SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-Q (mark one)x
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
  EXCHANGE ACT OF 1934For
  the quarterly period ended April 1, 2001ORo
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
  EXCHANGE ACT OF 1934
 For the transition period from _____ to _______ Commission file number: 333-82713 CHEROKEE INTERNATIONAL, LLC(Exact name of
registrant as specified in its charter)  CALIFORNIA
  33-0696451(State or other
  jurisdiction of
  (I.R.S. Employerincorporation 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    o
        ---      --- 
 
 CHEROKEE INTERNATIONAL,
LLC

TABLE OF CONTENTS



PART
  IFINANCIAL INFORMATIONItem
  1.  Consolidated Financial Statements:Consolidated Balance SheetsMarch 31, 2001 and December 31, 2000Consolidated Statements of IncomeFor the Three Months Ended March
  31, 2001 and 2000Consolidated Statements of Cash
  FlowsFor the Three Months Ended March
  31, 2001 and 2000Notes to Consolidated Financial
  StatementsItem
  2.  Management's Discussion and
  Analysis of Financial Condition andResults of OperationsItem
  3.  Quantitative and Qualitative
  Disclosures About Market RiskPART IIOTHER
  INFORMATIONItem 1.  Legal ProceedingsItem 6.  Exhibits and Reports on Form 8-KSIGNATURESPART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements



CHEROKEE
INTERNATIONAL, LLC AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
(Unaudited)

MARCH 31,
  DECEMBER 31,2001
  2000ASSETSCURRENT ASSETS:Cash and cash
  equivalents
  $3,393,264
  $1,752,826Accounts receivable,
  net of allowance for doubtful accounts of $253,927 and $259,886 as of March
  31, 2001 and December 31, 2000, respectively
  28,954,817
  32,819,473Inventories, net
  33,672,042
  36,275,745Prepaid expenses and
  other current assets
  695,704
  628,512Total current assets
  66,715,827
  71,476,556PROPERTY AND EQUIPMENT,
  net of accumulated depreciation and amortization of $10,543,605 and
  $9,574,286 as of March 31, 2001 and December 31, 2000, respectively
  15,863,982
  17,062,279DEPOSITS
  304,950
  306,046DEFERRED FINANCING
  COSTS, net of accumulated amortization of $1,753,255 and $1,510,504 as of
  March 31, 2001 and December 31, 2000, respectively
  3,976,433
  4,219,184GOODWILL, net of
  accumulated amortization of $2,407,000 and $1,648,000 as of March 31, 2001
  and December 31, 2000, respectively
  43,197,000
  43,956,000$130,058,192
  $137,020,065LIABILITIES AND MEMBERS'
  EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable
  $14,974,926
  $19,616,135Accrued liabilities
  4,879,098
  4,818,026Accrued compensation
  and benefits
  6,250,587
  7,688,487Accrued interest
  payable
  5,107,356
  2,707,091Accrued distribution
  payable
  2,765,000
  2,118,000Current portion of
  long-term debt
  21,765,039
  23,418,841Current portion of
  capital lease obligations
  787,399
  773,446Total current liabilities
  56,529,405
  61,140,026LONG-TERM DEBT, net of
  current portion
  141,000,064
  142,900,265CAPITAL LEASE
  OBLIGATIONS, net of current portion
  1,838,652
  2,040,813MEMBERS' EQUITY
  (DEFICIT)Class A units: 347,671
  units issued and outstanding in 2001 and 2000
  354,371
  354,371Class B units:
  36,035,065 units issued and outstanding in 2001 and 2000
  37,037,827
  37,037,827Paid-in capital
  5,330,000
  5,330,000Retained earnings
  (deficit)
  (111,255,782)
  (111,570,983)Accumulated other
  comprehensive loss
  (776,345)
  (212,254)Total members' deficit
  (69,309,929)
  (69,061,039)$130,058,192
  $137,020,065

See notes to consolidated
financial statements.

CHEROKEE INTERNATIONAL, LLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited)



THREE MONTHS ENDEDMARCH 31,
  MARCH 31,2001
  2000NET SALES
  $39,419,797
  $25,431,363COST OF SALES
  27,340,923
  16,632,751GROSS PROFIT
  12,078,874
  8,798,612OPERATING EXPENSES:Engineering and
  development
  1,886,255
  1,137,621Selling and marketing
  1,060,417
  615,476General and
  administrative
  2,970,076
  1,028,124Amortization of
  goodwill and other related intangibles
  759,000
  0Total operating expenses
  6,675,748
  2,781,221OPERATING INCOME
  5,403,126
  6,017,391OTHER INCOME (EXPENSE):Interest expense
  (4,370,508)
  (3,921,103)Other income (expense)
  24,583
  42,261Total other income (expense)
  (4,345,925)
  (3,878,842)Income before income
  taxes
  1,057,201
  2,138,549Provision for income taxes
  95,000
  0NET INCOME
  $962,201
  $2,138,549NET INCOME PER UNIT:Basic
  $.03
  $.07Diluted
  $.03
  $.07WEIGHTED AVERAGE UNITS
  OUTSTANDING:Basic
  36,382,736
  30,302,000Diluted
  36,723,108
  30,468,579See notes to consolidated
financial statements

CHEROKEE
INTERNATIONAL, LLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)



THREE MONTHS ENDEDMARCH 31,
  MARCH 31,2001
  2000CASH FLOWS FROM
  OPERATING ACTIVITIES:Net income
  $962,201
  $2,138,549Adjustments to
  reconcile net income to net cash 
  provided by operating activities:Depreciation and
  amortization
  1,763,319
  652,447Amortization of
  deferred financing costs
  242,751
  224,819Net change in operating
  assets and liabilities:Accounts receivable, net
  3,022,656
  (1,010,212)Inventories, net
  1,726,703
  698,403Prepaid expenses and other current assets
  (84,192)
  (61,722)Deposits
  1,096
  58,511Accounts payable
  (3,885,300)
  (2,007,505)Accrued liabilities
  (22,928)
  (121,490)Accrued compensation and benefits
  (1,121,900)
  (675,464)Accrued interest payable
  2,402,265
  2,633,861Accrued distribution payable
  0
  383,000Net cash provided by
  operating activities
  5,006,671
  2,913,197CASH FLOWS FROM
  INVESTING ACTIVITIES:Additions to property
  and equipment
  (297,022)
  (484,083)Net cash used in investing activities
  (297,022)
  (484,083)CASH FLOWS FROM
  FINANCING ACTIVITIES:Borrowings on revolving
  line of credit
  2,969,648
  0Payments on revolving
  line of credit
  (4,600,000)
  (585,510)Payments on obligations
  under capital leases
  (188,208)
  (288,201)Borrowings on long-term
  debt
  208,000
  0Payments on long-term
  debt
  (1,427,651)
  (582,279)Equity distribution
  0
  (2,113,000)Net cash used in
  financing activities
  (3,038,211)
  (3,568,990)Cash effect of exchange
  rate changes
  (31,000)
  0NET INCREASE (DECREASE)
  IN CASH AND CASH EQUIVALENTS
  1,640,438
  (1,139,876)CASH AND CASH
  EQUIVALENTS, beginning of period
  1,752,826
  7,968,576CASH AND CASH
  EQUIVALENTS, end of period
  $3,393,264
  $6,828,700SUPPLEMENTAL
  DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
  $1,730,485
  $1,080,444SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITY:

During the period ended March 31, 2001, the Company had declared and
accrued an equity distribution of $647,000.

See notes to consolidated
financial statements.

CHEROKEE
INTERNATIONAL, LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)

1.
  Basis of PresentationThe information set forth in the accompanying consolidated financial
statements is unaudited and, in the opinion of management, reflects all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position, results of operations and cash flows of
Cherokee International, LLC (the "Company") for the periods
indicated.

Results of operations for the interim three months ended March 31, 2001
and 2000 are not necessarily indicative of the results of operations for the
full fiscal year. The Company's first quarter represented the 13-week periods
ended on April 1 in 2001 and April 2 in 2000. For presentation purposes, these
fiscal quarters have been referred to as ending on March 31.

The consolidated financial statements include the financial statements
of the Company and its wholly-owned subsidiaries. One such subsidiary, Cherokee
International Finance, Inc., 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 and
has no independent assets or operations. All significant intercompany accounts
and transactions have been eliminated.

Certain information normally included in footnote disclosure to the
financial statements has been condensed or omitted in accordance with the rules
and regulations of the Securities and Exchange Commission, and do not include
all the information and note disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America. These unaudited consolidated financial statements
should be read in conjunction with the other disclosures contained herein and
with the Company's audited consolidated financial statements and notes thereto
contained in the Company's Form 10-K for the year ended December 31, 2000.

The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these estimates.

2.
  InventoriesInventories 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:


March 31, 2001
  December 31, 2000Raw Material
  $24,194,418
  $26,593,294Work-in-process
  5,737,753
  6,495,045Finished goods
  3,739,871
  3,187,406$33,672,042
  $36,275,745

3.
  Income TaxesThe 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.

4.
  Comprehensive IncomeComprehensive 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 $398,110 for the three months ended March 31, 2001. The
Company's net income was the same as comprehensive income for the three months
ended March 31, 2000.

5.
  Income Per UnitThe following table sets forth the computation of basic
and diluted income per unit:

Three Months EndedMarch 31, 2001
  March 31, 2000Net Income
  $962,201
  $2,138,549Units:Weighted-average units outstanding - basic
  36,382,736
  30,302,000Effect of dilutive options
  340,372
  166,579Weighted-average units outstanding -
  diluted
  36,723,108
  30,468,579Net income per unit:Basic
  $.03
  $.07Diluted
  $.03
  $.07

6.
  New Accounting
  PronouncementStatement 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 did not have a
significant impact on the financial position, results of operations, or cash
flows of the Company.

MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS



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

OVERVIEW

Cherokee is a leading
designer and manufacturer of a broad range of switch mode power supplies for
original equipment manufacturers (OEM's)primarily in the telecommunications,
networking and high-end workstation industries. The Company produces its
products and related components in sophisticated manufacturing facilities
located in Tustin and Irvine, California; Wavre, Belgium; Guadalajara, Mexico;
and Bombay, India.

The principal elements comprising cost of
sales are raw materials, labor and manufacturing overhead. Raw materials
account for a 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
Industrial and Telecommunication Systems and related entities ("ITS")
for approximately $55 million, including assumption of debt. The acquisition
was accounted for using the purchase method of accounting.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH
31, 2000

NET SALES

Net sales increased by approximately 55.0% or $14.0
million to $39.4 million for the three months ended March 31, 2001 from last
year's $25.4 million for the three months ended March 31, 2000.

The higher sales were primarily attributable
to the acquisition of ITS, which contributed approximately $13.9 million of
sales for the three months ended March 31, 2001. Sales of our North American
operations were approximately the same as the prior year.

GROSS PROFIT

Gross profit increased by approximately 37.3%
or $3.3 million to $12.1 million for the three months ended March 31, 2001 from
$8.8 million for the three months ended March 31, 2000. Gross margin for the
quarter decreased to 30.6% from 34.6% in the prior year.

The increase in gross profit was primarily due to the
gross profit contributed by ITS, partially offset by a slight decrease in gross
profit contributed by the North American operations. The decrease in gross
margin compared to the prior year was primarily due to the inclusion in 2001 of
the ITS operations, which had a lower gross margin than the North American
operations. The gross margin for the North American operations decreased
slightly due to a change in product mix.

OPERATING EXPENSES

Operating expenses for the three months ended
March 31, 2001 increased by approximately 140.1% or $3.9 million to $6.7
million from $2.8 million for the three months ended March 31, 2000. As a
percentage of sales, operating expenses increased to 16.9% from 10.9% in the
first quarter of 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 in 2001 of the ITS operations and amortization of goodwill and other
related intangibles associated with the ITS acquisition.

OPERATING INCOME

Operating income decreased by approximately 10.2% or $.6
million to $5.4 million for the three months ended March 31, 2001 from $6.0
million for the three months ended March 31, 2000. Operating margin decreased
to 13.7% for the current quarter from 23.7% in the prior year.

Operating income
contributed by ITS in the current quarter was offset by amortization of
goodwill and other related intangibles associated with the ITS acquisition. The
decrease in operating margin was primarily attributable to the decrease in
gross margin combined with higher operating expenses as a percentage of sales
discussed above.

INTEREST EXPENSE

Interest expense for the three months ended
March 31, 2001 was $4.4 million compared to $3.9 million for the three months
ended March 31, 2000. This increase was primarily due to the additional debt
incurred in June 2000 in connection with the ITS acquisition.

NET INCOME

As a result of the items discussed above, net
income decreased to $1.0 million for the three months ended March 31, 2001 from
approximately $2.1 million for the three months ended March 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH
31, 2000

Net cash provided by operating activities was
$5.0 million for the three months ended March 31, 2001 compared to $2.9 million
for the three months ended March 31, 2000. Cash provided by operating
activities for 2001 reflects depreciation and amortization of $1.8 million,
decreases of $3.0 million in accounts receivable and $1.7 million in inventory,
and a $2.4 million increase in accrued interest payable, partially offset by
decreases of $3.9 million in accounts payable and $1.1 million in accrued
compensation and benefits. Cash provided by operating activities for 2000
reflects net income of $2.1 million and a $2.6 million increase in accrued
interest payable, offset by an increase of $1.0 million in accounts receivable
and a decrease of $2.0 million in accounts payable.

Net cash used in financing activities of $3.0
million for the three months ended March 31, 2001 primarily reflects $1.4
million of payments on long-term debt and a $1.6 million net reduction in
revolving credit borrowings. Net cash used in financing activities was $3.6
million for the three months ended March 31, 2000 which consisted primarily of
equity distributions of $2.1 million.

LIQUIDITY

Historically, the Company has financed its
operations with cash from operations supplemented by borrowings from credit
facilities. As a result of certain transactions in 1999, the Company's current
and future liquidity needs primarily arise from debt service on indebtedness,
working capital requirements, capital expenditures and distributions to pay
taxes.

As of March 31, 2001,
the Company's borrowings consisted of $100 million of senior subordinated notes
and $65.4 million of borrowings under its various credit facilities, including
$10.2 million drawn under its $25 million domestic revolving credit facility.
The Company is not subject to any amortization requirements under the
subordinated notes prior to maturity in 2009, but it is required to make
scheduled repayments under certain term loans.

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

The Company's
historical capital expenditures have substantially resulted from investments in
equipment to increase manufacturing capacity and improve manufacturing
efficiencies. For fiscal 2001, the Company expects capital expenditures to be
approximately $3 million.

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
covenants 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 in the Company's Registration Statement on
Form S-4 (No. 333-82713) 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 revisions to any of the forward-looking statements
contained or incorporated by reference herein to reflect future events or
developments.

ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Market risks relating to our operations
result primarily from changes in short-term interest rates. The Company did not
have any derivative financial instruments at March 31, 2001.

The Company's exposure to market risk for
changes in interest rates relates primarily to its current domestic credit
facility. In accordance with the credit facility, the Company enters into
variable rate debt obligations to support general corporate purposes, including
capital expenditures and working capital needs. The Company continuously
evaluates its level of variable rate debt with respect to total debt and other
factors, including assessment of the current and future economic environment.

The Company had approximately $63 million in
variable rate debt outstanding at March 31, 2001. Based upon these variable
rate debt levels, a hypothetical 10% adverse change in interest rates would
increase interest expense by approximately $0.5 million on an annual basis, and
likewise decrease our earnings and cash flows. The Company cannot predict
market fluctuations in interest rates and their impact on its variable rate
debt, nor can there be any assurance that fixed rate long-term debt will be
available to the Company at favorable rates, if at all. Consequently, future
results may differ materially from the estimated adverse changes discussed
above.

As a result of the ITS acquisition in June
2000, the Company has European operations and is, therefore, subject to a
certain degree of market risk associated with changes in foreign currency
exchange rates. The Company has not actively engaged in exchange rate hedging
activities.

PART II.           OTHER
INFORMATION



ITEM 1. LEGAL PROCEEDINGS



The Company is subject to disputes and potential claims
by third parties that are incidental to the conduct of its business. The
Company does not believe that the outcome of any such matters, pending at March
31, 2001 will have a material adverse effect on its financial condition or
results of operations.

ITEM 6.EXHIBITS AND
REPORTS ON FORM 8-K
(a)         EXHIBITS:

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 and 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.

(b)        REPORTS ON FORM 8-K

The Company did not file any reports on Form 8-K during the 13-week
period  ended April 1, 2001.





*Incorporated by reference to designated exhibit to the Company's
Registration  Statement on Form S-4
(File No. 333-82713).

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

SIGNATURES

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

Cherokee International,
  LLCDate: May 15, 2001
  
  /s/ R. Van Ness
  Holland, Jr.R. Van Ness Holland,
  Jr.Chief Financial OfficerMay 15, 2001

VIA EDGAR

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C.20549



CHEROKEE INTERNATIONAL,
LLC
 (Commission File No. 333-82713)
QUARTERLY REPORT ON FORM 10-Q

Ladies and Gentlemen:

On behalf of Cherokee
International, LLC. (the "Company"), we transmit herewith in
electronic form for filing with the Securities and Exchange Commission (the
"Commission"), pursuant to Section 15(d) of the Securities Exchange
Act of 1934, as amended, Rule 15d-1 thereunder and item 101(a)(1)(iii) of Regulation
S-T, the Company's Quarterly Report on Form 10-Q (the "Form 10-Q")
for the quarterly period ended April 1, 2001.

The original
signature page to the Form 10-Q has been manually executed and will be retained
by the Company in accordance with Item 302 (b) of Regulation S-T.

Should you have any
questions or comments, please call me at (213) 687-5218.

Very truly yours,/s/ Benjamin A. VegaBenjamin A. Vega