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:  June 30, 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 August
14, 1997 were 17,782,040.


<PAGE>


                           Williams Controls, Inc.

                                     Index


                                      Page
                                     Number

Part I.  Financial Information

  Item 1.  Financial Statements

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

           Unaudited Consolidated Statement of Stockholders' Equity,
              nine months ended June 30, 1997                                2

           Unaudited Consolidated Statements of Operations,
              three and nine months ended June 30, 1997 and 1996             3

           Unaudited Consolidated Statements of Cash Flows,
              nine months ended June 30, 1997 and 1996                       4

           Notes to Unaudited Consolidated Financial Statements           5-10

  Item 2.  Management's Discussion and Analysis
              of Financial Condition and Results of Operations           11-14


Part II.  Other Information

  Item 4.  Submission of Matters to a Vote of Security Holders              15

  Item 5.  Other Information                                                15

  Item 6.  Exhibits and Reports on Form 8-K                                 15

           Signature Page                                                   16






<PAGE>



                                     

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

                                                      June 30,   September 30,
                                                          1997            1996
                                                    ----------   ------------- 
                                                   (unaudited)
Assets

   Current Assets:
     Cash                                           $    3,091        $  1,379
     Accounts receivable, net                           12,234          13,103
     Inventories                                        14,879          15,288
     Other                                               1,545           1,885
           Total current assets                         31,749          31,655
                                                        ------          ------

   Investment in affiliate                                 739             943

   Property, plant and equipment                        25,968          24,955
    Less accumulated depreciation and amortization       6,376           5,154
                                                        ------          ------
                                                        19,592          19,801
                                                        ------          ------

   Other assets                                          1,862           1,379
                                                        ------          ------
                                                       $53,942         $53,778
                                                        ======          ======

Liabilities and Stockholders' Equity

   Current Liabilities:
     Revolving line of credit                          $     -         $21,000
     Current portion of long-term debt
           and capital leases                              258             212
     Estimated net loss from discontinued operations     1,171               -
     Accounts payable and accrued expenses               8,831           8,388
                                                        ------          ------
           Total current liabilities                    10,260          29,600
                                                        ------          ------

   Long-term debt                                       19,542           2,734
   Finance and capital  lease obligations                4,524              48
Other liabilities                                        2,951           2,673

   Commitments and contingencies                             -               -

Minority interest in consolidated subsidiaries             597             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                                   7,229           9,439
    Unearned ESOP shares                                  (511)           (511)
    Treasury stock (130,200 and 195,200 shares)           (378)           (540)
    Pension liability adjustment                          (228)           (228)
                                                        -------         -------

                                                        16,068          18,010
                                                        ------          ------
                                                       $53,942         $53,778
                                                        ======          ======


       The accompanying notes are an integral part of these statements.

                                       1
<PAGE>


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


<TABLE>
<CAPTION>

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

<S>                                  <C>           <C>      <C>       <C>       <C>         <C>      <C>       <C>  

Balance, September 30, 1996          17,869,987    $ 179    $9,671    $9,439    $(228)      $(511)   $ (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                                      -        -         -     (2,210)      -           -          -    (2,210)
                                     ----------    ------  -------    --------  ------       -------  -------   -------
Balance, June 30, 1997               17,912,240     $ 179   $9,777     $7,229   $(228)        $(511)  $ (378)  $16,068
                                     ==========    ======  =======     ======   ======       =======  =======  =======    


</TABLE>







































        The accompanying notes are an integral part of these statements.

                                       2
<PAGE>


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

<TABLE>
<CAPTION>


                                        Three months  Three months    Nine months   Nine months
                                            ended         ended          ended          ended
                                       June 30, 1997 June 30, 1996  June 30, 1997  June 30, 1996
                                       ---------------------------------------------------------
<S>                                         <C>           <C>            <C>          <C>   

Net sales                                   $ 14,536      $13,474        $42,305      $38,116
Cost of sales                                 11,470        9,695         32,286       26,921
                                             -------      -------        -------      -------
Gross margin                                   3,066        3,779         10,019       11,195
                                             -------      -------        -------      ------- 
Operating expenses:
   Research and development                     512           444          1,472        1,409
   Selling                                      816           652          2,470        1,680
   Administrative                             1,064           922          3,001        2,397
                                             -------      -------        -------      -------                             
                                              2,392         2,018          6,943        5,486
                                             -------      -------        -------      -------

Earnings from continuing operations             674         1,761          3,076        5,709

Other (income) expense:
   Interest expense                             477           433          1,437        1,154
   Equity interest in loss of affiliate          25             -            204           75
                                             -------      -------        -------      -------
                                                502           433          1,641        1,229
                                             -------      -------        -------      -------
Earnings from continuing operations
   before income taxes                          172         1,328          1,435        4,480
Income taxes                                     78           548            589        1,760  
                                             -------      -------        -------      -------
Earnings  from continuing operations
   before minority interest                      94           780            846        2,720
Minority interest in net (earnings) loss
   of consolidated subsidiaries                  85           (50)           116          (90)
                                             -------      -------        -------      -------

Earnings from continuing operations             179           730            962        2,630

Discontinued operations:
 Loss from operations of discontinued
  Automotive Accessories segment               (306)       (1,824)        (1,207)      (2,220)
 Loss on disposal of Automotive Accessories
  segment, including provision of $1,171 for
  operating losses during phase-out period   (1,965)            -         (1,965)           -   
                                             -------      -------         ------      -------
Loss from discontinued operations           $(2,271)      $(1,824)       $(3,172)      (2,220)
                                             -------      -------         ------       ------

Net earnings (loss)                         $(2,092)      $(1,094)       $(2,210)     $   410
                                             ======        ======         ======       ======


Earnings  per common
     share from continuing operations       $   .01       $   .04        $   .05      $   .15
Loss per common
     share from discontinued operations     $ ( .13)      $  (.10)       $ ( .17)     $  (.13) 
                                             -------       -------        ------       ------
Loss per common share                       $ ( .12)      $  (.06)       $ ( .12)     $   .02
                                             =======       =======        ======       ======
</TABLE>


       The accompanying notes are an integral part of these statements.

                                       3
<PAGE>


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



                                                    Nine months     Nine months
                                                       ended           ended
                                                  June 30, 1997   June 30, 1996
                                                   -------------   -------------

Cash flows from operations:
   Net earnings                                      $   (2,210)        $   410
   Non-cash adjustments to net earnings:
      Provision for loss on disposal of 
          discontinued operations                         1,171            -
      Depreciation and amortization                       1,303           1,655
      Restructuring charge                                    -           2,250
         Minority interest in earnings (loss)
          of consolidated subsidiaries                     (116)             90
      Equity interest in loss of affiliate                  204              75
   Changes in working capital items net
    of the effects of acquisitions:
      Receivables, net                                      869          (2,861)
      Inventories                                           409          (4,817)
      Other                                                 290            (329)
      Accounts payable and accrued expenses                 820             461
                                                          ------         -------


   Net cash provided by (used for) operations             2,740          (3,066)
                                                          ------         -------

   Cash flows from investing:
      Payment for acquisitions                                -          (1,200)
      Payment for equipment                              (1,013)         (1,139)
                                                         -------         -------

   Net cash used for investing                           (1,013)         (2,339)
                                                         -------         -------

   Cash flows from financing:
     Net borrowings (repayments) under revolving loan    (4,129)          5,759
     Net proceeds from sale/leaseback                     4,274               -
     Payments of long-term debt and capital leases         (160)            (75)
     Repurchase of common stock                               -            (540)
     Proceeds from stock issuance                             -             235
                                                         -------          ------

   Net cash provided by financing                           (15)          5,379
                                                         -------          ------

   Net increase/(decrease) in cash                        1,712             (26)

   Cash at beginning of period                            1,379           1,653
                                                        -------          -------

   Cash at end of period                               $  3,091         $ 1,627
                                                        =======          =======

   Cash paid for:

Interest                                               $  1,567         $ 1,500
                                                        =======          =======

Taxes paid (net refund)                                $  (483)         $ 1,000
                                                        =======          =======


       The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three Months ended June 30, 1997 and 1996
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


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. ("Aptek"); Agrotec
     Williams, Inc. ("Agrotec");  Techwood Williams, Inc. ("Techwood");  Premier
     Plastic Technologies,  Inc. ("PPT");  GeoFocus, Inc. ("GeoFocus");  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

2.   The interim unaudited  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  that 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 that 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 was  18,179,000  and
     18,089,000 for the three and nine months ended June 30, 1997, respectively,
     and  17,600,000  for the three and nine months ended June 30, 1996.  Common
     stock equivalents, which are antidilutive, are not included in the earnings
     per share calculation.



                                       5
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three Months ended June 30, 1997 and 1996
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


4.   Inventories
                                        June 30,             September 30,
                                            1997                      1996

     Raw material                       $  8,535                  $  7,243
     Work-in-process                       1,032                     1,349
     Finished goods                        5,312                     6,696
                                          ------                    ------

                                         $14,879                   $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 $631 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. At June 30, 1997,  the market value of the Company's
     investment  in Ajay was  $1,029  based upon the  closing  price of $.25 per
     share.

     The Company had guaranteed  Ajay's $13,500 credit  facility to the previous
     lender  ("Previous  Lender") of which $12,051 was  outstanding  at July 11,
     1997,  the date on which the previous  loan was repaid with proceeds from a
     new  loan ( the  "Loan")  with  a new  lender  (the  "Bank").  Ajay's  loan
     availability at the date of the Loan closing was  insufficient to repay the
     Previous  Lender.  The  previous  Lender  provided  Ajay  $2,340  of bridge
     financing and the Company  provided Ajay a secured demand loan of $2,268 at
     Loan closing to repay the previous loan in full.  The loan from the Company
     to Ajay bears an annual  interest rate at the Bank's prime rate plus 3/4% .
     The expected sources of repayment for the bridge loan are primarily derived
     from  expected  financial  transactions  of the Company.  Therefore,  it is
     likely that Ajay will need to borrow  additional  funds from the Company in
     the future to repay the bridge  loan to the extent  that the bridge loan is
     repaid with Company funds(See Note 6). As a condition to the loans made by
     the  Company  to Ajay,  Ajay has  agreed  to grant the  Company a  security
     interest in all of the assets of Ajay  subordinate to the liens of the Bank
     and the  Previous  Lender.  In  addition,  the  Company has agreed to issue
     400,000  newly issued  shares of the  Company's  common stock to Ajay which
     will be security to the previous  lender for the bridge  loan.  The Company
     has also agreed to purchase  approximately  $1,000 of notes payable by Ajay
     to  affiliated  parties,  which  had  provided  loans to Ajay to help  Ajay
     finance  operations  during debt  refinancing.  These affiliated  companies
     provided these loans because the Company was prohibited from down-streaming
     funds to Ajay while the previous loan was in default.

                                       6
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three Months ended June 30, 1997 and 1996
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


6.   Debt  - Subsequent Event

     On July 11, 1997, the Company  refinanced its bank debt with the Bank under
     a $34,088 three year revolving credit and term loan agreement. Accordingly,
     the Company has recorded  the debt as a long-term  liability as of June 30,
     1997.  At the date of the Loan  closing,  the  Company  borrowed a total of
     $17,141  which was  comprised  of $9,619 of  borrowings  under the  $26,000
     revolving loan facility (the  "Revolver"),  $2,658 under a real estate term
     loan ("Real Estate  Loan"),  $3,864 under a machinery  and  equipment  loan
     ("Term Loan I"), and $1,000  under Term Loan II ("Term Loan II").  The Loan
     is a joint and several  obligation  of the Company and Ajay. At the date of
     the Loan  closing,  Ajay  borrowed a total of $7,391 which was comprised of
     $6,825 under the Revolver and $566 under Term Loan I. The proceeds from the
     Company's  and Ajay's  borrowings  plus cash on hand were used to repay the
     Previous Lender. In addition, the Previous Lender provided bridge financing
     of $2,340 to Ajay which is to be repaid  primarily from the proceeds of the
     sale of Kenco  (Note  9),  the sale of other  assets,  or from a  specified
     percentage of future  combined  Ajay and Williams cash flow.  The Company's
     Chairman has guaranteed $1,000 of the bridge loan and the Term Loan II.

     Under the  Revolver,  the Company  and Ajay can borrow up to $26,000  based
     upon a borrowing base availability  calculated using specified  percentages
     of eligible accounts receivable and inventory.  The Revolver bears interest
     at the Bank's  prime rate (8.5% at July 11, 1997) plus .5%. The Real Estate
     Loan and Term Loan I bear  interest at the Bank's prime rate plus .75%.  At
     the Company's option, the Company may borrow funds under the Revolver,  the
     Real Estate Loan and the Term Loan I at the London InterBank  Offering Rate
     ("Libor") plus 2.75%, 3% and 3%,  respectively.  The Revolver,  Real Estate
     Loan  and  Term  Loan  I  mature  on  July11,   2000  and  are  secured  by
     substantially  all of the assets of the Company  and Ajay.  The Real Estate
     Loan is being  amortized  over 20 years and Term Loan I is being  amortized
     over seven years with all remaining  principal  outstanding due on July 11,
     2000.  At  July  11,  1997,  after  the  Loan  closing,   the  Company  had
     approximately  $1,545  available for borrowing under the Loan. Term Loan II
     matures on June 1, 1999 with principal  payments based upon an amortization
     period of 24 months plus additional  principal  payments equal primarily to
     any  excess  proceeds  from  the  sale  of  Kenco  after  repayment  of any
     indebtedness  under the Revolver  borrowing  due from Kenco plus  principal
     payments  equal to 50% of the  Company's  and  Ajay's  annual  consolidated
     excess cash flow, as defined.  The Loan agreement  prohibits payment of any
     dividends by the Company, requires the Company and Ajay in the aggregate to
     maintain minimum working capital of $25,000 exclusive of the Revolver and
     maintain  minimum  tangible net worth of $11,000.  The Loan also  prohibits
     additional  indebtedness  and  common  stock  repurchases,   and  restricts
     combined  Company  and  Ajay  annual  capital  expenditures  and  increased
     operating  lease  obligations  to $2,500 and $600,  respectively.  The Loan
     agreement  imposes a prepayment  penalty of 3%-.5%,  which is waived if the
     Loan is  repaid  with  proceeds  from the sale of  assets  or  equity or is
     refinanced with an affiliate of the Bank.

7.   Common Stock and Treasury Shares - Stock Repurchase Program

     In July 1997, the Company agreed to issue 400,000 shares of common stock to
     Ajay as security for a bridge loan due to the Previous Lender. In addition,
     the Company has agreed to issue,  if required by the affiliated  companies'
     lender, up to $1,000 market value of the Company's common stock to serve as
     collateral for notes due to such  affiliated  companies in exchange for the
     affiliated  companies  agreement to subordinate to the Bank their rights to
     principal  repayments  until  certain  financial   transactions  have  been
     completed.

                                       7
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three Months ended June 30, 1997 and 1996
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


7.    Common Stock and Treasury Shares - Stock Repurchase Program (continued)

     The Company granted  1,078,800 options under the Employee Stock Option Plan
     to 195 employees on May 1, 1997, with an exercise price equal to the market
     value at date of grant.  In  January  1996 the  Company  initiated  a stock
     repurchase  program of up to one  million  shares of the  Company's  common
     stock. The Loan prohibits further purchases under this program.  Under this
     program,  through June 1997, the Company had acquired approximately 195,200
     shares at an average price of $2.77 per share. During the nine months ended
     June 30, 1997, the Company issued 65,000 treasury shares to related parties
     for acquisition advisory work.

8.   Sale/Leaseback - Contingent Liability

     In April 1997 the Company sold its Portland,  Oregon 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 may be required to finance
     part of the  purchaser's  price in  October  1997 if the  purchaser  cannot
     obtain   permanent   financing   from  a  lender   willing  to  accept  the
     environmental  condition of the property.  The acquisition  agreement under
     which  the  Company   purchased  the  facility   contains   provisions  for
     indemnification  by the  subsidiary  of the company that owned and sold the
     property  to the  Company  for any  environmental  cleanup  costs after the
     subsidiary  spends $25 towards such  cleanup.  The Company  intends to seek
     indemnification  from the prior property  owner for cleanup costs,  if any.
     Although  the  Company  has the right of first  refusal to  repurchase  the
     building  during  the  first  year if the  purchaser  attempts  to sell the
     property to a third party, the Company has discussed with the purchaser the
     possible  resale of the  building  to an  acceptable  third party who would
     purchase the property without any contingent repurchase obligation.

     The  transaction  was  accounted  for as a financing  in which the property
     remains  recorded  as an asset  and  continues  to be  depreciated  and the
     capitalized lease  obligations are recorded as long term  liabilities.  The
     lease has a term of 15 years and requires  minimum annual  payments of $450
     with rental increases every two years equal to the increase in the consumer
     price index for the  Portland,  Oregon  area but not greater  than a 5% nor
     less than a 3% increase  for every  two-year  period.  At the time that the
     contingent repurchase obligation is eliminated, the Company will record the
     transaction  as an operating  lease.  At such time, the gain on the sale of
     approximately $1,700 will be recognized and the capitalized costs and lease
     obligation will be eliminated from the balance sheet.

9     Discontinued Operations

     On May 8, 1997,  the Company  signed a letter of intent to sell Kenco.  The
     Company  anticipates  that  Kenco will be sold on or around  September  30,
     1997, but there is no assurance that the sale will occur.  If the sale does
     not occur,  the  Company  will  consider  all  strategic  alternatives  for
     reduction of operating  losses  including  sale,  merger or  liquidation of
     Kenco.  Accordingly,  Kenco is reported as a discontinued operation for the
     quarter  and nine  months  ended  June 30,  1997 and 1996.  Based  upon the
     proposed  terms of the sale,  the purchaser  will acquire  certain  assets,
     excluding  Kenco's  manufacturing and warehousing  facility,  for $5,000 in
     cash and  assume  the  liability  for  trade  payables  and  other  current
     liabilities.  The  proposed  purchaser  has  expressed  an interest in also
     purchasing the manufacturing and warehouse  facilities,  which would result
     in an as yet undetermined increase in the cash purchase price. In addition,
     under the terms of the purchase  offer,  the Company will receive an equity
     interest in the new company.

                                       8
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three Months ended June 30, 1997 and 1996
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


     The summarized results for Kenco are as follows:

<TABLE>
<CAPTION>
                                          Three months  Three months  Nine months Nine months
                                              ended          ended       ended      ended
                                        June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
<S>                                           <C>          <C>         <C>        <C> 
     Net sales                                $ 2,194      $ 4,001     $ 7,285    $ 11,922

     Loss from discontinued operations           (450)      (2,928)     (1,727)     (3,362)
     Allocated interest expense                    60          113         290         339
                                               ------      --------    --------    --------
     Loss before income tax benefit              (510)      (3,041)     (2,017)     (3,701)
     Income tax benefit                           204        1,217         810       1,481
                                               ------      -------     --------     ------
     Net loss from discontinued operations       (306)      (1,824)     (1,207)     (2,220)
                                                ------     -------     --------     ------

     Loss on disposal before interest
       and income taxes                        (2,771)           -      (2,771)          -
     Allocated interest expense                   505            -         505           -
                                              --------     -------     -------      ------
     Loss on disposal before
        income tax benefit                     (3,276)           -      (3,276)          -
     Income tax benefit                         1,311            -       1,311           -
                                               ------      -------     -------      ------
     Loss on disposal                          (1,965)           -      (1,965)          -
                                               ------      -------     -------      ------

     Total loss on discontinued operations    $(2,271)     $(1,824)    $(3,172)   $ (2,220)
                                               ======       ======      ======     =======
</TABLE>

     The  estimated  loss on disposal  of Kenco of $1,965  consists of $1,171 of
     estimated  future  operating losses net of tax benefits of $781 and $794 of
     operating losses incurred since the measurement date net of tax benefits of
     $530. The $794 of operating  losses since the measurement date include $488
     of charges  which are  primarily  provisions  for  obsolete  inventory  and
     charges  for other  non-recoverable  assets.  The  Company  has  elected to
     include  estimated  interest  costs in its estimated loss on disposal based
     upon the expected debt  reduction  from the $5,000 of cash proceeds and the
     current rate of interest.  The 1996 third quarter and nine-month  loss from
     discontinued operations included a $2,250 pre-tax restructuring charge.


                                        9
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three Months ended June 30, 1997 and 1996
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


10.  Segment Information
<TABLE>
<CAPTION>

                                                 Three months   Three months  Nine months Nine months
                                                     ended          ended       ended      ended
                                                June 30, 1997  June 30, 1996 June 30, 1997 June 30, 1996
<S>                                                   <C>          <C>         <C>        <C>   
     By classes of similar products
     Net Sales - Continuing Operations:
       Vehicle components                             $ 11,119     $ 9,333     $31,696    $26,503
       Agricultural equipment                            2,352       3,251       7,864      8,277
       Electrical components                             1,065         890       2,745      3,336
                                                       -------      -------     -------    ------
       Total from continuing operations                 14,536      13,474      42,305     38,116
     Net Sales - Discontinued Operations                 2,194       4,001       7,285     11,922
                                                       -------      ------      ------     ------
           Total sales                                  16,730      17,475      49,590     50,038
                                                        ======      ======      ======     ======

     Earnings (Loss) from Continuing Operations:
       Vehicle components                                1,716       1,389       4,961      4,843
       Agricultural equipment                             (810)        489      (1,017)     1,013
       Electrical components                              (232)       (117)       (868)      (147)
                                                        ------      ------      ------     ------
        Total from continuing operations                   674       1,761       3,076      5,709
     Loss - Discontinued Operations                       (450)     (2,928)     (1,727)    (3,362)
                                                        ------      ------      ------     -------
        Total earnings (loss) from operations              224      (1,167)      1,349      2,347
                                                        ======      ======      ======     =======
     Capital expenditures from Continuing Operations: 
       Vehicle components                                  233          26         410        268
       Agricultural equipment                               40          22         169        373
       Electrical components                                72           3         156        213
                                                        ------      ------      ------     ------
        Total from continuing operations                   345          51         735        854
     Capital Expenditures - Discontinued Operations         59         125         278        285
                                                        ------      ------      ------      -----
        Total capital expenditures                         404         176       1,013      1,139
                                                        ======      ======       =====      =====
     Depreciation and Amortization - Continuing
     Operations:
       Vehicle components                                  272         251         711      1,104
       Agricultural equipment                               40          80         185        178
       Electrical components                                78          63         220        180
                                                         -----      ------      ------   --------
        Total from continuing operations                   390         394       1,116      1,462
     Depreciation and Amortization - Discontinued
         Operations                                         65          65         187        193
                                                         -----      ------      ------   --------
        Total depreciation and amortization             $  455     $   459     $ 1,303   $  1,655
                                                         =====      ======      ======   ========

                                                                                June 30,  June 30, 
                                                                                  1997       1996
     Identifiable assets
     Heavy vehicle components                                                   24,229     19,370
     Discontinued operations - automotive accessories                           11,265     14,589
     Agricultural equipment                                                     10,565     13,678
     Electrical components                                                       7,793      7,553
                                                                                ------    ------
     Total assets                                                              $53,942    $55,190
                                                                                ======     ======

</TABLE>

     Note:  Prior  year data  restated  to conform  with  current  year  segment
     classification.
                                       10
<PAGE>

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


Financial Condition, Liquidity and Capital Resources

The Company's  principal  sources of liquidity are borrowings under its Loan and
funds generated from operations. At June 30, 1997, the Company's working capital
improved to $21,489  compared  with $2,055 at September 30, 1996 and the current
ratio  improved to 3.1 at June 30, 1997  compared to 1.1 at September  30, 1996.
The improvement  was primarily as a result of the successful  refinancing of the
Company's  bank debt and  resulting  classification  of the Loan as a  long-term
obligation  and also as a result of a  sale/leaseback  transaction.  The Company
generated cash flow from operations of $2,740 for the nine months ended June 30,
1997  compared to cash used of $3,066 for the nine months  ended June 30,  1996.
The Company's 1997 cash flow from operations  benefited from improved receivable
and inventory management and a federal tax refund.

The Company intends to reduce Bank debt and fund  operational  growth by raising
additional  capital  through the sale of Kenco, a possible  sale/leaseback  of a
manufacturing  facility and a private placement or public offering of its common
stock. The Company has signed a letter of intent to sell certain assets of Kenco
for an expected  $5,000 cash plus the  assumption  of certain  liabilities.  The
proceeds  of this  transaction,  if  completed,  would be used to pay bank  debt
including Term Loan II and any excess  proceeds would be used towards payment of
the $2,340 bridge loan provided to Ajay by the Previous  Lender.  The payment on
Ajay's behalf would increase the demand loan due from Ajay.

In April 1997 the Company sold its Portland,  Oregon manufacturing facility in a
sale-leaseback transaction for $4,524. The Company may be required to repurchase
the property within one year if it cannot cure possible  environmental  problems
and may be required to finance part of the purchaser's  price in October 1997 if
the purchaser cannot obtain permanent  financing from a lender willing to accept
the environmental condition of the property.  Although the Company has the right
of first  refusal  to  repurchase  the  building  during  the first  year if the
purchaser  attempts  to sell the  property  to a third  party,  the  Company has
discussed  with  the  purchaser  the  possible  resale  of  the  building  to an
acceptable  third party who would  purchase the property  without any contingent
repurchase  obligation.  The  acquisition  agreement  under  which  the  Company
purchased the facility contains provisions for indemnification by the subsidiary
of the  company  that  owned  and  sold  the  property  to the  Company  for any
environmental  cleanup  costs  after the  subsidiary  spends  $25  towards  such
cleanup.  The Company  intends to seek  indemnification  from the prior property
owner for cleanup costs, if any, under those indemnification provisions.


                                       11
<PAGE>

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


Results of Operations

Overview
The  Company  has  agreed to sell the  remaining  operations  of the  automotive
accessories segment, which have been classified as discontinued operations.

Continuing Operations
The following  discussion of results of operations  include only the  continuing
operations and all references to financial  statement amounts are for continuing
operations only.

The Company's net earnings from continuing  operations declined $551 and $1,668,
or 75.3% and 63.4%, respectively, for the quarter and nine months ended June 30,
1997,  compared to the prior year periods primarily as a result of losses in the
agricultural equipment and electrical component segments.

Three  months  ended June 30, 1997  compared to the three  months ended June 30,
1996

Net sales from continuing  operations:  Net sales increased  $1,062, or 7.9%, to
$14,536  for the three  months  ended June 30,  1997  compared to $13,474 in the
prior year  quarter.  Excluding  the sales of  GeoFocus,  which was  acquired in
August 1996,  sales increased $875, or 6.5% for the quarter ended June 30, 1997.
Sales as a  percent  of  total  sales in the  vehicle  components,  agricultural
equipment and electrical  components  segments were 76.5%, 16.2% and 7.3% in the
1997  quarter  compared to 69.3%,  24.1% and 6.6% in the 1996  quarter.  Vehicle
component sales in the quarter ended June 30, 1997 increased  $1,786,  or 19.1%,
due to higher unit sales of component parts to heavy truck manufacturers.  Sales
of agricultural equipment declined $899, or 27.7%, in the quarter ended June 30,
1997 due to lower unit sales  believed to result from reduced  demand  resulting
from cool and rainy weather in the Spring of 1997.  Electrical  component  sales
increased $175, or 19.7%  primarily due to the acquisition of GeoFocus,  Inc. in
August 1996.  Electrical  equipment  sales exclusive of GeoFocus sales decreased
$12, or 1.3%.

Cost of sales from continuing  operations:  Costs of sales as a percent of sales
increased to 78.9% in the quarter  ended June 30, 1997  compared to 72.0% in the
quarter  ended  June 30,  1996.  The  higher  cost of sales  percentage  related
primarily to lower sales and the resulting  lower  absorption of fixed overheads
at the  agricultural  equipment  segment  and  higher  costs  in the  electrical
equipment segment.

Operating expenses - continuing  operations:  Operating expenses increased $374,
or 18.5%, to $2,392 in the quarter ended June 30, 1997 compared to $2,018 in the
prior year quarter.  Operating expenses were 16.5% of sales in the quarter ended
June 30, 1996  compared to 15.0 % of sales in the quarter  ended June 30,  1996.
Higher operating  expenses related  primarily to increased  selling costs in the
agricultural  equipment  segment  and  increased  administration  costs  in  the
electrical component segment due to the acquisition of GeoFocus,  Inc. in August
1996.

Other expenses:  Other expenses  increased $69, or 15.9%, to $502 in the quarter
ended June 30,  1997  compared  to $433 in the prior year  quarter due to higher
interest  rates on defaulted  bank debt and increased  losses from the Company's
equity investment in Ajay.

                                       12
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.


Results of Operations - Continued

Nine months ended June 30, 1997 compared to the nine months ended June 30, 1996

Net sales from continuing  operations:  Net sales increased $4,189, or 11.0%, to
$42,305 for the nine months ended June 30, 1997 compared to $38,116 in the prior
year period.  PPT and GeoFocus  were not in operation  for the full 1996 period.
Excluding the sales of PPT and GeoFocus,  sales increased  $1,225,  or 3.3%, for
the nine months ended June 30, 1997 compared to the prior year period.

Sales as a  percent  of  total  sales in the  vehicle  components,  agricultural
equipment and electrical  components segments were 74.9%, 18.6% and 6.5% for the
nine months ended June 30, 1997  compared to 69.5%,  21.7% and 8.8% in the prior
year  period.  Vehicle  component  sales for the nine months ended June 30, 1997
increased $5,193, or 19.6%.  Excluding sales of PPT, which was acquired in April
1996, sales of the vehicle  component segment increased $2,708, or 10.8% the for
the nine  months  ended June 30,  1997 over the prior year  period due to higher
unit  sales  of  component  parts  to  heavy  truck   manufacturers.   Sales  of
agricultural  equipment  declined  $413, or 5.0%, for the nine months ended June
30,  1997 due to lower  unit  sales  believed  to  result  from  reduced  demand
resulting  from  cool and  rainy  weather  in the  Spring  of  1997.  Electrical
component sales decreased $591, or 17.7%.  Electrical  component sales exclusive
of  GeoFocus,  which was  acquired in August 1996,  decreased  $1,070,  or 32.1%
primarily due to the loss of two major customers.

Cost of sales from continuing  operations:  Costs of sales as a percent of sales
increased to 76.3% for the nine months ended June 30, 1997  compared to 70.6% in
the prior year period.  The higher cost of sales percentage related primarily to
lower  sales  and the  resulting  lower  absorption  of fixed  overheads  at the
agricultural equipment segment and the electrical equipment segment.

Operating expenses: Operating expenses increased $1,457, or 26.6%, to $6,943 for
the nine months ended June 30, 1997 compared to $5,486 in the prior year period.
Exclusive  of PPT and  GeoFocus,  which  were  not in  operation  for  the  full
nine-month  period ended June 30, 1997,  operating  expenses  increased $623, or
11.6% over the period  ended June 30,  1996.  Operating  expenses  were 16.4% of
sales for the nine months ended June 30, 1997 compared to 14.4% of sales for the
nine months ended June 30, 1996.  Higher operating  expenses for operations that
were in operation  for both the nine months ended June 30, 1997 and 1996 related
primarily to increased selling costs in the agricultural equipment segment.

Other expenses:  Other expenses increased $412, or 33.5%, to $1,641 for the nine
months ended June 30, 1997 compared to $1,229 for the same period in 1996 due to
higher interest expenses associated with increased  borrowings,  higher interest
rates on defaulted bank debt and increased losses from the equity  investment in
Ajay.

Discontinued Operations

Net loss from the discontinued  automotive  accessories  segment was $306 net of
tax benefits of $204 for the three  months  ended June 30, 1997  compared to net
losses of $1,824 net of tax  benefits of $1,217 for the  quarter  ended June 30,
1996.  The 1997 quarterly net loss includes  operations for the quarter  through
the measurement  date of May 8, 1997. All losses after the measurement  date are
reported as losses on disposal




                                       13
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)        Williams Controls, Inc.

Results of Operations (continued)

Discontinued Operations (continued)

of  discontinued  operations.  The 1996  losses  included  a  pre-tax  operating
restructuring charge of $2,250. Net sales from the discontinued segment declined
$1,807,  or 45.2% to $2,194 for the  quarter  ended June 30,  1997  compared  to
$4,001 in the prior year period.

Net loss from the automotive accessories  discontinued segment was $1,207 net of
tax  benefits  of $810 for the nine months  ended June 30, 1997  compared to net
losses of $2,220 net of tax  benefits of $1,481 for the nine  months  ended June
30, 1996. The 1996 losses included a pre-tax operating  restructuring  charge of
$2,250.  Net sales from the discontinued  segment  declined $4,637,  or 38.9% to
$7,285 for the nine months ended June 30, 1997  compared to $11,922 in the prior
year period.  The decline in  automotive  accessory  sales was due to lower unit
sales and lower prices  resulting from strong downward price pressure  generated
by competitors who are vertically integrated and have lower cost structures than
the Company's automotive accessories segment.

The estimated  loss on disposal of the business of $1,965  consists of $1,171 of
estimated  future  operating  losses  net of tax  benefits  of $781  and $794 of
operating  losses  incurred  since the  measurement  date net of tax benefits of
$530. The $794 of operating  losses since the measurement  date includes $489 of
charges that are primarily estimated inventory reserves. The Company has elected
to include  interest  costs in its  estimated  loss on  disposal  based upon the
expected debt reduction from the $5,000 of cash proceeds and the current rate of
interest.   The  1996  third  quarter  and  nine-month  loss  from  discontinued
operations included a $2,250 restructuring charge.


                                       14
<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

          10.1 Credit  Agreement dated July 11, 1997,  among  registrant and its
               subsidiaries  and Ajay  Sports,  Inc.  And its  subsidiaries,  as
               borrowers, and Wells Fargo Bank, National Association,  as lender
               (the "Credit Agreement").

      10.2 Promissory Notes under the Credit Agreements
          (a)  Revolving Credit Loans Promissory Note
          (b)  Term Loan I Promissory Note
          (c)  Term Loan II Promissory Note
          (d)  Real Estate Loan Promissory Note

      10.3  Mortgage and Security  Agreement  between  Aptek  Williams,  Inc.
           and Wells Fargo Bank

      10.4 Patent Assignment and Security Agreements for
           (a)     Williams Controls Industries, Inc.
           (b)     Kenco Williams, Inc.
           (c)     Hardee Williams, Inc.
           (d)     Aptek Williams, Inc.

      10.5 Trademark Security Agreements for
           (a)     Agrotec Williams, Inc.
           (b)     Hardee Williams, Inc.
           (c)     Kenco Williams, Inc.

      10.6 Continuing Unconditional Guaranty of Thomas W. Itin in favor of Wells
           Fargo Bank.

     10.7 Intercreditor  Agreement  dated  July 11,  1997 among  registrant  and
          subsidiaries,  Ajay  Sports,  Inc.  and  subsidiaries,  United  States
          National Bank of Oregon ("US Bank"),  Thomas W. Itin,  and Wells Fargo
          Bank, National  Association.  10.8 Consent,  Reaffirmation and Release
          Agreement with US Bank.

      10.9 Promissory Note of Ajay for $2,340,000 to US Bank.

     10.10 Mortgage,  Assignment  of Rents,  Security  Agreement and Fixture
              Filing  by Aptek  Williams,  Inc.  in  favor  of US  Bank. 

     10.11 Guaranty to US Bank


                                       15
<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










Date:  August 14, 1996


                                       16