<PAGE>

                                 UNITED STATES                         
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                   FORM 10-Q


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

              For the quarterly period ended: December 31, 1996.

                                      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
January 31, 1997:  17,782,040.

<PAGE>

                            Williams Controls, Inc.

                                     Index


                                      Page
                                     Number

Part I.  Financial Information

  Item 1.  Financial Statements

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

           Unaudited Consolidated Statement of Stockholders' Equity,
            three months ended December 31, 1996                             2

           Unaudited Consolidated Statements of Operations,
              three months ended December 31, 1996 and 1995                  3

           Unaudited Consolidated Statements of Cash Flows,
            three months ended December 31, 1996 and 1995                    4

           Notes to Unaudited Consolidated Financial Statements            5-8

  Item 2.  Management's Discussion and Analysis
              of Financial Condition and Results of Operations            9-11


Part II.   Other Information

  Item 4.  Submission of Matters to a Vote of Security Holders              12

  Item 5.  Other Information                                                12

  Item 6.  Exhibits and Reports on Form 8-K                                 12

               Signature Page                                               13








<PAGE>











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



                                                  December 31,   September 30,
                                                       1996             1996
                                                  ------------    -------------
                                                  (unaudited)

Assets

   Current Assets:
     Cash                                           $    1,676        $  1,379
     Accounts receivable, net                           12,696          13,103
     Inventories                                        14,941          15,288
     Other                                               1,767           1,885
                                                        ------          ------
           Total current assets                         31,080          31,655
   
   Investment in affiliate                                 813             943

   Property, plant and equipment                        25,178          24,955
   Less accumulated depreciation and amortization        5,465           5,154
                                                       -------         -------
                                                        19,713          19,801
                                                        ------          ------

   Other assets                                          1,384           1,379
                                                        ------          ------
                                                       $52,990         $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                7,390          8,388
                                                         -------       -------
           Total current liabilities                     28,770         29,600

   Long-term debt                                         2,703          2,782
   Other liabilities                                      2,764          2,673

   Commitments and contingencies                              -              -

   Minority interest in consolidated subsidiaries           731            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, 17,869,987 shares issued          179            179
     Additional paid-in capital                           9,671          9,671
     Unearned ESOP shares                                  (511)          (511)
     Pension liability adjustment                          (228)          (228)
     Retained earnings                                    9,451          9,439
     Treasury shares (195,200 shares at cost)              (540)          (540)
                                                        -------       --------
 
                                                         18,022         18,010
                                                         ------         ------
                                                        $52,990        $53,778
                                                         ======         ======


        The accompanying notes are an integral part of these statements.

                                       1
<PAGE>


Williams Controls, Inc.
Unaudited  Consolidated  Statement  of  Stockholders'  Equity Three months ended
December 31, 1996 (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>


                               Number of          Additional Unearned Pension
                                Shares     Common  Paid-in    ESOP   Liability   Retained  Treasury  Stockholders'
                                Issued     Stock   Capital   Shares  Adjustment  Earnings  Shares    Equity
<S>                           <C>           <C>     <C>       <C>       <C>       <C>       <C>        <C>


Balance, September 30, 1996   17,869,987    $ 179   $9,671    $(511)    $(228)    $9,439    $ (540)    $18,010


Net earnings                           -        -        -         -        -         12         -          12
                             -----------      ---    -----      ---       ---     ------       ----    -------   
Balance, December 31, 1996    17,869,987    $ 179   $9,671    $(511)    $(228)    $9,451    $ (540)    $18,022
                              ==========     ====    =====     =====     =====    ======       ====    =======



</TABLE>



























        The accompanying notes are an integral part of these statements.
                                       2
<PAGE>


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



                                           Three months     Three months
                                             ended            ended
                                           Dec 31, 1996     Dec 31, 1995
                                           ------------     ------------

Net sales                                       $16,684          $16,428
Cost of sales                                    12,957           12,024
                                                 ------           ------
Gross margin                                      3,727            4,404
                                                 ------          -------

Operating expenses:
   Research and development                         500              507
   Selling                                        1,363              740
   Administrative                                 1,136            1,014
                                                -------           ------
                                                  2,999            2,261
                                                -------           ------

Earnings from operations                            728            2,143

Other expense:
Interest expense                                    551              464
Equity interest in loss of affiliate                130               70
                                              ---------         --------
                                                    681              534
                                              ---------          -------

Earnings before income taxes                         47            1,609
Income taxes                                         17              608
                                              ---------          --------

Earnings before minority interest                    30            1,001

Minority interest in net earnings
   of consolidated subsidiaries                      18               11
                                              ---------         --------

Net earnings                                 $       12         $    990
                                              =========          =======

Earnings per common share                    $        -         $    .06
                                              =========          =======










       The accompanying notes are an integral part of these statements.

                                       3
<PAGE>


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



                                                  Three months    Three months
                                                         ended           ended
                                                  Dec 31, 1996    Dec 31, 1995
                                                  ------------    ------------

Cash flows from operations:
   Net earnings                                     $       30      $      990
   Non-cash adjustments to net earnings:
      Depreciation and amortization                        397             428
      Minority interest in earnings 
          of consolidated subsidiaries                      18              11
      Equity interest in loss of affiliate                 130              70
   Changes in working capital items net 
          of the effects of acquisitions:
      Receivables, net                                     407            (921)
      Inventories                                          347          (1,297)
      Other                                                118            (184)
      Accounts payable and accrued expenses               (830)         (1,034)
                                                         -----          ------

      Net cash provided by (used for) operations           599          (1,937)
                                                         -----         -------

Cash flows from investing:
     Payment for equipment                                (223)           (438)
                                                          -----        -------

   Net cash used for investing                            (223)           (438)
                                                          -----        -------

Cash flows from financing:
   Payments of long-term debt                              (60)            (57)
   Proceeds from long-term debt                              -           1,500
   Payments of capital leases                              (19)            (30)
   Proceeds from stock issuance                              -              99
                                                      ---------       --------

   Net cash provided by (used for) financing               (79)          1,512
                                                         ------         ------

Net increase (decrease) in cash                            297           (863)

Cash at beginning of period                              1,379           1,653
                                                         -----         -------
Cash at end of period                                   $1,676       $     790
                                                         =====        ========







        The accompanying notes are an integral part of these statements.


                                       4

<PAGE>


Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements 
Three Months ended December31, 1996 and 1995 
(Dollars in thousands, except per share amounts)



1.   Organization

     The Company  includes  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 its
     80% subsidiaries Hardee Williams, Inc. ("HWI") and Waccamaw Wheel Williams,
     Inc. ("WWWI").

2.   The Interim Consolidated Financial Statements

     The interim  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.  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.  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. It is
     the Company's  opinion that, when the interim  consolidated  statements are
     read in conjunction with the September 30, 1996 annual report on Form 10-K,
     the  disclosures  are  adequate  to  make  the  information  presented  not
     misleading.  The  interim  consolidated  financial  statements  include the
     accounts of the Company and its subsidiaries.  All significant intercompany
     accounts and transactions have been eliminated.


3.   Earnings (loss) per Share

     Earnings per share are computed on the basis of the weighted average number
     of shares  outstanding plus the common stock  equivalents which would arise
     from the  exercise of stock  options and  warrants.  The average  number of
     shares  outstanding were 18,000,000 for the three months ended December 31,
     1996 and 17,900,000 for the three months ended December 31, 1995.












                                       5
<PAGE>


Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements 
Three Months ended December31, 1996 and 1995 
(Dollars in thousands, except per share amounts)



4.   Inventories

                                    December 31,             September 30,
                                            1996                      1996

     Raw material                       $  8,958                  $  7,243
     Work-in-process                       1,529                     1,349
     Finished goods                        4,454                     6,696
                                          ------                    ------

                                         $14,941                   $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, approximately 18% of Ajay's outstanding common stock and the Company
     has vested  options to acquire  11,110,873  shares of Ajay 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 $557 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.  In addition,  the Company has
     guaranteed  Ajay's  $13,500  credit  facility  (approximately  $11  million
     outstanding  at December  31 1996) and is charging  Ajay a fee of 1/2 of 1%
     per annum of the outstanding loan amount for providing this guaranty.

                                       6
<PAGE>


Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements 
Three Months ended December 31, 1996 and 1995 
(Dollars in thousands, except per share amounts)

6.   Debt

     In December  1996,  the  Company's  bank 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.  Decreased loan availability
     resulted  from  decreased  earnings  from  operations,  the major factor in
     determining  loan  availability  under the  credit  facility.  The bank has
     agreed to  forbear  from  exercising  its rights  under the loan  agreement
     through March 14, 1997  provided that the Company  provides the bank with a
     commitment  letter  satisfactory  in form and content  from a new lender by
     February 17, 1997. The Company expects to receive a commitment  letter from
     a new lender by February 17, 1997. If the  commitment  letter is not timely
     received  or is not  satisfactory  to  the  bank,  the  bank  could  demand
     immediate repayment of the loan. 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 agreement  contains
     certain  restrictions  that  limit  acquisitions,  investments,  payment of
     dividends and capital expenditures.  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 December  1996 the Company  and Ajay  ("Borrowers")  received a proposal
     from  a bank  to  obtain  an  asset-based  loan  facility  consisting  of a
     revolving  line of credit up to $38,000 and term loans up to  $12,000.  The
     proposed  revolving  line of credit  (including  letters of credit) may not
     exceed  the  lesser of $38,000 or an agreed  upon  percentage  of  eligible
     accounts  receivable  and  inventories.  The revolving  line of credit will
     expire in three years and carry an interest rate, at the Company's  option,
     of the bank's  prime rate or London  Interbank  Offering  Rate (LIBOR) plus
     1.75% to 3.00% depending upon the financial performance of the Company. The
     revolving  line of credit will require the  borrowers to pay an initial fee
     of 1%, an annual  facility fee of 3/8 of 1%, an unused  facility fee of 1/4
     of 1% and will be subject to an early termination fee of 1%. The term loans
     will be due in three years and carry an interest  rate,  at the Company's
     option,  of the bank's prime rate or LIBOR plus 2.00% and  amortize  over a
     period of five to fifteen  years.  The term loan  facility is subject to an
     annual facility fee of 3/8 of 1% of the proposed  unused balance.  The bank
     has  completed  its due  diligence  and audit  procedures.  The facility is
     subject to final credit approval and  documentation  and appraisals of real
     estate  and  machinery  and  equipment.  The  Company  expects to receive a
     commitment  letter by February 17, 1997 and to close the new facility on or
     before March 14, 1997 although  there is no assurance  that the  commitment
     letter will be received or that the loan will close by such date. Under the
     terms of the proposed asset-based loan facility, the Company is required to
     have  availability  of  approximately   $2,000.  Under  the  terms  of  the
     asset-based  loan facility,  the borrowers have the option to make advances
     between the two companies provided the borrowers are in compliance with the
     provisions of the loan  facility.  At December 31, 1996,  the Company would
     have to  advance  Ajay  approximately  $5,000  to repay its  previous  loan
     facility, which the Company has guaranteed.

     The proposed  asset-based loan facility will replace the Company's  $30,000
     credit  facility,  which consists of a three-year  revolving  loan, with an
     interest  rate at either the bank's  prime rate or the  Interbank  Offering
     Rate (IBOR) plus 2% to 3%  depending  upon  certain  financial  ratios.  At
     December  31,  1996,  the  outstanding  balance of the credit  facility was
     $21,000  with  interest  at  7.9%,  which  is IBOR  plus  2.5%.  Due to the
     technical  default,  the Company is restricted  from  borrowing  additional
     funds under the credit facility.


                                       7

<PAGE>


Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements 
Three Months ended December 31, 1996 and 1995 
(Dollars in thousands, except per share amounts)



7.   Segment Information

                                          Three months        Three months
                                                 ended               ended
                                      December 31, 1996  December 31, 1995
                                      -----------------  -----------------
                           
     Net sales by classes of similar products
     Vehicle components                        $ 9,464          $ 8,214
     Automotive accessories                      3,163            4,384
     Agricultural equipment                      3,104            2,357
     Electrical components                         953            1,473
                                              --------          -------
                                                16,684           16,428
                                                ======           ======

     Earnings (loss) from operations
     Vehicle components                          1,257            1,785
     Automotive accessories                      (521)               39
     Agricultural equipment                        212              166
     Electrical components                       (220)              153
                                              --------          -------
                                                   728            2,143
                                             =========           ======


     Capital expenditures
     Vehicle components                             67              100
     Automotive accessories                         51               49
     Agricultural equipment                         76              189
     Electrical components                          29              100
                                              --------          -------
                                                   223              438
                                               =======          =======

     Depreciation and amortization
     Vehicle components                            211              256
     Automotive accessories                         58               65
     Agricultural equipment                         67               48
     Electrical components                          61               59
                                              --------         --------
                                              $    397         $    428
                                               =======          =======


                                          December 31,     December 31,
                                                 1996             1995
                                          -----------      ------------   
     Identifiable assets
     Vehicle components                       $ 19,457         $ 18,606
     Automotive accessories                     12,836           13,408
     Agricultural equipment                     13,114            9,060
     Electrical components                       7,583            7,677
                                               -------          -------
     Total assets                             $ 52,990         $ 48,751
                                                ======           ======

                                       8
<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
bank  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.
Decreased loan  availability  resulted from decreased  earnings from operations,
the major factor in determining loan availability under the credit facility. The
bank has agreed to forbear from  exercising  its rights under the loan agreement
through  March 14,  1997  provided  that the  Company  provides  the bank with a
commitment letter satisfactory in form and content from a new lender by February
17, 1997. The Company  expects to receive a commitment  letter from a new lender
by February 17, 1997. If the commitment  letter is not timely received or is not
satisfactory to the bank, the bank could demand immediate repayment of the loan.
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  agreement  contains  certain  restrictions  that  limit  acquisitions,
investments, and payment of dividends and capital expenditures.  At December 31,
1996, the  outstanding  balance of the credit facility was $21,000 with interest
at 7.9%, which is IBOR plus 2.5%. Due to the technical  default,  the Company is
restricted  from  increasing   borrowings   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 December 1996 the Company and Ajay  ("Borrowers")  received a proposal from a
bank to obtain an  asset-based  loan facility  consisting of a revolving line of
credit up to $38,000 and term loans up to $12,000, the proceeds of which will be
used to replace the  Company's  current  credit  facility (See "Note 6. Debt" to
Unaudited Consolidated  Financial Statements).  The bank has completed its due
diligence  and audit  procedures.  The loan  facility is subject to final credit
approval and  documentation  and  appraisals  of real estate and  machinery  and
equipment.  The Company  expects to receive a commitment  letter by February 17,
1997 and to close the new loan  facility on or before March 14,  1997,  although
there is no assurance  that the  commitment  letter will be received or that the
loan will close by such date.

Under the terms of the  proposed  asset-based  loan  facility,  the  Company  is
required to have  availability  of  approximately  $2,000 at closing.  Under the
terms of the  asset-based  loan facility,  the borrowers have the option to make
advances between the two companies provided the borrowers are in compliance with
the  provisions  of the loan  facility.  Based upon  projected  availability  at
closing,  the Company would have to advance Ajay  approximately  $5,000 to repay
their previous loan facility,  which the Company has guaranteed to the bank. The
Company  believes that it has the ability to finance,  from  additional  outside
sources,  any shortfall from  refinancing and has received  financing  proposals
including a sale-leaseback on certain property and convertible debentures.


                                       9
<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)

The  Company  owns  4,117,647  shares of Ajay  common  stock,  which  represents
approximately 18% of Ajay's  outstanding common stock and the Company has vested
options to acquire 11,110,873 shares of Ajay common stock at prices ranging from
$.34 to .50 per share  (See  "Note 5.  Investment  in  Affiliate"  to  Unaudited
Consolidated Financial Statements). The bank has claimed that if it discontinues
its  forbearance  against  Williams,  the loan from the bank to Ajay would be in
default.   The  Company  has   guaranteed   Ajay's   $13,500   credit   facility
(approximately  $11,000 outstanding at December 31, 1996) and is charging Ajay a
fee of 1/2% of 1% per annum on the  outstanding  loan amount for providing  this
guaranty.  Ajay has agreed to an amendment to its loan facility which limits its
borrowing  under the revolver to $7 million,  but the line will increase to $7.5
million  through  February 28, 1997 and to $8 million  through March 14, 1997 if
Ajay delivers a satisfactory commitment letter from a new lender before February
17, 1997. The amendment does not affect the $5 million currently  borrowed under
Ajay's  "bulge" loan. The Company and Ajay have entered into  negotiations  with
another bank to obtain a replacement loan facility as described above.

At December  31, 1996 the  Company  had  working  capital of $2,310  compared to
$2,055 at  September  30, 1996.  The current  ratio on December 31, 1996 was 1.1
compared to 1.1 at September  30,  1996.  The Company  generated  cash flow from
operations  of $599 for the three months end December 31, 1996  compared to cash
used for operations of $1,937 for the same period in the prior year.

Under the existing loan  facilities,  the Company is restricted  from  increased
borrowings.  Under the proposed new bank facility,  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 months ended December 31, 1996 compared to the three months ended December
31, 1995.


SALES:  Sales for the three months ended December 31, 1996 were $16,684 compared
to sales of $16,428 for the three months ended December 31, 1995, an increase of
2%. Sales of vehicle components, automotive accessories,  agricultural equipment
and electrical  components accounted for 57%, 19%, 18% and 6% of total sales for
the three months ended  December 31, 1996  compared to 50%, 27%, 14%, and 9% for
the same period in the prior year. Vehicle  components' sales included $1,300 of
sales from Premier Plastic Technologies, Inc. ("PPT") acquired in April of 1996.


                                       10
<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 were $9,464 for the three months ended December 31, 1996
compared to $8,214 for the same  period in the prior  year,  an increase of 15%.
The increase in sales for vehicle  component  segment was due to the acquisition
of PPT in April of 1996. Automotive  accessories sales were $3,163 for the three
months  ended  December  31, 1996  compared to $4,384 for the same period in the
prior  year,  a  decrease  of 28%.  The  decrease  in sales  for the  automotive
accessories  segment was due to the  elimination  of certain  product  lines and
product mix changes made in conjunction  with the operational  restructuring  in
the third  quarter of 1996  combined  with a slow-down  in consumer  spending on
after-market  automotive  accessories.  Agricultural equipment sales were $3,104
for the three  months ended  December  31, 1996  compared to $2,357 for the same
period  in the  prior  year,  an  increase  of 32%.  The  increase  in sales and
operating earnings in the agricultural equipment business results from increased
shipments  under a pre-season  discount  program  which may result in offsetting
lower sales and  operating  earnings in future  quarters.  Electrical  component
sales were $953 for the three months ended  December 31, 1996 compared to $1,453
for the same period in the prior year,  a decrease of 35%. The decrease in sales
for the electrical  component  segment is due primarily to the loss of two major
customers during the second quarter of the prior year.

EARNINGS  FROM  OPERATIONS:  Earnings  from  operations  were $728 for the three
months  ended  December  31, 1996  compared to $2,143 for the same period in the
prior year, a decrease of 66%. Earnings from operations as a percentage of sales
were 4% for the three  months ended  December  31, 1996  compared to 13% for the
same period in the prior year. Gross margin as a percentage of sales was 22% for
the three  months  ended  December  31,  1996  compared  to a gross  margin as a
percentage of sales of 27% for the same period in the prior year.  Earnings from
operations  declined  as a  result  of  decreased  earnings  at  the  automotive
accessories and electrical component businesses and losses at PPT.

Operating  expenses  were $2,999 for the three  months  ended  December 31, 1996
compared to $2,261 for the same  period in the prior  year,  an increase of 33%.
Operating  expenses as a percentage of sales were 18% for the three months ended
December  31, 1996  compared  to 14% for the same period in the prior year.  The
increase in operating  expenses is due primarily to increased  selling  expenses
for the automotive accessories and agricultural  equipment segments.  Automotive
accessories  segment selling expenses increased as a result of costs incurred to
secure shelf space to sell  products at mass  merchants  and chain  stores.  The
increased selling expenses for the agricultural  equipment segment is the result
of increased  sales and the costs  associated with expanding its sales territory
outside the Southeastern United States.

OTHER  EXPENSES:  Interest  expense was $551 for the three months ended December
31, 1996 compared to $464 for the same period in the prior year. The increase in
interest  expense is due to primarily to increased  average  borrowings  for the
period.  The equity  interest in loss of affiliate  represents the Company's 18%
ownership interest of Ajay.



                                       11
<PAGE>



                                    Part II


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

      None


Item 5.  Other Information

      None


Item 6.  Exhibits and Reports on Form 8-K

      None 





                                       12
<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.




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





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





                                        /s/ Dale J. Nelson
                                        ---------------------------------------
                                         Dale J. Nelson, Controller








Date: February 14, 1997