<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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: DECEMBER 26, 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: 333-32207


                               HCC INDUSTRIES INC.
             (Exact name of Registrant as specified in its charter)


        DELAWARE                                              95-2691666
       ----------                                            ------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)


                  4232 TEMPLE CITY BLVD., ROSEMEAD, CALIFORNIA
                 ----------------------------------------------
                 91770 (Address of principal executive offices)


                                 (626) 443-8933
                             ----------------------
              (Registrant's telephone number, including area code)

                               -------------------

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )


 Registrant's Common Stock, outstanding at February 9, 1999 was 135,495 shares.


<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                      HCC INDUSTRIES INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                     ASSETS

                                                                     DECEMBER 26,         MARCH 28,
                                                                         1998               1998
                                                                     ------------         ----------
<S>                                                                  <C>                  <C>
CURRENT ASSETS:
    Cash and cash equivalents                                         $  13,161           $  13,441
    Trade accounts receivable, less allowance for
       doubtful accounts of $67 at December 26, 1998
       and $40 at March 28, 1998                                          9,448              10,136
    Inventories                                                           4,264               4,610
    Prepaid and deferred income taxes                                     3,139                 260
    Other current assets                                                    260                 416
                                                                       ---------           ---------
              Total current assets                                       30,272              28,863

PROPERTY, PLANT AND EQUIPMENT, NET                                       18,831              14,617

OTHER ASSETS:
    Intangible assets                                                     5,427               5,643
    Deferred financing costs                                              3,246               3,532
    Deferred income taxes                                                 4,192               4,192
    Restricted cash                                                       6,176               6,013
                                                                       ---------           ---------
              TOTAL ASSETS                                             $ 68,144            $ 62,860
                                                                       ---------           ---------
                                                                       ---------           ---------
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
    Current portion of long-term debt                                  $  1,044            $    897
    Accounts payable                                                      2,149               2,947
    Accrued liabilities                                                   4,684               6,384
    Income taxes payable                                                  2,248               1,752
                                                                       ---------           ---------
                  Total current liabilities                              10,125              11,980

LONG TERM LIABILITIES:
    Long-term debt, net of current portion                              101,304              98,201
    Other long-term liabilities                                           9,486               9,619
                                                                       ---------           ---------
                                                                        120,915             119,800
                                                                       ---------           ---------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock; $.10 par value; authorized 550,000 shares,
       issued and outstanding 135,495 shares at December 26,
       1998 and 134,955 shares at March 28, 1998                             14                  13
    Additional paid-in capital                                              200                 ---
    Accumulated deficit                                                 (52,985)            (56,953)
                                                                       ---------           ---------
TOTAL STOCKHOLDERS' DEFICIT                                             (52,771)            (56,940)
                                                                       ---------           ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                            $ 68,144            $ 62,860
                                                                       ---------           ---------
                                                                       ---------           ---------
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                       2

<PAGE>

                      HCC INDUSTRIES INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                            Three Months Ended                   Nine Months Ended
                                                      -----------------------------        -------------------------------
                                                      December 26,      December 27,       December 26,       December 27,
                                                         1998              1997               1998               1997
                                                      -----------       -----------        -----------        ----------
<S>                                                    <C>                <C>                <C>                <C>
NET SALES                                              $ 15,297           $ 15,128           $ 50,703           $ 46,189

Cost of goods sold                                        9,558              9,508             30,987             28,324
                                                       ---------          ---------          ---------          ---------
GROSS PROFIT                                              5,739              5,620             19,716             17,865

Selling, general and administrative expenses              1,266              1,736              5,463              6,031
Non-recurring expense                                       ---              1,250                ---              1,250
                                                       ---------          ---------          ---------          ---------
EARNINGS FROM OPERATIONS                                  4,473              2,634             14,253             10,584

OTHER INCOME (EXPENSE):
  Interest and other income                                 168                157                520                372
  Interest expense                                       (2,747)            (2,573)            (8,233)            (7,751)
                                                       ---------          ---------          ---------          ---------
            Total other expense, net                     (2,579)            (2,416)            (7,713)            (7,379)

Earnings before taxes and extraordinary item              1,894                218              6,540              3,205
Taxes on earnings                                           748                 99              2,572              1,274
                                                       ---------          ---------          ---------          ---------
Earnings before extraordinary item                        1,146                119              3,968              1,931

Extraordinary loss on retirement of debt, net
  of tax benefit of $640                                    ---                ---                ---             (1,002)
                                                       ---------          ---------          ---------          ---------
NET EARNINGS                                           $  1,146           $    119           $  3,968           $    929
                                                       ---------          ---------          ---------          ---------
                                                       ---------          ---------          ---------          ---------
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                       3

<PAGE>

                      HCC INDUSTRIES INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   For the Nine Months Ended
                                                                               --------------------------------
                                                                               December 26,        December 27,
                                                                                   1998                1997
                                                                               -----------         -----------
<S>                                                                            <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings                                                                     $  3,968           $    929
Reconciliation of net earnings to net cash provided
   by operating activities:
     Depreciation                                                                   1,243              1,058
     Amortization                                                                     502                547
     Deferred income taxes                                                         (2,879)              (562)
     Extraordinary loss                                                               ---              1,002
Changes in operating assets and liabilities:
         Decrease (increase) in trade accounts receivable, net                        688               (608)
         Decrease in inventories                                                      346                112
         (Increase) decrease in other assets                                           (7)                86
         (Decrease) increase in accrued liabilities                                (1,833)               170
         (Decrease) increase in accounts payable and income
              taxes payable                                                          (302)               961
                                                                                 ---------          ---------
         Net cash provided by operating activities                                  1,726              3,695

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property, plant and equipment                                    (1,479)            (1,145)
     Business acquisition                                                             ---             (2,200)
                                                                                 ---------          ---------

         Net cash used in investing activities                                     (1,479)            (3,345)
                                                                                 ---------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on long-term debt                                            (728)           (80,408)
     Proceeds from sale of stock                                                      201                ---
     Proceeds from issuance of long-term debt                                         ---             90,000
     Deferred financing costs                                                         ---             (3,790)
     Repurchases of stock                                                             ---             (3,728)
                                                                                 ---------          ---------
         Net cash (used in) provided by financing activities                         (527)             2,074
                                                                                 ---------          ---------
Net (decrease) increase in cash and cash equivalents                                 (280)             2,424

Cash and cash equivalents at beginning of period                                   13,441              6,841
                                                                                 ---------          ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $ 13,161           $  9,265
                                                                                 ---------          ---------
                                                                                 ---------          ---------
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES:
     Mortgage indebtedness                                                          2,762                ---
     Capital lease obligations                                                      1,216                854

</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements 


                                       4


<PAGE>

                      HCC INDUSTRIES INC. AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                December 26, 1998



1.   INTERIM FINANCIAL STATEMENTS:

The accompanying unaudited condensed consolidated financial statements of HCC 
Industries Inc. and Subsidiaries (the "Company"), include all adjustments 
(consisting of normal recurring entries) which management believes are 
necessary for a fair presentation of the financial position and results of 
operations for the periods presented. Certain information and footnote 
disclosures normally included in financial statements prepared in accordance 
with generally accepted accounting principles have been condensed or omitted. 
The year end condensed balance sheet data was derived from audited financial 
statements, but does not include all disclosures required by generally 
accepted accounting principles. It is suggested that the accompanying interim 
financial statements be read in conjunction with the Company's audited 
financial statements and footnotes as of and for the year ended March 28, 
1998. Operating results for the three and nine month periods ended December 
26, 1998 are not necessarily indicative of the operating results for the full 
fiscal year.

2.   INVENTORIES:

     Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                               December  26,          March 28,
                                                                   1998                 1998
                                                               ------------           ----------
<S>                                                            <C>                    <C>

     Raw materials and component parts                           $  1,878             $   2,340
     Work in process                                                2,386                 2,270
                                                                 --------             ---------
                                                                 $  4,264             $   4,610
                                                                 --------             ---------
                                                                 --------             ---------
</TABLE>

3.   PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                               December  26,          March 28,
                                                                   1998                 1998
                                                               ------------           ----------
<S>                                                            <C>                    <C>
     Land                                                        $  4,025             $  3,180
     Buildings and improvements                                     8,618                5,988
     Furniture, fixtures and equipment                             14,589               12,607
                                                                 ---------            ---------
                                                                   27,232               21,775
     Less accumulated depreciation                                 (8,401)              (7,158)
                                                                 ---------            ---------
                                                                 $ 18,831             $ 14,617
                                                                 ---------            ---------
                                                                 ---------            ---------
</TABLE>

                                       5

<PAGE>


                      HCC INDUSTRIES INC. AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                December 26, 1998


4.   LONG-TERM DEBT:

     Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                      December 26,       March 28,
                                                                          1998             1998
                                                                      -----------       ----------
<S>                                                                   <C>               <C>
     10 3/4% Senior Subordinated Notes - interest payable
     semi-annually; due May 15, 2007                                   $  90,000         $ 90,000

     Subordinated Notes due Selling Shareholders -
     12% interest payable semi-annually; due March 28, 2001                2,500            2,500

     Subordinated Bonus Notes - 10% interest payable
     semi-annually; due March 28, 2001                                     3,000            3,000

     Term loans on land, building and improvements -
     8% interest payable monthly; due May 2008                             2,762              ---

     Other                                                                 4,086            3,598
                                                                       ---------         --------

                                                                         102,348           99,098
     Less current portion                                                  1,044              897
                                                                       ---------         --------
                                                                       $ 101,304         $ 98,201
                                                                       ---------         --------
                                                                       ---------         --------
</TABLE>

5.   CAPITAL STOCK:

The Company is authorized to issue an aggregate of 550,000 shares of common
stock. These shares may be issued in four different classes (A, B, C or D
shares) which differ only in voting rights per share. At December 26, 1998, the
135,495 outstanding shares of common stock were designated as follows:

<TABLE>
<CAPTION>
                                     Shares                                      Voting Rights
                  Class            Outstanding                 Amount              Per Share
                  -----            -----------               ----------            ----------
<S>               <C>              <C>                       <C>                 <C>
                    A                103,193                 $ 11,000                 1
                    B                 27,506                    3,000                 1
                    C                  4,316                     ---               None
                    D                    480                     ---                10
                                    --------                 --------
                                     135,495                 $ 14,000
                                    --------                 --------
                                    --------                 --------
</TABLE>

The remaining 414,505 shares of authorized but unissued common stock are
undesignated as to class.

                                       6

<PAGE>

                      HCC INDUSTRIES INC. AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                December 26, 1998


6.   COMMITMENTS AND CONTINGENCIES:

ENVIRONMENTAL

As an ongoing facet of the Company's business, it is required to maintain 
compliance with various environmental regulations. The cost of this 
compliance is included in the Company's operating results as incurred. These 
ongoing costs include permitting fees and expenses and specialized effluent 
control systems as well as monitoring and site assessment costs required by 
various governmental agencies. In the opinion of management, the maintenance 
of this compliance will not have a significant effect on the financial 
position or results of operations of the Company.

In August 1994, the U.S. Environmental Protection Agency ("EPA") identified 
the Company as a potentially responsible party ("PRP") in the El Monte 
Operable Unit ("EMOU") of the San Gabriel Valley Superfund Sites. In early 
1995, the Company and the EPA executed an Administrative Consent Order which 
requires the Company and other PRP's to perform a Remedial Investigation and 
Feasibility Study ("RI/FS") for the EMOU. In addition, the Company's facility 
in Avon, Massachusetts is subject to Massachusetts "Chapter 21E", the State's 
hazardous site clean-up program. Uncertainty as to (a) the extent to which 
the Company caused, if at all, the conditions being investigated, (b) the 
extent of environmental contamination and risks, (c) the applicability of 
changing and complex environmental laws (d) the number and financial 
viability of other PRP's, (e) the stage of the investigation and/or 
remediation, (f) the unpredictability of investigation and/or remediation 
costs (including as to when they will be incurred), (g) applicable clean-up 
standards, (h) the remediation (if any) that will ultimately be required, and 
(i) available technology make it difficult to assess the likelihood and scope 
of further investigation or remediation activities or to estimate the future 
costs of such activities if undertaken. In addition, liability under CERCLA 
is joint and several, and any potential inability of other PRPs to pay their 
pro rata share of the environmental remediation costs may result in the 
Company being required to bear costs in excess of its pro rata share.

In fiscal 1997, the Company with the help of independent consultants, 
determined a range of estimated costs of $9,000,000 to $11,000,000 associated 
with the various claims and assertions it faces. The time frame over which 
the Company expects to incur such costs varies with each site, ranging up to 
20 years as of March 28, 1998. These estimates are based partly on progress 
made in determining the magnitude of such costs, experience gained from sites 
on which remediation is ongoing or has been completed, and the timing and 
extent of remedial actions required by the applicable governmental 
authorities. As a result, the Company accrued $10,000,000 in fiscal 1997 for 
existing estimated environmental remediation and other related costs which 
the Company believes to be the best estimate of the liability. As of December 
26, 1998, the accrual for estimated environmental costs was $9,486,000.

Claims for recovery of costs already incurred and future costs have been 
asserted against various insurance companies. The Company has neither 
recorded any asset nor reduced any liability in anticipation of recovery with 
respect to such claims made.

The Company believes its reserves are adequate, but as the scope of its 
obligations becomes more clearly defined, this reserve may be modified and 
related charges against earnings may be made.

Pursuant to the Recapitalization Agreement, the Selling Group has agreed to 
indemnify the Company with respect to the after-tax costs of contingent 
environmental and other liabilities, subject to a cap for all indemnified 
liabilities of $30 million. Pursuant to the Recapitalization Agreement, a 
$6.0 million interest bearing escrow account was established by the selling 
stockholders (the "Deferred Amount") to secure indemnity claims of the 
Company and others, including with respect to environmental liabilities. Any 
environmental costs, net of tax benefit, are expected to be funded from the 
escrow account. Actual expenditures for environmental remediation were 
$19,000 for the quarter ended December 26, 1998 and $90,000 for the nine 
months ended December 26, 1998.

                                       7



                      HCC INDUSTRIES INC. AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                December 26, 1998

6.   COMMITMENTS AND CONTINGENCIES, Continued:

OTHER

On March 3, 1998, Walter Neubauer, formerly the largest shareholder of the 
Company and presently one of the largest shareholders of Special Devices, 
Inc., the Company's largest customer, filed a lawsuit in California Superior 
Court against the Company and certain other stockholders alleging (i) breach 
of fiduciary duty, (ii) fraud, (iii) negligent misrepresentation, (iv) 
negligence, (v) violations of corporations code and (vi) breach of contract. 
The allegations primarily relate to the Company's exercise of a 1995 option 
to acquire Mr. Neubauer's stock in August 1996. The former stockholder is 
seeking damages of $40.0 million. Based upon the Company's analysis of the 
current facts, it is management's belief that the Company should ultimately 
prevail in this matter, although there can be no assurance in this regard at 
this time.

On May 7, 1998, the Company filed a lawsuit against the former stockholder in 
California Superior Court alleging (i) breach of contract, (ii) intentional 
interference with business relations and (iii) interference with prospective 
business advantage. All allegations relate to violations of the 
noncompetition agreement executed by the former stockholder in August 1996. 
The Company is seeking damages of $50.0 million.

In addition to the above, the Company is involved in other claims and 
litigation arising in the normal course of business. Based on the advice of 
counsel and in the opinion of management, the ultimate resolution of these 
matters will not have a significant effect on the financial position or the 
results of operations of the Company.


                                       8


<PAGE>

PART I - FINANCIAL INFORMATION


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


RESULTS OF OPERATIONS (IN MILLIONS)

<TABLE>
<CAPTION>

                                         For the Three  Months Ended                         For the Nine Months Ended
                                  --------------------------------------------    ---------------------------------------------
                                  Dec. 26,                Dec. 27,                Dec. 26,               Dec. 27,
                                    1998        Percent     1997       Percent      1998     Percent       1997         Percent
                                  --------      -------   --------     -------    --------   -------     --------       -------
<S>                               <C>           <C>       <C>          <C>        <C>        <C>         <C>            <C>
Net sales                         $  15.3       100.0%    $  15.1       100.0%    $  50.7       100.0%    $  46.2       100.0%
Gross profit                          5.7        37.5%        5.6        37.1%       19.7        38.9%       17.9        38.7%
Selling, general and
     administrative expenses          1.3         8.4%        1.7        11.5%        5.5        10.8%        6.0        13.1%
Non-recurring expense                 0.0         0.0%        1.3         8.3%        0.0         0.0%        1.3         2.7%
Earnings from operations              4.5        29.1%        2.6        17.4%       14.2        28.1%       10.6        22.9%
Other income/expense                 (2.6)      -16.8%       (2.4)      -16.0%       (7.7)      -15.2%       (7.4)      -16.0%
Extraordinary loss (1)                0.0         0.0%        0.0         0.0%        0.0         0.0%       (1.0)      -2.2%
Net earnings                      $   1.1         7.5%    $   0.1         0.1%    $   4.0         7.8%    $   0.9         2.0%

</TABLE>
(1)  Represents extraordinary loss on retirement of debt, net of tax benefit.


COMPARISON OF THE THREE MONTHS ENDED DECEMBER 26, 1998 ("1999 QUARTER") TO THE
THREE MONTHS ENDED DECEMBER 27, 1997 ("1998 QUARTER")

NET SALES

     The Company's net sales increased by approximately 1.3% or $0.2 million 
to $15.3 million for the 1999 Quarter compared to sales of $15.1 million for 
the 1998 Quarter. The modest increase was due to an increase in automotive 
shipments which was almost wholly offset by a decrease in non-automotive 
shipments. Sales to existing aerospace, industrial process control, and 
petrochemical customers decreased approximately 3% in the 1999 Quarter 
compared to the 1998 Quarter. Based on current order volume, the Company 
expects weakness in the aerospace, industrial process control and 
petrochemical markets in the next two quarters.

     On the automotive side, overall unit shipments of airbag initiator 
products increased moderately due to the development of some new programs. 
The Company's airbag initiator unit shipments to its largest customer, 
Special Devices, Inc. ("SDI") decreased 7% for the 1999 Quarter compared to 
the 1998 Quarter. The decrease in units shipped to SDI was offset by 
significantly increased shipments on initiator products to other automotive 
customers. Overall, automotive revenue increased approximately 8% for the 
1999 Quarter compared to the 1998 Quarter.

GROSS PROFIT

     Gross profit increased by approximately 1.8% or $0.1 million, to $5.7 
million for the 1999 Quarter compared to $5.6 for the 1998 Quarter. Gross 
margin increased slightly to 37.5% for the 1999 Quarter from 37.1% for the 
1998 Quarter.

     The increase in gross profit is attributable to the increased sales 
volume. The slight increase in gross margin is due to efficiencies gained 
through operating leverage on the higher sales volume.

                                       9

<PAGE>

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


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative ("S,G&A") expenses decreased 23.5% 
to $1.3 million for the 1999 Quarter compared to $1.7 million for the 1998 
Quarter. S,G&A expenses as a percent to sales decreased to 8.4% in the 1999 
Quarter from 11.5% for the 1998 Quarter.

     The decrease in selling, general and administrative expenses were a 
result of lower contingent compensation accruals, and slightly lower 
commission costs. The improvement in the percentage of S,G&A expenses to 
sales reflects the decreased overall costs.

NON-RECURRING EXPENSE

     There was no non-recurring expense recorded in the 1999 Quarter. For the 
1998 Quarter, the non-recurring expense was attributable to a $1.3 million 
financing fee.

EARNINGS FROM OPERATIONS

     Operating earnings increased 73.1% or $1.9 million to $4.5 million for 
the 1999 Quarter compared to $2.6 million for the 1998 Quarter. Operating 
margins increased to 29.1% in the 1999 Quarter from 17.4% for the 1998 
Quarter.

     The increase in operating earnings and margin was attributable to the 
same factors (as discussed above) that contributed to the increase in gross 
profit, lower S,G&A expenses and the absence of the non-recurring expense in 
the 1999 Quarter.

OTHER EXPENSE, NET

     Other expense, net (which is predominantly net interest expense) 
increased 8.3% or $0.2 million to $2.6 million in the 1999 Quarter compared 
to $2.4 million in the 1998 Quarter. The $0.2 million increase was primarily 
attributable to interest expense incurred on additional indebtedness and 
partially offset by increased interest income in the 1999 Quarter. The 
Company has $102.3 million of indebtedness as of December 26, 1998 compared 
to $92.1 million at December 27, 1997.

NET EARNINGS

     Net earnings increased by approximately $1.0 million to $1.1 million for 
the 1999 Quarter from $0.1 million in the 1998 Quarter.

     The increase in net earnings was primarily attributable to the increase 
in earnings from operations in the 1999 Quarter.

                                       10

<PAGE>

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


COMPARISON OF THE NINE MONTHS ENDED DECEMBER 26, 1998 ("1999 PERIOD") TO THE
NINE MONTHS ENDED DECEMBER 27, 1997 ("1998 PERIOD")

NET SALES

     The Company's net sales increased by approximately 9.7% or $4.5 million 
to $50.7 million for the 1999 Period compared to sales of $46.2 million for 
the 1998 Period.

     This increase was attributable to increasing demand in all product 
lines. The Company experienced moderate growth in its aerospace, industrial 
and petrochemical products. Net non-automotive shipments increased 
approximately 6.7% in the 1999 Period compared to the 1998 Period. Based on 
current order volume, the Company expects weakness in the aerospace, 
industrial process control and petrochemical markets in the next two quarters.

     On the automotive side, unit shipments of airbag initiator products 
increased significantly due to increased volumes on existing programs and the 
development of some new programs. The Company's airbag initiator shipments to 
its largest customer, Special Devices, Inc. ("SDI") increased 21.5% for the 
1999 Period compared to the 1998 Period. This increased volume was mostly 
offset by a price reduction effected under a supply agreement with SDI. The 
agreement with SDI was effective October 1, 1997 and expires on December 31, 
2000. Unit shipments of initiator products to other automotive customers 
increased significantly during the 1999 Period. Overall, revenue from all 
automotive shipments increased approximately 14.9% in the 1999 Period 
compared to the 1998 Period.

GROSS PROFIT

     Gross profit increased by approximately 10.1% or $1.8 million, to $19.7 
million for the 1999 Period compared to $17.9 for the 1998 Period. Gross 
margin increased slightly to 38.9% for the 1999 Period from 38.7% for the 
1998 Period.

     The increase in gross profit is attributable to the increased sales 
volume. The gross margin as a percent to sales was relatively unchanged in 
the 1999 Period compared to the 1998 Period.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative ("S,G&A") expenses decreased by 
approximately 8.3% to $5.5 million for the 1999 Period compared to $6.0 
million for the 1998 Period. S,G&A expenses as a percent to sales decreased 
to 10.8% in the 1999 Period from 13.1% for the 1998 Period.

     The decrease in selling, general and administrative expenses were a 
result of lower contingent compensation accruals, and slightly lower 
commission costs. The improvement in the percentage of S,G&A expenses to 
sales reflects the decreased overall costs.

NON-RECURRING EXPENSE

     There was no non-recurring expense recorded in the 1999 Period. For the 
1998 Period, the non-recurring expense was attributable to a $1.3 million 
financing fee.

                                       11

<PAGE>

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


EARNINGS FROM OPERATIONS

     Operating earnings increased 34.0% or $3.6 million to $14.2 million for 
the 1999 Period compared to $10.6 million for the 1998 Period. Operating 
margins increased to 28.1% in the 1999 Period from 22.9% for the 1998 Period.

     The significant increase in operating earnings and margin was 
attributable to the same factors (as discussed above) that contributed to the 
increase in gross profit, lower S,G&A expenses and the absence of the 
non-recurring expense.

OTHER EXPENSE, NET

     Other expense, net (which is predominantly net interest expense) 
increased 4.1% or $0.3 million to $7.7 million in the 1999 Period compared to 
$7.4 million in the 1998 Period. The $0.3 million increase was attributable 
to interest expense incurred on additional indebtedness and partially offset 
by increased interest income in the 1999 Period. The Company has $102.3 
million of indebtedness as of December 26, 1998 compared to $92.1 million at 
December 27, 1997.

NET EARNINGS

     Net earnings increased by approximately $3.1 million to $4.0 million for 
the 1999 Period from $0.9 million in the 1998 Period.

     The significant increase in net earnings was primarily attributable to 
the increase in earnings from operations in the 1999 Period.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by operating activities was $1.7 million for the 1999 
Period compared to $3.7 million for the 1998 Period. The decrease of $2.0 
million was primarily attributable to an increase in estimated income tax 
payments and an increase in working capital requirements.

     Net cash used in investing activities was $1.5 million for the 1999 
Period compared to $3.4 million for the 1998 Period. The $1.9 million 
decrease was primarily attributable to an expenditure in the 1998 Period of 
$2.2 million for the acquisition of a business.

     Net cash used in financing activities was $0.5 million for the 1999 
Period compared to $2.1 million provided in the 1998 Period. The $0.5 million 
used in the 1999 Period resulted from approximately $0.7 million of principal 
repayments on existing debt partially offset by $0.2 million provided by 
proceeds from the sale of stock.

     As of December 26, 1998, the Company's outstanding indebtedness is $102.3 
million. The Company has a Revolving Credit Facility up to $20.0 million and 
is collateralized by accounts receivable and inventories. At December 26, 
1998 there was $15.5 million available under the Revolving Credit Facility. 
Borrowings under the Revolving Credit Facility may be used for general and 
other corporate purposes. To date, the Company has not used any amounts under 
the Revolving Credit Facility.

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<PAGE>

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


     The Company believes that cash flow from operations and the availability 
of borrowings under the Revolving Credit Facility will provide adequate funds 
for ongoing operations, planned capital expenditures and debt service during 
the term of such facility. To the extent certain performance thresholds with 
respect to the Contingent Notes and Contingent Bonuses are met, and such 
obligations become vested, the Company believes that cash flow from 
operations and availability of borrowings will be sufficient to fund such 
obligations.

     Capital expenditures for fiscal 1999 are expected to focus on 
investments in management information systems, equipment to expand 
manufacturing capacity in machining, glass production, sealing and plating, 
as well as automation equipment to lower production costs on the high volume 
production lines. Expected capital expenditures within fiscal 1999 are 
approximately $7.0 million and will be financed through working capital, the 
Revolving Credit Facility and a mortgage on the newly acquired El Monte 
property.

YEAR 2000 ISSUE

     The Year 2000 readiness issue, which is common to most businesses, 
arises from the inability of information systems, and other time and date 
sensitive products and systems to properly recognize and process 
date-sensitive information or system failures. Assessments of the potential 
cost and effects of Year 2000 issues vary significantly among businesses, and 
it is extremely difficult to predict the actual impact. Recognizing this 
uncertainty, management is continuing to actively analyze, assess and plan 
for various Year 2000 issues across its business. The products manufactured 
by the Company do not have issues related to Year 2000 functionality.

     The Year 2000 issue has an impact on both information technology ("IT") 
systems and non-IT systems, such as manufacturing systems and physical 
facilities including, but not limited to, security systems and utilities. 
Although management believes that a majority of the Company's IT systems are 
Year 2000 ready, such systems still have to be tested for Year 2000 
readiness. The Company is replacing or upgrading those systems that are 
identified as non-Year 2000. Certain IT systems previously identified as 
non-Year 2000 compliant are being upgraded or replaced which should be 
complete by June 30, 1999. Non-IT system issues are more difficult to 
identify and resolve. The Company is actively identifying non-IT Year 2000 
issues concerning its physical facility locations. As non-IT areas are 
identified, management formulates the necessary actions to ensure minimal 
disruption to its business processes. Although management believes that its 
efforts will be successful and the costs will be insignificant to its 
consolidated financial position and results of operations, management also 
recognizes that any failure or delay could cause a potential negative impact.

     Independent of the Company's efforts to prepare for Year 2000 readiness, 
the Company has purchased and is implementing a new management information 
system. This new system is Year 2000 compliant and is scheduled to be 
operational in mid 1999.

     The Year 2000 readiness of its customers varies. The Company is not 
investigating whether or not its customers are evaluating and/or preparing 
their own systems. These efforts by customers to address Year 2000 issues may 
affect the demand for certain products and services; however, the impact to 
the revenue or any change in revenue patterns is highly uncertain.

     The Company has also initiated efforts to assess the Year 2000 readiness 
of its key suppliers and business partners. The Company's direction of this 
effort is to ensure the adequacy of resources and supplies to minimize any 
potential business interruptions. Management plans to complete this part of 
its Year 2000 readiness plan in the early part of calendar 1999. While the 
Company continues to believe the Year 2000 issue described above will not 
materially affect its consolidated financial position or results of 
operations, it remains uncertain as to what extent, if any, the Company may 
be impacted.

                                       13

<PAGE>


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


     This filing contains statements that are "forward looking statements", 
and includes, among other things, discussions of the Company's business 
strategy and expectations concerning market position, future operations, 
margins, profitability, liquidity, capital resources and Year 2000 issues. 
Although the Company believes that the expectations reflected in such forward 
looking statements are reasonable, it can give no assurance that such 
expectations will prove to have been correct. All phases of the operations of 
the Company are subject to a number of uncertainties, risks and other 
influences, including general economic conditions, regulatory changes and 
competition, many of which are outside the control of the Company, any one of 
which, or a combination of which, could materially affect the results of the 
Company's operations and whether the forward looking statements made by the 
Company ultimately prove to be accurate.











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<PAGE>

PART II - OTHER INFORMATION

Items 1 through 5 are omitted as they are not applicable.

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits:  12 - Computation of ratio of earnings to fixed charges

          (b)  Reports on Form 8-K  -  Not applicable



                                   SIGNATURES


                                    HCC INDUSTRIES INC.


DATED:  February 9, 1999           s/s  Andrew Goldfarb
        ----------------           -------------------------------------
                                   President and Chief Executive Officer


DATED:  February 9, 1999           s/s  Christopher H. Bateman
        -----------------          ------------------------
                                   Vice President and Chief Financial Officer





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