<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


For the quarter ended MARCH 31, 2001              Commission File No. 000-27308.


                        AAVID THERMAL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)


            DELAWARE                                     02-0466826
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


                 ONE EAGLE SQUARE, SUITE 509, CONCORD, NH 03301
               (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code: (603) 224-1117

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 [ ]

Aggregate market value of the Registrant's common stock held by non-affiliates:
N/A. The number of outstanding shares of the registrant's Common Stock as of May
15, 2001 was 940 shares of Class A, 1,000 shares of Class B and 40 shares of
Class H, all of which are owned by Heat Holdings Corp. On February 2, 2000, a
wholly-owned subsidiary of Heat Holdings Corp. was merged with and into the
Registrant with the Registrant becoming a wholly-owned subsidiary of Heat
Holdings Corp. and each share of Registrant's then outstanding common stock was
converted into $25.50 in cash. The Registrant's Common Stock is no longer
publicly traded; however, the Registrant's Senior Notes are publicly traded.
<PAGE>   2
                        AAVID THERMAL TECHNOLOGIES, INC.
                               INDEX TO FORM 10-Q


<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Part I. Financial Information

Item 1. Financial Statements

      a.)  Consolidated Balance Sheets as of March 31, 2001 and
           December 31, 2000 ............................................    3

      b.)  Consolidated Statements of Operations for the quarter
           ended March 31, 2001, the period from January 1, 2000
           to February 1, 2000 and the period from
           February 2, 2000 through April 1, 2000 .......................    4

      c.)  Consolidated Statements of Cash Flows for the quarter
           ended March 31, 2001, the period from January 1, 2000
           to February 1, 2000 and the period from February 2, 2000
           through April 1, 2000 ........................................    5

      d.)  Notes to Consolidated Financial Statements ...................    6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations .............................   19

Part II. Other Information

Item 1. Legal Proceedings ...............................................   23

Item 5. Other Information ...............................................   23

Item 6. Exhibits and Reports on Form 8-K ................................   23
</TABLE>


                                       2
<PAGE>   3
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                        AAVID THERMAL TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                MARCH 31,
                                                                  2001         DECEMBER 31,
                                                               (UNAUDITED)         2000
<S>                                                            <C>             <C>
ASSETS
Cash and cash equivalents                                      $   14,473       $   23,849
Accounts receivable-trade, net                                     43,784           49,094
Inventories                                                        23,471           25,203
Prepaid and other current assets                                    5,263            4,625
                                                               ----------       ----------
     Total current assets                                          86,991          102,771
Property, plant and equipment, net                                 50,114           57,013
Goodwill, net                                                     156,636          162,430
Developed technology and assembled workforce, net                  46,291           49,015
Other assets, net                                                  10,484           15,059
                                                               ----------       ----------
     Total assets                                              $  350,516       $  386,288
                                                               ==========       ==========

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY

Current portion of debt obligations                            $   10,744       $   10,768
Accounts payable - trade                                           16,915           18,582
Income taxes payable                                                6,158            6,250
Restructuring charges                                               3,745            1,274
Deferred revenue                                                    9,859            9,390
Deferred income taxes                                               1,741            1,741
Accrued expenses and other current liabilities                     22,479           29,998
                                                               ----------       ----------
     Total current liabilities                                     71,641           78,003
Revolving line of credit                                            7,700            7,700
Term loan                                                          39,000           41,000
12 3/4% senior subordinated notes                                 144,451          144,290
Other long term debt obligations                                      173              244
Deferred income taxes                                               9,922            9,977
                                                               ----------       ----------
     Total liabilities                                            272,887          281,214
                                                               ----------       ----------
Commitments and Contingencies
Minority interests in consolidated subsidiaries                     1,744            4,915
Stockholders' equity:
Class A Common Stock, $.0001 par value; authorized
   1,000 shares; 940 shares issued and outstanding                    --               --
Class B Common Stock, $.0001 par value; authorized
   1,000 shares; 1,000 shares issued and outstanding                  --               --
Class H Common Stock, $.0001 par value; authorized
   1,000 shares; 40 shares issued and outstanding                     --               --
Warrants to purchase 60 shares of Class A common stock
   and 60 shares of Class H common stock                            4,560            4,560
Additional paid-in capital                                        147,187          147,187
Cumulative translation adjustment                                  (3,321)          (1,608)
Retained deficit                                                  (72,541)         (49,980)
                                                               -----------      -----------
     Total stockholders' equity                                    75,885          100,159
                                                               ----------       ----------
     Total liabilities, minority interests and
       stockholders' equity                                    $  350,516       $  386,288
                                                               ==========       ==========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       3
<PAGE>   4
                        AAVID THERMAL TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                     PERIOD FROM      PERIOD FROM
                                                                    QUARTER          FEBRUARY 2,      JANUARY 1,
                                                                     ENDED               TO               TO
                                                                    MARCH 31,         APRIL 1,        FEBRUARY 1,
                                                                      2001              2000             2000
                                                                   ----------        -----------     -------------
                                                                    (COMPANY)         (COMPANY)      (PREDECESSOR)
<S>                                                                <C>               <C>              <C>
    Net sales                                                      $  61,611         $   54,560       $  23,442
    Cost of goods sold                                                38,144             40,051          15,516
                                                                   ---------         ----------       ---------
        Gross profit                                                  23,467             14,509           7,926
    Selling, general and administrative expenses                      17,964             13,229           5,032
    Amortization of intangible assets                                  8,560              5,172             182
    Acquired in-process research and development                         ---             15,000             --
    Research and development                                           2,884              1,723             752
    Restructuring charge                                              12,457                ---             ---
                                                                   ---------         ----------       ---------
        Income (loss) from operations                                (18,398)           (20,615)          1,960
    Interest expense, net                                             (6,278)            (3,989)           (816)
    Other income (expense), net                                         (145)               (86)             22
                                                                   ----------        -----------      ---------
        Income (loss) before income taxes and
          minority interest                                          (24,821)           (24,690)          1,166

    Income tax expense                                                  (911)            (1,294)           (547)
                                                                   ---------         ----------       ---------
        Income (loss) before minority interest                       (25,732)           (25,984)            619
    Minority interest in (income) loss of consolidated
      with subsidiaries                                                3,171                (10)              6
                                                                   ---------         ----------       ---------
        Net income (loss)                                          $ (22,561)        $  (25,994)      $     625
                                                                   ==========        ==========       =========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       4
<PAGE>   5
                AAVID THERMAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                    PERIOD FROM
                                                                                                     FEBRUARY 2,      PERIOD FROM
                                                                                  FOR THE                TO          JANUARY 1, TO
                                                                                QUARTER ENDED         APRIL 1,        FEBRUARY 1,
                                                                               MARCH 31, 2001           2000              2000
                                                                               --------------       -------------    -------------
                                                                                  (COMPANY)           (COMPANY)      (PREDECESSOR)
<S>                                                                            <C>                  <C>              <C>
Cash flows (used in) provided by operating activities:
Net income (loss)                                                               $   (22,561)         $ (25,994)       $     625
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating
  activities:
  Depreciation and amortization                                                      11,876              7,307            1,155
  Acquired in-process research and development                                          --              15,000              --
  Charge from inventory write-up to fair value                                          --               3,963              569
  Deferred income taxes                                                                 (59)              (529)             (22)
  Accretion of discount on 12 3/4% senior subordinated
     notes to interest expense                                                          147                 98              --
  Minority interest in (loss) income                                                 (3,171)                10               (6)
  Restructuring charges                                                              12,457                --               --
Changes in assets and liabilities:
  Accounts receivable - trade                                                         5,060                641             (578)
  Inventories                                                                         1,582               (470)            (499)
  Prepaid and other current assets                                                     (681)              (804)             (53)
  Other long term assets                                                                596              1,428              137
  Accounts payable - trade                                                           (1,567)            (5,246)           2,346
  Income taxes payable                                                                  (67)               870              337
  Deferred revenue                                                                      469                916              109
  Accrued expenses and other current liabilities                                     (8,042)             1,154             (473)
                                                                                ------------         ---------       ----------
       Total adjustments                                                             18,600             24,338            3,022
                                                                                -----------          ---------       ----------
       Net cash (used in) provided by operating activities                           (3,961)            (1,656)           3,647


Cash flows used in investing activities:
  Purchase of property, plant & equipment                                            (2,612)            (1,802)            (308)
                                                                                ------------         ----------      -----------
       Net cash used in investing activities                                         (2,612)            (1,802)            (308)

Cash flows provided by (used in) financing activities:
  Issuance of common stock, net of expenses                                             --                 --               349
  Advances under line of credit                                                         --               7,700              --
  Repayments of line of credit                                                          --              (8,182)             --
  Advances under other debt obligations                                                 --              53,856              --
  Principal payments under debt obligations                                          (2,080)           (80,000)             (25)
  Payment of merger and financing expenses                                              --             (15,793)             --
  Repurchase of common stock, options and warrants                                      --            (261,268)             --
  Net proceeds from 12 3/4% senior subordinated
     notes and warrants                                                                 --             148,312              --
  Proceeds from investors                                                               --             152,000              --
                                                                                 ----------          ---------       ---------
       Net cash provided by (used in) financing activities                           (2,080)            (3,375)             324


Foreign exchange rate effect on cash and cash equivalents                              (723)               (37)             (89)

Net increase (decrease) in cash and cash equivalents                                 (9,376)            (6,870)           3,574
Cash and cash equivalents, beginning of period                                       23,849             21,847           18,273
                                                                                -----------          ---------       ----------
Cash and cash equivalents, end of period                                        $    14,473          $  14,977       $   21,847
                                                                                ===========          =========       ==========
Supplemental disclosure of cash flow information:
Interest paid                                                                   $    10,859          $     430       $      834
                                                                                ===========          =========       ==========
Income taxes paid                                                               $       843          $     892       $      117
                                                                                ===========          =========       ==========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       5
<PAGE>   6
                        AAVID THERMAL TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

     (1) ORGANIZATION AND MERGER

     Aavid Thermal Technologies, Inc. (the "Company" or "Aavid") is the leading
global provider of thermal management solutions for electronic products and the
leading developer and marketer of Computational Fluid Dynamics (CFD) software.

     On February 2, 2000, the Company was acquired by Heat Holdings Corp., a
corporation newly formed by Willis Stein & Partners II, L.P. Pursuant to the
merger, Aavid stockholders received $25.50 in cash for each outstanding share of
common stock. In addition, all outstanding stock options and warrants were
cashed out. The Merger was accounted for using the purchase method.

     The Merger and related transaction costs were funded by a cash contribution
from Heat Holdings and an affiliate of $152,000, proceeds of $148,312, net of
original issue discount, from the sale by the Company of 12 3/4% senior
subordinated notes and warrants due 2007, $54,700 pursuant to a new credit
facility entered into by the Company, and approximately $4,653 of cash on hand.
Additionally, the Company used $7,085 of cash on hand to pay financing fees
associated with the senior credit facility and 12 3/4% senior subordinated
notes. Net assets on the date of acquisition were $156,560. Based upon fair
value of assets acquired and liabilities assumed, goodwill of $183,676 was
established. Approximately $113,705 of this goodwill is attributable to Aavid
Thermalloy, the hardware business, and will be amortized over 20 years. The
remainder, $69,971, is attributable to Fluent, the CFD software business, and
will be amortized over 4 years.

     Of the $152,000 cash contribution, $4,811 was invested by Heat Holdings II
Corp., an affiliate of Heat Holdings, to acquire 95% of the common equity of
Aavid Thermalloy, LLC, the thermal management hardware business. The Company
controls Aavid Thermalloy, LLC through a preferred equity interest and holds a
5% common equity interest and thus consolidates Aavid Thermalloy LLC in its
results within the accompanying financial statements. The investment by Heat
Holdings II Corp. has been recorded as minority interests within the
accompanying financial statements.

     On February 2, 2000, as part of the transactions relating to the Merger,
the Company issued 150,000 units (the "Units"), consisting of $150,000 aggregate
principal amount of its 12 3/4% Senior Subordinated Notes due 2007 (the "Notes")
and warrants (the "Warrants") to purchase an aggregate of 60 shares of the
Company's Class A Common Stock, par value $0.0001 per share, and 60 shares of
the Company's Class H Common Stock, par value $0.0001 per share. The Notes are
fully and unconditionally guaranteed on a joint and several basis by each of the
Company's domestic subsidiaries (the "Subsidiary Guarantors") (see note (10) for
selected consolidating financial statements of parent, guarantors and
non-guarantors). The Notes were issued pursuant to an Indenture (the
"Indenture") among the Company, the Subsidiary Guarantors and Bankers Trust
Company, as trustee. $4,560 of the proceeds from the sale of the Units was
allocated to the fair value of the Warrants and $143,752 was allocated to the
Notes, net of original issue discount of $1,688. The total discount of $6,248 is
being accreted over the term of the notes, using the effective interest rate
method. This accretion is recorded as interest expense within the accompanying
statement of operations for the period February 2, 2000 to April 1, 2001 and for
the quarter ended March 31, 2001.

     In connection with the Merger, the Company repaid all of the outstanding
term loan and revolving line of credit under its existing credit facility, which
aggregated approximately $88,200 at December 31, 1999, and entered into an
amended and restated credit facility (the "Amended and Restated Credit
Facility"). The Amended and Restated Credit Facility provides for a $22,000
revolving credit facility (the "Revolving Facility") (of which $1,700 was drawn
at the closing of the Merger) and a $53,000 term loan facility (the "Term
Facility") (which was fully drawn at the closing of the Merger). Subject to
compliance with the terms of the Amended and Restated Credit Facility,
borrowings under the Revolving Facility are available for working capital
purposes, capital expenditures and future acquisitions. The Revolving Facility
will terminate, and all amounts outstanding thereunder will be payable, on March
31, 2005. Principal on the Term Facility is required to be repaid in quarterly
installments commencing December 31, 2000 and ending March 31, 2005 as follows:
five installments of $2,000; four installments of $2,500; four installments of
$2,750; two installments of $3,200; two installments of $3,900; and a final
installment of $7,800. In addition, commencing with our fiscal year ending
December 31, 2001, the Company is required to apply 50% of excess cash flow, as
defined, to permanently reduce the Term Facility. The Amended and Restated
Credit Facility bears interest at a rate equal to, at the Company's option,
either (1) in the case of Eurodollar loans, the sum of (x) the interest rate in
the London interbank market for loans in an amount substantially equal to the
amount of borrowing and for the period of borrowing selected by Aavid and (y) a
margin of between 1.50% and 2.25% (depending on the Company's consolidated
leverage ratio (as defined in the Amended and Restated Credit Facility)) or (2)
the sum of the higher of (x)


                                       6
<PAGE>   7
Canadian Imperial Bank of Commerce's prime or base rate or (y) one-half percent
plus the latest overnight federal funds rate plus (z) a margin of between .25%
and 1.00% (depending on the Company's consolidated leverage ratio). At March 31,
2001, the interest rates on the Term Facility and the Revolving Facility were
7.34%.

     The Amended and Restated Credit Facility may be prepaid at any time in
whole or in part without penalty, and must be prepaid to the extent of certain
equity or asset sales. The Amended and Restated Credit Facility limits the
Company's ability to incur additional debt, to sell or dispose of assets, to
create or incur liens, to make additional acquisitions, to pay dividends, to
purchase or redeem its stock and to merge or consolidate with any other party.
In addition, the Amended and Restated Credit Facility requires that the Company
meet certain financial ratios, and provides the lenders with the right to
require the payment of all amounts outstanding under the facility, and to
terminate all commitments thereunder, if there is a change in control of Aavid.
The Amended and Restated Credit Facility is guaranteed by each of Heat Holdings
Corp. and Heat Holdings II Corp., and all of the Company's domestic subsidiaries
and secured by the Company's assets (including the assets and stock of its
domestic subsidiaries and a portion of the stock of its foreign subsidiaries).

     As of March 31, 2001, $7,700 was outstanding under the revolving credit
facility and $49,000 was outstanding under the term facility, of which $10,000
was classified as current within the accompanying balance sheet.

     The Company incurred approximately $7,085 in underwriting, legal and other
professional fees in connection with the issuance of the Notes and the
establishment of the Amended and Restated Credit Facility. These costs, in
addition to the $1,624 of unamortized costs associated with the original Credit
Facility, have been capitalized as deferred financing fees and are being
amortized over the respective terms of the related debt. This amortization is
recorded in interest expense in the accompanying statement of operations from
February 2, 2000 to April 1, 2000 and for the quarter ended March 31, 2001.

     At December 31, 2000 the Company was not in compliance with the leverage
ratio covenant required by the amended and restated credit facility and the
Indenture under which the Notes were issued. As a result, the Company's
stockholders were required to make an equity contribution sufficient to allow
the Company to pay down enough debt to achieve a 4.5 to 1 leverage ratio based
on total leverage at December 31, 2000. On May 4, 2001 certain of the Company's
stockholders and their affiliates made an equity contribution of $8,000 in cash
and $26,191 in principal amount of senior notes in full satisfaction of this
obligation. In addition, the Company and the lenders amended the facility to
provide that the last three required quarterly principal payments in 2001 under
the facility will be prepaid with $6,000 of the proceeds of the equity
contribution, and the four required principal payments in 2002 will be reduced
by $500 each, reflecting application of the remaining cash equity contribution.
Further, certain covenant ratios and ratio definitions were amended to levels
which the Company expects to meet through December 31, 2001 and the available
line of credit was reduced to $17,000 from $22,000. Based on the equity
contribution, the Company's event of non-compliance with the leverage ratio at
December 31, 2000 and March 31, 2001 was cured.


     (2) BASIS OF PRESENTATION

     These financial statements reflect the consolidated results of operations
and cash flows of the Company for the period from January 1, 2000 to February 1,
2000 (collectively "Predecessor financial statements"). The Predecessor
financial statements have been prepared using the historical cost of the
Company's assets and have not been adjusted to reflect the merger with Heat
Holdings Corp. The accompanying financial statements as of March 31, 2001,
December 31, 2000 and for the quarter ended March 31, 2001 reflect the
consolidated financial position, results of operations, and cash flows of the
Company subsequent to the date of the merger and include adjustments required
under the purchase method of accounting.

     In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, consisting only of normal
adjustments, necessary to present fairly the financial position of Aavid Thermal
Technologies, Inc. and its consolidated subsidiaries at March 31, 2001 and
December 31, 2000, and the results of operations and cash flows for the quarter
ended March 31, 2001 and the period from January 1, 2000 to February 1, 2000 and
the period from February 2, 2000 to April 1, 2000.

     The financial information as of and for the period ended March 31, 2001
should be read in conjunction with the financial statements contained in the
Company's Form 10-K Annual Report for the year ended December 31, 2000.


                                       7
<PAGE>   8
     (3) ACCOUNTS RECEIVABLE

     The components of accounts receivable at March 31, 2001 and December 31,
2000 are as follows:


<TABLE>
<CAPTION>
                                                      MARCH 31,     DECEMBER 31,
                                                        2001           2000
                                                     -----------    ------------
                                                     (UNAUDITED)
<S>                                                  <C>            <C>
Accounts receivable                                   $  47,092      $  52,187
Allowance for doubtful accounts                          (3,308)        (3,093)
                                                      ----------     ---------
Net accounts receivable                               $  43,784      $  49,094
                                                      =========      =========
</TABLE>

     (4) INVENTORIES

     Inventories are valued at the lower of cost or market (first-in,
first-out), and consist of materials, labor and overhead. The components of
inventories at March 31, 2001 and December 31, 2000 are as follows:



<TABLE>
<CAPTION>
                                                    MARCH 31,     DECEMBER 31,
                                                      2001            2000
                                                  -----------     ------------
                                                  (UNAUDITED)
<S>                                                <C>              <C>
Raw materials                                      $  11,593        $  12,675
Work-in-process                                        5,159            6,168
Finished goods                                         6,719            6,360
                                                   ---------        ---------
                                                   $  23,471        $  25,203
                                                   =========        =========
</TABLE>

     (5) COMPREHENSIVE INCOME

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which specifies the presentation and
disclosure requirements for comprehensive income. The following details
comprehensive income for the periods reported herein:

<TABLE>
<CAPTION>
                                                                            PERIOD FROM        PERIOD FROM
                                                                            FEBRUARY 2,        JANUARY 1,
                                                        QUARTER ENDED         2000 TO             2000
                                                          MARCH 31,           APRIL 1,        TO FEBRUARY 1,
                                                            2001               2000               2000
                                                          (COMPANY)          (COMPANY)        (PREDECESSOR)
                                                        -------------       -----------       --------------
                                                         (UNAUDITED)        (UNAUDITED)        (UNAUDITED)
<S>                                                     <C>                 <C>               <C>
    Net income (loss)                                     $(22,561)         $  (25,994)          $  625
    Foreign currency translation adjustment, net
       of taxes                                             (1,713)                (38)             (53)
                                                          ---------         ----------           ------
    Comprehensive income (loss)                           $(24,274)         $  (26,032)          $  572
                                                          =========         ==========           ======
</TABLE>

     (6) IN-PROCESS RESEARCH AND DEVELOPMENT

     In connection with the Merger, the Company allocated $15,000 of the
purchase price to in-process research and development projects. This allocation
represented the estimated fair value based on risk-adjusted cash flows related
to the incomplete software research and development projects of Fluent, Inc. At
the date of the merger, the development of these projects had not yet reached
technological feasibility and the research and development in progress had no
alternative future uses. Accordingly, these costs were expensed as of the merger
date.

     The Company allocated values to the in-process research and development
based on an in-depth assessment of the R&D projects. The value assigned to these
assets was limited to significant research projects for which technological
feasibility had not been established, including development, engineering and
testing activities associated with the introduction of the acquired in-process
technologies.

     The value assigned to purchased in-process technology was determined by
estimating the costs to develop the acquired technology into commercially viable
products, estimating the resulting net cash flows from the projects, and
discounting the net cash flows to


                                       8
<PAGE>   9
their present value. The revenue projection used to value the in-process
research and development was based on historical results, estimates of relevant
market sizes and growth factors, expected trends in technology, and the nature
and expected timing of new product introductions by the Company and its
competitors. The resulting net cash flows from such projects are based on
management's estimates of cost of sales, operating expenses, and income taxes
from such projects.

     The nature of the efforts to develop the acquired in-process technologies
into commercially viable products and services principally related to the
completion of certain planning, designing, coding, prototyping, and testing
activities that were necessary to establish that the developmental software
technologies met their design specifications including functional, technical,
and economic performance requirements. At the merger date, the technologies
under development were between 40% and 80% complete, based upon project
man-month and cost data. Anticipated completion dates ranged from 6 to 18
months, at which times the Company expects to begin selling the developed
products. Development costs to complete the R&D were estimated at approximately
$4,000.

     Fluent's primary in-process R&D projects involved developing: (i) Fluent
version 6.0; (ii) Gambit version 2.0; (iii) materials processing functionality;
and, (iv) advanced infrastructure technology. Fluent 6.0 represents the
Company's next-generation computational fluid dynamics (CFD) software engine.
Gambit 2.0 includes new pre-processor CFD technologies. The development of
materials processing technologies is designed to address CFD needs in new
markets. The advanced infrastructure technology establishes a new platform upon
which future products will be more efficiently and rapidly developed.

     Aggregate revenues for the developmental Fluent products were estimated to
peak within three years of acquisition and then decline steadily as other new
products and technologies are expected to enter the market. Operating expenses
were estimated based on historical results and management's analysis of Fluent's
cost structure. Projected operating expenses as a percentage of revenues were
expected to be stable for the foreseeable future.

     The rates utilized to discount the net cash flows to their present value
were based on estimated cost of capital calculations. A discount rate of 18
percent was considered appropriate for the in-process R&D, and a discount rate
of 15 percent was appropriate for the existing products and technologies. These
discount rates were commensurate with the Fluent's long history and market
leadership position. The discount rate utilized for the in-process technology
was higher than Aavid's cost of capital due to the inherent uncertainties
surrounding the successful development of the purchased in-process technology,
the useful life of such technology, the profitability levels of such technology
and the uncertainty of technological advances that are unknown at this time.

     With respect to the acquired in-process technology, the calculations of
value were adjusted to reflect the development efforts of Fluent prior to the
close of the merger. In doing so, consideration was given to each major
project's stage of completion, the complexity of the work completed to date, the
difficulty of completing the remaining development, costs already incurred, and
the projected cost to complete the projects.

     The Company believes that the foregoing assumptions used in the forecasts
were reasonable at the time of the merger. No assurance can be given, however,
that the underlying assumptions used to estimate sales, development costs or
profitability, or the events associated with such projects, will transpire as
estimated. For these reasons, actual results may vary from projected results.
The most significant and uncertain assumptions relating to the in-process
projects relate to the projected timing of completion of, and revenues
attributable to, each project.

     If these projects are not successfully developed, the sales and
profitability of the Fluent division may be adversely affected in future
periods. Additionally, the value of other acquired intangible assets may become
impaired.

     (7) NON-RECURRING CHARGES AND RESTRUCTURING RESERVES

     Approximately $2,130 of restructuring charges have been recorded in
connection with the Company's October 1999 acquisition of Thermalloy, the
thermal management business of Bowthorpe plc. The restructuring plan includes
initiatives to integrate the operations of the Company and Thermalloy and reduce
overhead. The primary components of these plans relate to (a) the closure of
duplicative Thermalloy operations in Hong Kong and the United Kingdom, (b) the
elimination of duplicative selling, general and administration functions of
Thermalloy on a global basis and (c) the termination of certain contractual
obligations. During the year ended December 31, 2000, 136 individuals were
terminated. The following amounts have been charged against the Thermalloy
restructuring reserves during the quarter ended March 31, 2001:


                                       9
<PAGE>   10
<TABLE>
<CAPTION>
                                                                                CHARGES AGAINST
                                                                                RESERVES FOR THE      RESTRUCTURING
                                                            RESTRUCTURING         QUARTER ENDED     RESERVES BALANCE
                                                         RESERVES BALANCE AT        MARCH 31,         AT MARCH 31,
                                                          DECEMBER 31, 2000           2001                2001
                                                         -------------------    ----------------    ----------------
<S>                                                      <C>                    <C>                 <C>
Lease terminations and leasehold improvements reserve         $   735              $     (75)           $   660
Employee separation                                               493                   (158)               335
                                                              -------              ----------           -------
Total                                                         $ 1,228              $    (233)           $   995
                                                              =======              ==========           =======
</TABLE>

     Approximately $716 of restructuring charges were recorded in connection
with the Merger. The restructuring plans included initiatives to integrate the
operations of the Company and reduce overhead. The primary components of these
plans related to (a) the closure of operations in California and the United
Kingdom and (b) the termination of certain contractual obligations. During the
year ended December 31, 2000, 89 individuals were terminated under the
restructuring plan. The following amounts have been charged against the merger
restructuring reserves during the quarter ended March 31, 2001:


<TABLE>
<CAPTION>
                                                                                  CHARGES AGAINST     RESTRUCTURING
                                                                                 RESERVES FOR THE       RESERVES
                                                            RESTRUCTURING          QUARTER ENDED         BALANCE
                                                         RESERVES BALANCE AT         MARCH 31,        AT MARCH 31,
                                                          DECEMBER 31, 2000            2001               2001
                                                         -------------------     ----------------     ------------
<S>                                                      <C>                     <C>                  <C>
Lease terminations and leasehold improvements reserve          $   12                $   (12)            $   --
Employee separation                                                34                    (34)                --
                                                               ------                --------            ------
Total                                                          $   46                $   (46)            $   --
                                                               ======                ========            ======
</TABLE>

     During the first half of 2001 the Company plans to cease manufacturing
activities at its Dallas, Texas facility and reduce its New Hampshire workforce.
In connection with this action, the Company recorded a one-time restructuring
charge within the statement of operations for the first quarter of 2001. This
one-time charge totals $12,457 and includes estimated amounts related to
employee severance, write-off of fixed assets and write-off of most of a prepaid
lease intangible asset that was originally recorded as part of the Thermalloy
acquisition. During the quarter ended March 31, 2001, 81 individuals were
terminated under the restructuring plan. The following amounts have been
recorded during the first quarter of 2001 related to this restructuring:


<TABLE>
<CAPTION>
                                                 CHARGES AGAINST   RESTRUCTURING
                                                RESERVES FOR THE     RESERVES
                            RESTRUCTURING         QUARTER ENDED       BALANCE
                         RESERVES ESTABLISHED       MARCH 31,       AT MARCH 31,
                         AT MARCH 31, 2001            2001             2001
                         --------------------   ----------------   -------------
<S>                      <C>                    <C>                <C>
Employee separation            $  3,138             $   (388)         $  2,750
Fixed asset reserve               5,500             $    ---             5,500
Prepaid rent write-off            3,819               (3,819)              ---
                               --------             ---------         --------
Total                          $ 12,457             $ (4,207)         $  8,250
                               ========             =========         ========
</TABLE>

     (8) NEW ACCOUNTING PRONOUNCEMENTS

     In June, 1998 the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". This statement
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the value of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting. SFAS 133, as
amended by SFAS 137 and 138, was adopted by the Company in the first quarter of
2001. The adoption of this statement did not have a significant impact on the
Company.

     (9) SEGMENT REPORTING

     Aavid provides thermal management solutions for microprocessors and
integrated circuits ("ICs") for computer and network and industrial
applications. The Company consists of two distinct reportable segments: (1)
thermal management products and (2) computational fluid dynamics ("CFD")
software. Aavid's thermal management products consist of products and services
that solve problems associated with the dissipation of unwanted heat in
electronic and electrical components and systems. The Company develops and
offers CFD software for computer modeling and fluid flow analysis of products
and processes that reduce time and expense associated with physical models and
the facilities to test them.


                                       10
<PAGE>   11
     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as disclosed in the Company's
Form 10-K for the year ended December 31, 2000.

     The Company accounts for inter-segment sales and transfers as if the sales
or transfers were to third parties, that is, at current market prices.

     Aavid's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
segment requires different marketing and sales strategies.

     The following summarizes the operations of each reportable segment for the
quarter ending March 31, 2001 and the periods from January 1, 2000 to February
1, 2000 and February 2, 2000 to April 1, 2000:

<TABLE>
<CAPTION>
                                                                             SEGMENT
                                                              REVENUES     INCOME (LOSS)
                                                                FROM       BEFORE TAXES    ASSETS (NET OF
                                                              EXTERNAL     AND MINORITY     INTERCOMPANY
                                                              CUSTOMERS      INTERESTS        BALANCES)
<S>                                                           <C>          <C>             <C>
March 31, 2001 (COMPANY)
      Thermal Products                                        $ 43,808      $  (19,532)      $  230,367
      CFD Software                                              17,803          (3,031)          93,888
      Corporate Office                                             --           (2,258)          26,261
                                                              --------      -----------      ----------
      Total..........................................         $ 61,611      $  (24,821)      $  350,516
                                                              ========      ===========      ==========

February 2, 2000 to April 1, 2000 (COMPANY)
      Thermal Products                                        $ 45,082      $    1,989       $  266,491
      CFD Software                                               9,478           1,534          117,935
      Corporate Office                                             --          (28,213)          20,725
                                                              --------      -----------      ----------
      Total..........................................         $ 54,560      $  (24,690)      $  405,151
                                                              ========      ===========      ==========

January 1, 2000 to February 1, 2000 (PREDECESOR)
      Thermal Products                                        $ 18,234      $      (43)
      CFD Software                                               5,208           1,840
      Corporate Office                                             --             (631)
                                                              --------      -----------
      Total..........................................         $ 23,442      $    1,166
                                                              ========      ==========
</TABLE>


                                       11
<PAGE>   12
    The following table provides geographic information about the Company's
operations. Revenues are attributable to an operation based on the location the
product was shipped from. Long-lived assets are attributable to a location based
on physical location.

<TABLE>
<CAPTION>
                                                                                                    FOR THE PERIOD
                                                                                                    JANUARY 1, 2000
                                FOR THE QUARTER ENDED             FOR THE PERIOD FEBRUARY 2,        TO FEBRUARY 1,
                                   MARCH 31, 2001                   2000 TO APRIL 1, 2000                 2000
                            -----------------------------        ---------------------------        ---------------
                                     (COMPANY)                             (COMPANY)                 (PREDECESSOR)
                                              LONG-LIVED                         LONG-LIVED
                                                ASSETS                             ASSETS
                                             AS OF PERIOD                       AS OF PERIOD
                             REVENUES             END             REVENUES           END               REVENUES
                            -----------      ------------        ----------     ------------          ----------
<S>                         <C>              <C>                 <C>            <C>                   <C>
United States               $   38,306        $  246,401         $  35,083       $ 266,358            $  14,967
Taiwan                           2,680             1,567             8,389           7,177                3,539
China                            3,099             3,692             7,913           4,255                2,298
United Kingdom                   6,217             1,568             3,211           1,711                1,608
Other International             22,408            10,362            10,371          10,387                4,120
Intercompany
    eliminations               (11,099)              (65)          (10,407)          8,062               (3,090)
                            -----------       -----------        ----------      ---------            ---------
Total                       $   61,611        $  263,525         $  54,560       $ 297,950            $  23,442
                            ===========       ===========        ==========      =========            =========
</TABLE>


                                       12
<PAGE>   13
     (10) SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND
NON-GUARANTORS (UNAUDITED)

     The Company's wholly-owned domestic subsidiaries have jointly and severally
guaranteed, on a senior subordinated basis, the $150,000 principal amount of the
Company's 12 3/4% Senior Subordinated Notes, due 2007. The guarantors include
the combined domestic operations of Aavid Thermalloy, LLC and Fluent, Inc. and
the Company's subsidiary Applied Thermal Technologies, Inc. The non-guarantors
include the combined foreign operations of Aavid Thermalloy, LLC and Fluent,
Inc. The consolidating condensed financial statements of the Company depict
Aavid Thermal Technologies, Inc., the Parent, carrying its investment in
subsidiaries under the equity method and the guarantor and non-guarantor
subsidiaries are presented on a combined basis. Management believes that there
are no significant restrictions on the Parent's and guarantors' ability to
obtain funds from their subsidiaries by dividend or loan. The principal
elimination entries eliminate investment in subsidiaries and intercompany
balances and transactions.

<TABLE>
<CAPTION>
                                                            CONDENSED CONSOLIDATING BALANCE SHEET AS OF MARCH 31, 2001 (UNAUDITED)
                                                          --------------------------------------------------------------------------
                                                                      U.S. GUARANTOR    NON-GUARANTOR
                                                            PARENT     SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                                          ---------   --------------    -------------   ------------    ------------
<S>                                                       <C>         <C>               <C>             <C>             <C>
ASSETS
Cash and cash equivalents ..............................  $     277      $   3,314        $ 10,882       $      --       $  14,473
Accounts receivable-trade, net .........................         --         21,650          21,766             368          43,784
Inventories ............................................     (1,000)        12,528          12,089            (146)         23,471
Due (to) from affiliate, net ...........................     73,430         (9,868)         (5,815)        (57,747)             --
Refundable taxes .......................................       (180)            --              80             100              --
Deferred income taxes ..................................     10,761         (2,194)            333          (8,900)             --
Prepaid and other current assets .......................        442          1,767           3,065             (11)          5,263
                                                          ---------      ---------        --------       ---------       ---------
Total current assets ...................................     83,730         27,197          42,400         (66,336)         86,991
Property, plant and equipment, net .....................        178         34,132          15,820             (16)         50,114
Investment in subsidiaries .............................    154,545             --              --        (154,545)             --
Other assets, net ......................................     24,990        146,818           9,723          31,880         213,411
                                                          ---------      ---------        --------       ---------       ---------
Total assets ...........................................  $ 263,443      $ 208,147        $ 67,943       $(189,017)      $ 350,516
                                                          =========      =========        ========       =========       =========

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY
Current portion of debt obligations ....................  $  10,000      $     367        $    377       $      --       $  10,744
Accounts payable-trade .................................        490          6,629           9,796              --          16,915
Income taxes payable ...................................    (16,266)        17,654           5,473            (703)          6,158
Deferred revenue .......................................         --          5,862           3,997              --           9,859
Deferred income taxes ..................................      1,741             --              --              --           1,741
Accrued expenses and other current liabilities .........      4,531         13,950           7,709              34          26,224
                                                          ---------      ---------        --------       ---------       ---------
Total current liabilities ..............................        496         44,462          27,352            (669)         71,641
                                                          ---------      ---------        --------       ---------       ---------
Debt obligations, net of current portion ...............    191,151            195             (22)             --         191,324
Deferred income taxes ..................................     (4,753)        19,346             (34)         (4,637)          9,922
                                                          ---------      ---------        --------       ---------       ---------
Total liabilities ......................................    186,894         64,003          27,296          (5,306)        272,887
                                                          ---------      ---------        --------       ---------       ---------
Commitments and contingencies
Minority interests .....................................        664             91           1,383            (394)          1,744
Stockholders' equity:
Common Stock ...........................................         --             --              --              --              --
Warrants ...............................................      4,560             --              --              --           4,560
Additional paid-in capital .............................    147,187        207,605           4,021        (211,626)        147,187
Cumulative translation adjustment ......................     (3,321)         1,861          (3,878)          2,017          (3,321)
Retained earnings (deficit) ............................    (72,541)       (65,413)         39,121          26,292         (72,541)
                                                          ---------      ---------        --------       ---------       ---------
Total stockholders' equity .............................     75,885        144,053          39,264        (183,317)         75,885
                                                          ---------      ---------        --------       ---------       ---------
Total liabilities, minority interests and
   stockholders' equity ................................  $ 263,443      $ 208,147        $ 67,943       $(189,017)      $ 350,516
                                                          =========      =========        ========       =========       =========
</TABLE>


                                       13
<PAGE>   14
<TABLE>
<CAPTION>
                                                                 CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2000
                                                           ------------------------------------------------------------------------
                                                                       U.S. GUARANTOR   NON-GUARANTOR
                                                            PARENT      SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                                           ---------   --------------   -------------   ------------   ------------
<S>                                                        <C>         <C>              <C>             <C>            <C>
ASSETS
Cash and cash equivalents ...............................  $   9,443      $   4,193       $ 10,213       $      --      $  23,849
Accounts receivable-trade, net ..........................         --         25,904         22,822             368         49,094
Inventories .............................................         --         14,273         10,624             306         25,203
Due (to) from affiliate, net ............................     81,116         (8,630)          (378)        (72,108)            --
Refundable taxes ........................................       (180)            --             --             180             --
Deferred income taxes ...................................     10,757         (2,194)           613          (9,176)            --
Prepaid and other current assets ........................        201          1,882          2,551              (9)         4,625
                                                           ---------      ---------       --------       ---------      ---------
Total current assets ....................................    101,337         35,428         46,445         (80,439)       102,771
Property, plant and equipment, net ......................        536         40,613         15,875             (11)        57,013
Investment in subsidiaries ..............................    168,457             --             --        (168,457)            --
Deferred taxes ..........................................      1,102         (1,102)            --              --             --
Other assets, net .......................................     23,444        168,376         12,992          21,692        226,504
                                                           ---------      ---------       --------       ---------      ---------
Total assets ............................................  $ 294,876      $ 243,315       $ 75,312       $(227,215)     $ 386,288
                                                           =========      =========       ========       =========      =========

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY
Current portion of debt obligations .....................  $  10,000      $     350       $    418       $      --      $  10,768
Accounts payable-trade ..................................        103          7,381         11,098              --         18,582
Income taxes payable ....................................    (15,253)        17,711          4,490            (698)         6,250
Deferred revenue ........................................         --          5,751          3,639              --          9,390
Deferred income taxes ...................................      1,741             --             --              --          1,741
Accrued expenses and other current liabilities ..........      9,225         13,633          8,387              27         31,272
                                                           ---------      ---------       --------       ---------      ---------
Total current liabilities ...............................      5,816         44,826         28,032            (671)        78,003
                                                           ---------      ---------       --------       ---------      ---------
Debt obligations, net of current portion ................    192,990            214             30              --        193,234
Deferred income taxes ...................................     (4,753)        19,410            (41)         (4,639)         9,977
                                                           ---------      ---------       --------       ---------      ---------
Total liabilities .......................................    194,053         64,450         28,021          (5,310)       281,214
                                                           ---------      ---------       --------       ---------      ---------
Commitments and contingencies
Minority interests ......................................        664          3,359          1,283            (391)         4,915
Stockholders' equity:
Common Stock ............................................         --             --             --              --             --
Warrants ................................................      4,560             --             --              --          4,560
Additional paid-in capital ..............................    147,187        207,508          6,129        (213,637)       147,187
Cumulative translation adjustment .......................     (1,608)         1,861         (2,638)            777         (1,608)
Retained earnings (deficit) .............................    (49,980)       (33,863)        42,517          (8,654)       (49,980)
                                                           ---------      ---------       --------       ---------      ---------
Total stockholders' equity ..............................    100,159        175,506         46,008        (221,514)       100,159
                                                           ---------      ---------       --------       ---------      ---------
Total liabilities, minority interests
 and stockholders' equity ...............................  $ 294,876      $ 243,315       $ 75,312       $(227,215)     $ 386,288
                                                           =========      =========       ========       =========      =========
</TABLE>


                                       14
<PAGE>   15
<TABLE>
<CAPTION>
                                                                        CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                                               FOR THE THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED) (COMPANY)
                                                         --------------------------------------------------------------------------
                                                                      U.S. GUARANTOR   NON-GUARANTOR
                                                          PARENT       SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                                         --------     --------------   -------------   ------------    ------------
<S>                                                      <C>          <C>              <C>             <C>             <C>
Net sales ........................................       $     --        $ 38,307        $ 34,403        $(11,099)       $ 61,611
Cost of goods sold ...............................          1,000          25,260          19,576          (7,692)         38,144
                                                         --------        --------        --------        --------        --------
Gross profit .....................................         (1,000)         13,047          14,827          (3,407)         23,467
Selling, general and administrative expenses .....            799          20,344           6,462          (1,081)         26,524
Restructuring charges ............................             --          12,457              --              --          12,457
Research and development .........................             --           2,268           3,001          (2,385)          2,884
                                                         --------        --------        --------        --------        --------
Income (loss) from operations ....................         (1,799)        (22,022)          5,364              59         (18,398)
Interest income (expense), net ...................           (453)         (5,756)            (56)            (13)         (6,278)
Other income (expense), net ......................              7             (73)           (108)             29            (145)
Equity in income (loss) of subsidiaries ..........        (21,316)             --              --          21,316              --
                                                         --------        --------        --------        --------        --------
Income (loss) before income taxes and minority
  interests ......................................        (23,561)        (27,851)          5,200          21,391         (24,821)
Income tax benefit (expense) .....................          1,000              84          (1,995)             --            (911)
                                                         --------        --------        --------        --------        --------
Income (loss) before minority interests ..........        (22,561)        (27,767)          3,205          21,391         (25,732)
Minority interests in (income) loss of
  consolidated subsidiaries ......................             --           3,269             (98)             --           3,171
                                                         --------        --------        --------        --------        --------
Net income (loss) ................................       $(22,561)       $(24,498)       $  3,107        $ 21,391        $(22,561)
                                                         ========        ========        ========        ========        ========
</TABLE>


                                       15
<PAGE>   16
<TABLE>
<CAPTION>
                                                                        CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                                           FOR THE PERIOD FROM FEBRUARY 2, TO APRIL 1, 2000 (UNAUDITED) (COMPANY)
                                                         --------------------------------------------------------------------------
                                                                      U.S. GUARANTOR   NON-GUARANTOR
                                                          PARENT       SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                                         --------     --------------   -------------   ------------    ------------
<S>                                                      <C>             <C>             <C>             <C>             <C>
Net sales ........................................       $     --        $ 34,992        $ 29,953        $(10,385)       $ 54,560
Cost of goods sold ...............................             --          28,392          19,706          (8,047)         40,051
                                                         --------        --------        --------        --------        --------
Gross profit .....................................             --           6,600          10,247          (2,338)         14,509
Selling, general and administrative expenses .....            669          13,951           5,491          (1,710)         18,401
Acquired research and development ................             --          15,000              --              --          15,000
Research and development .........................             --           1,367           1,744          (1,388)          1,723
                                                         --------        --------        --------        --------        --------
Income (loss) from operations ....................           (669)        (23,718)          3,012             760         (20,615)
Interest income (expense), net ...................         (3,909)            (94)             (9)             23          (3,989)
Other income (expense), net ......................            407              64            (120)           (437)            (86)
Equity in income of subsidiaries .................        (23,696)             --              --          23,696              --
                                                         --------        --------        --------        --------        --------
Income (loss) before income taxes and minority
   interests .....................................        (27,867)        (23,748)          2,883          24,042         (24,690)
Income tax benefit (expense) .....................          1,873            (152)           (891)         (2,124)         (1,294)
                                                         --------        --------        --------        --------        --------
Income (loss) before minority interests ..........        (25,994)        (23,900)          1,992          21,918         (25,984)
Minority interests in income of consolidated
   subsidiaries ..................................             --              --             (10)             --             (10)
                                                         --------        --------        --------        --------        --------
Net income (loss) ................................       $(25,994)       $(23,900)       $  1,982        $ 21,918        $(25,994)
                                                         ========        ========        ========        ========        ========
</TABLE>

<TABLE>
<CAPTION>
                                                                          CONDENSED CONSOLIDATING STATEMENT OF INCOME FOR
                                                             THE PERIOD FROM JANUARY 1, TO FEBRUARY 1, 2000 (UNAUDITED)(PREDECESSOR)
                                                             -----------------------------------------------------------------------
                                                                       U.S. GUARANTOR   NON-GUARANTOR
                                                              PARENT    SUBSIDIARIES     SUBSIDIARIES   ELIMINATIONS    CONSOLIDATED
                                                             -------   --------------   -------------   ------------    ------------
<S>                                                          <C>       <C>              <C>             <C>             <C>
Net sales ..............................................     $    --      $14,810          $11,662        $(3,030)        $23,442
Cost of goods sold .....................................          --        9,912            7,796         (2,192)         15,516
                                                             -------      -------          -------        -------         -------
Gross profit ...........................................          --        4,898            3,866           (838)          7,926
Selling, general and administrative expenses ...........          19        3,324            2,157           (286)          5,214
Research and development ...............................          --          577              824           (649)            752
                                                             -------      -------          -------        -------         -------
Income (loss) from operations ..........................         (19)         997              885             97           1,960
Interest income (expense), net .........................        (818)          (9)              --             11            (816)
Other income (expense), net ............................         206           13              (21)          (176)             22
Equity in income of subsidiaries .......................       1,256           --               --         (1,256)             --
                                                             -------      -------          -------        -------         -------
Income (loss) before income taxes and minority
   interests ...........................................         625        1,001              864         (1,324)          1,166
Income tax benefit (expense) ...........................          --         (540)            (419)           412            (547)
                                                             -------      -------          -------        -------         -------
Income (loss) before minority interests ................         625          461              445           (912)            619
Minority interests in loss of consolidated
   subsidiaries ........................................          --           --                6             --               6
                                                             -------      -------          -------        -------         -------
Net income (loss) ......................................     $   625      $   461          $   451        $  (912)        $   625
                                                             =======      =======          =======        =======         =======
</TABLE>


                                       16
<PAGE>   17
<TABLE>
<CAPTION>
                                                                        CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                                                                  FOR THE QUARTER ENDED MARCH 31, 2001 (UNAUDITED) (COMPANY)
                                                           -------------------------------------------------------------------------
                                                                      U.S. GUARANTOR   NON-GUARANTOR
                                                            PARENT     SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                                           -------    --------------   -------------    ------------    ------------
<S>                                                        <C>        <C>              <C>              <C>             <C>
Net cash provided by (used in) operating activities ..     $(7,166)      $    90          $ 3,116         $    (1)         $(3,961)
Cash flows used in investing activities:
Notes receivable .....................................          --            --               --              --               --
Proceeds from sale of property, plant and equipment ..          --
Purchases of property, plant and equipment ...........          --          (964)          (1,648)             --           (2,612)
                                                           -------       -------          -------         -------          -------
Net cash used in investing activities ................          --          (964)          (1,648)             --           (2,612)
Cash flows provided by (used in) financing activities:
Principal payments on debt obligations ...............      (2,000)           (1)             (79)             --           (2,080)
                                                           -------       -------          -------         -------          -------
Net cash provided by (used in) financing activities ..      (2,000)           (1)             (79)             --           (2,080)
Foreign exchange effect on cash and cash equivalents .          --            --             (723)             --             (723)
                                                           -------       -------          -------         -------          -------
Net increase in cash and cash equivalents ............      (9,166)         (875)             666              (1)          (9,376)
Cash and cash equivalents, beginning of period .......       9,443         4,190           10,215               1           23,849
                                                           -------       -------          -------         -------          -------
Cash and cash equivalents, end of period .............     $   277       $ 3,315          $10,881         $    --          $14,473
                                                           =======       =======          =======         -------          =======
</TABLE>

<TABLE>
<CAPTION>
                                                                         CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                                                         FOR THE PERIOD FROM FEBRUARY 2, 2000 TO APRIL 1, 2000 (UNAUDITED) (COMPANY)
                                                         ---------------------------------------------------------------------------
                                                                       U.S. GUARANTOR  NON-GUARANTOR
                                                          PARENT        SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                                         --------      --------------  -------------   ------------    ------------
<S>                                                      <C>           <C>             <C>             <C>             <C>
Net cash provided by (used in) operating activities ..   $  3,291        $ (9,634)       $  3,622        $  1,065        $ (1,656)
Cash flows used in investing activities:
Purchases of property, plant and equipment ...........         --          (1,286)           (333)           (183)         (1,802)
                                                         --------        --------        --------        --------        --------
Net cash provided by (used in) investing activities ..         --          (1,286)           (333)           (183)         (1,802)
Cash flows provided by (used in) financing activities:
Advances under other debt obligations ................     53,856              --              --              --          53,856
Principal payments on other debt obligations .........    (80,000)             --              --              --         (80,000)
Advances under line of credit ........................      7,700              --             506            (506)          7,700
Repayments of line of credit .........................     (8,182)             93             357            (450)         (8,182)
Payment of merger and financing expense ..............    (15,793)             --              --              --         (15,793)
Repurchase of common stock, options and warrants .....   (261,268)             --              --              --        (261,268)
Net proceeds from 12 3/4% senior subordinated notes ..    148,312              --              --              --         148,312
Proceeds from investors ..............................    152,000              --              --              --         152,000
                                                         --------        --------        --------        --------        --------
Net cash provided by (used in) financing activities ..     (3,375)             93             863            (956)         (3,375)
Foreign exchange effect on cash and cash equivalents .         --              --            (158)            121             (37)
                                                         --------        --------        --------        --------        --------
Net increase (decrease) in cash and cash equivalents .        (84)        (10,827)          3,994              47          (6,870)
Cash and cash equivalents, beginning of period .......        134          14,483           7,278             (48)         21,847
                                                         --------        --------        --------        --------        --------
Cash and cash equivalents, end of period .............   $     50        $  3,656        $ 11,272        $     (1)       $ 14,977
                                                         ========        ========        ========        ========        ========
</TABLE>


                                       17
<PAGE>   18
<TABLE>
<CAPTION>
                                                                       CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR
                                                            THE PERIOD FROM JANUARY 1, TO FEBRUARY 1, 2000 (UNAUDITED) (PREDECESSOR)
                                                            ------------------------------------------------------------------------
                                                                        U.S. GUARANTOR    NON-GUARANTOR
                                                             PARENT      SUBSIDIARIES     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                            -------     --------------    -------------  ------------   ------------
<S>                                                         <C>         <C>               <C>            <C>            <C>
Net cash provided by (used in) operating activities ..      $  (363)       $ 9,533          $(5,614)       $    91        $ 3,647
Cash flows used in investing activities:
Purchases of property, plant and equipment ...........           --           (288)             (38)            18           (308)
                                                            -------        -------          -------        -------        -------
Net cash used in investing activities ................           --           (288)             (38)            18           (308)
Cash flows provided by (used in) financing activities:
Issuance of common stock, net of expenses ............          349             --               --             --            349
Principal payments on debt obligations ...............           --            (25)              --             --            (25)
                                                            -------        -------          -------        -------        -------
Net cash provided by (used in) financing activities ..          349            (25)              --             --            324
Foreign exchange effect on cash and cash equivalents .           --             --              (89)            --            (89)
                                                            -------        -------          -------        -------        -------
Net increase (decrease) in cash and cash equivalents .          (14)         9,220           (5,741)           109          3,574
Cash and cash equivalents, beginning of period .......          152          5,132           13,035            (46)        18,273
                                                            -------        -------          -------        -------        -------
Cash and cash equivalents, end of period .............      $   138        $14,352          $ 7,294        $    63        $21,847
                                                            =======        =======          =======        =======        =======
</TABLE>


                                       18
<PAGE>   19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     Statements in this Quarterly Report on Form 10-Q concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; introductions and advancements in
development of products, and plans and objectives related thereto; and
statements concerning assumptions made or expectations as to any future events,
conditions, performance or other matters, are "forward-looking statements" as
that term is defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from those stated in such statements.
Such risks, uncertainties and factors include, but are not limited to, changes
in the Company's markets, particularly the potentially volatile semiconductor
market, changes in and delays in product development plans and schedules,
customer acceptance of new products, changes in pricing or other actions by
competitors, patents owned by the Company and its competitors, risk of foreign
operations and markets, the Company's substantial indebtedness, the Company's
ability to integrate its Thermalloy acquisition and general economic conditions,
as well as other risks detailed in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.

     The Company undertakes no obligation to update publicly any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.

OVERVIEW

     Aavid Thermal Technologies, Inc. (the "Company" or "Aavid") is a leading
global provider of thermal management solutions for electronics products and the
leading developer and marketer of computational fluid dynamics ("CFD") software.
Each of these businesses has a leading reputation for high product quality,
service excellence and engineering innovation in its market. Aavid designs,
manufactures and distributes on a worldwide basis thermal management products
that dissipate heat from microprocessors and industrial electronics products.
Aavid's products include heat sinks, interface and attachment accessories, fans,
heat spreaders and liquid cooling and phase change devices that can be
configured to meet customer-specific needs. CFD software is used in complex
computer-generated modeling of fluid flows, heat and mass transfer and chemical
reactions. Aavid's CFD software is used in a variety of industries, including
the automotive, aerospace, chemical processing, power generation, electronics
and bio-medical industries.

     On February 2, 2000, the Company was acquired by Heat Holdings Corp., a
corporation newly formed by Willis Stein & Partners II, L.P. Pursuant to the
merger, Aavid stockholders received $25.50 in cash for each outstanding share of
common stock. In addition, all outstanding stock options and warrants were
cashed out. The Merger was accounted for using the purchase method.

     The Merger and related transaction costs were funded by a cash contribution
from the Purchaser of $152.0 million, proceeds of $148.3 million, net of
original issue discount, from the sale by the Company of 12 3/4% senior
subordinated notes and warrants due 2007, $54.7 million pursuant to a new credit
facility entered into by the Company, and approximately $4.7 million of cash on
hand. Net stockholders' equity on the date of acquisition was $156.6 million.
Based upon fair value of assets acquired and liabilities assumed, goodwill of
$183.7 million was established. Approximately $113.7 million of this goodwill is
attributable to Aavid Thermalloy, the hardware business, and will be amortized
over 20 years. The remainder, $70.0 million, is attributable to Fluent, the CFD
software business, and will be amortized over 4 years.

     Of the $152.0 million cash contribution, $4.8 million was invested by Heat
Holdings II Corp., an affiliate of Heat Holdings, to acquire 95% of the common
equity of Aavid Thermalloy, LLC, the thermal management hardware business. The
Company controls Aavid Thermalloy, LLC through a preferred equity interest and
holds a 5% common equity interest and thus consolidates Aavid Thermalloy LLC in
its results within the accompanying financial statements. The investment by Heat
Holdings II Corp. has been recorded as minority interest within the accompanying
financial statements.

     On February 2, 2000, as part of the transactions relating to the Merger,
the Company issued 150,000 units (the "Units"), consisting of $150,000,000
aggregate principal amount of its 12 3/4% Senior Subordinated Notes due 2007
(the "Notes") and warrants (the "Warrants") to purchase an aggregate of 60
shares of the Company's Class A Common Stock, par value $0.0001 per share, and
60 shares of the Company's Class H Common Stock, par value $0.0001 per share.
The Notes are fully and unconditionally guaranteed on a joint and several basis
by each of the Company's domestic subsidiaries (the "Subsidiary Guarantors").
The Notes were issued pursuant to an Indenture (the "Indenture") among the
Company, the Subsidiary Guarantors and Bankers Trust Company, as trustee.
Approximately $4.6 million of the proceeds from the sale of the Units was
allocated to the fair value of the Warrants and approximately $143.8 million was
allocated to the Notes, net of original issue discount of approximately $1.7
million. The total


                                       19
<PAGE>   20
discount of $6.2 million is being accreted over the term of the notes, using the
effective interest rate method. This accretion is recorded as interest expense
within the accompanying statement of operations for the quarter ended March 31,
2001 and the period February 2, 2000 to April 1, 2000.

     The Indenture limits the Company's ability to incur additional debt, to pay
dividends or make other distributions, to purchase or redeem our stock or make
other investments, to sell or dispose of assets, to create or incur liens, and
to merge or consolidate with any other person. The Indenture also contains
provisions requiring additional equity investments by Willis Stein & Partners in
the event the Company does not achieve certain leverage to EBITDA ratios, as
defined, in years 2000 and 2001. As described below, Willis Stein has made the
maximum required equity investment and is not required to make an additional
equity investment even if the Company does not achieve he required ratio in
2001. The Indenture provides that upon a change in control of Aavid, the Company
must offer to repurchase the Notes at 101% of the face value thereof, together
with accrued and unpaid interest. The Notes are subordinated in right of payment
to amounts outstanding under the Amended and Restated Credit Facility and
certain other permitted indebtedness.

     In connection with the Merger, the Company repaid all of the outstanding
term loan and revolving line of credit under its existing credit facility and
entered into an amended and restated credit facility ("the Amended and Restated
Credit Facility"). The Amended and Restated Credit Facility provides for a
$22,000,000 revolving credit facility ("the Revolving Facility") (of which
$1,700,000 was drawn at the closing of the Merger) and a $53,000,000 term loan
facility ("the Term Facility") (which was fully drawn at the closing of the
Merger). Subject to compliance with the terms of the Amended and Restated Credit
Facility, borrowings under the Revolving Facility are available for working
capital purposes, capital expenditures and future acquisitions. The Revolving
Facility will terminate, and all amounts outstanding thereunder will be payable,
on March 31, 2005. Principal on the Term Facility is required to be repaid in
quarterly installments commencing December 31, 2000 and ending March 31, 2005 as
follows: five installments of $2,000,000; four installments of $2,500,000; four
installments of $2,750,000; two installments of $3,200,000; two installments of
$3,900,000; and a final installment of $7,800,000. In addition, commencing with
our fiscal year ending December 31, 2001, the Company is required to apply 50%
of our excess cash flow, as defined in the credit agreement, to permanently
reduce the Term Facility. The Amended and Restated Credit Facility bears
interest at a rate equal to, at the Company's option, either (1) in the case of
Eurodollar loans, the sum of (x) the interest rate in the London interbank
market for loans in an amount substantially equal to the amount of borrowing and
for the period of borrowing selected by Aavid and (y) a margin of between 1.50%
and 2.25% (depending on the Company's consolidated leverage ratio (as defined in
the Amended and Restated Credit Facility)) or (2) the sum of the higher of (x)
Canadian Imperial Bank of Commerce's prime or base rate or (y) one-half percent
plus the latest overnight federal funds rate plus (z) a margin of between .25%
and 1.00% (depending on the Company's consolidated leverage ratio). At March 31,
2001 the interest rates on the Term Facility and the Revolving Facility were
7.34%.

     The Amended and Restated Credit Facility may be prepaid at any time in
whole or in part without penalty, and must be prepaid to the extent of certain
equity or asset sales. The Amended and Restated Credit Facility limits the
Company's ability to incur additional debt, to sell or dispose of assets, to
create or incur liens, to make additional acquisitions, to pay dividends, to
purchase or redeem its stock and to merge or consolidate with any other person.
In addition, the Amended and Restated Credit Facility requires that the Company
meet certain financial ratios, and provides the lenders with the right to
require the payment of all amounts outstanding under the facility, and to
terminate all commitments thereunder, if there is a change in control of Aavid.
The Amended and Restated Credit Facility is guaranteed by each of Holdings Corp.
and Heat Holdings II Corp., and all of the Company's domestic subsidiaries and
secured by the Company's assets (including the assets and stock of its domestic
subsidiaries and a portion of the stock of its foreign subsidiaries).

     As of March 31, 2001, $7,700,000 was outstanding under the revolving credit
facility and $49,000,000 was outstanding under the term facility, of which
$10,000,000 was classified as current within the accompanying balance sheet.

     The Company incurred approximately $7,085,000 in underwriting, legal and
other professional fees in connection with the issuance of the Notes and the
obtainment of the Amended and Restated Credit Facility. These costs, in addition
to the $1,624,000 of unamortized costs associated with the original Credit
Facility, have been capitalized as deferred financing fees and are being
amortized over the respective terms of the related debt. This amortization is
recorded in interest expense in the statement of operations.

     At December 31, 2000 the Company was not in compliance with the leverage
ratio covenant required by the Amended and Restated Credit Facility and the
Indenture under which the Notes were issued. As a result, the Company's
stockholders were required to make an equity contribution sufficient to allow
the Company to pay down enough debt to achieve a 4.5 to 1 leverage ratio based
on total leverage at December 31, 2000. On May 4, 2001 certain of the Company's
stockholders and their affiliates made an equity


                                       20
<PAGE>   21
contribution of $8.0 million in cash and $26.2 million in principal amount of
senior notes in full satisfaction of this obligation. In addition, the Company
and the lenders amended the Amended and Restated Credit Facility (Amendment No.
1) to provide that the last three required quarterly principal payments in 2001
under the facility will be prepaid with $6.0 million of the proceeds of the
equity contribution, and the four required principal payments in 2002 will be
reduced by $0.5 million each, reflecting application of the remaining cash
equity contribution. Further, certain covenant ratios and ratio definitions were
amended to levels which the Company expects to meet through December 31, 2001
and the available line of credit was reduced to $17.0 million from $22.0
million. Based on the equity contribution, the Company's events of
non-compliance with its debt covenants at December 31, 2000 and March 31, 2001
was cured.


     As further discussed in Footnote (6) under "In-Process Research and
Development", in connection with the Merger, the Company allocated $15,000,000
of the purchase price to in-process research and development projects. This
allocation represented the estimated fair value based on risk-adjusted cash
flows related to the incomplete software research and development projects of
Fluent, Inc. At the date of the merger, the development of these projects had
not yet reached technological feasibility and the research and development in
progress had no alternative future uses. Accordingly, these costs were expensed
as of the date of the merger.

RESULTS OF OPERATIONS

     For The Quarter Ended March 31, 2001 Compared With The Quarter Ended
April 1, 2000

     The results of operations for the quarter ended April 1, 2000 are the
result of the combination of the results for the period from January 1, 2000
through February 1, 2000 (the Predecessor) and the period from February 2, 2000
through April 1, 2000. As a result of purchase accounting adjustments for the
Merger, which was consummated February 2, 2000, the Company had a significant
increase in goodwill and interest expense, and incurred one-time restructuring
charges and a charge for acquired in-process research and development.
Accordingly, a comparison of the results for the quarters ended March 31, 2001
and April 1, 2000 may not necessarily be meaningful.

<TABLE>
<CAPTION>
SALES (DOLLARS IN MILLIONS)                  FOR THE THREE MONTHS ENDED
                                         MARCH 31,     APRIL 1,
                                           2001          2000         CHANGE
                                         ---------     --------       -------
<S>                                      <C>           <C>            <C>
Computers and Network                     $  9.6        $  27.5       (65.1)%
Industrial Electronics                      33.7           35.5        (5.1)%
Consulting and Design (Applied)              0.5            0.3        66.7 %
                                          ------        -------       -------

Total Aavid Thermalloy                      43.8           63.3       (30.8)%
Total Fluent                                17.8           14.7        21.1 %
                                          ------        -------       -------
Total Company                             $ 61.6        $  78.0        21.0 %
                                          ======        =======       =======
</TABLE>

     Sales in the first quarter of 2001 were $61.6 million, a decrease of $16.4
million, or 21.0% from the comparable period of 2000. This decrease stems from
Aavid Thermalloy and is a direct result of the decline experienced by the
Computer and Networking industry during the first quarter of 2001. This decrease
was primarily due to a decline in the Semi-Conductor industry as a whole. The
Company does expect to see revenue growth in the second half of the year. The
company also expects an improvement in profitability as a result of cost
reduction actions within Aavid Thermalloy such as personnel reductions and
further consolidation of manufacturing operations which will be completed on or
about June 30, 2001.

     Fluent software sales of $17.8 million in the first quarter of 2001 were
$3.1 million, or 21.1%, higher, than the first quarter of 2000. The increase was
spread among all product offerings due to overall growth in the market for
computational fluid dynamics design software, as well as the success of
application specific products, such as "Icepak" and "Airpak".

     Aavid Thermalloy's sales were $43.8 million in the first quarter of 2001, a
decrease of $19.5 million, or 30.8%, over the comparable period of 2000. The
Company has taken steps to stop the erosion of sales seen in the Computer and
Networking industry (and to a lesser extent the Industrial Electronics industry)
by reinforcing its manufacturing, engineering and sales and marketing efforts,
particularly in North America and Asia. The Company has also deferred the
expansion of its fan business and does not anticipate significant revenues from
the sale of fans in 2001.

     International sales (which include North American exports) decreased to 51%
of sales for the first quarter of 2001 compared with 59% in the first quarter of
2000.


                                       21
<PAGE>   22
     No customer generated greater than 10% of the Company's revenues in the
first quarter of 2001 or 2000.

     The Company's gross profit for the first quarter of 2001 was $23.5 million
compared with $22.4 million in the comparable period from 2000. Gross margin as
a percentage of sales increased from 28.8% in the first quarter of 2000 to 38.1%
for the comparable period of 2001. For the first quarter of 2000, excluding $4.0
million of additional cost of sales associated with the write-up of inventory to
fair value on the date of the Merger and $0.5 million of additional cost of
sales associated with the write-up of Thermalloy inventory to fair value in the
fourth quarter of 1999, gross margin was 34.6%. Gross margin has improved
through improvements in manufacturing efficiency and utilization as a result of
the consolidation of manufacturing facilities that occurred during 2000 and
continues into 2001 with the cessation of manufacturing activities in the Dallas
facility. In addition, Fluent's higher gross margin business has become a larger
percentage of the Company's consolidated gross margin.

     In the first quarter of 2001 the Company's operating loss of $18.4 million
compares with operating loss of $18.7 million in the first quarter of 2000. The
magnitude of the operating loss in the first quarter of 2001 was primarily
impacted by a one-time restructuring charge of $12.5 million that was recorded
in connection with the planned cessation of manufacturing activities at the
Dallas facility and the reduction of the New Hampshire workforce. Additionally,
the results for 2001 contain a full quarter of amortization of intangibles that
were established as part of the merger. The large operating loss that occurred
in the first quarter of 2000 was primarily the result $4.5 million of additional
cost of sales associated with the write-up of inventory to fair value on the
date of the merger, and a $15 million one-time charge related to the write-off
of acquired in-process research and development related to Fluent. The Company
expects an improvement in profitability in the second half of the 2001 as a
result of cost reduction actions within Aavid Thermalloy such as personnel
reductions and further consolidation of manufacturing operations which will be
completed on or about June 30, 2001.

     Net interest charges for the Company were $6.3 million in the first quarter
of 2001 which compares with $4.8 million for the comparable period of 2000. The
increase in interest charges resulted from the fact that the first quarter of
2001 contains a full quarter of interest charges on the debt that resulted from
the merger. The first quarter of 2000 contained only a partial quarter of merger
related interest charges due the merger occurring on February 2, 2000.

     The Company incurred a tax provision in the first quarter of 2001 despite
having significant operating losses in the United States because of significant
foreign tax provisions on foreign earnings. The Company's tax provision in 2001
represents the foreign tax provision on foreign earnings. The Company incurred
significant losses in the United States and the Company only benefits the U.S.
losses to the extent of foreign earnings which are expected to be repatriated
in the United States. Because the Company is in a net operating loss position
for U.S. tax purposes, the Company will not receive any tax benefit from
foreign tax credits. Accordingly, there is no net benefit recorded for the
United States losses, resulting in an overall tax provision for foreign taxes.

     The Company's net loss for the first quarter of 2001 was $22.6 million,
versus a net loss for the comparable period of 2000 of $25.4 million. As
discussed above, the first quarter of 2001 includes a $12.5 million
restructuring charge related to the closure of the Dallas manufacturing
facility. The net loss in the first quarter of 2000 includes a $15.0 million
write-off of acquired in-process research and development and $4.5 million of
additional cost of sales which represents the impact of the write-up of
inventory to fair value that occurred in conjunction with the merger.


                                       22
<PAGE>   23
FINANCIAL CONDITION

     Historically, the Company has used internally generated funds and proceeds
from financing activities to meet its working capital and capital expenditure
requirements. As a result of the Thermalloy acquisition and the Merger, the
Company has significantly increased its cash requirements for debt service
relating to the Notes and Amended and Restated Credit Facility described in
footnote (1) in the accompanying financial statements. The Company intends to
use amounts available under the Amended and Restated Credit Facility, future
debt and equity financings and internally generated funds to finance its working
capital requirements, capital expenditures and potential acquisitions. See
"Overview" for a discussion of the Notes and Amended and Restated Credit
Facility.

     During the first three months of 2001, the Company used $4.0 million of
cash for operations, versus providing $2.0 million of cash from operations in
the first quarter of 2000. During the period, the Company used $2.1 million of
cash in connection with financing activities and $2.6 million for capital
expenditures.

     Total indebtedness at March 31, 2001 was $202.1 million, which compares
with $204.0 million at December 31, 2000. Total indebtedness as a percent of
stockholders' equity at March 31, 2001 was 266.3%, compared with 203.7% at
December 31, 2000. Long-term debt at March 31, 2001 was $191.3 million, a
decrease of $1.9 million from December 31, 2000. The Company had $7.7 million
outstanding under its line of credit as of March 31, 2001 and December 31, 2000,
which is classified as long term debt on the accompanying balance sheet.

     As further discussed in Note (6) in the accompanying financial statements
development costs to complete ongoing development projects at Fluent are
estimated to be $1.2 million.

     There were no material purchase commitments as of March 31, 2001.

     At March 31, 2001 inventory turns were 5.7, which compare with 6.4 at
December 31, 2000.

     At March 31, 2001 accounts receivable days sales outstanding ("DSO") were
64, which compare with 66 days at December 31, 2000.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company is involved in various other legal proceedings that are
incidental to the conduct of the Company's business, none of which the Company
believes could reasonably be expected to have a materially adverse effect on the
Company's financial condition.

ITEM 5. OTHER INFORMATION

     None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

     10.1 Amendment No. 1 and Consent to Amended and Restated Credit Agreement
     10.2 Omnibus Amendment

     (b) Reports on Form 8-K

     None.


                                       23
<PAGE>   24
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   SIGNATURES

DATE: May 15, 2001           AAVID THERMAL TECHNOLOGIES, INC.

                                By: /s/  Brian A. Byrne
                                    --------------------------------------------
                                    Vice President and Chief Financial Officer
                                    (Principal Financial Officer)


                                       24