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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

           For the fiscal year ended December 31, 2000

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

       For the transition period from ________________ to _______________

                           CHEROKEE INTERNATIONAL, LLC
             (Exact name of registrant as specified in its charter)


              CALIFORNIA                                 33-0696451
     (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                 Identification No.)

                                 2841 DOW AVENUE
                            TUSTIN, CALIFORNIA 92780
                    (Address of principal executive offices)

                                 (714) 544-6665
              (Registrant's telephone number, including area code)

                                       N/A
        -----------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

     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 past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---   ---

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

     The voting membership units of the registrant are not publicly traded. All
of the voting membership units are held by affiliates of the registrant.

     The number of membership units outstanding of the registrant's voting and
non-voting membership units was 36,382,736 as of March 15, 2001.

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                                     PART I

ITEM 1. BUSINESS

    Cherokee International, LLC is a leading designer and manufacturer of a
broad range of switch mode power supplies for original equipment
manufacturers, or OEMs, in the telecommunications, networking, high-end
workstation and other electronic equipment industries. Power supplies perform
many essential functions relating to the supply, distribution and regulation
of electrical power and are used in virtually all electronic equipment. Basic
power supplies convert AC from a utility source such as a wall outlet, into
the DC required for electronic systems.

STRATEGIC ADVANTAGES

    We believe that our strategic advantages include the following:

- TIME TO MARKET: A critical factor in a customer's selection of a power supply
  manufacturer is the time to market of the power supply. Time to market is the
  time required to design, engineer, manufacture and deliver the product to a
  customer. We have established a track record of consistently providing high
  quality products with short times to market. We streamline the design and
  production processes by employing experienced personnel, providing them with
  sophisticated state of the art equipment and tools and encouraging our
  engineers to communicate directly with our customers' engineers throughout the
  design and manufacturing process. In addition, we are one of the few companies
  in the industry with the ability to self certify our products for virtually
  all safety agencies. Our unique design and production methodologies, along
  with strategically located operations in North America and Europe, help
  increase production efficiency, enhance our customer relationships and avoid
  delays in communication and the exchange of designs and prototypes that burden
  many of our competitors that depend on their overseas manufacturing
  facilities.

- STRONG PARTNERSHIPS WITH BLUE CHIP CUSTOMER BASE: We provide products to
  leading OEMs such as IBM, Cisco, Hewlett-Packard, Motorola, Lucent, Alcatel,
  Nortel, Silicon Graphics and Network Appliance. We have been doing business
  with many of our customers for over 10 years. We believe that our customers
  continue to seek long-term partnerships with a small number of core suppliers
  like Cherokee. Our relationships are strengthened by the fact that we work
  jointly with many of our customers in the design and development of new
  products, which our customers partially fund. We believe that as a result of
  these factors we have been successful in building our share with many of these


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  customers over the last several years.

- RECURRING SALES: Our products are generally used for the entire life cycle of
  a customer's end products, providing a base of recurring sales from year to
  year. We have found that OEMs generally prefer not to change suppliers once a
  power supply has been designed into a product, due to the fact that such a
  change often requires time-consuming and costly re-testing and
  re-certification by the customer and one or more regulatory agencies. It is
  also very difficult for another manufacturer to precisely and economically
  replicate a power supply unit which is already incorporated into a product.
  The life cycle of our customers' products range from approximately 2 to 10
  years.

- LOW COST STATE OF THE ART OPERATIONS: Our sophisticated engineering
  capabilities, in-house production of certain critical components, highly
  automated manufacturing processes and state of the art testing equipment
  enable us to operate extremely efficiently, thereby enhancing profitability,
  flexibility and competitiveness. The following initiatives have lowered our
  overall cost of production and enhanced profit margins:

    - in-house manufacturing of labor intensive magnetic sub-assemblies at our
      facilities in India;

    - use of common componentry in our product designs, including in our highly
      customized products, thereby reducing development and production costs;

    - procurement of raw materials and components directly from manufacturers,
      rather than distributors;

    - use of continuous flow manufacturing lines and computer controlled surface
      mount assembly, or SMT, machines to improve quality and yield rates;

    - procurement and maintenance of state of the art equipment resulting in
      limited maintenance capital expenditures; and

    - refinement of our systems and processes to increase overall operational
      efficiency.

- COMMITMENT TO QUALITY AND SERVICE: We believe that in addition to short lead
  times and competitive prices, our commitment to provide consistent, high
  quality products and services forms the basis of our strong customer
  relationships. We manufacture high quality products using advanced testing
  methods to monitor our sophisticated design and manufacturing techniques (such
  as Computer Aided Design and Computer Aided Engineering). In addition to
  testing performed during the design and manufacturing process, we test 100% of
  our finished products using automated test equipment.


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  With the exception of a recently opened facility in India, all of our
  facilities and manufacturing processes are ISO 9000 certified.

- EXPERIENCED MANAGEMENT: Mr. Pat Patel, our Chairman and Chief Executive
  Officer, founded Cherokee Corporation in 1978, formed Cherokee International,
  LLC as a California limited liability company on March 28, 1996, and has over
  30 years experience in the industry. Mr. Patel is supported by a senior
  management team including Bud Patel (no relationship to Pat Patel), Dennis
  Pouliot, Howard Ribaudo and Van Holland who have combined industry experience
  of over 100 years.

BUSINESS STRATEGY

    Our objective is to be the supplier of choice to a targeted group of
industry leading OEMs who require sophisticated power supply solutions and who
are likely to have substantial volume requirements. To achieve this objective,
our strategy is to continue to differentiate ourselves through advanced design
and engineering, shorter time to market and superior product performance,
quality and service. Our strategy focuses on maximizing profitability and
expanding the business through:

- FOCUSING ON HIGH GROWTH, HIGH MARGIN, MARKETS: A substantial majority of our
   2000 sales were to the networking, telecommunications and high-end
   workstations markets, which are expected to grow over the long term primarily
   due to the increase in demand for internet/intranet, wireless and other
   communications. We achieve higher margins in these markets due to their
   highly sophisticated design and engineering requirements and the high demands
   for technical expertise required to serve them. Focusing on these high growth
   areas also allows us to work with the most sophisticated customers, which
   further improves our technological and knowledge base and enables us to
   create products that can form the basis for an expanding and more
   sophisticated product catalog.

- LEVERAGING CUSTOMER RELATIONSHIPS: We have strong relationships with industry
  leaders in the high growth networking, telecommunications and high-end
  workstations. We plan to leverage our in-depth knowledge of our customers and


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  their needs and continue to increase our share of our customers' business. We
  believe that our long-standing customer relationships, coordinated engineering
  services and flexible manufacturing capabilities provide us with a significant
  advantage when bidding for new business.

- EXPANDING PRODUCT OFFERING AND MARKET APPLICATIONS: We plan to continue to
  broaden our existing product line to attract new customers and to capture a
  larger portion of our existing customers' business. Although we may at any
  time decide otherwise, products we presently plan to offer in the future
  include a larger catalog of higher margin product offerings for multiple
  applications, higher power range products for the increased requirements of
  internet/intranet, telecommunications and wireless and other applications and
  new DC to DC products to provide more complete power solutions for
  communication systems such as telecommunication switches.

- EXPANDING CUSTOMER BASE: We have leveraged our reputation and success with
   our existing blue chip customer base to attract new customers with
   significant growth prospects and high-margin product requirements. We plan to
   continue expanding our customer base through increased marketing, heightened
   use of our network of independent sales representatives and further
   development of collaborative relationships in design and engineering. To help
   achieve this expansion, we compensate our independent sales representatives
   with additional incentives to attract new customers and provide them with a
   significant level of support.

- CONTINUALLY REDUCING COSTS THROUGH DISCIPLINED DESIGN AND LOW COST
  PROCUREMENT: We seek to remain a low cost provider through continued
  disciplined design techniques that incorporate common componentry and
  circuitry and through the negotiation of long-term contracts for the
  procurement of raw materials and components directly with certain suppliers
  rather than purchasing through distributors. In addition, where appropriate we
  will continue to invest in new technologies to increase automation and lower
  costs.

- PURSUING SELECTED STRATEGIC ACQUISITIONS: The power supply industry is highly
  fragmented according to industry sources. We intend to pursue strategic add-on
  acquisitions to add products and capabilities that are complementary to our
  existing operations.


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POWER SUPPLY INDUSTRY

    OVERVIEW

    Power supplies perform many essential functions relating to the supply,
regulation and distribution of electrical power in electronic equipment.
Electronic systems require a precise and constant supply of electrical power at
one or more voltage levels. Traditional AC/DC power supplies convert alternating
current, or AC, from a primary power source, such as a utility company, into a
precisely controlled direct current, or DC. Virtually every electronic device
that plugs into an AC wall socket requires some type of AC/DC power supply.
DC/DC converters modify one DC voltage level to other DC levels to meet the
needs of various electronic subsystems and components. Power supplies are also
used to regulate and monitor voltages to protect the electronic components from
surges or drops in voltage, to perform functions that prevent electronic
equipment from being damaged by their own malfunction, or to provide back-up
power in the event that a primary power source fails.

    The latest technology now used in power supplies is higher frequency
switch mode topology. Switch mode power supplies, which comprise our entire
product line, are preferred over linear power supplies, with comparable power
outputs, due to their higher energy efficiency, considerably smaller size and
lighter weight. The market for switch mode power supplies is the fastest
growing segment of the overall external power conversion product market,
according to industry sources.

    CAPTIVE VERSUS MERCHANT MANUFACTURERS

    Captive power supply manufacturers design and manufacture power supplies for
in-house use for their own products. Merchant power supply manufacturers design
and manufacture power supplies for use by third parties. According to industry
sources, the merchant segment of the market is expected to grow faster than the
captive segment as OEMs increasingly focus on core competencies and outsource
power supply products to more efficient suppliers. As a leading merchant
manufacturer, we expect to significantly benefit from this shift.

    PRODUCT TYPES--CUSTOM, STANDARD AND MODIFIED STANDARD

    Custom power supplies are designed for a specific customer to meet the exact
form, fit and function for a specific application. Custom products are
characterized by (1) lead times of 4 to 12 months from initial prototype to full


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production; (2) up-front engineering costs; and (3) relatively high volume
production requirements. They are attractive to OEMs because they provide
maximum design flexibility and allow the use of special features. Standard
"off-the-shelf" power supplies are products designed to appeal to a wide range
of customers for use in a variety of different applications. Standard power
supplies offer benefits to the OEM because there are no up-front engineering
charges or minimum order quantities and the product is readily available, which
allows the OEM to reduce its time-to-market for new products. In addition,
standard products have lower risks associated with technology, production ramps,
and customer product qualification. Modified standard power supplies are
standard products that have been altered in a way that does not change the basic
product architecture. Modified standard products, as compared with custom
products, are characterized by (1) shorter lead times; (2) lower up-front
engineering costs; and (3) smaller minimum order quantities.


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PRODUCT LINE

    Over our more than 20-year history, we have developed an extensive range of
switch mode power supply products. These products, containing magnetic
assemblies, circuits and components, convert AC power to DC power and maintain
voltage levels within specific limits. Our products cover a broad range of
applications, from 10 to 14,000 watts for AC/DC power supplies, and from 20 to
1,000 watts for DC/DC converters. Our power supplies are self-contained units,
range in weight from one half of a pound to thirty pounds and are normally
incorporated inside our customers' end products.

    We plan to continue to broaden our existing product line to include a larger


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catalog of higher margin product offerings for multiple applications, higher
power range products for the increased requirements of internet/intranet,
wireless and other communications applications and new DC to DC products to
provide more complete power solutions for telecommunication systems.

CUSTOMERS AND APPLICATIONS

    Our base of OEM customers are in diverse markets such as telecommunications,
networking, high-end workstations (excluding PCs), industrial process controls
and other electronic equipment industries. Many of the OEMs are Fortune 500
companies and leaders in their respective industries.

    During 2000, our top 10 customers accounted for approximately 63% of our
sales. During such period, sales to IBM and Nortel each represented more than
10% of our sales.

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SALES AND MARKETING

    We market our products and services in North America through an integrated
sales approach involving account managers and independent sales representatives
with active support from design, engineering and production personnel. Our
in-house account managers supervise customer relationships and oversee a
nation-wide network of commission-based independent sales representatives whose
main purpose is to source new customers. We market our products in Europe
primarily using our in-house account managers.

    We focus our efforts on expanding relationships with existing customers and
aggressively targeting emerging OEM industry leaders with whom the opportunity
exists to provide products and services across a number of product families and
through successive product generations. We focus our resources on markets that
are growing relatively quickly and have the potential for significant profit
margins. Potential customers are assigned to our in-house account managers who
evaluate the customer against our customer selection criteria.

    On an ongoing basis, our engineering personnel provide technical support to
customers in the areas of product design changes, field performance and testing.
Our collaborative relationships allow us to gain valuable knowledge about an
existing customer and its processes, which we believe gives us an advantage in
obtaining future business from that customer. Historically, we have had
substantial recurring sales from existing customers.

BACKLOG

    Backlog consists of purchase orders on hand generally having delivery
dates scheduled within the next four months. Our backlog was approximately
$75.0 million at December 31, 2000, $35.1 million at December 31, 1999, and
$42.8 million at December 31, 1998. Backlog for 2000 includes $19.4 million
relating to Industrial and Telecommunication Systems, which was acquired in
June 2000. In addition, we are currently working on numerous customer
initiated engineering and design projects, which we expect will result in
increased future revenue.

    Although customers are generally able to cancel or reschedule deliveries,
subject to cancellation fees or carrying cost charges in certain circumstances,
our backlog has historically been a reliable indicator of our future
revenues. However, subsequent to December 31, 2000, we began to experience an
industry-wide slowdown which has caused many of our customers to reschedule
or cancel certain orders with us. As a result, future revenues may be
adversely affected by these deferrals or cancellations of orders.

MANUFACTURING PROCESS AND QUALITY CONTROL

    A typical power supply consists primarily of one or more printed circuit
boards, electronic and electromagnetic components and a sheet metal chassis. The
production of our power supplies entails the assembly of structural hardware
combined with a sophisticated assembly of circuit boards encompassing highly
automated SMT.


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    In response to market demands for increased quality and reliability,
design complexity, and sophisticated technology, we have automated many
electronic assembly and testing processes which were traditionally performed
manually and we have standardized our manufacturing processes to efficiently
utilize our resources and optimize our capacities. Since the beginning of
1997, we have acquired five SMT lines. SMT permits reduction in board size by
eliminating the need for holes in the printed circuit boards and by allowing
components to be placed on both sides of a board. Each SMT line is capable of
placing as many as 40,000 parts per hour, with each machine hour equating to
approximately 50 labor hours. The new SMT lines have allowed us to
significantly increase throughput and capacity which together with higher
demand has resulted in increased sales.

    In addition to increasing automation of our facilities, we have
standardized our operations to include 22 self-contained continuous flow
manufacturing lines, which incorporate flow solder machines, in-circuit test
machines, highly advanced computer controlled burn-in equipment, automated
final test machines, ongoing reliability test equipment, standardized
processes and measurements on all lines.

    Most of our customers require that their power supplies meet or exceed
established international safety and quality standards. In response to this
need, we design and manufacture power supplies in accordance with the
certification requirements of many international agencies, including
Underwriters Laboratories Incorporated (UL) in the United States; the Canadian
Standards Association (CSA) in Canada; Technischer Uberwachungs-Verein (TUV) and
Verband Deutscher Electrotechniker (VDE), both in Germany; the British Approval
Board for Telecommunications (BABT) in the United Kingdom; and International
Electrotechnical Committee (IEC), a European standards organization.

    Quality and reliability are emphasized in both the design and manufacture of
our products. In addition to testing throughout the design and manufacturing
process, we test and burn-in 100% of all products using automated equipment and
customer-approved processes. An additional out-of-box test or pre-ship audit is
performed on randomly selected units, which are ready for shipment, further
ensuring manufacturing quality and integrity.

    Our six sophisticated manufacturing facilities, including plants in
Tustin, California; Irvine, California; Guadalajara, Mexico; Wavre, Belgium;
and two in Bombay, India, are ISO 9000 certified. Our facilities in India
manufacture labor-intensive magnetic

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sub-assemblies that are distributed to our other facilities for incorporation
into many of our final products.

SUPPLIERS

    Our high quality products and reduced time-to-market are the result of a
well managed supply chain network. We typically design products using common
components thereby increasing our purchasing power and reducing inventory risk.
Most of our raw materials, including electronic and other components, sheet
metal, transistors, mechanical parts and electrical wires, are readily available
from several sources. Although some of our raw materials are sourced from only
one manufacturer, they are generally available in large quantities from a number
of different suppliers.

COMPETITION

    The merchant power supply manufacturing industry is highly fragmented and
characterized by intense competition. No single company dominates the overall
power supplies market and our competitors vary depending upon the particular
power conversion product category. Our competition includes companies located
throughout the world, including Delta, Astec, Tyco, Artesyn, Power One and
many smaller companies. We also view as competitive threats the potential
that our customers may decide to produce their own power supplies and that
OEMs with captive manufacturing capabilities may compete in the merchant
market. However, several large OEMs have divested their captive power supply
manufacturing operations, including IBM, Nortel, NCR, TRW and Digital
Equipment.

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ENGINEERING AND PRODUCT DEVELOPMENT

    Our engineering and product development activities are principally directed
to the development of new power supplies to satisfy customer needs. As part of
the collaborative relationships established by us with our key customers, we
work closely with our customers to develop new products.
Product development is performed by a group of nearly 100 engineers and
technicians located primarily in Tustin, California and Wavre, Belgium.

    Our total expenditures for engineering and product development were $6.1
million, $4.1 million and $3.8 million for the years ended December 31, 2000,
1999, and 1998, respectively.

INTELLECTUAL PROPERTY MATTERS

    We do not believe that intellectual property or branding is a significant
competitive factor in the power supply industry. As a result, we do not rely
upon proprietary rights in the conduct of our business.

EMPLOYEES

    At December 31, 2000, we employed approximately 1,367 full-time employees at
our facilities in the following capacities:


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<TABLE>
<CAPTION>

                                                             INDIVIDUALS
                                                               EMPLOYED
                                                             -----------
<S>                                                              <C>
Manufacturing..............................................      1,139
Engineering................................................         97
Quality....................................................         35
Marketing..................................................         27
General Administrative.....................................         69
                                                               ---------
    Total..................................................      1,367
                                                               =========
</TABLE>

     None of our domestic employees is represented by a labor organization.
Some of our employees who work in our Guadalajara, Mexico Facility are
represented by a union as required under Mexican law. Some of our employees
who work in our Wavre, Belgium facility are represented by trade unions and
work subject to a collective bargaining agreement. We believe that our
relations with our employees, including in our Mexico and Belgium facilities,
are excellent.

ITS ACQUISITION

     On June 15, 2000, we completed the acquisition of Industrial and
Telecommunication Systems, or ITS, which we have subsequently named Cherokee
Europe. The acquisition of ITS substantially increased our European presence
and strengthened our capabilities in the telecommunications system market.
ITS is primarily a leading designer and manufacturer of custom designed power
supplies for OEM's of telecommunications systems, Internet infrastructure and
medical and industrial applications.

RISK FACTORS

We are subject to the following risks:

OUR SUBSTANTIAL INDEBTEDNESS AND DEBT SERVICE OBLIGATIONS COULD IMPEDE OUR
OPERATIONS AND FLEXIBILITY

    We have a large amount of outstanding debt compared to the net book value of
our assets and we have substantial repayment obligations and interest expense.
As of December 31, 2000, we had:


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    - total consolidated debt of approximately $169.1 million; and

    - members' deficit of approximately $69.1 million.

    Our level of debt and the limitations imposed on us by our debt agreements
could have other important consequences to us, including the following:

    - we have less ability to satisfy our obligations with respect to our 10
      1/2% Senior Subordinated Notes due 2009;

    - we have to use a substantial portion of our cash flow from operations for
      debt service rather than for our operations;

    - we may not be able to obtain additional debt financing for future working
      capital, capital expenditures or other corporate purposes;

    - we could be less able to take advantage of significant business
      opportunities, such as acquisition opportunities, and react to changes in
      market or industry conditions;

    - we are more vulnerable to general adverse economic and industry
      conditions; and

    - we are disadvantaged compared to competitors with lower levels of
      outstanding debt compared to net book value of assets.

OUR BUSINESS OPERATIONS ARE RESTRICTED BY PROVISIONS OF OUR DEBT AGREEMENTS;
FAILURE TO COMPLY COULD RESULT IN ACCELERATION OF INDEBTEDNESS

    The indenture governing our 10 1/2% Senior Subordinated Notes due 2009, the
notes, and our credit agreements contain a number of covenants that
significantly restrict our ability to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay other indebtedness or amend
other debt instruments, pay dividends, create liens on assets, enter into
capital leases, make investments, loans or advances, make acquisitions, engage
in mergers or consolidations, make capital expenditures, engage in certain
transactions with subsidiaries and affiliates and otherwise restrict business
operations. In addition, under our credit agreement, we are required to meet a
number of financial ratios and tests.

    Our ability to comply with these agreements may be affected by events beyond
our control, including prevailing economic, financial and industry conditions.
The breach of any of these covenants or restrictions could result in an event of
default under our credit agreement or the indenture. In either case, certain
lenders could declare all amounts borrowed under those agreements to be
immediately due and payable, together with accrued and unpaid interest.
Additionally, the senior lenders could terminate their commitments to make


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further extensions of credit under our credit agreement. If we are unable to
repay indebtedness to our senior lenders, they can proceed against the
collateral securing indebtedness under our credit agreement.

THE LOSS OF ONE OR MORE MAJOR CUSTOMERS COULD MATERIALLY AND ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS

    During 2000, our top ten customers accounted for approximately 63% of our
sales, including IBM and Nortel, each of which accounted for more than 10% of
our sales. The loss of any of our major customers could have a material adverse
effect on our financial condition or results of operations. We do not have
long-term contracts with our customers. As a result, we cannot assure that a
customer will not transfer, reduce the volume of, or cancel a purchase order,
each of which could adversely affect our financial condition or results of
operations. In addition, as a provider of power supplies to OEMs, our sales are
dependent upon the success of the underlying products of which our power
supplies are a component.

WE COULD LOSE BUSINESS IF WE FAIL TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE IN
THE ELECTRONIC EQUIPMENT INDUSTRY

    Many of our existing customers are in the electronic equipment industry,
especially telecommunications and networking, and produce products that are
subject to rapid technological change, obsolescence and large fluctuations in
world-wide product demand. These industries are characterized by intense
competition and end-user demand for increased product performance at lower
prices. Our customers make similar demands on us. We cannot assure that we will
properly assess developments in the electronic equipment industries and identify
product groups and customers with the potential for continued and future growth.
Factors affecting the electronic equipment industries, in general, or any of our
major customers or their products, in particular, could have a material adverse
effect on our financial condition or results of operations.

    The markets for our products are characterized by:

    - rapidly changing technologies;

    - increasing customer demands;

    - evolving industry standards;

    - frequent new product introductions; and

    - in some cases, shortening product life cycles.

Generally, our customers purchase power supplies from us for the life cycle of a


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product. The development of new, technologically advanced products is a complex
and uncertain process requiring high levels of innovation and cost, as well as
the accurate anticipation of technological and market trends. As the life cycle
of our customers' products shorten, we will be required to bid on contracts for
replacement or next generation products to replace revenues generated from
discontinued products more frequently. We cannot assure that we will
successfully develop, introduce or manage the transition of new products. The
failure of or the delay in anticipating technological advances or developing and
marketing product enhancements or new products that respond to any significant
technological change or change in customer demand could have a material adverse
effect on our financial condition or results of operations.

WE FACE SIGNIFICANT COMPETITION; OUR FAILURE TO EFFECTIVELY COMPETE COULD
MATERIALLY AND ADVERSELY AFFECT RESULTS OF OPERATIONS AND MARKET SHARE

    The design, manufacture and sale of power supplies is highly competitive.
Our competition includes numerous companies located throughout the world, some
of which have advantages over us in terms of labor and component costs and
technology. Many of our competitors have substantially greater resources and
geographic presence than we do. We cannot assure that competition from existing
competitors or new market entrants will not increase. We also face competition
from current and prospective customers that may design and manufacture their own
power supplies. In times of an economic downturn, or when dealing with
high-volume orders, price may become an increasingly important competitive
factor, which could cause us to reduce prices and thereby adversely affect our
results of operations. Some of our major competitors have also been engaged in
merger and acquisition transactions. Such consolidations by competitors are
likely to create entities with increased market share, customer bases,
technology and marketing expertise, and/or sales force size. These developments
may adversely affect our ability to compete. We cannot assure that we will
continue to be able to compete successfully against current or future
competitors in the market.

OUR DEPENDENCE ON INTERNATIONAL OPERATIONS SUBJECTS US TO VARIOUS RISKS
ASSOCIATED WITH, AMONG OTHER THINGS, FOREIGN LAWS, POLICIES, ECONOMIES AND
EXCHANGE RATE FLUCTUATIONS

    We have manufacturing operations located in Mexico, Belgium and India. These
operations are subject to inherent risks, including variations in tariffs,
quotas, taxes and other market barriers, political and economic instability,
work stoppages or strikes, unexpected changes in regulatory requirements,


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restrictions on the export or import of technology, and difficulties in
staffing and managing international operations, which could have a material
adverse effect on our financial condition or results of operations. Although
we transact business primarily in United States dollars, a portion of our
sales and/or expenses, including labor costs, are denominated in the Mexican
peso, the Indian rupee, the Euro and other European currencies. Fluctuations
in the value of the U.S. dollar relative to these foreign currencies, or
increased import duties, the imposition of tariffs or import quotas or
interruptions in transportation, could affect our revenues, costs of goods
sold and operating margins and could result in exchange losses or delays in
shipments. Historically, we have not actively engaged in substantial exchange
rate hedging activities and do not intend to do so in the future.

AN INTERRUPTION IN DELIVERY OF COMPONENT SUPPLIES COULD LEAD TO SUPPLY SHORTAGES
OR A SIGNIFICANT INCREASE IN PRICES OF COMPONENT SUPPLIES, WHICH COULD
MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS

    We are dependent on our suppliers for timely shipments of components. We
typically use a primary source of supply for each component used in our
products. Establishing alternate primary sources of supply, if needed, could
take a significant period of time which could result in supply shortages and
could result in increased prices. In some cases components are sourced from only
one manufacturer and an interruption in supply could materially adversely affect
our operations. Any shortages of particular components, including components
manufactured in our India facilities, could increase product delivery times
and/or costs associated with manufacturing, reducing gross margins. For more
details, see the heading "Our Dependence on International Operations Subjects us
to Various Risks Associated With, Among Other Things, Foreign Laws, Policies,
Economies and Exchange Rate Fluctuations" above. Additionally, such shortages
could cause a substantial loss of business due to shipment delays. Any
significant shortages or price increases of components could have a material
adverse effect on our financial condition or results of operations.

OUR QUARTERLY SALES MAY FLUCTUATE WHILE OUR EXPENDITURES REMAIN RELATIVELY
FIXED, POTENTIALLY RESULTING IN LOWER GROSS MARGINS

    Our quarterly results of operations have fluctuated in the past and may
continue to fluctuate in the future. Variations in volume production orders and
in the mix of products sold by us have significantly affected sales and gross
profit. Sales generally may also be affected by other factors. These factors
include:

    - the receipt and shipment of large orders;

    - raw material availability and pricing;


                                      17

<PAGE>

    - product and price competition; and

    - the length of sales cycles and economic conditions in the electronics
      industry.

    Many of these factors are outside our control.

    We do not obtain long term purchase orders or commitments from our
customers, and a substantial portion of sales in a given quarter may depend on
obtaining orders for products to be manufactured and shipped in the same quarter
in which those orders are received. Sales for future quarters may be difficult
to predict. We rely on our estimates of anticipated future volumes when making
commitments regarding the level of business that we will seek and accept, the
mix of products that we intend to manufacture, the timing of production
schedules and the levels and utilization of personnel, inventory and other
resources.

    A variety of conditions, both specific to the individual customer and
generally affecting the customer's industry, may cause customers to cancel,
reduce or delay orders that were previously made or anticipated. At any time, a
significant portion of our backlog may be subject to cancellation or
postponement. We cannot assure that we will be able to timely replace cancelled,
delayed or reduced orders. Significant or numerous cancellations, as well as
reductions or delays in orders by a customer or group of customers, could
materially adversely affect our financial condition or results of operations.

    Our expense levels are relatively fixed and are based, in part, on
expectations of future revenues. Consequently, if revenue levels are below
expectations, our financial condition or results of operations could be
materially adversely affected. Due to all of the preceding factors, in some
future quarter or quarters our financial condition or results of operations may
be below our expectations and our gross margins may decrease. For details
concerning our financial condition, see Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

OUR ABILITY TO MAINTAIN AND ENHANCE PRODUCT AND MANUFACTURING TECHNOLOGIES AND
TO SUCCESSFULLY OPERATE OUR BUSINESS IS DEPENDENT UPON OUR CONTINUED ABILITY
TO ATTRACT AND RETAIN KEY PERSONNEL

    Our success depends to a significant degree on the efforts of Mr. Pat Patel,
our Chief Executive Officer, and the other members of our senior management
team. We have no employment agreements with our key management executives and do
not maintain key person life insurance for any of our officers or Management
Committee members other than Mr. Patel. We believe that the loss of service of


                                      18

<PAGE>

any of these executives could have a material adverse effect on our business.

    Our ability to maintain and enhance product and manufacturing technologies
and to manage any future growth will also depend on our success in attracting
and retaining personnel with highly technical skills. The competition for these
qualified technical personnel may be intense if the relatively limited number of
qualified and available power engineers continues. We cannot assure that we will
be able to attract and retain qualified management or other highly technical
personnel.

IF WE ARE UNABLE TO SUSTAIN OUR RAPID GROWTH OR EFFECTIVELY INTEGRATE ACQUIRED
BUSINESSES OUR LONG TERM COMPETITIVE POSITION MAY SUFFER

    We believe that our long-term competitive position depends in part on our
ability to continue to increase manufacturing capacity, and we cannot assure
that we will be able to acquire or build sufficient capacity or successfully
integrate and manage such expanded facilities. The failure to obtain sufficient
capacity or to successfully integrate and manage additional or expanded
manufacturing facilities could adversely impact our relationships with customers
and suppliers and materially adversely affect our financial condition or results
of operations.

    The growth of our business, through acquisition or otherwise, requires
substantial additional capital, and we cannot assure that such capital will be
available on acceptable terms, or at all. In addition, such growth is expected
to place significant demands on our financial and management resources,
including:

    - diversion of management's attention from day to day operations;

    - requiring us to develop further the management skills of our managers and
      supervisors; and

    - requiring additional personnel at all levels, including highly technical
      personnel and management.

    Moreover, our ability to make successful acquisitions depends on numerous
other factors, including our ability to identify acceptable acquisition
opportunities and consummate acquisition transactions. We cannot assure that we
will be successful in making future acquisitions or, once one or more
acquisitions have been completed, that we will be able to effectively manage
expansion of our operations and attract and retain necessary personnel. Failure


                                      19

<PAGE>

to effectively integrate acquired businesses could adversely affect our
financial condition or results of operations.

CHANGES IN GOVERNMENT REGULATIONS OR PRODUCT CERTIFICATION COULD RESULT IN
DELAYS IN SHIPMENT OR IN LOST SALES, THEREBY MATERIALLY AND ADVERSELY
AFFECTING OUR RESULTS OF OPERATIONS

    Our operations are subject to general laws, regulations and government
policies in the United States and abroad relating to items such as minimum wage,
employee safety and other health and welfare regulations. Additionally, our
product standards are certified by agencies in various countries including the
United States, Canada, Germany and the United Kingdom among others. As many
customers will not order uncertified products, changes in such certification
standards could negatively affect the demand for our products, result in the
need to modify our existing products or affect the development of new products,
each of which may involve substantial costs or delays in sales and could have a
material adverse effect on our financial condition or results of operations.

ENVIRONMENTAL COMPLIANCE COULD REQUIRE SIGNIFICANT EXPENDITURES, THEREBY
MATERIALLY AND ADVERSELY AFFECTING OUR RESULTS OF OPERATIONS

    We are subject to federal, state and local environmental laws and
regulations (in both the United States and abroad) that govern the handling,
transportation and discharge of materials into the environment, including into
the air, water and soil. Environmental laws could become more stringent over
time, imposing greater compliance costs and increasing risks and penalties
associated with violation. Should there be an environmental occurrence, incident


                                      20

<PAGE>

or violation, our financial condition or results of operations may be adversely
affected. We could be held liable for significant damages for violation of
environmental laws and could also be subject to a revocation of licenses or
permits, thereby materially and adversely affecting our financial condition or
results of operations.


ITEM 2.  PROPERTIES

    The following table identifies our facilities.

<TABLE>
<CAPTION>

                                                        APPROX.       OWNED
                                    PRIMARY             SQUARE         VS.                LEASE
       FACILITIES                  ACTIVITY             FOOTAGE      LEASED          EXPIRATION DATE
-------------------------  -------------------------  -----------  -----------  -------------------------
<S>                        <C>                        <C>          <C>          <C>
Tustin, CA                 Administrative,                86,000       Leased   April 30, 2009
                           Manufacturing,
                           Engineering

Tustin, CA                 Storage                        14,000       Leased   November 30, 2001

Irvine, CA                 Manufacturing,                 31,000       Leased   December 31, 2003
                           Engineering

Wavre, Belgium             Manufacturing                 178,000       Owned    --

Guadalajara, Mexico        Manufacturing                  35,000       Owned    --

Bombay, India              Manufacturing                  14,000       Leased   March 31, 2003

Bombay, India              Manufacturing                  17,000       Leased   April 15, 2004
</TABLE>


                                      21

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         We are subject to disputes and potential claims by third parties that
are incidental to the conduct of our business. We do not believe that the
outcome of any such matters, pending at December 31, 2000, will have a material
adverse effect on our financial condition or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED UNITHOLDER
         MATTERS

         There is no established public trading market for our membership units.

         As of March 15, 2001, there were 23 holders of record of our membership
units.

         Pursuant to our Second Amended and Restated Operating Agreement, as
amended, subject to certain qualifications, we may make distributions of cash on
our membership units at times, and in amounts, determined by our Management
Committee. Subject to compliance with our contractual obligations, however, we
must make quarterly tax distributions on our membership units to enable our
members to pay taxes on our income. For the fiscal years ended December 31, 2000
and 1999, we made the following distributions:

<TABLE>
<CAPTION>

                           FISCAL 2000
                           -----------
                                    DISTRIBUTION
            DATE PAID                PER UNIT
           -----------              ------------
<S>                                 <C>
         February 1, 2000              $0.06
         July 25, 2000                 $0.07
         November 28, 2000              0.10
</TABLE>




<TABLE>
<CAPTION>

                 FISCAL 1999
                -------------
                            DISTRIBUTION
        DATE PAID             PER UNIT
       -----------         ---------------
<S>                        <C>
    January 14, 1999            $ 0.07
    March 12, 1999              $ 0.01
    April 14, 1999              $ 0.13
    April 30, 1999 (1)          $ 5.00
    June 10, 1999               $ 0.03
    September 15, 1999          $ 0.06
</TABLE>

(1) Distribution made as part of the Transactions


                                      22

<PAGE>

         On June 14, 2000, we consummated an offering of an aggregate of
47,671 of our Class A Voting Units and an aggregate of 5,948,264 of our Class
B Non-voting Units, pursuant to exemptions from, or transactions not subject
to the registration requirements of the Securities Act of 1933, as amended,
and applicable state securities laws. The net proceeds of the offering were
approximately $34 million. The offering was effected pursuant to Section 4(2)
of the Securities Act and Rule 506 promulgated thereunder, and the purchasers
were those holders of our membership units who were on the date of purchase
Accredited Investors, as that term is defined by Securities Act Rule 501, and
who elected to participate in the offering.

         We used the net proceeds together with borrowings under our credit
facility to fund the purchase for approximately $55 million, including
assumption of debt, of all of the outstanding stock of ITS. For more
information regarding the purchase of ITS, see "Business--ITS Acquisition."

         On April 30, 1999, we consummated an offering of $100 million
aggregate principal amount of notes, pursuant to exemptions from, or
transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. The net proceeds of the offering
were approximately $96.4 million. The offering was effected pursuant to
Section 4(2) of the Securities Act and Rule 144A promulgated thereunder, and
the initial purchaser was Credit Suisse First Boston Corporation. Following
the offering, we effected an exchange offer, registered under the Securities
Act, pursuant to which the 10 1/2% Series A Senior Subordinated Notes due
2009 were exchanged for 10 1/2% Series B Senior Subordinated Notes due 2009
with substantially the same terms and conditions as the 10 1/2% Series A
Senior Subordinated Notes due 2009.

         We used the net proceeds together with borrowings under our credit
facility to fund a $150 million cash distribution to our members made in
connection with the acquisition by Cherokee Investor Partners, LLC of 60% of
our then outstanding membership units. Collectively, we refer to the issuance
of the notes, the entrance into our current credit facility, the acquisition
by Cherokee Investors of 60% of our then outstanding membership units and the
$150 million cash distribution as the "Transactions."

ITEM 6.  SELECTED FINANCIAL DATA

    You should read the following selected historical consolidated financial
information in conjunction with our audited consolidated financial statements
beginning on page F-1 of this Annual Report on Form 10-K. We derived our
selected historical consolidated financial information as of December 31,
1996, 1997, 1998, 1999 and 2000 and for the nine months ended December 31,
1996, and the years ended December 31, 1997, 1998, 1999 and 2000 from our
audited consolidated financial statements. Effective March 29, 1996 we
entered into an asset purchase agreement with Cherokee International, Inc., a
wholly-owned subsidiary of Core Industries, and an asset transfer agreement
with Bikor Corporation whereby we purchased assets and assumed liabilities
for a total purchase price of $26,536,888. The acquisition was accounted for
under the purchase method of accounting with the total purchase price
allocated to net tangible assets. No goodwill was recorded as the fair market
value of assets acquired and liabilities assumed approximated historical
cost. We continued the businesses of Cherokee International, Inc. and Bikor
Corporation subsequent to the acquisitions and incurred a significant
increase in interest in 1996 and 1997 due to additional borrowings incurred
as a result of the acquisitions. We derived our selected historical
consolidated financial information as of March 31, 1996, and for the three
months ended March 31, 1996 from our unaudited consolidated financial
statements which have been prepared by us on a basis consistent with our
audited financial statements and, in our opinion, include all adjustments
(consisting of only normal recurring

                                       23

<PAGE>

adjustments) necessary for a fair presentation of our results of operations for
such periods and financial condition as of the dates presented.

<TABLE>
<CAPTION>

                                               PREDECESSOR                           CHEROKEE INTERNATIONAL, LLC
                                               ------------------------------------------------------------------------------------
                                              3 MONTHS        9 MONTHS                        YEAR ENDED
                                                ENDED           ENDED         -----------------------------------------------------
                                               MAR. 31         DEC. 31         DEC. 31        DEC. 31       DEC. 31        DEC. 31
                                                1996           1996(a)         1997(a)        1998(a)       1999(a)        2000(a)
                                              ---------       ---------       ---------      ----------    ---------     ----------
                                                               (IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
<S>                                           <C>             <C>             <C>            <C>           <C>           <C>
STATEMENT OF INCOME DATA

Net sales ................................... $  12,175       $  50,197       $  77,022       $  87,553     $121,458     $  143,175
Cost of sales ...............................     9,587          33,901          48,990          54,824       77,593         94,517
                                              ---------       ---------       ---------      ----------    ---------     ----------
Gross profit ................................     2,588          16,296          28,032          32,729       43,865         48,658
Operating expenses ..........................     1,927           7,085           9,520           8,794       10,599         20,526
Special bonus distribution ..................      --              --              --              --          5,330           --
                                              ---------       ---------       ---------      ----------    ---------     ----------
Operating income ............................       661           9,211          18,512          23,935       27,936         28,132
Interest expense ............................      (152)         (1,638)         (1,065)           (373)     (10,675)       (16,779)
Other income (expense) ......................       135              41             377             338         (709)           342
                                              ---------       ---------       ---------      ----------    ---------     ----------
Income before extraordinary item ............       644           7,614          17,824          23,900       16,552         11,695
Extraordinary gain on early extinguishment
  of debt ...................................      --              --               714           --           --             --
                                              ---------       ---------       ---------      ----------    ---------     ----------
Pretax income(b) ............................ $     644       $   7,614       $  18,538       $  23,900     $ 16,552     $   11,695
                                              =========       =========       =========      ==========    =========     ==========
Basic and diluted income per unit:
Income before extraordinary item ............      --         $     .25       $     .59     $      .80      $    .55     $      .35
Net income ..................................      --         $     .25       $     .62     $      .80      $    .55     $      .34
                                                              =========       =========      ==========    =========     ==========
Weighted Average Units Outstanding:
Basic .......................................      --            30,000          30,000          30,000       30,124         33,647
                                                              =========       =========      ==========    =========     ==========
Diluted .....................................      --            30,000          30,000          30,000       30,211         33,985
                                                              =========       =========      ==========    =========     ==========

BALANCE SHEET DATA (AT PERIOD END):
Working capital ............................. $   5,671       $  16,445       $  14,398       $  23,698     $ 22,757     $   10,337
Total assets ................................    27,611          28,756          30,654          40,846       54,876        137,020
Total debt ..................................     6,784          15,520           4,463           2,042      149,651        169,133
Shareholder's equity/members' equity
  (deficit)(c) ..............................    16,287           8,654          19,118          30,029     (107,676)       (69,061)

OTHER FINANCIAL DATA:
EBITDA(d) ................................... $   1,086       $  10,575       $  20,015       $  25,606     $ 35,656     $   32,959
EBITDA margin(e) ............................      8.9%           21.1%           26.0%           29.2%        29.4%           23.0%
Cash flow provided by (used in) operating
  activities ................................ $  (1,675)      $   9,839       $  20,078       $  20,066     $ 19,152     $    6,730
Cash flow used in investing activities ......       (78)        (17,199)         (1,355)         (1,898)        (532)       (56,365)
Cash flow provided by (used in) financing
  activities ................................       246           6,927         (18,416)        (16,256)     (13,436)        43,528
Depreciation and amortization................       425           1,364           1,503           1,671        2,390          4,827
Capital expenditures.........................        78           1,935           1,355           1,898          532          4,873
</TABLE>


                                      24

<PAGE>

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

(a) Includes financial results of Bikor Corporation, the assets of which we
    acquired on March 29, 1996. The financial results of Bikor Corporation are
    not included for periods prior to such acquisition.

(b) For the period ended March 31, 1996,the income of our predecessor was
subject to tax on a consolidated basis with its parent which amounted to
$232,000. For subsequent periods, pretax income primarily represents net
income for a limited liability company that is not subject to income tax.

(c) For the three months ended March 31, 1996, the term "Shareholders'
Equity" applies. For the nine months ended December 31, 1996, and the years
ended December 31, 1997, 1998, 1999, and 2000 the term "Members' Equity
(Deficit)" applies.

(d) EBITDA represents operating income plus depreciation and amortization and,
for the year ended December 31, 1999, plus a special bonus of $5,330,000 made by
Cherokee in connection with the Transactions. We consider EBITDA to be a widely
accepted financial indicator of a company's ability to service debt, fund
capital expenditures and expand its business; however, EBITDA is not calculated
in the same way by all companies and is neither a measurement required, nor
represents cash flow from operations as defined, by generally accepted
accounting principles. You should not consider EBITDA to be an alternative to
net income, an indicator of operating performance or an alternative to cash flow
as a measure of liquidity.

(e) EBITDA Margin represents EBITDA as a percentage of net sales.


                                      25

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

GENERAL

    You should read the following discussion and analysis of our results of
operations, financial condition and liquidity in conjunction with the audited
consolidated financial statements beginning on page F-1 of this Annual Report on
Form 10-K.

OVERVIEW

    We are a leading designer and manufacturer of a broad range of switch mode
power supplies for OEMs primarily in the high growth telecommunications,
networking and high-end workstation industries. We produce our products and
related components in six sophisticated manufacturing facilities including
plants located in Tustin, California, Irvine, California, Wavre, Belgium,
Guadalajara, Mexico and two in Bombay, India.

    The telecommunications, networking and high-end workstation markets are
benefitting from the proliferation of internet/intranet, wireless and other
communications.

    The principal elements comprising cost of sales are raw materials, labor and
manufacturing overhead. Raw materials account for a large majority of cost of
sales. Raw materials include magnetic subassemblies, sheet metal, electronic and
other components, mechanical parts and electrical wires. Labor costs include
employee costs of salaried and hourly employees. Manufacturing overhead includes
lease costs, depreciation on property, plant and equipment, utilities, property
taxes and repairs and maintenance.

    Operating expenses include engineering costs, selling and marketing costs
and administrative expenses. Engineering costs primarily include salaries and
benefits of engineering personnel, safety approval and quality certification
fees, depreciation on equipment and subcontract costs for third party
contracting services. Selling and marketing expenses primarily include salaries
and benefits to account managers and commissions to independent sales
representatives. Administrative expenses primarily include salaries and benefits
for certain management and administrative personnel, professional fees and
information system costs.

         On June 15, 2000, the Company acquired ITS for approximately $55
million, including assumption of debt. The acquisition was accounted for
using the purchase method of accounting, and the fair market value of ITS's
assets and liabilities were included in the Company's balance sheet as of the
acquisition date. For the year ended December 31, 2000, the Company's
statements of income are consolidated to include ITS's operations from June
16, 2000 to December 31, 2000.

                                      26

<PAGE>

    Cherokee is organized as a California limited liability company and treated
as a partnership for United States federal income tax purposes. Under this
treatment, Cherokee is not itself subject to United States federal income
taxation. Each member of Cherokee, however, is subject to tax on its allocable
share of Cherokee's income. In general, Cherokee makes distributions to its
members in an amount sufficient to pay their United States federal and state
income taxes resulting from their allocable share of Cherokee's income.


                                      27

<PAGE>

RESULTS OF OPERATIONS

FISCAL 2000 COMPARED TO FISCAL 1999

NET SALES

    Net sales increased by approximately 17.9% or $21.7 million to $143.2
million for the year ended December 31, 2000 from $121.5 million for the year
ended December 31, 1999.

         The inclusion of ITS's operations from June 16, 2000 to December 31,
2000 contributed approximately $31.5 million of sales for the current year.
This was partially offset by lower sales for the North American operations
primarily due to decreased demand from certain major customers in 2000
compared with particularly strong demand from those same customers in the
prior year. A decline in sales to IBM, one of the Company's largest
customers, accounted for substantially all of the North American sales
decrease from 1999.

GROSS PROFIT

     Gross Profit increased by approximately 10.9% or $4.8 million to $48.7
million for the year ended December 31, 2000 from $43.9 million for the year
ended December 31, 1999. Gross margin for 2000 decreased to 34.0% from 36.1% in
the prior year.

    The increase in gross profit was primarily due to inclusion of ITS in the
current year, partially offset by lower gross profit from the North American
operations due to decreased sales as discussed above. The decrease in gross
margin compared to 1999 was primarily due to the inclusion in 2000 of the ITS
operations, which had lower gross margins than the North American operations.

                                      28

<PAGE>

OPERATING EXPENSES

    Operating expenses for the year ended December 31, 1999 of $15.9 million
included a $5.3 million special bonus distribution. This bonus payment was in
addition to our discretionary annual management bonus plan and was funded by
capital contributions made by our then existing members. No such special bonus
distribution was made for the year ended December 31, 2000.

    Operating expenses increased by approximately 93.7% or $9.9 million to
$20.5 million for the year ended December 31, 2000 from $10.6 million,
excluding the special bonus distribution, for the year ended December 31,
1999. As a percentage of sales, operating expenses, before the special bonus
distribution, increased to 14.3% from 8.7% in the prior year.

         The increase in operating expenses, as expressed in dollars as well
as a percentage of net sales, was primarily attributable to the inclusion of
ITS's operations from June 16, 2000 to December 31, 2000, and amortization of
goodwill and other related intangibles related to the ITS acquisition. The
increase in operating expenses as expressed as a percentage of net sales was
also attributable to having the resources in place at the North American
operations to support sales levels commensurate with those achieved in 1999.

OPERATING INCOME

   Operating income decreased by approximately 15.4% or $5.1 million to $28.1
million for the year ended December 31, 2000 from $33.3 million, excluding
the special bonus distribution, for the year ended December 31, 1999.
Operating margin for the year ended December 31, 2000, declined to 19.6% from
27.4% in the prior year.

    The decrease in operating income was primarily due to the same factors
contributing to our decrease in gross profit and increase in operating
expenses as discussed above.

INTEREST EXPENSE

    Interest expense for the year ended December 31, 2000 was $16.8 million
compared to $10.7 million for the year ended December 31, 1999. This
substantial increase was primarily due to the issuance of $100 million of 10
1/2% senior subordinated notes and a $50 million term loan, all of which
occurred in April 1999 in connection with the Transactions, and $8.0 million
of new term debt in connection with the ITS acquisition in June 2000.

NET INCOME

    Net income for the year ended December 31, 2000 was $11.7 million. Net
income decreased

                                      29

<PAGE>

by approximately 46.7% or $10.2 million from $21.9 million, excluding the
effect of the special bonus distribution, for the year ended December 31,
1999. Net income margin for 2000 was 8.1% compared to 18.0% for 1999.

    The decrease in net income and net income margin was primarily due to the
factors discussed above.

FISCAL 1999 COMPARED TO FISCAL 1998

NET SALES

    Net sales increased approximately 38.7% or $33.9 million to $121.5 million
for the year ended December 31, 1999 from $87.6 million for the year ended
December 31, 1998.

    This increase in net sales was primarily attributable to growth in
business with existing customers, along with a broadening of our customer base
resulting in additional sales from new projects with certain new customers.

GROSS PROFIT

    Gross profit increased by approximately 34.0% or $11.1 million to $43.9
million for the year ended December 31, 1999 from $32.7 million for the year
ended December 31, 1998. Gross margin


                                     30

<PAGE>

for 1999 decreased to 36.1% from 37.4% in 1998.

    The increase in gross profit was primarily attributable to the increase in
sales.

     The decrease in gross margin compared to the prior year was primarily due
to increased pricing pressure from certain key existing customers and a change
in product mix. This decrease was partially offset by improved operating
leverage due to higher sales volume and improved operating efficiencies due to
increased automation.

OPERATING EXPENSES

    Operating expenses, excluding the $5.3 special bonus distribution in 1999,
increased by approximately 20.5% or $1.8 million to $10.6 million for the year
ended December 31, 1999 from $8.8 million for the year ended December 31, 1998.
Operating expenses as a percentage of net sales, before the special bonus
distribution, declined to 8.7% in 1999 from 10.0% in 1998.

    The increase in operating expenses was primarily attributable to the
increased costs to support the higher sales volume. The decline in operating
expenses as a percentage of net sales was primarily attributable to increased
operating leverage as a result of the higher sales volume.

OPERATING INCOME

    Operating income for the year ended December 31, 1999 of $27.9 million
includes the $5.3 million special bonus distribution. Excluding the effect of
the special bonus distribution, operating income increased by approximately
39.0% or $9.3 million to $33.3 million for the year ended December 31, 1999 from
$23.9 million for the year ended December 31, 1998. Operating margin for 1999,
before the special bonus distribution, improved slightly to 27.4% from 27.3% in
1998.

    The increase in operating income was attributable to the same factors
contributing to the increase in gross profit as discussed above and improved
operating leverage due to increased sales volume.

INTEREST EXPENSE

Interest expense for the year ended December 31, 1999 was $10.7 million compared
to $0.4 million for the year ended December 31, 1998. This substantial increase
was primarily due to the issuance of $100 million of 10 1/2% senior subordinated
notes and a new $50 million term loan, all of which occurred in April 1999 in
connection with the Transactions.


                                      31

<PAGE>

NET INCOME

    Net income for the year ended December 31, 1999 was $16.6 million, which
includes the effect of the $5.3 million special bonus distribution. Excluding
the effect of the special bonus distribution, net income decreased by
approximately 8.4% or $2.0 million to $21.9 million for the year ended December
31, 1999 from $23.9 million for the year ended December 31 1998. Net income
margin for 1999, before the special bonus distribution, was 18.0% compared to
27.3% for 1998.

    The decrease in net income and net income margin was primarily due
to the substantially higher interest expense discussed above, partially offset
by the increased operating income discussed above.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

FISCAL 2000 COMPARED TO FISCAL 1999

    Net cash provided by operating activities was $6.7 million for the year
ended December 31, 2000 compared to $19.2 million for the year ended December
31, 1999. Cash provided by operating activities for 2000 reflects increased
depreciation and amortization, partially offset by increases in accounts
receivable of $7.0 million and inventories of $4.7 million. Cash provided by
operating activities for 1999 reflects increased depreciation and
amortization as well as increased accrued interest payable of $2.4 million,
partially offset by increased inventories of $3.4 million.

    Net cash used in investing activities was $56.4 million for the year
ended December 31, 2000 compared to $0.5 million for the year ended December
31, 1999. The amount for 2000 reflects $4.9 million of additions to property
and equipment and $51.5 million invested in the ITS acquisition, net of cash
acquired.

                                      32

<PAGE>

    Net cash provided by financing activities was $43.5 million for the year
ended December 31, 2000 compared to $13.4 million used for the year ended
December 31, 1999. The amount for 2000 reflects $34.8 million of cash
proceeds from the sale and issuance of new members' equity units and $8.0
million of borrowings under a new term loan, both done primarily in
connection with the ITS acquisition. A net increase in revolving credit
borrowings of $14.4 million was offset by payments on long-term debt of $5.2
million and equity distributions of $7.2 million. The amount for 1999
includes the favorable cash flow effect of a $5.3 million capital
contribution made by the existing members to fund the special bonus
distribution discussed above. This was partially offset by payment in 1999 of
$5.4 million of deferred financing costs.

FISCAL 1999 COMPARED TO FISCAL 1998

    Net cash provided by operating activities was $19.2 million for the year
ended December 31, 1999 compared to $20.1 million for the year ended December
31, 1998. The amount for 1999 includes the negative cash flow effect of a $5.3
million special bonus distribution which was funded by a capital contribution
made by the existing members. Excluding the effect of the special bonus
distribution, cash provided by operating activities was $24.5 million for fiscal
1999, which increased 21.9% or $4.4 million from fiscal 1998. Cash provided by
operating activities for 1999 reflects increased depreciation and amortization,
including amortization of deferred financing costs, and increased accrued
interest payable of $2.4 million partially offset by increased inventories of
$3.4 million. Cash provided by operating activities for 1998 reflects a $2.5
million increase in accounts payable, offset by increases of $5.2 million in
accounts receivable and $2.1 million in inventories.


                                      33

<PAGE>

LIQUIDITY

    Historically, we have financed our operations with cash from operations
supplemented by borrowings from our credit facilities. As a result of the
Transactions in 1999, our liquidity needs primarily arise from debt service
on our indebtedness, working capital requirements, capital expenditures and
distributions to our members so that they may satisfy their obligations to
pay taxes on our income. Our liquidity in 2000 was also affected by the
acquisition of ITS. As of December 31, 2000, our borrowings consisted of $100
million of senior subordinated notes and $66.3 million of borrowings under
our various credit facilities, including $48.2 million under the term loan
facilities and $11.8 million drawn under the $25 million revolving credit
facility. We are not subject to any amortization requirements under the notes
prior to maturity but we are required to make scheduled repayments under the
term loan facilities.

    We believe that cash flow from operations and available borrowing capacity
will be adequate to meet our anticipated cash requirements, including operating
requirements, planned capital expenditures, debt service and distributions to
pay taxes, for the next twelve months.

    Our historical capital expenditures have substantially resulted from
investments in equipment to increase our manufacturing capacity and improve
manufacturing efficiencies. Our cash capital expenditures were $4.9 million,
$0.5 million and $1.9 million for fiscal 2000, 1999 and 1998, respectively.
Capital expenditures under capital leases were $0.0 in 2000, $3.2 million in
1999 and $0.8 million in 1998. For fiscal 2001, we expect capital
expenditures to be approximately $3.4 million. We expect capital expenditures
for fiscal 2001 to relate principally to continuing investments in equipment
to expand manufacturing capacity as well as automation and test equipment to
lower production costs.

                                      34

<PAGE>

    We are organized as a California limited liability company and treated as
a partnership for United States federal income tax purposes. Under this
treatment, we are not subject to United States federal income taxation;
however, our foreign subsidiaries are subject to income tax. Each of our
members, however, is subject to tax on its allocable share of our income. In
general, we make distributions to our members in an amount sufficient to pay
their United States federal and state income taxes resulting from their
allocable share of our income. During 2000, 1999 and 1998, we made
distributions to our members of approximately $7.6 million, $160.8 million
and $13.0 million, respectively. The 1999 distribution included the $150
million distribution made in connection with the Transactions.

                                      35

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risks relating to our operations result primarily from changes
in short-term interest rates. We do not have significant foreign exchange or
other market risk. We did not have any derivative financial instruments at
December 31, 2000.

         Our exposure to market risk for changes in interest rates relates
primarily to our credit facility. In accordance with the credit facility, we
enter into variable rate debt obligations to support general corporate
purposes, including capital expenditures and working capital needs. We
continuously evaluate our level of variable rate debt with respect to total
debt and other factors, including assessment of the current and future
economic environment.

We had approximately $66 million in variable rate debt outstanding at December
31, 2000. Based upon this year-end variable rate debt level, a hypothetical 10%
adverse change in interest rates would increase interest expense by
approximately $0.6 million on an annual basis, and likewise decrease our
earnings and cash flows. We cannot predict market fluctuations in interest rates
and their impact on our variable rate debt, nor can there be any assurance that
fixed rate long-term debt will be available to us at favorable rates, if at all.
Consequently, future results may differ materially from the estimated adverse
changes discussed above.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATE

         See the Index to Financial Statements on page F-1.

ITEM 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

         None.

                                      36

<PAGE>

ITEM 10.  MANAGEMENT

EXECUTIVE OFFICERS AND MANAGEMENT COMMITTEE MEMBERS

    Pursuant to our Second Amended and Restated Operating Agreement, as
amended, we are managed by an seven-member Management Committee.

    Set forth below is certain information concerning our executive officers and
members of our Management Committee.

<TABLE>
<CAPTION>

NAME                                              AGE                 POSITION(S) WITH CHEROKEE
---------------------------------------------  ---------  --------------------------------------------------
<S>                                            <C>        <C>
Pat Patel....................................      56     Chairman, Chief Executive Officer and member of
                                                          Management Committee

Bud Patel....................................      65     Executive Vice President and member of Management
                                                          Committee

Dennis Pouliot...............................      53     Vice President of Marketing

Howard Ribaudo...............................      42     Vice President of Sales

Van Holland..................................      47     Chief Financial Officer

Ken King.....................................      72     Member of Management Committee

Ian Schapiro.................................      43     Vice President and member of Management Committee

Stephen Kaplan...............................      42     Member of Management Committee

Tony Bloom...................................      62     Member of Management Committee

Chris Brothers...............................      35     Member of Management Committee
</TABLE>


    PAT PATEL founded Cherokee Corporation in 1978, and served as President
of Cherokee and its successor since its inception. In April 1999, he became
Chairman of the Management Committee and Chief Executive Officer and resigned
as President. Prior to founding Cherokee Corporation, Mr. Patel served as a
Senior Project Engineer at Burroughs Corp. (now Unisys) for four years. Mr.
Patel also serves as President and Chief Executive Officer of, and is a
director of, Cherokee Finance.


                                        37

<PAGE>

    BUD PATEL has served as our Executive Vice President since April 1996 and
was a Vice President of Engineering of Cherokee Corporation from 1987 to 1993.
Mr. Patel served as President of Bikor from June 1993 through March 1996 when we
acquired substantially all of the assets of Bikor. Prior to joining the Company
in 1987, Mr. Patel was a Director of Engineering at Leland Electro Systems for
over 25 years. Mr. Patel also serves as a director of Cherokee Finance. Bud
Patel is not related to Pat Patel.

    DENNIS POULIOT has served as Vice President of Marketing of Cherokee and its
predecessor since March 1991. Prior to joining us, Mr. Pouliot was a sales
manager at Lambda Qualidyne from June 1989 to March 1991 and a Director of
International Sales and Marketing from September 1978 through June 1989.

    HOWARD RIBAUDO has served as our Vice President of Sales since March 1996
and served us in various other marketing capacities for Cherokee Corporation
from 1988 through September 1993. Mr. Ribaudo served as Vice President of Sales
and Marketing for Bikor from September 1993 through March 1996.

    VAN HOLLAND became our Chief Financial Officer in August 1999. Prior
to joining Cherokee, Mr. Holland served as Executive Vice President and Chief
Financial Officer of Wyle Electronics, a $1.5 billion electronics
distributor. From 1979 to May 1999, Mr. Holland served in various senior
financial management positions at Wyle. Prior to that, Mr. Holland was an
auditor with Arthur Andersen & Co.

    KEN KING served as Executive Vice President of Cherokee and its predecessor
from September 1982 until April 2000. Mr. King joined us after serving as the
President of Delphi Communications Corp. from September 1972 until September
1982.

    IAN SCHAPIRO became our Vice President and a member of our Management
Committee in April 1999. Mr. Schapiro became a founding principal of GFI
Energy Ventures in June 1995. From November 1985 to June 1995 he was a
partner of Venture Associates and of Arthur Andersen & Co. following that
firm's acquisition of Venture Associates. From 1984 to 1985, Mr. Schapiro was
Chief Financial Officer of a technology company, and before that, a
commercial banker with The Bank of California whose portfolio was
concentrated in the energy sector. Mr. Schapiro is a widely quoted author of
numerous articles regarding the financial management of energy utilities. He
is a member of the board of directors of Xantrex Technology, Inc. and Smart
Systems International. Mr. Schapiro also serves as Vice President and
Secretary of, and is a director of, Cherokee Finance.

    STEPHEN KAPLAN became a member of our Management Committee in April
1999. Mr. Kaplan is a principal of Oaktree. Prior to joining Oaktree in June
1995, Mr. Kaplan was a Managing Director of Trust Company of the


                                      38

<PAGE>

West, or TCW. Prior to joining TCW in 1993, Mr. Kaplan was a partner in the law
firm of Gibson, Dunn & Crutcher. Mr. Kaplan serves on the boards of directors of
Acorn Products, Inc., KinderCare Learning Centers, Inc., Collagenex
Pharmaceuticals, Inc., BioPure Corporation, Forest Oil Corporation and various
other private companies.

    TONY BLOOM became a member of our Management Committee in April 1999. Mr.
Bloom is an international investor now based in London. Prior to his relocation
to London in July 1988, he lived in South Africa where he was the Chairman and
Chief Executive of The Premier Group (a multi-billion dollar conglomerate
involved in agribusiness, retail, and consumer products), and a member of the
boards of directors of Barclays Bank, Liberty Life Assurance, and South African
Breweries. Since moving to the United Kingdom, he has been a member of the board
of directors of Rothschild, Deputy Chairman of Sketchley plc and is currently
Chairman of Cine-UK Ltd. Mr. Bloom's association with GFI goes back to its
inception in 1995.

    CHRIS BROTHERS became a member of our Management Committee in April 1999.
Mr. Brothers is a Managing Director of Oaktree. Prior to joining Oaktree in
1996, Mr. Brothers worked at the New York headquarters of Salomon Brothers
Inc., where he served as a Vice President in the Mergers and Acquisitions
group. Prior to 1992, Mr. Brothers was a Manager in the Valuation Services
group of Price Waterhouse. Mr. Brothers serves on the boards of directors of
National Mobile Television, Inc., Caminus Corporation, Power Measurement,
Ltd. and Xantrex Technology, Inc.

    Our Second Amended and Restated Operating Agreement, as amended, provides
that Cherokee Investors has the right to designate four members of our
Management Committee. OCM/GFI Cherokee Investments II, Inc. has the right to
designate one member of our Management Committee and our other members have
the right to designate three members of our Management Committee.

    The individuals serving as members of our Management Committee serve
indefinite terms, and may be removed only by the members that appointed that
individual to the Management Committee.


                                      39

<PAGE>

NON-COMPETITION AGREEMENTS

    In connection with the Transactions, each of Messrs. Pat Patel, Bud
Patel, Amrit Patel and Mukesh Patel, all of whom are not directly related to
each other, entered into Non-Competition and Confidentiality Agreements. The
Non-Competition Agreements are effective for the longer of five years or the
period during which the executive directly or indirectly holds any equity
interest in Cherokee.

    Each Non-Competition Agreement prohibits the applicable executive from
directly or indirectly taking any action or encouraging others to take any
action, which advances or is intended to advance the interest of any existing or
potential competitor of ours or that would otherwise affect the Company's
relationship with any existing or potential customer in a manner that is not in
our interest. Each Non-Competition Agreement also contains confidentiality and
non-solicitation provisions.

ITEM 11.  COMPENSATION OF NAMED EXECUTIVE OFFICERS

    The summary compensation table below sets forth information concerning
compensation paid in the fiscal year ended December 31, 1998, 1999 and 2000 to
our Chief Executive Officer and our four other most highly compensated executive
officers, referred to in this prospectus as our named executive officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                   ANNUAL COMPENSATION
                                         ---------------------------------------
                                                                   OTHER ANNUAL       SECURITIES        ALL OTHER
                                          SALARY       BONUS(1)   COMPENSATION(2)     UNDERLYING     COMPENSATION(3)
NAME AND PRINCIPAL POSITION        YEAR     ($)           ($)         ($)              OPTIONS (#)         ($)
---------------------------------  ----  ----------     ---------   ------------      ------------    --------------
<S>                                <C>   <C>            <C>         <C>               <C>             <C>

Pat Patel .......................  2000    316,196       250,000          --             150,000            5,250
  Chairman and Chief Executive     1999    319,732       175,000          --             150,000            5,000
  Officer                          1998    276,216       281,000          --                 --             5,000


Bud Patel  ....................... 2000    216,256       125,000          --              75,000            5,250
  Executive Vice President         1999    202,384       110,000          --              75,000            5,000
                                   1998    186,829       165,803          --                 --             5,000


Dennis Pouliot ..................  2000    150,020        60,000          --              40,000            4,500
  Vice President of Marketing      1999    150,020        50,000          --              75,000        1,004,500(4)
                                   1998    150,020       110,000          --                 --             4,500


Howard Ribaudo ..................  2000    124,098        50,000          --              30,000            3,723
  Vice President of Sales          1999    124,770        30,000          --              37,500            3,552
                                   1998    109,999        66,000          --                 --             3,300


Van Holland                        2000    158,769        65,000          --              50,000            3,600
  Chief Financial Officer          1999     64,615        25,000          --              75,000              --
                                   1998        --            --           --                 --               --
</TABLE>


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

(1) Bonus payments reported for 1998 include payments made in early 1998
relating to bonuses earned in 1997 of $125,000 for Pat Patel, $72,376 for Bud
Patel, $50,000 for Dennis Pouliot and $30,000 for Howard Ribaudo.

(2) For each named executive officer, the aggregate dollar amount of other


                                      40

<PAGE>

    annual compensation received during fiscal 1999 not properly categorized as
    salary or bonus did not exceed the lesser of (1) $50,000 and (2) 10% of the
    total salary and bonus reported by such named executive officer for such
    fiscal year.

(3) Represents matching contributions made by us on behalf of the named
    executive officers under our 401(k) plan.

(4)  $1,000,000 represents a special bonus paid by the Company's members in
     connection with the Transactions in 1999.

UNIT OPTION PLAN

    1999 UNIT OPTION PLAN. The Management Committee adopted the 1999 Unit Option
Plan (the "Plan") on June 28, 1999, which has been approved by a majority of our
members holding Class A Units, for the benefit of our officers, Board members,
employees, advisors and consultants. The Plan covers an aggregate of 2,970,000
non-voting Class B Units and provides for the issuance of unit options.

    The Plan may be administered by the Management Committee or a committee
designated by the Management Committee (either such committee sometimes referred
to as the "plan administrator"). The plan administrator may interpret the Plan
and, subject to its provisions, may prescribe, amend and rescind rules and make
all other determinations necessary or desirable for the administration of the
Plan. The Plan permits the plan administrator to select the officers, Management
Committee representatives, employees, advisors and consultants of the Company
(including Management Committee representatives who are also employees) who will
receive unit options and generally to determine the terms and conditions of such
unit options.

    The unit price of each unit option granted under the Plan may generally not
be less than 85% of the fair market value of a Class B Unit on the date a unit
option is granted. Unit options generally vest at the rate of 25% per year over
four years.

    In the event that we (i) become incorporated (or merged into a corporation
or transfer all or substantially all of our assets to a corporation) or (ii)
become a publicly traded corporation (each, a "Conversion Transaction"), the
plan administrator will, prior to such Conversion


                                      41

<PAGE>

Transaction, take such action as it shall determine to be appropriate with
respect to the Plan and the outstanding unit options granted, so as to equitably
treat such options and the participants and to enable them to retain the
benefits of the unit options following such Conversion Transaction. Such actions
may, but need not, include adopting a new plan and converting the unit options
into comparable awards under that plan.

    In connection with any proposed (i) liquidation or dissolution of us, (ii) a
sale of all or substantially all of our assets other than in the ordinary course
of our business or (iii) a merger or consolidation involving us in which we are
not the surviving entity or we become a subsidiary of another corporation,
excluding, however, any Conversion Transaction, the plan administrator shall
determine the appropriate treatment, if any, of outstanding unit options and may
make such amendments to the Plan as are necessary to reflect such determination.

    Except as otherwise provided, in the event of any merger, reorganization,
consolidation or other change in corporate structure affecting the Class B
Units, an equitable substitution or proportionate adjustment, if any, as
determined by the plan administrator, may be made in (i) the aggregate number of
Class B Units reserved for issuance under the Plan, and (ii) the kind, number
and exercise price of Class B Units subject to outstanding unit options granted
under the Plan.

    Except as otherwise provided, in the event of any unit split, reverse unit
split, distribution of units, recapitalization, combination or reclassification
of units, an equitable substitution or proportionate adjustment, as determined
by the plan administrator, shall be made in (i) the aggregate number of Class B
Units reserved for issuance under the Plan, and (ii) the kind, number and
exercise price of Class B Units subject to outstanding unit options granted
under the Plan.

    In connection with any such event, the plan administrator may provide for
the cancellation of any outstanding unit options that are vested but
unexercised, or any portion thereof. In connection with any such cancellation,
we will make a payment to the participant in cash or other property equal to the
difference between the aggregate fair market value of the Class B Units subject
to the cancelled unit options, or portion thereof, and the aggregate exercise
price of the cancelled unit options, or portion thereof.

    The terms of the Plan provide that the plan administrator may amend, suspend


                                      42

<PAGE>

or terminate the Plan at any time, provided, however, that certain amendments
require approval of a majority of the members holding Class A Units. Further, no
such action may be taken which adversely affects any rights under outstanding
unit options without the holder's consent.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

     The following table sets forth summary information regarding the option
grants made to our chief executive officer and each of our four other most
highly paid executive officers during 2000. Options granted to purchase our
Class B units under our 1999 Unit Option Plan generally vest over four equal
annual installments. The exercise price per unit for each option granted is no
less than the per unit fair market value of our Class B Units on the date of
grant as determined by our Management Committee.

     The percentage of total options was calculated based on options to purchase
an aggregate of 1,340,000 of our Class B Units granted under our 1999 Unit
Option Plan in 2000. The potential realizable value was compounded annually from
the date the options were granted to their expiration date based on the fair
market value of the Class B Units on the date of grant. These assumed rates of
appreciation comply with the rules of the Securities Exchange Commission and do
not represent our estimate of future unit prices. Actual gains, if any, on unit
option exercises will be dependent on the future performance of our units.

<TABLE>
<CAPTION>



                                                                                                           POTENTIAL REALIZABLE
                                                                                                          VALUE AT ASSUMED ANNUAL
                                                          INDIVIDUAL GRANTS                                 RATES OF UNIT PRICE
                                                          -----------------                                  APPRECIATION FOR
                                         NUMBER OF           % OF TOTAL                                         OPTION TERM
                                         SECURITIES        OPTIONS GRANTED
                                         UNDERLYING        TO EMPLOYEES IN     EXERCISE       EXPIRATION
NAME                           YEAR   OPTIONS GRANTED (#)   FISCAL YEAR (%)   PRICE ($/SH)      DATE        5% ($)       10%($)
----                           ----    -------------------  ---------------   ------------      ----        -------     ---------
<S>                            <C>     <C>                  <C>               <C>            <C>            <C>         <C>
Pat Patel...............       2000         150,000              11.19           5.71        Sept 13, 2010  $184,581    $397,502
  Chairman and Chief Executive
  Officer
Bud Patel...............       2000          75,000               5.60           5.71        Sept 13, 2010    92,291     198,751
  Executive Vice President
Dennis Pouliot..........       2000          40,000               2.99           5.71        Sept 13, 2010    49,222     106,000
  Vice President of Marketing
Howard Ribaudo..........       2000          30,000               2.24           5.71        Sept 13, 2010    36,916      79,500
  Vice President of Sales
Van Holland.............       2000          50,000               3.73           5.71        Sept 13, 2010    61,527     132,501
  Chief Financial Officer
</TABLE>


There were no option exercises in the last fiscal year

                 AGGREGATED OPTION EXERCISES AND FISCAL YEAR END
                       OPTION VALUES AT DECEMBER 31, 2000

<TABLE>
<CAPTION>

                                                                NUMBER OF SECURITIES
                              NUMBER OF                        UNDERLYING UNEXERCISED        VALUE OF UNEXERCISED
                               SHARES                               OPTIONS AT              IN-THE-MONEY OPTIONS AT
                              ACQUIRED ON       VALUE            DECEMBER 31, 2000             DECEMBER 31, 2000
NAME                           EXERCISE        REALIZED      (EXERCISABLE/UNEXERCISABLE)  (EXERCISABLE/UNEXERCISABLE) (a)
<S>                           <C>              <C>           <C>                          <C>
Pat Patel                         -               -                37,500/262,500                 $64,125/192,375
Bud Patel                         -               -                18,750/131,250                  32,062/ 96,187
Dennis Pouliot                    -               -                18,750/ 96,250                  32,062/ 96,187
Howard Ribaudo                    -               -                 9,375/ 58,125                  16,031/ 48,093
Van Holland                       -               -                18,750/106,250                  32,062/ 96,187
</TABLE>

(a) The units are not publicly traded and the value of the options represents
management's best judgment of value at December 31, 2000.

COMPENSATION OF DIRECTORS

    The individuals serving on the Management Committee who are not employees
of Cherokee will receive no compensation so long as they are affiliated with,
or have a financial interest in, Cherokee. All of our Management Committee
members currently have these affiliations. The Management Committee has sole
discretion to determine to what extent, if any, to compensate any individuals
serving on the Management Committee.

    No director of Cherokee Finance receives any compensation with respect to
his or her position as a director.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    After we completed the Transactions, our Management Committee formed a
compensation committee comprised of Pat Patel, Ian Schapiro and Chris
Brothers. No member of the compensation committee will participate in the
determination of his or her own compensation.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth the beneficial ownership of our outstanding
membership units as of March 15, 2001 by:

    - each person who is known by us to own beneficially more than 5% of our
      outstanding Class A Units;

    - each of our Management Committee members and named executive officers; and

    - all of our Management Committee members and named executive officers as a
      group.


                                      43

<PAGE>

<TABLE>
<CAPTION>

                                                                             MEMBERSHIP UNITS BENEFICIALLY OWNED(1)
                                                                        -------------------------------------------------
                                                                               CLASS A                  CLASS B
                                                                               (VOTING)               (NON-VOTING)
                                                                        ----------------------  -------------------------
NAME                                                                     NUMBER      PERCENT       NUMBER       PERCENT
----------------------------------------------------------------------  ---------  -----------  ------------  -----------
<S>                                                                     <C>        <C>          <C>           <C>
Cherokee Investor Partners, LLC(2)(3).................................    203,306        58.48%   20,704,162      57.46%

Bikor Corporation(4)..................................................     33,884         9.75%    3,450,694       9.58%

OCM/GFI Cherokee Investors II (2)(3)..................................      8,828         2.54%    1,092,448       3.03%

Manju Patel(4)(5).....................................................    101,653        29.24%    2,547,095       7.07%

Ganpat Patel(4)(6)....................................................    101,653        29.24%    2,547,095       7.07%

Bud Patel(4)(7).......................................................     33,884         9.75%    3,469,444       9.63%

Dennis Pouliot(4).....................................................         --          --         68,750       0.19%

Howard Ribaudo(4).....................................................         --          --         96,514       0.27%

Van Holland (4).......................................................         --          --        117,623       0.33%

Ian Schapiro(3)(8)....................................................    212,134        61.02%   21,796,610      60.49%

Stephen Kaplan(9)(10).................................................    212,134        61.02%   21,796,610      60.49%

Tony Bloom (3)(11)....................................................    212,134        61.02%   21,796,610      60.49%

Chris Brothers(9)(10).................................................    212,134        61.02%   21,796,610      60.49%

Ken King(4)...........................................................         --         0.00%       12,500       0.03%

All Management Committee members and named executive officers as a
  group (10 persons)..................................................    347,671       100.00%   28,089,786      77.95%
</TABLE>

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

*   Less than 1.0%

(1) The Class A Units and Class B Units are identical except that Class A Units
    have voting rights and Class B Units have no voting rights.

(2) The owners of Cherokee Investors Partners, LLC and OCM/GFI Cherokee
    Investors II include an affiliate of GFI, an affiliate of Oaktree,
    Rothschild and an affiliate of the initial purchaser of the outstanding
    notes. By virtue of their ownership of equity of Cherokee Investors,
    these entities may be deemed to share beneficial ownership of the
    membership units owned by Cherokee Investors. GFI, Oaktree, Rothschild
    and the initial purchaser, and their affiliates, if appropriate,
    expressly disclaim beneficial ownership of such units.

(3) c/o GFI Energy Ventures LLC, 11611 San Vicente Boulevard, Suite 710, Los
    Angeles, CA 90049.

(4) c/o Cherokee International, LLC, 2841 Dow Avenue, Tustin, California 92780.

(5) Consists entirely of membership units that Manju Patel holds jointly with
    her husband, Pat Patel, as trustees of the Patel Family Trust (see note 6).
    Manju Patel expressly disclaims beneficial ownership of any units
    beneficially owned by her as trustee of that trust.

(6) Consists entirely of membership units that Mr. Patel holds jointly with his
    wife, Manju Patel, as trustees of the Patel Family Trust (see note 5). Mr.
    Patel expressly disclaims beneficial ownership of any units beneficially


                                      44

<PAGE>

    owned by him as trustee of that trust.

(7) Bud Patel may be deemed to share beneficial ownership of the 33,884 Class A
    Units and 3,450,694 Class B Units owned by Bikor, by virtue of his ownership
    of Bikor's common stock. Bud Patel expressly disclaims beneficial ownership
    of any units beneficially owned by him by virtue of his ownership of Bikor's
    common stock.

(8) Ian Schapiro may be deemed to share beneficial ownership of the 212,134
    Class A Units and 21,796,610 Class B Units owned by Cherokee Investors and
    OCM/GFI Cherokee Investors II by virtue of his status as a principal of GFI,
    which, through an affiliate holds an equity interest in Cherokee Investors.
    Mr. Schapiro expressly disclaims beneficial ownership of any units
    beneficially owned by him by virtue of his status as a principal of GFI.

(9) c/o Oaktree Capital Management, LLC, 333 South Grand Avenue, Los Angeles,
    California 90071.

(10)Stephen Kaplan may be deemed to share beneficial ownership of the 212,134
    Class A Units and 21,796,610 Class B Units owned by Cherokee Investors and
    OCM/GFI Cherokee Investors II by virtue of his status as a principal of
    Oaktree, which, through an affiliate holds an equity interest in Cherokee
    Investors. Mr. Kaplan expressly disclaims beneficial ownership of any units
    beneficially owned by him by virtue of his status as a principal of Oaktree.

(11)Tony Bloom may be deemed to share beneficial ownership of the 212,134 Class
    A Units and 21,796,610 Class B Units owned by Cherokee Investors and OCM/GFI
    Cherokee Investors II by virtue of his status as a principal of Rothschild,
    which holds an equity interest in Cherokee Investors. Mr. Bloom expressly
    disclaims beneficial ownership of any units beneficially owned by him by
    virtue of his status as a principal of Rothschild.

    Our current credit facility is secured by a non-recourse pledge of 100% of
our outstanding membership units (other than those issued to certain of our
employees upon exercise of options or other rights to purchase in the aggregate
up to ten percent (10%) of our outstanding membership units).


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     We lease our facility located at 2841 Dow Avenue in Tustin, California
from Patel/King Investment, or PKI. The Principals of PKI are Pat Patel and
Ken King, our Chairman and CEO and our Management Committee
Member,respectively. Pursuant to the lease, we paid PKI $862,280 in 1998,
$927,378 in 1999, and $975,382 in 2000.

     Our lease with PKI will run through April 30,2009, with an extension for an
additional 60 months at our option. Pursuant to the lease, we will pay rent of
approximately $79,840 per month to PKI, subject to certain periodic adjustments.


                                      45

<PAGE>

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.


(a)  Documents filed as part of this report:

     (1) and (2) Financial Statements and Financial Statement Schedules - The
     consolidated financial statements and consolidiated financial statement
     schedules of Cherokee International, LLC and subsidiaries as of December
     31, 2000 and 1999 and for each of the three years in the period ended
     December 31, 2000 are included in Part II, Item 8.

     (3) Exhibits:

       2.1**      Stock Purchase Agreement, dated as of May 24, 2000, between
                  Cherokee International, LLC, and Panta Electronics, B.V.

       3.1*       Second Amended and Restated Operating Agreement of Cherokee
                  International,LLC, dated as of April 30, 1999.

       3.2*       Amendment No. 1 to the Second Amended and Restated
                  Operating Agreement of Cherokee International, LLC, dated
                  as of June 28, 1999.

       3.3*       Amendment No. 2 to the Second Amended Restated Operating
                  Agreement of Cherokee International, LLC, dated as of June
                  28, 1999.

       3.4***     Amendment No. 3 to the Second Amended and Restated Operating
                  Agreement of Cherokee International, LLC, dated as of June 12,
                  2000.

       3.5***     Amendment No. 4 to the Second Amended and Restated Operating
                  Agreement of Cherokee International, LLC, dated as of June 14,
                  2000.

       3.6*       Certificate of Incorporation of Cherokee International,
                  Finance, Inc.

       3.7*       Bylaws of Cherokee International Finance, Inc.

       4.1*       Indenture, dated as of April 30,1999, among the Issuers and
                  Firstar Bank of Minnesota, N.A., as trustee, relating to the
                  notes.

       4.2*       Form of 10 1/2% Series A Senior Subordinated Notes due 2009
                  (included in Exhibit 4.1).

       4.3*       Form of 10 1/2% Series B Senior Subordinated Notes due 2009
                  (included in Exhibit 4.1).

       4.4*       Registration Rights Agreement, dated as of April 30, 1999,
                  among the Issuers and Credit Suisse First Boston
                  Corporation.

      10.1*       Credit Agreement, dated as of April 30, 1999, among Cherokee
                  International, LLC, as borrower, Heller Financial, Inc., as
                  agent and lender, and Bank Austria Creditanstalt Corporate
                  Finance, Inc., Fleet Capital Corporation, Finova Capital
                  Corporation, Key Corporate Capital Inc. and U.S.
                  Bank, as lenders.

      10.2*       Security Agreement, dated as of April 30, 1999, between
                  Cherokee International, LLC and Heller Financial, Inc., as
                  agent.

      10.3*       Security Agreement, dated as of April 30, 1999, between
                  Cherokee International Finance, Inc. and Heller Financial,
                  Inc., as agent.

      10.4*       Cherokee International, LLC 1999 Unit Option Plan.

      10.5*       Form of Unit Option Agreement.

      10.6*       Cherokee International, LLC 1999 Unit Purchase Plan.

      10.7*       Noncompetition and Confidentiality Agreement, dated as of
                  April 30, 1999, between Cherokee International, LLC and Mukesh
                  Patel.

      10.8*       Noncompetition and Confidentiality Agreement, dated as of
                  April 30, 1999, between Cherokee International, LLC and Bud
                  Patel.

      10.9*       Noncompetition and Confidentiality Agreement, dated as of
                  April 30, 1999, between Cherokee International, LLC and Pat
                  Patel.

      10.10*      Noncompetition and Confidentiality Agreement, dated as of
                  April 30, 1999, between Cherokee International, LLC and Amrit
                  Patel.

      10.11***    Consent, Waiver and First Amendment to Credit Agreement,
                  dated as of June 15, 2000, by and between Cherokee
                  International, LLC, Heller Financial, Inc., and the Lenders
                  signatory thereto.

      10.12       Subscription Agreement, dated as of June 14, 2000, by and
                  among Cherokee International, LLC and Cherokee Investor
                  Partners, LLC.

      10.13       Schedule of additional Subscription Agreements, each dated
                  as of June 14, 2000, by and among Cherokee International, LLC
                  and certain of its Members.

                                      46

<PAGE>

       12.1       Statement regarding the computation of ratio of earnings to
                  fixed charges for the Company.

       21.1       List of Subsidiaries

       23.1       Independent Auditors' Consent

       24.1       Powers of Attorney for each registrant.  (Included in
                  Signature Page)


---------------------------
*   Incorporated by reference to designated exhibit to our Registration
    Statement on Form S-4, filed with the Securities and Exchange Commission on
    July 13, 1999 (File No. 333-82713).

**  Incorporated by reference to designated exhibit to the Company's Current
    Report on Form 8-K, dated June 30, 2000.

*** Incorporated by reference to designated exhibit to the Company's
    Quarterly Report on Form 10-Q, dated July 2, 2000.

FORWARD-LOOKING STATEMENTS

         Statements in this report containing the words "believes,"
"anticipates," "expects," and words of similar meaning, and any other
statements which may be construed as a prediction of future performance or
events, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
that may cause the actual results, performance, or achievements of the
Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among others,
(1) restrictions imposed by the Company's substantial leverage and
restrictive convenants in its debt agreements, (2) reductions in sales to any
of the Company's significant customers or in customer capacity generally,
(3) changes in the Company's sales mix to lower margin products,
(4) increased competition, (5) disruptions of the Company's established
supply channels, and (6) the additional risk factors identified under the
heading "Risk Factors" in the Section "Business", and those described from
time to time in the Company's other filings with the SEC, press releases and
other communications. The Company disclaims any obligations to update any
such factors or to announce publicly the result of any revision to any of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments.

                                      47

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                           CHEROKEE INTERNATIONAL, LLC

March 30, 2001                           By: /s/ GANPAT I. PATEL
                                            -----------------------------------
                                                      Ganpat I. Patel
                                            Chairman and Chief Executive Officer

     We, the undersigned officers and Management Committee Members of Cherokee
International, LLC, hereby severally constitute Rita Patel and R. Van Ness
Holland, Jr. and each of them singly, our true and lawful attorneys with full
power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, any and all amendments to this Annual Report on Form
10-K, and generally do all such things in our name and behalf in such capacities
to enable Cherokee International, LLC to comply with the applicable provisions
of the Securities Exchange Act of 1934, and all requirements of the Securities
and Exchange Commission, and we hereby ratify and confirm our signatures as they
may be signed by our said attorneys, or either of them, to any and all such
amendments.

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

<TABLE>
<CAPTION>

                   Name                                    Title                                  Date
                  ------                                  -------                                ------
<S>                                          <C>                                             <C>
    /s/ GANPAT I. PATEL
   -------------------------------           Chairman, Chief Executive Officer and           March 30, 2001
         Ganpat I. Patel                       member of Management Committee
                                               (Principal Executive Officer)
   /s/ R. VAN NESS HOLLAND, JR.
   -------------------------------           Chief Financial Officer (Principal              March 30, 2001
      R. Van Ness Holland, Jr.                 Financial and Accounting Officer)



   /s/ KENNETH KING
   -------------------------------           Member of Management Committee                  March 30, 2001
            Kenneth King

   /s/ BAHECHAR S. PATEL
   -------------------------------           Executive Vice President and member             March 30, 2001
          Bahechar S. Patel                    of Management Committee

   /s/ IAN A. SCHAPIRO
   -------------------------------           Member of Management Committee                  March 30, 2001
           Ian A. Schapiro

   /s/ STEPHEN KAPLAN
   -------------------------------           Member of Management Committee                  March 30, 2001
           Stephen Kaplan

   /s/ TONY BLOOM
   -------------------------------           Member of Management Committee                  March 30, 2001
             Tony Bloom

   /s/ CHRISTOPHER BROTHERS
   -------------------------------           Member of Management Committee                  March 30, 2001
        Christopher Brothers
</TABLE>

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                                             PAGE
<S>                                                                                                                          <C>
Independent Auditors' Report..............................................................................................   F-2
Consolidated Balance Sheets as of December 31, 2000 and 1999..............................................................   F-3
Consolidated Statements of Income for each of the three years in the period ended December 31, 2000.......................   F-4
Consolidated Statements of Members' Equity (Deficit) for each of the three years in the period ended December 31, 2000....   F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2000...................   F-6
Notes to Consolidated Financial Statements................................................................................   F-7
Independent Auditors' Report on Schedule..................................................................................  F-15
Schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2000...........  F-16
</TABLE>


                                     F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Members of
  Cherokee International, LLC

         We have audited the accompanying consolidated balance sheets of
Cherokee International, LLC and subsidiaries (the Company) as of December 31,
2000 and 1999 and the related consolidated statements of income, members' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

         In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Cherokee International, LLC
and subsidiaries as of December 31, 2000 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California
March 23, 2001


                                     F-2

<PAGE>

                  CHEROKEE INTERNATIONAL, LLC AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                             DECEMBER 31,
                                                                                        2000             1999
                                                                                        ----             ----
<S>                                                                                  <C>               <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................            $  1,752,826      $ 7,968,576
Accounts receivable, net of allowance for doubtful accounts of $259,886
  and $175,000 in 2000 and 1999, respectively............................              32,819,473       14,108,596
Inventories, net ........................................................              36,275,745       18,911,652
Prepaid expenses and other current assets................................                 628,512           50,475
                                                                                     ------------      -----------
  Total current assets...................................................              71,476,556       41,039,299
PROPERTY AND EQUIPMENT, net..............................................              17,062,279        8,761,516
DEPOSITS.................................................................                 306,046          274,697
DEFERRED FINANCING COSTS, net of accumulated amortization of $1,510,504
  and $555,919 in 2000 and 1999, respectively ...........................               4,219,184        4,800,504
GOODWILL AND OTHER RELATED INTANGIBLES, net of accumulated
  amortization of $1,648,000 in 2000.....................................              43,956,000              -
                                                                                     ------------      -----------
                                                                                     $137,020,065      $54,876,016
                                                                                     ============      ===========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.........................................................            $ 19,616,135       $5,468,043
Accrued liabilities......................................................               4,818,026        1,085,686
Accrued compensation and benefits........................................               7,688,487        2,211,193
Accrued interest payable.................................................               2,707,091        2,406,054
Accrued distribution payable.............................................               2,118,000        1,730,000
Current portion of long-term debt........................................              23,418,841        4,545,004
Current portion of capital lease obligations.............................                 773,446          835,947
                                                                                     ------------      -----------
  Total current liabilities..............................................              61,140,026       18,281,927
LONG-TERM DEBT, net of current portion...................................             142,900,265      141,458,228
CAPITAL LEASE OBLIGATIONS, net of current portion........................               2,040,813        2,811,367
COMMITMENTS (Note 5)
MEMBERS' EQUITY (DEFICIT):
Class A units; 347,671 and 300,000 units issued and
  outstanding in 2000 and 1999, respectively.............................                 354,371           14,000
Class B units; 36,035,065 and 30,002,000 units issued and
  outstanding in 2000 and 1999, respectively ............................              37,037,827        2,594,000
Paid-in capital..........................................................               5,330,000        5,330,000
Retained earnings (deficit)..............................................            (111,570,983)    (115,613,506)
Accumulated other comprehensive loss.....................................                (212,254)             -
                                                                                   --------------      -----------
  Total members' deficit.................................................             (69,061,039)    (107,675,506)
                                                                                   --------------      -----------
                                                                                   $  137,020,065      $54,876,016
                                                                                   ==============      ===========
</TABLE>


                See notes to consolidated financial statements.


                                     F-3

<PAGE>

                  CHEROKEE INTERNATIONAL, LLC AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                YEARS ENDED DECEMBER 31,
                                                        2000             1999             1998
                                                   -------------    -------------    -------------
<S>                                                <C>              <C>              <C>
NET SALES . . . . ................................ $143,174,588     $ 121,457,537    $  87,553,056
COST OF SALES.....................................   94,517,124        77,592,619       54,824,150
                                                   -------------    -------------    -------------
GROSS PROFIT......................................   48,657,464        43,864,918       32,728,906
OPERATING EXPENSES:
Engineering and development.......................    6,081,351         4,118,124        3,798,767
Selling and marketing.............................    4,379,312         2,609,261        1,916,442
General and administrative........................    8,416,986         3,871,526        3,079,007
Amortization of goodwill and other related
 intangibles......................................    1,648,000               -                -
Special bonus distribution........................           -          5,330,000              -
                                                   -------------    -------------    -------------
  Total operating expenses........................   20,525,649        15,928,911        8,794,216
                                                   -------------    -------------    -------------
OPERATING INCOME..................................   28,131,815        27,936,007       23,934,690
OTHER INCOME (EXPENSE):
Interest expense..................................  (16,779,018)      (10,675,340)        (372,870)
Other income (expense)............................      341,726          (708,702)          338,433
                                                   -------------    -------------    -------------
  Total other income (expense)....................  (16,437,292)      (11,384,042)         (34,437)
                                                   -------------    -------------    -------------

Income before income taxes........................   11,694,523        16,551,965       23,900,253
  Provision for income taxes......................       32,000               -                -
                                                   ------------     -------------    -------------

NET INCOME........................................ $ 11,662,523       $16,551,965    $  23,900,253
                                                   =============    =============    =============
NET INCOME PER UNIT:
   BASIC.......................................... $        .35       $       .55    $         .80
                                                   =============    =============    =============
   DILUTED........................................ $        .34       $       .55    $         .80
                                                   =============    =============    =============
WEIGHTED AVERAGE UNITS OUTSTANDING
   BASIC..........................................   33,646,953        30,124,286       30,000,000
                                                   =============    =============    =============
   DILUTED........................................   33,985,106        30,210,779       30,000,000
                                                   =============    =============    =============
</TABLE>


                See notes to consolidated financial statements.


                                     F-4

<PAGE>

                  CHEROKEE INTERNATIONAL, LLC AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                                                                        ACCUMULATED
                                   CLASS A              CLASS B                            RETAINED       OTHER
                             ------------------- -----------------------    PAID-IN        EARNINGS    COMPREHENSIVE
                              UNITS    AMOUNT      UNITS      AMOUNT        CAPITAL        (DEFICIT)        LOSS          TOTAL
                             ------- ----------- ---------- ------------   -----------  -------------   ------------ -------------
<S>                          <C>     <C>         <C>        <C>            <C>          <C>             <C>          <C>
BALANCE, December 31, 1997   300,000 $    14,000 29,700,000  $ 1,386,000   $      --     $  17,718,276  $    --      $  19,118,276

Equity distribution                                                                        (12,990,000)                (12,990,000)
Net income                                                                                  23,900,253                  23,900,253
                             ------- ----------- ---------- ------------   -----------   -------------  ----------   -------------

BALANCE, December 31,1998    300,000      14,000 29,700,000     1,386,000         --        28,628,529       --         30,028,529

Units issued under Unit
  Purchase Plan                                     302,000     1,208,000                                                1,208,000
Equity distribution                                                                       (160,794,000)               (160,794,000)
Capital contribution to fund
  special bonus distribution                                                 5,330,000                                   5,330,000
Net income                                                                                  16,551,965                  16,551,965
                             ------- ----------- ---------- ------------   -----------   -------------  ----------   -------------

BALANCE, December 31, 1999   300,000      14,000 30,002,000     2,594,000    5,330,000   (115,613,506)       --       (107,675,506)


Units issued in connection
 with ITS acquisition         47,671     340,371  5,948,264    33,959,627                                               34,299,998


Units issued under Unit
  Purchase Plan                                      84,801       484,200                                                  484,200

Equity distribution                                                                       (7,620,000)                   (7,620,000)

Net income                                                                                11,662,523                    11,662,523

Foreign currency translation                                                                              (212,254)       (212,254)
                                                                                                                     -------------
Total comprehensive
  income                                                                                                                11,450,269
                             ------- ----------- ---------- ------------   -----------   -------------  ----------   -------------

BALANCE, December 31, 2000   347,671 $   354,371 36,035,065 $  37,037,827  $ 5,330,000   $(111,570,983) $ (212,254)  $ (69,061,039)
                             ======= =========== ========== =============  ===========   =============  ==========   =============
</TABLE>


                See notes to consolidated financial statements.


                                   F-5

<PAGE>

                  CHEROKEE INTERNATIONAL, LLC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              YEARS ENDED DECEMBER 31,
                                                                                              ------------------------
                                                                                     2000               1999              1998
                                                                                     ----               ----              ----
<S>                                                                                <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income .....................................................................   $  11,662,523    $  16,551,965    $  23,900,253
Adjustments to reconcile net income to net cash provided by operating
  activities:
  Depreciation and amortization ................................................       4,827,164        2,389,877        1,670,586
  Amortization of deferred financing costs .....................................         954,585          555,919             --
   Net change in operating assets and liabilities, net of effects of
   acquisition:
  Accounts receivable, net .....................................................      (6,986,877)         753,220       (5,195,309)
  Inventories, net .............................................................      (4,692,093)      (3,444,469)      (2,095,821)
  Prepaid expenses and other current assets ....................................        (293,037)          17,101          132,457
  Deposits .....................................................................         (31,349)         (67,171)         (49,600)
  Accounts payable .............................................................         547,092         (427,973)       2,467,426
  Accrued liabilities ..........................................................         306,340          260,573         (399,632)
  Accrued compensation and benefits ............................................         134,294          156,457         (364,518)
  Accrued interest payable .....................................................         301,037        2,406,054
                                                                                   -------------     -------------    -------------
  Net cash provided by operating activities ....................................       6,729,679       19,151,553       20,065,842
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment ............................................      (4,872,630)        (532,095)      (1,898,202)
Acquisition of ITS, net of cash acquired .......................................     (51,492,551)            --               --
                                                                                   -------------     -------------    -------------

Net cash used in investing activities ..........................................     (56,365,181)        (532,095)      (1,898,202)


CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on revolving line of credit .........................................      31,852,187        5,770,937             --
Payments on revolving line of credit ...........................................     (17,469,559)      (5,185,427)      (2,739,773)
Payments on obligations under capital leases ...................................        (833,055)        (776,519)        (306,449)
Payments on long-term debt .....................................................      (5,200,754)      (5,362,278)        (220,000)
Borrowings on long-term debt ...................................................       8,000,000      150,000,000             --
Deferred financing cost ........................................................        (373,265)      (5,356,423)            --
Proceeds from sale of shares ...................................................      34,784,198        1,208,000             --
Equity distribution ............................................................      (7,232,000)    (159,064,000)     (12,990,000)
Capital contribution to fund special bonus
  distribution .................................................................            --          5,330,000             --
                                                                                   -------------     -------------    -------------
  Net cash provided by (used in) financing
  activities ...................................................................      43,527,752      (13,435,710)     (16,256,222)
                                                                                   -------------     -------------    -------------
Cash effect of exchange rate changes............................................        (108.000)           --               --

NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENT .............................      (6,215,750)       5,183,748        1,911,418
CASH AND CASH EQUIVALENTS, beginning of
  period .......................................................................       7,968,576        2,784,828          873,410
                                                                                   -------------     -------------    -------------

CASH AND CASH EQUIVALENTS, end of period .......................................   $   1,752,826    $   7,968,576    $   2,784,828
                                                                                   =============    =============     =============
SUPPLEMENTAL INFORMATION
  Cash paid during the year for interest .......................................   $  15,309,313    $   7,628,151    $     372,870
                                                                                   =============    =============     =============
SUPPLEMENTAL DISCLOSURE OF NONCASH
  TRANSACTIONS
Assets acquired under capital lease
  obligations ..................................................................   $        --      $   3,161,202    $     844,790
                                                                                   =============    =============     =============
</TABLE>

On June 15, 2000, the Company acquired Industrial and Telecommunication Systems
and related entities ("ITS") for approximately $43.2 million in cash, plus $1.0
million in acquisition costs and paid off $9.7 million of ITS's debt. In
conjunction with the acquisition, liabilities were assumed as follows:

<TABLE>
<S>                                                  <C>
Fair Value of tangible assets acquired               $33,435,000
Goodwill and other related intangibles                45,604,000
Cash paid for ITS's stock                            (43,150,000)
Repayment of certain assumed debt at closing         ( 9,722,000)
                                                     ------------
Liabilities assumed                                  $26,167,000
                                                     ============
</TABLE>


                 See notes to consolidated financial statements.


                                       F-6

<PAGE>

CHEROKEE INTERNATIONAL, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

1. GENERAL

         FORMATION Cherokee International, LLC (the Company) was formed on
February 21, 1996, under the California Beverly-Killea Limited Liability
Company Act. After the acquisition described below, principal operations
commenced on March 30, 1996.

         ACQUISITIONS On March 29, 1996, the Company and Cherokee
International, Inc., a California corporation, entered into an asset purchase
agreement whereby the Company purchased certain assets and assumed certain
liabilities of Cherokee International, Inc. for a total cash payment of
$15,264,383 and issuance of a subordinated note payable of $5,885,218. The
acquisition was accounted for under the purchase method of accounting, with
the total purchase price allocated to net tangible assets.

         On March 29, 1996, the Company and Bikor Corporation, a California
corporation, entered into an asset transfer agreement and operations transfer
agreement whereby Bikor Corporation transferred all operations and assets and
certain liabilities to the Company in exchange for 75,000 Class A units of the
Company with a fair market value of $400,000 and a subordinated note payable of
$476,166. The acquisition was accounted for under the purchase method of
accounting, with the total purchase price allocated to net tangible assets.

            On June 15, 2000, the Company completed its acquisition of
Industrial and Telecommunication Systems and related entities ("ITS"). The
Company paid approximately $43 million in cash, acquired net assets
(excluding debt) at fair value of approximately $9 million, assumed debt of
approximately $12 million, of which approximately $10 million was repaid at
closing, and incurred transaction costs of approximately $1 million. The
Company accounted for the acquisition using the purchase method of accounting
and recorded goodwill and other related intangibles of approximately $46
million in the transaction, which is being amortized over 15 years. The
Company's statements of income are consolidated to include ITS's operations
from June 16, 2000 to December 31, 2000.

         LINE OF BUSINESS The Company designs, develops, assembles and sells
switch mode power supplies for original equipment manufacturers (OEMs) in the
telecommunications, data networking and high-end workstation markets
primarily in the United States and Europe.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION The accompanying financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States of America.

         PRINCIPLES OF CONSOLIDATION The consolidated financial statements
include the financial statements of the Company and its wholly-owned
subsidiaries Industrial and Telecommunication Systems and related entities (ITS)
(Note 10), Cherokee Electronica, S.A. DE C.V., (Electronica), Cherokee India
Pvt. Ltd. (India), Powertel India Pvt. Ltd. (Powertel) and Cherokee
International Finance, Inc. (Finance). Finance was formed in April 1999 as a
wholly-owned finance subsidiary to act as a co-obligor of the 10 1/2% Senior
Subordinated Notes (see Note 4) and has no independent assets or operations. All
material intercompany accounts and transactions have been eliminated.

         FISCAL YEAR The Company's fiscal years 2000, 1999 and 1998 ended on
December 31, 2000, January 2, 2000, and January 3, 1999, respectively. For
convenience, the accompanying consolidated financial statements have been shown
as ending on the last day of the calendar month.

         TRANSLATION OF FOREIGN CURRENCIES: Foreign subsidiary assets and
liabilities denominated in foreign currencies are translated at the exchange
rate on the balance sheet date. Revenues, costs and expenses are translated
at the average exchange rate during the year. Resulting transaction gains and
losses are included in results of operations. The functional currency of ITS
is the Belgium Franc. The functional currency of Electronica, Powertel and
India is the U.S. dollar as the majority of transactions are denominated in
U.S. dollars. Translation adjustments are reflected in other comprehensive
income in accordance with Statement of Financial Accounting Standards (SFAS)
No. 130, REPORTING COMPREHENSIVE INCOME. Transaction gains and losses were
not significant for the periods presented.

         CASH AND CASH EQUIVALENTS For presentation purposes in the consolidated
financial statements, all highly liquid debt instruments purchased with an
original maturity date of three months or less are considered to be cash
equivalents.


                                     F-7

<PAGE>

         INVENTORIES Inventories are valued at the lower of cost (first-in,
first-out) or market. Inventory costs include the cost of material, labor, and
manufacturing overhead and consist of the following at December 31:

<TABLE>
<CAPTION>

                                                                  2000               1999
                                                                  ----               ----
<S>                                                           <C>                 <C>
Raw material..........................................        $26,593,294         $15,633,994
Work-in-process.......................................          6,495,045           2,699,689
Finished goods........................................          3,187,406             577,969
                                                              -----------         -----------
                                                              $36,275,745         $18,911,652
                                                              ===========         ===========
</TABLE>


         PROPERTY AND EQUIPMENT Depreciation and amortization of property and
equipment are provided using the straight-line method over the following
estimated useful lives:

<TABLE>
<S>                                                                     <C>
Buildings and improvements.........................................     5-20 years
Machinery and equipment............................................      5-6 years
Dies, jigs and fixtures............................................        3 years
Office equipment and furniture.....................................      3-5 years
Automobiles and trucks.............................................        5 years
Leasehold improvements.............................................        5 years
</TABLE>

         DEFERRED FINANCING COSTS During 1999, the Company incurred
approximately $6.2 million of costs related to the issuance of senior
subordinated notes and the execution of a new term loan and credit facility.
Approximately $5.4 million of such costs were capitalized as deferred financing
costs and approximately $.8 million of such costs were directly expensed in 1999
and included in other income (expense) in the accompanying consolidated
statements of income. During 2000, the Company incurred approximately $373,265
of costs related to additional borrowings associated with the acquisition of
ITS. Deferred financing costs are being amortized over the term of the related
debt.

         LONG-LIVED ASSETS The Company accounts for the impairment and
disposition of long-lived assets in accordance with SFAS No. 121, ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF. In
accordance with SFAS No. 121, long-lived assets to be held are reviewed for
events or changes in circumstances which indicate that their carrying value may
not be recoverable. There was no impairment of the value of such assets for the
years ended December 31, 2000 and 1999.

            DERIVATIVE INSTRUMENTS Statement of Financial Accounting
Standards (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, is effective for all fiscal years beginning after June 15, 2000.
SFAS 133, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. Under SFAS 133, certain contracts
that were not formerly considered derivatives may now meet the definition of
a derivative and all derivatives are to be reported on the balance sheet at
fair market value. The Company adopted SFAS 133 effective January 1, 2001.
The adoption of SFAS 133 will not have a significant impact on the financial
position, results of operations, or cash flows of the Company.

            FAIR VALUE OF FINANCIAL INSTRUMENTS The amounts recorded for
accounts receivable, accounts payable and accrued expenses approximate their
fair values based on their short-term nature. The amounts recorded for long-term
debt and capital lease obligations approximate fair value, as interest is tied
to or approximates market rates.

         INCOME TAXES The Company is a limited liability company under the
provisions of the federal and state tax codes. Under federal laws, taxes
based on income of a limited liability company are payable by the Company's
individual members. Accordingly, no provision for federal income taxes has
been provided in the accompanying financial statements. Provisions for
California franchise tax and fees are not significant for any period
presented. The Company's operations in Mexico and Belgium are subject to
income taxes on earnings generated in those countries.

         The Company accounts for income taxes in accordance with SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. In accordance with SFAS No. 109, deferred tax
assets and liabilities are recorded for the estimated future tax effects of
temporary differences between the carrying value of assets and liabilities for
financial reporting and their tax basis, and carry-forwards to the extent they
are realizable. A deferred tax provision or benefit results from the net change
in deferred tax assets and liabilities during the year. A deferred tax valuation
allowance is recorded if it is more likely than not that all or a portion of the
recorded deferred tax assets will not be realized.

         REVENUE RECOGNITION Revenues from product sales are recognized upon
passage of title and shipment of products to customers. In December 1999, the
Securities and Exchange Commission issued Staff Accounting Bulletin 101,
Revenue Recognition ("SAB 101"). SAB 101 summarizes certain of the SEC
staff's views in applying generally accepted accounting principles to
selected revenue recognition issues in financial statements. Implementation
of SAB 101 was required by the fourth quarter of 2000. The adoption of SAB
101 did not have an impact on the Company's consolidated financial statements.

         CREDIT RISK The Company performs ongoing credit evaluations of its
customers and generally does not require collateral. The Company maintains
reserves for estimated credit losses.

         STOCK-BASED COMPENSATION The Company accounts for unit-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES.


                                 F-8

<PAGE>

         INCOME PER UNIT In accordance with SFAS No. 128, EARNINGS PER SHARE,
basic income per unit calculations are determined by dividing net income by the
weighted average Class A and B units outstanding. Diluted income per unit
reflects the potential dilutive effect, determined by the treasury stock method,
of additional Class B units that are issuable upon exercise of outstanding unit
options:

<TABLE>
<CAPTION>

                                             YEARS ENDED DECEMBER 31
                                     -----------------------------------------
                                        2000           1999           1998
                                     ----------      ---------     -----------
<S>                                  <C>             <C>           <C>
Net Income                           $11,662,523     $16,551,965   $23,900,253
                                     ===========     ===========   ===========
Units:
Weighted-average units
  outstanding - basic                 33,646,953      30,124,286    30,000,000
Effect of dilutive options               338,153          86,493             -
                                     -----------     -----------   -----------
Weighted-average units                33,985,106      30,210,779    30,000,000
  Outstanding - diluted              ===========     ===========   ===========

Net income per unit:
Basic                                $       .35     $      .55    $       .80
  Outstanding - diluted              ===========     ===========   ===========

Diluted                              $       .34     $      .55    $       .80
  Outstanding - diluted              ===========     ===========   ===========
</TABLE>


         SEGMENT INFORMATION The Company has adopted SFAS No. 131, DISCLOSURES
ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131
established standards for reporting information about operating segments in
financial reports issued to stockholders. It also established standards for
related disclosures about products and services, geographic areas and major
customers. The Company currently operates in a single business segment as a
leading designer and manufacturer of a broad range of power supplies for
original equipment manufacturers in the telecommunications, data networking,
high-end workstations and other electronic industries.

         COMPREHENSIVE INCOME Comprehensive income is defined as all changes
in a company's net assets except changes resulting from transactions with
shareholders. It differs from net income in that certain items currently
recorded through equity are included in comprehensive income. Comprehensive
income, including net income and a loss from foreign currency translation
adjustments, was $11,450,269 for the year ended December 31, 2000.
Comprehensive income for the years ended December 31, 1999 and 1998 was the
same as net income for those years.

         USE OF ESTIMATES The preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements and the amounts of revenues and expenses
during the reporting period. Actual results could differ from such estimates.

         RECLASSIFICATIONS Certain items in the prior period consolidated
financial statements have been reclassified to conform to the current period
presentation.

3. PROPERTY AND EQUIPMENT

         Property and equipment consist of the following at December 31:

<TABLE>
<CAPTION>

                                                                     2000            1999
                                                                     ----            ----
<S>                                                              <C>                <C>
Land.................................................            $1,373,335         $398,919
Building and improvements............................             4,049,660          793,752
Machinery and equipment..............................            14,655,865       10,382,393
Dies, jigs and fixtures..............................               415,141          356,692
Office equipment and furniture.......................             1,762,181        1,030,196
Automobiles and trucks...............................               245,879          138,625
Leasehold improvements...............................             1,783,115        1,513,963
Construction in progress.............................             2,351,389          521,098
                                                                -----------      -----------
                                                                 26,636,565       15,135,638
Less accumulated depreciation and amortization.......            (9,574,286)      (6,374,122)
                                                                -----------      -----------
                                                                $17,062,279      $ 8,761,516
                                                                ===========       ==========
</TABLE>

         Included in property and equipment are assets under capital leases of
$5,155,278 as of December 31, 2000 and 1999. Accumulated amortization of assets
under capital leases was $2,465,190 and $1,592,023 as of December 31, 2000 and
1999, respectively.


                                     F-9

<PAGE>

4. LONG-TERM DEBT
         Long-term debt consists of the following at December 31:

<TABLE>
<CAPTION>
                                                                                            2000             1999
                                                                                            ----             ----
<S>                                                                                     <C>               <C>
10.5% unsecured senior subordinated notes, interest due semi-annually, redeemable
  at the Company's option beginning May 2004 at a rate of 105.25% of the original
  principal amount decreasing to 100% of the original principal amount at May 2007
  and thereafter, the Company may also redeem up to 35% of the original principal
  amount prior to May 2002 at 110.5% of the original principal amount, matures in
  May 2009.......................................................................       $100,000,000      $100,000,000
Term loans, bearing interest at LIBOR plus 2.50% and LIBOR plus 3.00% (9.25%
  to 9.5% as of December 31, 2000). Interest rates subject to change based on
  the Company's leverage ratio as defined, aggregate quarterly principal amounts
  due at amounts ranging from $1,377,650 to $3,074,714, remaining unpaid principal
  and interest due April 30, 2005................................................         48,216,968        45,417,722

Revolving lines of credit, including foreign credit facilities...................         18,102,138           585,510
                                                                                        ------------      ------------
                                                                                         166,319,106       146,003,232
Less current portion.............................................................        (23,418,841)       (4,545,004)
                                                                                        ------------      ------------
Total long-term debt.............................................................       $142,900,265      $141,458,228
                                                                                        ============      ============
</TABLE>

         As of December 31, 2000, maturities of long-term debt are as follows:

<TABLE>
<CAPTION>

Year ending December 31:
<S>                                                            <C>
2001..................................................        $ 23,418,841
2002..................................................           8,104,303
2003..................................................           9,486,609
2004..................................................          11,489,415
2005..................................................          13,819,938
Thereafter............................................         100,000,000
                                                               -----------
                                                              $166,319,106
                                                               ===========
</TABLE>

         In June 2000, the Company amended its credit agreement to provide
for additional term loan borrowings of $8 million, the proceeds of which were
used to finance a portion of the purchase price of an acquisition (see Note
10). The term loans are collateralized by substantially all of the Company's
assets and contain certain financial covenants including capital
expenditures limitations, minimum fixed charge coverage and interest coverage
ratios, minimum debt to equity ratio requirements and restrictions on
dividends. The Company was in compliance with these financial covenants as of
December 31, 2000.

         During April 1999, the Company entered into a revolving line of
credit agreement, which provides for borrowings, based on a percentage of
certain receivables and inventory, not to exceed $25,000,000. Borrowings bear
interest at LIBOR plus 2.50% or prime plus 1.25% (9.1875% to 10.75% as of
December 31, 2000). Interest rates are subject to change over time based on
the Company's leverage ratio as defined. This revolving line of credit is
collateralized by substantially all of the Company's assets and is subject to
the same financial covenants as the term loan discussed above. This revolving
line of credit required payment of commitment fees and expires in 2005.
Outstanding borrowings under this line of credit were $11,827,138 and
$585,510 at December 31, 2000, and 1999, respectively.

Foreign credit facilities of $6,275,000 at December 31, 2000 included a
working capital line of credit with a Belgian bank, BBL, which is denominated
in Belgian Francs and is collateralized by a pledge in first rank over
accounts receivable. The loan is due on demand and bears interest based on
variable market rates (5.9% as of December 31, 2000) and requires ITS to
maintain a certain specific net assets ratio. ITS is in compliance with all
loan requirements as of December 31, 2000.

                                     F-10
<PAGE>

5. COMMITMENTS

         The Company leases certain of its manufacturing facilities under
non-cancelable operating leases for an aggregate monthly rental of approximately
$119,424. These leases expire at various dates through 2009. One of the
manufacturing facilities is leased from an entity controlled by an officer and a
principal member of the Company. Rental expense for the years ended December 31,
2000, 1999 and 1998 totaled approximately $1,433,243, $1,375,845 and $1,072,700
($975,382, $927,378 and $862,280 to a related entity), respectively.

         The Company has two capital lease contracts, bearing interest ranging
from 6.41% to 8.03%. The total monthly principal and interest payments related
to these capital leases are approximately $79,341. The leases expire between
November 2003 and December 2004.

         A summary of lease commitments as of December 31, 2000 is as follows:

<TABLE>
<CAPTION>

                                                   CAPITAL         OPERATING
                                                    LEASES           LEASES
                                                ------------   -------------
<S>                                             <C>            <C>
Year ending December 31:
2001 .........................................   $   952,089    $ 1,432,259
2002 .........................................       952,089      1,256,311
2003 .........................................     1,021,116      1,244,356
2004 .........................................       344,373        989,066
2005 .........................................          --          984,006
Thereafter ...................................          --        3,362,018
                                                 ------------    -----------

Total minimum lease payments .................     3,269,667    $ 9,268,016
                                                                ===========
Less amount representing interest ............      (455,408)
                                                 ------------
Present value of future minimum lease payments     2,814,259
Less current portion .........................      (773,446)
                                                 ------------
                                                 $ 2,040,813
                                                 ============
</TABLE>


Of the $9,268,016 total minimum payments for operating leases, $8,282,046 is
payable to a related entity.


                                     F-11

<PAGE>

6. MEMBERS' EQUITY (DEFICIT)

         CAPITALIZATION The Company's members' equity consists of Class A and
Class B units. Class A units are entitled to one vote per unit and Class B units
are not entitled to vote.

         On November 3, 1997, the members and managers authorized a dividend
distribution of Class B units in the ratio of 99 Class B units for every Class A
unit issued and outstanding to members as of November 3, 1997. All Unit A and
Unit B stated values have been restated to reflect this transaction.

         UNIT SPLIT Effective June 28, 1999, the Company's management committee
approved a 75-for-1 split of the outstanding Class A units and Class B units
from 4,000 to 300,000 and from 396,000 to 29,700,000, respectively. Accordingly,
all unit and per unit figures included in the accompanying consolidated
financial statements and footnotes have been restated to reflect this unit split
for all periods presented.

         UNIT OPTION PLAN In June 1999, the Company adopted the 1999 Unit Option
Plan (the Plan) which provides for the issuance to officers and key employees of
up to 2,970,000 options to purchase Class B units at an exercise price per unit
of not less than 85% of fair market value at the date of grant. At December 31,
2000, 545,500 options were available for grant. Options expire no later than ten
years from the date of grant and generally become exercisable over a four-year
period.

         As permitted by SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, the Company accounts for its employee unit-based compensation
plan using the intrinsic value method under APB Opinion No. 25 and provides
the expanded disclosures specified in SFAS No. 123. On May 11, 2000, the
Company granted 110,000 unit options at an exercise price of $4.70 and on
September 13, 2000, the Company granted 1,230,000 unit options at an exercise
price of $5.71. The exercise prices represented the fair value of the
Company's Class B units at the respective dates of grant as determined by the
Company's Management Committee using information contained in an independent
appraisal. Accordingly, no compensation expense was recorded for these unit
option grants pursuant to APB Opinion No. 25.

         Had compensation cost been determined using the provisions of SFAS No.
123, the difference between net income and income per unit as reported and pro
forma net income and income per unit would have been as follows:

<TABLE>
<CAPTION>

                                               2000                           1999
                                     --------------------------     --------------------------
                                     AS REPORTED      PRO FORMA     AS REPORTED      PRO FORMA
----------------------------------------------------------------------------------------------
<S>                                <C>             <C>            <C>             <C>
Net income                          $ 11,662,523    $11,229,165    $ 16,651,965    $16,416,974
Net earnings per unit:
  Basic                             $        .35    $       .33    $        .55    $       .54
                                   =============   ============   =============   ============
  Diluted                           $        .34    $       .33    $        .55    $       .54
                                   =============   ============   =============   ============
</TABLE>


         For purposes of estimating the compensation cost of the Company's
option grants in accordance with SFAS No. 123, the fair value of each option
grant is estimated on the date of grant using the Black-Scholes option-pricing
model, with the following weighted average assumptions used for grants during
the year ended December 31, 2000: expected volatility of zero; risk-free
interest rate of 6%; no dividends; and expected lives of five years.

         A summary of activity for the Unit Option Plan is presented below:

<TABLE>
<CAPTION>

                                                            FISCAL YEAR ENDED                 FISCAL YEAR ENDED
                                                            DECEMBER 31, 2000                 DECEMBER 31, 1999
                                               ------------------------------------- -------------------------------------
                                                                       WEIGHTED-AVG                         WEIGHTED-AVG
                                                     UNITS            EXERCISE PRICE        UNITS           EXERCISE PRICE
                                               ---------------------------------------------------------------------------
<S>                                            <C>                    <C>              <C>                  <C>
Outstanding at beginning of year                     1,130,000            $   4.00              --              $--

Granted (weighted average fair
  value of $1.44 for 2000 and                        1,340,000            $   5.63         1,155,000            $   4.00
  $.96 for 1999)
Exercised                                                 --                                                     --
Cancelled                                              (45,500)           $   4.11           (25,000)           $   4.00
                                                  ---------------                      ---------------

Outstanding at end of year                           2,424,500            $   4.90         1,130,000            $   4.00
                                                  ===============                      ===============

Exercisable at end of year                             271,875            $   4.00              --               --
                                                  ===============                      ===============
</TABLE>


                                     F-12

<PAGE>

         The following table summarizes information about options as of
December 31, 2000:

<TABLE>
<CAPTION>

                                               OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                                               -------------------       -----------------------------------
EXERCISE          OPTION UNITS      WEIGHTED AVERAGE WEIGHTED AVERAGE    NUMBER           WEIGHTED AVERAGE
PRICE             OUTSTANDING       REMAINING YEARS  EXERCISE PRICE      EXERCISABLE      EXERCISE PRICE
---------         ------------      ---------------- ----------------  ---------------- -----------------
<S>               <C>               <C>              <C>               <C>              <C>
$  4.00           1,012,500                 8.50          $4.00            271,875             $4.00
$  4.00              75,000                 8.66          $4.00                  -             $   -
$  4.70             110,000                 9.36          $4.70                  -             $   -
$  5.71           1,227,000                 9.70          $5.71                  -             $   -
                  ---------                 ----          -----            -------             -----
                  2,424,500                 9.15          $4.90            271,875             $4.00
                  =========                 ====          =====            =======             =====
</TABLE>

         UNIT PURCHASE PLAN In June 1999, the Company adopted the 1999 Unit
Purchase Plan covering an aggregate of 1,500,000 shares of Class B units. The
purpose of the 1999 Unit Purchase Plan is to enable selected officers,
management committee members, employees, consultants and advisors of the
Company to purchase Class B units. The price of the Class B units under the
plan shall not be less than 85% of the fair market value of the Class B units
at the date of grant. During 2000 and 1999, the Company granted 84,801 units
at $5.71 per unit and 302,000 units at $4.00 per unit, respectively,
representing fair value consistent with the unit option grants described
above. At December 31, 2000, the Company had 1,113,199 units available for
future grant.

7. RETIREMENT PLANS

         In March 1996, the managers and members of the Company approved the
adoption of a supplemental retirement plan (the 401(k) Plan) in which
substantially all domestic employees are eligible to participate after
completing six months of employment. The 401(k) Plan allows participating
employees to contribute up to 15% of the employee's pretax compensation, with
the Company making discretionary matching contributions. Company
contributions fully vest and are non-forfeitable after the participant has
completed five years of service. For the years ended December 31, 2000, 1999
and 1998 the Company elected to contribute approximately $276,833, $237,764
and $201,700 respectively, to the 401(k) Plan. Administrative costs
associated with the 401(k) Plan are paid by participants.

ITS maintains a pension plan for certain levels of staff and management that
includes a defined benefit feature. The following represents the amounts
related to this defined benefit plan:

<TABLE>
<CAPTION>
                                                                                JUNE 15, 2000 TO
                                                                                DECEMBER 31, 2000
                                                                                -----------------
<S>                                                                             <C>
CHANGE IN BENEFIT OBLIGATION:
         Benefit obligation, beginning of year                                     $        -
         Benefit obligation acquired                                                2,872,757
         Effect of exchange rate changes                                              (42,295)
         Service cost and plan participants' contributions                             86,968
         Interest cost                                                                 87,654
         Actuarial gain                                                              (326,569)
                                                                                -----------------
         Benefit obligation, end of year                                           $2,678,515
                                                                                =================


CHANGE IN PLAN ASSETS:
         Fair value of plan assets, beginning of year                              $        -
         Fair value of plan assets acquired                                         1,977,183
         Effect of exchange rate changes                                              (30,770)
         Actual return on plan assets                                                  24,753
         Employer contribution                                                         54,079
         Plan participants' contributions                                              36,053
                                                                                -----------------
         Fair value of plan assets, end of year                                    $2,061,298
                                                                                =================


         Funded (unfunded) status                                                  $ (617,217)
         Unrecognized net actuarial gain                                             (290,058)
                                                                                -----------------
         Accrued pension liability                                                 $ (907,275)
                                                                                =================


COMPONENTS OF NET PERIODIC BENEFIT COST:
         Service cost                                                              $   50,915
         Interest cost                                                                 87,654
         Expected return on plan assets                                               (59,053)
                                                                                -----------------
         Net periodic benefit cost                                                 $   79,516
                                                                                =================
</TABLE>

The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligations were 5.75% and 3.65% for the period June 16,
2000 (date of acquisition) to December 31, 2000. The expected long-term rate
of return on assets was 5.5%.

8. CONCENTRATION OF NET SALES

         For the years ended December 31, 2000, 1999 and 1998 approximately
48%, 53%, and 59%, respectively, of the Company's net sales were derived from
six, six and five customers, respectively, of which two, one and two
customers, respectively, individually exceeded 10%. For the years ended
December 31, 2000, 1999 and 1998, the Company's largest customer accounted
for approximately 13%, 27% and 26%, respectively, of net sales. A single
customer in 2000 and 1998 accounted for 11% of net sales. Although not
anticipated, a decision by a major customer to decrease the amount purchased
from the Company or to cease purchasing the Company's products would have a
material adverse effect on the Company's financial position and results of
operations.

         The Company sells its power supply products to OEMs in the
telecommunications, networking, high-end workstations and other electronic
industries. The Company uses information based on customers and geographic
location; however, these activities are managed as a single business and have
been aggregated into a single reportable operating segment. For the years
ended December 31, 2000, 1999 and 1998, net sales by region were as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                                  ------------------------
                                                         2000                1999             1998
                                                         ----                ----             ----
<S>                                                 <C>                   <C>             <C>
     United States........................           $89,636,075          $ 99,882,529    $75,583,826
     Europe...............................            46,276,587            18,882,707     10,832,647
     Other................................             7,261,926             2,692,301      1,136,583
                                                     ------------         -----------     -----------
                                                    $143,174,588          $121,457,537    $87,553,056
                                                     ============         ===========     ===========
</TABLE>

                                     F-13

<PAGE>

         The Company's long-lived assets located outside of the United States
were $10,922,432 and $1,844,457 as of December 31, 2000 and 1999, espectively.

9. SPECIAL BONUS DISTRIBUTION

         During 1999, the Company's management committee authorized
approximately $5,330,000 of special bonus payments to certain key employees for
their role in the Company's growth and success over the previous years. These
bonus payments were entirely funded by capital contributions made by the
Company's then existing members.

10. ACQUISITION

    On June 15, 2000, the Company completed its acquisition of Industrial and
    Telecommunication Systems and related entities ("ITS), one of Europe's
    leading designers and manufacturers of custom power supplies for OEM's
    primarily in the telecommunications industry. The Company paid approximately
    $43 million in cash, acquired net assets (excluding debt) at fair value of
    approximately $9 million, assumed debt of approximately $12 million, of
    which approximately $10 million was repaid at closing, and incurred
    transaction costs of approximately $1 million. The company recorded goodwill
    and other related intangibles of approximately $46 million in the
    transaction, which is being amortized over 15 years.

    The acquisition, including the repayment of certain assumed debt at closing,
    was financed with approximately $34 million of cash proceeds from the
    issuance and sale of new members' equity units, approximately $13 million of
    borrowings under the Company's existing bank credit agreement, as amended,
    and utilization of available cash.

    The Company's unaudited pro forma net sales, net income, and diluted income
    per share as if the acquisition of ITS had occurred as of the beginning of
    the years ended December 31, 2000 and 1999, are as follows:

<TABLE>
<CAPTION>

                                                                                  YEAR ENDED DECEMBER 31
                                                                                --------------------------
                                                                                   2000          1999
     -----------------------------------------------------------------------------------------------------
<S>                                                                             <C>           <C>
     Net sales                                                                  $167,970,000  $170,728,000
                                                                                ==========================

     Net income                                                                 $ 11,439,000  $  9,192,000
                                                                                ==========================

     Diluted net income per unit                                                $        .31  $      .  25
                                                                                ==========================
</TABLE>

         The pro forma operating results above include the results of operations
     for ITS for the years ended December 31, 2000 and 1999 with goodwill and
     other related intangibles amortization along with other relevant
     adjustments to reflect fair value of the acquired assets. Additionally,
     the pro forma operating results include pro forma interest expense on the
     assumed acquisition borrowings and pro forma issuance of the Company's
     membership units reflected in the weighted average number of units
     outstanding for the computations of pro forma diluted net income per unit.

         The results of operations reflected in the pro forma information above
     are not necessarily indicative of the results which would have been
     reported if the acquisition had been effected at the beginning of 1999.

11. INCOME TAXES

The provision for current and deferred income taxes consists of the following:

<TABLE>
<CAPTION>

                                                 December 31, 2000
<S>                                              <C>
              Current
                Federal                                   $     -
                State                                           -
                Foreign                                    32,000
                                                           ------

                   Total Current                           32,000

              Non-Current
                Federal                                         -
                State                                           -
                Foreign                                   ______-
                                                                -

                   Total Non-Current                            -

              Total Provision                             $32,000
                                                          =======
</TABLE>

As described in Note 1, no federal income tax provision has been provided
because the Company is a limited liability company for U.S. income tax
purposes and is not subject to tax. State minimum franchise taxes and fees
are insignificant and have been recorded in general and administrative
expenses. Foreign income taxes have been provided for ITS. Income taxes for
Electronica, India, and Powertel are insignificant for all periods presented.
Any U.S. or state income tax liability on undistributed earnings of foreign
subsidiaries would accrue to the Company's members.

Deferred income taxes are provided for net operating losses (NOL) of ITS. As
of December 31, 2000, ITS has an NOL carry forward of $3,672,000. The NOL has
an indefinite carry over period. In the opinion of management it is more
likely than not that the ITS NOL will not be realized in the foreseeable
future. Accordingly, management has determined that a full valuation
allowance was required as of December 31, 2000 for the NOLs. The Company's
deferred income tax asset is comprised of the following:

<TABLE>
<CAPTION>

                                                  December 31, 2000
<S>                                               <C>
Employee benefit accrual                             $  227,000

Pension liability                                       363,000

Inventories                                             720,000

Net operating loss carryforwards                      1,468,000

Less: Valuation Allowance                            (2,778,000)
                                                     ----------
Net Deferred Tax Asset                               $        -
                                                     ==========
</TABLE>

The change in the valuation allowance for the period from June 16, 2000
(date of acquisition) to December 31, 2000 is an increase of $570,000.
Approximately $2,217,000 of the Company's valuation allowance relates to
acquired deferred tax assets. If these acquired deferred tax assets are
realized in the future, the tax benefit will be credited to goodwill.

12. SELECTED QUARTERLY DATA (UNAUDITED)

<TABLE>
<CAPTION>

                                                   (In Thousands)
                               2 0 0 0                                       1 9 9 9
                  --------------------------------------      ---------------------------------------
<S>               <C>        <C>       <C>       <C>          <C>        <C>       <C>        <C>
                  March 31   June 30   Sept.30   Dec. 31      March 31   June 30   Sept. 30   Dec. 31

Net Sales         $ 25,431   $28,664   $43,205   $45,875       $34,811   $31,685    $27,602   $27,360

Gross Profit         8,799    10,169    14,820    14,869        13,154    11,843      9,531     9,337

Net Income           2,139     2,541     3,019     3,964        10,722       276      2,744     2,810

Diluted net income
  per unit        $    .07   $   .08   $   .08   $   .11       $   .36   $   .01    $   .09    $  .09

</TABLE>


                                     F-14

<PAGE>

                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE


To the Members of
 Cherokee International, LLC:

         We have audited the consolidated financial statements of Cherokee
International, LLC and subsidiaries (the Company) as of December 31, 2000 and
1999 and for each of the three years in the period ended December 31, 2000,
and have issued our report thereon dated March 23, 2001. Such consolidated
financial statements and report are included elsewhere in this Form 10-K. Our
audits also included the consolidated financial schedule of the Company
listed in Item 14a. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

DELOITTE & TOUCHE LLP


Costa Mesa, California
March 23, 2001


                                     F-15

<PAGE>

CHEROKEE INTERNATIONAL, LLC
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>

                                                                           CHARGED
                                                         BALANCE AT     (CREDITED) TO
                                                        BEGINNING OF       COST AND      ACQUIRED                    BALANCE AT END
                                                           PERIOD          EXPENSES      BALANCE      DEDUCTIONS        OF PERIOD
<S>                                                     <C>             <C>              <C>          <C>            <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year ended December 31, 1998 . . . . . . . . . . .         $400,000      ($150,771)       $     -      ($74,229)         $175,000
Year ended December 31, 1999 . . . . . . . . . . .          175,000              -              -             -           175,000
Year ended December 31, 2000 . . . . . . . . . . .          175,000         96,299         72,947       (84,360)          259,886
</TABLE>


                                     F-16