<PAGE>

================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-Q

(MARK ONE)
/X/      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
                   For the quarterly period ended July 1, 2000

                                       OR

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

            For the transition period from ___________ to ___________

                       COMMISSION FILE NUMBER 1-333-55797

                                   ----------

                              ELGAR HOLDINGS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                  DELAWARE                                51-0373329
      (State or other jurisdiction of                  (I.R.S. Employer
       incorporation or organization)                  Identification No.)

            9250 BROWN DEER ROAD
           SAN DIEGO, CALIFORNIA                          92121-2294
  (Address of Principal Executive Offices)                (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (858) 450-0085

                                   ----------

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

         As of August 11, 2000, the number of shares outstanding of the
Registrant's Common Stock was 4,600,000.

================================================================================

<PAGE>

                              ELGAR HOLDINGS, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                             PAGE
                                                                                                            NUMBER
                                                                                                            ------
<S>                                                                                                         <C>
PART I             FINANCIAL INFORMATION

Item 1             Consolidated Financial Statements

                       Consolidated Statements of Operations for the three and six months ended July
                         3, 1999 (unaudited) and July 1, 2000 (unaudited)...........................          3

                       Consolidated Balance Sheets as of January 1, 2000 and July 1, 2000
                         (unaudited)................................................................          4


                       Consolidated Statements of Cash Flows for the six months ended July 3, 1999
                         (unaudited) and July 1, 2000 (unaudited)...................................          5

                       Notes to Consolidated Financial Statements (unaudited).......................          6

Item 2             Management's Discussion and Analysis of Financial Condition and
                     Results of Operations..........................................................          10

Item 3             Quantitative and Qualitative Disclosures About Market Risks......................          12

PART II            OTHER INFORMATION

Item 6             Exhibits and Reports on Form 8-K.................................................          15

</TABLE>

                                       2
<PAGE>

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                      ELGAR HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           (UNAUDITED) (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                          FOR THE THREE MONTHS ENDED    FOR THE SIX MONTHS ENDED
                                                         ---------------------------   ---------------------------
                                                         JULY 3, 1999   JULY 1, 2000   JULY 3, 1999    JULY 1, 2000
                                                         ------------   ------------   ------------   ------------
<S>                                                      <C>            <C>            <C>            <C>
Net sales .............................................  $     13,237   $     15,937   $     28,230   $     30,167
Cost of sales .........................................         7,604          9,009         16,193         17,128
                                                         ------------   ------------   ------------   ------------
    Gross profit ......................................         5,633          6,928         12,037         13,039
Selling, general and administrative expense ...........         2,643          2,951          5,287          5,440
Research and development and engineering expense ......
                                                                1,523          1,727          3,020          3,414
Amortization expense ..................................           608            609          1,214          1,218
                                                         ------------   ------------   ------------   ------------
    Operating income ..................................           859          1,641          2,516          2,967
Interest expense, net .................................         2,598          2,630          5,287          5,249
                                                         ------------   ------------   ------------   ------------
Loss before income tax benefit ........................        (1,739)          (989)        (2,771)        (2,282)
Income tax benefit ....................................          (450)           (21)          (625)           (21)
                                                         ------------   ------------   ------------   ------------
    Net loss ..........................................  $     (1,289)  $       (968)  $     (2,146)  $     (2,261)
                                                         ============   ============   ============   ============

</TABLE>

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
                         OF THESE FINANCIAL STATEMENTS

                                       3


<PAGE>

                      ELGAR HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                      JANUARY 1, 2000  JULY 1, 2000
                                                                      ---------------  ------------
                                                                                        (UNAUDITED)
<S>                                                                  <C>               <C>
                            ASSETS
CURRENT ASSETS:
  Cash and cash equivalents ..........................................  $      4,479   $      1,397
  Accounts receivable, net of allowance for doubtful accounts
     of $152 and $153, respectively ..................................         7,253          7,981
  Inventories ........................................................         7,623          9,960
  Deferred income taxes ..............................................           796            796
  Prepaids and other .................................................           984          1,046
                                                                        ------------   ------------
      Total current assets ...........................................        21,135         21,180
                                                                        ------------   ------------
PROPERTY, PLANT AND EQUIPMENT, at cost, net of accumulated
   depreciation and amortization of $3,093 and $3,479, respectively ..         2,343          2,729
INTANGIBLE ASSETS, net of accumulated amortization of
   $8,076 and $9,659, respectively ...................................        34,414         32,831
DEFERRED INCOME TAXES, net of current portion ........................           653            653
                                                                        ------------   ------------
                                                                        $     58,545   $     57,393
                                                                        ============   ============
                     LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable ...................................................  $      1,748   $      2,861
  Accrued expenses ...................................................         7,665          7,951
  Current portion of long-term debt ..................................         1,250          3,000
                                                                        ------------   ------------
      Total current liabilities ......................................        10,663         13,812
LONG-TERM DEBT, net of current portion ...............................        98,750         97,000
                                                                        ------------   ------------
         Total liabilities ...........................................       109,413        110,812
                                                                        ------------   ------------
SERIES A 10% CUMULATIVE REDEEMABLE PREFERRED STOCK,
   no par value, 20,000 shares authorized; 10,000 shares issued
   and outstanding ...................................................        10,707         11,407
                                                                        ------------   ------------

STOCKHOLDERS' DEFICIT:
  Series B 6% Cumulative Convertible Preferred Stock, no par value,
     5,000 shares authorized, issued and outstanding .................         5,000          5,000
  Series C 6% Cumulative Convertible Preferred Stock, no par value,
     4,000 shares authorized, issued and outstanding .................         4,000          4,000
  Common Stock, $.01 par value, 15,000,000 shares authorized;
     4,600,000 shares issued and outstanding .........................            46             46
  Additional paid-in capital .........................................       (68,581)       (68,581)
  Accumulated deficit ................................................        (2,040)        (5,291)
                                                                        ------------   ------------
                                                                             (61,575)       (64,826)
                                                                        ------------   ------------
                                                                        $     58,545   $     57,393
                                                                        ============   ============

</TABLE>

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
                         OF THESE FINANCIAL STATEMENTS

                                       4
<PAGE>

                      ELGAR HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (UNAUDITED) (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                   FOR THE SIX MONTHS ENDED
                                                                                  ---------------------------
                                                                                  JULY 3, 1999   JULY 1, 2000
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss .....................................................................  $     (2,146)  $     (2,261)
  Adjustments to reconcile net loss to net cash used in operating activities:
      Amortization of intangibles ..............................................         1,582          1,583
      Depreciation and amortization on property, plant and equipment ...........           476            428
      Loss on sale of property, plant and equipment ............................            25              2
      (Increases) decreases in assets:
         Accounts receivable ...................................................          (915)          (728)
         Inventories ...........................................................           639         (2,337)
         Prepaids and other ....................................................           334            (62)
      Increases (decreases) in liabilities:
         Accounts payable ......................................................          (875)         1,113
         Accrued liabilities ...................................................           427             (4)
                                                                                  ------------   ------------
  Net cash used in operating activities ........................................          (453)        (2,266)
                                                                                  ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment ...................................          (348)          (816)
                                                                                  ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from preferred stock issuance .......................................         4,000           --
  Repayments on debt ...........................................................        (4,000)          --
  Payments under capital leases ................................................            (5)          --
                                                                                  ------------   ------------
  Net cash used in financing activities ........................................            (5)          --
                                                                                  ------------   ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ......................................          (806)        (3,082)
CASH AND CASH EQUIVALENTS, beginning of period .................................         6,507          4,479
                                                                                  ------------   ------------
CASH AND CASH EQUIVALENTS, end of period .......................................  $      5,701   $      1,397
                                                                                  ============   ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest .......................................................  $      4,948   $      4,888
  Cash received from income taxes ..............................................          (589)           (43)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Series A preferred stock dividend-in-kind ....................................  $        553   $        616
  Series B and Series C preferred stock dividend accrual .......................           220            290
  Accretion of discount on Series A preferred stock ............................            83             84

</TABLE>

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
                         OF THESE FINANCIAL STATEMENTS

                                       5

<PAGE>

                              ELGAR HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. COMPANY OPERATIONS

         Elgar Holdings, Inc., a Delaware corporation (the "Company"),
manufactures and sells programmable power and high power supply units through
its direct and indirect wholly owned subsidiaries, Elgar Electronics
Corporation ("Elgar") and Power Ten, to commercial and defense entities as
well as to governmental agencies. The Company's primary sales are within the
United States and Europe.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   PRINCIPLES OF CONSOLIDATION/BASIS OF PRESENTATION

         The accompanying consolidated financial statements as of and for the
three and six months ended July 1, 2000 include the accounts of the Company,
its wholly owned subsidiary, Elgar, and Elgar's wholly owned subsidiary,
Power Ten. All significant intercompany accounts and transactions have been
eliminated. These financial statements have been prepared in accordance with
generally accepted accounting principles and with the instructions to Form
10-Q. The Company suggests that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-K for the fiscal year ended January 1, 2000. These
financial statements include all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of financial condition, results of operations and cash flows for
such periods.

   INTERIM ACCOUNTING PERIODS

         The Company operates and reports financial results on a fiscal year
of 52 or 53 weeks ending the Saturday closest to December 31. Interim periods
include 13 or 14 weeks ending the last Saturday closest to the end of the
quarter. Results of operations for the three and six months ended July 1,
2000 are not necessarily indicative of the results to be expected for the
Company's fiscal year ending December 30, 2000.

   USE OF ESTIMATES

         The preparation of 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.

                                       6
<PAGE>

   INVENTORIES

         Inventories, which include materials, direct labor and manufacturing
overhead, are stated at the lower of cost (first-in, first-out) or market and
are comprised of the following (in thousands):

<TABLE>
<CAPTION>

                                       JANUARY 1, 2000   JULY 1, 2000
                                       ---------------  ---------------
<S>                                    <C>              <C>
            Raw materials ...........           $3,789           $4,622
            Work-in-process .........            2,482            3,749
            Finished goods ..........            1,352            1,589
                                       ---------------  ---------------
                 Total ..............           $7,623           $9,960
                                       ===============  ===============
</TABLE>

   RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the FASB issued SFAS No. 133 "Accounting for
Derivative Instruments and for Hedging Activities." SFAS No. 133 requires
that all derivatives be recorded on the balance sheet as an asset or
liability measured at its fair value with changes in fair value recognized
currently in earnings unless hedge accounting criteria are met. In June 1999,
the FASB issued SFAS No. 137 which deferred the implementation of SFAS No.
133 to all fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS No. 133, as further amended in June 2000 by SFAS No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities,"
establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded on the balance sheet as either an asset or
liability measured at its fair value. The Company has not yet determined what
impact, if any, the adoption of SFAS No. 133, as amended by SFAS No. 138,
will have on its consolidated financial statements, results of operations or
related disclosures thereto.

         In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" (SAB 101). This bulletin draws on existing accounting rules and
provides specific guidance on how those accounting rules should be applied to
revenue recognition. In June 2000, the SEC issued SAB 101B which deferred the
implementation of SAB 101 to the fourth quarter for fiscal years beginning
after December 15, 1999. The Company believes that its accounting policies
conform to the current provisions of SAB 101.

         In July 2000, the Emerging Issues Task Force ("EITF") reached a
consensus on EITF 00-10, "Accounting for Shipping and Handling Fees and
Costs." EITF 00-10 requires that all amounts billed to a customer in a sales
transaction related to shipping and handling, if any, represent revenue to
the vendor and should be classified as revenue. There has been no consensus
at this time on the treatment for the related costs. This EITF will be
effective in the fourth quarter of fiscal years beginning after December 15,
1999. The Company has not yet determined what impact, if any, the adoption of
EITF 00-10 will have on its consolidated financial statements, results of
operations or related disclosures thereto.

3. CONCENTRATIONS OF CREDIT RISK

         In the quarter ended July 1, 2000, sales to one customer accounted
for approximately 13% of the Company's net sales. In the quarter ended July
3, 1999, sales to one customer accounted for approximately 19% of the
Company's net sales. In the six months ended July 1, 2000, sales to one
customer accounted for approximately 11% of the Company's net sales. In the
six months ended July 3,

                                       7
<PAGE>

1999, sales to two customers accounted for approximately 19% and 16% of the
Company's net sales. No other customers individually represented more than
10% of net sales in the three months ended July 3, 1999 and July 1, 2000 or
the six months ended July 3, 1999 and July 1, 2000. The Company performs
ongoing credit evaluation of its customers' financial condition. The Company
maintains reserves for potential credit losses.

4. CREDIT FACILITY AND CAPITAL CALL AGREEMENT

         On March 10, 2000, in anticipation of Elgar's noncompliance with the
EBITDA and fixed charge covenants for the quarter ended April 1, 2000
contained in Elgar's credit facility, Elgar, the Company and the banks under
the credit facility entered into a third amendment to the credit agreement
governing the facility. In addition to receiving waivers for any covenant
violations both before and after giving effect to the third amendment, the
third amendment (i) resets the fixed charge coverage ratio for the quarter
ended April 1, 2000 and for following quarters of fiscal 2000 and (ii) resets
the minimum EBITDA levels for the quarter ended January 1, 2000 and for the
following quarters of fiscal 2000. Elgar was in compliance with the covenants
contained in the amended credit agreement as of July 1, 2000.

         The Company, Elgar and the Company's majority shareholder are
parties to a capital call agreement with Bankers Trust Company, as agent (the
"Capital Call Agreement"). Pursuant to the terms of this agreement, as
amended, the majority shareholder agreed to contribute up to $5.0 million of
capital to the Company upon the occurrence of certain events, including the
Company's failure to comply with certain financial covenants contained in the
Capital Call Agreement. The Company was in compliance with the these
covenants for the quarter ended July 1, 2000.

5. CONVERTIBLE PREFERRED STOCK

         In connection with the acquisition of Power Ten, the Company issued
5,000 shares of Series B 6% Cumulative Convertible Preferred Stock (the
"Series B Preferred Stock") for cash proceeds of $5.0 million. This offering,
which was made in compliance with the subscription rights contained in the
Company's Shareholders Agreement, was completed on May 29, 1998.

         In connection with entering into the first amendment to the credit
agreement, the Company's majority shareholder made a $4.0 million capital
contribution to the Company. In order to effectuate the contribution, the
Company issued 4,000 shares of Series C 6% Cumulative Convertible Preferred
Stock (the "Series C Preferred Stock") for cash proceeds of $4.0 million.
This offering, which was made in compliance with the subscription rights
contained in the Company's Shareholders Agreement, was completed on March 30,
1999.

         Dividends are payable to the holders of the Series B Preferred Stock
and Series C Preferred Stock at the annual rate per share of 6% times the sum
of (x) $1,000 and (y) accrued but unpaid dividends. For the series B
Preferred Stock, dividends are payable semi-annually on April 30 and October
31. For the Series C Preferred Stock, dividends are payable semi-annually on
March 31 and September 30. These dividends are payable when and if declared
by the Board of Directors out of funds legally available therefor. During the
three months ended July 1, 2000, the Company accrued $83,392 of dividends on
the Series B Preferred Stock and $63,729 of dividends on the Series C
Preferred Stock.

                                       8
<PAGE>


6. INTEREST RATE SWAP

         On June 22, 1998, the Company entered into an interest rate swap
agreement with a bank with a notional amount of $7.5 million. Under the swap
agreement, the Company is required to make a payment based on a fixed rate of
5.83% on each March 24, June 24, September 24 and December 24. This swap
agreement continues for the life of the related term loan agreement, with the
notional amounts of the swap decreasing as principal decreases on the related
loan agreement, terminating on June 25, 2001. The Company receives a floating
rate based on three-month LIBOR on the same dates as described above. In
connection with the swap agreement, the Company has included settlement income
of $8,000 and $15,000, respectively, in interest expense, net, in its
consolidated statements of operations for the three and six months ended July 1,
2000.

7.   SUBSEQUENT EVENT

         In July 2000, the Board of Directors and the shareholders approved (i)
a two-for-one stock split of the Company's common stock, (ii) an increase in the
number of authorized shares of common stock from 5,000,000 to 15,000,000 and
(iii) an amendment to the Company's stock option plan to increase the number of
shares of common stock reserved under the plan from 489,763 to 582,041, on a
pre-split basis (after the two-for-one stock split, the number of shares
reserved under the plan is 1,164,082). The stock split has been retroactively
presented in the accompanying balance sheets.

                                       9
<PAGE>


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
unaudited Consolidated Financial Statements and Notes thereto of the Company
included elsewhere herein.

         This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by, and information currently available to management. The
words "anticipates," "believes," "estimates," "expects," "plans," "intends" and
similar expressions, as they relate to the Company or its management, are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company, with respect to future events and are subject to
certain risks, uncertainties and assumptions, that could cause actual results to
differ materially from those expressed in any forward-looking statement,
including, without limitation: competition from other manufacturers in the
Company's industry, loss of key employees and/or general economic conditions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or expected. The
Company does not intend to update these forward-looking statements.

RESULTS OF OPERATIONS

         The following table sets forth certain income statement information for
the Company as a percentage of net sales for the three months ended July 3, 1999
and July 1, 2000:

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED               SIX MONTHS ENDED
                                                  ---------------------------------------------------------
                                                  JULY 3, 1999  JULY 1, 2000     JULY 3, 1999  JULY 1, 2000
                                                  ------------  ------------     ------------  ------------
<S>                                               <C>           <C>              <C>           <C>
Net sales ......................................     100.0%       100.0%             100.0%        100.0%
Cost of sales ..................................      57.4         56.5               57.4          56.8
                                                    ------       ------             ------        ------
    Gross profit ...............................      42.6         43.5               42.6          43.2
Selling, general and administrative
   expenses ....................................      20.0         18.5               18.7          18.0
Research and development and engineering
   expenses ....................................      11.5         10.9               10.7          11.3
Amortization expense ...........................       4.6          3.8                4.3           4.1
                                                    ------       ------             ------        ------
    Operating income ...........................       6.5%        10.3%               8.9%          9.8%
                                                    ======       ======             ======        ======

</TABLE>

         NET SALES. Net sales for the quarter ended July 1, 2000 were $15.9
million, an increase of $2.7 million, or 20.5%, from net sales of $13.2
million for the quarter ended July 3, 1999. This increase was mainly due to
an increase in sales of programmable DC power products, including sales of
Sorensen and Power Ten products and sales to Racal.

         GROSS PROFIT. Gross profit for the quarter ended July 1, 2000 was
$6.9 million, an increase of $1.3 million, or 23.2%, from gross profit of
$5.6 million for the quarter ended July 3, 1999. As a percentage of net
sales, gross profit increased from 42.6% for the quarter ended July 3, 1999
to 43.5% for the quarter ended July 1, 2000 as a result of increased sales
volume.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $3.0 million for the quarter ended July
1, 2000, an increase of $0.4 million, or 15.4%,

                                       10
<PAGE>

from SG&A expenses of $2.6 million for the quarter ended July 3, 1999. SG&A
expenses decreased slightly as a percentage of net sales from 20.0% for the
quarter ended July 3, 1999 to 18.5% for the quarter ended July 1, 2000. The
increase in SG&A dollars was primarily due to higher commissions, increased
compensation and higher expenses for customer demonstration equipment in the
quarter ended July 1, 2000 compared to the quarter ended July 3, 1999.

         RESEARCH AND DEVELOPMENT AND ENGINEERING EXPENSES. Research and
development and engineering expenses were $1.7 million for the quarter ended
July 1, 2000, an increase of $0.2 million, or 13.3%, from research and
development and engineering expenses of $1.5 million for the quarter ended
July 3, 1999. As a percentage of net sales, research and development and
engineering expense decreased from 11.5% for the quarter ended July 3, 1999
to 10.9% for the quarter ended July 1, 2000. The increase in dollars was due
to higher compensation and headcount for the quarter ended July 1, 2000 as
compared to the quarter ended July 3, 1999.

         AMORTIZATION EXPENSE. Amortization expense was $0.6 million for each
of the quarters ended July 1, 2000 and July 3, 1999.

         OPERATING INCOME. Operating income was $1.6 million for the quarter
ended July 1, 2000, an increase of $0.7 million, or 77.8%, from operating
income of $0.9 million for the quarter ended July 3, 1999. Operating income
increased as a percentage of net sales from 6.5% for the quarter ended July
3, 1999 to 10.3% for the quarter ended July 1, 2000, due to the factors
discussed above.

         INCOME TAXES. Income taxes for the three months ended July 3, 1999
contained a tax benefit of $0.5 million, compared to a tax benefit of
approximately $21,000 for the three months ended July 1, 2000. For the
quarter ended July 3, 1999, the Company had generated losses that resulted in
carryback benefits that were reflected in income. Losses generated in the
quarter ended July 1, 2000 do not have a carryback benefit and thus the
benefit has not been recognized in income as its realization is uncertain.

COMPARISON OF THE SIX MONTHS ENDED JULY 1, 2000 TO THE SIX MONTHS ENDED
JULY 3, 1999.

         NET SALES. Net sales for the six months ended July 1, 2000 were
$30.2 million, an increase of $2.0 million, or 7.1%, from net sales of $28.2
million for the six months ended July 3, 1999. This increase was mainly due
to an increase in sales of programmable DC power products, including sales of
Sorensen and Power Ten products and sales to Racal, partially offset by a
decrease in sales of Space Systems and CASS program products.

         GROSS PROFIT. Gross profit for the six months ended July 1, 2000 was
$13.0 million, an increase of $1.0 million, or 8.3%, from gross profit of
$12.0 million for the six months ended July 3, 1999. As a percentage of net
sales, gross profit increased from 42.6% for the six months ended July 3,
1999 to 43.2% for the six months ended July 1, 2000 as a result of increased
sales volume.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were
$5.4 million for the six months ended July 1, 2000, an increase of $0.1
million, or 1.9%, from SG&A expenses of $5.3 million for the six months ended
July 3, 1999. SG&A expenses decreased as a percentage of net sales from 18.7%
for the six months ended July 3, 1999 to 18.0% for the six months ended July
1, 2000. The increase in SG&A dollars was primarily due to higher
compensation and higher sales and marketing expenses at Power Ten in the six
months ended July 1, 2000 compared to the six months ended July 3, 1999.

                                       11

<PAGE>

         RESEARCH AND DEVELOPMENT AND ENGINEERING EXPENSES. Research and
development and engineering expenses were $3.4 million for the six months
ended July 1, 2000, an increase of $0.4 million, or 13.3%, from research and
development and engineering expenses of $3.0 million for the six months ended
July 3, 1999. As a percentage of net sales, research and development and
engineering expense increased from 10.7% for the six months ended July 3,
1999 to 11.3% for the six months ended July 1, 2000. The increase in both
dollars and as a percentage of net sales was due to higher compensation and
headcount for the six months ended July 1, 2000 as compared to the six months
ended July 3, 1999

         AMORTIZATION EXPENSE. Amortization expense was $1.2 million for each
of the six months ended July 1, 2000 and July 3, 1999.

         OPERATING INCOME. Operating income was $3.0 million for the six
months ended July 1, 2000, an increase of $0.5 million, or 20.0%, from
operating income of $2.5 million for the six months ended July 3, 1999.
Operating income increased as a percentage of net sales from 8.9% for the six
months ended July 3, 1999 to 9.8% for the six months ended July 1, 2000, due
to the factors discussed above.

         INCOME TAXES. Income taxes for the six months ended July 3, 1999
contained a tax benefit of $0.6 million, compared to approximately $21,000
for the six months ended July 1, 2000. For the six months ended July 3, 1999,
the Company had generated losses that resulted in carryback benefits that
were reflected in income. Losses generated in the six months ended July 1,
2000 do not have a carryback benefit and thus have not been recognized in
income as its realization is uncertain.

LIQUIDITY AND CAPITAL RESOURCES

         CASH FLOW. The Company's principal uses of cash are to finance
working capital, debt service and capital expenditures. Historically, the
Company has funded its activities principally from working capital, a
revolving line of credit and the sale of convertible preferred stock to its
stockholders.

         SOURCES OF CAPITAL. The Company anticipates that its principal uses
of cash will be working capital requirements, debt service requirements and
capital expenditures. The Company anticipates that its principal sources of
cash will be cash flow from operations together with amounts available under
the Company's line of credit with Bankers Trust Company, which provides for
borrowings of up to $5,000,000.

         Based upon current and anticipated levels of operations, management
believes that its cash flow from operations, together with amounts available
under the Company's credit facility, will be adequate to meet its anticipated
requirements for the foreseeable future for working capital, debt service
requirements and capital expenditures. Management believes, but can give no
assurance, that Elgar will be in compliance with the financial covenants
contained in its credit agreement during fiscal 2000.

         CAPITAL EXPENDITURES. The Company's capital expenditures were
$816,000 in the six months ended July 1, 2000 and $348,000 in the three
months ended July 3, 1999.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

         We have only limited involvement in derivative financial
instruments. We do not hold or issue derivative financial instruments for
trading purposes. As of July 1, 2000, $10,000,000 of outstanding borrowings
under our credit facility are at variable interest rates and we are thus
subject to market risk resulting from interest rate fluctuations. We enter
into interest rate swaps in part to alter interest rate


                                       12

<PAGE>

exposures. Interest rate swaps allow us to raise long-term borrowings at
floating rates and effectively swap them into fixed rates that are lower than
those available to us if fixed-rate borrowings were made directly. Under
interest rate swaps, we agree with another party to exchange, at specified
intervals, the difference between fixed-rate and floating-rate amounts
calculated by reference to an agreed notional principal amount. As of July 1,
2000, all but $2,500,000 of our long-term bank debt was covered by this swap
arrangement. Thus, our exposure with respect to upward movements in interest
rates is this portion of our bank debt.

         In addition, we are exposed to market risks related to fluctuations
in interest rates on our $90,000,000 of senior notes outstanding at July 1,
2000. For fixed rate debt such as the senior notes, changes in interest rates
generally affect the fair value of the debt instrument. We do not have an
obligation to repay the senior notes prior to maturity in February 2008 and,
as a result, interest-rate risk and changes in fair value should not have a
significant impact on us.

         The tables below provide information as of July 1, 2000 about our
derivative instruments and other financial instruments that are sensitive to
changes in interest rates.

<TABLE>
<CAPTION>

LONG TERM BANK DEBT (VARIABLE RATE)
-----------------------------------
<S>                                        <C>
Principal amount                           $10,000,000(1)
Variable interest rate                     9.5625%(2)
Maturity--loan                             February 3, 2003
Remaining principal payments:
        2000                                  $2,125,000
        2001                                  $3,875,000
        2002                                  $4,000,000

</TABLE>

-----------
(1) $7,500,000 of this amount is covered by the interest-rate swap arrangement
    described below.

(2) Renewals are based on the Eurodollar Rate plus 2.75%.

<TABLE>
<CAPTION>

REVOLVING BANK DEBT  (VARIABLE RATE)
-----------------------------------
<S>                                        <C>
Line of credit limit                       $5,000,000
Principal amount outstanding               0
Variable interest rate                     (1)

</TABLE>

-----------
(1) Renewals are based on the Eurodollar Rate plus 2.75%.

                                       13
<PAGE>

<TABLE>
<CAPTION>

INTEREST RATE SWAP ARRANGEMENT (FIXED RATE)
-------------------------------------------
<S>                                        <C>
Parties                                    The Company (fixed rate payor) and
                                           Bankers Trust Company (floating rate
                                           payor)
Notional amount                            $7,500,000
Fixed interest rate                        5.83%(1)
Floating interest rate                     6.7725%for the current period (2)
Swap interest(credit)                      ($15,309) (3)
Commencement date                          June 24, 1998
Maturity date                              June 25, 2001

</TABLE>

-----------
(1)   As the fixed interest rate payor, the Company is required to pay a fixed
      rate of 5.83% per annum on the $7,500,000 notional amount, payable
      quarterly on each March 24, June 24, September 24 and December 24.

(2)   As the floating rate payor, Bankers Trust Company is required to pay a
      floating rate of interest on the $7,500,000 notional amount, based on the
      three-month London Interbank Offering Rate (LIBOR), payable quarterly on
      each March 24, June 24, September 24 and December 24.

(3)   In connection with the swap agreement, the Company recorded $15,000 as a
      credit to interest expense for the six months ended July 1, 2000.

<TABLE>
<CAPTION>

SENIOR NOTES (FIXED RATE)
-------------------------
<S>                                        <C>
Principal amount outstanding               $90,000,000
Fixed interest rate                        9.875%
Maturity date                              February 1, 2008

</TABLE>

                                       14
<PAGE>

PART II  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)   EXHIBITS.

               EXHIBIT NO.        DESCRIPTION

                  3.1      Certificate of Amendment of Certificate of
                             Incorporation of the Registrant
                  10.1     1998 Stock Option Plan Amended and Restated as of
                             August 1, 2000
                  27       Financial Data Schedule


         (b)      No current reports on Form 8-K were filed during the quarter
                  ended July 1, 2000.

                                    SIGNATURE

         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.

                                   ELGAR HOLDINGS, INC.

Dated:  August 15, 2000            By: /s/ Christopher W. Kelford
                                      -----------------------------------------
                                      Christopher W. Kelford
                                      Vice President--Finance, Chief Financial
                                      Officer, Treasurer and Assistant Secretary


                                       15