<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

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

                           FORM 10-Q/A AMENDMENT NO. 1

(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 January 2, 1999

                                       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
     (Address of Principal Executive Offices)                (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 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 February 16, 1999, the number of shares outstanding of the
Registrant's Common Stock was 2,300,000.

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

<PAGE>



                              ELGAR HOLDINGS, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                  PAGE
PART I             FINANCIAL INFORMATION                                                         NUMBER
------             ---------------------                                                         -------
<S>                <C>                                                                           <C>
Item 1             Consolidated Financial Statements

                       Consolidated Statements of Operations for the three
                         months and nine months ended December 27, 1997
                         (unaudited) and the three months and nine months ended
                         January 2, 1999 (unaudited).......................................         3

                       Consolidated Balance Sheets as of March 28, 1998 and January 2,
                         1999 (unaudited)..................................................         4

                       Consolidated Statements of Cash Flows for the nine months ended
                         December 27, 1997 (unaudited) and  nine months ended January 2,
                         1999 (unaudited)..................................................         5

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

Item 2             Management's Discussion and Analysis of Financial Condition and Results
                     of Operations.........................................................        12

PART II            OTHER INFORMATION
-------            -----------------

Item 6             Exhibits and Reports on Form 8-K........................................        16

</TABLE>

                                     2

<PAGE>


                      ELGAR HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                    FOR THE THREE MONTHS ENDED          FOR THE NINE MONTHS ENDED
                                                  -----------------------------      ------------------------------
                                                  DEC. 27, 1997     JAN. 2, 1999     DEC. 27, 1997     JAN. 2, 1999
                                                  -------------     ------------     -------------     ------------
<S>                                               <C>               <C>              <C>               <C>
Net sales.....................................       $17,533           $14,188          $46,615           $47,136
Cost of sales.................................         8,758             7,926           24,325            26,000
                                                     -------           -------          -------            ------
    Gross profit..............................         8,775             6,262           22,290            21,136
Selling, general and administrative expense...         2,482             2,372            6,781             8,114
Research and development and engineering
   expenses...................................         1,661             1,454            4,448             4,912
Amortization expense..........................           328               612              985             1,663
                                                     -------           -------          -------            ------
    Operating income..........................         4,304             1,824           10,076             6,447
Interest expense, net.........................           336             2,631            1,096             8,008
                                                     -------           -------          -------            ------
Income (loss) before income tax provision
   (benefit)..................................         3,968              (807)           8,980            (1,561)
Income tax provision (benefit)................         2,139              (309)           4,410              (191)
                                                     -------           -------          -------            ------
    Net income (loss).........................        $1,829           $ (498)         $  4,570           $(1,370)
                                                     -------           -------          -------            ------
                                                     -------           -------          -------            ------
</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
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                         MARCH 28,          JAN. 2, 1999
                                                                                          1998(1)            (UNAUDITED)
                                                                                         ---------          ------------
<S>                                                                                      <C>                <C>
                                     ASSETS

CURRENT ASSETS:

  Cash and cash equivalents...................................................           $  2,666             $  6,507
  Accounts receivable, net of allowance for doubtful accounts of
     $197 and $171, respectively..............................................              6,453                5,168
  Inventories.................................................................              8,305                9,095
  Deferred tax assets.........................................................              1,098                  796
  Prepaids and other..........................................................                373                1,356
                                                                                         --------             --------
      Total current assets....................................................             18,895               22,922
PROPERTY, PLANT AND EQUIPMENT, at cost, net of accumulated depreciation and
   amortization of $1,643 and $2,337, respectively............................              2,952                2,599
INTANGIBLE ASSETS, net of accumulated amortization of
   $2,711 and $4,910, respectively............................................             22,412               37,580
DEFERRED TAX ASSETS, net of current portion...................................                653                  653
                                                                                         --------             --------
                                                                                         $ 44,912             $ 63,754
                                                                                         --------             --------
                                                                                         --------             --------
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

  Accounts payable............................................................             $3,068               $3,164
  Accrued liabilities.........................................................              4,801                6,750
  Current portion of long-term debt...........................................               --                  2,250
  Current portion of capital lease obligations................................                 17                   15
                                                                                         --------             --------
      Total current liabilities...............................................              7,886               12,179
CAPITAL LEASE OBLIGATIONS, net of current portion.............................                 19                    8
LONG-TERM DEBT, net of current portion........................................             90,000              101,750
                                                                                         --------             --------
         Total liabilities....................................................             97,905              113,937
                                                                                         --------             --------
SERIES A 10% CUMULATIVE REDEEMABLE PREFERRED STOCK,
   no par value, 20,000 shares authorized; 10,000 shares issued and outstanding
   on March 28, 1998 and January 2, 1999, respectively........................              8,478                9,406
                                                                                         --------             --------

STOCKHOLDERS' EQUITY (DEFICIT):

  Series B 6% Cumulative Convertible Preferred Stock, no par value, 0 and 5,000
     shares authorized, issued and outstanding on March 28, 1998
     and January 2, 1999, respectively........................................               --                  5,000
  Common Stock, $.01 par value, 5,000,000 shares authorized; 2,300,000 shares
     issued and outstanding...................................................                 23                   23
  Additional paid-in capital..................................................            (67,926)             (68,558)
  Retained earnings...........................................................              6,432                3,946
                                                                                         --------             --------
                                                                                          (61,471)             (59,589)
                                                                                         --------             --------
                                                                                         $ 44,912             $ 63,754
                                                                                         --------             --------
                                                                                         --------             --------
</TABLE>

-------------
(1) The balance sheet at March 28, 1998 has been derived from the audited
    financial statements at that date, but does not include all of the
    information and footnotes required by generally accepted accounting
    principles for complete financial statements.


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)
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                 FOR THE NINE MONTHS ENDED
                                                                                ----------------------------
                                                                                DEC. 27, 1997  JAN. 2, 1999
                                                                                -------------  -------------
<S>                                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss).....................................................          $  4,570       $ (1,370)
  Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:
      Amortization of intangibles.......................................               985          1,663
      Amortization of deferred loan costs...............................               132            536
      Depreciation and amortization on property, plant and equipment....               615            748
      (Increases) decreases in assets:
         Accounts receivable............................................            (1,205)         2,542
         Inventories....................................................            (2,420)           375
         Prepaids and other.............................................              (158)          (914)
         Deferred tax assets............................................               226            403
      Increases (decreases) in liabilities:
         Accounts payable...............................................               355           (510)
         Accrued liabilities............................................               553         (1,540)
         Income taxes payable...........................................               943            --
         Interest payable...............................................               (61)         2,390
                                                                                  --------       --------
  Net cash provided by operating activities.............................             4,535          4,323
                                                                                  --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchases of property, plant and equipment............................              (933)          (294)
  Acquisition of Power Ten, net of cash acquired........................               --         (17,266)
  Non-compete agreements................................................               --            (240)
                                                                                  --------       --------
  Net cash (used in) investing activities...............................              (933)       (17,800)
                                                                                  --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from preferred stock issuance................................               --           5,000
  Proceeds from bank borrowings.........................................               --          15,000
  Deferred financing costs..............................................               --          (1,037)
  Repayments on debt....................................................            (4,007)        (1,000)
  Payments under capital leases.........................................               (28)           (13)
  Recapitalization consideration........................................               --            (632)
                                                                                  --------       --------
  Net cash provided by (used in) financing activities                               (4,035)         17,318
                                                                                  --------       --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................              (433)         3,841
CASH AND CASH EQUIVALENTS, beginning of period..........................               691          2,666
                                                                                  --------       --------
CASH AND CASH EQUIVALENTS, end of period................................          $    258        $ 6,507
                                                                                  --------       --------
                                                                                  --------       --------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  Cash paid for interest................................................          $    851       $  5,147
  Cash paid for income taxes............................................             3,241            427

NON-CASH INVESTING AND FINANCING ACTIVITIES:

  Preferred stock dividend-in-kind......................................          $    --        $    799
  Preferred stock dividend..............................................               --             189
  Accretion of discount on preferred stock..............................               --             128
</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


1. COMPANY OPERATIONS

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

         On February 3, 1998, the Company consummated a recapitalization (the
"Recapitalization") in which all shares of the Company's common stock, other
than those retained by certain members of management and certain other
shareholders (the "Continuing Shareholders"), were converted into the right to
receive cash based upon a formula. The Continuing Shareholders retained
approximately 15% of the common equity of the Company while new investors
acquired the balance of the equity interests in the Company.

         On May 29, 1998, Elgar acquired all of the issued and outstanding
shares of common stock of Power Ten, which specializes in developing and
manufacturing high-quality, high-power DC power supplies. In connection with the
acquisition, which was accounted for as a purchase, Elgar entered into
non-compete agreements with the two former stockholders of Power Ten, one of
whom is currently a member of Power Ten's management team. The acquisition was
financed by the issuance of 5,000 shares of Series B Convertible Preferred Stock
and borrowings under the Company's credit facility (the "Credit Facility") with
Bankers Trust Company, as agent ("Bankers Trust").

         Unaudited condensed pro forma net sales and net loss for the nine month
periods ended December 27, 1997 and January 2, 1999, assuming the
Recapitalization and the Power Ten acquisition occurred on March 30, 1997 and
March 29, 1998, respectively, and also assuming a 40% statutory tax rate, are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                NINE MONTHS ENDED
                                         ---------------------------------
                                         DEC. 27, 1997        JAN. 2, 1999
                                         -------------        ------------
<S>                                      <C>                  <C>
Net sales...........................         $54,027              $49,000
Net income (loss)...................           $ 561              $(1,382)
</TABLE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   PRINCIPLES OF CONSOLIDATION/BASIS OF PRESENTATION

         The accompanying consolidated financial statements as of and for the
three months and nine months ended January 2, 1999 include the accounts of the
Company and its wholly owned subsidiary, Elgar, and the accounts of Elgar's
wholly owned subsidiary, Power Ten, from the date of Power Ten's acquisition on
May 29, 1998. All significant intercompany accounts and transactions have been
eliminated. The accompanying financial statements for the three months and nine
months ended December 27, 1997 include only the accounts of Elgar. These
financial statements have been prepared in accordance with generally accepted
accounting principles and with the instructions to Form 10-Q. These financial
statements have not been examined by independent public accountants, but 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

                                     6

<PAGE>

                              ELGAR HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The Company operates and reports financial results on a fiscal year of
52 or 53 weeks ending the Saturday closest to March 31. Interim periods include
13 or 14 weeks ending the last Saturday closest to the end of the quarter.
Results from operations for the three months and nine months ended January 2,
1999 are not necessarily indicative of the results to be expected for the fiscal
year ending April 3, 1999.

   CASH EQUIVALENTS

         Cash equivalents at March 28, 1998 and January 2, 1999 consist of cash
held in a money market account.

   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>
                                            MARCH 28, 1998         JAN. 2, 1999
                                            --------------         ------------
<S>                                         <C>                    <C>
Raw materials...........................        $3,745               $4,151
Work-in-process.........................         3,677                3,254
Finished goods..........................           883                1,690
                                                ------               ------
     Total..............................        $8,305               $9,095
                                                ------               ------
                                                ------               ------
</TABLE>

   PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are recorded at cost. Depreciation of
property, plant and equipment is provided using the straight-line method over
the estimated useful lives of the related assets.

   INTANGIBLE ASSETS

         Intangible assets represent (i) the excess of purchase price over net
book value of assets acquired in connection with acquisitions, (ii) deferred
financing costs incurred in connection with the Recapitalization and the Power
Ten acquisition and (iii) agreements not to compete relating to the Power Ten
acquisition. The components of intangible assets are being amortized on a
straight-line basis over their estimated useful lives, ranging from 5 to 15
years.

         The Company periodically re-evaluates the original assumptions and
rationale utilized in the establishment of the carrying value and estimated
useful lives of these assets. The criteria used for these evaluations include
management's estimate of the assets' continuing ability to generate income from
operations and positive cash flows in future periods as well as the strategic
significance of the intangible assets to the Company's business activity.

   INCOME TAXES

         The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires the use of the liability method in providing for income taxes.
Current income tax expense is the amount of income taxes expected to be payable
in the current year.

   REVENUE RECOGNITION

                                      7

<PAGE>
                              ELGAR HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The Company recognizes revenue when goods are shipped to the customer,
net of sales returns.

   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.

   CONCENTRATION OF CREDIT RISK

         In the quarter ended January 2, 1999, sales to two customers accounted
for approximately 20% and 19% of the Company's net sales. In the quarter ended
December 27, 1997, sales to two customers accounted for approximately 38% and
19% of the Company's net sales. In the nine months ended January 2, 1999, sales
to two customers accounted for approximately 20% and 12% of the Company's net
sales. In the nine months ended December 27, 1997, sales to two customers
accounted for approximately 30% and 17% of the Company's net sales. No other
customers individually represented more than 10% of net sales in the third
quarter of fiscal 1999 or fiscal 1998. The Company performs ongoing credit
evaluation of its customers' financial condition. The Company maintains reserves
for potential credit losses.

   RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." SFAS No. 130
establishes standards for reporting of comprehensive income and its components
in a full set of general-purpose financial statements. SFAS No. 131 requires
reporting certain information about operating segments in annual and
interim-period financial statements. The Company adopted SFAS No. 130 on March
29, 1998. The Company had no elements of comprehensive income during the three
months or nine months ended January 2, 1999. The Company plans to adopt SFAS No.
131 during its fiscal year ending April 3, 1999.

         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. SFAS No. 133 is effective for fiscal
years beginning after June 15, 1999; however, a company may implement the
provisions of SFAS No. 133 as of the beginning of any fiscal quarter after June
16, 1998. The Company has not yet determined what impact, if any, the adoption
of SFAS No. 133 will have on the Company's consolidated financial statements,
results of operations or related disclosures thereto.

                                      8
<PAGE>

                              ELGAR HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. LONG-TERM DEBT, CREDIT FACILITY AND CAPITAL CALL AGREEMENT

   SENIOR NOTES

         In connection with the Recapitalization, all outstanding borrowings
under the then-existing revolving line of credit agreement and term loans
payable to a bank aggregating approximately $10.9 million were repaid and,
concurrently, the Company issued $90 million of 9.875% Senior Notes due February
1, 2008 and entered into the Credit Facility. Interest on the Senior Notes is
payable semi-annually on each February 1 and August 1, with the first such
payment having been made on August 1, 1998.

   CREDIT FACILITY

         In connection with the Recapitalization, Elgar, as borrower, and the
Company, as guarantor, entered into a credit agreement (the "Credit Agreement")
with Bankers Trust, as agent, which provided for a $15 million revolving credit
facility (the "Revolving Facility") that matures on February 3, 2003. On May 29,
1998, in connection with the acquisition of Power Ten, the Credit Agreement was
amended and restated to, among other things, increase the available borrowings
to $30 million by adding a $15 million term facility (the "Term Facility") to
the existing $15 million Revolving Facility. Elgar used all of the proceeds from
the Term Facility to finance a portion of the purchase price for Power Ten.
Loans under the Credit Agreement are secured by substantially all of the
Company's assets (including a pledge of the capital stock of Elgar and Power
Ten) and guaranteed by the Company and Power Ten. No amounts were outstanding
under the Revolving Facility as of March 28, 1998 and January 2, 1999,
respectively.

         The Credit Agreement contains restrictions on the incurrence of debt,
the sale of assets, mergers, acquisitions and other business combinations,
voluntary prepayment of other debt of the Company, transactions with affiliates,
repurchase or redemption of stock from stockholders, and various financial
covenants, including covenants requiring the maintenance of fixed charge
coverage, and maximum debt to earnings, before interest, taxes, depreciation and
amortization (EBITDA) ratios and minimum consolidated EBITDA. As of January 2,
1999, Elgar was not in compliance with certain financial covenants contained in
the Credit Agreement.

         On February 12, 1999, the Company and Elgar entered into a First
Amendment and Waiver to the Credit Agreement pursuant to which, among other
things, available borrowings under the Revolving Facility were reduced from $15
million to $5 million, certain financial covenants were amended, and the Company
and Elgar received a waiver for past noncompliance with the covenants referred
to above. The Company believes that it will be in compliance with the covenants
contained in the Credit Agreement, as amended, for its fiscal quarter ended
April 3, 1999.

   CAPITAL CALL AGREEMENT

         In connection with amending the Credit Agreement on May 29, 1998,
the Company, Elgar and the Company's majority shareholder entered into a
capital call agreement with Bankers Trust (the "Capital Call Agreement"). The
Capital Call Agreement requires the majority shareholder to make a capital
contribution to the Company upon the occurrence of certain events, including
the failure to comply with certain financial covenants contained in the
Credit Agreement. Upon receipt of any such contribution, the Company would
transfer the funds to Elgar for purposes of repaying outstanding indebtedness
under the Credit Agreement. On February 12, 1999, in connection with entering
into the First Amendment and Waiver to the Credit Agreement, the majority
shareholder agreed to make a capital contribution to the Company by no later
than March 31, 1999 in the amount of $4.0 million. In addition, on February
12, 1999, the majority shareholder

                                      9

<PAGE>
                              ELGAR HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

entered into an Amended and Restated Capital Call Agreement with Bankers
Trust pursuant to which, among other things, the majority shareholder agreed
to contribute up to an additional $5.0 million of capital to the Company upon
the occurrence of certain events, including the failure to comply with
certain financial covenants contained in the Credit Agreement, as amended.

4. PREFERRED STOCK

   REDEEMABLE PREFERRED STOCK

         In connection with the Recapitalization, the Company issued 10,000
shares of redeemable preferred stock, designated as Series A 10% Cumulative
Redeemable Preferred Stock, for cash proceeds of $10 million. In connection with
such issuance, the Company also issued to the purchasers warrants to purchase
353,744 shares of the Company's common stock. A value of $1.7 million has been
attributed to the warrants. The $1.7 million warrant value is included in
additional paid-in-capital as of March 28, 1998.

         Dividends are payable to the holders of the redeemable preferred stock
at the annual rate per share of 10% times the sum of $1,000 and accrued but
unpaid dividends. Dividends shall be payable at the rate per share of 0.10
shares of redeemable preferred stock through January 31, 2001, and in cash on
and after April 30, 2001. Dividends are payable quarterly on January 31, April
30, July 31, and October 31 of each year, commencing April 30, 1998. Dividends
shall be fully cumulative and shall accrue on a quarterly basis.

   CONVERTIBLE PREFERRED STOCK

         In connection with the acquisition of Power Ten, the Company issued
5,000 shares Convertible Preferred Stock, designated as Series B Convertible
Preferred Stock, for cash proceeds of $5 million.

         Dividends are payable to the holders of the convertible preferred stock
at the annual rate per share of 6% times the sum of $1,000 and accrued but
unpaid dividends. Dividends are payable semi-annually on April 30 and October 31
of each year, commencing October 31, 1998, when and if declared by the Board of
Directors out of funds legally available therefor.

5. COMMON STOCK

         On February 3, 1998, immediately prior to the Recapitalization, the
Company effected (i) an increase in the number of shares authorized from 1,000
to 9,340,000 shares and (ii) a 9,340 to 1 stock split of the common stock
distributed in the form of a stock dividend. As a result of this action,
9,339,000 shares were issued to shareholders of record on February 3, 1998. All
references throughout the accompanying consolidated financial statements to the
number of shares of the Company's common stock and earnings per share have been
restated to reflect the effect of the stock split. In connection with the
Recapitalization, the number of authorized shares of common stock was then
reduced to 5,000,000 shares.

         At March 28, 1998 and January 2, 1999, a total of 353,744 shares of
common stock were reserved for issuance for the exercise of warrants at the
initial exercise price of $5.00 per share to the holders of the preferred stock.
The exercise price and number of warrant shares are both subject to adjustment
in certain events.

6. INTEREST RATE SWAP

         On June 22, 1998, the Company entered into an interest rate swap
agreement with a bank with a

                                      10

<PAGE>
                              ELGAR HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

notional amount of $7.5 million. Under the swap agreement, the Company is
required to pay a fixed rate of 5.83% on each March 24, June 24, September 24
and December 24, commencing on September 24, 1998. The swap agreement
terminates on June 25, 2001. The Company will receive a floating rate based
on the three-month London Interbank Offering Rate (LIBOR) on the same dates
as described above. In connection with the swap agreement, the Company has
included $6,777 and $10,077 in interest expense in its consolidated statement
of operations for the three and nine months ended January 2, 1999,
respectively.

7. STOCK OPTION PLAN

         On July 14, 1998, the Board of Directors adopted the Elgar Holdings,
Inc. 1998 Stock Option Plan (the "Option Plan"). The maximum number of shares of
common stock that may be issued pursuant to awards granted under the Option Plan
is 265,374. As of October 3, 1998 there were options outstanding to purchase
227,000 shares of common stock. During the quarter ended January 2, 1999, the
Company granted options to purchase 9,750 shares of common stock. All options
have been granted at fair market value on the date of grant. Options vest
ratably over four years and generally expire on the tenth anniversary of the
date of grant.


                                      11
<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 and nine
months ended December 27, 1997 and January 2, 1999, with the results of Power
Ten included from its date of acquisition on May 29, 1998:

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED                  NINE MONTHS ENDED
                                            ------------------------------     ------------------------------
                                            DEC. 27, 1997     JAN. 2, 1999     DEC. 27, 1997     JAN. 2, 1999
                                            -------------     ------------     -------------     ------------
<S>                                         <C>               <C>              <C>               <C>
Net sales...............................       100.0%            100.0%            100.0%           100.0%
Cost of sales...........................        50.0              55.9              52.2             55.2
                                               -----             -----             -----            -----
    Gross profit........................        50.0              44.1              47.8             44.8
Selling, general and administrative
   expense..............................        14.1              16.7              14.6             17.2
Research and development and
   engineering expenses.................         9.5              10.2               9.5             10.4
Amortization expense....................         1.9               4.3               2.1              3.5
                                               -----             -----             -----            -----
    Operating income....................        24.5%             12.9%             21.6%            13.7%
                                               -----             -----             -----            -----
</TABLE>

COMPARISON OF THE THREE MONTHS ENDED JANUARY 2, 1999 TO THE THREE MONTHS
ENDED DECEMBER 27, 1997

         NET SALES. Net sales for the quarter ended January 2, 1999 were
$14.2 million, a decrease of $3.3 million, or 18.9%, from net sales of $17.5
million for the quarter ended December 27, 1997. This decrease was due to a
decrease in sales of programmable DC products (primarily attributable to
decreased sales to Racal Instruments, Inc. ("Racal"), as discussed in the
following paragraph), partially offset by an increase in sales of Space
Systems products, AC products and the inclusion of the results of Power Ten.

         In the first quarter of fiscal year 1999, the Company was notified
by Racal Instruments, Inc., a systems integrator for test and measurement
equipment which provides certain automatic test equipment ("ATE") systems
utilizing Elgar's programmable power supplies to manufacturers, including a
leading semiconductor manufacturer, that the leading semiconductor
manufacturer referred to above has decided to cease orders for Elgar's
current AT-8000 DC power supplies until anticipated "next generation"
technology

                                      12

<PAGE>

is available. Elgar's prototype ATE system for this next-generation
technology was delivered to the end-user in August 1998 with production
scheduled to commence in the latter part of calendar 1999. Racal accounted
for approximately $17.7 million, or 28.3%, of the Company's total net sales
in fiscal l998, the substantial majority of which was attributable to the
semiconductor manufacturer. Revenues from Racal were less than $0.1 million
for the quarter ended January 2, 1999 and $3.1 million for the nine months
ended January 2, 1999. As result of the conversion to the next-generation
product described above, the Company does not expect to book revenues from
Racal for sales to the semiconductor manufacturer during the remainder of
fiscal 1999.

         A major customer of Space Systems products recently requested that
the Company upgrade one of its satellite testing systems. Since this upgrade
will require additional engineering efforts on the part of the Company and
testing on the part of the customer, deliveries of additional systems to the
customer are expected to be delayed. These delays are expected to adversely
affect the Company's anticipated sales in fiscal 2000.

         GROSS PROFIT. Gross profit for the quarter ended January 2, 1999 was
$6.3 million, a decrease of $2.5 million, or 28.4%, from gross profit of $8.8
million for the quarter ended December 27, 1997. As a percentage of net
sales, gross profit decreased from 50.0% for the quarter ended December 27,
1997 to 44.1% for the quarter ended January 2, 1999. The decrease in gross
profit was primarily attributable to unfavorable product mix and lower sales
volume.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $2.4 million for the quarter ended
January 2, 1999, a decrease of $0.1 million, or 4.0%, from SG&A expenses of
$2.5 million for the quarter ended December 27, 1997. SG&A expenses increased
as a percentage of net sales from 14.1% for the quarter ended December 27,
1997 to 16.7% for the quarter ended January 2, 1999. The decrease in dollars
in SG&A was primarily due to a reduction in advertising expense, lower
commissions due to lower sales volume and lower levels of bonuses expected as
compared to the prior year.

         RESEARCH AND DEVELOPMENT AND ENGINEERING EXPENSES. Research and
development and engineering expenses were $1.5 million for the quarter ended
January 2, 1999, a decrease of $0.2 million, or 11.8%, from research and
development and engineering expenses of $1.7 million for the quarter ended
December 27, 1997. As a percentage of net sales, research and development and
engineering expense increased from 9.5% for the quarter ended December 27,
1997 to 10.2% for the quarter ended January 2, 1999. The decrease in dollars
was due to lower labor, consulting and engineering material expense in the
quarter ended January 2, 1999 versus the quarter ended December 27, 1997.

         AMORTIZATION EXPENSE. Amortization expense increased to $0.6 million
for the quarter ended January 2, 1999 from $0.3 million for the quarter ended
December 27, 1997. This increase was due to three months of amortization
expense incurred in connection with the Company's acquisition of Power Ten.

         OPERATING INCOME. Operating income was $1.8 million for the quarter
ended January 2, 1999, a decrease of $2.5 million, or 58.1%, from operating
income of $4.3 million for the quarter ended December 27, 1997. Operating
income decreased as a percentage of net sales from 24.5% for the quarter
ended December 27, 1997 to 12.9% for the quarter ended January 2, 1999, due
to the factors discussed above.

         INCOME TAXES. Income taxes for the three months ended January 2,
1999 contained a tax benefit of $309,000, compared to a tax provision of $2.1
million for the three months ended December 27, 1997. The Company's effective
tax rate was 38.3% for the three months ended January 2, 1999 and 53.9% for
the

                                      13

<PAGE>

three months ended December 27, 1997. The effective tax rate differs from
the statutory tax rate of 40.0%, primarily due to the non-deductibility of
goodwill for tax purposes and realization of R & D tax credits utilized by
the Company.

COMPARISON OF THE NINE MONTHS ENDED JANUARY 2, 1999 TO THE NINE MONTHS ENDED
DECEMBER 27, 1997

         NET SALES. Net sales for the nine months ended January 2, 1999 were
$47.1 million, an increase of $0.5 million, or 1.1%, from net sales of $46.6
million for the nine months ended December 27, 1997. During the nine months
ended January 2, 1999, increases in (i) sales to the U.S. Navy's CASS
Program, (ii) sales of Sorensen-brand products and (iii) sales of GUPS
products and customer service revenues, along with the inclusion of the
results of Power Ten, were offset by a decrease in sales of programmable DC
products (primarily attributable to decreased sales to Racal).

         GROSS PROFIT. Gross profit for the nine months ended January 2, 1999
was $21.1 million, a decrease of $1.2 million, or 5.4%, from gross profit of
$22.3 million for the nine months ended December 27, 1997. As a percentage of
net sales, gross profit decreased from 47.8% for the nine months ended
December 27, 1997 to 44.8% for the nine months ended January 2, 1999. The
decrease in gross profit was primarily attributable to unfavorable product
mix.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were
$8.1 million for the nine months ended January 2, 1999, an increase of $1.3
million, or 19.1%, from SG&A expenses of $6.8 million for the nine months
ended December 27, 1997. SG&A expenses increased as a percentage of net sales
from 14.6% for the nine months ended December 27, 1997 to 17.2% for the nine
months ended January 2, 1999. The increase in dollars was primarily due to
the inclusion of $0.9 million of such expenses from Power Ten, $0.2 million
of nonrecurring expenditures incurred in connection with the acquisition of
Power Ten and merit increases.

         RESEARCH AND DEVELOPMENT AND ENGINEERING EXPENSES. Research and
development and engineering expenses were $4.9 million for the nine months
ended January 2, 1999, an increase of $0.5 million, or 11.4%, from research
and development and engineering expenses of $4.4 million for the nine months
ended December 27, 1997. The increase was primarily due to the inclusion of
$0.4 million of such expense from Power Ten and a $0.1 million increase in
labor costs. As a percentage of net sales, research and development and
engineering expense increased from 9.5% for the nine months ended December
27, 1997 to 10.4% for the nine months ended January 2, 1999.

         AMORTIZATION EXPENSE. Amortization expense increased to $1.7 million
for the nine months ended January 2, 1999 from $1.0 million for the nine
months ended December 27, 1997. This increase was due to seven months of
amortization expense incurred in connection with the Company's acquisition of
Power Ten.

         OPERATING INCOME. Operating income was $6.4 million for the nine
months ended January 2, 1999, a decrease of $3.7 million, or 36.6%, from
operating income of $10.1 million for the nine months ended December 27,
1997. Operating income decreased as a percentage of net sales from 21.6% for
the nine months ended December 27, 1997 to 13.7% for the nine months ended
January 2, 1999, due to the factors discussed above.

         INCOME TAXES. Income taxes for the nine months ended January 2, 1999
contained a tax benefit of $191,000, compared to a tax provision of $4.4
million for the nine months ended December 27, 1997. The Company's effective
tax rate was 12.2% for the nine months ended January 2, 1999 and 49.1% for
the nine

                                      14

<PAGE>

months ended December 27, 1997. The effective tax rate differs from the
statutory tax rate of 40.0%, primarily due to the non-deductibility of
goodwill for tax purposes realization of R & D tax credits utilized by the
Company.

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 and a line
of credit.

         Cash flow provided by operating activities for the nine months ended
January 2, 1999 was $4.3 million, a decrease of $0.2 million from cash flow
of $4.5 million provided by operating activities for the nine months ended
December 27, 1997. This decrease was attributable to a decrease in net income
of $5.9 million, a decrease of $2.1 million in accruals, a decrease of $0.9
million in accounts payable and a decrease of $0.9 million in income tax
accrual, offset by a $3.7 million decrease in accounts receivable, a $2.8
million decrease in inventory, a $2.5 million increase in interest payable on
the Senior Notes and a $0.6 million decrease in intangibles.

         SOURCES OF CAPITAL. The Company anticipates that its principal uses
of cash will be working capital requirements, debt service requirements and
capital expenditures. 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, interest payments, amortization of the Company's term credit
facility and capital expenditures. The Company's future operating performance
will be subject to future economic conditions and to financial, business and
other factors, many of which may be beyond the Company's control.

         CAPITAL REQUIREMENTS. The Company's capital expenditures were
$294,000 and $933,000 for the nine months ended January 2, 1999 and December
27, 1997, respectively.

YEAR 2000

         Many computer programs have been written using two digits rather
than four to define the applicable year. Computer programs with
time-sensitive software may recognize a date using "00" as the year 1900
rather the year 2000. This "year 2000" issue could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.

         With a view to the year 2000 issue, the Company has undertaken a
detailed review of all of the significant operating systems, software
applications and hardware used in its operations. The Company has also made
contact with its major suppliers in order to determine their state of
readiness. The Company's operating systems and business software updates have
been installed and tested, and personal computer hardware and software
upgrades/replacements are being evaluated for conversion by the end of fiscal
1999. Other items such as the phone switch, bank capabilities, outside
insurance carriers and the outside payroll system are being evaluated for
conversion before the end of fiscal 1999. Management expects that the cost to
become year 2000 compliant, including conversion of its business software and
upgrades of its personal computer hardware and software, will total
approximately $80,000 ($15,000 of which has been incurred to date).
Compliance status from key suppliers will be evaluated to determine whether
the Company will need to switch sources to ensure ongoing product/service
availability. This evaluation/conversion is expected to

                                      15

<PAGE>

be completed by September 1999. A contingency plan has not been developed as
the risk on remaining items is considered low. Should any issues arise which
cannot be adequately addressed and remedied, management will develop a
contingency plan at that point.

         Management believes that its most significant exposure on the year
2000 issue is from suppliers that experience problems. Along those lines,
management is both obtaining year 2000 compliance certificates from most
suppliers and meeting with key suppliers to assess compliance status. Should
any of the areas being addressed not provide adequate results, management
will evaluate alternate suppliers for service or equipment or convert to
alternate software as needed.

         Based on the steps taken to date, management does not expect that
the year 2000 issue will materially affect the Company's operations due to
problems encountered by its suppliers, customers or end-users for its
products, although no assurances can be given as to this.

PART II  OTHER INFORMATION

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

              (a) EXHIBITS.

               EXHIBIT NO.        DESCRIPTION

                   27             Financial Data Schedule

              (b) No current reports on Form 8-K were filed during the quarter
ended January 2, 1999.

                                      16

<PAGE>

                                   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:  June 21, 1999        By: /s/ Christopher W. Kelford
                                 -------------------------------------------
                                 Christopher W. Kelford
                                 Vice President--Finance, Chief Financial
                                   Officer, Treasurer and Assistant Secretary


                                      17