SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarter ended April 30, 1996                 Commission File No. 1-9389


                           CHARTER POWER SYSTEMS, INC.
             (Exact name of Registrant as specified in its charter)

               Delaware                          13-3314599
    (State or other jurisdiction of           (I.R.S. Employer
    incorporation or organization)           Identification No.)

      1400 Union Meeting Road
        Blue Bell, Pennsylvania                 19422
 (Address of principal executive office)      (Zip Code)

                                 (215) 619-2700
              (Registrant's telephone number, including area code)

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_____

Number of shares of the Registrant's Common Stock outstanding on June 10, 1996:
6,444,826







                           CHARTER POWER SYSTEMS, INC.
                                AND SUBSIDIARIES


                                      INDEX


PART I. FINANCIAL INFORMATION                                         Page No.

     Item 1 - Financial Statements

              Consolidated Balance Sheets -
              April 30, 1996 and January 31, 1996.................       3

              Consolidated Statements of Income -
              Three Months Ended April 30, 1996 and 1995..........       5

              Consolidated Statements of Cash Flows -
              Three Months Ended April 30, 1996 and 1995..........       6

              Notes to Consolidated Financial Statements..........       8

              Report of Independent Accountants...................      14

    Item 2 -  Management's Discussion and Analysis
              Of Financial Condition and Results of Operations....      15

PART II.  OTHER INFORMATION                                             18

SIGNATURES                                                              19



                                        2



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

                                                             (Unaudited)
                                                      April 30,      January 31,
                                                        1996           1996
                                                        ----           ----
ASSETS

Current assets:
      Cash and cash equivalents                     $  1,735       $  5,472
      Restricted cash and cash equivalents             4,091          5,402
      Accounts receivable, less allowance for
           doubtful accounts of $1,378 and
           $1,421, respectively                       36,572         31,855
      Inventories                                     45,335         35,227
      Deferred income taxes                            6,523          6,235
      Other current assets                             1,213          1,367
                                                     -------        -------
                 Total current assets                 95,469         85,558

Property, plant and equipment, net                    46,433         39,375
Intangible and other assets, net                       5,690          3,287
Goodwill, net                                         11,525          2,607
                                                     -------        -------
                 Total assets                       $159,117       $130,827
                                                     =======        =======


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Current portion of long-term debt             $  1,842       $    200
      Accounts payable                                24,916         19,008
      Accrued liabilities                             14,770         13,513
      Other current liabilities                        2,994          2,535
                                                     -------        -------
                 Total current liabilities            44,522         35,256

Deferred income taxes                                  3,188          2,750
Long-term debt                                        29,162         15,417
Other liabilities                                      8,761          8,478
                                                     -------        -------
                 Total liabilities                    85,633         61,901
                                                     -------        -------

        The accompanying notes are an integral part of these statements.

                                        3



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (continued)
                             (Dollars in thousands)


                                                   (Unaudited)
                                                    April 30,      January 31,
                                                      1996            1996
                                                      ----            ----
Commitments and contingencies

Stockholders' equity:
      Common stock, $.01 par value,
           10,000,000 shares authorized;
           6,470,176 and 6,326,176 shares
           issued, respectively                           65             63
      Additional paid-in capital                      38,059         36,283
      Minimum pension liability adjustment              (760)          (760)
      Treasury stock, at cost, 57,400 shares          (1,304)        (1,304)
      Note receivable from stockholder,
             net of discount of $70                     (594)            -
      Cumulative translation adjustment                  (95)            - 
      Retained earnings                               38,113         34,644
                                                    --------       --------
                 Total stockholders' equity           73,484         68,926
                                                    --------       --------
                 Total liabilities and
                   stockholders' equity             $159,117       $130,827
                                                     =======        =======















        The accompanying notes are an integral part of these statements.

                                        4





                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)

                                                       (Unaudited)
                                                   Three months ended
                                                        April 30,
                                                  1996            1995
                                                  ----            ----

Net sales                                       $62,429          $58,777

Cost of sales                                    47,308           44,985
                                                 ------           ------

      Gross profit                               15,121           13,792

Selling, general and administrative
   expenses                                       7,443            7,065

Research and development expenses                 1,874            1,593
                                                -------           ------

      Operating income                            5,804            5,134

Interest expense, net                               262              231

Other (income) expense, net                        (  3)              56
                                                -------           ------

      Income before income taxes                  5,545            4,847

Provision for income taxes                        1,899            1,672
                                                -------          -------

      Net income                               $  3,646         $  3,175
                                                =======          =======

Net income per common and
  common equivalent share                      $    .56         $    .50
                                                =======          =======

Weighted average common and
  common equivalent shares                        6,548            6,395
                                                =======          =======

Dividends per share                            $  .0275         $  .0275
                                                =======          =======


        The accompanying notes are an integral part of these statements.

                                        5



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                                               (Unaudited)
                                                           Three months ended
                                                                April 30,
                                                            1996         1995*
                                                            ----         -----
Cash flows provided (used) by operating activities:
      Net income                                         $  3,646      $ 3,175
      Adjustments to reconcile net income to net
        cash provided by operating activities:
            Depreciation and amortization                   1,940        1,536
            Deferred taxes                                    150         (171)
            Changes in:
                  Accounts receivable                      (2,096)      (4,230)
                  Inventories                              (2,964)      (4,960)
                  Other current assets                       (478)        (104)
                  Accounts payable                          4,121        7,423
                  Accrued liabilities                        (444)         329
                  Income taxes payable                      1,489        1,653
                  Other current liabilities                   (33)        (340)
                  Other liabilities                            66          438
            Other, net                                         25         (188)
                                                          -------       ------
Net cash provided by operating activities                   5,422        4,561
                                                          -------       ------
Cash flows provided (used) by investing activities:
      Acquisition of businesses, net of cash
         acquired                                         (19,739)         -
      Acquisition of property, plant and equipment         (4,310)      (1,648)
      Change in restricted cash                             1,311           75
                                                         -------        ------
Net cash used by investing activities                     (22,738)      (1,573)
                                                          -------       ------
Cash flows provided (used) by financing activities:
      Repayment of long-term debt                          (6,367)      (1,390)
      Proceeds from new borrowings                         19,784          -
      Proceeds from issuance of common stock                  331           60
      Payment of common stock dividends                      (173)        (164)
      Purchase of treasury stock                             -             (87)
                                                          -------       ------
Net cash provided (used) by financing activities           13,575       (1,581)
                                                          -------       ------
Effect of exchange rate changes on cash                         4           12
                                                          -------       ------

        The accompanying notes are an integral part of these statements.

                                        6



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                             (Dollars in thousands)

                                                             (Unaudited)
                                                         Three months ended
                                                               April 30,
                                                          1996         1995*
                                                          ----         -----
(Decrease) increase in cash and cash
      equivalents                                        (3,737)       1,419
Cash and cash equivalents at beginning
   of period                                              5,472        1,097
                                                          -----        -----
Cash and cash equivalents at end of
   period                                               $ 1,735      $ 2,516
                                                          =====        =====

           SUPPLEMENTAL CASH FLOW
                 DISCLOSURES

Interest paid, net                                      $   248      $  482
Income taxes paid                                           261         189


           SCHEDULE OF NONCASH INVESTING
           AND FINANCING ACTIVITIES

Acquired businesses:
      Estimated fair value of assets acquired           $14,565      $   -
      Goodwill and identifiable intangible
        assets                                           11,661          -
      Purchase price obligations                         (1,160)         -
      Cash paid, net of cash acquired                   (19,739)         -
                                                        -------       -----
      Liabilities assumed                               $ 5,327      $   -
                                                        =======       =====

Dividends declared but not paid                        $    177      $  164

Note receivable from stockholder in connection
  with issuance of common stock                        $    594          -

*   Reclassified for comparative purposes.

        The accompanying notes are an integral part of these statements.

                                        7



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in thousands)

                                   (UNAUDITED)

1.       INTERIM STATEMENTS

         The accompanying  interim  consolidated  financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
contained in the  Company's  Annual Report to  Shareholders  for the fiscal year
ended January 31, 1996. The consolidated  financial  statements presented herein
are  unaudited  but,  in  the  opinion  of  management,  include  all  necessary
adjustments  (which  comprise only normal  recurring  items) required for a fair
presentation of the consolidated financial position as of April 30, 1996 and the
consolidated  statements  of income  and cash flows for the three  months  ended
April 30, 1996 and 1995.  However,  interim  results of  operations  necessarily
involve more estimates than annual results and are not indicative of results for
the full fiscal year.

2.       INVENTORIES

         Inventories consisted of the following:
                                                      April 30,      January 31,
                                                        1996           1996

Raw materials ............................            $12,059        $14,033
Work-in-progress .........................             21,635          9,357
Finished goods ...........................             11,641         11,837
                                                      -------        -------
                                                      $45,335        $35,227
                                                      =======         ======

3.       INCOME TAXES

         A  reconciliation  of the provision for income taxes from the statutory
rate to the effective rate is as follows:
                                                       Three months ended
                                                            April 30,
                                                       1996          1995
                                                       ----          ----

    U.S. statutory income tax                          35.0%        35.0%
    State tax, net of federal income tax benefit        3.3          3.7
    Reduction in valuation allowance                     -          (3.8)
    Reduction of taxes provided in prior years         (3.6)          -
    Other                                              (0.4)        (0.4)
                                                       ----         ----
                                                       34.3%        34.5%
                                                       ====         ====

                                        8


                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             (Dollars in thousands)

                                   (UNAUDITED)

4.       CONTINGENT LIABILITIES

         With regard to the following contingent  liabilities there have been no
material changes since January 31, 1996.

         Because the Company  uses lead and other  hazardous  substances  in its
manufacturing processes, it is subject to numerous federal,  Canadian,  Mexican,
state  and  local  laws  and  regulations  that  are  designed  to  protect  the
environment and employee health and safety.  These laws and regulations  include
requirements of periodic  reporting to governmental  agencies  regarding the use
and disposal of hazardous  substances  and  compliance  with  rigorous  criteria
regarding exposure to employees and the disposal of scrap. In the opinion of the
Company,  the Company  complies  in all  material  respects  with these laws and
regulations.

         Notwithstanding   such   compliance,   if  damage  to  persons  or  the
environment  has been or is caused by hazardous  substances used or generated in
the conduct of the  Company's  business,  the Company may be held liable for the
damage and be required to pay the cost of remedying the same,  and the amount of
any such  liability  might be material to the results of operations or financial
condition.  However,  under the terms of the purchase  agreement with Allied for
the Acquisition of the Company (the Acquisition Agreement),  Allied is obligated
to  indemnify  the  Company  for any  liabilities  of this type  resulting  from
conditions existing at January 28, 1986 that were not disclosed by Allied to the
Company in the schedules to the Acquisition Agreement.

         The Company,  along with numerous other parties,  has been requested to
provide  information to the United States  Environmental  Protection Agency (the
EPA) in connection with investigations of the source and extent of contamination
at several lead smelting  facilities  (the Third Party  Facilities) to which the
Company had made scrap lead shipments for  reclamation  prior to the date of the
Acquisition.  As of January 16,  1989,  the  Company,  with the  concurrence  of
Allied,  entered into an agreement with other  potentially  responsible  parties
(PRPs)  relating  to  remediation  of a  portion  of  one  of  the  Third  Party
Facilities,  the former NL Industries (NL), facility in Pedricktown,  New Jersey
(the  NL  Site),   which  agreement  provides  for  their  joint  funding  on  a
proportionate  basis of certain  remedial  investigation  and feasibility  study
activities with respect to that site.



                                        9



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             (Dollars in thousands)

4.       CONTINGENT LIABILITIES (continued)

         In fiscal 1993 in accordance  with an EPA order,  a group  comprised of
the Company and 30 other parties  commenced  work on the cleanup of a portion of
the NL Site based on a specified remedial approach which is now completed. Based
on currently available  information and well defined  contribution levels of the
other  parties,  including NL  Industries,  the Company does not expect to incur
costs in excess of the $138 previously reserved.

         With  regard  to the  remainder  of the NL  Site,  the EPA is  pursuing
negotiations  with NL and the other PRPs,  including the Company,  regarding the
conduct  and  funding of the  remedial  work plan.  The EPA has  proposed a cost
allocation plan,  however,  the allocation  percentages  between parties and the
basis  for  allocation  of  cost  are not  defined  in the  plan  or  elsewhere.
Therefore,  a reliable  range of the potential cost to the Company of this phase
of the clean-up cannot currently be determined. Accordingly, the Company has not
created any reserve for this potential exposure.

         The  remedial  investigation  and  feasibility  study at a second Third
Party  Facility,  the former  Tonolli  Incorporated  facility  at  Nesquehoning,
Pennsylvania  (the Tonolli Site),  was completed in fiscal 1993. The EPA and the
PRPs are  continuing  to evaluate  the draft  remedial  design work plan for the
site. Based on the estimated cost of the remedial  approach selected by the EPA,
the Company  believes that the potential cost of remedial  action at the Tonolli
Site is likely to range between  $16,000 and $17,000.  The  Company's  allocable
share of this  cost has not been  finally  determined,  and will  depend on such
variables  as the  financial  capability  of  various  other  PRPs to fund their
respective  allocable shares of the remedial cost. Based on currently  available
information,  however,  the Company  believes that its most likely exposure with
respect to the Tonolli Site will be the approximately $579 previously  reserved,
the majority of which is expected to be paid over the next three to five years.

         The Company has responded to requests for information from the EPA with
regard to three other Third Party  Facilities,  one in September  1991, one (the
Chicago  Site) in October 1991 and the third (the ILCO Site) in October 1993. Of
the  three  sites,  the  Company  has been  identified  as a PRP at the ILCO and
Chicago Sites only.

         Based on currently available information, the Company believes that the
potential  cost of  remediation  at the ILCO  Site is  likely  to range  between
$54,000 and  $59,000  (based on the  estimated  costs of the  remedial  approach
selected by the EPA).  The Company's  allocable  share of this cost has not been
finally determined and will depend on such variables as the financial capability
of various other PRPs to fund their respective allocable shares of

                                       10



                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             (Dollars in thousands)

4.       CONTINGENT LIABILITIES (continued)

the  remedial  cost.   However,   on  October  31,  1995  the  Company  received
confirmation from the EPA that it is a de minimis PRP at the ILCO Site. Based on
currently  available  information,  however,  the Company believes that its most
likely exposure with respect to the ILCO Site is an immaterial  amount which has
been previously reserved,  the majority of which is expected to be paid over the
next three to five years.

         Based on currently available information, the Company believes that the
potential cost of the remediation at the Chicago Site is likely to range between
$8,000 and $10,500 (based on the preliminary  estimated costs of the remediation
approach  negotiated with the EPA).  Sufficient  information is not available to
determine  the  Company's  allocable  share of this  cost.  Based  on  currently
available  information,  however,  the  Company  believes  that its most  likely
exposure  with  respect  to the  Chicago  Site  will be the  approximately  $283
previously reserved,  the majority of which is expected to be paid over the next
two to five years.

         Allied has accepted  responsibility under the Acquisition Agreement for
potential  liabilities  relating  to all Third Party  Facilities  other than the
aforementioned  Sites. Based on currently available  information,  management of
the Company  believes that the foregoing will not have a material adverse effect
on the Company's financial condition or results of operations.

5.       ACQUISITIONS

         Effective  February 22, 1996 the Company acquired certain equipment and
inventory of LH Research,  Inc. used in their power supply business,  along with
all  rights to the name "LH  Research,"  for  approximately  $4,100,  subject to
certain adjustments. The Company used available cash to finance the acquisition.

         The  acquisition  has  been  recorded  using  the  purchase  method  of
accounting and the net purchase price  approximates the fair value of the assets
acquired.  The results of operations are included in the Company's  consolidated
financial statements from the date of acquisition.

         Effective  March  12,  1996,  the  Company   acquired  from  Burr-Brown
Corporation  its  entire  interest  in  Power  Convertibles   Corporation  (PCC)
consisting of 1,044,418 shares of PCC common stock and all outstanding preferred
stock.  In addition  the  Company  acquired  or repaid  approximately  $5,200 of
indebtedness of PCC. On April 26, 1996, the Company

                                       11


                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  (Dollars in thousands, except per share data)

5.       ACQUISITIONS (continued)

acquired  190,000  shares of PCC common  stock from the former  chief  executive
officer of PCC which together with the shares previously  acquired represents in
excess of 99.6% of the  outstanding  PCC common stock.  As of May 29, 1996,  the
Company  purchased  all  remaining  shares of PCC common stock and shares of PCC
common stock covered by stock options.

         The  source  of  funds  for the  acquisition  was  advances  under  the
Company's existing credit facility with NationsBank,  N.A., National Westminster
Bank, NJ and CoreStates  Bank,  N.A. PCC is engaged in the business of designing
and manufacturing DC to DC converters used in communications,  computer, medical
and industrial and  instrumentation  markets and also produces  battery chargers
for cellular phones.

         The  acquisition  has  been  recorded  using  the  purchase  method  of
accounting.  The  aggregate  purchase  price of  approximately  $17,000 has been
allocated  on the  basis of the  estimated  fair  market  values  of the  assets
acquired and  liabilities  assumed.  The excess of the aggregate  purchase price
over  the  estimated   fair  market  values  of  the  net  assets   acquired  of
approximately  $9,000 was  recognized as goodwill and is being  amortized over a
period of 20 years.  The results of  operations  are  included in the  Company's
consolidated financial statements from the date of acquisition.

         The following  unaudited pro forma financial  information  combines the
consolidated  results of operations as if both  acquisitions  had occurred as of
the beginning of the periods presented.  Pro forma adjustments  include only the
effects  of events  directly  attributed  to a  transaction  that are  factually
supportable and expected to have a continuing  impact. The pro forma adjustments
contained  in the table below  include  amortization  of  intangibles,  interest
expense on the  acquisition  debt,  elimination of interest  expense on debt not
acquired,  reduction of certain selling, general and administrative expenses and
the related income tax effects.

                                                      Three months
                                                     ended April 30,
                                               1996                  1995
                                               ----                  ----

         Net sales                           $64,352               $68,045
         Net income                            3,392                 2,613
         Net income per common and
              common equivalent share            .52                   .41


                                       12





                  CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                             (Dollars in thousands)


5.       ACQUISITIONS (continued)

         The pro forma financial  information  does not necessarily  reflect the
operating results that would have occurred had the acquisitions been consummated
as of the above dates,  nor is such  information  indicative of future operating
results.  In addition,  the pro forma financial  results contain estimates since
the acquired businesses did not maintain information on a period comparable with
the Company's fiscal year-end.

                                       13



                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Stockholders and Board of Directors of
Charter Power Systems, Inc.


We have reviewed the  accompanying  consolidated  balance sheet of Charter Power
Systems,  Inc. and  Subsidiaries as of April 30, 1996, the related  consolidated
statements  of income for the three months ended April 30, 1996 and 1995 and the
related  consolidated  statements of cash flows for the three months ended April
30, 1996 and 1995.  These  financial  statements are the  responsibility  of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying  consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards, the consolidated balance sheet as of January 31, 1996 and the related
consolidated  statements of income,  stockholders' equity and cash flows for the
year then ended (not presented herein);  and in our report dated March 22, 1996,
we expressed an unqualified opinion on those consolidated  financial statements.
In our  opinion,  the  information  set forth in the  accompanying  consolidated
balance  sheet as of January 31,  1996,  is fairly  presented,  in all  material
respects,  in relation to the consolidated  balance sheet from which it has been
derived.


COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
June 5, 1996


                                       14



Item 2.

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


         The Company  completed  two  acquisitions  during the first  quarter of
fiscal  1996.  Effective  February  22,  1996,  the  Company  purchased  certain
equipment and inventory of LH Research,  Inc. ("LH"),  a Costa Mesa,  California
based  manufacturer  of  standard  power  supply  systems  for  the  electronics
industry. The power supplies are used in telecommunications,  computer, medical,
process control and other industrial applications. Effective March 12, 1996, the
Company  acquired  from  Burr-Brown  Corporation  its entire  interest  in Power
Convertibles  Corporation  ("PCC")  consisting of 1,044,418 shares of PCC common
stock and all outstanding  preferred  stock. In addition the Company acquired or
repaid  approximately  $5,200,000 of indebtedness of PCC. On April 26, 1996, the
Company  acquired  190,000  shares of PCC Common  Stock  from the  former  chief
executive officer of PCC, which together with shares previously  acquired by the
Company represents in excess of 99.6% of the outstanding PCC Common Stock. As of
May 29, 1996 the Company  purchased all remaining shares of PCC Common Stock and
shares of PCC Common Stock covered by stock options.  Tucson,  Arizona based PCC
produces  DC to DC  converters  used in  communications,  computer,  medical and
industrial and  instrumentation  markets and also produces  battery chargers for
cellular phones.

         Net sales for the fiscal 1997 first  quarter  ended April 30, 1996 were
up $3,652,000 or 6 percent  compared to the  equivalent  quarter in fiscal 1996.
Sales recorded by the acquired businesses accounted for approximately $5,000,000
of net sales.  On a company  wide basis,  domestic  and  international  sales of
standby  power  products  and power  supplies to the  telecommunications  market
increased approximately 23 percent if the telecommunications sales of PCC and LH
are  included or 16 percent if these sales are  excluded.  Sales of motive power
products  were down 16 percent due to lower volumes  partially  offset by higher
prices.

         Gross profit for the first quarter of fiscal 1997 increased  $1,329,000
or 10 percent to $15,121,000  from  $13,792,000  in fiscal 1996,  resulting in a
gross margin of 24.2 percent versus 23.5 percent in the prior year.

         Selling,  general and administrative  expenses remained proportional to
sales at 12 percent of sales for the first quarter of fiscal 1997 and 1996.

         Research and development  expenses  continued at 3 percent of sales for
the first quarter of fiscal 1997 and 1996.



                                       15



                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (continued)

         Interest expense,  net,  increased 13 percent from the first quarter of
fiscal  1996 to the  first  quarter  of fiscal  1997 as a result of higher  debt
balances  related  to the  acquisitions  partially  offset  by  lower  effective
interest rates.

         As a result of the  above,  income  before  income  taxes for the first
quarter of fiscal  1997  increased  $698,000 or 14 percent  from the  comparable
quarter of the prior year and net income rose 15 percent from the first  quarter
of fiscal 1996 to $3,646,000 or 56 cents per share.

Liquidity and Capital Resources
- -------------------------------

         Net cash flows provided by operating activities increased 19 percent to
$5,422,000  in the first  quarter of fiscal 1997  compared to  $4,561,000 in the
comparable quarter of the prior year. This increase was primarily due to smaller
increases  during the first  quarter of fiscal 1997 in accounts  receivable  and
inventories  partially  offset  by  less of an  increase  in  accounts  payable.
Collections of accounts  receivable  improved  during the current quarter versus
the prior year's first quarter. Inventory and accounts payables increased during
the  current  quarter  primarily  due to a  required  purchase  of  certain  raw
materials with extended payment terms.

         Net cash used by investing activities totaling $22,738,000 in the first
quarter of fiscal 1997  includes  the purchase by the Company of PCC and certain
equipment and inventory of LH for  $19,739,000.  Acquisition of property,  plant
and equipment  during the first  quarter of fiscal 1997  increased to $4,310,000
over the  comparable  quarter  of the  prior  year,  primarily  due to the plant
capacity  expansion  programs  at the  Company's  Conyers,  Georgia  and  Leola,
Pennsylvania facilities.

         Net cash provided by financing  activities was $13,575,000  compared to
net cash used by financing  activities  of  $1,581,000 in the prior year's first
quarter. The additional borrowings in the current year's first quarter were used
primarily  for the funding of the  acquisitions.  In addition,  during the first
quarter of fiscal 1997, the Company  elected to accelerate the retirement of the
remaining term loan portion of its long-term debt.

         The Company's availability under the current loan agreement is expected
to  be  sufficient   to  meet  its  ongoing  cash  needs  for  working   capital
requirements,   debt  service,   capital  expenditures  and  possible  strategic
acquisitions.  Capital  expenditures  in the first  quarter of fiscal  1997 were
incurred  primarily  to fund  capacity  expansion,  new product  development,  a
continuing series of cost reduction programs,  normal maintenance  capital,  and
regulatory  compliance.  Fiscal 1997  capital  expenditures  are  expected to be
approximately $17,000,000 for similar purposes.

                                       16



Forward Looking Statements
- --------------------------

         Certain  information  contained in this Quarterly  Report on Form 10-Q,
including, without limitation, information appearing under Item 2, "Management's
Discussion and Analysis of Financial  Condition and Results of Operations,"  are
forward-looking  statements (within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the  Securities  Exchange  Act of 1934).  Factors
that appear  with the  forward-looking  statements,  or in the  Company's  other
Securities and Exchange  Commission  filings,  could affect the Company's actual
results and could cause the Company's  actual results to differ  materially from
those  expressed in any  forward-looking  statements made by the Company in this
Quarterly Report on Form 10-Q.

                                       17



                           PART II. OTHER INFORMATION

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

(a)      Exhibits

     2.1  Asset Purchase  Agreement,  dated as of February 21, 1996,  between LH
          Research,  Inc. and International Power Systems, Inc. (incorporated by
          reference to Exhibit 2.1 to the Company's  Current  Report on Form 8-K
          dated February 22, 1996).

     2.2  Purchase   Agreement,   dated  as  of  February  23,   1996,   between
          International Power Systems, Inc. and Burr-Brown  Corporation relating
          to  Power  Convertibles  Corporation  (incorporated  by  reference  to
          Exhibit 2.1 to the  Company's  Current  Report on Form 8-K dated March
          12, 1996).

     4.1  Third  Amendment to Financing and Security  Agreement  dated March 13,
          1996 (filed herewith).

     10.1 Charter  Power  Systems,  Inc.  Incentive   Compensation  Plan  (filed
          herewith).

     11.  Computation of per share earnings (filed herewith).

     15.  Letter from Coopers & Lybrand L.L.P.,  independent accountants for the
          Company,  regarding  unaudited  interim financial  information  (filed
          herewith).

     27.  Financial Data Schedule (filed herewith).


(b)      Reports on Form 8-K:

         The  Company  has filed with the  Securities  and  Exchange  Commission
         during the quarter  ended  April 30, 1996 (i) a Current  Report on Form
         8-K dated  February  22,  1996 (as amended by a Form 8-K/A filed May 7,
         1996)  reporting  under Item 2 that the  Company had  acquired  certain
         assets of LH  Research,  Inc.,  and (ii) a  Current  Report on Form 8-K
         dated March 12,  1996 (as  amended by a Form 8-K/A filed May 16,  1996)
         reporting under Item 2 that the Company had acquired  certain shares of
         stock and indebtedness of Power Convertibles  Corporation.  Each of the
         Forms 8- K/A contained  historical  financial  statements and pro forma
         financial information concerning the acquired businesses.


                                       18




SIGNATURES
- -------------

         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.

                                      CHARTER POWER SYSTEMS, INC.





     June 14, 1996                BY:      /s/ Alfred Weber
                                ---------------------------------
                                               Alfred Weber
                                               Chairman, President and Chief
                                               Executive Officer




     June 14, 1996                BY:      /s/ Stephen E. Markert, Jr.
                                ----------------------------------
                                               Stephen E. Markert, Jr.
                                               Vice President Finance and
                                                      Treasurer
                                               (Principal Financial and
                                                      Accounting Officer)













                                       19




                                  EXHIBIT INDEX

     4.1  Third  Amendment to Financing and Security  Agreement  dated March 13,
          1996 (filed herewith).

     10.1 Charter  Power  Systems,  Inc.  Incentive   Compensation  Plan  (filed
          herewith).

     11.  Computation of per share earnings (filed herewith).

     15.  Letter from Coopers & Lybrand L.L.P.,  independent accountants for the
          Company  regarding  unaudited  interim  financial  information  (filed
          herewith).

     27.  Financial Data Schedule (filed herewith).

                                       20