<PAGE>   1
                       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, 1998
                               --------------

                                       or

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

For the transition period from _______________________ to ______________________

Commission File Number:  1-8988

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

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

175 Strafford Avenue, Suite 116, Wayne, PA                            19087-3377
----------------------------------------                             -----------
(Address of principal executive offices)                             (Zip Code)

                                 (610) 687-2600
--------------------------------------------------------------------------------
              (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, 1998, there were 8,212,141 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, 1998 AND 1997
                      (In Thousands Except Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                            Nine Months   Nine Months
                                              Ended          Ended
                                             3/31/98        3/31/97
                                            -----------   -----------
<S>                                          <C>           <C>

Net Sales                                    $ 37,224      $ 57,421

Cost of Sales                                  30,197        48,553
                                             --------      --------
Gross Profit                                    7,027         8,868
                                             --------      --------
Expenses:
   Selling, General & Administrative            9,649         8,544
   Systems Development                          1,958           620
                                             --------      --------
        Total Expenses                         11,607         9,164
                                             --------      --------
Operating Loss                                 (4,580)         (296)
                                             --------      --------
Other Income (Expense):
   Interest Income                                202           400
   Interest Expense                              (886)       (1,377)
   Other - Net                                     99           (64)
                                             --------      --------
        Total Other Expense                      (585)       (1,041)
                                             --------      --------

Loss from Continuing Operations
   Before Income Taxes                         (5,165)       (1,337)

(Benefit)/Provision for Income Taxes           (1,015)          318
                                             --------      --------
Loss from Continuing Operations                (4,150)       (1,655)

Discontinued Operations:
   Loss from Operations (net of applicable
   income tax benefit of $1,142 in FY 1997         --        (1,731)
   Loss on Disposal (net of applicable
   income tax of $199 in FY 1998)                (370)           --
                                             --------      --------
Net Loss                                     $ (4,520)     $ (3,386)
                                             ========      ========

Loss Per Common Share - Basic and
  Assuming Dilution:

Loss Per Common Share
        from Continuing Operations           $  (0.51)     $  (0.21)
Loss Per Common Share
        from Discontinued Operations         $  (0.04)     $  (0.22)

Net Loss Per Common Share                    $  (0.55)     $  (0.43)
                                             ========      ========
</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, 1998 AND 1997
                      (In Thousands Except Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Three Months   Three Months
                                                         Ended         Ended
                                                        3/31/98       3/31/97
                                                     -----------    -----------
<S>                                                   <C>           <C>     

Net Sales                                             $ 12,548      $ 13,842

Cost of Sales                                           10,410        12,550
                                                      --------      --------
Gross Profit                                             2,138         1,292
                                                      --------      --------
Expenses:
   Selling, General & Administrative                     3,426         2,563
   Systems Development                                     432           222
                                                      --------      --------
        Total Expenses                                   3,858         2,785
                                                      --------      --------
Operating Loss                                          (1,720)       (1,493)
                                                      --------      --------

Other Income (Expense):
   Interest Income                                         114           297
   Interest Expense                                       (213)         (471)
   Other - Net                                             108           (84)
                                                      --------      --------
        Total Other Income/(Expense)                         9          (258)
                                                      --------      --------

Loss from Continuing Operations
   Before Income Taxes                                  (1,711)       (1,751)

Benefit for Income Taxes                                  (261)         (409)
                                                      --------      --------
Loss from Continuing Operations                         (1,450)       (1,342)

Discontinued Operations:
   Loss from Operations (net of applicable
   income tax benefit of $408 in 1997)                      --          (610)
                                                      --------      --------
Net Loss                                              $ (1,450)     $ (1,952)
                                                      ========      ========

Loss Per Common Share - Basic and
  Assuming Dilution:
Loss Per Common Share
        from Continuing Operations                    $  (0.18)     $  (0.17)
Loss Per Common Share
        from Discontinued Operations                  $  (0.00)     $  (0.08)

Net Loss Per Common Share                             $  (0.18)     $  (0.25)
                                                      ========      ========
</TABLE>

        See accompanying notes to the consolidated financial statements.


<PAGE>   4

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


<TABLE>
<CAPTION>
                                               (Unaudited)   (Audited)
                                                3/31/98       6/30/97
                                               -----------   ---------
ASSETS
<S>                                            <C>          <C>

Current Assets:
   Cash                                         $ 6,622       $ 3,888
   Accounts Receivable, Net                       4,937         9,189
   Costs and Estimated Earnings in Excess
    of Billings on Uncompleted Contracts         19,165        25,497

   Inventories
        Raw Material                              2,717         5,062
        Work in Process                           3,828         2,326
        Finished Goods                            1,290         2,278

   Prepaid Expenses and Other                     5,981         5,406
                                                -------       -------

        Total Current Assets                     44,540        53,646

Property, Plant and Equipment - Net              22,485        26,119

Other Assets                                      2,485         2,269
                                                -------       -------

        Total Assets                            $69,510       $82,034
                                                =======       =======
</TABLE>










                                                                    Continued...

<PAGE>   5

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

<TABLE>
<CAPTION>
                                               (Unaudited)   (Audited)
                                                3/31/98       6/30/97
                                               -----------   ---------
<S>                                            <C>          <C>
LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:
   Current Portion of Long-Term Debt            $11,161       $ 2,250
   Accounts Payable                               4,819         4,846
   Advances on Long-Term Contracts                5,969         4,551
   Accrued Expenses                               4,428         6,642
                                                -------       -------
         Total Current Liabilities               26,377        18,289
                                                -------       -------
Deferred Income Taxes                             1,559         1,559
                                                -------       -------
Long-Term Debt                                       --        16,640
                                                -------       -------

Commitments and Contingencies

Stockholders' Equity:
   Common stock, $.10 par; authorized
     20,000,000 shares at 3/31/98 and
     6/30/97; issued and outstanding,
     8,212,141 shares at 3/31/98 and 
     8,046,707 at 6/30/97                           824           805
   Preferred stock, $.10 par; authorized
     1,000,000 shares at 3/31/98 and at
     6/30/97; none issued and outstanding
     at 3/31/98 and 6/30/97                          --            --
   Capital in Excess of Par                      24,503        23,935
   Retained Earnings                             16,229        20,749
   Cumulative Translation Adjustment                 18            57
                                                -------       -------
Total Stockholders' Equity                       41,574        45,546
                                                -------       -------
Total Liabilities & Stockholders' Equity        $69,510       $82,034
                                                =======       =======
</TABLE>



        See accompanying notes to the consolidated financial statements.



<PAGE>   6

                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                             MARCH 31, 1998 AND 1997
                                 (In Thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                            Nine Months    Nine Months
                                                               Ended          Ended
                                                              3/31/98         3/31/97
                                                            -----------    -----------
<S>                                                         <C>            <C>

Cash Flows From Operating Activities:
Net Loss                                                     $(4,520)       $(3,386)
Items Not Requiring Cash:
      Depreciation                                             3,298          2,904
      Provision for Discontinued Operations                      569             --
Changes in Certain Assets and Liabilities:
      Accounts Receivable                                      2,415          2,535
      Costs and Estimated Earnings in Excess
            of Billings on Uncompleted Contracts               6,332          6,860
      Inventories                                             (1,907)        (1,065)
      Prepaid Expenses and Other                                (575)           (69)
      Accounts Payable                                           (27)        (5,782)
      Advances on Long-Term Contracts                          1,418          1,723
      Accrued Expenses                                        (1,601)        (2,778)
                                                             -------        -------

Net Cash Provided By Operating Activities                      5,402            942
                                                             -------        -------

Cash Flows From Investing Activities:
      Proceeds from Sale of Discontinued Operations            7,881             --
      Additions to Property, Plant and Equipment              (2,662)        (2,495)
      Other                                                     (255)           199
                                                             -------        -------

Net Cash Provided By/(Used In) Investing Activities            4,964         (2,296)
                                                             -------        -------

Cash Flows From Financing Activities:
      Proceeds From Issuance of Common Stock, Options
      Exercised and Warrants, Including Related Tax Benefit       97            575
      Repayments under Term Loan                              (2,250)        (2,250)
      Borrowings under Revolving Credit Facility, Net         (5,479)         1,204
                                                             -------        -------

Net Cash Used In Financing Activities                         (7,632)          (471)
                                                             -------        -------

Net Increase/(Decrease) in Cash                                2,734         (1,825)

Cash at Beginning of the Period                                3,888          5,057
                                                             -------        -------

Cash at End of the Period                                    $ 6,622        $ 3,232
                                                             =======        =======
</TABLE>



                                                                    Continued...



<PAGE>   7

                    ECC INTERNATIONAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                       MARCH 31, 1998 AND 1997 (Continued)
                                 (In Thousands)
                                   (Unaudited)


                                                      Nine Months    Nine Months
                                                         Ended          Ended
                                                        3/31/98        3/31/97
                                                      -----------    -----------
Supplemental Disclosure of  Cash Flow Information:
 Cash Paid During the Year For:
      Interest                                           $940           $1,422
      Income Taxes                                       $ --           $  922

Supplemental Schedule of
  Non Cash Financing Activities:

Issuance of Employee Stock Incentives                    $421           $   --
Issuance of Director Equity Compensation                 $ 69           $   --












        See accompanying notes to the consolidated financial statements.


<PAGE>   8

              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, 1997 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 period 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, 1997.

2.   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 earnings
     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 are as follows:

                                   3/31/98          3/31/97
                                  ---------        ---------

     Three-months ended           8,204,292        7,960,739

     Nine-months ended            8,160,122        7,888,900


3.   The Company did not comply with the minimum fixed charge coverage ratio at
     September 30, 1997, December 31, 1997 or March 31, 1998 under its Term Loan
     and Revolving Credit Agreement and, accordingly, has received irrevocable
     waivers with respect to such covenant from its bank lender. The Company
     made the two final required payments on its term loan totaling $2,250,000
     during the first quarter of fiscal year 1998.

     On November 25, 1997, the Company executed an amendment to its Revolving
     Credit Agreement whereby the maximum aggregate principal amount of
     advances, including the face amount of Letters of Credit, was reduced from
     $25 million to $15 million. In addition, the Company was required to pay $6
     million on the Revolving Credit Agreement with proceeds from the sale of
     certain assets of the vending operation. An amendment dated February 17,
     1998 further reduced permitted borrowings under the Revolving Credit
     Agreement to $13 million. In addition, the February 17, 1998 amendment
     modified the fixed charge covenant and the current ratio covenant.


     The Company's bank lenders also extended the Revolving Credit Agreement's
     expiration

<PAGE>   9

     date to October 1, 1998. Pending re-negotiation of the Revolving Credit
     Agreement, outstanding amounts due under the Agreement are classified as
     current liabilities in the consolidated balance sheet at March 31, 1998.

4.   In February 1997, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
     128"). SFAS 128 specifies new standards designed to improve the earnings
     per share ("EPS") information provided in financial statements by
     simplifying the existing computational guidelines, revising the disclosure
     requirements, and increasing the comparability of EPS data on an
     international basis. Changes made to simplify the EPS computation include:
     eliminating the presentation of primary EPS and replacing it with basic
     EPS, with the principal difference being that common stock equivalents are
     not considered in computing basic EPS. The Company adopted this standard
     during the second quarter of fiscal year 1998. There was no significant
     change in loss per share as a result of the adoption of this standard. Loss
     per share amounts for all periods presented were restated to conform to the
     SFAS 128 requirements.

5.   On November 25,1997, the Company completed the sale of the fixed assets,
     inventory and trade receivables of the Company's vending operation.
     Proceeds from the sale of the vending operation were used to reduce the
     Company's debt.

     Operating results have been segregated in the accompanying consolidated
     statements of operations. Net losses for the nine and three-month periods
     ended March 31, 1998 were included as a component of discontinued
     operations in the Company's June 30, 1997 consolidated financial
     statements. Discontinued operations at June 30, 1997 included management's
     best estimates of the amounts expected to be realized on the sale of the
     vending operation, the costs directly associated with the disposal of the
     operation, as well as the operating losses expected to be incurred during
     the phase-out period.

     During the second quarter of fiscal year 1998, the Company recorded an
     additional provision for the estimated loss on disposal of discontinued
     operations of $370,000, after-tax. This change in the estimated loss
     resulted primarily from additional costs associated with the consummation
     of the sale of the fixed assets, inventory and trade receivables of the
     vending operation.

<PAGE>   10

                    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. 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, 1998, the Company's principal
     sources of cash were proceeds from the sale of certain assets of the
     vending operation, billings and receipts on costs and estimated earnings in
     excess of billings on uncompleted contracts and advances on contracts in
     the UK subsidiary. The principal uses of these funds were to make the final
     payments on the term loan, pay down the revolving credit agreement, finance
     the increase in inventories and to fund the improvements to the Orlando
     facility.

     Accounts receivable, raw material, and property, plant and equipment
     decreased as a result of the sale of these items in connection with the
     disposal of the vending operation. (See Note 5 to the Consolidated
     Financial Statements.)

     Accounts receivable also decreased as a result of the near completion of
     the two main contracts in the UK subsidiary.

     Costs and estimated earnings in excess of billings on uncompleted contracts
     decreased due to the completion or near completion of several contracts in
     the domestic training division. This decrease was partially offset by
     progress on several new domestic training division contracts which were
     awarded during the third quarter of fiscal year 1998.

     Work in process inventory increased primarily due to unabsorbed overhead.
     Overhead is absorbed on an annualized projected rate. Management expects
     that volume during the fourth quarter of fiscal year 1998 will support the
     currently budgeted overhead rate.

     Finished goods inventory decreased as a result of the sale of vending units
     inventoried at June 30, 1997.

     Prepaid expenses and other increased primarily due to the federal tax
     benefit recorded for the federal net operating loss realized during the
     nine-month period ended March 31, 1998.


<PAGE>   11

     Advances on long-term contracts increased as a result of payments received
     in advance of work performed on contracts in the UK division.

     Accrued expenses decreased primarily as a result of the realization of
     accrued losses associated with the sale of certain assets of the vending
     operation on November 25, 1997. (See Note 5 to the Consolidated Financial
     Statements.)

     The increase in capital in excess of par was primarily the result of
     employee stock bonuses and director equity compensation during the
     nine-month period ended March 31, 1998.

     The Company did not comply with the minimum fixed charge coverage ratio at
     September 30, 1997, December 31, 1997 and March 31, 1998 under its Term
     Loan and Revolving Credit Agreement and, accordingly, has received
     irrevocable waivers with respect to such covenant from its bank lender. The
     Company made the two final required payments on its term loan totaling
     $2,250,000 during the first quarter of fiscal year 1998.

     On November 25, 1997, the Company executed an amendment to its Revolving
     Credit Agreement whereby the maximum aggregate principal amount of
     advances, including the face amount of Letters of Credit, was reduced from
     $25 million to $15 million. The Company was also required to pay $6 million
     on the Revolving Credit Agreement with proceeds from the sale of certain
     assets of the vending operation. An amendment dated February 17, 1998
     further reduced permitted borrowings under the Revolving Credit Agreement
     to $13 million. In addition, the February 17, 1998 amendment modified the
     fixed charge covenant and the current ratio covenant.

     The Company's bank lenders also extended the Revolving Credit Agreement's
     expiration date to October 1, 1998. Pending re-negotiation of the Revolving
     Credit Agreement, outstanding amounts due under the Loan Facility are
     classified as current liabilities in the consolidated balance sheet at
     March 31, 1998.

     During the remainder of fiscal year 1998, the Company anticipates spending
     approximately $400,000 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. Management believes that with funds
     available under its loan facility and its projected cash flows, the Company
     will have sufficient resources to meet current and future operating
     commitments.

<PAGE>   12

b)   MATERIAL CHANGES IN RESULTS OF OPERATIONS.

     Continuing Operations

     Net sales decreased for the nine and three-month periods ended March 31,
     1998 as compared to the same periods ended March 31, 1997. The decrease in
     net sales was primarily the result of several domestic training division
     contracts with reduced activity as they are complete or near completion.
     This decrease in net sales was partially offset by sales generated from the
     award of several new contracts during the third quarter of fiscal year 1998
     including: Javelin multi-year; CCTT LRIP; a Saudi VIGS contract; as well as
     several additions to other ongoing contracts.

     Net sales volume in the UK subsidiary also decreased for the nine and
     three-month periods ended March 31, 1998 as compared to the same periods
     ended March 31, 1997. The decrease in net sales in the UK was a result of
     reduced activity on its two major contracts as they are expected to be
     completed during the first half of fiscal year 1999. The UK subsidiary was
     awarded a contract for Cabin Crew Training equipment from Airtours
     International Airways Ltd. during the third quarter of fiscal year 1998,
     however, activity on this new contract was minimal during this period. The
     Board of Directors is currently reviewing the Company's options regarding
     ECC Simulation Limited to determine whether sufficient opportunities exist
     for this operation to return to profitability.

     Overall gross margin as a percentage of net sales increased for the nine
     and three-month periods ended March 31, 1998 versus the same periods ended
     March 31, 1997. This increase was a result of the completion or near
     completion of many large "cost plus" type contracts which have historically
     had lower gross margins than the "fixed price" type. In addition, the
     Company is continuing cost reduction initiatives, including significant
     workforce reductions. However, overhead levels have not decreased
     proportionate to the decrease in sales volume. Management anticipates that
     the activity generated from several of its new contracts, combined with
     continued cost reduction initiatives, will result in improved results
     during the fourth quarter of fiscal year 1998.

     Selling, general and administrative expense increased for the nine and
     three-month periods ended March 31, 1998 versus the corresponding period in
     the prior fiscal year primarily as a result of fees paid to international
     marketing representatives, consulting fees and an increase in bid and
     proposal activities.

     Systems development expense increased for the nine and three-month periods
     ended March 31, 1998 versus the corresponding period in the previous fiscal
     year. The increase is primarily the result of efforts in the domestic
     training division to develop and/or enhance technologies and processes in
     order to remain competitive in the industry.

     Interest income decreased for the nine and three-month periods ended March
     31, 1998 as interest due the Company based on the IRS look-back method of
     accounting for completed contracts was substantially lower than the amount
     received in the corresponding period in the prior fiscal year.

<PAGE>   13

     Interest expense decreased for the nine and three-month periods ended
     March 31, 1998 versus the corresponding periods in the previous fiscal
     year. The decrease was primarily the result of final payments totaling
     $2,250,000 on the Company's term loan during the first quarter of fiscal
     year 1998 as well as payments totaling $5,500,000 on the revolving credit
     facility during the second quarter of fiscal year 1998.

     Discontinued Operations

     On November 25, 1997 the Company completed the sale of the fixed assets,
     inventory and trade receivables of the Company's vending operation.
     Proceeds from the sale of the vending operation were used to reduce the
     Company's debt.

     Operating results have been segregated in the accompanying consolidated
     statements of operations. Net losses for the nine and three-month periods
     ended March 31, 1998 were included as a component of discontinued
     operations in the Company's June 30, 1997 consolidated financial
     statements. Discontinued operations at June 30, 1997 included management's
     best estimates of amounts expected to be realized on the sale of the
     vending operation, the costs directly associated with the disposal of the
     operation, as well as the operating losses expected to be incurred during
     the phase-out period.

     During the second quarter of fiscal year 1998, the Company recorded an
     additional provision for the estimated loss on disposal of discontinued
     operations of $370,000, after-tax. The change in the estimated loss
     resulted primarily from additional costs associated with the consummation
     of the sale of the fixed assets, inventory and trade receivables of the
     vending operation.

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.

     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.

<PAGE>   14

     The Company's UK subsidiary, ECC Simulation Limited, has experienced
     significant losses in recent quarters. The Company has initiated a 20%
     workforce reduction in the UK subsidiary and additional workforce
     reductions and other cost-saving measures will be made in the future as
     necessary. The Board of Directors is currently reviewing the Company's
     options to determine the Company's future plans with respect to the UK
     subsidiary. There can be no assurance that the UK subsidiary will return to
     profitability in the near term or at all.

     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, depending on factors
     such as the timing of contract awards. 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.

     The Company recognizes that it must ensure that its products and operations
     will not be adversely impacted by various so-called "Year 2000" systems and
     software failures which can arise in certain date-sensitive functions. All
     of the Company's products are currently Year 2000 compliant, and therefore,
     the Company does not expect to undertake additional research and
     development efforts in this regard. In addition, the Company is in the
     process of identifying anticipated costs, problems and uncertainties
     associated with making its internal-use operating systems Year 2000
     compliant. In general, the Company expects to resolve the Year 2000 issue
     with respect to its computer systems and software applications through
     upgrade, conversion, modification or replacement of non-compliant systems
     and applications. There can be no assurance, however, that the systems of
     other parties upon which the Company's business also relies will be Year
     2000 compliant. The costs of becoming Year 2000 compliant, or the failure
     thereof by the Company or other parties, could have a material adverse
     effect on the Company's business, financial condition or results of
     operations.

     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not Applicable.


<PAGE>   15

                           PART II. OTHER INFORMATION

                             ECC INTERNATIONAL CORP.



Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.   EXHIBITS

              Exhibit 10.1 - Amendment, dated as of January 30, 1998, to the
              Term Loan and Revolving Credit Agreement dated as of September 20,
              1994 by and among the Company and First Fidelity Bank, N.A.

              Exhibit 10.2 - Amendment, dated as of February 17, 1998, to the
              Term Loan and Revolving Credit Agreement dated as of September 20,
              1994 by and among the Company and First Fidelity Bank, N.A.

              Exhibit 10.3 - Amendment, dated as of March 16, 1998, to the Term
              Loan and Revolving Credit Agreement dated as of September 20, 1994
              by and among the Company and First Fidelity Bank, N.A.

              Exhibit 10.4 - Amended and Restated Revolving Credit Note, dated
              February 17, 1998.

              Exhibit 27.1 - Financial Data Schedule for the nine-month period
              ended March 31, 1998.

         b.   REPORTS ON FORM 8-K

              None.

<PAGE>   16

                                   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 15, 1998                              /s/ Relland Winand
                                               ---------------------------------
                                               Relland Winand
                                               Vice President, Finance and
                                               Principal Financial and
                                               Accounting Officer