<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended        March 31, 1999                          

                                       or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from         to                     

Commission File Number:            001-8988                                   

                             ECC International Corp.
             (Exact name of registrant as specified in its charter)

            Delaware                                  23-1714658               
  (State or other jurisdiction            (I.R.S. Employer Identification No.)
of incorporation or organization)


2001 West Oak Ridge Road, Orlando, FL                 32809-3803   
(Address of principal executive offices)              (Zip Code)

                                 (407) 859-7410
              (Registrant's telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

         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 twelve 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.

                                [ X ] Yes [ ] No

         As of March 31, 1999, there were 8,363,603 shares of the Registrant's
Common Stock, $.10 par value per share, issued and outstanding.






<PAGE>   2


                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      NINE MONTHS ENDED MARCH 31, 1999 AND
                    1998 (In Thousands Except Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                        Nine Months            Nine Months
                                                                           Ended                  Ended
                                                                          3/31/99                3/31/98
                                                                        -----------            -----------

<S>                                                                      <C>                   <C>      
Net Sales                                                                $  34,432             $  37,054

Cost of Sales                                                               25,169                30,668
                                                                         ---------             ---------

Gross Profit                                                                 9,263                 6,386
                                                                         ---------             ---------

Expenses:
   Selling, General & Administrative                                         8,394                 9,649
   Systems Development                                                         705                 1,958
   Non-Recurring Expenses                                                    3,160                    --
                                                                         ---------             ---------
      Total Expenses                                                        12,259                11,607
                                                                         ---------             ---------

Operating Loss                                                              (2,996)               (5,221)
                                                                         ---------             ---------

Other Income (Expense):
   Interest Income                                                             275                   202
   Interest Expense                                                           (844)                 (886)
   Other - Net                                                                 182                    99
                                                                         ---------             ---------

      Total Other Expense - Net                                               (387)                 (585)
                                                                         ---------             ---------

Loss From Continuing Operations Before Income                                                   
   Taxes                                                                    (3,383)               (5,806)

Benefit From Income Taxes                                                     (213)               (1,247)
                                                                         ---------             ---------

Loss From Continuing Operations                                             (3,170)               (4,559)
                                                                         ---------             ---------

Discontinued Operations:
   Loss on Disposal (net of applicable income tax
  benefit of $199 in 1998)                                                      --                  (370)
                                                                         ---------             ---------

Net Loss                                                                 $  (3,170)            $  (4,929)
                                                                         =========             =========

Loss Per Common Share - Basic and Assuming Dilution:
Loss Per Common Share From Continuing Operations                             (0.38)                (0.56)
Loss Per Common Share From Discontinued Operations                              --                 (0.04)
                                                                         ---------             ---------

Net Loss Per Common Share                                                $   (0.38)            $   (0.60)
                                                                         =========             =========


</TABLE>


        See accompanying notes to the consolidated financial statements.


<PAGE>   3


                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      THREE MONTHS ENDED MARCH 31, 1999 AND
                    1998 (In Thousands Except Per Share Data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                        Three Months          Three Months
                                                                           Ended                 Ended
                                                                          3/31/99               3/31/98
                                                                        ------------          ------------
<S>                                                                      <C>                   <C>      
Net Sales                                                                $  10,053             $  12,378

Cost of Sales                                                                6,703                10,457
                                                                         ---------             ---------

Gross Profit                                                                 3,350                 1,921
                                                                         ---------             ---------

Expenses:
   Selling, General & Administrative                                         2,515                 3,426
   Systems Development                                                         135                   432
   Non-Recurring Expenses                                                    1,288                    --
                                                                         ---------             ---------
      Total Expenses                                                         3,938                 3,858
                                                                         ---------             ---------

Operating Loss                                                                (588)               (1,937)
                                                                         ---------             ---------

Other Income (Expense):
   Interest Income                                                             155                   114
   Interest Expense                                                           (258)                 (213)
   Other - Net                                                                 (33)                  108
                                                                         ---------             ---------

      Total Other Income/(Expense) - Net                                      (136)                    9
                                                                         ---------             ---------

Loss From Continuing Operations Before Income Taxes                           (724)               (1,928)

Provision/(Benefit) for Income Taxes                                           210                  (340)
                                                                         ---------             ---------
Net Loss                                                                 $    (934)            $  (1,588)
                                                                         =========             =========

Net Loss Per Common Share - Basic and Assuming Dilution
                                                                         $   (0.11)            $   (0.19)
                                                                         ==========            =========

</TABLE>


        See accompanying notes to the consolidated financial statements.


<PAGE>   4


                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
                    NINE MONTHS ENDED MARCH 31, 1999 AND 1998
                                 (In Thousands)
                                   (Unaudited)


                                                   Nine Months       Nine Months
                                                      Ended             Ended
                                                     3/31/99           3/31/98

Net Loss                                          $  (3,170)          $  (4,929)
Other Comprehensive Income (Expense):
   Foreign Currency Translation Adjustments             247                 (39)
                                                  ---------           ---------

      Total Comprehensive Loss                    $  (2,923)          $  (4,968)
                                                  =========           =========




         See accompanying notes to the consolidated financial statements


<PAGE>   5


                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
                   THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                 (In Thousands)
                                   (Unaudited)


                                                 Three Months       Three Months
                                                    Ended              Ended
                                                   3/31/99            3/31/98

Net Loss                                        $    (934)            $  (1,588)
Other Comprehensive Income (Expense):
   Foreign Currency Translation Adjustments           394                   (63)
                                                ---------             ---------

      Total Comprehensive Loss                  $    (540)            $  (1,651)
                                                =========             =========





         See accompanying notes to the consolidated financial statements


<PAGE>   6

                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<TABLE>
<CAPTION>

                                                                        (Unaudited)          (Audited)
                                                                          3/31/99             6/30/98
ASSETS

<S>                                                                    <C>                  <C>
Current Assets:
   Cash                                                                $   7,324            $   4,830
   Accounts Receivable, Net                                                2,728                8,097
   Cost and Estimated Earnings in Excess
      of Billings on Uncompleted Contracts                                15,098               16,391

   Inventories
      Raw Material                                                         4,105                4,149
      Work in Process                                                      1,451                1,053

   Prepaid Expenses and Other                                              3,089                6,868
                                                                       ---------            ---------

      Total Current Assets                                                33,795               41,388

Property, Plant and Equipment - Net                                       19,267               20,994

Other Assets                                                                 671                1,976
                                                                       ---------            ---------

      Total Assets                                                     $  53,733            $  64,358
                                                                       =========            =========

</TABLE>





                                                                Continued...

<PAGE>   7



                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (Continued)
                 (In Thousands Except Share and Per Share Data)

<TABLE>
<CAPTION>


                                                                        (Unaudited)          (Audited)
                                                                          3/31/99             6/30/98

LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities:
<S>                                                                    <C>                  <C>       
     Current Portion of Long-Term Debt                                 $    7,208           $   11,132
      Accounts Payable                                                      2,261                6,263
      Advances on Long-Term Contracts                                          --                4,683
      Accrued Expenses and Other                                           10,799                7,925
                                                                       ----------           ----------

Total Current Liabilities                                                  20,268               30,003
                                                                       ----------           ----------

Deferred Income Taxes                                                         918                  918
                                                                       ----------           ----------

Other Long-Term Liabilities                                                 1,934                   --
                                                                       ----------           ----------

Commitments and Contingencies

Stockholders' Equity:
     Common stock, $.10 par; authorized
       20,000,000 shares at 3/31/99 and
       6/30/98; issued and outstanding,
       8,363,603 shares at 3/31/99 and
        8,318,058 at 6/30/98                                                  836                  832

     Preferred stock, $.10 par; authorized 1,000,000
       shares at 3/31/99 and at 6/30/98; none issued
       and outstanding at 3/31/99 and 6/30/98                                  --                   --

Note Receivable from Stockholder                                             (146)                (146)
Capital in Excess of Par                                                   24,899               24,804
Retained Earnings                                                           4,763                7,933
Accumulated Other Comprehensive Income                                        261                   14
                                                                       ----------           ----------

Total Stockholders' Equity                                                 30,613               33,437
                                                                       ----------           ----------

Total Liabilities & Stockholders' Equity                               $   53,733           $   64,358
                                                                       ==========           ==========


</TABLE>

        See accompanying notes to the consolidated financial statements.


<PAGE>   8


                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                             MARCH 31, 1999 AND 1998
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                           Nine Months            Nine Months
                                                                              Ended                   Ended

                                                                             3/31/99                 3/31/98
<S>                                                                     <C>                     <C>
Cash Flows From Operating Activities:
Net Loss                                                                $    (3,170)            $   (4,929)
Items Not Requiring (Providing) Cash:
   Depreciation                                                               3,257                  3,298
   Gain on Sale of Assets                                                      (337)                    --
   Provision for Discontinued Operations                                         --                    569
Changes in Certain Assets and Liabilities:
   Accounts Receivable                                                        5,369                  2,415
   Costs and Estimated Earnings in Excess
      of Billings on Uncompleted Contracts                                    1,293                  6,502
   Inventories                                                                 (354)                (1,436)
   Prepaid Expenses and Other                                                 3,779                   (807)
   Accounts Payable                                                            (856)                   (27)
   Advances on Long-Term Contracts                                           (3,277)                 1,418
   Accrued Expenses and Other                                                   299                 (1,601)
                                                                        -----------             ----------

Net Cash Provided By Operating Activities                                     6,003                  5,402
                                                                        -----------             ----------

Cash Flows From Investing Activities:
 Proceeds From Sale of Discontinued Operations                                   --        --        7,881
 Proceeds From Sales of Assets                                                  529                     --
 Additions to Property, Plant and Equipment                                  (1,722)                (2,662)
 Other                                                                        1,613                   (255)
                                                                        -----------             ----------

Net Cash Provided By Investing Activities                                       420                  4,964
                                                                        -----------             ----------

Cash Flows From Financing Activities:
 Proceeds From Issuance of Common Stock, Options                         
   Exercised and Warrants, Including Related Tax Benefit                         56                     97
 Repayments under Term Loan                                                      --                 (2,250)
 Repayments under Revolving Credit Facility, Net                             (3,985)                (5,479)
                                                                        -----------             ----------

Net Cash Used In Financing Activities                                        (3,929)                (7,632)
                                                                        -----------             ----------

Net Increase in Cash                                                          2,494                  2,734

Cash at Beginning of the Period                                               4,830                  3,888
                                                                        -----------             ----------

Cash at End of the Period                                               $     7,324             $    6,622
                                                                        ===========             ==========

</TABLE>

                                                                  Continued...


<PAGE>   9


                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                       MARCH 31, 1999 AND 1998 (Continued)
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                           Nine Months        Nine Months
                                                              Ended              Ended
                                                             3/31/99            3/31/98

Supplemental Disclosure of Cash Flow Information:
 Cash Paid During the Year For:

<S>                                                         <C>                <C>     
Interest                                                    $    830           $    840

Supplemental Schedule of Non Cash Financing Activities:

Issuance of Director Equity Compensation                    $     43           $     69

Issuance of Employee Stock Incentives                       $     --           $    421

Extended Payment Terms in Connection with
  Novation Agreement                                        $  4,552                 --



</TABLE>



        See accompanying notes to the consolidated financial statements.


<PAGE>   10



              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1.     The accompanying statements are unaudited and have been prepared by ECC
       pursuant to the rules and regulations of the Securities and Exchange
       Commission. The June 30, 1998 consolidated balance sheet was derived from
       audited financial statements but does not include all disclosures
       required by generally accepted accounting principles. In the opinion of
       management the accompanying unaudited consolidated financial statements
       contain all adjustments, consisting of only normal recurring adjustments,
       necessary to present fairly the consolidated financial position, results
       of operations and cash flows for the interim periods presented. These
       unaudited consolidated financial statements should be read in conjunction
       with the consolidated financial statements and footnotes thereto in the
       Company's Annual Report on Form 10-K for the fiscal year ended June 30,
       1998.

2.     For the nine and three-month periods ended March 31, 1998 the Company's
       consolidated statements of operations and consolidated statements of cash
       flows were restated for the following in order to conform to the
       presentation in the Company's Annual Report on Form 10-K for the fiscal
       year ended June 30, 1998.

       In accordance with Statement of Position 98-5 "Reporting on the Cost of
       Start-Up Activities," in the fourth quarter of fiscal year 1998, the
       Company changed its method of accounting for pre-contract costs from
       deferring costs incurred for specific anticipated contracts and including
       those costs in contract sales and costs when the contract award was
       assured to expensing the costs as incurred. The retroactive effect of the
       change on the nine and three-month periods ended March 31, 1998, was to
       increase net loss by $409,000 ($0.05 per share) (of which $106,000
       represents the cumulative effect of this change) and $138,000 ($0.02 per
       share), respectively.

3.     Basic loss per common share is computed by dividing net loss available to
       common shareholders by the weighted-average number of common shares
       outstanding during the period. Diluted loss per share is computed by
       dividing net loss available to common shareholders by the
       weighted-average number of common shares outstanding during the period
       adjusted for the number of shares that would have been outstanding if the
       dilutive potential common shares had been issued. The diluted loss per
       share does not assume the exercise of options that would have an
       antidilutive effect on loss per share.

       The weighted-average number of common shares outstanding for the basic
       and diluted per share calculations are identical since the assumed
       exercise of all outstanding options would be antidilutive.

       The weighted-average number of common shares outstanding for each period
       presented is as follows:

                                             3/31/99                  3/31/98

       Nine-months ended                    8,350,805                8,160,122
       Three-months ended                   8,372,128                8,204,292



   4.  The Company's financial statements have been presented on the basis that
       it is a going concern, which contemplates the realization of assets and
       satisfaction of liabilities in the


<PAGE>   11


       normal course of business. The Company has suffered substantial losses in
       recent fiscal years and for the first nine months of fiscal year 1999.
       This factor raises substantial doubt about the Company's ability to
       continue as a going concern.

       The financial statements do not include any adjustments relating to the
       recoverability and classification of liabilities that might be necessary
       should the Company be unable to continue as a going concern.

       On January 22, 1999 the Company entered into an Agreement with First
       Union National Bank which extended the maturity date of the Company's
       credit line with the bank to October 12, 1999, reduced the availability
       of credit from $11.4 million to $8.7 million and waived all past events
       of default. In addition, the Agreement provides for the maintenance of
       minimum cash balances, fixed charge coverage ratio, current ratio, debt
       to equity ratio and minimum tangible net worth through the maturity date.

       Pursuant to the terms of the Agreement, the Company made payments on the
       credit line totaling $2.7 million during the third quarter of fiscal year
       1999. The Company is required to make monthly payments totaling $700,000
       between April 1, 1999 and October 1, 1999, with the remaining balance due
       on October 12, 1999. There is currently approximately $7.2 million
       outstanding under the credit line.

       The Company has entered into a commitment letter agreement with Mellon
       Bank, N.A. to provide a $12,500,000 revolving line of credit with an
       initial term of four years. This new financing agreement is expected to
       be completed by June 30, 1999 and is subject to standard conditions and
       terms, including completion of an appraisal of the Company's real estate.
       When concluded, the Mellon Bank Agreement will replace the Company's 
       current credit line.

       On December 10, 1998, the Company's wholly owned subsidiary, ECC
       Simulation Limited ("Simulation"), entered into a Novation Agreement with
       Lockheed Martin ASIC ("Lockheed"). Under the agreement Simulation
       assigned all rights and obligations under a certain contract to Lockheed.
       The terms of the novation permit Simulation to extend payments, already
       owing to Lockheed, to monthly installments through December 2000. At
       March 31, 1999, the total outstanding due to Lockheed was approximately
       $4.1 million. The current portion of this agreement was $2.4 million and
       is included in Accrued Expenses and Other on the Consolidated Balance
       Sheet. The balance is included in Other Long-Term Liabilities.

5.     The Company adopted Statement of Financial Accounting Standards No. 130,
       "Reporting Comprehensive Income" (SFAS No. 130), in the first quarter of
       fiscal year 1999. SFAS No. 130 establishes standards for reporting
       comprehensive income and its components, classified by their nature, in a
       full set of annual financial statements. The components of other
       comprehensive income for the Company have generally only included foreign
       currency translation adjustments.

6.       Non-Recurring Expenses

       During the first quarter of fiscal year 1999, the Board of Directors
       announced the approval of a plan to wind-down and discontinue the
       operations of Simulation. The Simulation wind-down is expected to be
       completed in May 1999. In addition, on September 30, 1999, the Company
       relocated its corporate headquarters staff and Instructional Systems
       Development Group from Wayne, Pennsylvania to the Company's principal
       Systems Design and Production Center in Orlando, Florida. As a result of
       the efforts to wind-


<PAGE>   12


       down the UK operation and the relocation of the corporate headquarters,
       the Company recorded non-recurring charges of approximately $1.2 million,
       $700,000 and $1.3 million during the three-month periods ended September
       30, 1998, December 31, 1998 and March 31, 1999, respectively. These
       charges primarily relate to employee termination benefits and lease
       termination costs. Management expects to record additional charges,
       principally relating to employee termination benefits, during the
       remainder of fiscal year 1999 of approximately $600,000. The following
       table sets forth the details and the cumulative activity in the various
       accruals associated with the wind down of Simulation and relocation of
       the Wayne office in the Consolidated Balance Sheet at March 31, 1999:

<TABLE>
<CAPTION>                                      
                                             Cash        Non-Cash      Accrual
                           Provisions     Reductions     Activity    at 03/31/99
     <S>                    <C>            <C>           <C>          <C>
     Severance              $  1,570       $ (1,417)     $    --      $     153
     Lease Obligations         1,393           (183)          (7)         1,203
     Other                       197             (6)         (40)           151
                            ---------      --------      -------      ---------
     Total                  $  3,160       $ (1,606)     $   (47)     $   1,507
                            --------       --------      -------      ---------

</TABLE>


<PAGE>   13



                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


         Overview

         This Quarterly Report on Form 10-Q contains forward-looking statements
         within the meaning of Section 21E of the Securities Exchange Act of
         1934, as amended, and Section 27A of the Securities Act of 1933, as
         amended. For this purpose, any statements contained herein that are not
         statements of historical fact may be deemed to be forward-looking
         statements. Without limiting the foregoing, the words "believes,"
         "anticipates," "plans," "expects," and similar expressions are intended
         to identify forward-looking statements. There are a number of factors
         that could cause the Company's actual results to differ materially from
         those indicated by such forward-looking statements. These factors
         include, without limitation, those set forth below under the caption
         "Certain Factors That May Affect Future Operating Results."

a)       Material Changes in Financial Condition


         During the nine-month period ended March 31, 1999, the Company's
         principal sources of cash were billings and receipts on accounts
         receivable, costs and estimated earnings in excess of billings on
         uncompleted contracts, federal tax refunds, proceeds from the sale of
         real estate, cash surrender of life insurance policies for terminated
         employees and refunds on deposits. The principal uses of these funds
         were to reduce debt, make vendor, severance and lease termination
         payments and fund improvements to the Orlando facility.

         Accounts Receivable decreased primarily due to the receipt of payments
         on the Company's domestic training contracts including the CCTT LRIP,
         Javelin multi-year, F-18, C-17 and Saudi Vigs programs.

         Cost and Estimated Earnings in Excess of Billings on Uncompleted
         Contracts decreased primarily due to the wind-down of the UK subsidiary
         partially offset by progress on domestic operation programs. (See Note
         4 to the Unaudited Consolidated Financial Statements.)

         Work in Process inventory increased primarily due to unabsorbed
         overhead. Overhead is absorbed on an annualized projected rate.
         Management expects that volume during the remainder of fiscal 1999 will
         support the currently budgeted overhead rate.

         Prepaid Expenses and Other decreased primarily due to a Federal tax
         refund received during the third quarter of fiscal year 1999.

         Other Assets decreased primarily as a result of the surrender of
         certain executive insurance policies and refunds of deposits related to
         the Company's profit sharing plan.

         Accounts Payable decreased primarily due to the UK subsidiary's
         novation of a contract to Lockheed, as well as improved accounts
         payable aging in the domestic operation. (See Note 4 to the Unaudited
         Consolidated Financial Statements.)



<PAGE>   14


         Advances on Long-Term Contracts decreased primarily due to the UK
         subsidiary's novation of a contract to Lockheed and the wind-down of
         its operations (See Notes 4 and 6 to the Unaudited Consolidated
         Financial Statements.)

         Accrued Expenses and Other increased primarily as a result of accruals
         recorded for non-recurring expenses, including employee termination
         benefits and lease termination costs, associated with the relocation of
         the corporate headquarters and wind-down of the UK operation. These
         accruals were partially offset by employee termination benefits and
         lease termination costs paid during the second and third quarters of
         fiscal year 1999. (See Note 6 to the Unaudited Consolidated Financial
         Statements.)

         In addition, Accrued Expenses and Other increased due to amounts
         payable to Lockheed pursuant to a Novation Agreement. (See Note 4 to
         the Unaudited Consolidated Financial Statements.)

         The Company's financial statements have been presented on the basis
         that it is a going concern, which contemplates the realization of
         assets and satisfaction of liabilities in the normal course of
         business. The Company has suffered substantial losses in recent fiscal
         years and for the first nine months of fiscal year 1999. This factor
         raises substantial doubt about the Company's ability to continue as a
         going concern.

         The financial statements do not include any adjustments relating to the
         recoverability and classification of liabilities that might be
         necessary should the Company be unable to continue as a going concern.

         On January 22, 1999 the Company entered into an Agreement with First
         Union National Bank which extended the maturity date of the Company's
         credit line with the bank to October 12, 1999, reduced the availability
         of credit from $11.4 million to $8.7 million and waived all past events
         of default. In addition, the Agreement provides for the maintenance of
         minimum cash balances, fixed charge coverage ratio, current ratio, debt
         to equity ratio and minimum tangible net worth through the maturity
         date.

         The Company has entered into a commitment letter agreement with Mellon
         Bank, N.A. to provide a $12,500,000 revolving line of credit with an
         initial term of four years. This new financing agreement is expected to
         be completed by June 30, 1999 and is subject to standard conditions and
         terms, including completion of an appraisal of the Company's real
         estate. When concluded, the Mellon Bank Agreement will replace the
         Company's current credit line.

         On December 10, 1998, Simulation entered into a Novation Agreement with
         Lockheed. Under the agreement, Simulation assigned all rights and
         obligations under a certain contract to Lockheed. The terms of the
         novation permit Simulation to extend payments, already owing to
         Lockheed, to monthly installments through December 2000. At March 31,
         1999, the total outstanding due to Lockheed was approximately $4.1
         million. The current portion of this agreement was $2.4 million and is
         included in Accrued Expenses and Other. The balance is included in
         Other Long-Term Liabilities.

         During the remainder of fiscal year 1999, the Company anticipates
         spending approximately $100,000 for new machinery and equipment and to
         continue to refurbish the Orlando facility.

         Other than as stated above, the Company currently has no other material
         commitments for capital expenditures.


<PAGE>   15


b.)      Material Changes in Results of Operations.

         Net Sales decreased for the three and nine-month periods ended March
         31, 1999 as compared to the same periods ended March 31, 1998. The
         decrease is primarily the result of reduced activity in the UK
         operation related to the wind-down of the subsidiary. Partially
         offsetting the decrease was progress on existing domestic operation
         programs including: Javelin multi-year; CCTT LRIP; F-18 E/F; Engagement
         Skills Trainers (EST); as well as several additions to other ongoing
         contracts.

         Overall Gross Margin as a percentage of net sales increased for the
         three and nine-month periods ended March 31, 1999 versus the same
         periods ended March 31, 1998. Domestic training contract gross margin
         levels improved as a result of the completion of many large "cost plus"
         type contracts which have historically had lower gross margins than the
         "fixed price" type. In addition, the Company's cost reduction
         initiatives during fiscal year 1999 reduced overhead cost, thus
         improving gross margins. In addition, gross margins in the UK operation
         improved over the corresponding periods in the prior fiscal year as a
         result of the accrual for loss contracts recorded at June 30, 1998.

         Selling, General and Administrative expenses decreased for the three
         and nine-month periods ended March 31, 1999 over the corresponding
         prior year periods ended March 31, 1998. These decreases are primarily
         the result of cost containment initiatives, closure of the corporate
         headquarters in Wayne, Pennsylvania and the near completion of the
         wind-down of the UK operation. Partially offsetting these decreases
         were costs related to increased utilization of consulting services
         related to marketing, refinancing of debt, outplacement and executive
         search services and increased legal fees.

         System Development Expense decreased for the three and nine-month
         periods ended March 31, 1999 over the corresponding prior year periods
         ended March 31, 1998. These decreases are the result of more focused
         initiatives, cost containment efforts and continuation of system
         development costs now included as part of the EST contract and recorded
         in cost of sales since the award of the contract in the second quarter
         of fiscal year 1999.

         During the first quarter of fiscal year 1999, the Board of Directors
         announced the approval of a plan to wind-down and discontinue the
         operations of Simulation. The Simulation wind-down is expected to be
         completed in May 1999. In addition, on September 30, 1998, the Company
         relocated its corporate headquarters staff and Instructional Systems
         Development Group from Wayne, Pennsylvania to the Company's principal
         Systems Design and Production Center in Orlando, Florida. As a result
         of the efforts to wind-down the UK operation and the relocation of the
         corporate headquarters, the Company recorded non-recurring charges of
         approximately $1.2 million, $700,000 and $1.3 million during the three-
         month periods ended September 30, 1998, December 31, 1998 and March 31,
         1999, respectively. These charges primarily relate to employee
         termination benefits and lease termination costs. The Company
         terminated the leases for both of its facilities in the UK during the
         second and third quarter of fiscal year 1999 and as such recorded
         charges of approximately $455,000 and $862,000, respectively.
         Management expects to record additional charges, principally relating
         to employee termination benefits, during the remainder of fiscal year
         1999 of approximately $600,000.

         Interest Expense decreased for the nine-month period ended March 31,
         1999 versus the corresponding period in the previous fiscal year,
         primarily due to a reduction in the



<PAGE>   16


         Company's revolving credit facility. Interest expense increased for the
         three-month period ended March 31, 1999, versus the corresponding
         period in the previous fiscal year, primarily due to bank fees.

         Other - Net increased for the nine-month period ended March 31, 1999,
         versus the corresponding period in the previous fiscal year, primarily
         as a result of a gain associated with the sale of real estate during
         the second quarter of fiscal year 1999. This gain was partially offset
         by foreign exchange rate losses associated with converting the UK
         subsidiary's portion of the revolving credit facility to dollars. The
         UK subsidiary's debt was previously denominated in pounds sterling.
         Other-Net decreased for the three-month period ended March 31, 1999
         versus the corresponding period in the prior year primarily due to the
         previously described foreign exchange rate losses in the UK subsidiary.

c)       Certain Factors That May Affect Future Operating Results.

         The following important factors, among others, could cause actual
         results to differ materially from those indicated by forward-looking
         statements made in this Quarterly Report on Form 10-Q and presented
         elsewhere by management from time to time. All forward-looking
         statements included in this document are based on information available
         to the Company on the date hereof, and the Company assumes no
         obligation to update any such forward-looking statements.

         A number of uncertainties exist that could affect the Company's future
         operating results, including, without limitation, general economic
         conditions, changes in government spending, cancellation of weapons
         programs, delays in contract awards, delays in the acceptance process
         of contract deliverables, the Company's continued ability to develop
         and introduce products, the introduction of new products by
         competitors, pricing practices of competitors, the cost and
         availability of parts and the Company's ability to control costs.

         The maturity date on the Company's line of credit with First Union
         National Bank is October 12, 1999. There is currently approximately
         $7.2 million outstanding under the line of credit and the Company is
         obligated to make monthly payments aggregating $700,000 through October
         1, 1999 with the balance due on the maturity date. The Company has
         entered into a commitment letter agreement with Mellon Bank, N.A. to
         provide a $12,500,000 revolving line of credit with an initial term of
         four years. This new financing agreement is expected to be completed by
         June 30, 1999 and is subject to standard conditions and terms,
         including completion of an appraisal of the Company's real estate. When
         concluded, the Mellon Bank Agreement will replace the Company's 
         current credit line.

         To date, a substantial portion of the Company's revenues have been
         attributable to long-term contracts with various government agencies.
         As a result, any factor adversely affecting procurement of long-term
         government contracts could have a material adverse effect on the
         Company's financial condition and results of operations.

         Because of these and other factors, past financial performance should
         not be considered an indication of future performance. The Company's
         future quarterly operating results may vary significantly. Investors
         should not use historical trends to anticipate future results and
         should be aware that the trading price of the Company's Common Stock
         may be subject to wide fluctuations in response to quarterly variations
         in operating results and other factors, including those discussed
         above.


<PAGE>   17


         Year 2000 Issue 

         The "Year 2000" problem relates to computer systems that have time and
         date-sensitive programs that were designed to read years beginning with
         "19", but may not properly recognize the year 2000. If a computer
         system or software application used by the Company or a third party
         dealing with the Company fails because of the inability of the system
         or application to properly read the year "2000" the results could
         conceivably have a material adverse effect on the Company if not
         adequately remedied by the Company, its suppliers and customers, on a
         timely basis.

         The Company has formally addressed the Year 2000 Issue since November
         1997 when a Year 2000 Compliance Program was initiated. A complete
         evaluation was made on all internal systems, including voice mail,
         automated badge entry, e-mail, payroll, accounting, facilities and
         products. In addition, the Company is working with its prime
         contractors to identify year 2000 problems that may affect the
         integration of the Company's product with those of the prime
         contractor. The Company will work with its prime contractors to
         remediate any problems as they are identified.

         For its information technology, the Company currently utilizes a
         network of Unix and Windows NT platforms, which provide company-wide
         access to all of the Company's business application programs. Employees
         access the network application software through individual PC's
         (approximately 400), all of which are compliant. Substantially all
         operating systems related to the Company's network have been updated to
         comply with Year 2000 requirements. Periodically, new application
         programs and updated versions of existing programs are added to the
         system. The Company has an ongoing program to confirm that all such
         added software programs are compliant with Year 2000 requirements. The
         Company expects to perform a final re-verification test of all systems
         by July 1999 to allow time for any unexpected remediation that may need
         to occur. Although there can be no assurance that the Company will
         identify and correct every Year 2000 problem found in its computer
         applications, the Company believes that it has in place a comprehensive
         program to identify and correct any such problems.

         The Company has reviewed its building and utility systems (heat, light,
         phones, etc.) for the impact of Year 2000. Almost all of the systems in
         this area are Year 2000 ready. While the Company has no reason to
         believe that its utility suppliers will not meet their required Year
         2000 compliance targets, there can be no assurance that these suppliers
         will in fact meet the Company's requirements. The failure of any such
         supplier to fully remediate its systems for Year 2000 compliance could
         cause a partial shutdown of the Company's plant, which could impact the
         Company's ability to meet its obligations to supply products to its
         customers.

         The Company is satisfied that its customer base is aware of the Year
         2000 issue and is proactively working to ensure that there are no
         problems associated with the Year 2000. The Company is aware of this
         because all major customers have asked the Company for its Year 2000
         status. In the process, they have revealed their Year 2000 plans and
         stated that they are actively engaged in solving any problems.

         The Company also previously commenced a program to determine the Year
         2000 compliance efforts of its equipment and material suppliers. The
         Company has sent requests to all of its significant suppliers regarding
         their Year 2000 compliance, requesting that they warrant their ability
         to provide services and supplies in the Year 2000. More than half of
         the suppliers have warranted their ability to provide supplies in the
         Year 2000, and the remainder have presented a plan to have their
         company compliant


<PAGE>   18


         by the end of calendar year 1999. This program will be ongoing and the
         Company's efforts with respect to specific problems identified will
         depend in part upon its assessment of the risk that any such problems
         may cause the shutdown of a customer's plant or its operations.
         Unfortunately, the Company cannot fully control the conduct of its
         suppliers, and there can be no guarantee that Year 2000 problems
         originating with a supplier will not occur. The Company has developed
         contingency plans in the event of a Year 2000 failure caused by a
         supplier or third party. In some cases, especially with respect to its
         utility vendors, alternative suppliers may not be available.

         The Company believes the cost of Year 2000 compliance for its
         information and productions systems has not and will not be material to
         its consolidated results of operations and financial position.

         If the Company does not become Year 2000 compliant in a timely manner,
         the Year 2000 issue could have a material impact on the business,
         financial condition and results of operations. Delays in Year 2000
         compliance could also adversely affect the Company's reputation and
         competitive position and impair its ability to process customer
         transactions and orders and payments of supplier merchandise. The most
         reasonably likely worst case scenarios would include (1) corruption of
         data contained in the Company's internal information systems, (2)
         hardware failure and (3) the failure of infrastructure services
         provided by third parties (e.g. electricity, phone service, etc.). The
         Company has completed its contingency plan for high, medium, and low
         risk areas. The plans include, among other things, manual
         "work-arounds" for software and hardware failures, as well as
         substitutions of systems, if necessary.

         The foregoing shall be considered a Year 2000 readiness disclosure to
         the maximum extent allowed under the Year 2000 Information and
         Readiness Disclosure Act.

         Quantitative and Qualitative Disclosures About Market Risk
         Not Applicable.


         Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits

         Exhibit 4.1 - Amendment No. 2 to Rights Agreement, dated as of March
         12, 1999, between the Company and Chase Mellon Shareholder Services,
         L.L.C., as successor to Mellon Bank, N.A., is incorporated herein by
         reference to Exhibit 3 to the Company's Amendment No. 1 to Registration
         Statement on Form 8-K/A (File No. 001-8988.)

         Exhibit 10.1 - Agreement, dated as of January 22, 1999, by and among
         the Company, First Union National Bank, ECC Simulation Limited, ECC
         International, Inc. and Educational Computer Corporation International,
         Inc. is incorporated herein by reference to Exhibit 10.1 to the
         Company's Current Report on Form 8-K dated January 22, 1999 (File No.
         001-8988.)

         Exhibit 27.1 - Financial Data Schedule

b.       Reports on Form 8-K

         On January 27, 1999, the Company filed a Current Report on Form 8-K,
         dated January 22, 1999, to report under Item 5 (Other Events) that the
         Company had entered into an Agreement with First Union National Bank.
         No financial statements were required to be filed with such report.






<PAGE>   19


                                   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.




                                                ECC INTERNATIONAL CORP.




Date          May 14, 1999                      /s/ Melissa Van Valkenburgh
        ------------------------                ---------------------------
                                                Melissa Van Valkenburgh
                                                Vice President and
                                                Chief Financial Officer 
                                                (Principal Financial and
                                                Accounting Officer)


<PAGE>   20


                                   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.




                                                ECC INTERNATIONAL CORP.




Date          May 14, 1999                      /s/ Melissa Van Valkenburgh
        ------------------------                ---------------------------
                                                Melissa Van Valkenburgh
                                                Vice President and
                                                Chief Financial Officer 
                                                (Principal Financial and
                                                Accounting Officer)