<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:  SEPTEMBER 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)

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

                 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 November 10, 1998 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)

                                        ASSETS

<TABLE>
<CAPTION>
                                                            SEPTEMBER 26,    MARCH 28,
                                                                1998            1998 
                                                            -------------    ---------
<S>                                                           <C>            <C>
CURRENT ASSETS:
   Cash and cash equivalents                                  $ 13,610       $ 13,441
   Trade accounts receivable, less allowance for
      doubtful accounts of $58 at September 26, 1998
      and $40 at March 28, 1998                                  9,568         10,136
   Inventories                                                   4,568          4,610
   Prepaid and deferred income taxes                             2,960            260
   Other current assets                                            390            416
                                                              --------       --------
          Total current assets                                  31,096         28,863

PROPERTY, PLANT AND EQUIPMENT, NET                              18,400         14,617

OTHER ASSETS:
   Intangible assets                                             5,499          5,643
   Deferred financing costs                                      3,341          3,532
   Deferred income taxes                                         4,192          4,192
   Restricted cash                                               6,179          6,013
                                                              --------       --------
          TOTAL ASSETS                                        $ 68,707       $ 62,860
                                                              --------       --------
                                                              --------       --------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Current portion of long-term debt                          $    905       $    897
   Accounts payable                                              2,423          2,947
   Accrued liabilities                                           7,427          6,384
   Income taxes payable                                         (1,677)         1,752
                                                              --------       --------
          Total current liabilities                             12,432         11,980

LONG TERM LIABILITIES:
   Long-term debt, net of current portion                      100,859         98,201
   Other long-term liabilities                                   9,534          9,619
                                                              --------       --------
                                                               122,825        119,800
                                                              --------       --------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
   Common stock; $.10 par value; authorized 550,000
      shares, issued and outstanding 134,955 shares                 13             13
   Accumulated deficit                                         (54,131)       (56,953)
                                                              --------       --------
TOTAL STOCKHOLDERS' DEFICIT                                    (54,119)       (56,940)
                                                              --------       --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                   $ 68,707       $ 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             Six Months Ended
                                                 ---------------------------    -----------------------------
                                                 September 26,  September 27,   September 26,   September 27,
                                                     1998          1997            1998             1997
                                                 -------------  -------------   -------------   -------------
<S>                                                <C>           <C>             <C>              <C>      
NET SALES                                          $  17,159     $  15,556       $  35,406        $  31,061
                                                                                                           
Cost of goods sold                                    10,496         9,497          21,429           18,816
                                                   ----------    ---------       ---------        ---------
GROSS PROFIT                                           6,663         6,059          13,977           12,245
                                                                                                           
Selling, general and administrative expenses           2,109         2,166           4,197            4,295
                                                   ----------    ---------       ---------        ---------
EARNINGS FROM OPERATIONS                               4,554         3,893           9,780            7,950
                                                                                                           
OTHER INCOME (EXPENSE):                                                                                    
  Interest and other income                              175           115             352              215
  Interest expense                                    (2,764)       (2,573)         (5,486)          (5,178)
                                                   ----------    ---------       ---------        ---------
            Total other expense, net                  (2,589)       (2,458)         (5,134)          (4,963)
                                                                                                           
Earnings before taxes and extraordinary item           1,965         1,435           4,646            2,987
Taxes on earnings                                        775           566           1,824            1,175
                                                   ----------    ---------       ---------        ---------
Earnings before extraordinary item                     1,190           869           2,822            1,812
                                                                                                           
Extraordinary loss on retirement of debt, net                                                              
  of tax benefit of $640                                 ---           ---             ---           (1,002)
                                                   ----------    ---------       ---------        ---------
NET EARNINGS                                        $  1,190        $  869        $  2,822           $  810
                                                   ----------    ---------       ---------        ---------
                                                   ----------    ---------       ---------        ---------
</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 Six Months Ended
                                                               -----------------------------
                                                               September 26,   September 27,
                                                                    1998            1997
                                                               -------------   -------------
<S>                                                               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings                                                      $  2,822       $    810
Reconciliation of net earnings to net cash
   provided by operating activities:
     Depreciation                                                       819           689
     Amortization                                                       335           382
     Deferred income taxes                                           (2,700)         (404)
     Extraordinary loss                                                  --         1,002
Changes in operating assets and liabilities:                         
        Decrease (increase) in trade accounts receivable, net           568        (1,299)
        Decrease in inventories                                          42           284
        (Increase) decrease in other assets                            (140)           58
        Increase in accrued liabilities                                 958         2,897
        (Decrease) increase in accounts payable and income           
             taxes payable                                             (599)        1,435
                                                                    -------      --------
        Net cash provided by operating activities                     2,105         5,854
                                                                    
CASH FLOWS FROM INVESTING ACTIVITIES:                               
     Purchases of property, plant and equipment                      (4,219)       (1,317)
     Business acquisition                                                --        (2,200)
                                                                    -------      --------
        Net cash used in investing activities                        (4,219)       (3,517)
                                                                    -------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:                               
     Principal payments on long-term debt                              (479)      (80,230)
     Proceeds from issuance of long-term debt                         2,762        90,000
     Deferred financing costs                                           ---        (3,700)
     Repurchases of stock                                               ---        (3,728)
                                                                    -------      --------
        Net cash provided by financing activities                     2,283         2,342
                                                                    -------      --------
Net increase in cash and cash equivalents                               169         4,679
                                                                    
Cash and cash equivalents at beginning of period                     13,441         6,841
                                                                    -------      --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                          $13,610      $ 11,520
                                                                    -------      --------
                                                                    -------      --------
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES:
     Capital lease obligations                                          383           ---
</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
                                  September 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 six month periods ended September 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>
                                               September  26,     March 28,
                                                  1998             1998
                                               --------------    -----------
     <S>                                       <C>               <C>
     Raw materials and component parts         $  2,179          $  2,340
     Work in process                              2,389             2,270
                                               --------          --------
                                               $  4,568          $  4,610
                                               --------          --------
                                               --------          --------
</TABLE>

3.   PROPERTY, PLANT AND EQUIPMENT:

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

<TABLE>
<CAPTION>
                                               September  26,     March 28,
                                                  1998             1998
                                               --------------    -----------
     <S>                                       <C>               <C>
     Land                                      $  4,025          $  3,180
     Buildings and improvements                   8,520             5,988
     Furniture, fixtures and equipment           13,832            12,607
                                               --------          --------
                                                 26,377            21,775
     Less accumulated depreciation               (7,977)           (7,158)
                                               --------          --------
                                              $  18,400         $  14,617
                                               --------          --------
                                               --------          --------
</TABLE>


                                       5

<PAGE>

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

4.   LONG-TERM DEBT:

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

<TABLE>
<CAPTION>
                                                               September  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                                                            3,502           3,598
                                                                 ----------       ---------
                                                                    101,764          99,098
     Less current portion                                               905             897
                                                                 ----------       ---------
                                                                 $  100,859       $  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 September 26, 1998, 
the 134,955 outstanding shares of common stock were designated as follows:

<TABLE>
<CAPTION>
                    Shares                   Voting Rights
        Class     Outstanding      Amount      Per Share
        -----     -----------  ----------    -------------
          <S>     <C>            <C>             <C>
          A       102,653        $10,000           1
          B        27,506          3,000           1
          C         4,316            ---         None
          D           480            ---          10
                  -------        -------
                  134,955        $13,000
                  -------        -------
                  -------        -------
</TABLE>

The remaining 415,045 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
                               September 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 
September 26, 1998, the accrual for estimated environmental costs was 
$9,534,000.

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 
$45,000 for the quarter ended September 26, 1998 and $381,000 for the fiscal 
year ended March 28, 1998.


                                       7

<PAGE>

                      HCC INDUSTRIES INC. AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                              September 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 SIX MONTHS ENDED 
                                        -------------------------------------   --------------------------------------
                                        SEPT. 26,           SEPT. 27,           SEPT. 26,           SEPT. 27,
                                         1998     PERCENT     1997    PERCENT     1998      PERCENT   1997     PERCENT
                                         ----     -------     ----    -------     ----      -------   ----     -------
<S>                                     <C>        <C>        <C>      <C>        <C>       <C>       <C>       <C> 
Net sales                               $17.2      100.0%     $15.6    100.0%     $35.4     100.0%    $31.1     100.0%
Gross profit                              6.7       38.8%       6.1     38.9%      14.0      39.5%     12.2      39.4%
Selling, general and administrative
  expenses                                2.1       12.3%       2.2     13.9%       4.2      11.9%      4.3      13.8%
Earnings from operations                  4.6       26.5%       3.9     25.0%       9.8      27.6%      8.0      25.6%
Other income/expense                     (2.6)     -15.1%      (2.5)   -15.8%      (5.1)    -14.5%     (5.0)    -16.0%
Extraordinary loss (1)                    0.0        0.0%       0.0      0.0%       0.0       0.0%     (1.0)     -3.2%
Net earnings                             $1.2        6.9%      $0.9      5.6%      $2.8       8.0%     $0.8       2.6%
</TABLE>


(1)  Represents extraordinary loss on retirement of debt, net of tax benefit.


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

NET SALES

     The Company's net sales increased by approximately 10.3% or $1.6 million 
to $17.2 million for the 1999 Quarter compared to sales of $15.6 million for 
the 1998 Quarter.  The  increase was due to increasing demand in all product 
lines. Sales to existing aerospace, industrial process control, and 
petrochemical customers increased significantly in the 1999 Quarter.  Net 
non-automotive shipments increased by approximately 19% in the 1999 Quarter 
compared to the 1998 Quarter.  Based on current order volume, the Company 
expects continued, but slower growth in the aerospace, industrial process 
control and petrochemical markets.

     On the automotive side, unit shipments of airbag initiator products 
increased moderately 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 13% for the 
1999 Quarter compared to the 1998 Quarter.  This increased volume was offset 
by a price reduction effected under a new three year supply agreement with 
SDI. The new agreement with SDI was effective October 1, 1997 and expires on 
December 31, 2000. Overall, revenue from all automotive shipments decreased 
approximately 1% in the 1999 Quarter compared to the 1998 Quarter.  Based on 
current order volume, the Company expects flat revenue from automotive 
products over the next quarter.

GROSS PROFIT

     Gross profit increased by approximately 9.8% or $0.6 million, to $6.7 
million for the 1999 Quarter compared to $6.1 for the 1998 Quarter.  Gross 
margin decreased slightly to 38.8% for the 1999 Quarter from 38.9% for the 
1998 Quarter.

     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 Quarter compared to the 1998 Quarter.


                                       9

<PAGE>








                                       10

<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 4.5% to 
$2.1 million for the 1999 Quarter compared to $2.2 million for the 1998 
Quarter. S,G&A expenses as a percent to sales decreased to 12.3% in the 1999 
Quarter from 13.9% for the 1998 Quarter.

     Selling expenses decreased slightly in lieu of higher sales volume 
reflecting increased non-commissioned sales.  Additionally, the Company 
enjoyed a slight decrease in general and administrative expenses which were a 
result of lower contingent compensation accruals.  The improvement in the 
percentage of S,G&A expenses to sales reflects the decreased overall costs 
and improved leverage on the fixed portion of those expenses.

EARNINGS FROM OPERATIONS

     Operating earnings increased 17.9% or $0.7 million to $4.6 million for 
the 1999 Quarter compared to $3.9 million for the 1998 Quarter.  Operating 
margins increased to 26.5% in the 1999 Quarter from 25.0% 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 and gross margin and improvements in S,G&A expenses as a percent to 
sales.

OTHER EXPENSE, NET

     Other expense, net (which is predominantly net interest expense) 
increased 4.0% or $0.1 million to $2.6 million in the 1999 Quarter compared 
to $2.5 million in the 1998 Quarter.  The $0.1 million increase was 
attributable to interest expense on the mortgages incurred in the Company's 
May 1998 purchase of a facility in El Monte, California of approximately 
110,000 square feet (of which the Company was leasing approximately 38,000 
square feet).  The Company has $101.8 million of indebtedness as of 
September 26, 1998 compared to $92.2 million at September 27, 1997.

NET EARNINGS

     Net earnings increased by approximately $0.3 million to $1.2 million for 
the 1999 Quarter from $0.9 million in the 1998 Quarter.

     The increase in net earnings was primarily attributable to the increase 
in gross profit in the 1999 Quarter. 

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

NET SALES

     The Company's net sales increased by approximately 13.8% or $4.3 million 
to $35.4 million for the 1999 Period compared to sales of $31.1 million for 
the 1998 Period.

     This increase was attributable to increasing demand in all product 
lines. The Company experienced strong growth in its aerospace, industrial and 
petrochemical products.  Net non-automotive shipments increased approximately 
15.5% in the 1999 Period compared to the 1998 Period.  Based on 


                                       11

<PAGE>

current order volume, the Company expects continued, but slower growth in the 
aerospace, industrial process control and petrochemical markets.








                                       12

<PAGE>

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

     On the automotive side, unit shipments of airbag initiator products 
increased moderately 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 36.5% for 
the 1999 Period compared to the 1998 Period.  This increased volume was 
mostly offset by a price reduction effected under a new three year supply 
agreement with SDI. The new agreement with SDI was effective October 1, 1997 
and expires on December 31, 2000. Overall, revenue from all automotive 
shipments increased approximately 11.9% in the 1999 Period compared to the 
1998 Period.  Based on current order volume, the Company expects flat revenue 
from automotive products over the next quarter.

GROSS PROFIT

     Gross profit increased by approximately 14.8% or $1.8 million, to $14.0 
million for the 1999 Period compared to $12.2 for the 1998 Period.  Gross 
margin increased slightly to 39.5% for the 1999 Period from 39.4% 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 2.3% to $4.2 million for the 1999 Period compared to $4.3 
million for the 1998 Period.  S,G&A expenses as a percent to sales decreased 
to 11.9% in the 1999 Period from 13.8% for the 1998 Period.

     Selling expenses decreased slightly in lieu of higher sales volume 
reflecting increased non-commissioned sales.  Additionally, the Company 
enjoyed a slight decrease in general and administrative expenses which were a 
result of lower contingent compensation accruals.  The improvement in the 
percentage of S,G&A expenses to sales reflects the decreased overall costs 
and improved leverage on the fixed portion of those expenses.

EARNINGS FROM OPERATIONS

     Operating earnings increased 22.5% or $1.8 million to $9.8 million for 
the 1999 Period compared to $8.0 million for the 1998 Period.  Operating 
margins increased to 27.6% in the 1999 Period from 25.6% 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 and gross margin and improvements in S,G&A 
expenses as a percent to sales.

OTHER EXPENSE, NET

     Other expense, net (which is predominantly net interest expense) 
increased 2.0% or $0.1 million to $5.1 million in the 1999 Period compared to 
$5.0 million in the 1998 Period.  The $0.1 million increase was attributable 
to additional interest expense incurred with the additional indebtedness and 
net of increased interest income recognized in the 1999 Period compared to 
the 1998 Period.  The Company has $101.8 million of long-term debt as of 
September 26, 1998 compared to $92.2 million at September 27, 1997.


                                       13

<PAGE>

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

NET EARNINGS

     Net earnings increased by approximately $2.0 million to $2.8 million for 
the 1999 Period from $0.8 million in the 1998 Period.

     The significant increase in net earnings was primarily attributable to 
the increase in gross profit recognized in the 1999 Period and the 
extraordinary loss associated with early retirement of debt in the 1998 
Period. 

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by operating activities was $2.1 million for the 1999 
Period compared to $5.9  million for the 1998 Period.  The decrease of $3.8 
million was primarily attributable to a reduction in income taxes payable and 
an increase in working capital requirements.

     Net cash used in investing activities was $4.2 million for the 1999 
Period compared to $3.5 million for the 1998 Period.  The $0.7 million 
increase was attributable to the Company's May 1998 purchase of a facility in 
El Monte, California of approximately 110,000 square feet (of which the 
Company was leasing approximately 38,000 square feet).  In addition, included 
in the $3.5 million of cash used in investing activities in the 1998 Period 
was $2.2 million for the acquisition of a business which did not recur in the 
1999 Period.

     Net cash provided by financing activities was $2.3 million for both the 
1999 and 1998 Periods. The $2.3 million provided in the 1999 Period resulted 
from the $2.8 million of mortgages associated with the Company's May 1998 
purchase of a facility in El Monte, California of approximately 110,000 
square feet and approximately $0.5 million of principal repayments on 
existing debt.

     As of September 26, 1998, the Company's outstanding long-term debt is 
$101.8 million.  The Company has a Revolving Credit Facility up to $20.0 
million and is collateralized by accounts receivable and inventories.  At 
September 26, 1998 there was $15.8 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.

     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 vertical 
integration  with investments in 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 for fiscal 1999 are approximately $7.7 million 
and will be financed through working capital, the Revolving Credit Facility 
and a mortgage on the 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 businesses.

                                       14

<PAGE>

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

     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 difficulty to 
identify and resolve.  The Company is actively identifying non-IT Year 2000 
issues concerning its products and services, as well as 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 immaterial (i.e., less than $25,000) to its consolidated 
financial position and results of operations, it also recognizes that any 
failure or delay could cause a potential impact.

     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.

     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 and capital resources.  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.


                                       15

<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


<TABLE>
     <S>  <C>
     (a)  Exhibits:  12 - Computation of ratio of earnings to fixed charges

     (b)  Reports on Form 8-K  -  Not applicable
</TABLE>


                                SIGNATURES


                                       HCC INDUSTRIES INC.


DATED:  November 10, 1998              /s/ Andrew Goldfarb
        -----------------              -------------------------------------
                                       President and Chief Executive Officer


DATED:  November 10, 1998              /s/ Christopher H. Bateman
        -----------------              -------------------------------------
                                       Vice President and Chief Financial
                                         Officer


                                       16