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:  March 31, 1997.

                                      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 0-18083


                             Williams Controls, Inc.
             (Exact name of registrant as specified in its charter)

          Delaware                                         84-1099587
-------------------------------                            ------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

      14100 SW 72nd Avenue
          Portland, Oregon                                             97224
-------------------------------                            -------------------
(Address of principal executive office)                             (zip code)

              Registrant's telephone number, including area code:
                                (503) 684-8600


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
The number of shares outstanding of the registrant's  common stock as of April
30, 1997:  17,782,040.


<PAGE>

                            Williams Controls, Inc.

                                     Index


                                                                            Page
                                                                          Number

Part I.  Financial Information

  Item 1.  Financial Statements

           Consolidated Balance Sheets, March 31, 1997 (unaudited)
              and September 30, 1996                                         1

           Unaudited Consolidated Statement of Stockholders' Equity,
              six months ended March 31, 1997                                2

           Unaudited Consolidated Statements of Operations,
              three and six months ended March 31, 1996 and 1997             3

           Unaudited Consolidated Statements of Cash Flows,
              six months ended March 31, 1996 and 1997                       4

           Notes to Unaudited Consolidated Financial Statements              5

  Item 2.  Management's Discussion and Analysis
              of Financial Condition and Results of Operations              10


Part II.  Other Information

  Item 4.  Submission of Matters to a Vote of Security Holders              14

  Item 5.  Other Information                                                14

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

               Signature Page                                               15



<PAGE>

Williams Controls, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)



                                                    March 31,   September 30,
                                                    1997             1996
                                                  -----------   -------------
                                                  (unaudited)

Assets

   Current Assets:
     Cash                                           $    2,747         $ 1,379
     Accounts receivable, net                           11,343          13,103
     Inventories                                        16,577          15,288
     Other                                               2,140           1,885
                                                        ------          ------
           Total current assets                         32,807          31,655
                                                        ------          ------

   Investment in affiliate                                 764             943

   Property, plant and equipment                        25,564          24,955
    Less accumulated depreciation and amortization       5,856           5,154
                                                        ------         -------
                                                        19,708          19,801
                                                        ------          ------

   Other assets                                          1,480           1,379
                                                        ------          ------
                                                       $54,759         $53,778
                                                        ======          ======



Liabilities and Stockholders' Equity

   Current Liabilities:
     Current portion of revolving line of credit       $21,000         $21,000
     Current portion of long-term debt                     380             212
     Accounts payable and accrued expenses               9,024           8,388
                                                        -------         ------
           Total current liabilities                    30,404          29,600
                                                        -------         ------

   Long-term debt                                        2,652           2,782
   Other liabilities                                     2,861           2,673

   Commitments and contingencies                             -               -

Minority interest in consolidated subsidiaries             682             713

   Stockholders' equity:
     Preferred stock of $.01 par value, 
          50,000,000 shares authorized                       -               -
     Common stock of $.01 par value, 
          50,000,000 shares authorized,
          17,912,240 and 17,869,987 shares issued          179             179
     Additional paid-in capital                          9,777           9,671
     Retained earnings                                   9,321           9,439
     Unearned ESOP shares                                (511)           (511)
     Treasury stock (130,200 and 195,200 shares)         (378)           (540)
     Pension liability adjustment                        (228)           (228)
                                                      --------        --------
                                                       18,160           18,010
                                                      --------        --------
                                                      $54,759          $53,778
                                                       ======           ======


       The accompanying notes are an integral part of these statements.


<PAGE>


Williams Controls, Inc.
Unaudited Consolidated Statement of Stockholders' Equity
(Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>



                                Number of             Additional            Unearned  Pension
                                Shares        Common  Paid-in    Retained   ESOP      Liability  Treasury  Stockholders'
                                Issued        Stock   Capital    Earnings   Shares    Adjustment Shares    Equity
<S>                             <C>           <C>     <C>        <C>        <C>       <C>        <C>       <C>
Balance, September 30, 1996     17,869,987    $ 179   $9,671     $9,439     $(511)    $(228)     $(540)    $18,010

Issuance of contingent
shares for acquisition              42,253        -      106          -         -         -           -        106

Issuance of shares from
treasury for acquisition
advisory services                        -        -        -          -         -         -        162         162

Net loss                                 -        -        -       (118)        -         -          -        (118)
                                ----------    -----   ------     ------     -----     -----      -----     ------- 
Balance, March 31, 1997         17,912,240    $ 179   $9,777     $9,321     $(511)    $(228)     $(378)    $18,160
                                ==========     ====   ======     ======     =====     =====      =====     =======



</TABLE>





























        The accompanying notes are an integral part of these statements.
<PAGE>

Williams Controls, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)

                                    Three        Three         Six         Six  
                                   months       months      months      months
                                    ended        ended       ended       ended
                                31-Mar-97    31-Mar-96   31-Mar-97   31-Mar-96
                              ------------   -----------  ---------  ----------

Net sales                         $16,176       $16,135    $32,860     $32,563
Cost of sales                      12,695        12,431     25,652      24,455
                              ------------   -----------  ---------  ----------
Gross margin                        3,481         3,704      7,208       8,108
                              ------------   -----------  ---------  ----------

Operating expenses:
   Research and development           527           492      1,027         999
   Selling                          1,286           678      2,649       1,418
   Administrative                   1,271         1,163      2,407       2,177
                              ------------   -----------  ---------  ----------
                                    3,084         2,333      6,083       4,594
                              ------------   -----------  ---------  ----------

Earnings from operations              397         1,371      1,125       3,514

Other  expense:
   Interest expense                   634           482      1,185         946
   Equity interest in loss
    of affiliate                       49             5        179          75
                              ------------   -----------  ---------  ----------
                                      683           487      1,364       1,021
                              ------------   -----------  ---------  ----------

Earnings (loss) before
 income taxes                       (286)           884      (239)       2,493
Income taxes (benefit)              (107)           341       (90)         949
                              ------------   -----------  ---------  ----------

Earnings (loss)before
 minority interest                  (179)           543      (149)       1,544

Minority interest in net
 earnings (loss)of consolidated  
 subsidiaries                        (49)            29       (31)          40
                              ------------   -----------  ---------  ----------
                   
Net earnings (loss)                ($130)          $514     ($118)      $1,504
                              ============   ===========  =========  ==========
Earnings (loss) per
 common shares                     ($0.01)         $0.03    ($0.01)       $0.09
                              ============   ===========  =========  ==========





       The accompanying notes are an integral part of these statements.


<PAGE>


Williams Controls, Inc.
Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands)



                                                   Six months      Six months
                                                        ended           ended
                                               March 31, 1997  March 31, 1996
                                                --------------  --------------

Cash flows from operations:
   Net earnings                                       $  (118)           1,504
   Non-cash adjustments to net earnings:
      Depreciation and amortization                        848           1,196
      Minority interest in earnings (loss) of 
       consolidated subsidiaries                           (31)             40
      Equity interest in loss of affiliate                 179              75
   Changes in working capital items net of 
       the effects of acquisitions:
      Receivables, net                                   1,760          (1,625)
      Inventories                                       (1,289)         (4,234)
      Other                                               (305)           (378)
      Accounts payable and accrued expenses              1,063            (271)
                                                       -------          -------

      Net cash provided by (used for) operations         2,107          (3,693)
                                                       -------          -------

Cash flows from investing:
      Payment for equipment                               (609)           (963)
                                                       -------          -------

Cash flows from financing:
   Payments of long term debt                             (105)              -
   Proceeds from long-term debt                              -           4,050
   Payments of capital leases                              (25)            (46)
   Repurchase of common stock                                -            (540)
   Proceeds from stock issuance                              -             235
                                                       -------          -------

   Net cash provided by (used for) financing              (130)          3,699
                                                       -------          -------

Net increase (decrease) in cash                          1,368            (957)

Cash at beginning of period                              1,379           1,653
                                                       -------          -------
Cash at end of period                                  $ 2,747          $  696
                                                       =======          =======


Cash paid for:

Interest                                               $ 1,139          $  950  
                                                       =======          =======
Taxes paid (refund)                                    $  (653)         $  750
                                                       ========         =======











       The accompanying notes are an integral part of these statements.


<PAGE>

Williams Controls, Inc.
Notes to Unaudited  Consolidated Financial Statements
Three and Six Months ended March 31, 1997 and 1996
(Dollars in thousands, except per share amounts)


1.   Organization

     The interim  consolidated  financial  statements  include the accounts of
     the  Company  and  its  wholly-owned   subsidiaries,   Williams  Controls
     Industries,  Inc.  ("Williams");  Kenco Williams,  Inc.  ("Kenco");  NESC
     Williams, Inc. ("NESC");  Williams Technologies,  Inc. ("WTI");  Williams
     World Trade, Inc.  ("WWT");  Williams  Automotive,  Inc.; Aptek Williams,
     Inc. ("AWI");  Agrotec Williams,  Inc. ("AGWI");  Techwood Williams, Inc.
     ("TWI");  Premier Plastic  Technologies,  Inc.  ("PPT");  GeoFocus,  Inc.
     ("GI"); and the Company's 80% owned subsidiaries,  Hardee Williams,  Inc.
     ("Hardee")  and  Waccamaw  Wheel   Williams,   Inc.   ("Waccamaw").   All
     significant intercompany accounts and transactions have been eliminated.

2.   The Interim Consolidated Financial Statements

     The interim unaudited  consolidated financial statements have been prepared
     by the  Company  and, in the opinion of  management,  reflect all  material
     adjustments  which are  necessary  to a fair  statement  of results for the
     interim  periods  presented.  Such  adjustments  consisted  only of  normal
     recurring items.  Certain  information and footnote  disclosure made in the
     last  annual  report on Form 10-K have been  condensed  or omitted  for the
     interim consolidated statements. The interim financial statements should be
     read in conjunction  with the consolidated  financial  statements and notes
     thereto in the  Company's  annual report on Form 10-K.  The interim  period
     results are not necessarily indicative of results which may be expected for
     any other interim period or for the full year.  Certain costs are estimated
     for the full  year and  allocated  to  interim  periods  based on  activity
     associated with the interim period. Accordingly,  such costs are subject to
     year-end adjustment.

3.   Earnings (Loss) per Share

     Earnings per share are computed  based on the  weighted  average  number of
     common shares and common stock  equivalent  shares  outstanding  during the
     period.  Options and warrants are considered  common stock  equivalents for
     the purposes of this  computation.  The weighted  average  number of common
     shares  used in  computation  of  earnings  per share were  17,782,000  and
     17,767,000 for the three and six months ended March 31, 1997,  respectively
     and  17,600,000  for the three and six months ended March 31, 1996.  Common
     stock  equivalents  which are antidilutive are not included in the earnings
     per share calculation.



<PAGE>

Williams Controls, Inc.
Notes to Unaudited  Consolidated Financial Statements
Three and Six Months ended March 31, 1997 and 1996
(Dollars in thousands, except per share amounts)


4.   Inventories

                                       March 31,             September 30,
                                            1997                      1996
                                         -------                   -------

     Raw material                       $  8,196                     7,243
     Work-in-process                       1,443                     1,349
     Finished goods                        6,938                     6,696
                                         -------                   -------

                                         $16,577                   $15,288
                                          ======                    ======

     Inventories  are  valued  at the  lower of cost  (first-in,  first  out) or
     market.  Finished goods include  component parts and finished product ready
     for shipment.


5.   Investment in Affiliate

     The Company owns  4,117,647  shares of Ajay Sports,  Inc.  ("Ajay")  common
     stock, or  approximately  18% of Ajay's  outstanding  common stock, and the
     Company owns vested options to acquire 11,110,873 of Ajay's common stock at
     prices  ranging  from  $.34  to  $.50  per  share.  The  Company  also  has
     manufacturing  rights in certain Ajay facilities through 2002 under a joint
     venture  agreement.  Ajay  manufactures  and distributes  golf clubs,  golf
     accessories and leisure living furniture primarily to retailers  throughout
     the United States.

     The  investment  in Ajay is recorded as an  investment  in affiliate in the
     Consolidated Balance Sheets net of the Company's equity interest of $606 in
     Ajay's losses since  acquiring the  investment.  The Company is required to
     account  for the  investment  in Ajay on the  equity  method  due to common
     ownership by the Chairman and President of the Company who is also Chairman
     and President of Ajay.  The Company has  guaranteed  Ajay's  $13,500 credit
     facility  (approximately  $11,800  outstanding  at March  31,  1997) and is
     charging Ajay a fee of 1/2 of 1% per annum of the  outstanding  loan amount
     for providing  this  guaranty.  At March 31, 1997,  the market value of the
     Company's  investment in Ajay was $772 based upon the closing price of $.19
     per share.


6.    Debt

     In December  1996,  the Company's  current  lender (the  "Current  Lender")
     advised  the Company  that it was in  technical  default  under its $30,000
     credit  facility  primarily  due  to  borrowings  in  excess  of  the  loan
     availability   provided   under  the  credit   facility.   Decreased   loan
     availability  resulted from decreased  earnings from operations,  the major
     factor in determining  loan  availability  under the credit  facility.  The
     Consolidated   Financial  Statements  reflect  the  $21,000  in  borrowings
     outstanding  under the credit  facility  as a current  liability  until the
     Company can obtain  alternative  financing  to replace  the $30,000  credit
     facility. In addition, in March 1997 the

<PAGE>

Williams Controls, Inc.
Notes to Unaudited  Consolidated Financial Statements
Three and Six Months ended March 31, 1997 and 1996
(Dollars in thousands, except per share amounts)

6.   Debt (continued)

     Current  Lender advised Ajay that Ajay's loan was in default as a result of
     the Company's default. The Company is a guarantor of Ajay's bank loan.

     In January  1997,  the  Current  Lender  advised  the  Company  that it was
     forbearing  from  exercising  its rights under the loan  agreement  and was
     continuing  to  provide  financing  under  the  credit  facility  with  the
     understanding  that the Company would attempt to close a refinancing with a
     new lender by May 31, 1997. In April 1997,  the Current  Lender advised the
     Company  that it would  provide  financing  until  June 30,  1997  under an
     asset-based loan structure and with an increase in the interest rate to the
     Current Lender's prime rate plus 2.5%. The Current Lender also restructured
     the Ajay loan on terms less favorable to Ajay until  required  repayment on
     June 30, 1997.  The Company  expects to close a new loan  facility  with an
     asset based lender  before June 30, 1997. If the Company does not close the
     new loan  facility  and repay the  Current  Lender  by June 30,  1997,  the
     Current  Lender could demand  payment of the loan and demand  payment under
     the Ajay loan guarantee.

     In December  1996, the Company and Ajay  ("Borrowers")  received a proposal
     from a bank (the  "Replacement  Lender") for an  asset-based  loan facility
     consisting of a revolving line of credit up to $38,000 and term loans up to
     $12,000.  In January  1997,  the Company paid a deposit to the  Replacement
     Lender  which began its due  diligence  investigations.  In  reliance  upon
     representations  from the Replacement Lender that a commitment letter would
     be  delivered on or before  February 17, 1997,  the Company and Ajay signed
     formal  forbearance  agreements  and  loan  amendment  agreements  with the
     Current Lender.  The amendments  contained  provisions that would result in
     default  under  the  loan   agreements  and  severely   reduced   borrowing
     availability for Ajay if the commitment letter was not timely delivered.

     In March 1997, the Company  learned that the  Replacement  Lender,  despite
     representations to the contrary, had not yet sought credit approval for the
     loan commitment and had not yet completed its credit approval  application.
     Subsequently, in March 1997, the Company discontinued negotiations with the
     Replacement  Lender after the Company learned that the  Replacement  Lender
     had been  negotiating to acquire the Current  Lender during the period.  In
     March 1997, the Replacement Lender publicly announced that it had agreed to
     acquire the Current Lender.

     The Company immediately sought alternative financing with other asset based
     lenders and received  several  proposals.  The Company and Ajay have signed
     loan proposal  agreements with two different  asset-based  lenders who have
     begun their respective due diligence  investigations.  The loans under each
     of the  proposal  agreements  would supply  funds  sufficient  to repay the
     Current  Lender.  The Company  intends to close on the loan  which,  in its
     opinion, offers the best terms to the Company, including timing.

     Both loan proposals  contain  provisions for advances against  receivables,
     inventory,  machinery and equipment and real estate, but in varying advance
     rate  formulas.  Both  loans  provide  for  $1,000 to  $2,000 of  unsecured
     borrowing if the available borrowing based upon the collateral is


<PAGE>

Williams Controls, Inc.
Notes to Unaudited  Consolidated Financial Statements
Three and Six Months ended March 31, 1997 and 1996
(Dollars in thousands, except per share amounts)

6.Debt (continued)

     insufficient  to repay the entire loan with the Current  Lender at the time
     of  closing.  Interest  rates  on the  loan  facilities  are  approximately
     one-half  percent  higher  than the  pre-default  rate on the loan with the
     Current  Lender.  Interest  rates are based upon the bank's prime rate plus
     1/4% to 1% with  options  to fix the  interest  rate  based upon the London
     Inter Bank Offering Rate ("LIBOR") plus 2.75% to 3.25%.  Under the terms of
     one of the  asset-based  loan  facilities,  the Company  may make  advances
     between the Company and Ajay provided the borrowers are in compliance  with
     the  provisions  of the loan  facility.  Under the other  asset  based loan
     facility,  the Company  may make total  advances of not more than $7,000 to
     Ajay. At March 31, 1997,  based on projected  borrowing  availability,  the
     Company  would  have to  advance  Ajay  approximately  $5,000  to repay its
     current  loan  facility,  which the Company has  guaranteed  to the Current
     Lender. Both loan proposals require the Company to present plans to sell or
     otherwise dispose of Kenco Williams within six months. In addition,  one of
     the  loans  is  contingent   upon  the   sale-leaseback   of  the  Portland
     manufacturing  facility,  which  was  completed  on  April  18,  1997.  The
     sale-leaseback  generated  net  proceeds  of  $4,300  which was used to pay
     $3,500 of the loan with the  remaining  amount held in escrow for  possible
     taxes payable on the gain on the sale.

     The proposed  asset-based loan facility will replace the Company's  $30,000
     credit facility.  At March 31, 1997, the outstanding  balance of the credit
     facility was $21,000 with interest at the prime rate,  or 8.5%  (increasing
     to the prime  rate plus  2.5%,  or11% in May  1997).  Due to the  technical
     default,  the Company is restricted from borrowing  additional  funds under
     the current credit facility.


7.   Treasury Shares - Stock Repurchase Program

     In January 1996 the Company  initiated a stock repurchase  program of up to
     one million  shares of the  Company's  common  stock.  Under this  program,
     through December 1997, the Company acquired approximately 195,200 shares at
     an average price of $2.77 per share.  During the six months ended March 31,
     1997,  the Company  issued 65,000  treasury  shares to related  parties for
     acquisition advisory work.


8.   Subsequent Event - Contingent Liability

     In April 1996 the Company sold a manufacturing facility in a sale-leaseback
     transaction  for $4,524 less $250  withheld in an escrow fund for  possible
     environmental  cleanup costs. The Company may be required to repurchase the
     property within one year if it cannot cure possible  environmental problems
     at the sold  property  and intends to seek  indemnification  from the prior
     property owner for cleanup costs, if any.


<PAGE>




Williams Controls, Inc.
Notes to Unaudited  Consolidated Financial Statements
Three and Six Months ended March 31, 1997 and 1996
(Dollars in thousands, except per share amounts)


8.   Segment Information

<TABLE>
<CAPTION>
                                         Three months Three months  Six months  Six months
                                         ended        ended         ended       ended
                                         March 31,    March 31,     March 31,   March 31,
                                         1997         1996          1997        1996
                                         --------    --------       -------      ------
<S>                                      <C>         <C>            <C>         <C>   

     Net sales by classes of similar products
     Vehicle components                  $ 11,113     $ 8,956       $20,577     $17,170
     Automotive accessories                 1,928       3,537         5,091       7,921
     Agricultural equipment                 2,408       2,669         5,512       5,026
     Electrical components                    727         973         1,680       2,446
                                         --------    --------       -------      ------
                                           16,176      16,135        32,860      32,563
                                           ======      ======        ======      ======

     Earnings (loss) from operations
     Vehicle components                     1,988       1,669         3,245       3,454
     Automotive accessories                 (756)       (473)        (1,277)       (434)
     Agricultural equipment                 (419)         358          (207)        524
     Electrical components                  (416)       (183)          (636)        (30)
                                           ------      -----         ------      ------
                                              397      1,371          1,125       3,514
                                          =======     ======         ======      ======

     Capital expenditures
     Vehicle components                       110         142           177         242
     Automotive accessories                   168         111           219         160
     Agricultural equipment                    53         162           129         351
     Electrical components                     55         110            84         210
                                           ------     -------        ------      ------
                                              386         525           609         963
                                          =======     =======        ======      ======

     Depreciation and amortization
     Vehicle components                       228         597           439         853
     Automotive accessories                    64          63           122         128
     Agricultural equipment                    78          50           145          98
     Electrical components                     81          58           142         117
                                         --------    --------        ------      ------
                                         $    451    $    768       $   848      $1,196
                                          =======     =======        ======      ======

     Identifiable assets
     Vehicle components                                              22,817      17,149
     Automotive accessories                                          11,999      15,040
     Agricultural equipment                                          12,052      12,736
     Electrical components                                            7,891       7,657
                                                                    -------     -------
     Total assets                                                   $54,759     $52,582
                                                                    =======     =======

</TABLE>

<PAGE>


Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)

Financial Condition, Liquidity and Capital Resources

The Company's  principal  sources of liquidity are  borrowings  under its credit
facilities and funds generated from operations.  In December 1996, the Company's
current  lender  (the  "Current  Lender")  advised  the  Company  that it was in
technical default under its $30,000 credit facility  primarily due to borrowings
in excess of the loan availability provided under the credit facility. Decreased
loan availability  resulted from decreased  earnings from operations,  the major
factor  in  determining  loan  availability  under  the  credit  facility.   The
Consolidated  Financial Statements reflect the $21,000 in borrowings outstanding
under the credit  facility as a current  liability  until the Company can obtain
replacement  financing.  The Company has pledged substantially all of its assets
as  collateral  for the credit  facility.  The  Company is  required to maintain
certain financial ratios, and the loan agreement  contains certain  restrictions
that  limit  acquisitions,   investments,   payment  of  dividends  and  capital
expenditures.

In January 1997,  the Current  Lender advised the Company that it was forbearing
from  exercising  its rights  under the loan  agreement  and was  continuing  to
provide  financing  under the credit  facility with the  understanding  that the
Company would attempt to close a refinancing  with a new lender by May 31, 1997.
In March 1997,  the Current  Lender advised Ajay that Ajay's loan was in default
as a result of the Company's default.  The Company is a guarantor of Ajay's bank
loan of which $11,800 was  outstanding  as of March 31, 1997. In April 1997, the
Current Lender  advised the Company that it would provide the Company  financing
until June 30, 1997 under an asset-based loan structure. The Current Lender also
restructured  the Ajay  loan on terms  less  favorable  to Ajay  until  required
repayment on June 30,  1997.  The Company  expects to close a new loan  facility
with an asset based lender  before June 30, 1997.  If the Company does not close
the new loan and repay the Current  Lender by June 30, 1997,  the Current Lender
could  demand  payment  of the loan  and  demand  payment  under  the Ajay  loan
guarantee.

The Company and Ajay have signed loan  proposal  agreements  with two  different
asset-based   lenders   who  have   begun   their   respective   due   diligence
investigations.  The loans under each of the  proposal  agreements  would supply
funds  sufficient to repay the Current  Lender.  The Company intends to close on
the loan which, in its opinion, offers the best terms to the Company,  including
timing.

Both  loan  proposals  contain  provisions  for  advances  against  receivables,
inventory,  machinery and equipment and real estate, but in varying advance rate
formulas.  The loans  provide  for up to $2,000 of  unsecured  borrowing  if the
available  borrowing  based upon the  collateral  is  insufficient  to repay the
entire loan with the Current Lender at the time of closing.  Both loan proposals
require  the  Company to  present  plans to sell or  otherwise  dispose of Kenco
Williams within six months. In addition, one of the loan proposals is contingent
upon the  sale-leaseback  of the  Portland  manufacturing  facility,  which  was
completed on April 18, 1997. Under the terms of one of the proposed  asset-based
loan  facilities,  the  Company may make  advances  between the Company and Ajay
provided  the  borrowers  are in  compliance  with  the  provisions  of the loan
facility.  Under the other asset based loan facility, the Company may make total
advances of not more than $7,000 to Ajay. At March

<PAGE>

Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)

Financial Condition, Liquidity and Capital Resources (continued)

31, 1997, based on projected borrowing  availability,  the Company would have to
advance Ajay approximately $5,000 to repay its current loan facility,  which the
Company has guaranteed to the Current Lender.

The Company believes it has sufficient borrowing availability under the proposed
loans to repay the  Current  Lender in full and to  finance  the  expected  loan
availability  shortfall at Ajay. If the available  borrowing is  insufficient to
repay the Current  Lender,  the  proposed  asset  based loans  provide for up to
$2,000 of unsecured borrowing. Furthermore, the Company believes that it has the
ability to finance from additional outside sources a shortfall from refinancing,
if any,  including  generating  sources  from the  sale of  assets  and  raising
additional  capital from private or public equity and debt markets.  The Company
has  initiated  certain  transactions  to reduce the loan payable at or prior to
closing.  The Company  completed  the  sale-leaseback  of the  Portland,  Oregon
manufacturing  facility and the Company paid $3,500 of the $4,300 sales proceeds
to the bank and reduced the loan  outstanding  to $17,500.  The remaining  sales
proceeds  will  be  used  to  reduce  the  loan  balance   further  after  final
determination  of any estimated  federal and state tax payments due. The Company
may be required to  repurchase  the  property  within one year if it cannot cure
possible environmental problems at the sold property.  Also, on May 8, 1997, the
Company  signed a letter of intent to sell Kenco for $6,000 plus the  assumption
of certain trade payables.  The sale is subject to due diligence,  financing and
legal documentation and is expected to close by June 30, 1997. The proceeds from
the proposed sale of Kenco would be used to reduce the loan balance.

At March 31, 1997 the Company had working  capital of $2,403  compared to $2,055
at September  30, 1996.  The current ratio on March 31, 1997 was 1.1 compared to
1.1 at September 30, 1996. The Company  generated  cash flow from  operations of
$2,107  for the six  months  end  March  31,  1997  compared  to cash  used  for
operations of $3,693 for the same period in the prior year.

Under the existing loan  facilities,  the Company is restricted  from  increased
borrowings. Under the proposed new borrowing facilities, the Company anticipates
that cash generated from operations and borrowings will be sufficient to satisfy
working capital and capital expenditure requirements for the following year. The
Company may seek  additional  financing  to provide the Company  with  financial
flexibility to respond to business  opportunities,  including  opportunities for
growth through internal development, strategic joint ventures or acquisitions.

Results of Operations
Three and six  months  ended  March  31,  1997  compared  to the three and six
months ended March 31, 1996.

SALES:  Sales for the three months ended March 31, 1997 were $16,176 compared to
sales of $16,135 for the three months ended March 31, 1996.  Sales for the three
months  ended  March 31,  1997  included  $1,512 of sales from  Premier  Plastic
Technologies,  Inc. ("PPT")  acquired in April of 1996.  Excluding sales at PPT,
sales  declined  $1,471,  or 9% for the  quarter.  Sales of vehicle  components,
automotive   accessories,   agricultural  equipment  and  electrical  components
accounted  for 69%,  12%,  15% and 4% of total sales for the three  months ended
March 31, 1997  compared  to 56%,  22%,  17%,  and 5% for the same period in the
prior year.

<PAGE>

Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)

Results of Operations (continued)

Vehicle  component  sales  increased  $2,157,  or 24% for the three months ended
March 31, 1997  compared to the same period in the prior year due  primarily  to
sales  at PPT  which  was  acquired  in April  of 1996  and  increased  sales of
component  parts to heavy  truck  manufacturers.  Agricultural  equipment  sales
declined  $261, or 10% for the three months ended March 31, 1997 compared to the
same  period in the prior  year due to a  pre-season  discount  selling  program
initiated in the quarter ended  December 31, 1996.  Electrical  component  sales
declined  $246, or 25% for the three months ended March 31, 1997 compared to the
same period in the prior year due primarily to the loss of two major customers

Sales for the six months ended March 31, 1997 were $32,860  compared to sales of
$32,563 for the six months ended March 31, 1996.  Sales for the six months ended
March 31, 1997  included  $2,821 of sales from  Premier PPT acquired in April of
1996.  Excluding  sales at PPT, sales declined  $2,524,  or 8% for the six month
period.  Sales  of  vehicle  components,  automotive  accessories,  agricultural
equipment and electrical  components accounted for 62%, 16%, 17% and 5% of total
sales for the six months ended March 31, 1997  compared to 53%, 24%, 15%, and 8%
for the same period in the prior year.

Vehicle  component sales increased $3,407, or 20% for the six months ended March
31, 1997 compared to the same period in the prior year due primarily to sales at
PPT which was acquired in April of 1996 and increased  sales of component  parts
to heavy truck  manufacturers.  Agricultural  equipment sales increased $486, or
10% for the six  months  ended  March  31,  1997  compared  to the  prior  year.
Electrical  component sales declined $766, or 31% for the six months ended March
31, 1997 compared to the same period in the prior year due primarily to the loss
of two major customers.

Automotive accessories sales decreased $1,609, or 46% and $2,830, or 36% for the
three and six months  ended March 31, 1997  compared to the same  periods in the
prior year. The decline in automotive accessory sales was due to strong downward
price pressure  generated by competitors who are vertically  integrated and have
lower  cost  structures  than  the  Company's  automotive  accessories  segment.
Although the Company  believes  that the  automotive  accessories  segment could
achieve profitability through vertical integration of manufacturing, the Company
has  instead  accepted  and  signed  a  letter  of  intent  to  sell  automotive
accessories subject to financing, due diligence and legal documentation.  As the
sale is  presently  structured,  the Company  would  retain an equity  ownership
interest in the sold  operations  which would result in no material gain or loss
on the  transaction.  The transaction is expected to close by June 30, 1997, but
there is no assurance that the sale will occur.  In the event that the sale does
not occur, the Company will consider all strategic alternatives for reduction of
operating losses in the automotive accessories segment including sale, merger or
disposal.




<PAGE>


Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)


Results of Operations (continued)

EARNINGS  FROM  OPERATIONS:  Earnings  from  operations  were $397 for the three
months ended March 31, 1997  compared to $1,371 for the same period in the prior
year, a decrease of 71%. Earnings from operations were $1,125 for the six months
ended March 31, 1997 compared to $3,514 for the same period in the prior year, a
decrease of 68%.  Earnings from  operations as a percentage of sales were 2% and
3% for the three and six months ended March 31, 1996,  respectively  compared to
8% and 11% for the same periods in the prior year.

Earnings from  operations  at the vehicle  components  segment  increased 19% to
$1,988 for the quarter  ended March 31, 1997 and  decreased 6% to $3,245 for the
six months ended March 31, 1997. Losses from operations  increased $283 and $843
in the  automotive  accessories  segment,  $777  and  $731  in the  agricultural
equipment segment, and $233 and $606 in the electrical equipment segment for the
quarter and six months ended March 31, 1997,  respectively compared to the prior
year quarter and six month  periods.  Losses from  operations at these  segments
increased due primarily to lower gross margins and higher operating  expenses at
the automotive  accessories  segment  resulting from lower sales and competitive
selling  pressures,  lower  gross  margins  and higher  selling  expenses in the
agricultural  equipment segment, and reduced margins in the electrical equipment
segment resulting from lower sales volume.

Gross  margin  as a  percentage  of sales  was 22% and 22% for the three and six
months ended March 31, 1997,  respectively  compared to 23% and 25% for the same
periods in the prior year.  Gross  margin  percentages  declined  due to reduced
sales levels at the electrical component segment,  competitive pricing pressures
in  the  automotive  accessories  segment,  higher  manufacturing  costs  at the
agricultural  equipment  segment and the inclusion of additional  sales from PPT
which generated minimal gross margins in the vehicle component segment.

Operating expense as a percentage of sales was 19% and 19% for the three and six
months ended March 31, 1997,  respectively  compared to 15% and 14% for the same
periods in the prior year.  Operating  expenses  increased  $751, or 32% for the
three  months  ended March 31, 1996 and $1,489,  or 32% for the six months ended
March 31, 1996  compared to the same periods in the prior year.  The increase in
operating  expenses is due primarily to increased selling expenses at PPT, which
was not acquired  until April of 1996,  and  increased  selling  expenses at the
agricultural equipment and automotive accessories segments. Automotive accessory
operating  expenses  increased due to increased  advertising and promotion costs
incurred to mitigate erosion of market share.

OTHER  EXPENSES:  Interest  expense  increased $152, or 32% for the three months
ended March 31,  1997and  $239,  or 25% for the six months  ended March 31, 1997
compared to the prior year due primarily to increased average borrowings for the
period.  The equity  interest in loss of affiliate  represents the Company's pro
rata share of the loss resulting from its 18% ownership interest of Ajay.


<PAGE>


                                    Part II


Item 4.  Submission of Matters to a Vote of Security Holders

      On February 28, 1997 the Company held its annual meeting of  stockholders.
      The stockholders approved the election of one director.

      The tabulation of votes cast for the proposal is as follows:

           Proposal Number One - Election of Director

                                           For            Withheld
                                    ----------            --------
           Timothy S. Itin          16,225,285             181,068



Item 5.  Other Information

      None


Item 6.  Exhibits and Reports on Form 8-K

      None






<PAGE>


                            Williams Controls, Inc.

                                   Signature


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




                                                       WILLIAMS CONTROLS, INC.




                                   By:/s/ Thomas W. Itin
                                      ---------------------------------------- 
                                   Thomas W. Itin, Chairman, President and CEO





                                   By:/s/ Gerard A. Herlihy
                                      ----------------------------------------
                                    Gerard A. Herlihy, Chief Financial Officer





















Date:  May 8, 1997