<PAGE>
 
================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549-1004
                                        
                                 ____________

                                   FORM 10-Q
                                        

            X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
            -                                                     
                      THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE QUARTERLY PERIOD ENDED APRIL 3, 1999

                                      OR

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

                        Commission File Number 0-17540


                         MONTGOMERY WARD HOLDING CORP.
            (Exact  name of registrant as specified in its charter)


           DELAWARE                                36-3571585
   (State of incorporation)            (I.R.S. Employer Identification No.)


   MONTGOMERY WARD PLAZA, CHICAGO, ILLINOIS               60671
   (Address of principal executive offices)            (Zip Code)


       Registrant's telephone number, including area code: 312/467-2000

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                           Yes    X       No  ______
                                 ---              

As of May 14, 1999 the Registrant had 18,322,152 shares of Class A Common Stock
and 25,000,000 shares of Class B Common Stock outstanding.


================================================================================
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                      For the Quarter Ended April 3, 1999
                                        
                    Index to Quarterly Report on Form 10-Q


<TABLE> 
<CAPTION> 
                                                                            Page
<S>                                                                         <C> 
Part I  - Financial Information.
 
 
Item 1.   Financial Statements (Unaudited).
 
          Consolidated Statements of  Income.                                  3
          Consolidated Balance Sheets.                                         4
          Consolidated Statements of Cash Flows.                               5
          Notes to Consolidated  Financial Statements.                         6
 
Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.                                          12
 
 
Part II - Other Information.                                                  18
</TABLE>

                                       2
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                          For the 13-Week                       
                                                                                           Periods Ended                        
                                                                               -------------------------------------            
                                                                                                                                
                                                                                   April 3,             April 4,                
         (In millions, except per share amounts)                                     1999                 1998                  
                                                                               ----------------     ----------------            
         <S>                                                                   <C>                  <C>                         
         Net sales, including leased and licensed department sales                      $  729               $  772             
                                                                                                                                
         Costs and Expenses                                                                                                     
           Cost of goods sold, including net occupancy and                                                                        
            buying expense                                                                 596                  625             
           Operating, selling, general and administrative                                                                         
            expenses                                                                       218                  241             
           Interest expense, net                                                            15                   12             
                                                                               ---------------      ---------------              
               Total Costs and Expenses                                                    829                  878             
                                                                               ---------------      ---------------              
                                                                                                                                
         Loss from Continuing Operations before Reorganization                                                                  
           Costs and Income Taxes                                                         (100)                (106)            
         Reorganization Costs (Note 5)                                                      10                   16             
                                                                               ---------------      ---------------             
         Loss before Income Taxes and Discontinued Operations                             (110)                (122)            
         Income Tax Expense                                                                  -                    -             
                                                                               ---------------      ---------------             
         Loss before Discontinued Operations                                              (110)                (122)            
         Income (Loss) from Discontinued Operations (Note 3)                                 4                  (19)            
                                                                               ---------------      ---------------             
         Net Loss                                                                       $ (106)              $ (141)            
                                                                               ===============      ===============             
                                                                                                                                
         Net Income (Loss) per Common Share (Note 6)                                                                            
          Class A                                                                                                               
           Before Discontinued Operations                                               $(2.98)              $(3.32)            
           Discontinued Operations                                                         .11                 (.53)            
                                                                               ---------------      ---------------              
                                                                                        $(2.87)              $(3.85)            
                                                                               ===============      ===============             
                                                                                                                                
          Class B                                                                                                                
           Before Discontinued Operations                                               $(2.23)              $(2.43)            
           Discontinued Operations                                                         .08                 (.39)            
                                                                               ---------------      ---------------              
                                                                                        $(2.15)              $(2.82)            
                                                                               ===============      ===============     
</TABLE>

                See notes to consolidated financial statements.

                                       3
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                        April 3,                 Jan. 2,                          
(In millions)                                                             1999                    1999                            
                                                                   ----------------          --------------                       
                                                                      (Unaudited)                                                
<S>                                                                <C>                       <C>                                  
Assets                                                                                                                            
  Cash and cash equivalents                                                 $   80                  $   58                        
  Investments of insurance operations                                            3                       3                        
                                                                   ---------------           -------------                        
       Total Cash and Investments                                               83                      61                        
                                                                                                                                  
  Trade and other accounts receivable                                          207                     187                        
  Accounts and notes receivable from affiliates                                113                     123                        
                                                                   ---------------           -------------                        
        Total Receivables                                                      320                     310                        
                                                                                                                                  
  Merchandise inventories                                                      896                     953                        
  Prepaid pension cost                                                         404                     402                        
  Properties, plants and equipment, net of accumulated                                                                            
    depreciation and amortization                                              966                     963                        
  Net assets of discontinued operations (Note 3)                               668                     666                        
  Other assets                                                                 110                     137                        
                                                                   ---------------           -------------                        
        Total Assets                                                        $3,447                  $3,492                        
                                                                   ===============           =============                        
                                                                                                                                  
Liabilities                                                                                                                       
  Short-term debt                                                           $  534                  $  328                        
  Trade accounts payable                                                       414                     444                        
  Accrued liabilities and other obligations                                    628                     738                        
  Long-term debt                                                                44                      46                        
  Liabilities subject to compromise (Note 4)                                 3,447                   3,447                        
                                                                   ---------------          --------------                        
        Total Liabilities                                                    5,067                   5,003                        
                                                                                                                                  
Commitments and Contingent Liabilities (Note 7)                                                                                   
                                                                                                                                  
Redeemable Preferred Stock                                                     177                    177                         
                                                                                                                                  
Shareholders' Deficit                                                                                                             
  Common stock                                                                   1                      1                         
  Capital in excess of par value                                                65                     65                         
  Accumulated deficit                                                       (1,728)                (1,622)                        
  Accumulated other comprehensive income                                         4                      7                         
  Less:  Treasury stock, at cost                                              (139)                  (139)                        
                                                                   ---------------          -------------                         
      Total Shareholders' Deficit                                           (1,797)                (1,688)                        
                                                                   ---------------          -------------                         
Total Liabilities and Shareholders' Deficit                                $ 3,447                $ 3,492                         
                                                                   ===============          =============                         
</TABLE>

                See notes to consolidated financial statements.

                                       4
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                            For the 13-Week                       
                                                                                             Periods Ended                        
                                                                                 ------------------------------------             
                                                                                                                                  
                                                                                     April 3,              April 4,               
         (In millions)                                                                 1999                  1998                 
                                                                                 --------------         -------------             
         <S>                                                                     <C>                    <C>                       
         Cash flows used for operating activities:                                                                                
          Net loss                                                                     $(106)                $(141)                
          Adjustments to reconcile net loss to net cash used for                                                                   
           operating activities:                                                                                                   
            (Income) loss from discontinued operations                                    (4)                   19                 
            Provision for reorganization costs                                             5                     -                 
            Net receipts/(disbursements) of cash relating to                                                                       
              reorganization activities                                                  (23)                   41                 
            Depreciation and goodwill amortization                                        23                    24                 
         Changes in operating assets and liabilities:                                                                              
            Trade and other accounts receivable                                          (20)                  (29)                
            Accounts and notes receivable from affiliates                                 10                     3                 
            Merchandise inventories                                                       46                   (60)                
            Prepaid pension cost                                                          (2)                   (8)                
            Other assets                                                                   6                     4                 
            Trade accounts payable                                                       (26)                    6                 
            Liabilities subject to compromise                                              -                   (13)                
            Accrued liabilities and other obligations                                    (62)                  (38)                
                                                                                 ------------           -----------                
              Net cash used for continuing operations                                   (153)                 (192)                
              Net cash provided by (used for) discontinued  operations                    27                    (6)                
              Net cash used for operating activities                                    (126)                 (198)                
                                                                                 -----------            ----------                 
                                                                                                                                   
         Cash flows used in investing activities:                                                                                  
          Capital expenditures                                                           (26)                  (10)               
                                                                                 ------------           -----------                
              Net cash used in investing activities of                                                                             
                continuing  operations                                                   (26)                  (10)               
              Net cash provided by (used in) investing activities of                                                               
                discontinued operations                                                  (28)                    6                
                                                                                 ------------           ----------- 
              Net cash used in investing activities                                      (54)                   (4)               
                                                                                 ------------           -----------                
                                                                                                                                   
         Cash flows provided by financing activities:                                                                              
          Borrowings under Post-Petition Loan and Guaranty                                                                         
           Agreement, net                                                                206                   234                
         Payments of long-term debt                                                       (2)                   (1)               
         Payments of obligations under capital leases                                     (2)                   (4)               
                                                                               --------------           -----------                
              Net cash provided by financing activities of                                                                         
                continuing operations                                                    202                   229                
                                                                               --------------           -----------                
                                                                                                                                   
         Increase in cash and cash equivalents                                            22                    27                
         Cash and cash equivalents at beginning of period                                 58                   164                
                                                                               --------------           -----------                
         Cash and cash equivalents at end of period                                     $ 80                  $191                
                                                                               ==============           ===========                
</TABLE>
                                                                               
                See notes to consolidated financial statements.

                                       5
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


1.   ACCOUNTING POLICIES
 
Basis of Presentation

     The accompanying consolidated financial statements are unaudited. The
     consolidated financial statements reflect all adjustments (consisting only
     of normal recurring accruals) which are, in the opinion of management,
     necessary for a fair statement of the results for the interim periods
     presented. The consolidated financial statements should be read in
     conjunction with the consolidated financial statements and notes thereto
     filed with the Securities and Exchange Commission in the 1998 Annual Report
     on Form 10-K of Montgomery Ward Holding Corp. ("MW Holding" or, together
     with its subsidiaries, the "Company"). Capitalized terms not otherwise
     defined herein have the meaning ascribed to such terms in the 1998 Annual
     Report on Form 10-K. Certain prior period amounts have been reclassified to
     be comparable with the current period presentation.

Comprehensive Income

     In 1998, the Company adopted Statement of Financial Accounting Standards
     No. 130 ("SFAS 130"), Reporting Comprehensive Income. This statement
     establishes rules for the reporting of comprehensive income and its
     components. Comprehensive income (loss) consists of unrealized holding
     gains and losses on available-for-sale securities. The adoption of SFAS 130
     had no impact on total shareholders' deficit. Comprehensive loss was $109
     million and $140 million for the quarterly periods ended April 3, 1999 and
     April 4, 1998, respectively.

2.   REORGANIZATION

     At the close of business on July 7, 1997 (the "Petition Date"), MW Holding
     and certain of its U.S. subsidiaries filed petitions for reorganization
     under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
     Court for the District of Delaware. These related proceedings are being
     jointly administered under the caption "In re Montgomery Ward Holding
     Corp., a Delaware corporation, et. al.", Case No. 97-1409 (PJW). The
     following U.S. subsidiaries were not included in the bankruptcy filings:
     Signature Financial/Marketing, Inc. ("Signature") and its direct and
     indirect subsidiaries; Marinco Insurance U.S.A., Inc. ("Marinco"); and
     Montgomery Ward Foundation.

     After a long period of negotiation, Wards was unable to reach an out-of-
     court settlement with its lenders. Accordingly, bankruptcy petitions were
     filed in order to obtain an opportunity to reorganize and begin
     implementing the Company's strategies while working to restructure its
     indebtedness. Pursuant to the Post-Petition Loan and Guaranty Agreement
     dated July 8, 1997, among Wards and Lechmere, as borrowers; MW Holding and
     other debtor subsidiaries of MW Holding, as guarantors; General Electric
     Capital Corporation ("GE Capital"), as agent and lender; and various
     lenders, as amended (the "DIP Facility"), the lenders have agreed to
     provide up to $1 billion in post-petition financing to Wards.

                                       6
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


2.   REORGANIZATION (CONTINUED)

     The Company filed its plan of reorganization and disclosure statement with
     the Bankruptcy Court on April 30, 1999. The plan of reorganization sets
     forth the means for satisfying claims and interests in the Company and its
     debtor subsidiaries, including the Liabilities subject to compromise. Under
     the reorganization plan, secured and non-tax priority claimholders will
     generally receive cash equal to the amount of their allowed claim. Claims
     held by unsecured creditors and certain allowed vendor claims held by GE
     Capital will be satisfied by cash distributions for a portion of the
     allowed claims. It is estimated that unsecured creditors will receive a
     recovery of approximately 28% to 29% of their allowed claim amount, other
     than holders of allowed claims against Lechmere, Inc. ("Lechmere") who will
     receive up to 14% to 14.5% of their allowed claim amount. In exchange for
     its remaining claims, GE Capital will receive 100% of the equity in a new
     limited liability company, Montgomery Ward LLC, which will acquire
     substantially all of the ongoing retail operations of Wards and its
     subsidiaries. Pursuant to an order of the Bankruptcy Court dated April 30,
     1999, GE Capital deposited $650 million with an escrow agent pursuant to an
     escrow agreement. These funds will be distributed under the plan of
     reorganization to unsecured creditors. Other distributions under the plan
     of reorganization will be funded through Wards' exit financing.

     The reorganization plan will be consummated and Wards will emerge from
     Chapter 11 on the effective date. The effective date shall occur and the
     plan of reorganization will be consummated upon (a) entry of a confirmation
     order by the Bankruptcy Court on or before July 30, 1999, and (b) the
     earlier to occur (i) the consummation of the restructuring transactions set
     forth in the plan of reorganization or (ii) August 31, 1999. However, the
     creditors' committee may extend either or both of the foregoing dates to a
     date not later than December 31, 1999. If the effective date has not
     occurred by December 31, 1999 the plan of reorganization shall be voided.
     It is further contemplated that contemporaneously with or after the
     effective date GE Capital will acquire Signature.

     The accompanying consolidated financial statements have been prepared on a
     going concern basis, which contemplates continuity of operations,
     realization of assets and liquidation of liabilities in the ordinary course
     of business. However, as a result of the Chapter 11 filing and
     circumstances relating to this event, including the Company's leveraged
     financial structure and losses from operations, such realization of assets
     and liquidation of liabilities is subject to significant uncertainty. While
     under the protection of Chapter 11, the Company may sell or otherwise
     dispose of assets, and liquidate or settle liabilities, for amounts other
     than those reflected in the financial statements. Further, a plan of
     reorganization could materially change the amounts reported in the
     financial statements, which do not give effect to all adjustments of the
     carrying value of assets or liabilities that might be necessary as a
     consequence of a plan of reorganization.
     
     The appropriateness of using the going concern basis is dependent upon,
     among other things, confirmation of a plan of reorganization, future
     profitable operations, the ability to comply with the terms of the DIP
     Facility and the ability to generate sufficient cash from operations and
     financing arrangements to meet obligations.

                                       7
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


3.   DISCONTINUED OPERATIONS

     On February 1, 1999, Wards announced that GE Capital, a major shareholder
     and creditor, will acquire Signature, Wards' direct marketing response
     operations segment. Signature's results of operations have been classified
     as discontinued operations and prior periods have been restated. The net
     loss for the period ended January 2, 1999 included the cumulative effect of
     $33 million associated with a change in the method of accounting for the
     printing and mailing of membership material costs. Historically, these
     costs were capitalized and amortized ratably over the membership period as
     revenue is recognized. Effective in fiscal year 1998, these costs were
     expensed upon the mailing of membership materials. In the fourth quarter of
     1998, Signature announced its intent to dispose of its dining business and
     in March 1999, signed a definitive agreement to sell this business to
     Transmedia Network Inc. Summarized financial data of discontinued
     operations are as follows:

<TABLE>
<CAPTION>
                                                                         For the 13-Week                                          
                                                                          Periods Ended                                           
                                                        ----------------------------------------------                            
                                                                                                                                  
                                                             April 3,                      April 4,                               
     (In millions)                                             1999                          1998                                 
                                                        ---------------                 --------------                            
     <S>                                                <C>                             <C>                                       
     Revenues                                                    $ 165                          $ 219                             
     Income (loss) from operations before                                                                                         
       income taxes                                              $   6                          $ (19)                            
     Income tax expense                                          $   2                          $   -                           
     Net income (loss)                                           $   4                          $ (19)                          


                                                             April 3,                     January 2,                              
     (In millions)                                             1999                          1999                                 
                                                        ---------------                 --------------                            
                                                                                                                                  
     Net assets of discontinued operations                                                                                        
       Cash and investments                                      $ 444                          $ 440                             
       Direct response and insurance acquisition costs             455                            466                             
       Other assets                                                278                            293                             
       Short-term debt                                            (105)                          (105)                            
       Insurance policy claim reserves                            (230)                          (234)                            
       Accrued liabilities                                        (174)                          (194)                            
                                                        ---------------                 --------------                            
     Net assets of discontinued operations                       $ 668                          $ 666                             
                                                        ===============                 ============== 
</TABLE>

     Signature's short-term debt balance represents a loan from Lechmere.

                                       8
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

 
4.   LIABILITIES SUBJECT TO COMPROMISE

     The principal categories of claims classified as liabilities subject to
     compromise under reorganization proceedings are identified below. All
     amounts below may be subject to future adjustment depending on Bankruptcy
     Court action, further developments with respect to disputed claims,
     determination as to the value of any collateral securing claims, or other
     events. Additional claims may arise resulting from rejection of additional
     executory contracts or unexpired leases by the Company.

<TABLE>
<CAPTION>
                                                              April 3,            January 2,                                       
     (In millions)                                             1999                 1999                                           
                                                         ----------------      --------------                                      
     <S>                                                 <C>                   <C>                                                 
     Accounts payable                                            $1,383              $1,380                                        
     Long Term Credit Agreement                                     603                 603                                        
     Short Term Credit Agreement                                    442                 442                                        
     Note Purchase Agreements                                       276                 276                                        
     Other long-term debt                                             4                   4                                        
     Obligations under capital leases                                62                  64                                        
     Lease and other contract rejection claims                      115                 118                                        
     Other liabilities                                              562                 560                                        
                                                         --------------        ------------                                        
                                                                 $3,447              $3,447                                        
                                                         ==============        ============                                        
</TABLE>

     The Company has $55 million of liabilities due Marinco which have been
     eliminated in consolidation but are subject to compromise. In addition,
     obligations under capital leases include amounts due Signature of $21
     million and $22 million at April 3, 1999 and January 2, 1999, respectively.

     As a result of the bankruptcy filing, no principal or interest payments
     will be made on any pre-petition debt without Bankruptcy Court approval or
     until a reorganization plan defining the repayment terms has been approved.
     Contractual interest expense not recorded on certain pre-petition debt
     totaled $31 million for the quarterly periods ended April 3, 1999 and April
     4, 1998.

                                       9
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                                        

5.   REORGANIZATION COSTS

     Reorganization costs recorded for the quarterly periods ended April 3, 1999
     and April 4, 1998, consisted of the following:
 
<TABLE>
<CAPTION>
                                                                For the 13-Week                                            
                                                                 Periods Ended                                             
                                                    --------------------------------------                                 
                                                                                                                           
                                                         April  3,               April 4,                                  
     (In millions)                                         1999                   1998                                     
                                                    --------------           -------------                                 
     <S>                                            <C>                      <C>                                           
     Corporate data center exit costs                     $  11                   $   -                                    
     Pension plan restructuring                               5                       -                                    
     Interim Account Agreement Fees                           8                       6                                    
     Store closings                                          (9)                      4                                    
     Settlement of finance lease claims                     (11)                      -                                    
     Professional fees                                        5                       5                                    
     Other                                                    3                       3                                    
     Interest income                                         (2)                     (2)                                   
                                                    -----------              ----------                                    
                                                          $  10                   $  16                                    
                                                    ===========              ==========                                    
</TABLE>

     In February 1999, Wards received Bankruptcy Court approval to enter into a
     post-petition contract to exit its corporate data center. The expenses
     associated with the transaction include software transfer charges, lease
     obligation termination fees, severance and other expenses.

     Pension plan restructuring represents losses associated with the spin-off
     and termination of a portion of the Company's over-funded deferred benefit
     pension plan.

     Store closings for the quarter ended April 3, 1999 represents a reversal of
     a portion of the reserve recorded in 1998 related to store closings due to
     an increase in the estimated proceeds to be received from the sale of
     properties.

     In early 1999, the Company settled with third-parties as to the amount of
     claims to be allowed associated with finance lease obligations. The claim
     amounts settled upon were lower than amounts previously provided for in the
     financial statements.

     Professional fees incurred consisted of consulting and legal fees for
     bankruptcy activity and restructuring efforts on behalf of the Company and
     Creditors' Committee.

                                       10
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


6.   Net Loss Per Common Share

     Net loss per common share is computed as follows:

<TABLE>
<CAPTION>
                                                                 For the 13-Week                 For the 13-Week
                                                                   Period Ended                    Period Ended
                                                                  April 3, 1999                   April 4, 1998
                                                          ----------------------------     ---------------------------
     (In millions, except share and per   
       share amounts)                                        Class A         Class B         Class A         Class B
                                                          ------------     -----------     -----------     ----------- 
     <S>                                                  <C>              <C>             <C>             <C>
     Net loss                                              $        52     $        54     $        71     $        70
                                          
     Weighted-average number of common    
        shares outstanding                                  18,322,152      25,000,000      18,322,237      25,000,000
                                          
     Net loss per common share, before    
        discontinued operations                            $     (2.98)    $     (2.23)    $     (3.32)    $     (2.43)
     Discontinued operations                                       .11             .08            (.53)           (.39)
                                                          ------------     -----------     -----------     ----------- 
                                                           $     (2.87)    $     (2.15)    $     (3.85)    $     (2.82)
                                                          ============     ===========     ===========     =========== 
</TABLE>

7.   COMMITMENTS AND CONTINGENT LIABILITIES

     MW Holding, Wards and its subsidiaries are engaged in various litigation
     and have a number of unresolved claims, as set forth in the 1998 Annual
     Report on Form 10-K. While the amounts claimed are substantial and the
     ultimate liability with respect to such litigation and claims cannot be
     determined at this time, management is of the opinion that such liability,
     to the extent not provided for through insurance or otherwise, is not
     likely to have a material impact on the financial condition and the results
     of operations of the Company.

                                       11
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

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

     The following discussion and analysis of results of operations for the
     Company compares the first quarter of 1999 to the first quarter of 1998.
     All dollar amounts referred to in this discussion are in millions, and all
     income and expense items are shown before income taxes, unless specifically
     stated otherwise.

     The Company's business is seasonal, with approximately one-third of the
     sales traditionally occurring in the fourth quarter. Accordingly, the
     results of operations for the quarter are not necessarily indicative of the
     results for the entire year.

Forward-Looking Statements

     Information included in this Report on Form 10-Q may constitute forward-
     looking statements that involve a number of risks and uncertainties. From
     time to time, information provided by the Company or statements made by its
     employees may contain other forward-looking statements. Factors that could
     cause actual results to differ materially from the forward-looking
     statements include but are not limited to: Bankruptcy Court actions or
     proceedings related to the bankruptcy, general economic conditions
     including inflation, consumer debt levels, trade restrictions and interest
     rate fluctuations; competitive factors including pricing pressures,
     technological developments and products offered by competitors; inventory
     risks due to changes in market demand or the Company's business strategies;
     and changes in effective tax rates.

     Readers are cautioned not to place undue reliance on these forward-looking
     statements, which speak only as of the date made. The Company undertakes no
     obligation to publicly update or revise any forward-looking statements,
     whether as a result of new information, future events or otherwise.

Results of Operations

First Quarter 1999 Compared with First Quarter 1998

     Net sales were $729 in the first quarter of 1999, compared with $772 in the
     first quarter of 1998, a decrease of $43, or 6%. Sales on a comparable
     store basis increased approximately 3% after adjusting for the closing of
     stores and the exit of certain product lines. The decrease in net sales is
     attributable to the closing of 39 retail stores in February 1999 and nine
     retail stores in the third quarter of 1998. These closed stores reported
     net sales of $55 in the first quarter of 1998. The sales decrease was also
     caused by the Company's decision to exit certain product offerings which
     reported net sales of $5 in the first quarter of 1999 and $12 in the first
     quarter of 1998. The increase in comparable net sales is comprised of
     increases in appliance, consumer electronics, furniture and home
     furnishings and fine jewelry sales, offset by declines in apparel and Auto
     Express sales.

     Gross margin (net sales less cost of goods sold) dollars were $133, a
     decrease of $14, or 10%, from the first quarter of 1998. This decrease was
     due to the gross margin impact of decreased sales of $12 and a decrease in
     the gross margin rate on sales of $8, offset by decreased occupancy and
     other margin-related expenses of $6 primarily related to the closed stores.
     The decline in the gross margin rate of one percentage point is primarily
     due to increased markdowns taken in the first quarter of 1999 as compared
     to the first quarter of 1998 as a result of lower than anticipated winter
     apparel sales.

                                       12
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

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

Results of Operations (continued)

First Quarter 1999 Compared with First Quarter 1998 (continued)

  Operating, selling and general and administrative expenses were $218 in the
  first quarter of 1999, as compared to $241 in the first quarter of 1998, a
  decrease of $23 or 10%.  The decrease was primarily due to decreased payroll
  costs primarily related to closed stores of $12, decreased bad debt expense of
  $5, decreased Year 2000 expenditures of $4, and a decrease in all other costs
  of $2.

  Net interest expense was $15 in the first quarter of 1999 as compared to $12
  in the first quarter of 1998, an increase of $3.  The increase in interest
  expense is due to additional borrowings under the Post-Petition Loan and
  Guaranty Agreement to fund operations.  The Company stopped accruing interest
  on its pre-petition short-term debt in connection with the Chapter 11 filing.

  Reorganization costs were $10 in the first quarter of 1999 as compared to $16
  in the first quarter of 1998.  See Note 5 to the Consolidated Financial
  Statements for the components of these costs.

  On February 1, 1999, Wards announced that GE Capital, a major shareholder and
  creditor, will acquire Signature, Wards' direct marketing response operations
  segment.  Signature's results of operations have been classified as
  discontinued operations.  The income from discontinued operations was $4
  million for the first quarter of 1999 as compared to a loss of $19 in the
  first quarter of 1998.  The prior year's results of discontinued operations
  included the write-off of $33 of capitalized fulfillment costs.

Discussion of Financial Condition

  Due to the inability of Wards to negotiate an out-of-court settlement with its
  lenders, MW Holding and certain of its subsidiaries have filed petitions for
  reorganization under Chapter 11 of the U.S. Bankruptcy Court.  As a result of
  the Chapter 11 filing the Company and those subsidiaries have ceased making
  certain debt, interest, trade payable and other liability payments that arose
  prior to the Chapter 11 filing.  Payments related to these liabilities are
  deferred, in most cases, until a plan for reorganization is confirmed by the
  Bankruptcy Court.

                                       13
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

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

Discussion of Financial Condition (continued)

  The Company filed its plan of reorganization and disclosure statement with the
  Bankruptcy Court on April 30, 1999.  The plan of reorganization sets forth the
  means for satisfying claims and interests in the Company and its debtor
  subsidiaries, including the Liabilities subject to compromise.  Under the
  reorganization plan, secured and non-tax priority claimholders will generally
  receive cash equal to the amount of their allowed claim.  Claims held by
  unsecured creditors and certain allowed vendor claims held by GE Capital will
  be satisfied by cash distributions for a portion of the allowed claims.  It is
  estimated that unsecured creditors will receive a recovery of approximately
  28% to 29% of their allowed claim amount, other than holders of allowed claims
  against Lechmere, Inc. ("Lechmere") who will receive up to 14% to 14.5% of
  their allowed claim amount.  In exchange for its remaining claims, GE Capital
  will receive 100% of the equity in a new limited liability company, Montgomery
  Ward LLC, which will acquire substantially all of  the ongoing retail
  operations of  Wards and its subsidiaries.  Pursuant to an order of the
  Bankruptcy Court dated April 30, 1999, GE Capital deposited $650 with an
  escrow agent pursuant to an escrow agreement.  These funds will be distributed
  under the plan of reorganization to unsecured creditors.  Other distributions
  under the plan of reorganization will be funded through Wards' exit financing.

  The reorganization plan will be consummated and Wards will emerge from Chapter
  11 on the effective date.  The effective date shall occur and the plan of
  reorganization will be consummated upon (a) entry of a confirmation order by
  the Bankruptcy Court on or before July 30, 1999, and (b) the earlier to occur
  (i) the consummation of the restructuring transactions set forth in the plan
  of reorganization or (ii) August 31, 1999.  However, the creditors' committee
  may extend either or both of the foregoing dates to a date not later than
  December 31, 1999.  If the effective date has not occurred by December 31,
  1999 the plan of reorganization shall be voided.  It is further contemplated
  that contemporaneously with or after the effective date GE Capital will
  acquire Signature.

  Net cash used in the Company's operating activities for continuing operations
  totaled $153 for the first quarter of 1999 compared to $192 for the first
  quarter of 1998, a decrease of $39.  The lower cash usage is summarized as
  follows:

<TABLE>
          <S>                                                                <C>
          Cash impact of smaller operating loss                               $      16
          Decrease in cash received from reorganization activities                  (64)
          Increase in cash provided by merchandise inventories                       
            and accounts payable, net                                                74
          All other cash from operations                                             13
                                                                             ----------
                                                                              $      39
                                                                             ==========
</TABLE>

  Cash received from reorganization activities represents proceeds from the
  disposition of properties, net of costs associated with the going out-of-
  business sales and other reorganization activities.  The first quarter of 1998
  included proceeds from the disposal of properties in connection with the 1997
  store closings.  The increase in cash provided by inventory and accounts
  payable is due to the reduction in inventories and accounts payable as a
  result of store closings.

                                       14
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

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

Discussion of Financial Condition (continued)

  Net cash used for capital expenditures totaled $26 for the first quarter of
  1999, compared to $10 million for the first quarter of 1998. The increase in
  capital expenditures relates to systems development and the remodeling of
  stores. Wards is remodeling 40 stores in 1999 and anticipates remodeling a
  minimum of 40 stores per year in 2000 and 2001. In 1998, Wards remodeled three
  stores, which serve as the prototype for the remodeling of future stores.
  These three stores reflected sales increases over the prior year in excess of
  40 percentage points above the combined performance of the entire chain from
  September 1998 through March 1999. The Company plans to spend $180 over the
  next three years related to the remodeling of approximately 120 stores.

  Net cash provided by financing activities of continuing operations totaled
  $202 for the first quarter of 1999, compared to $229 for the first quarter of
  1998, which primarily represents borrowings under the Post-Petition Loan and
  Guaranty Agreement.  The decrease in borrowings under the Post-Petition Loan
  and Guaranty Agreement is due to less cash used by operating activities offset
  by increased capital expenditures. The Company had borrowed to the full extent
  of its financing facilities (excluding the Seasonal Credit Agreement) prior to
  the Chapter 11 filing.

  Wards is the only subsidiary of the Company and, therefore, Wards and its
  subsidiaries are the Company's sole source of funds.

  Wards entered into the DIP Facility on July 8, 1997, as amended, which was
  approved by the Bankruptcy Court on July 31, 1997.  Under the DIP Facility,
  the lenders have agreed to provide a revolving credit and letter of credit
  facility, the maximum amount of which is based on the book value of eligible
  inventory (as defined in the DIP Facility), the fair market value of eligible
  real property (as defined in the DIP Facility) and the earnings of Signature.
  In no case may borrowings exceed $1,000.  Under the DIP Facility, Wards may
  select among several interest rate options, all of which are based on market
  rates plus a margin.  A commitment fee is payable based on the unused amount
  of the facility.  Total borrowings outstanding were $510 and letters of credit
  outstanding were $126 at April 3, 1999.  The Company had $158 of borrowing
  availability under the DIP Facility at April 3, 1999.

  On April 30, 1999, the Bankruptcy Court approved the Amended and Restated
  Post-Petition Loan and Guaranty Agreement ("Amended and Restated DIP
  Facility").  The Amended and Restated DIP Facility amends and restates certain
  provisions of the DIP Facility including an extension of the $1 billion DIP
  Facility through March 31, 2000 and provides for a $200 million subordinated
  loan tranche from GE Capital.  The maximum amount available under the DIP
  Facility, as amended by the Amended and Restated DIP Facility, will remain at
  $1 billion.

  Prior to the bankruptcy filing, Wards entered into a long term credit
  agreement, as amended, ("Long Term Credit Agreement") and a short term credit
  agreement, as amended, ("Short Term Credit Agreement") both dated as of
  September 15, 1994; note purchase agreements, as amended, dated March 1, 1993
  and July 11, 1995 ("Note Purchase Agreements"); and a credit agreement, as
  amended, ("Seasonal Credit Agreement") dated October 4, 1996.  The Company is
  currently in default of the terms of these agreements and no future amounts
  may be drawn thereunder.

                                       15
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

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

Discussion of Financial Condition (continued)

  On September 15, 1998, the Company received approval from the Bankruptcy Court
  to permit Lechmere to lend Signature the funds to repay its borrowings of $102
  under a Credit Agreement between Signature and various lenders, plus interest
  and other fees associated with the extension and refinancing of such
  agreement.  On September 30, 1998, Signature's loan under the Credit Agreement
  was repaid from the $105 of funds  advanced by Lechmere to Signature.  The
  Lechmere loan to Signature, which accrues interest at either the prime rate
  plus 1.75% or the LIBO rate plus 2.75%, is secured by a pledge of stock of
  certain Signature subsidiaries and is guaranteed by Wards.  Such guarantee is
  subordinate to the DIP Facility.  The loan shall become immediately due upon
  the earliest of (i) upon demand; (ii) the effective date of a plan of
  reorganization for the debtor subsidiary; (iii) the conversion of the
  bankruptcy case from a Chapter 11 case to a Chapter 7 case under the
  Bankruptcy Code; (iv) the sale of all or substantially all of Signature's
  assets, the merger or consolidation of Signature with or into another entity,
  or the sale of more than 50% of an interest in Signature to another entity; or
  (v) December 31, 1999.
 
  In 1997, Wards had facilities available under vendor financing programs (which
  are reflected in liabilities subject to compromise) which totaled $725. At
  June 28, 1997, these facilities were principally drawn. These facilities are
  no longer available due to the Chapter 11 filing.

  The Company intends to improve its financial condition and reduce its
  dependence on borrowing by  increasing its sales base, continuing to improve
  its gross margin rates and controlling expenses.  In addition, the financial
  performance of the remaining retail stores will be reviewed on a continuing
  basis and additional stores may be closed if warranted.  Management has also
  reevaluated the Company's merchandising, marketing, store operations and
  logistics strategies, and is in the process of implementing the new strategy.

  Future cash is expected to continue to be provided by ongoing operations,
  receipt of payment for credit sales under the agreements with Montgomery Ward
  Credit Companies and borrowings under the DIP Facility.

  The Company began addressing Year 2000 date conversion issues in the fall of
  1996 and has developed a plan to assess and remediate both information
  technology ("IT") and non-IT systems.  The Company's plan consists of two
  phases.  The assessment phase includes the inventory of all systems (IT and
  non-IT) subject to the Year 2000 issue and developing a plan for addressing
  the problem  as related to each system.  The remediation phase includes the
  implementation of the identified changes required and testing of these changes
  before implementation.

  For IT systems, the Company has completed its assessment phase and the
  remediation phase is 95% complete. The remainder of the remediation phase is
  expected to be completed in the third quarter of 1999.  For non-IT systems,
  the Company anticipates the assessment phase to be completed in the second
  quarter 1999 and the remediation phase to be completed by September 30, 1999.
  The Company is also in the process of assessing the Year 2000 readiness of its
  suppliers  and service providers and is participating in a National Retail
  Federation survey of such providers.

                                       16
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

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

Discussion of Financial Condition (continued)

  In the first quarter of 1999, the Company expensed $2 related to Year 2000
  readiness.  Prior to 1999, the Company expensed $34.  The Company estimates an
  additional $2 will be expensed as incurred to become Year 2000 ready.  In
  addition, the Year 2000 issue has accelerated the timing of an estimated $26
  of capital expenditures of which $19 has been capitalized as of April 3, 1999.
  No significant capital projects have been delayed as a result of addressing
  the Year 2000 issue.  Based on the Company's plan, the remaining costs to be
  expended to become Year 2000 ready are not expected to materially impact
  future cash flows.

  The Company believes that its program will result in Year 2000 readiness.
  However, due to the complexity of the issue, there can be no assurances given
  that the Company's plan will be fully effective.  The Company could experience
  interruptions of business at some of its operations, including those caused
  by, but not limited to, the inability of utility companies to provide
  telecommunications and electrical services, the failure of financial
  institutions to process transactions, and the inability of vendors to deliver
  products on a timely basis.  The Company is in the process of developing
  contingency plans which are anticipated to be completed by September 30, 1999,
  with respect to the Company's facilities and merchandise supply and
  distribution networks.

  As discussed in Note 2 to the Consolidated Financial Statements, the
  accompanying consolidated financial statements have been prepared on a going
  concern basis. The appropriateness of using the going concern basis is
  dependent upon, among other things, confirmation of a plan of reorganization,
  future profitable operations, the ability to comply with the terms of the DIP
  Facility and the ability to generate sufficient cash from operations and
  financing arrangements to meet obligations.

                                       17
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

PART II -   OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

            None.

ITEM 2.     CHANGES IN SECURITIES

            None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

  The Company's Certificate of Incorporation provides that the holders of shares
  of Senior Preferred Stock of the Company are entitled to receive, before any
  dividends may be declared or paid upon or set aside for the Common Stock,
  cash dividends in quarterly payments on the last business day of March, June,
  September and December. The Company did not make any dividend payment with
  respect to the Senior Preferred Stock on June 30, 1997. The holder of all
  1,750 outstanding shares of the Senior Preferred Stock would have been
  entitled to receive $3,066,875 in such dividend on such date.  Such amount
  also represents the total arrearage on the payment of dividends on the Senior
  Preferred Stock as of the date of filing of this report.

  The redemption provisions of the Senior Preferred Stock have been stayed by
  the Chapter 11 proceedings. No further dividends will be declared or paid
  prior to the approval of a plan of reorganization.

  The Company's Certificate of Incorporation provides that the holders of shares
  of Series C Preferred Stock of the Company are entitled to receive, before any
  dividends may be declared or paid upon or set aside for the Common Stock, cash
  dividends in quarterly payments on the last business day of March, June,
  September and December. If for any reason the full dividend on any payment
  date is not paid in cash on such date, the unpaid amount thereof will be
  automatically, without further action, be deemed added to the Liquidation
  Value. The Company did not make any dividend payment with respect to the
  Series C Preferred Stock on June 30, 1997. The holder of all 352 shares would
  have been entitled to receive $1,726,154 in such dividend on such date. This
  amount was added to the Liquidation Value.

  The redemption provisions of the Series C Preferred Stock have been stayed by
  the Chapter 11 proceedings. No further dividends will be declared or paid
  prior to the approval of a plan of reorganization.

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

            None.

ITEM 5.     OTHER INFORMATION

            None.

                                       18
<PAGE>
 
                         MONTGOMERY WARD HOLDING CORP.
                                        

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a)   Exhibits
 
         27.  Financial Data Schedule.
 
   (b)   Reports on Form 8-K

         On February 3, 1999, the Registrant filed a Form 8-K to communicate
         that the Company will emerge from Chapter 11 bankruptcy protection in
         mid-1999 as a result of an agreement reached with Wards' Creditor's
         Committee. The press release issued by Montgomery Ward & Co.,
         Incorporated on February 1, 1999 was included as an exhibit thereto.

                                   SIGNATURE
                                        

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

REGISTRANT                   MONTGOMERY WARD HOLDING CORP.

BY                           /s/ THOMAS J. PAUP
                             --------------------------------------------------
NAME AND TITLE               THOMAS J. PAUP, EXECUTIVE VICE PRESIDENT AND CHIEF
                                 FINANCIAL OFFICER                      
                                 
DATE:                        MAY 14, 1999
 
                                       19