<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q

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

For the quarterly period ended          OCTOBER 30, 1998
                              -------------------------------------------------

Commission File Number     0-27414
                       --------------------------------------------------------

                                     REMEC, INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               CALIFORNIA                                 95-3814301
-------------------------------------------------------------------------------
        (State of other jurisdiction of               I.R.S. Employer
         incorporation or organization)             Identification Number

     9404 CHESAPEAKE DRIVE  SAN DIEGO, CALIFORNIA           92123
-------------------------------------------------------------------------------
       (Address of principal executive offices)           (Zip Code)

                                 (619) 560-1301
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


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

                           YES      X              NO
                                ----------            ---------

Indicate number of shares outstanding of each of the issuer's classes of common
stock, at the latest practicable date:

<TABLE>
<CAPTION>
            Class                   Outstanding as of: OCTOBER 30, 1998
         -----------                -----------------------------------
<S>                                 <C>
         Common shares,
         $.01(cent)par value                    23,120,307

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

Index                                                                                 Page No.
-----                                                                                 --------
<S>                                                                                   <C>
PART I     FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements:

                 Condensed Consolidated Balance Sheets.....................................3

                 Condensed Consolidated Statements of Income...............................4

                 Condensed Consolidated Statement of Changes in
                      Shareholder's Equity.................................................5

                 Condensed Consolidated Statements of Cash Flows...........................6

                 Notes to Condensed Consolidated Financial Statements......................7

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations.............................................9


PART II    OTHER INFORMATION

Item 2.    Changes in Securities and Use of Proceeds......................................14

Item 6.    Exhibits and Reports on Form 8-K...............................................14

SIGNATURES................................................................................15

</TABLE>

                                      -2-

<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1

                                   REMEC, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                            October 30,             January 31,
                                                               1998                     1998
                                                            -----------             -----------
<S>                                                         <C>                     <C>
ASSETS

Current assets:

Cash and cash equivalents                                     $80,702,480             $41,937,101
Accounts receivable, net                                       22,758,458              25,494,474
Inventories, net                                               35,077,302              30,380,941
Prepaid expenses and other current assets                       8,979,476               6,831,010
                                                             ------------            ------------
Total current assets                                          147,517,716             104,643,526

Property, plant and equipment, net                             40,622,330              31,988,934
Intangible and other assets, net                               17,221,345              17,232,241
                                                             ------------            ------------
                                                             $205,361,391            $153,864,701
                                                             ------------            ------------
                                                             ------------            ------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable                                               $5,008,749              $8,531,756
Accrued expenses                                                9,547,204              11,616,242
                                                             ------------            ------------
Total current liabilities                                      14,555,953              20,147,998


Deferred income taxes and other long-term liabilities           4,825,507               5,222,169


Shareholders' equity                                          185,979,931             128,494,534
                                                             ------------            ------------
                                                             $205,361,391            $153,864,701
                                                             ------------            ------------
                                                             ------------            ------------
</TABLE>

SEE ACCOMPANYING NOTES.


                                      -3-

<PAGE>


                                   REMEC, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                  Three months                   Nine months  ended
                                                       ---------------------------------  ----------------------------------
                                                           October 30,      October 31,       October 30,      October 31,
                                                              1998             1997              1998              1997
                                                       -----------------  ---------------  ----------------  ---------------
<S>                                                    <C>                <C>              <C>               <C>
Net sales                                                  $35,165,597       $38,560,919     $120,551,662      $111,850,276
Cost of sales                                               25,226,316        26,788,816       85,972,678        77,861,350
                                                           -----------       -----------     ------------      ------------
Gross profit                                                 9,939,281        11,772,103       34,578,984        33,988,926

Operating expenses:

Selling, general and administrative                          6,775,900         6,442,512       21,766,652        18,008,794
Research and development                                     2,061,994         1,217,040        5,553,352         3,862,233
                                                           -----------       -----------     ------------      ------------
Total operating expenses                                     8,837,894         7,659,552       27,320,004        21,871,027
                                                           -----------       -----------     ------------      ------------
Income from operations                                       1,101,387         4,112,551        7,258,980        12,117,899
Gain on sale of subsidiary                                       -----         2,833,240            -----         2,833,240
Interest income                                                798,683           608,390        2,266,663         1,833,624
                                                           -----------       -----------     ------------      ------------
Income before provision for income taxes                     1,900,070         7,554,181        9,525,643        16,784,763


Provision for income taxes                                     554,232         2,621,027        1,246,819         5,993,812
                                                           -----------       -----------     ------------      ------------
Net income                                                  $1,345,838        $4,933,154       $8,278,824       $10,790,951
                                                           -----------       -----------     ------------      ------------
                                                           -----------       -----------     ------------      ------------

Earnings per share:

Basic                                                            $0.06             $0.24            $0.36             $0.52
                                                           -----------       -----------     ------------      ------------
                                                           -----------       -----------     ------------      ------------
Diluted                                                          $0.06             $0.23            $0.35             $0.50
                                                           -----------       -----------     ------------      ------------
                                                           -----------       -----------     ------------      ------------

Shares used in computing earnings per share:

Basic                                                       23,177,000        20,881,000       22,993,000        20,747,000
                                                           -----------       -----------     ------------      ------------
                                                           -----------       -----------     ------------      ------------
Diluted                                                     23,293,000        21,876,000       23,403,000        21,549,000
                                                           -----------       -----------     ------------      ------------
                                                           -----------       -----------     ------------      ------------
</TABLE>


SEE ACCOMPANYING NOTES.


                                      -4-

<PAGE>


                                   REMEC, INC.
                       CONDENSED CONSOLIDATED STATEMENT OF
                         CHANGES IN SHAREHOLDERS' EQUITY
                                   (unaudited)

<TABLE>
<CAPTION>
                                                     Common stock
                                             -------------------------
                                                 Shares       Amount        Paid-in capital   Retained earnings     Total
                                             ------------   --------        --------------    -----------------   -------------
<S>                                          <C>             <C>            <C>               <C>                 <C>
Balance at January 31, 1998                    21,182,663    $211,828         $95,838,167        $32,444,539       $128,494,534
Issuance of common shares in stock offering     1,990,000      19,900          49,543,600                ---         49,563,500
Issuance of common shares upon exercise of
   stock options                                   80,768         807             403,079                ---            403,886
Issuance of common shares under employee
   stock purchase plan                            193,749       1,937           1,732,406                ---          1,734,343
Issuance of common shares                          39,627         396             355,854                ---            356,250
Purchase and retirement of common shares         (366,500)     (3,665)         (2,847,741)               ---         (2,851,406)
Net income                                            ---         ---                 ---          8,278,824          8,278,824
                                             ------------    --------        ------------        -----------       ------------
Balance at October 30, 1998                    23,120,307    $231,203        $145,025,365        $40,723,363       $185,979,931
                                             ------------    --------        ------------        -----------       ------------
                                             ------------    --------        ------------        -----------       ------------
</TABLE>

    SEE ACCOMPANYING NOTES.

                                      -5-

<PAGE>

                                   REMEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                           Nine months ended
                                                                                    -------------------------------
                                                                                     October 30,        October 31,
                                                                                         1998              1997
                                                                                    --------------     ------------
<S>                                                                                 <C>                <C>
        OPERATING ACTIVITIES
        Net income                                                                      $8,278,824        $10,790,951
        Adjustments to reconcile net income to net cash
          provided by operating activities:
          Depreciation and amortization                                                  6,826,722          3,916,830
          Gain on sale of subsidiary                                                           ---         (2,833,240)
        Changes in operating assets and liabilities:
        Accounts receivable                                                              2,736,016         (4,260,780)
        Inventories                                                                     (4,696,361)        (7,644,546)
        Prepaid expenses and other current assets                                       (2,148,466)           245,308
        Accounts payable                                                                (3,523,007)         1,145,856
        Accrued expenses, deferred income taxes and
          other long-term liabilities                                                   (2,465,700)            37,894
                                                                                      ------------        -----------
        Net cash provided by operating activities                                        5,008,028          1,398,273

        INVESTING ACTIVITIES
        Additions to property, plant and equipment                                     (14,262,226)       (10,785,093)
        Proceeds from sale of subsidiary                                                       ---          5,000,000
        Payment for acquisitions, net of cash acquired                                         ---         (5,066,075)
        Other assets                                                                    (1,186,996)           539,001
                                                                                      ------------        -----------
        Net cash used by investing activities                                          (15,449,222)       (10,312,167)

        FINANCING ACTIVITIES
        Borrowings under credit facilities and long-term debt                                  ---         11,628,387
        Repayments on credit facilities and long-term debt                                     ---        (18,553,066)
        Proceeds from sale of common shares                                             52,057,979          1,877,754
        Purchase and retirement of common shares                                        (2,851,406)               ---
                                                                                      ------------        -----------
        Net cash provided (used) by financing activities                                49,206,573         (5,046,925)
                                                                                      ------------        -----------

        Increase (decrease) in cash and cash equivalents                                38,765,379        (13,960,819)
        Cash and cash equivalents at beginning of period                                41,937,101         63,172,362
        Adjustment for net cash activity of pooled companies                                   ---           (326,504)
                                                                                      ------------        -----------
        Cash and cash equivalents at end of period                                     $80,702,480        $48,885,039
                                                                                      ------------        -----------
                                                                                      ------------        -----------
</TABLE>

SEE ACCOMPANYING NOTES


                                      -6-

<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.       QUARTERLY FINANCIAL STATEMENTS

         The interim condensed consolidated financial statements included herein
         have been prepared by REMEC, Inc. (the "Company") without audit,
         pursuant to the rules and regulations of the Securities and Exchange
         Commission (the "SEC"). Certain information and footnote disclosures,
         normally included in annual financial statements, have been condensed
         or omitted pursuant to such SEC rules and regulations; nevertheless,
         management of the Company believes that the disclosures herein are
         adequate to make the information presented not misleading. These
         condensed consolidated financial statements should be read in
         conjunction with the consolidated financial statements and notes
         thereto for the year ended January 31, 1998 included in the Company's
         Annual Report on Form 10-K. In the opinion of management, the condensed
         consolidated financial statements included herein reflect all
         adjustments, consisting only of normal recurring adjustments, necessary
         to present fairly the consolidated financial position of the Company as
         of October 30, 1998 and the results of its operations for the three and
         nine month periods ended October 30, 1998 and October 31, 1997. The
         results of operations for the interim periods ended October 30, 1998
         are not necessarily indicative of the results which may be reported for
         any other interim period or for the entire fiscal year.

         In June 1997, the Financial Accounting Standards Board issued FAS No.
         130, "Reporting Comprehensive Income" and FAS No. 131, "Segment
         Information". Both of these standards are effective for fiscal years
         beginning after December 15, 1997. FAS No. 130 requires that all
         components of comprehensive income, including net income, be reported
         in the financial statements in the period in which they are recognized.
         Comprehensive income is defined as the change in equity during a period
         from transactions and other events and circumstances from non-owner
         sources. Net income and other comprehensive income, including foreign
         currency translation adjustments, and unrealized gains and losses on
         investments, shall be reported, net of their related tax effect, to
         arrive at comprehensive income. Comprehensive income is not materially
         different than reported net income for the three and nine month periods
         ended October 30, 1998 and October 31, 1997. FAS No. 131 amends the
         requirements for public enterprises to report financial and descriptive
         information about its reportable operating segments. Operating
         segments, as defined in FAS No. 131, are components of an enterprise
         for which separate financial information is required to be reported on
         the basis that is used internally for evaluating the segment
         performance. The Company believes it operates in one business and
         operating segment and that adoption of these standards will not have a
         material impact on the Company's financial statements.

         The statements in this report on Form 10-Q that relate to future plans,
         events or performance are forward-looking statements. Actual results
         could differ materially due to a variety of factors, including the
         Company's success in penetrating the commercial wireless market, risks
         associated with the cancellation or reduction of orders by significant
         commercial or defense customers, trends in the commercial wireless and
         defense markets, risks of cost overruns and product nonperformance and
         other factors and considerations described in the Company's Annual
         Report on Form 10-K, and the other documents the company files from
         time to time with the SEC. Readers are cautioned not to place undue
         reliance on these forward-looking statements, which speak only as of
         the date hereof. Other than as required by applicable law, the Company
         undertakes no obligation to publicly release the result of any
         revisions to these forward-looking statements to reflect events or
         circumstances after the date hereof or to reflect the occurrence of
         unanticipated events.


                                          -7-

<PAGE>



2.       NET INCOME PER SHARE

         The Company presents its earnings per share information in accordance
         with FAS No. 128, "Earnings per Share". Statement 128 replaced the
         previously reported primary and fully diluted earnings per share with
         basic and diluted earnings per share. Unlike primary earnings per
         share, basic earnings per share excludes any dilutive effects of
         options, warrants and convertible securities. Diluted earnings per
         share, which includes the dilutive effects of options, warrants and
         convertible securities, is very similar to the previously reported
         fully diluted earning per share. All earnings per share amounts for all
         periods have been presented, and where necessary, restated to conform
         to the Statement 128 requirements.

         The following table reconciles the shares used in computing basic and
         diluted earnings per share for the periods indicated:

<TABLE>
<CAPTION>

                                                                 Three Months Ended                 Nine Months Ended
                                                           ------------------------------       ---------------------------
                                                            October 30,      October 31,       October 30,      October 31,
                                                               1998             1997             1998              1997
                                                           -------------    -------------    -------------     ------------
          <S>                                              <C>              <C>              <C>               <C>
           Weighted average common shares
            outstanding used in basic earnings per            23,177,000        20,881,000       22,993,000      20,747,000
                share calculation
            Effect of dilutive stock options                     116,000           995,000          410,000         802,000
                                                             -----------        ----------       ----------      ----------
            Shares used in diluted earnings per share
            calculation                                       23,293,000        21,876,000       23,403,000      21,549,000
                                                             -----------        ----------       ----------      ----------
                                                             -----------        ----------       ----------      ----------
</TABLE>

3.       INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                                 October 30,             January 31,
                                                                                     1998                    1998
                                                                                 -----------             -----------
                  <S>                                                            <C>                     <C>
                  Raw materials                                                  $21,382,292             $16,087,158
                  Work in progress                                                13,940,291              14,968,767
                                                                                ------------             -----------
                                                                                  35,322,583              31,055,925

                  Less unliquidated progress payments                               (245,281)               (674,984)
                                                                                 -----------             -----------
                                                                                 $35,077,302             $30,380,941
                                                                                 -----------             -----------
                                                                                 -----------             -----------
</TABLE>

         Inventories related to contracts with prime contractors to the U.S.
         Government included capitalized general and administrative expenses of
         $2,168,000 and $2,076,000 at October 30, 1998 and January 31, 1998,
         respectively.

4.       EQUITY OFFERING

         In March 1998, the Company sold in an underwritten public offering an
         additional 1,990,000 shares of common stock. The net proceeds received
         by the Company from this offering totaled approximately $49.6 million.
         Certain shareholders of the Company also sold 1,000,000 shares as part
         of this offering.


                                          -8-

<PAGE>



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

         REMEC commenced operations in 1983 and has become a leader in the 
design and manufacture of microwave multifunction modules ("MFM's") for 
microwave transmission systems used in defense applications and the 
commercial wireless telecommunications industry. REMEC's consolidated results 
of operations include the operations of REMEC Microwave, Inc. ("Microwave"), 
REMEC Wireless, Inc. ("Wireless"), Humphrey, Inc. ("Humphrey"), Magnum 
Microwave Corporation ("Magnum"), Radian Technology, Inc. ("Radian"), 
Verified Technical Corporation ("Veritek"), C&S Hybrid, Inc. ("C&S"), Q-bit 
Corporation ("Q-bit"), Nanowave Technologies, Inc. ("Nanowave") and REMEC 
S.A.. ("REMEC Costa Rica"). The Company's consolidated results of operations 
for the three and nine months ended October 31, 1997 include the operations 
of RF Microsystems, Inc. ("RFM"). RFM, which was acquired by REMEC on April 
30 ,1996, was sold on August 26, 1997.

         During fiscal 1998, the Company acquired all of the outstanding 
shares of Q-bit, Radian and C&S Hybrid in a series of transactions accounted 
for as poolings of interests. Accordingly, the consolidated financial 
statements for the three and nine months ended October 31, 1997 have been 
restated to include Radian's, C&S Hybrid's and Q-bit's operations, assets and 
liabilities.

         In March 1997, the Company acquired Veritek in a transaction 
accounted for as a purchase. The condensed consolidated statements of income 
and cash flows for the three and nine months ended October 31, 1997 include 
Veritek's results of operations from March 31, 1997. On October 29, 1997, the 
Company acquired Nanowave in a transaction also accounted for as a purchase. 
The Company's condensed consolidated statements of income and cash flows for 
the three and nine months ended October 31, 1997 include the results of 
Nanowave from October 29, 1997 forward. REMEC's January 31, 1998 balance 
sheet includes Veritek's and Nanowave's assets and liabilities.

         REMEC's research and development efforts in the defense industry are 
conducted in direct response to the unique requirements of a customer's order 
and, accordingly, expenditures related to such efforts are included in cost 
of sales and the related funding is included in net sales. As a result, 
historical REMEC funded research and development expenses related to defense 
programs have been minimal. As REMEC's commercial business has expanded, 
research and development expenses have generally increased in amount and as a 
percentage of sales. REMEC expects this trend to continue, although research 
and development expenses may fluctuate on a quarterly basis both in amount 
and as a percentage of sales.

         Currently, the Company derives significant revenues from a limited 
group of customers and expects that it will continue to do so in the 
immediate future. In certain circumstances, customers place purchase orders 
but release quantities incrementally against those purchase orders, subject 
to an agreed period of performance. At the time a purchase order is placed, 
the Company records the entire amount of the purchase order as backlog, even 
if the customer releases quantities incrementally against the purchase order. 
A substantial amount of the Company's backlog with these customers can be 
canceled at any time generally without substantial penalties. As a result, 
any cancellation, reduction or delay in orders by or shipments to any 
significant customer may have a material adverse effect on the Company's 
business, financial condition and results of operations. The Company's 
results of operations for the third quarter of fiscal 1999 were adversely 
affected by the significant decline in commercial revenues as compared to the 
first and second quarters of fiscal 1999. The decline in commercial revenues 
was primarily attributable to requests by certain customers to delay 
deliveries of previously announced requirements. Some of the customer delays 
are attributable to the economic difficulties in the Asian markets or other 
international markets in which REMEC's customers operate, and to the 
increased competition among the participants in those markets. There can be 
no assurance whether, or to what extent, these delays will result in future 
cancellations or reductions in customer orders, or whether the delays may 
reflect the transfer of revenues to future quarters. The Company has also 
experienced continued pricing pressure on follow-on orders for existing 
defense programs on which the Company participates, and the Company 
anticipates that there will be fewer available defense programs to which it 
can market 


                                      -9-

<PAGE>

its products in the future. Failure of the Company to replace sales 
attributable to a significant defense program or contract at the end of that 
program or contract, whether due to cancellation, spending cuts, budgetary 
constraints or otherwise, may have a material adverse effect on the Company's 
business, financial condition or results of operations.

RESULTS OF OPERATIONS

         The following table sets forth, as a percentage of total net sales, 
certain consolidated statement of income data for the periods indicated.

<TABLE>
<CAPTION>
                                                                 Three Months Ended             Nine Months Ended
                                                             ----------------------------------------------------------
                                                             October 30,    October 31,    October 30,     October 31,
                                                                1998           1997            1998           1997
                                                             -----------    -----------    -----------     ------------
               <S>                                           <C>            <C>            <C>             <C>
               Net sales..................................           100%           100%            100%           100%
               Cost of goods sold.........................             72             69              71             70
                                                                      ---            ---             ---            ---
               Gross profit...............................             28             31              29             30
               Operating expenses:
               Selling, general & administrative..........             19             17              18             16
               Research and development...................              5              3               5              4
                                                                        -              -               -              -
               Total operating expenses...................             24             20              23             20
                                                                      ---            ---             ---            ---
               Income from operations.....................              4             11               6             10
               Gain on sale of subsidiary.................            ---              7             ---              3
               Interest income ...........................              2              2               2              2
                                                                      ---            ---             ---            ---
               Income before income taxes.................              6             20               8             15
               Provision for income taxes.................              2              7               1              5
                                                                        -              -               -              -
               Net income.................................             4%            13%              7%            10%
                                                                      ---            ---             ---            ---
                                                                      ---            ---             ---            ---

</TABLE>

         NET SALES. Net sales were $35.2 million and $120.6 million for the 
three and nine month periods ended October 30, 1998, representing a decrease 
of $3.4 million or 9% and an increase of $8.7 million or 8%, respectively, 
over the comparable prior year periods. Defense sales were $18.5 million and 
$53.1 million for the three and nine month periods ended October 30, 1998, 
representing an increase of $2.4 million or 15% and $.6 million or 1%, 
respectively, over the comparable prior year periods. Commercial wireless 
sales were $16.7 million and $67.5 million for the three and nine month 
periods ended October 30, 1998, representing a decrease of $5.8 million or 
26% and an increase of $8.1 million or 14%, respectively, over the comparable 
prior year periods. The increase in defense sales is primarily attributable 
to increased customer demand for the Company's products and to $1.0 million 
of non-recurring revenue associated with the settlement of a termination 
claim for a defense contract that was terminated in February, 1997. The 
Company's fiscal 1998 results reflect approximately $3.8 million of defense 
contract revenue arising at RFM; the fiscal 1999 results include no revenue 
from RFM as this entity was sold in August 1997. The decrease in commercial 
sales during the three months ended October 30, 1998 is primarily 
attributable to a reduction in demand from the Company's customers as a 
result of the economic difficulties in the Asian markets or the other 
international markets in which those customers operate. Approximately $4.6 
million of the increase in commercial sales during the nine months ended 
October 30, 1998 is attributable to revenue generated by the Company's 
Nanowave subsidiary (which was acquired in October 1997); the fiscal 1998 
period includes no revenue for Nanowave. The remaining increase in commercial 
sales during fiscal 1999 is attributable to increased customer for the 
Company's products.

         GROSS PROFIT. Gross profit was $9.9 million and $34.6 million for 
the three and nine month periods ended October 30, 1998, representing a 
decrease of $1.8 million or 16% and an increase of $.6 million or 2%, 
respectively, over the comparable prior year periods. Gross margins for 
defense were 34% and 31% for the three and nine month periods ended October 
30, 1998, compared with 25% and 30%, respectively, for the comparable prior 
year periods. Commercial gross margins were 23% and 27% for the three and 
nine month periods ended October 30, 1998 compared with 34% and 31% 
respectively, for the comparable prior year periods. The increase in defense 
gross margins is primarily attributable to improved overhead absorption as a 
result of the increased production volume and approximately $570,000 of gross 
margin associated with the termination settlement discussed above. The 
fluctuations in the Company's commercial gross margins are primarily 
attributable to changes in the Company's sales mix and to the impact on gross 
margin associated with decreased production volume.



                                      -10-

<PAGE>



         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and 
administrative expenses ("SG & A") were $6.8 million and $21.8 million for 
the three and nine month periods ended October 30, 1998, representing 
increases of $.3 million or 5% and $3.8 million or 21%, respectively, over 
the comparable prior year periods. These expenses as a percentage of sales 
increased to 19% and 18% for the three and nine month periods ended October 
30, 1998 from 17% and 16% for the comparable prior year periods. The 
increased expenses are primarily attributable to costs of approximately $2.6 
million arising at subsidiaries acquired during fiscal 1998 whose operations 
were not fully included in operating results for the three and nine months 
ended October 31, 1997, approximately $600,000 of accounting and legal 
expenses associated with an income tax credit study completed during the 
second quarter of fiscal 1999, and increased personnel, legal and other 
administrative costs resulting from the Company's growth.

         RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses 
were $2.1 million and $5.6 million for the three and nine month periods ended 
October 30, 1998, representing increases of $.8 million or 69% and $1.7 
million or 44%, respectively, over the comparable prior year periods. The 
expenditures are almost entirely attributable to the Company's commercial 
wireless business. Research and development expenditures fluctuate on a 
quarterly basis both in amount and as a percentage of sales.

         GAIN ON SALE OF SUBSIDIARY. The Company's results of operations for 
the three and nine month periods ended October 31, 1997 included the gain 
from the sale of the Company's RFM subsidiary. There was no similar gain in 
the current fiscal year.

         INTEREST INCOME. Interest income was $799,000 and $2,267,000 for the 
three and nine month periods ended October 30, 1998, representing increases 
of $190,000 and $433,000 over the comparable prior year periods. The increase 
in interest income during the current year reflects the increased level of 
cash on hand as a result of the funds generated from REMEC's follow-on public 
offering which was completed in March 1998.

         PROVISION FOR INCOME TAXES. REMEC's effective income tax rate 
declined from 36% during the nine month period ended October 31, 1997 to 13% 
during the nine month period ended October 30, 1998. The decrease in the 
effective income tax rate reflects the tax benefit of $1,992,000 related to 
the recognition of research and experimentation tax credits pertaining to 
previously filed tax returns. The reduction in the effective tax rate during 
fiscal 1999 also reflects the benefit of tax credits for certain capital 
expenditures. The Company expects its future effective tax rate to be 
approximately 34%.

         LIQUIDITY AND CAPITAL RESOURCES

         At October 30, 1998, REMEC had $133.0 million of working capital 
which included cash and cash equivalents totaling $80.7 million. REMEC also 
has $17.0 million in available credit facilities consisting of a $9.0 million 
revolving working capital line of credit and a $8.0 million revolving term 
loan. The borrowing rate under both credit facilities is based on a fixed 
spread over the London Interbank Offered Rate (LIBOR). The revolving working 
capital line of credit terminates July 3, 2000. The revolving period under 
the term loan expires July 1, 2000, at which time any loan amount outstanding 
converts to a term loan to be fully amortized and paid in full by January 2, 
2004. As of October 30, 1998, there were no borrowings outstanding under 
REMEC's credit facilities.

         During the nine month period ended October 30, 1998, net cash 
provided by operations totaled $5.0 million as the cash flow from earnings 
and non-cash expenses (primarily depreciation and amortization) more than 
offset the increase in inventories and the repayment of trade accounts 
payables and other accrued expenses. Inventories increased during this period 
due to requests by certain customers to delay delivery of previously 
announced requirements. Investing activities utilized $15.4 million during 
the nine months ended October 30, 1998, primarily as a result of $14.3 
million in capital expenditures. The bulk of the capital expenditures were 
associated with the expansion of REMEC's commercial wireless 
telecommunications business. The above expenditures were financed primarily 
by cash on hand. REMEC's future capital expenditures may continue to be 
substantially higher than historical levels as a result of commercial 
wireless telecommunications expansion requirements. Financing activities 
generated approximately


                                      -11-

<PAGE>



$49.2 million during the nine month period ended October 30, 1998, 
principally as a result of the net proceeds of $49.6 million from the 
follow-on offering and the proceeds of $2.1 million generated by the issuance 
of shares in connection with the Company's Employee Stock Purchase Plan and 
from exercises of stock options, net of $2.9 million utilized for the 
repurchase and retirement of Company common stock.

         REMEC's future capital requirements will depend upon many factors, 
including the nature and timing of orders by OEM customers, the progress of 
REMEC's research and development efforts, expansion of REMEC's marketing and 
sales efforts, and the status of competitive products.

         YEAR 2000 READINESS DISCLOSURE

         GENERAL. Many currently installed computer systems, software 
products and equipment are coded to accept only two digit entries to 
recognize years. These date-sensitive systems, products and equipment may not 
be able to accurately recognize the year 2000. As a result, these systems, 
products and equipment may need to be upgraded or replaced in order to become 
year 2000 ready.

         The Company's Vice President of Information Technology is 
responsible for coordinating the Company's efforts relating to year 2000 
readiness. These efforts include the following phases: (i) identification of 
potential year 2000 problems; (ii) assessment of the potential impact on and 
risks to the Company's business; (iii) determination of specific solutions; 
(iv) implementation of solutions; and (v) evaluation of all of the foregoing. 
The Vice President of Information Technology reports to the Company's 
President and Chief Operating Officer on these matters. In addition, the 
Company's Audit Committee and Board of Directors provides supervisorial 
oversight of the Company's efforts relating to year 2000 readiness.

         MANUFACTURING. The Company utilizes various tools and equipment in 
connection with the manufacture of its products which may have embedded 
technology that is date sensitive. The Company is testing substantially all 
of its critical tools and equipment currently being utilized by the Company 
in the manufacture of its products, and continues to monitor year 2000 
readiness in this area. Based on its efforts to date, the Company believes 
that its critical tools and equipment will be year 2000 ready on or before 
December 31, 1999. As a result, the Company currently does not anticipate 
significant interruption of its manufacturing capabilities due to the failure 
of its tools and equipment to be year 2000 ready.

         INFORMATION SYSTEMS. The Company has various internal financial
information and reporting systems, human resources and payroll applications,
procurement requirements, customer billing applications, manufacturing
monitoring systems, communications systems, desktop computers and computer
networks. The Company is testing all of these internal systems and applications
and upgrading or replacing software and hardware where needed. Based on its
efforts to date, the Company currently does not anticipate significant
interruption of its operations due to the failure of its information systems to
be year 2000 ready.

         In addition to testing existing information systems for year 2000
compliance, the Company is phasing in the installation of a new management
information system which will be used by the Company and all of its operating
subsidiaries in connection with internal financial information and reporting,
production planning and manufacturing monitoring and procurement requirements.
The purchase and installation of this system is estimated to cost approximately
$3.0 million and will be paid for by the Company out of existing funds when
installed at the various Company facilities. Although this system is not being
purchased exclusively to address year 2000 compliance issues, this management
information system is certified by the manufacturer to be year 2000 compliant.
This system has been implemented in one of the Company's subsidiaries, is in the
process of being implemented in another subsidiary and is estimated to be
completely installed and operational in all the Company's facilities over the
next two years.

         FACILITIES. The Company is also testing all of its facilities and 
infrastructure systems, including the heating/ventilation/air conditioning 
(HVAC) systems, security systems and health, safety and environment systems 
at each of its facilities. The Company currently has manufacturing operations 
or management personnel in thirteen leased or Company-owned facilities. Based 
on its efforts to date, the Company currently does not anticipate


                                      -12-

<PAGE>

significant interruption of its operations due to the failure of its facilities
and infrastructure systems to be year 2000 ready.

         SUPPLIERS. The Company is implementing a system to monitor the year 
2000 readiness of its suppliers. The system will include 
awareness/notification letters, warranties and a review of suppliers' 
web-site statements regarding year 2000 readiness. If a supplier is 
identified as having a high risk of year 2000 non-readiness, the Company will 
develop alternative sourcing plans to minimize the year 2000 risks.

         COSTS. The Company estimates that the aggregate costs for its year 
2000 readiness program incurred by the Company to date and anticipated to be 
incurred by the Company through December 31, 1999 is approximately $350,000. 
Approximately $125,000 of the aggregate estimated costs relate to internal 
resources incurred or anticipated to be incurred in connection with the 
Company's readiness program. Through October 30, 1998, the Company estimates 
that it has incurred approximately $50,000 on internal and external costs 
relating to its year 2000 readiness program. No information technology or 
other capital expenditure projects have been delayed due to the Company's 
year 2000 efforts and the costs relating thereto.

         WORST CASE SCENARIO: CONTINGENCY PLAN. The most reasonably likely 
worst case year 2000 scenario which may affect the Company is a significant 
disruption in the business operations of the Company's customers due to year 
2000 problems. The Company manufactures components and systems for commercial 
customers and various government agencies. To the extent that the customers' 
business is disrupted by year 2000 problems, these customers may be unable to 
purchase or pay for the Company's products. In that event the Company's 
business, financial condition and results of operation will be adversely 
effected.

         The Company is in the process of analyzing all of its customers to 
determine their risk of year 2000 non-readiness. Upon completion of this 
analysis, the Company intends to develop a contingency plan to address this 
and other year 2000 scenarios that may adversely effect the Company's 
business, financial condition and results of operation. It is anticipated 
that the Company's year 2000 contingency plan will be completed in October 
1999.

         UNCERTAINTIES. The above-description of the Company's year 2000 
efforts contains forward-looking statements, including: the expected state of 
readiness of the Company's manufacturing equipment, information systems and 
facilities; the future impact on the Company's business, financial condition 
and results of operation due to its year 2000 readiness; the anticipated 
state of readiness of the Company's suppliers; the estimated costs associated 
with the Company's year 2000 readiness program; and the Company's most 
reasonably likely worst case scenario. There are many factors that could 
cause the Company's actual results to differ materially from those year 2000 
related forward-looking statements.

         Some of the factors that could effect the anticipated impact of the 
Company's year 2000 readiness include the availability and cost of personnel 
trained in this area, the ability of Company personnel, vendors, customers 
and suppliers to locate and correct all relevant computer codes; the 
reliability of statements of third parties (customers, suppliers and vendors) 
regarding their own year 2000 readiness; and similar uncertainties. In 
addition, the anticipated costs of any year 2000 modifications are based on 
management's best estimates, which were derived utilizing numerous 
assumptions of future events. Many of these factors and assumptions are 
beyond the Company's control and no assurances can be given that the Company, 
its suppliers and customers will be able to resolve all of their year 2000 
readiness problems in a timely manner to avoid a material adverse effect on 
the Company's business, financial condition or results of operations.


                                      -13-

<PAGE>



PART II - OTHER INFORMATION


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         In September 1998, the Company issued 39,627 shares of common stock
that were not registered under the Securities Act of 1933. The proceeds from
this offering totaled $356,250. The shares were issued in connection with a
leasing transaction related to one of the Company's facilities.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      The following exhibits are filed herewith:

                  -  Exhibit 27  -  Financial Data Schedule

         (b) There were no reports on Form 8-K filed during the quarter ended
October 30, 1998.



                                      -14-

<PAGE>



SIGNATURES

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



REMEC, Inc.
(Registrant)



By:      /s/ Ronald E. Ragland
         ---------------------------------------
         Ronald E. Ragland
         Chairman and Chief Executive Officer




By:      /s/ Michael D. McDonald
         ----------------------------------------
         Michael D. McDonald
         Chief Financial Officer and Secretary


Date:    December 14, 1998



                                      -15-

<PAGE>




EXHIBIT INDEX


Exhibit
Number

27                Financial Data Schedule




                                      -16-