone plant and equipment in service is provided on
        a straight-line basis over estimated useful lives of 10 to 30 years for
        buildings and 5 to 20 years for equipment. Depreciation as a percentage
        of average depreciable plant and equipment in service amounted to 9.3%,
        8.7% and 8.5% in 2000, 1999 and 1998, respectively.

        Expenditures for maintenance, repairs and renewals are charged to
        operations as incurred.

    (f) Impairment of Long-Lived Assets

        Based upon the provisions of Statement of Financial Accounting Standards
        No. 121, Accounting for the Impairment of Long-Lived Assets and for
        Long-Lived Assets to be Disposed Of, the Company reviews assets for
        impairment whenever events or changes in circumstances indicate that the
        carrying value of the assets may not be recoverable. A determination of
        impairment (if any) is made based on estimates of future cash flows. The
        Company has determined that there has been no impairment to the carrying
        value of such assets in 2000, 1999 or 1998.

    (g) Inventories

        Inventories consist of telecommunication equipment and parts to provide
        service to, or to make sales to, the Company's customers. Inventories
        are valued at the lower of cost (using the moving average method) or
        market.

    (h) Accounts Receivable

        The Company provides telecommunication services to customers (business
        and residential) located in western Pennsylvania and access connectivity
        to interexchange carriers. Access service settlements and other
        principally represent amounts due from interexchange carriers.

                                      10                             (Continued)
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


        Uncollected accounts receivable are typically expensed approximately 30
        days after telephone service to such customer has been disconnected.

    (i) Income Taxes

        Income taxes are accounted for under the asset and liability method.
        Deferred tax assets and liabilities are recognized for the future tax
        consequences attributable to differences between the financial statement
        carrying amounts of existing assets and liabilities and their respective
        tax bases and operating loss and tax credit carryforwards. Deferred tax
        assets and liabilities are measured using enacted tax rates expected to
        apply to taxable income in the years in which those temporary
        differences are expected to be recovered or settled. The effect on
        deferred tax assets and liabilities of a change in tax rates is
        recognized in income in the period that includes the enactment date.

        Investment tax credits applicable to assets acquired or committed for by
        January 1, 1986, are being amortized over the average useful lives of
        the assets to which they relate.

        The Company and its subsidiaries file a consolidated federal income tax
        return.

    (j) Cash Equivalents

        For purposes of the consolidated statements of cash flows, the Company
        considers all temporary investments purchased with a maturity of three
        months or less to be cash equivalents. Under conditions of the Company's
        loan agreement with the Rural Utilities Services, the Company has cash
        of $764 and $781 for 2000 and 1999, respectively, that is restricted in
        use.

    (k) Pension and Other Postretirement Benefits

        The Company provides pension and other postretirement benefits to
        substantially all of its employees and eligible retirees. Benefits
        provided by these plans are expensed over the estimated working lives of
        employees.

    (l) Comprehensive Income

        Comprehensive income consists of net income and net unrealized gains
        (losses) on securities, net of income tax and is presented in the
        consolidated statements of shareholders' equity and comprehensive
        income.

                                      11                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    (m) Earnings Per Share

        Basic earnings per share is calculated based upon the weighted average
        number of common shares actually outstanding, and diluted earnings per
        share is calculated based upon the weighted average number of common
        shares outstanding and other potential common shares if they are
        dilutive. The Company has no potential, dilutive common shares
        outstanding.

    (n) Reclassifications

        Certain prior year amounts have been reclassified to conform with the
        current year's presentation.

(2) Marketable Securities

    Information about marketable investment securities at December 31, 2000 and
    1999, is as follows:

<TABLE>
<CAPTION>
                                                                   2000
                               -----------------------------------------------------------------------------
                                                       Unrealized          Unrealized             Market
                                      Cost               gains               losses               value
                               ----------------    ----------------    ----------------     ----------------
    <S>                        <C>                 <C>                 <C>                  <C>
    Available for sale:
       Equity securities       $            213                  --                (127)                  86
       Debt securities                    4,892                 101                 (53)               4,940
                               ----------------    ----------------    ----------------     ----------------
                               $          5,105                 101                (180)               5,026
                               ================    ================    ================     ================

                                                                   1999
                               -----------------------------------------------------------------------------
                                                       Unrealized          Unrealized             Market
                                      Cost               gains               losses               value
                               ----------------    ----------------    ----------------     ----------------
    <S>                        <C>                 <C>                 <C>                  <C>
    Available for sale:
       Equity securities      $          6,135               2,320                (441)               8,014
       Debt securities                   9,446                   -                (438)               9,008
                              ----------------    ----------------    ----------------     ----------------
                              $         15,581               2,320                (879)              17,022
                               ================    ================    ================     ================
</TABLE>

                                      12                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    The carrying value of debt securities at December 31, 2000, by contractual
    maturity, are as follows:


              Due in:
                One year or less                             $      585
                One to five years                                 2,849
                Five to ten years                                 1,506
                                                             ----------
                                                             $    4,940
                                                             ==========


    Proceeds, gross realized gains and gross realized losses from the sale of
    debt and equity securities were $19,515, $2,940 and $(884), respectively,
    for the year ended December 31, 2000. Realized gains and losses on the sale
    of marketable securities for the years 1999 and 1998 were immaterial.

(3) Investments

    The Company's investments at December 31, 2000 and 1999, consist of the
    following:

<TABLE>
<CAPTION>
                                                                  2000          1999
                                                              -----------    -----------
        <S>                                                   <C>            <C>
        Investments at equity:
          Investments in cellular limited partnerships        $    10,280          9,006
          Boulevard Communications, LLP                               890            609
                                                              -----------    -----------
                 Total investments                            $    11,170          9,615
                                                              ===========    ===========
</TABLE>

    The Company had no capital calls to maintain its ownership percentages in
    its limited partnership investments in 2000 and 1999. The Company did invest
    $1,003 in 2000 to acquire additional ownership in a cellular limited
    partnership. The Company received distributions from affiliated entities of
    $374 and $943 in 2000 and 1999, respectively.

                                      13                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


(4) Long-Term Debt

    Long-term debt as of December 31, 2000 and 1999, was as follows:

<TABLE>
<CAPTION>
                                                                        2000             1999
                                                                    ------------     ------------
           <S>                                                      <C>              <C>
           Notes payable to Rural Telephone
              Bank, maturing at various dates from 2009
                through 2019                                        $     18,363           19,277
           Notes payable to Federal Financing Bank,
              maturing in 2012                                            30,533           22,292
                                                                    ------------     ------------
                                                                          48,896           41,569
              Less current portion of long-term debt                       3,519            2,629
                                                                    ------------     ------------
                         Long-term debt                             $     45,377           38,940
                                                                    ============     ============
</TABLE>

    Principal payments required over the next five years calculated on the
    outstanding indebtedness at December 31, 2000, are:  $3,519 in 2001; $3,584
    in 2002; $3,653 in 2003; $3,727 in 2004; and $3,806 in 2005.

    The notes payable to the Rural Telephone Bank are secured by a supplemental
    Mortgage Agreement executed by NPTC which provides that substantially all of
    the property, plant and equipment of NPTC are subject to a lien or a
    security interest. Such agreement contains restrictions regarding dividends
    and other distributions by NPTC. Under these restrictions, unless certain
    working capital and net worth levels are maintained, NPTC is not permitted
    to pay dividends on its capital stock (other than in shares of capital
    stock), or to make any other distributions to its shareholders or purchase,
    redeem or retire any of its capital stock or make any investment in
    affiliated companies. As a result of the NPTC restrictions, $1,080 of NPTC
    retained earnings were available for dividends to the Company as of December
    31, 2000.

    As of December 31, 2000, consolidated retained earnings of the Company of
    approximately $23,206 were available for dividends and other distributions
    to shareholders.

    In 1996, NPTC was granted approval for a loan from the Federal Financing
    Bank (FFB) guaranteed by the Rural Utilities Service in the maximum
    principal amount of $75 million. The maximum principal amount will be
    advanced periodically over a five-year period beginning January 2, 1997, to
    furnish or improve telephone service in rural areas.

                                      14                             (Continued)
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    Notes payable to the Rural Telephone Bank carry an interest rate of 6.5%.
    Notes payable to the Federal Financing Bank carry interest rates ranging
    from 4.3% to 6.7%.

    Based on borrowing rates currently available to the Company for loans with
    similar terms and maturities, the estimated fair value of long-term debt as
    of December 31, 2000, is $41,431.

    NPTC also has a $10 million line of credit at a rate of prime plus 1-1/2%
    with the Rural Telephone Finance Cooperative. The line of credit was not
    used in 2000 or 1999.


(5) Capital Lease

    The Company has a capital lease for equipment used in its operations.
    Amortization of the assets held under the capital lease is included within
    depreciation and amortization expense. The capital lease amount included in
    property, plant and equipment is as follows:

                                                          2000         1999
                                                       ----------   ----------
         Capital lease                                 $    8,875           --
         Accumulated amortization                            (247)          --
                                                       ----------   ----------
                    Total                              $    8,628           --
                                                       ==========   ==========

                                      15                             (Continued)
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    The following table displays the aggregate minimum lease commitments under
    the capital lease as of December 31, 2000:

<TABLE>
        <S>                                                                   <C>
        2001                                                                  $    1,370
        2002                                                                       1,370
        2003                                                                       1,370
        2004                                                                       1,370
        2005                                                                       1,218
        Thereafter                                                                 4,613
                                                                              ----------
                     Total minimum lease commitments                              11,311

          Less interest and executory costs                                        3,427
                                                                              ----------
                     Present value of minimum lease commitments                    7,884

          Less current installments                                                  747
                                                                              ----------
                     Long-term obligation at December 31, 2000                $    7,137
                                                                              ==========
</TABLE>

(6) Retirement Plan and Other Postretirement Benefit Plans

    Substantially all employees of the Company are covered by a noncontributory,
    defined benefit retirement plan. The benefits are based on each employee's
    years of service and compensation. The Company's funding policy is to
    contribute an amount annually that satisfies at least the minimum funding
    required under the Employee Retirement Income Security Act of 1974. The
    assets of the Plan are held in a trust and are invested in a variety of
    equity and fixed income securities.

    Eligible retirees of the Company are provided healthcare and life insurance
    benefits until the retiree reaches 65 years of age under an unfunded plan.

                                      16                             (Continued)
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    The following table sets forth the Plans' change in benefit obligation,
    change in plan assets and reconciliation of funded status at December 31,
    2000 and 1999.

<TABLE>
<CAPTION>
                                                                Pension benefits               Other benefits
                                                            -----------------------       -----------------------
                                                              2000           1999           2000           1999
                                                            --------       --------       --------       --------
    <S>                                                     <C>            <C>            <C>            <C>
    Change in benefit obligation:
        Benefit obligation at beginning
           of year                                          $ 28,148         28,765          5,274          3,902
        Service cost                                             824            948            153            127
        Interest cost                                          2,071          1,907            390            256
        Plan amendments                                           --             --             45             --
        Curtailment gain                                        (190)            --           (201)            --
        Special termination benefits                             267             --            304             --
        Benefits paid                                         (1,243)        (1,002)          (322)          (210)
        Actuarial (gain) or loss                                 791         (2,470)          (177)         1,199
                                                            --------       --------       --------       --------

        Benefit obligation at end of year                     30,668         28,148          5,466          5,274

    Change in plan assets:
        Fair value at beginning of year                       31,792         28,353             --             --
        Actual return on plan assets                           3,249          3,771             --             --
        Employer contributions                                    --            670            322            210
        Benefits paid                                         (1,243)        (1,002)          (322)          (210)
                                                            --------       --------       --------       --------

        Fair value at end of year                             33,798         31,792             --             --

    Reconciliation of funded status:
        Funded status                                          3,130          3,644         (5,466)        (5,274)
        Unrecognized actuarial (gain)
           or loss                                            (3,859)        (3,954)          (152)           226
        Unrecognized transition (asset)                         (764)          (917)            --             --
        Unrecognized prior service cost                        1,340          1,692            (10)           (74)
                                                            --------       --------       --------       --------

        Net amount at year end                              $   (153)           465         (5,628)        (5,122)
                                                            ========       ========       ========       ========
</TABLE>

                                      17                             (Continued)
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    Assumptions used in the calculations as of December 31, 2000, 1999 and 1998,
    are:

<TABLE>
<CAPTION>
                                                      Pension benefits                              Other benefits
                                            ----------------------------------           ----------------------------------
                                              2000         1999         1998               2000         1999         1998
                                            --------     --------     --------           --------     --------     --------
    <S>                                     <C>          <C>          <C>                <C>          <C>          <C>
    Weighted average assumptions:
        Discount rate                   %     7.50         7.50         6.75               7.50         7.50         6.75
        Expected return on assets             8.00         8.00         7.50                N/A          N/A          N/A
        Rate of compensation increase         4.50         4.50         5.00               4.50         4.50         5.00
</TABLE>

    Net periodic benefit costs include the following:

<TABLE>
<CAPTION>
                                                      Pension benefits                              Other benefits
                                            ----------------------------------           ----------------------------------
                                              2000         1999         1998               2000         1999         1998
                                            --------     --------     --------           --------     --------     --------
    <S>                                     <C>          <C>          <C>                <C>          <C>          <C>
    Components of net periodic
      benefit cost:
        Service cost                        $    824          948          887                153          127          161
        Interest cost                          2,071        1,907        1,792                390          256          314
        Expected return on
          plan assets                         (2,494)      (2,126)      (2,069)                --           --           --
        Amortization of prior
          service cost                           207          227          227                (11)         (12)         (12)
        Amortization of transition
          (asset)                               (153)        (153)        (153)                --           --           --
        Recognized actuarial
          (gain) or loss                         (58)          --           --                 --          (41)          --
                                            --------     --------     --------           --------     --------     --------
        Net periodic benefit cost           $    397          803          684                532          330          463
                                            ========     ========     ========           ========     ========     ========
</TABLE>

                                                                     (Continued)

                                      18
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    For purposes of measuring other postretirement benefits, the annual rate of
    increase in the per capita cost of covered benefits (i.e., healthcare cost
    trend rate) for 2000 was 8.5 percent for participants whose coverage
    included Major Medical Insurance, 7.6 percent for participants who have Blue
    Cross/Blue Shield coverage only, and 6.1 percent for participants who have
    Point of Service coverage. The rates were assumed to decrease gradually to 5
    percent by the year 2007 and remain at that level thereafter. Assumed health
    care cost trend rates have a significant effect on the amounts reported for
    the health care plans. A one percentage point change in the assumed health
    care trend rate would have the following effects:

<TABLE>
<CAPTION>
                                                                          One                   One
                                                                      percentage             percentage
                                                                    point increase         point decrease
                                                                  --------------------   -------------------
        <S>                                                       <C>                    <C>
        Effect on total of service and interest cost
           components for 2000                                    $             62                   (54)
        Effect on 2000 postretirement benefit obligation                       474                  (420)
</TABLE>

(7) Income Taxes

    The components of income tax expense are:

<TABLE>
<CAPTION>
                                             2000       1999       1998
                                           --------   --------   --------
        <S>                                <C>        <C>        <C>
        Current:
           Federal                         $  3,830      6,093     10,231
           State                              2,191      1,810      3,243
                                           --------   --------   --------
                                              6,021      7,903     13,474

        Deferred:
           Federal                              390        809     (3,114)
           State                               (374)       190     (1,005)
                                           --------   --------   --------
                                                 16        999     (4,119)

        Deferred investment tax credit          (29)       (69)       (91)
                                           --------   --------   --------
                                           $  6,008      8,833      9,264
                                           ========   ========   ========
</TABLE>

                                                                     (Continued)

                                      19
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    The Company's income tax expense differs from income tax expense computed at
    the federal statutory rate of 35 percent due to the following factors:

                                               2000        1999        1998
                                             --------    --------    --------
     Statutory federal income tax            $  4,864       7,531       8,324
     State taxes on income (net of
        federal income tax benefit)               902       1,300       1,455
     Change in beginning of year
        valuation allowance                       451          86        (374)
     Investment tax credit                        (29)        (69)        (91)
     Tax-exempt interest                          (34)         --         (13)
     Other tax-exempt income                       --          --        (301)
     Other                                       (146)        (15)        264
                                             --------    --------    --------
     Income tax expense                      $  6,008       8,833       9,264
                                             ========    ========    ========

    The significant components of deferred income tax expense attributable to
    income from operations are as follows:

<TABLE>
<CAPTION>
                                                    2000      1999       1998
                                                 ---------  ---------  ---------
    <S>                                          <C>        <C>        <C>
    Deferred tax expense (exclusive of the
        effects of the other components below)   $    (435)       913      1,544
    Net gain on investment                              --         --     (5,289)
    Increase (decrease) in beginning of year
        valuation allowance                            451         86       (374)
                                                 ---------  ---------  ---------
                                                 $      16        999     (4,119)
                                                 =========  =========  =========
</TABLE>

  Additional deferred taxes of $(631) and $267 were recorded in 2000 and 1999,
  respectively, related to unrealized gains and losses on marketable securities
  classified as available for sale (note 2).

                                                                     (Continued)

                                      20
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


  The tax effects of temporary differences that give rise to significant
  portions of the deferred tax assets and deferred tax liabilities at December
  31, 2000 and 1999, are presented below:

<TABLE>
<CAPTION>
                                                                         2000                1999
                                                                     ------------        ------------
    <S>                                                              <C>                 <C>
    Deferred tax assets:
        Postretirement benefits                                          $ (2,335)             (2,125)
        Deferred compensation                                                (445)               (423)
        Compensated absences, principally due
           to accrual for financial reporting purposes                       (266)               (257)
        Accounts receivable                                                  (634)               (540)
        Goodwill                                                               --                 (54)
        State net operating loss carryforwards                             (1,175)                 --
        Other                                                                (388)               (311)
        Net unrealized loss on available for sale securities                  (33)                 --
                                                                         --------            --------
                       Total gross deferred tax assets                     (5,276)             (3,710)

           Less valuation allowance                                           605                 154
                                                                         --------            --------
                       Net deferred tax assets                             (4,671)             (3,556)

    Deferred tax liabilities:
        Plant and equipment, principally due to
           differences in depreciation                                     12,255              10,860
        Pension                                                                43                 208
        Amortization of deferred financing costs                              127                 149
        Net unrealized gain on available for sale securities                   --                 598
        Other                                                                 958               1,068
                                                                         --------            --------
                       Total gross deferred tax liability                  13,383              12,883
                                                                         --------            --------
                       Net deferred tax liability                        $  8,712               9,327
                                                                         ========            ========
    Unamortized investment tax credit                                    $     82                 111
                                                                         ========            ========
</TABLE>

                                                                     (Continued)

                                      21
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


    The valuation allowance for deferred tax assets relates to state loss
    carryforwards of subsidiaries. The valuation allowance for deferred tax
    assets as of January 1, 2000 and 1999, was $605 and $154, respectively. For
    the year ended December 31, 2000, there was a net increase in the valuation
    allowance in the amount of $451. The net change in the valuation allowance
    for the year ended December 31, 1999, was a net increase of $86. In
    assessing the realizability of deferred tax assets, management considers
    whether it is more likely than not that some portion or all of the deferred
    tax assets will not be realized. The ultimate realization of deferred tax
    assets is dependent upon the generation of future taxable income during the
    periods in which those temporary differences become deductible. Management
    considers the scheduled reversal of deferred tax liabilities, projected
    future taxable income and tax planning strategies in making this assessment.
    Based upon the level of historical taxable income and projections for future
    taxable income over the periods which the deferred tax assets are
    deductible, management believes it is more likely than not the Company will
    realize the benefits of these deductible differences, net of the existing
    valuation allowances at December 31, 2000. The amount of the deferred tax
    asset considered realizable, however, could be reduced in the near term if
    estimates of future taxable income during the carryforward period are
    reduced.

    At December 31, 2000, the Company has net operating loss carryforwards for
    state income tax purposes of $11,760 which are available to offset future
    state taxable income, if any, through 2010.

(8) Business Restructuring

    In the fourth quarter of 2000, a pretax charge of $972 was recorded in
    network and other operating expenses to cover the restructuring costs
    associated with the shut down of the Nauticom Sports Network. The total
    charges reduced net income by $632.

    The business restructuring charge of $972 included restructuring liabilities
    of $671 and asset impairments of $301. The restructuring liabilities
    consisted of $432 for employee severance payments and related taxes for 30
    people who were involuntarily terminated, $122 for future operating lease
    expense associated with a leased facility under contract which will no
    longer be used and $117 for other charges associated with the restructuring.
    As of December 31, 2000, all employees have been terminated and all
    severance payments and related taxes have been paid, making the remaining
    restructuring accrual liability $239 as of December 31, 2000, with $183
    recorded in other accrued liabilities (current) and $56 recorded in other
    liabilities (non-current).

                                                                     (Continued)

                                      22
<PAGE>

               NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                       December 31, 2000, 1999 and 1998

                 (Amounts in Thousands, Except Per Share Data)


(9)  Related Party Transaction

     In 1998, the Company entered into an agreement to outsource certain data
     processing functions to a third party processor (Processor). The Company
     and the Processor are related by a common shareholder and director.
     Payments to the Processor under this agreement were $2,807, $2,553 and
     $1,227 in 2000, 1999 and 1998, respectively. During 2000, 1999 and 1998,
     the Company paid approximately $106, $101 and $198, respectively, to a
     member of the Board of Directors law firm for various legal services.

(10) Unaudited Quarterly Financial Data for 2000 and 1999

     The following are summaries of quarterly financial data for the years ended
     December 31, 2000 and 1999, as reported by the Company:

<TABLE>
<CAPTION>
                                                              Unaudited (in thousands, except per share data)
                                                        -----------------------------------------------------------
                                                          First          Second            Third           Fourth
                                                         quarter         quarter          quarter          quarter
                                                        ---------       ---------        ---------        ---------
    <S>                                                 <C>             <C>              <C>              <C>
    2000
      Operating revenues                                $  19,052         20,222           19,935          19,812
      Net operating revenues                                4,294          3,696            2,463           2,392
      Net earnings                                          2,436          3,276            1,158           1,019
      Basic and diluted earnings per
          common share                                        .16            .22              .08             .07
    1999:
      Operating revenues                                $  17,539         17,429           17,557          18,363
      Net operating revenues                                5,783          4,682            4,640           4,439
      Net earnings                                          3,416          2,779            3,279           3,211
      Basic and diluted earnings per
          common share                                        .23            .18              .22             .22
</TABLE>

                                      23
<PAGE>

                                                                      Schedule I

                NORTH PITTSBURGH SYSTEMS, INC. (Parent Company)

                 Condensed Financial Information of Registrant

                           Condensed Balance Sheets

                          December 31, 2000 and 1999

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                               Assets                                                2000                1999
                                                                               -----------------   -----------------
<S>                                                                            <C>                 <C>
Current assets:
    Cash and temporary investments                                             $       1,422               5,537
    Marketable securities available for sale                                           4,940              16,920
    Accounts receivable from subsidiary                                                  144                  25
    Accounts receivable - other                                                           86                 144
                                                                               -------------       -------------
                   Total current assets                                                6,592              22,626

Property, plant and equipment:
    Land                                                                                 150                 150
    Buildings                                                                          1,187               1,187
    Equipment                                                                             21                  21
                                                                               -------------       -------------
                                                                                       1,358               1,358

       Less accumulated depreciation and amortization                                    210                 171
                                                                               -------------       -------------
                                                                                       1,148               1,187

Deferred income taxes                                                                     32                  --
Other assets                                                                           1,008                 982
Investment in subsidiaries                                                            51,618              53,051
Notes and accounts receivable - subsidiaries                                          17,865               2,830
                                                                               -------------       -------------
                                                                               $      78,263              80,676
                                                                               =============       =============
</TABLE>

                                      24                             (Continued)
<PAGE>

                                                                      Schedule I

                NORTH PITTSBURGH SYSTEMS, INC. (Parent Company)

                 Condensed Financial Information of Registrant

                           Condensed Balance Sheets

                          December 31, 2000 and 1999

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                   Liabilities and Shareholders' Equity                              2000                1999
                                                                               -----------------   -----------------
<S>                                                                            <C>                 <C>
Current liabilities:
    Dividend payable                                                           $       2,551               2,401
    Deferred income taxes                                                                 --                 536
    Accounts payable - subsidiaries                                                        8                  20
    Federal and state income taxes                                                     1,426                 407
    Other liabilities                                                                     84                  65
                                                                                  -------------       -------------
                   Total current liabilities                                           4,069               3,429

Shareholders' equity:
    Common stock                                                                       2,350               2,350
    Capital in excess of par value                                                     2,215               2,215
    Retained earnings                                                                 70,183              72,347
    Less cost of treasury stock                                                         (508)               (508)
    Accumulated other comprehensive income - unrealized
       (loss) gain on available for sale securities, net                                 (46)                843
                                                                               -------------       -------------
                                                                                      74,194              77,247
                                                                               -------------       -------------
                                                                               $      78,263              80,676
                                                                               =============       =============
</TABLE>

                                      25                             (Continued)
<PAGE>

                                                                      Schedule I


                NORTH PITTSBURGH SYSTEMS, INC. (Parent Company)

                 Condensed Financial Information of Registrant

                     Condensed Statements of Operations

             For the Years Ended December 31, 2000, 1999 and 1998

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                       2000              1999             1998
                                                                  ------------      ------------      ------------
<S>                                                               <C>               <C>               <C>
Revenues:
    Dividends from subsidiaries                                   $      7,352            14,302            11,009
    Interest income                                                      1,549               622               833
    Nonoperating income                                                    134                79               103
    Gain on sale of marketable securities                                2,056               208                11
    Gain on insurance policy                                                --                --               860
                                                                  ------------      ------------      ------------

                                                                        11,091            15,211            12,816
Expenses:
    General office salaries and expenses                                   463               396               405
    State taxes                                                            111               109               121
                                                                  ------------      ------------      ------------

                                                                           574               505               526
                                                                  ------------      ------------      ------------
                   Earnings before income taxes and
                     equity in (overdistributed)
                     undistributed net earnings of
                     subsidiaries                                       10,517            14,706            12,290

Income taxes                                                             1,269               123               148
                                                                  ------------      ------------      ------------
                   Earnings before equity in
                     (overdistributed) undistributed net
                     earnings of subsidiaries                            9,248            14,583            12,142

Equity in (overdistributed) undistributed net
    earnings of subsidiaries                                            (1,359)           (1,898)            2,376
                                                                  ------------      ------------      ------------

                   Net earnings                                   $      7,889            12,685            14,518
                                                                  ============      ============      ============
</TABLE>

                                      26                             (Continued)
<PAGE>

                                                                      Schedule I

               NORTH PITTSBURGH SYSTEMS, INC. (Parent Company)

                Condensed Financial Information of Registrant

                      Condensed Statements of Cash Flows

             For the Years Ended December 31, 2000, 1999 and 1998

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                       2000              1999               1998
                                                                  ---------------   ---------------   ----------------
<S>                                                               <C>               <C>               <C>
Cash from operating activities:
    Net earnings                                                         $  7,889            12,685             14,518
    Adjustments to reconcile net earnings
       to net cash provided by operating activities:
          Equity in undistributed earnings of affiliates                    1,359             1,898             (2,376)
          Gain on sale of marketable securites                             (2,056)             (208)               (11)
          Other adjustments                                                    13                15                803
          Changes in assets and liabilities:
            Receivables                                                       (61)               (3)              (127)
            Dividend receivable                                                --             2,248               (142)
            Accounts payable - subsidiaries                                   (12)               17                (23)
            Other liabilities                                               1,038            (1,193)            (1,894)
            Deferred income taxes                                               9               (23)            (5,330)
                                                                         --------          --------           --------

                   Total adjustments                                          290             2,751             (9,100)
                                                                         --------          --------           --------
                   Net cash provided by operating
                     activities                                             8,179            15,436              5,418
                                                                         --------          --------           --------
Cash from investing activities:
    Investment in affiliates                                                   --                --                 (3)
    Purchases of marketable securities available                           (6,871)           (9,867)           (18,060)
       for sale
    Proceeds from sale of marketable securities
       available for sale                                                  19,515             8,450             20,957
    Notes receivable - subsidiaries                                       (15,035)           (1,670)                --
                                                                         --------          --------           --------
                   Net cash (used for) provided by
                     investing activities                                  (2,391)           (3,087)             2,894
                                                                         --------          --------           --------
</TABLE>

                                      27                             (Continued)
<PAGE>

                                                                      Schedule I

                NORTH PITTSBURGH SYSTEMS, INC. (Parent Company)

                 Condensed Financial Information of Registrant

                      Condensed Statements of Cash Flows

             For the Years Ended December 31, 2000, 1999 and 1998

                            (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                      2000              1999               1998
                                                                  ------------      ------------      -------------
<S>                                                               <C>               <C>               <C>
Cash used for financing activities:
    Cash dividends                                                $     (9,903)           (9,453)            (9,603)
                                                                  ------------      ------------      -------------
                   Net cash used for financing
                     activities                                         (9,903)           (9,453)            (9,603)
                                                                  ------------      ------------      -------------
                   Net (decrease) increase in cash
                     and temporary investments                          (4,115)            2,896             (1,291)

Cash and temporary investments at beginning of year                      5,537             2,641              3,932
                                                                  ------------      ------------      -------------
Cash and temporary investments at end of year                     $      1,422             5,537              2,641
                                                                  ============      ============      =============
</TABLE>

See accompanying independent auditors' report.

                                      28
<PAGE>

                                  SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.


                        NORTH PITTSBURGH SYSTEMS, INC.
                        ------------------------------
                                  Registrant



By /s/ H.R. Brown                       By   /s/ C.E. Thomas, Jr.
  ------------------------------           ------------------------------
     H. R. Brown                             C. E. Thomas, Jr.
     President, Director, and                Chairman of the Board
     Principal Executive Officer


Date   3/28/2001                        Date  3/28/2001
     ---------------------------            -----------------------------

<PAGE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


     /s/ A. P. Kimble
By_________________________________
     A. P. Kimble
     Director, Vice President, Treasurer and
     Principal Financial and Accounting Officer

       3/28/2001
Date_______________________________


     /s/ C. E. Cole
By_________________________________
     C. E. Cole
     Director

      3/28/2001
Date_______________________________
<PAGE>

                               OTHER INFORMATION

                 Exhibit Index for Annual Reports on Form 10-K
                 ---------------------------------------------


Exhibit No.                Subject                         Applicability
-----------                -------                         -------------

  (2)          Plan of acquisition, reorganization,    Not Applicable
               arrangement, liquidation or
               succession

  (3)(i)       Articles of Incorporation               Provided in Quarterly
                                                       Report on Form 10-Q for
                                                       the quarter ended June
                                                       30, 1996 and Incorporated
                                                       Herein by Reference.

  (3)(ii)      By-Laws                                 Provided in Annual Report
                                                       on Form 10-K for the year
                                                       ended December 31, 1998
                                                       and Incorporated Herein
                                                       by Reference.

  (4)          Instruments defining the rights         Provided in Registration
               of security holders, including          of Securities of Certain
               indentures                              Successor Issuers on Form
                                                       8-B filed on June 25,
                                                       1985 and Incorporated
                                                       Herein by Reference.

  (9)          Voting trust agreement                  Not Applicable

 (10)          Material contracts                      Provided in Quarterly
                                                       Report on Form 10-Q for
                                                       the quarter ended
                                                       September 30, 1999 and
                                                       Incorporated Herein by
                                                       Reference.

 (11)          Statement re computation of per         Attached Hereto
               share earnings

 (12)          Statement re computation of ratios      Not Applicable

 (13)          Annual report to security holders,      Not Applicable
               Form 10-Q or quarterly report to
               security holders
<PAGE>

Exhibit No.               Subject                      Applicability
-----------               -------                      -------------

 (16)          Letter re change in certifying          Not Applicable
               accountant

 (18)          Letter re change in accounting          Not Applicable
               principles

 (21)          Subsidiaries of the Registrant          Attached Hereto

 (22)          Published report regarding matters      Not Applicable
               submitted to vote of security
               holders

 (23)          Consent of experts and counsel          Not Applicable

 (24)          Power of attorney                       Not Applicable

 (99)          Additional Exhibits                     Not Applicable