ALPHA TECHNOLOGIES GROUP INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED OCTOBER 28, 2001

COMMISSION FILE NUMBER 0-14365
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ALPHA TECHNOLOGIES GROUP, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 76-0079338
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

11990 SAN VICENTE BLVD., SUITE 350 90049
LOS ANGELES, CA (Zip Code)
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(310) 566-4005
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SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
COMMON STOCK, $.03 PAR VALUE
(Title of each class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) had 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. [ ]

Aggregate market value of the voting stock held by non-affiliates of the
registrant.

$9,810,436 at January 31, 2002

Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Common Stock, 7,110,336 shares outstanding at January 31, 2002
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PART I

ITEM 1. BUSINESS.

OUR COMPANY

Alpha Technologies Group, Inc. ("Alpha" or the "Company") is engaged in the
manufacture, fabrication and sale of thermal management products and aluminum
extrusions. The Company is one of the leading manufacturers of thermal
management products in the United States. Thermal management products,
principally heat sinks, are devices made out of fabricated aluminum extrusions
that have high surface area to volume ratios and are engineered to dissipate
unwanted heat generated by electronic components. As systems become increasingly
more powerful and packaging becomes smaller, the need to dissipate heat becomes
more important to the reliability and functioning of electronic systems. The
Company's thermal management products serve the automotive, telecommunication,
industrial controls, transportation, power supply, factory automation, consumer
electronics, aerospace, defense, microprocessor, and computer industries.

The Company extrudes aluminum for its use in the production of thermal
management products and sells aluminum extrusions to various industries
including the construction, sporting goods and other leisure activity markets.
Extruded aluminum is the primary raw material in the production of thermal
management products.

In July 2000, the Company's connector operation was sold, and in November
2000, its subsystems operation was sold for an aggregate amount of approximately
$14,500,000. These dispositions were made so that the Company could focus on its
thermal management business. (See Footnote 3: Discontinued Operations) To that
end, in January 2001, the Company acquired National Northeast Corporation
("NNE"), which was engaged in the thermal management and aluminum extrusion
business in Pelham, New Hampshire. (See Footnote 2: Acquisitions)

The Company was incorporated as Synercom Technology, Inc., in Texas in
1969, and was reincorporated in Delaware in 1983. In April 1995, it changed its
name to Alpha Technologies Group, Inc. The Company's business is conducted
through its wholly-owed subsidiaries Wakefield Thermal Solutions, Inc.
("Wakefield") which includes the Wakefield-Pelham, Wakefield-Fall River and
Wakefield-Temecula divisions, Specialty Extrusion Corp. ("Speciality") and
Lockhart Industries, Inc. ("Lockhart").

PRODUCTS

The Company designs, extrudes, fabricates and sells thermal management
products for use in a variety of industries including automotive,
telecommunication, industrial controls, transportation, power supply, factory
automation, consumer electronics, aerospace, defense, microprocessor and
computer industries. The Company extrudes aluminum for its use in the production
of thermal management products and sells aluminum extrusions to a variety of
industries including the construction, sporting goods and other leisure activity
markets.

The Company's principal products include:

Extruded Heat Sinks Heat sinks and heat sink assemblies designed
for high power industrial applications,
including transportation equipment; automotive,
stereo amplifiers and others; bonded fin heat
sinks used by makers of power supplies,
transportation equipment and other industrial
equipment.

Active Cooling Components These products use air or liquid to dissipate
heat. Air-to-air heat exchangers use fans to
exchange heat with cooler air and are used in
high-performance telecommunications, military
and aerospace systems. These products also
include sophisticated precision formed
fin/fluxless vacuum brazed chassises, heat
exchangers and cold plates used to cool and
protect computer, radar and laser systems for
the aerospace, military and commercial markets.
Liq-

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uid cooling systems are used in applications
which require the removal of significantly
greater amounts of heat than can be achieved by
air cooling.

Penguin(TM) Coolers Heat sinks specifically designed to solve
thermal problems for the latest high-speed
microprocessors offered by major manufacturers.
These products are used in personal computers
and servers. Older versions of Penguin Coolers
are used in embedded microprocessor
applications. In addition, these products solve
thermal problems for ASICs, ball grid arrays
("BGA") and multichip modules.

Stamped and Low Power Heat
Sinks Heat sinks designed to dissipate heat generated
by power semiconductors, transistors,
rectifiers, diodes and other electronic
components used in electronic applications.
Typically, these are smaller components used on
printed circuit boards.

Precision Compression Mounting These products are complete mounting clamp and
heat sink
Clamp Systems assembly systems for proper installation,
compression and cooling of high-power
compression pack (SCR) silicon-controlled
rectifiers. These products are used in
industrial welding, transportation and motor
control systems.

Accessory Products The Company's accessories include
high-performance thermal compounds, adhesives,
interface materials and other accessories.

Aluminum Extrusions The Company extrudes aluminum for its use in
the production of thermal management products
and sells aluminum extrusions to a variety of
industries including the construction, sporting
goods and other leisure activity markets.

CUSTOMERS

The principal customers for the Company's thermal management products are
leading original equipment manufacturers ("OEM's") of electronic equipment,
including: Harman, Hewlett-Packard, Flextronics, Tyco, Solectron, Rockwell
Automation, Lockheed Martin, General Electric, Delco, SCI, Celestica, Raytheon,
Chrysler, and Motorola. The Company has approximately 1,600 customers. Harman
International Industries, Inc. accounted for 10.1% of its revenues in fiscal
year 2001. No single customer accounted for 10% or more of its revenues in
fiscal years 2000 and 1999.

The Company's thermal management products must meet its OEM customer's
exacting specifications. Some of the Company's thermal management OEM customers
require the Company to qualify as an approved supplier. In order to so qualify,
the Company must satisfy stringent quality control standards and undergo
extensive in-plant inspections of its manufacturing processes, equipment and
quality control systems. In conformity with the above, the Company's
Wakefield-Temecula division is QS9000 registered (a quality specification
required by numerous automotive customers) and the Company's Wakefield-Fall
River and Wakefield-Pelham divisions are ISO9002 registered (a quality standard
required by numerous customers from certain other industries).

SALES, MARKETING AND DISTRIBUTION

While the Company designs, manufactures and sells both standard and
customized thermal management products, it seeks to become a strategic supplier
to its customers and to differentiate itself from its competitors by offering a
higher level of service to its customers. The Company has applications engineers
who are dedicated to providing ongoing technical support. These engineers
provide solutions to customers for their thermal management problems, answer
customers' questions on the use and application of the Company's products,
provide field support to customers and work with certain key customers to
develop new thermal

2

management solutions. The Company believes the technical services provided by
its engineers are an important factor in its thermal management sales.

The Company sells thermal management products and aluminum extrusion
products through its in-house sales personnel and a network of independent
manufacturers' representatives and distributors. In North America, thermal
management products sales are supported by an internal sales support staff of 15
individuals, five factory direct key account managers, 15 independent
manufacturers' representatives and 15 distributors. In international markets,
the Company's thermal management products are sold by: six companies functioning
both as manufacturers' representatives and distributors, two manufacturers'
representatives and nine distributors.

In general, the Company's thermal management manufacturers' representatives
and distributors enter into agreements that allow for termination by either
party upon 60 days notice. Generally, distributors are permitted to return a
small portion of products purchased by them during the term of their agreement
with the Company. They are required to return all products other than obsolete,
minimum buy and custom products upon termination of the agreement. Historically,
the amount of returns has been insignificant to the Company's business. The
Company's distributors are generally not precluded from marketing competitive
products.

RESEARCH AND PRODUCT DEVELOPMENT

The Company's product development strategy continues to focus on
engineering modifications of existing products to provide customers with higher
performance and lower cost products. The Company maintains technical
relationships with certain key customers in order to understand their future
thermal management requirements and focuses on developing new or modifying
existing products to meet such requirements. The Company strives to be included
on the recommended vendor list of its customers, however, such recommendation is
typically not exclusive.

During fiscal 2001, 2000 and 1999, the Company spent $926,000, $831,000 and
$738,000, respectively, on product research and development with respect to its
thermal management products. The Company believes that its technical
capabilities, in conjunction with its relationships with customers, will allow
it to continue to introduce solutions to new thermal management problems
responsively.

COMPETITION

The thermal management market is highly competitive. There are many
companies which compete directly with the Company in the thermal management
business and offer products and services similar to those offered by the
Company. In this market, the Company's principal competitor is Aavid Thermal
Technologies, Inc. Additional competition comes from numerous small machine
shops and aluminum extruders, which typically focus on a single product and do
not provide technical engineering support nor offer a complete line of thermal
management products.

BACKLOG

The Company's backlog was approximately $11.6 million and $13.6 million on
October 28, 2001 and October 29, 2000, respectively. Backlog consists of
purchase orders typically scheduled for shipment from two to eight weeks
following the order date. The Company's backlog at any time is not indicative of
future revenue.

PROPRIETARY RIGHTS

The Company applies for patents with respect to its most significant
patentable developments. It owns 18 patents related to its thermal management
products, which expire from 2002 to 2019. Management believes that its
competitive position is not dependent on patents and that patent expirations
will not materially adversely affect the Company's competitive position.

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RAW MATERIALS

The principal raw materials used in the Company's products are aluminum
billet and extrusions. The Company owns facilities and equipment which produce
the largest portion of the extruded aluminum it needs to manufacture its thermal
management products. Raw materials represent a significant portion of the cost
of the Company's products. Prices for raw materials are based upon market prices
at the time of purchase. Historically, the price of aluminum has experienced
substantial volatility. Although the Company's products are generally shipped
within 60 days following the order date, increases in raw materials prices
cannot always be reflected in product sales prices. All raw materials are
readily available from multiple suppliers at competitive prices. The Company
does not believe the price volatility for aluminum billet represents a
significant risk because the raw materials for an order are usually purchased
within a short time after the order is accepted.

ENVIRONMENTAL REGULATIONS

Several aspects of the Company's operations utilize hazardous materials,
the removal of which is subject to government regulation. The Company contracts
with licensed third party waste haulers to remove such hazardous materials.
While the Company believes that it conducts its operations in substantial
compliance with applicable environmental laws and regulations and has all
environmental permits necessary to conduct its business, more stringent
environmental regulations may be enacted in the future, and there can be no
assurance that the Company will not incur significant costs in the future in
complying with such regulations. Local environmental agencies monitor the
Company's operations for ongoing compliance with environmental requirements, and
the Company is required to correct any violations revealed by such monitoring.
The Company is not aware of any violations or events that would require the
Company to incur material cost, nor has the cost of complying with environmental
laws represented a material cost to the Company.

EMPLOYEES

At October 28, 2001, the Company employed 443 people of which 423 were full
time. Management believes that employee relations are excellent.

FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

Financial information about export sales is set forth in Note 15 in the
Notes to Consolidated Financial Statements.

ITEM 2. PROPERTIES.

The Company has facilities at the following locations:

The Company's sales, engineering and administrative functions are located
in Pelham, New Hampshire. In addition, the Company has office space in Los
Angeles, California and New York, New York for some of

4

its corporate staff. Management believes that its facilities are in good
condition and suitable for the purposes for which they are used.

In addition, the Company has a lease on approximately 15,581 square feet of
unused office space in Beverly, Massachusetts which will expire in December 31,
2006. The Company is actively seeking to sublease this space and has accrued in
fiscal year 2001 the difference between its lease payments and expected sublease
payments and other costs related to this space. No assurance can be given that
the Company will be able to sublease the premises for the expected payments or
at all.

ITEM 3. LEGAL PROCEEDINGS.

There are no material pending legal proceedings against the Company and, to
the Company's knowledge, no such proceedings are threatened.

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

None

PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET FOR COMMON STOCK

The Company's common stock is traded on The Nasdaq Stock Market, National
Market System (NMS) under the symbol ATGI. Through the facilities of the
NASDAQ/NMS reporting system, actual sales prices of the Company's common stock
are available.

The following table sets forth the high and low sales prices of the
Company's common stock as reported on the NASDAQ National Market System for each
full quarterly period within the Company's two most recent fiscal years:

HOLDERS OF RECORD

On December 31, 2001, there were approximately 183 holders of record and
approximately 2,000 beneficial owners of the Company's common stock.

DIVIDENDS

The Company has paid no cash dividends on its common stock during fiscal
years 2001 and 2000. The Board of Directors of the Company does not intend to
authorize the payment of cash dividends to the Company's common stock holders in
the foreseeable future.

5

ITEM 6. SELECTED FINANCIAL DATA.

In July 2000, the Company sold (the "Uni-Star Sale") its connector
business, Uni-Star Industries, Inc. ("Uni-Star") to Tyco Electronics Corporation
and Tyco Electronics UK Ltd. The sale resulted in a gain of $6,478,000, net of
income tax expense.

In November 2000, the Company sold its subsystems business (Malco
Technologies, Inc.) for $2,200,000 in cash and a three-year promissory note in
the amount of $300,000. The sale resulted in a gain of approximately $277,000,
net of taxes. In June 1997, the Company sold its hermetic connector business.

In January 2001, Alpha purchased all of the outstanding Common Stock of NNE
from Mestek, Inc. The purchase price was $49,900,000 in cash, subject to
adjustment based upon working capital as of the Closing. The operating results
of NNE have been included in the Company's consolidated results of operations
since its acquisition date.

The results of operations in the following Selected Financial Data have
been restated to exclude information with respect to the businesses sold. In the
consolidated financial statements for the Company which are included in this
document, these businesses are accounted for as discontinued operations.

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(1) See Consolidated Financial Statements and Notes to Consolidated Financial
Statements on pages F-1 through F-20.

(2) See "Discontinued Operations" in Notes to Consolidated Financial Statements.

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

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K may contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations, estimates and projections
about the Company's business based, in part, on assumptions made by management.
These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in such forward-looking statements due to numerous factors, including the
following:

6

changes in demand for the Company's products, product mix, the timing of
customer orders and deliveries, the impact of competitive products and pricing,
excess or shortage of production capacity, difficulties encountered in the
integration of acquired businesses, restructuring of its Credit Agreement and
other risks discussed from time to time in the Company's Securities and Exchange
Commission filings and reports. In addition, such statements could be affected
by general industry and market conditions and growth rates, and general domestic
and international economic conditions. Such forward looking statements speak
only as of the date on which they are made, and the Company does not undertake
any obligation to update any forward-looking statement to reflect events or
circumstances which may take place after the date of this report.

RESULTS OF OPERATIONS

The results of operations have been restated to reflect the results of
operations from Uni-Star and Malco Technologies, Inc. as discontinued
operations. See introductory paragraphs in "Selected Financial Data". Unless
otherwise mentioned, the following discussion reflects results from continuing
operations, which includes the thermal management and extrusion business
including the operating results of NNE since acquisition and Alpha corporate
expenses.

FISCAL YEAR 2001 VERSUS FISCAL YEAR 2000 COMPARISON

Net Income. The Company reported net income for fiscal 2001 of $305,000
which includes $557,000 in income from continuing operations, a $277,000 gain
from the sale of the Company's subsystems business, a loss from discontinued
operations of $79,000 and an extraordinary loss from early extinguishment of
debt of $450,000. Net income for fiscal 2000 was $15,392,000 which included
$7,918,000 in income from continuing operations, a $6,478,000 gain from the sale
of the Company's connector business and $996,000 in income from discontinued
operations. The decrease in net income from continuing operations is the result
of substantially reduced demand for the Company's products resulting from the
economic downturn in the markets served by the Company and an increase in
overhead expenses due to the acquisition of "NNE" without a corresponding
increase in sales.

Income From Operations. Income from continuing operations for fiscal 2001
was $557,000, inclusive of a $365,000 income tax provision compared to income
from continuing operations for fiscal 2000 of $7,918,000 which included a tax
provision of $580,000. For the 2000 period, the Company utilized the benefit of
net operating loss carryforwards and therefore did not report fully taxed
results.

Sales. The Company's sales for fiscal 2001 increased 10.3% to $67,914,000
from $61,547,000 for fiscal 2000. The increase in sales in fiscal 2001 was due
to the inclusion of revenue from NNE, which was acquired on January 9, 2001.
Management believes that sales in fiscal 2001 have been negatively impacted
compared to the prior year by the weakness in the economy, particularly in the
markets served by the Company's products.

Gross Profit. The Company's gross profit as a percentage of total revenues
("gross profit percentage") for fiscal 2001 was 20.6% compared to 29.9% for
fiscal 2000. The Company's gross margin decreased primarily due to an increase
in fixed overhead expenses without a corresponding increase in revenue, as
described above. The NNE acquisition caused overhead expenses to increase due to
the addition of its manufacturing facility. In addition, a change in the sales
mix resulted in greater aluminum extrusion sales which have lower profit
margins.

Selling, General and Administrative Expense. Selling, general and
administrative expenses for fiscal 2001 were $9,031,000, or 13.3% of sales. This
compares to $8,722,000, or 14.2% of sales, for fiscal 2000. SG&A expenses
increased by $309,000 due primarily to the goodwill amortization associated with
the NNE business which was partially offset by a decrease in commission expense
and other compensation costs. SG&A expenses for fiscal 2001 included $1,389,000
in goodwill and non-compete amortization compared to $221,000 in the prior year.
The Company expects to adopt Statement of Financial Accounting Standard No. 142,
Goodwill and Other Intangible Assets (SFAS 142)in fiscal year 2002, and is
evaluating the effect that such adoption may have on its consolidated results of
operations and financial position. However, the Company expects that a
substantial amount of its intangible assets will no longer be amortized.

7

Restructuring Costs. In response to the decline in demand for the
Company's products resulting from the economic downturn in the markets served by
the Company's products, the Company took significant actions to reduce future
operating expenses. As a result, restructuring costs totaling $822,000 were
incurred in fiscal 2001, consisting primarily of severance costs, excess and
obsolete inventory write downs and lease costs related to an unused facility.

Other Income(net). The Company recorded other income(net)in fiscal 2001 of
$72,000 which was due primarily to the gain on the sale of certain equipment not
being used in the business. The Company recorded other income(net)in fiscal 2000
of $145,000 which was primarily the reversal of a $160,000 accrual expensed in
prior periods for the environmental litigation at the Company's Lockhart
facility. In April 2000, the parties reached a settlement under which the suit
was dismissed.

Interest Expense. Interest expense was $2,546,000 and $692,000 for 2001
and 2000, respectively. This increase was due to higher average outstanding
borrowings due to the acquisition of NNE.

Provision for Income Tax. Income from continuing operations for fiscal
2001 reflects a $365,000 income tax provision compared to $580,000 for fiscal
2000. For fiscal 2001, the Company's book tax provision reflected the full
statutory rate of 39.6%.

Income (loss) From Discontinued Operations. The Company recorded a $79,000
loss from discontinued operations during fiscal 2001 compared to $996,000 in
income during fiscal 2000. The decrease in income from discontinued operations
was due to the sale of the Company's connector business in the third quarter of
fiscal 2000 and the sale of its subsystems business early in the first quarter
of fiscal 2001.

Gain on Sale of Discontinued Operation. During 2001, the Company earned
$277,000, net of taxes, from the sale of the assets of its Malco Technologies
subsidiary. During 2000, the Company earned $6,478,000, net of $640,000 in
taxes, from the sale of its Uni-Star subsidiary.

Extraordinary Loss-Early Extinguishment of Debt. The Company recorded a
$450,000 charge, net of tax, during the first quarter of fiscal 2001 resulting
from the payoff of the credit facility entered into on April 16, 1999, which was
paid off early to allow the Company to enter into a new credit facility to
purchase NNE.

FISCAL YEAR 2000 VERSUS FISCAL YEAR 1999 COMPARISON

Net Income. The Company reported net income for fiscal 2000 of $15,392,000
which includes $7,918,000 in income from continuing operations, a $6,478,000
gain from the sale of the Company's connector business and $996,000 in income
from discontinued operations. Net income for fiscal 1999 was $4,154,000
including $2,656,000 from continuing operations and $1,498,000 from discontinued
operations.

Income from Continuing Operations. The increase in income from continuing
operations is primarily due to the increase in sales and gross margin from the
Company's thermal management business.

Sales. The Company's sales for fiscal 2000 increased 27.1% to $61,547,000
from $48,429,000 for the same period of fiscal 1999. Management believes that
the increase in sales resulted from the Company's ability to better serve its
thermal management customers including improvements in customer service, shorter
lead times, and better on-time delivery.

Gross Profit. The Company's gross profit as a percentage of total revenues
("gross profit percentage") for fiscal 2000 was 29.9% compared to 25.4% for
fiscal 1999. This increase was due to the effects of programs to forgo lower
margin sales, enhance productivity and lower costs. In addition, the Company
focused on improving manufacturing efficiencies.

Selling, General and Administrative Expense. Selling, general and
administrative expenses for fiscal 2000 were $8,722,000, or 14.2% of sales,
compared to $8,035,000, or 16.6% of sales, for the 1999 period which included
$180,000 accrued in the first quarter of 1999 for the cancellation of a
contractual obligation. SG&A expenses (excluding the additional accrual in
1999), as a percentage of sales, decreased due to higher sales volume without a
proportional increase in SG&A expenses in fiscal 2000 as compared to the prior
year.

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Interest Income. Interest income in fiscal 2000 was $187,000. During
fiscal 2000, the Company paid off its revolving credit line with the positive
cash flow from operations and, thus, was able to earn interest on the proceeds
received from the sale of the connector business during the fourth quarter of
fiscal 2000.

Other Income(net). The Company recorded other income (net) in fiscal 2000
of $145,000 which was primarily a result of a $160,000 reversal of the accrual
expensed in prior periods for environmental litigation related to the Company's
Lockhart facility. In April 2000, the parties reached a settlement under which
the suit was dismissed.

Interest Expense. Interest expense was $692,000 and $898,000 for fiscal
2000 and 1999, respectively. This decrease was due to a decrease in the average
outstanding borrowing base partially offset by an increase in the effective
interest rate paid on outstanding debt. The effective interest rate increased
due to the market increase in the base rate used to calculate the interest
charged on the Company's debt (See "Liquidity and Capital Resources" below).

Provision for Income Tax. Income from continuing operations reflects a
$580,000 income tax provision. The Company's tax provision is not at statutory
rates due to the Company's utilization of its net operating loss carryforwards.

Gain on sale of discontinued operation. On July 28, 2000, as a result of
the Uni-Star Sale discussed previously, the Company recorded a $6,478,000 gain,
net of $640,000 in income taxes.

INCOME TAXES

On October 28, 2001, the Company had, for tax purposes, net operating loss
carryforwards of approximately $4,167,000, unused investment and research and
development tax credits of approximately $252,000 and $488,000 of alternative
minimum tax credits available to offset future taxable income and Federal income
taxes. The net operating loss carry forward will expire at the end of fiscal
2018, the investment tax credit and research and development tax credit
carryforwards will expire from 2001 to 2005, and the alternative minimum tax
credit has no expiration.

All carryforwards are subject to review and possible adjustment by the
Internal Revenue Service. In compliance with the Tax Reform Act of 1986,
investment tax credits carried forward were reduced by 35%. The Company's
ability to utilize the net operating loss carryforwards to offset alternative
minimum taxable income is limited to 90% for tax years after fiscal 1987.

LIQUIDITY AND CAPITAL RESOURCES

On October 28, 2001, the Company had cash of approximately $2,701,000
compared to $12,364,000 on October 29, 2000. For fiscal year 2001, $9,535,000
was provided by operating activities and $29,436,000 was provided by financing
activities including $32,600,000 provided by a new credit facility and
$1,914,000 in net proceeds received from the issuance of common stock, primarily
from the Company's rights offering which was completed on January 8, 2001.
During fiscal 2001, $49,551,000 was used in investing activities for the
purchase of NNE and the Company received $2,200,000 in cash from the sale of its
subsystems business. Capital equipment purchases for fiscal 2001 of $1,288,000
were made to improve manufacturing capabilities and to refurbish and upgrade
existing machinery. The Company used $3,661,000 to repay the credit facility
entered into on April 16, 1999, including a $378,000 early termination fee, and
used $1,327,000 to pay fees and expenses related to the new credit facility.

On January 9, 2001, the Company and its subsidiaries, as guarantors,
entered into a Credit Agreement (the "Credit Agreement") with Union Bank of
California, N.A. ("Union Bank") as sole lead arranger and administrative agent
and several banks and other financial institutions named in the Credit
Agreement. The Credit Agreement provides for a revolving loan facility of up to
$15,000,000 (which was subsequently reduced to $5,000,000), and a $35,000,000
term facility, maturing on January 8, 2006. The advances on the revolving loans
are based on eligible accounts receivable, and are now repayable by June 30,
2003. Prior to the closing of the Credit Agreement, the Company paid off, with
its cash on hand, the credit facility entered into on April 16, 1999.
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As of October 28, 2001, $2,200,000 was drawn on the revolving loan facility
with interest accruing at the relevant adjusted LIBOR rate plus 2.5% (5.322%
weighted average rate on October 28, 2001). There is an unused line fee equal to
.5% per annum based on the average aggregate amount, for each day during the
period, of the Available Revolving Loan Commitment payable quarterly in arrears
on the last day of each quarter.

On October 28, 2001, $30,400,000 was outstanding on the Term Loan. The
obligations under the Agreement are secured by a first lien on and assignment of
all of the assets of the Company. Under the Credit Agreement, the Company must
meet certain financial covenants. The Company was not in compliance with certain
financial covenants at October 28, 2001 relating to leverage ratios and fixed
charge coverage ratios, resulting from the Company's reduced earnings before
interest, taxes, depreciation and amortization ("EBITA"), which management
believes was caused by the economic downturn in the markets served by the
Company's products. On January 28, 2002, the Company and its lenders entered
into an amendment to the Credit Agreement("the Amendment"), which waived the
Company's noncompliance with the financial covenants at October 28, 2001 and
which reduced the revolving loan commitment under the Credit Agreement from $15
million to $5 million. In addition, pursuant to the Amendment, the expiration
date for the revolving loan commitment was accelerated from January 9, 2006 to
June 30, 2003.

As a result of the economic downturn in the markets served by the Company's
products, the Company does not believe it will be in compliance with future
financial covenants currently contained in the Credit Agreement. The Company has
received a term sheet and draft amendment from its lead lender to amend such
future covenants in a manner that the Company believes it will be able to
achieve in the future and to amend the amortization schedule of the Term Loan.
While such amendment has not been finalized, based on discussions with its lead
lender, Management is confident that an acceptable restructuring of the Credit
Agreement to be consistent with the Company's current expectations will take
place, and should be finalized during the early stages of the second quarter of
fiscal 2002. Until the Credit Agreement is restructured, all amounts due under
the Term Loan are being classified as a short term obligation.

On April 2, 2001, the Company entered into an interest rate swap agreement
to manage its interest rate risk. The interest rate swap effectively fixes the
interest rate on half of the term debt outstanding (7.72% on $15,250,000 at
October 28, 2001) at an effective interest rate of 4.97% plus the applicable
LIBOR rate margin. The interest rate swap is effective through March 31, 2004.
The balance of the term note accrues interest at the relevant LIBOR rate plus
2.5% (adjusted weighted average rate of 5.95% on October 28, 2001). The term
note is payable in four quarterly installments of $1,500,000 beginning March 31,
2001, followed by twelve quarterly installments of $1,750,000, and four final
quarterly installments of $2,000,000. Interest is payable in quarterly
installments for base rate loans and LIBOR rate loans with a duration of longer
than 3 months.

Working capital on October 28, 2001 was $(18,117,000) compared to
$22,646,000 on October 29, 2000. The decrease in working capital during fiscal
2001 was primarily due to the Company's use of cash in connection with its
purchase NNE and the classification of the Term Loan as short-term. Inventories,
net increased to $8,049,000 at October 28, 2001 from $5,935,000 reported at
October 29, 2000 primarily as a result of the acquisition of NNE. The Company
believes its currently available cash and anticipated cash flow from operations
is sufficient to fund its operations in the near-term. As a result of the
Amendment, the Company will have limited borrowing ability under the Credit
Agreement. Capital equipment expenditures in fiscal year 2002 are anticipated to
be at levels not greater than the amounts expended in fiscal year 2001.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

On January 9, 2001, the Company and its subsidiaries, as guarantors,
entered into the Credit Agreement. The Credit Agreement provides for a revolving
loan facility of up to $15,000,000 (which was subsequently reduced to
$5,000,000), and a $35,000,000 term facility, maturing on January 8, 2006. The
term note is payable in four quarterly installments of $1,500,000 beginning
March 31, 2001, followed by twelve quarterly installments of $1,750,000, and
four final quarterly installments of $2,000,000. As a result of the economic
downturn in the markets served by the Company's products, the Company does not
believe it will be in

10

compliance with future financial covenants currently contained in the Credit
Agreement. Until the Credit Agreement is restructured, all the amounts due under
the Term Loan are being classified on a short term obligation.

As of October 28, 2001, $2,200,000 was drawn on the revolving credit
facility with interest accruing at the relevant adjusted LIBOR rate plus 2.5%
(5.322% weighted average rate on October 28, 2001).

On April 2, 2001, the Company entered an interest rate swap agreement as a
means of managing its interest rate exposure. The interest rate swap effectively
fixes the interest rate on half of the term debt outstanding (based on its
amortization schedule) at an effective interest rate of 4.97% plus the
applicable LIBOR rate margin, effectively an interest rate of 7.72% on
$15,250,000 at October 28, 2001. The interest rate swap is effective through
March 31, 2004. The corresponding floating rate of interest received on the
notional amount is based on three month LIBOR rates and are typically reset
quarterly. Net amounts paid or received will be reflected in interest expense.
On October 28, 2001, the decrease in the fair value of the swap agreement of
$522,000 was recognized as a component of comprehensive income (shown net of tax
in the equity section of the balance sheet). The remainder of the $35,000,000
term note ($15,150,000 on October 28, 2001) accrues interest at the relevant
adjusted weighted average LIBOR rate plus 2.5% (5.95% on October 28, 2001).

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Financial statements and supplementary data required pursuant to this Item
are presented on pages F-2 through F-20 and page S-1 of this report.

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

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The current members of the Board of Directors were most recently elected at
the 2001 Annual Meeting of Stockholders for a term of one year, and until their
successors are duly elected and qualified or until their earlier death,
resignation or removal. The members, their ages and certain other information
about each of them are set forth below.

The current executive officers of the Company are as follows:

Each officer of the Company holds office until his successor shall be duly
elected and qualified or until his earlier death, resignation or removal.

For information concerning Messrs. L. Butler and Streiter see above.

Mr. Chupik has been Vice President Administration of the Company since
August 1993; from May 1988, he was Vice President Human Resources of the
Company.

Mr. Polakiewicz has been Chief Financial Officer of the Company since
September 2001; from January 1995, he was Vice President of Finance for
Wakefield Thermal Solutions, Inc., a subsidiary of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and holders of more than ten percent of a registered
class of the Company's equity securities, to file reports of ownership of such
securities with the Securities and Exchange Commission. Officers, directors and
greater than ten percent beneficial owners are required by applicable
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Other than Lawrence Butler and Marshall Butler, the Company is not aware
of a beneficial owner of more than ten percent of its Common Stock.

Based on a review of the copies of Forms 3, 4 and 5 furnished to the
Company, the Company believes that all Section 16(a) filing requirements
applicable to its officers, directors and ten percent holders were complied
within a timely manner during fiscal year 2001 with the exception of two amended
reports for Lawrence Butler and two amended reports for Marshall Butler. Mr.
Lawrence Butler filed a Form 4 in July 2001 amending his Form 4 dated February
9, 2001 to correct the number of shares of Common Stock acquired pursuant to the
Company's stock rights offering to 10,078 shares from 9,426 shares. In a Form 4
filed in December 2001, he further amended his Form 4 dated February 9, 2001 to
report that the Trusts of which he was a trustee acquired 8,906 shares pursuant
to the stock rights offering, which acquisition had inadvertently not been
reported. Mr. Marshall Butler filed a Form 4 amending a Form 4 dated May 10,
1999 to correct the number of shares purchased on April 12, 1999 to 5,500 shares
from 11,000 shares and to correct the number of shares purchased on April 13,
1999 to zero shares from 2,400 shares. In a Form 4 filed in December 2001, he
amended a Form 4, dated February 9, 2001 to correct the number of shares
acquired pursuant to the stock rights offering to 31,651 shares from 31,901
shares.

13

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or accrued for
services rendered in all capacities on behalf of the Company during the last
three fiscal years to the Company's "Named Executive Officers," the current
executive officers who received compensation in excess of $100,000 during the
fiscal year ended October 28, 2001.

SUMMARY COMPENSATION TABLE

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

(1) On May 26, 1999, Mr. Butler became Chairman and Chief Executive Officer of
the Company.

(2) Represents car allowance of $14,400 and 401(k) Employer Matching
Contribution of $3,150 for fiscal 2001; represents car allowance of $7,200
and 401(k) Employer Matching Contribution of $3,150 for fiscal 2000;
represents car allowance of $7,200 and 401(k) Employer Matching Contribution
of $4,122 for fiscal 1999.

(3) Mr. Streiter became President and Chief Operating Officer of the Company on
May 26, 1999.

(4) Represents car allowance and reimbursements of $8,200 and 401(k) Employer
Matching Contribution of $4,688 for fiscal 2001; represents car allowance
and reimbursements of $5,679 and 401(k) Employer Matching Contribution of
$4,500 for fiscal 2000.

(5) Represents accrued vacation payments.

(6) Represents 401(k) Employer Matching Contributions.

(7) Represents car allowance and reimbursements of $8,200, medical insurance
waiver of $1,200 and 401(k) Employer Matching Contribution of $3,820 for
fiscal 2001; represents car allowance and reimbursements of $5,523, medical
insurance waiver of $1,000 and 401(k) Employer Matching Contribution of
$4,110 for fiscal 2000. Mr. Chupik became an officer within the meaning of
Section 16 of the Exchange Act effective as of February 22, 2000.

(8) Mr. Polakiewicz became Chief Financial Officer of the Company in September
2001.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding grants of stock
options to the Named Executive Officers during the last fiscal year. No SARs
were granted by the Company during the last fiscal year.

14

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

(1) Aggregate for all fiscal year 2001 grants.

(2) The options are exercisable as to one-third of the shares one year after the
date of the grant, an aggregate of two-thirds of the shares two years after
the date of the grant and the remaining one-third of the shares three years
after the date of the grant.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED OCTOBER 28, 2001 AND FISCAL
YEAR END OPTION VALUES

The following table sets forth information regarding each exercise of stock
options during the fiscal year ended October 28, 2001 by the Named Executive
Officers and the fiscal year-end value of unexercised options held by such
persons.

EMPLOYMENT AGREEMENTS

Effective November 1, 2000, the Company and Mr. L. Butler entered into a
three year employment agreement (the "Agreement"). Under the Agreement, Mr.
Butler is entitled to a base annual salary of $260,000 for the first year of the
term with annual reviews of such base salary by the Board of Directors. In
addition, the Agreement provides for an annual bonus based on the Company's
earnings from continuing operations before provision for income taxes.

Effective November 1, 2000, the Company entered into a three year
employment agreement, with Robert C. Streiter pursuant to which Mr. Streiter is
to serve as President and Chief Operating Officer of the Company. Under the
agreement, Mr. Streiter is entitled to a base annual salary of not less than
$260,000 for the first year of the term with annual reviews of such base salary
by the Board of Directors. In addition, the Agreement provides for an annual
bonus based on the Company's earnings from continuing operations before
provision for income taxes. The agreement provides that in the event of a change
in control, Mr. Streiter may terminate the agreement. This agreement supercedes
the Employment Agreement between the Company and Mr. Streiter effective March
23, 1999.

COMPENSATION OF DIRECTORS

In 1998, the Company's Board of Directors and stockholders approved an
amendment to the Company's 1994 Stock Option Plan to provide for the annual
grant on the date of the Annual Meeting of Stockholders for the 1998, 1999 and
2000 fiscal years of options to purchase 10,000 shares to each director who is
not an

15

employee of the Company. During 2001, the Company's Board of Directors approved,
subject to stockholder approval, an amendment to the Company's 1994 Stock Option
Plan to provide for the annual grant of options to purchase 5,000 shares to each
director who is not an employee of the Company, elected or reelected, at the
Annual Meeting of Stockholders for the 2001 and 2002 fiscal years. Such Options,
which are not Incentive Stock Options, are exercisable at the fair market value
of Common Stock of the Company on the day of the Annual Meeting, vest one year
from the date of the grant and are exercisable until the date that is the
earlier of five years from the date of grant or 90 days after the Optionee
ceases to be a director of the Company.

The Company issued to Richard E. Gormley, options under the Company's 1994
Stock option Plan to purchase 25,000 shares of Common Stock of the Company at an
exercise price of $5.82 per share, the fair market value of a Common Share of
the Company on the date Mr. Gormley was elected as director at the 2001 Annual
Meeting. The options are exercisable in three equal installments on each of the
first three annual anniversary dates of the grant of the options.

In addition, directors who are not employees of or consultants to the
Company will be paid $1,000 for each meeting of the Board of Directors
physically attended and $1,000 for each committee meeting physically attended.
Directors who are officers of or consultants to the Company will not receive any
additional compensation for serving on the Board of Directors or its committees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board has a Compensation Committee, which currently consists of
Marshall D. Butler, Donald Grierson and Frederic A. Heim. For services to the
Company, Marshall Butler , formerly Chairman and Chief Executive Officer of the
Company, received compensation of $70,300 in fiscal year 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of December 31, 2001, the number and
percentage of outstanding shares of Common Stock of the Company owned
beneficially, within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"), by (i) each stockholder known by the
Company to own more than 5% of the outstanding shares of Common Stock; (ii) each
director of the Company; (iii) each named executive officer; and (iv) all
directors and executive officers, as a group. Except as otherwise specified, the
named beneficial owner has sole voting and investment power.

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

* Constitutes less than 1%

(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Alpha Technologies Group, Inc., 11990 San Vicente Boulevard, Suite 350, Los
Angeles CA 90049.

16

(2) Includes shares deemed to be beneficially owned by such persons or entities
pursuant to Rule 13d-3 promulgated under the Exchange Act because they have
the right to acquire such shares within 60 days upon the exercise of
options or similar rights or because such persons or entities have or share
investment or voting power.

(3) Does not include shares owned by Dot.Com of which Mr. M. Butler and Mr.
Heim are each limited partners. Messrs. M. Butler and Heim disclaim
beneficial ownership of such shares.

(4) Includes 58,334 shares which Mr. M. Butler has the right to acquire upon
the exercise of stock options within 60 days, and 227,184 shares owned by a
trust of which Mr. M. Butler is a trustee.

(5) Includes 695,038 shares owned by Dot.Com, 231,560 shares owned by trusts of
which Mr. L. Butler is trustee, 376,668 shares which Mr. L. Butler has the
right to acquire upon the exercise of stock options within 60 days and
17,971 shares held for Mr. L. Butler's account in the Company's 401(k)
Plan.

(6) Includes 30,000 shares which Mr. Grierson has the right to acquire upon the
exercise of stock options within 60 days.

(7) Includes 55,000 shares that Mr. Heim has the right to acquire upon exercise
of stock options within 60 days.

(8) Shares owned by Dot.Com are also included in the number of shares reported
as beneficially owned by Mr. L. Butler, the president and sole shareholder
of the general partner of Dot.Com.

(9) Includes 200,001 shares that Mr. Streiter has the right to acquire upon
exercise of stock options within 60 days, 14,900 shares owned by Mr.
Streiter's spouse as to which Mr. Streiter disclaims beneficial ownership
and 3,406 shares held for Mr. Streiter's account in the Company's 401(k)
Plan.

(10) Includes 60,601 shares that Mr. Chupik has the right to acquire within 60
days and 13,731 shares held for Mr. Chupik's account in the Company's
401(k) Plan.

(11) Includes 27,943 shares that Mr. Polakiewicz has the right to acquire upon
exercise of stock options within 60 days and 2,818 shares held for Mr.
Polakiewicz's account in the Company's 401(k) Plan.

(12) Dimensional Fund Advisors Inc. ownership as of December 5, 2001.

(13) Includes 808,547 shares which individuals in the group have the right to
acquire upon the exercise of stock options which are exercisable within 60
days, 36,168 shares held for the accounts of the individuals in the group
in the Company's 401(k) Plan, 695,038 shares held by Dot.Com, 231,560
shares owned by trusts of which Mr. L. Butler is trustee, and 227,184
shares owned by a trust of which Mr. M. Butler is a trustee.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the Company's last fiscal year, Mr. M. Butler, A director of the
Company, was paid $70,300 for services rendered to the Company.

PART IV

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

(a) The following documents are filed as part of this Annual Report on Form
10-K.

(1) Financial Statements

The Consolidated Financial Statements listed in the accompanying Index
to Consolidated Financial Statements on page F-1 are filed as part of the
Annual Report on Form 10-K.

(2) Financial Statement Schedule:

Schedule II -- Valuation and Qualifying Accounts, page S-1.

All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or
notes thereto.

(3) Exhibits:

The exhibits listed in the accompanying Index to Exhibits are filed or
incorporated by reference as part of this Annual Report on Form 10-K.

(b) No reports on Form 8-K were filed in the fourth quarter of the fiscal
year ended October 28, 2001.
17

SIGNATURES

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

ALPHA TECHNOLOGIES GROUP, INC.

By: /s/ LAWRENCE BUTLER

--------------------------------------
(Lawrence Butler)
Chairman and Chief Executive Officer

Date: February 8, 2002

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

18

ALPHA TECHNOLOGIES GROUP, INC., AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of Alpha Technologies Group, Inc.

We have audited the accompanying consolidated balance sheet of Alpha
Technologies Group, Inc. (a Delaware corporation) and Subsidiaries as of October
28, 2001 and October 29, 2000 and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended October 28, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Alpha
Technologies Group, Inc. and Subsidiaries as of October 28, 2001 and October 29,
2000 and the consolidated results of their operations and their consolidated
cash flows for each of the three years in the period ended October 28, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

We have also audited Schedule II for each of the three years in the period
ended October 28, 2001. In our opinion, this schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be set forth therein.

/s/ GRANT THORNTON LLP

Houston, Texas
December 14, 2001

F-2

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

F-3

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

F-4

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 28, 2001, OCTOBER 29, 2000 AND OCTOBER 31, 1999

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

F-5

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these consolidated financial
statements.
F-6

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Alpha Technologies Group, Inc. ("Alpha" or the "Company") designs,
extrudes, fabricates and sells thermal management products for use in a variety
of industries including automotive, telecommunication, industrial controls,
transportation, power supply, factory automation, consumer electronics,
aerospace, defense, microprocessor and computer industries. The Company extrudes
aluminum for its use in the production of thermal management products and sells
aluminum extrusions to a variety of industries including the construction,
sporting goods and other leisure activity markets.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Alpha and its
wholly-owned subsidiaries. All material intercompany transactions and balances
have been eliminated. As more fully described in Note 3 - Discontinued
Operations, prior year numbers have been restated, through reclassification, to
discontinue the connector business sold in July 2000 and the subsystems business
which was sold on November 17, 2000.

REVENUE RECOGNITION

Revenue from product sales is recognized upon shipment to the customer.

USE OF ESTIMATES AND OTHER UNCERTAINTIES

The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash, trade
receivables, trade payables and debt instruments. The Company has entered an
interest rate swap agreement to manage its interest rate risk. The interest rate
swap effectively fixes the interest rate on half of the term debt outstanding at
an effective interest rate of 4.97% plus the applicable LIBOR rate margin (7.72%
on $15,250,000 at October 28, 2001). On October 28, 2001, the carrying value of
the Company's financial instruments approximated their fair value.

Cash and cash equivalents include cash in banks and money market accounts
as well as highly liquid investments with initial maturities of less than three
months.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method.

PROPERTY AND EQUIPMENT

The cost of property and equipment is depreciated using the straight-line
method for financial reporting purposes over the estimated useful lives of such
assets, ranging from three to fifteen years. Leasehold improvements are
amortized on a straight-line basis over the related lease term.

F-7

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

GOODWILL

Goodwill represents the excess of cost over fair value of net assets
acquired and is being amortized over 15 to 20 years using the straight-line
method. The accumulated amortization for continuing operations on October 28,
2001 and October 29, 2000 was approximately $2,297,000 and $1,022,000,
respectively. Amortization expense of approximately $1,275,000, $181,000, and
$181,000 was recorded in fiscal years 2001, 2000 and 1999, respectively.

LONG-LIVED ASSETS

The Company reviews the valuation of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and/or its disposition
is less than its carrying amount. The Company has not identified any such
impairment loss.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes net income, plus other comprehensive
income (loss). Other comprehensive loss in fiscal year 2001 consists of market
value adjustments related to the interest rate swap agreement. Other
comprehensive income in fiscal years 2000 and 1999 consists of foreign currency
translation adjustments.

STOCK-BASED COMPENSATION

The Financial Accounting Standards Board issued SFAS 123, "Accounting for
Stock-Based Compensation" during October 1995. The standard establishes a fair
value approach to valuing stock options awarded to its employees as
compensation. The Company has elected, as permitted by the standard, to continue
to follow its intrinsic value based method of accounting for stock options
consistent with Accounting Principals Board No. 25, "Accounting for Stock Issued
to Employees" (APB 25). The intrinsic method measures compensation cost for
stock options as the excess, if any, of the quoted market price of the Company's
stock at the measurement date over the exercise price.

INCOME TAXES

The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using current enacted
tax rates. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in the results of operations in the period that includes the
enactment date.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company follows Statement of Financial Accounting Standard No. 133, as
amended, which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and hedging activities. All derivatives, whether designated in hedging
relationships or not, are required to be recorded on the balance sheet at fair
value. If the derivative is designated as a fair value hedge, the changes in the
fair value of the derivative and of the hedged item attributable to the hedged
risk are recognized in earnings. If the derivative is designated as a cash flow
hedge, the effective portions of changes in the fair value of the derivative are
recorded in other comprehensive income and ineffective portions of changes in
the fair value of cash flow hedges are recognized in earnings. We utilize our
derivative instrument to manage our exposure to interest rate fluctuations. Our
objective is to minimize the risk of fluctuations using the most effective
methods to eliminate or reduce the impact of this exposure.

F-8

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141, Business Combinations (SFAS 141) and
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141, which superseded APB Opinion No. 16,
Business Combinations and Statement of Financial Accounting Standard No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises, addresses
financial accounting and reporting for business combinations initiated after
June 30, 2001. SFAS 142, which supersedes APB Opinion No. 17, Intangible Assets,
addresses the financial accounting and reporting for acquired goodwill and other
intangible assets other than those acquired in a business combination. SFAS 142
is effective in fiscal years beginning after December 15, 2001, with early
adoption permitted. The Company expects to adopt SFAS 142 in fiscal year 2002,
and is evaluating the effect that such adoption may have on its consolidated
results of operations and financial position. However, the Company expects that
a substantial amount of its intangible assets will no longer be amortized.

2. ACQUISITIONS

On January 9, 2001, pursuant to a Stock Purchase Agreement (the "SPA")
dated September 18, 2000, as amended by Amendment No. 1 dated November 10, 2000,
Alpha purchased all of the outstanding Common Stock of National Northeast
Corporation ("NNE") from Mestek, Inc.(the "Seller").The purchase price was
$49,900,000 in cash, subject to adjustment based upon working capital as of the
Closing. The working capital adjustment is currently being negotiated but is not
expected to be material to the Company's financial condition. Pursuant to the
SPA, the Seller and certain of its affiliates agreed not to engage in the
manufacture and sale of aluminum extrusions and aluminum heat sinks for four and
one half years. The terms of the transaction, including the purchase price, were
the result of arms length negotiations between Alpha and Seller. Alpha used
$14,800,000 of its cash on hand and $39,800,000 in borrowings under its new
credit facility to pay the purchase price and $1,300,000 in transaction costs
and costs for the new credit facility and to satisfy $3,400,000 in outstanding
debt under its old credit facilities, including a $378,000 early termination
fee. The acquisition has been accounted for as a purchase transaction, and
accordingly, the purchase price has been allocated to the assets acquired and
liabilities assumed for the acquisition. The Company intends to amortize the
portion of the purchase price allocated to goodwill over 20 years except to the
extent the Company adopts SFAS 142. The operating results of NNE have been
included in the Company's consolidated results of operations since its
acquisition date.

The following unaudited pro forma summary, based on historical operations,
is not necessarily indicative either of results of operations that would have
occurred had the purchase been made as of the beginning of the period presented,
or of future results of operations of the combined companies. The pro forma
summary below does not include any savings that the Company expects to achieve
as a result of the combination. Total revenues included in the following
unaudited pro forma summary reflect the effect of accounting for the Company's
connector business and subsystems business as discontinued operations.

Net income included in the following unaudited pro forma summary does not
reflect the effect of income from discontinued operations the gain on sale of
discontinued operations, or the extraordinary loss from the early extinguishment
of debt.

F-9

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA RESULTS

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

(1) Fiscal year 2001 results reflect a 39.6% tax provision; Fiscal year 2000
results reflect a 12.8% tax provision due to net operating loss
carryforwards.

3. DISCONTINUED OPERATIONS

On July 28, 2000, pursuant to a Stock Purchase Agreement (the "Agreement"),
the Company sold its connector business, Uni-Star Industries, Inc. ("Uni-Star"
or the "Business") to Tyco Electronics Corporation and Tyco Electronics UK Ltd.
(the "Buyer"). The sale included 100% of the outstanding stock of Uni-Star
Industries, Inc. and Microdot Connectors Europe, Ltd. (a wholly owned UK
subsidiary of Uni-Star) and the agreement by Alpha and certain of their
affiliates not to engage in the connector business for five years. Alpha
initially received $12,300,000, in cash, subject to reduction if Uni-Star's Net
Assets (as defined in the Stock Purchase Agreement) were less than $3,986,000 as
of the closing date. In conformity with the above, a subsequent payment of
$325,000 was made to the seller. The purchase price was a negotiated amount
between Buyer and Seller. The sale resulted in a gain of $6,478,000, net of
income tax expense.

On November 17, 2000, Malco Technologies Group, Inc., a wholly-owned
subsidiary of Alpha, pursuant to an asset purchase agreement, sold substantially
all of the assets and the subsystems business (the "Business") located in
Colmar, Pennsylvania, to a privately owned company (the "Buyer"). The sale
included Malco's accounts receivable, inventory, machinery, equipment, tools,
business machines, office furniture and fixtures and certain intangibles
including but not limited to customer lists, trade names and engineering designs
and the agreement by Alpha and certain of their affiliates not to engage in any
business, directly or indirectly, that competes with Malco for three years. As a
result of the sale, Alpha received $2,200,000 in cash plus a three-year, 12%
note for $300,000 and Buyer assumed certain payables and liabilities of the
Business. The purchase price was a negotiated amount between Buyer and Malco
Technologies Group, Inc. The sale resulted in a gain of $277,000, net of $70,000
of income tax expense.

Summary operating results of the discontinued operations are as follows for
the fiscal year ended:

CONNECTOR BUSINESS -- SOLD JULY 28, 2000

F-10

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SUBSYSTEMS BUSINESS -- SOLD NOVEMBER 17, 2000

In 2001, the loss from discontinued operations of $79,000 is net of income
taxes. No income tax provision was provided from discontinued operations in
prior years due to the Company's use of its net operating loss carryforwards.

SUMMARY BALANCE SHEET DATA FOR SUBSYSTEM BUSINESS -- SOLD NOVEMBER 17, 2000

4. INVENTORIES

Inventories consisted of the following on:

F-11

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following on:

6. ACCRUED COMPENSATION AND RELATED BENEFITS

Accrued compensation and related benefits consisted of the following on:

7. DEBT AND REVOLVING CREDIT FACILITIES

Debt and revolving credit facilities consisted of the following on:

On January 9, 2001, the Company and its subsidiaries, as guarantors,
entered into a Credit Agreement (the "Credit Agreement") with Union Bank of
California, N.A. ("Union Bank") as sole lead arranger and administrative agent
and several banks and other financial institutions named in the Credit
Agreement. The Credit Agreement provides for a revolving loan facility of up to
$15,000,000 (which was subsequently reduced to $5,000,000), and a $35,000,000
term facility, maturing on January 8, 2006. The advances on the revolving

F-12

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

loans are based on eligible accounts receivable, and are now repayable by June
30, 2003. Prior to the closing of the Credit Agreement, the Company paid off,
with its cash on hand, the previously outstanding credit agreement. The Company
recorded a $450,000 charge net of $200,000 of income taxes as an extraordinary
loss on the early extinguishment of debt.

As of October 28, 2001, $2,200,000 was drawn on the revolving loan facility
with interest accruing at the relevant adjusted LIBOR rate plus 2.75% (5.32%
weighted average rate on October 28, 2001). There is an unused line fee equal to
.5% per annum, based on the average aggregate amount of the Available Revolving
Loan Commitment, payable quarterly in arrears on the last day of each calendar
quarter.

On April 2, 2001, the Company entered an interest rate swap agreement to
manage its interest rate risk. The interest rate swap effectively fixes the
interest rate on half of the term debt outstanding (7.72% on $15,250,000 at
October 28, 2001) at an effective interest rate of 4.97% plus the applicable
LIBOR rate margin. The interest rate swap is effective through March 31, 2004.
The balance of the term note accrues interest at the relevant LIBOR rate plus
2.5% (adjusted weighted average rate of 5.95% on October 28, 2001). The term
note is payable in four quarterly installments of $1,500,000 beginning March 31,
2001, followed by twelve quarterly installments of $1,750,000, and four final
quarterly installments of $2,000,000. Interest is payable in quarterly
installments for base rate loans and LIBOR rate loans with a duration of longer
than 3 months.

On October 28, 2001, $30,400,000 was outstanding on the Term Loan. The
obligations under the Agreement are secured by a first lien on and assignment of
all of the assets of the Company. Under the Credit Agreement, the Company must
meet certain financial covenants. The Company was not in compliance with certain
financial covenants at October 28, 2001 relating to leverage ratios and fixed
charge coverage ratios, resulting from the Company's reduced earnings before
interest, taxes, depreciation and amortization ("EBITA"), which management
believes was caused by the economic downturn in the markets served by the
Company's products. On January 28, 2002, the Company and its lenders entered
into an amendment to the Credit Agreement("the Amendment"), which waived the
Company's noncompliance with the financial covenants at October 28, 2001 and
which reduced the revolving loan commitment under the Credit Agreement from $15
million to $5 million. In addition, pursuant to the Amendment, the expiration
date for the revolving loan commitment was accelerated from January 9, 2006 to
June 30, 2003.

As a result of the economic downturn in the markets served by the Company's
products, the Company does not believe it will be in compliance with future
financial covenants currently contained in the Credit Agreement. The Company has
received a term sheet and draft amendment from its lead lender to amend such
future covenants in a manner that the Company believes it will be able to
achieve in the future and to amend the amortization schedule of the Term Loan.
While such amendment has not been finalized, based on discussions with its lead
lender, Management is confident that an acceptable restructuring of the Credit
Agreement to be consistent with the Company's current expectations will take
place, and should be finalized during the early stages of the second quarter of
fiscal 2002. Until the Credit Agreement is restructured, all amounts due under
the Term Loan are being classified as a short term obligation.

Cash paid for interest on all outstanding debt amounted to approximately:

F-13

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In addition, debt issue costs and origination fees of $1,327,000 and
$393,000 were paid in fiscal 2001 and fiscal 1999, respectively. These fees were
incurred in connection with the refinancing of the Company's credit facilities,
and will be expensed over the term of the agreements.

8. PREFERRED STOCK

On October 28, 2001 and October 29, 2000, the Company had authorized
180,000 shares of unissued, preferred stock with a par value of $100 per share.
The Board of Directors has the authority to issue such preferred stock and to
set the terms thereof, including the dividend rate, conversion rights,
redemption rights, voting rights and liquidation preferences. There are no
shares of preferred stock outstanding as of October 28, 2001.

9. REPURCHASE OF COMMON STOCK

In October 1999, the Board of Directors of the Company approved a plan to
purchase up to $500,000 of the Company's common stock in the open market.
Pursuant to the stock repurchase plan, the Company purchased 25,317 shares of
common stock at an aggregate price of $90,000 during fiscal year 2001 and 35,800
shares of common stock at an aggregate price of $161,011 during fiscal year
1999.

On October 29, 1999, pursuant to a Stock Purchase Agreement, the Company
acquired 350,000 shares of its common stock from the former owners of its
Lockhart subsidiary. The acquired shares were issued as consideration for the
purchase of the Lockhart subsidiary in August 1996. As part of the Agreement,
the Company released the former owners from the indemnification provisions
related to the purchase of the Lockhart business. A $449,000 indemnification
liability was established representing the difference between the market value
of the shares repurchased of $1,975,000 and the consideration paid of $1,476,000
to the former owners.

10. STOCK OPTION PLANS

The Company has in effect nonqualified and incentive stock option plans
under which shares are available for exercise. As of October 28, 2001, the Board
of Directors has reserved 1,644,693 shares of common stock for issuance under
the plans. The prices at which substantially all stock options outstanding have
been granted have been equal to or in excess of the fair market value of the
Company's stock at the time of the grant. These options vest over periods up to
five years. On October 28, 2001, there were 64,533 shares available for future
grants.

F-14

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes activity and outstanding options under the
plans:

The Company's Board of Directors approved an amendment to the 1994 Stock
Option Plan on November 14, 2001 to increase the aggregate number of shares
subject to the Plan to 2,400,000 shares, subject to shareholder approval. In
April, 2001, the Board approved an amendment to the Plan, which provided for
options to purchase 5,000 Shares to be automatically granted to non-employee
directors at the Annual Meetings to be held in 2001 and 2002 and set the maximum
number of shares as to which options may be granted to any one individual under
the Plan during any calendar year at 250,000.

F-15

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For fiscal 2001, 2000 and 1999, $11,000, $7,000 and $14,000, respectively,
was recognized as expense for options issued to non-employees under the
Company's stock option plans. Pro forma information regarding net income and
earnings per share is required by SFAS 123 and has been determined as if the
Company has accounted for options issued to employees under the fair value
method of that statement. The fair value of these options was estimated at the
date of grant using the Black-Scholes option pricing model. The weighted average
assumptions for fiscal 2001 were: expected volatility 65.71%, risk free interest
rate of 5.10%, expected option life of 4.0 years and no expected dividends. The
weighted average assumptions used for fiscal 2000 were: expected volatility
73.45%, risk free interest rate of 6.35%, expected option life of 4.0 years and
no expected dividends. The weighted average assumptions used for fiscal 1999
were: expected volatility 74.5%, risk free interest rate of 5.78%, expected
option life of 4.0 years and no expected dividends. In addition, adjustments
were made for estimated cancellations.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options' vesting period. If the fair value based
method of accounting defined in SFAS 123 had been applied, the Company's net
income and net income per share would have decreased by $1,588,000, or $0.23 per
basic and diluted share, in fiscal 2001, by $926,000, or $0.14 per basic and
diluted share, in fiscal 2000, and its net income and net income per share would
have decreased by approximately $530,000, or $0.07 per basic and diluted share,
in fiscal 1999. The estimated weighted average fair value of options granted
during fiscal 2001, 2000 and fiscal 1999 was $4.10, $4.53, and $2.32,
respectively. This pro forma information is not meant to be representative of
the effects on reported net income for future years, because as provided by SFAS
123, only the effects of awards granted after the Company's 1995 fiscal year are
considered in the pro forma calculation.

11. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per common share is computed by dividing income
(loss) available to common shareholders by the weighted average number of shares
of common stock outstanding during each year. Diluted earnings per common share
are calculated to give effect to stock options outstanding during the period.
The treasury stock method is used to calculate dilutive shares and reduces the
gross number of dilutive shares by the number of shares purchasable from the
proceeds of the options assumed to be exercised. For fiscal year 2001,
potentially dilutive shares were not considered in the computation as their
effect would have

F-16

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

been antidilutive. The amounts used in calculating basic and dilutive earnings
per share and the amounts that would have been used in fiscal 2001 were:

12. INCOME TAXES

Income (loss) before income taxes from continuing operations was as follows
for the fiscal years ended:

The provision (benefit) for income taxes for continuing operations was as
follows for the fiscal years ended:

F-17

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The differences in the income taxes provided for and the amounts determined
by applying the Federal statutory rate to income before taxes of the Company are
summarized as follows:

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities and their changes during the
year ended October 28, 2001 were as follows:

Due to the Company's historical results of operations, a valuation
allowance has been provided for certain deferred tax assets that may not be
realized. The valuation allowance decreased by $454,000, $4,338,000 and
$1,682,000 in fiscal 2001, 2000 and 1999 respectively. During fiscal 2001 and
2000, the net deferred tax asset decreased primarily due to the utilization of
net operating loss carryforwards.

On October 28, 2001, the Company had, for tax purposes, net operating loss
carryforwards of approximately $4,167,000, unused investment and research and
development tax credits of approximately $252,000 and $488,000 of alternative
minimum tax credits available to offset future taxable income and Federal income
taxes. The net operating loss carry forward will expire at the end of fiscal
2018, the investment tax credit and research and development tax credit
carryforwards will expire from 2001 to 2005, and the alternative minimum tax
credit has no expiration.

All carryforwards are subject to review and possible adjustment by the
Internal Revenue Service. In compliance with the Tax Reform Act of 1986,
investment tax credits carried forward were reduced by 35%. The Company's
ability to utilize the net operating loss carryforwards to offset alternative
minimum taxable income is limited to 90% for tax years after fiscal 1987.

Additionally, Section 382 of the Internal Revenue Code limits the amounts
of net operating loss carryforwards usable by a corporation following a more
than 50 percentage point change in ownership of the corporation during a
three-year period. It is possible that subsequent transactions involving the
Company's

F-18

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

capital stock could result in such a limitation. As of October 28, 2001,
management does not believe that a 50 percentage point change in ownership has
occurred during a three year period.

Cash paid for income taxes was approximately:

13. COMMITMENTS AND CONTINGENCIES

The Company has operating lease commitments for certain office equipment
and manufacturing, administrative and support facilities. Minimum lease payments
under noncancellable leases on October 28, 2001 are as follows:

Rent expense (exclusive of operating expenses and net of sublease rents)
for operating leases for continuing operations was approximately $1,163,376,
$1,157,000 and $1,140,000 in fiscal 2001, 2000 and 1999, respectively. Total
rent expense (exclusive of operating expenses and net of sublease rents) for all
operating leases was approximately $1,209,626, $1,617,000 and $1,692,000 in
fiscal 2001, 2000 and 1999, respectively.

The Company is engaged in various lawsuits, the outcome of which cannot
presently be determined. In the opinion of management, losses, if any, resulting
from these lawsuits will not have a material effect on the Company's
consolidated financial statements.

14. RETIREMENT PLANS

The Company sponsors a defined contribution plan which is available to all
domestic employees. This plan provides for employer contributions based on
employee participation. The total expense under the plan was:

F-19

ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. BUSINESS SEGMENT INFORMATION

Net sales to one customer totaled approximately 10.1% of consolidated
revenues for the fiscal year ended October 28, 2001.

F-20

SUMMARY OF QUARTERLY RESULTS OF OPERATIONS

(1) Restated.

F-21

SCHEDULE II
ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

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

(1) Uncollectible accounts written off, net of recoveries.

(2) Obsolete inventory written off at cost, net of value recovered.

(3) Primarily severance and equipment write offs.

S-1

ALPHA TECHNOLOGIES GROUP, INC.

INDEX TO EXHIBITS

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

* Management Contract or Compensatory Plan

(1) Incorporated herein by reference to the Company's Form 8-K filed on January
23, 2001.

(2) Incorporated herein by reference to the Company's Form 8-K filed on August
14, 2000.

(3) Incorporated herein by reference to the Company's Form 8-K filed on
December 4, 2000.

(4) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-1 (Reg. No. 33-2979), which became effective March 7, 1986.

(5) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, filed September 28, 1987 (Reg. No. 33-17359).

(6) Incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended October 29, 2000 filed on January 31, 2001.

(7) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, filed March 17, 1988 (Reg. No. 33-20706).

(8) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, filed June 30, 1989 (Reg. No. 33-29636).

(9) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, filed June 23, 1992 (Reg. No. 33-48663).

(10) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, filed January 29, 1987 (Reg. No. 33-11627).

(11) Incorporated herein by reference to the Company's Form 10-Q for the
quarterly period ended April 26, 1998 filed on June 10, 1998.

(12) Incorporated herein by reference to the Company's Proxy Statement filed
February 23, 1998.

(13) Incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended October 27, 1996 filed on January 27, 1997.

(14) Incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended October 31, 1999 filed on January 31, 2000.

(15) Incorporated herein by reference to the Company's Form 10-Q for the
quarterly period ended April 30, 2000 filed on June 6, 2000.

(16) Incorporated herein by reference to the Registrant's Definitive Proxy
Statement for its 2001 Annual Meeting of Stockholders, dated April 10,
2001.