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


                                    FORM 10-Q


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

                For the quarterly period ended: March 31, 2002

                                       OR

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

                        For the transition period from to


                         Commission file number 0-18083


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

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

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


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes  X   No
                                      ---     ---

The number of shares outstanding of the registrant's  common stock as of April
30, 2002: 19,928,522


<PAGE>


                             Williams Controls, Inc.

                                      Index


                                                                           Page
                                                                          Number

Part I.  Financial Information

  Item 1.  Financial Statements

           Consolidated Balance Sheets, March 31, 2002
             (unaudited) and September 30, 2001                            1

           Unaudited Consolidated Statements of Operations,
             three and six months ended March 31, 2002 and 2001            2

           Unaudited Consolidated Statements of Cash Flows,
             six months ended March 31, 2002 and 2001                      3

           Notes to Unaudited Consolidated Financial Statements           4-7

  Item 2.  Management's Discussion and Analysis
             of Financial Condition and Results of Operations            8-11


Part II.  Other Information

  Item 1.  Legal Proceedings                                               12

  Item 2.  Changes in Securities and Use of Proceeds                       12

  Item 3.  Defaults Upon Senior Securities                                 12

  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>


                                     Part I

Item 1.
                             Williams Controls, Inc.
                           Consolidated Balance Sheets
         (Dollars in thousands, except share and per share information)
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                             <C>                     <C>

                                                                            March 31,
                                                                              2002                 September 30,
                                                                          (unaudited)                  2001
                                                                       -------------------    ---------------------
                           ASSETS
Current Assets:
   Cash and cash equivalents                                                  $     38                 $       -
   Trade and other accounts receivable, less allowance of $448 and
     $379 at March 31, 2002 and September 30, 2001, respectively                 8,714                     8,231
   Inventories, net                                                              4,174                     4,725
   Prepaid and other current assets                                              1,389                     1,222
                                                                       -------------------    ---------------------
     Total current assets                                                       14,315                    14,178

Property plant and equipment, net                                               11,280                    11,729
Investment in and note receivable from affiliate                                     -                     3,065
Goodwill, net                                                                       36                        36
Other assets                                                                       340                       331
                                                                       -------------------    ---------------------
        Total assets                                                          $ 25,971                 $  29,339
                                                                       ===================    =====================

            LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
   Accounts payable                                                           $  8,556                 $   9,434
   Accrued expenses                                                              9,244                     9,048
   Current portion of long-term debt and capital leases                         14,091                    13,146
   Convertible subordinated debt, net                                            2,102                     2,082
                                                                       -------------------     --------------------
      Total current liabilities                                                 33,993                    33,710

Long-term debt and capital lease obligations                                       152                       205
Other liabilities, Primarily employee benefit obligations                        6,616                     6,132

Commitments and contingencies

Shareholders' equity (deficit):
   Preferred stock ($.01 par value, 50,000,000 authorized;
      78,200 issued and outstanding at March 31, 2002
      and 78,400 at September 30, 2001)                                              1                         1
   Common stock ($.01 par value, 50,000,000 authorized;
      19,928,522 issued at March 31, 2002 and 19,921,114 at
      September 30, 2001)                                                          199                       199
   Additional paid-in capital                                                   23,069                    23,069
   Accumulated deficit                                                         (35,303)                  (30,721)
   Other comprehensive loss - Pension liability adjustment                      (2,379)                   (2,379)
   Treasury stock (130,200 shares at March 31, 2002
      and September 30, 2001)                                                     (377)                     (377)
   Note receivable                                                                   -                      (500)
                                                                       -------------------     --------------------
      Total shareholders' equity (deficit)                                     (14,790)                  (10,708)
                                                                       -------------------     --------------------

        Total liabilities and shareholders' equity (deficit)                  $ 25,971                 $  29,339
                                                                       ===================     ====================




        The accompanying notes are an integral part of these balance sheets.

</TABLE>

                                       1
<PAGE>

                             Williams Controls, Inc.
                      Consolidated Statements of Operations
         (Dollars in thousands, except share and per share information)
                                  (unaudited)
<TABLE>
<CAPTION>
<S>                                                   <C>                <C>                <C>                <C>

                                               Three months       Three months         Six months        Six months
                                                   Ended              Ended              Ended             Ended
                                                  March 31,          March 31,          March 31,         March 31,
                                                    2002               2001               2002              2001
                                               --------------     --------------     --------------     --------------

Sales                                              $12,848           $15,030            $24,267            $30,009
Cost of sales                                        9,358            12,207             18,086             24,831
                                               --------------     --------------     --------------     --------------
Gross margin                                         3,490             2,823              6,181              5,178

Operating expenses:
  Research and development                             695             1,022              1,659              1,967
  Selling                                              360               339                602                767
  Administration                                     1,636             2,362              3,292              4,777
  Loss on impairment of investment - Ajay            3,565                 -              3,565                  -
  Loss on impairment of assets - PPT                     -                 -                  -              1,996
  Loss on impairment of assets - ProActive               -             4,366                  -              4,366
                                               --------------     --------------     --------------     --------------
    Total operating expenses                         6,256             8,089              9,118             13,873
                                               --------------     --------------     --------------     --------------

Loss from operations                                (2.766)           (5,266)            (2,937)            (8,695)

Other (income) expenses:

   Interest expense                                    632             1,067              1,572              2,140
   Other (income) expense, net                        ( 15)              (16)              ( 44)               (24)

                                               --------------     --------------     --------------     --------------
     Total other expenses                              617             1,051              1,528              2,116
                                               --------------     --------------     --------------     --------------

Loss from operations before
   income tax                                       (3,383)           (6,317)            (4,465)           (10,811)
Income tax                                               -                 -                  -                  -
                                               --------------     --------------     --------------     --------------

Net loss from continuing
     operations                                     (3,383)           (6,317)            (4,465)           (10,811)

Discontinued operations:
   Gain from exchange of building for debt of
   the previously discontinued agricultural
   equipment segment                                     -                 -                417                  -
                                               --------------     --------------     ==============     ==============

Net loss                                            (3,383)           (6,317)            (4,048)           (10,811)

Dividends on preferred stock                          (293)             (602)              (534)              (749)
Net loss allocable to common
     shareholders                                  $(3,676)          $(6,919)          $ (4,582)          $(11,560)
                                               ==============     ==============     ==============     ==============

Net loss per common share from
   continuing operations - basic                   $ (0.18)          $ (0.35)           $ (0.25)          $ (0.58)
Net income per common share from discontinued
   operations - basic                                   -                 -                0.02                 -
                                             --------------     --------------       --------------    ------------
Net loss per common share - basic                  $ (0.18)          $ (0.35)           $ (0.23)          $ (0.58)
                                             ==============     ==============       ==============    ==============
Weighted average shares used in per share
  calculation - basic                           19,928,522        19,790,914         19,926,935        19,790,914
                                              ==============     ==============      ==============   ==============

Net loss per common share from
   continuing operations - diluted                  $ (0.18)         $ (0.35)           $ (0.25)           $ (0.58)
Net income per common share from discontinued
   operations - diluted                                   -                -               0.02                  -
                                               --------------     --------------      --------------   -------------
Net loss per common share - diluted                 $ (0.18)         $ (0.35)           $ (0.23)          $ (0.58)
                                               ==============     ==============      ==============   =============
Weighted  average  shares  used in per  share
   calculation - diluted                         19,928,522       19,790,914         19,926,935         19,790,914
                                               ==============     ==============     ===============   =============

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

                             Williams Controls, Inc.
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                 <C>               <C>

                                               Six months         Six months
                                                 Ended               Ended
                                                March 31,          March 31,
                                                  2002                2001
                                             --------------      ---------------
Cash flows from operating activities:
  Net loss                                     $ (4,048)            $(10,811)
  Adjustments  to reconcile net loss
    to net cash (used) provided by operations:
      Depreciation and amortization               1,631                2,193
      Gain from discontinued operations            (417)                   -
      Gain from sale of assets                     ( 45)                   -
      Loss from impairment of investment - Ajay   3,565                    -
      Loss from impairment of assets - PPT            -                1,996
      Loss from impairment of assets - Proactive      -                4,366
  Changes in working capital:
      Receivables, net                             (483)               2,005
      Inventories                                   551                3,325
      Accounts payable and accrued expenses      (1,044)                 662
      Other                                          88                  787
                                             --------------      ---------------
Net cash provided (used)by operating activities  (  202)               4,523


Cash flows from investing activities:
  Payments for property, plant and equipment       (445)                (671)
  Proceeds from sale of assets                       45                    -
                                             --------------      ---------------
Net cash used in investing activities              (400)                (671)


Cash flows from financing activities:
  Net borrowings (payments) of debt and lease
    obligations                                     640               (7,376)
  Net proceeds from secured subordinated debt         -                4,576
  Preferred dividends                                 -                 (147)
                                             --------------      ---------------
Net cash provided by (used in) financing
  activities                                        640               (2,947)

Net increase in cash and cash
  equivalents                                        38                  905

Cash and cash equivalents at beginning of
  period                                              -                   30
                                             --------------      ---------------
Cash and cash equivalents at end of period     $     38             $    935
                                             ==============      ===============

Supplemental disclosure of cash flow
  information:
      Interest paid                            $    324             $  1,066
                                             --------------      ---------------
      Income taxes paid (refund)               $      -             $   (158)
                                             --------------      ---------------
Supplemental disclosure of non-cash
  investing and financing activities:
      Dividends accrued not paid               $    534             $    147

      Debt modification fee accrued, not paid  $    225             $      -

      Accrued fees/interest converted to debt  $    397             $      -

      Dividends for implied returns on         $      -             $    455
           preferred stock

      Secured subordinated debt issuance costs $      -             $     57

      Secured subordinated debt discount       $      -             $    813


        The accompanying notes are an integral part of these statements.

</TABLE>

                                      3
<PAGE>

                             Williams Controls, Inc.
              Notes to Unaudited Consolidated Financial Statements
                 Three and Six Months ended March 31, 2002 and 2001
           (Dollars in thousands, except share and per share amounts)


     Cautionary  Statement:  This  report,  including  these Notes to  Unaudited
     Consolidated  Financial  Statements,  contains  forward-looking  statements
     within the meaning of the Private Securities Litigation Reform Act of 1995.
     Forward-looking  statements include,  without limitation,  those statements
     relating to  development  of new products,  the financial  condition of the
     Company,  the ability to increase  distribution of the Company's  products,
     integration of businesses the Company acquires,  disposition of any current
     business of the Company.  These  forward-looking  statements are subject to
     the business and economic risks faced by the Company including, its ability
     to renegotiate its outstanding debt commitments and its ability to conclude
     a proposed  equity  offering,  the  ability of the  Company to  generate or
     obtain sufficient working capital to continue its operations. The Company's
     actual  results could differ  materially  from those  anticipated  in these
     forward-looking  statements as a result of the factors  described above and
     other factors described elsewhere in this report.

1.   Organization

     Williams Controls, Inc., including its wholly-owned subsidiaries,  Williams
Controls Industries, Inc. ("Williams");  Aptek Williams, Inc. ("Aptek"); Premier
Plastic   Technologies,   Inc.  ("PPT");   ProActive   Acquisition   Corporation
("ProActive");  Waaco-Geo,  Inc.  ("GeoFocus");  NESC Williams,  Inc.  ("NESC");
Williams  Technologies,  Inc.  ("Technologies");   Williams  World  Trade,  Inc.
("WWT");  Kenco/Williams,  Inc.  ("Kenco");  Techwood  Williams,  Inc.  ("TWI");
Agrotec  Williams,  Inc.  ("Agrotec")  and its  80%  owned  subsidiaries  Hardee
Williams,  Inc.  ("Hardee") and Waccamaw Wheel  Williams,  Inc.  ("Waccamaw") is
hereinafter referred to as the "Company" or "Registrant."

2.   Interim Consolidated Financial Statements

     The unaudited 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.   The  interim  results  are  not  necessarily
     indicative  of the results  expected for the entire  fiscal  year.  Certain
     information and footnote disclosures 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, 2001 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.   Going Concern Matters

     The accompanying consolidated financial statements have been prepared on a
     going concern basis,  which  contemplates the realization of assets and the
     satisfaction of liabilities in the normal course of business.  At March 31,
     2002, essentially all of the Company's $8,556 of trade accounts payable was
     significantly past due, the working capital deficit was ($19,678),  and the
     Company stockholders' equity was a deficit of ($14,790).  Additionally,  in
     February 2001 the Company  raised $4,576,  net of expenses,  from a private
     placement of debt in the form of $4,950 of secured subordinated debentures,
     which were due March 1, 2002,  bearing  interest at 12%.  The  interest was
     deferred  until the maturity of the underlying  notes.  The Company did not
     make the  principal and interest  payments  when due on March 1, 2002,  and
     discussions are ongoing with the debenture  holders  regarding the ultimate
     satisfaction  of this debt.  The  Company  also ceased  making  payments of
     preferred  stock  dividends in the second quarter of fiscal 2001.  Also, as
     described  in  Note 7 of  Notes  to the  Unaudited  Consolidated  Financial
     Statements,  the Company was not in  compliance  with the  covenants of its
     credit  agreement  with its  primary  bank at March 31,  2002.  The  credit
     agreement matured on July 11, 2001, and the Company has obtained extensions
     on this debt through June 30, 2002. As a result, the Company has classified
     the $7,946 owed to its  primary  bank as a current  liability  at March 31,
     2002. To improve liquidity, the Company has entered into a letter of intent
     with  American   Industrial   Partners   (AIP)  whereby  AIP  would  invest
     approximately $10,000, less fees and expenses, into the Company pursuant to
     a new Series B Convertible Preferred Stock offering. See Note 8 of Notes to
     Unaudited  Consolidated  Financial  Statements.  Completion of the proposed
     financing  transaction  is  subject to a number of  conditions,  including,
     without limitation,  customary due diligence and consent to the transaction
     by the holders of the Company's outstanding convertible  subordinated debt,
     secured   subordinated  debt  and  Series  A  preferred  stock.   Following
     completion of a definitive  agreement and upon closing of the  transaction,
     AIP will be entitled to hold a majority of seats on the Company's  Board of
     Directors.


     This investment by AIP is expected to improve  significantly  the Company's
     liquidity, however no assurances can be given that this transaction, or any
     other transaction,  will ultimately be completed.  Until the transaction is
     completed,  the  Company  will  continue  to  have a  significant  lack  of
     liquidity.

     The above matters  continue to raise doubt about the  Company's  ability to
     continue as a going  concern.  The financial  statements do not include any
     adjustments  relating to the  recoverability  and  classification  of asset
     carrying amounts or the amount and classification of liabilities that might
     result should the Company be unable to continue as a going concern.

                                       4
<PAGE>


4.   Comprehensive  Income  (Loss)

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  130,  "Reporting   Comprehensive
Income",  which requires  companies to report a measure of all changes in equity
except those resulting from  investments by owners and  distributions to owners.
Total  comprehensive  (loss) for the three  months ended March 31, 2002 and 2001
was ($3,383) and ($6,317),  respectively, and for the six months ended March 31,
2002 and 2001 was ($4,048) and ($10,811)  respectively,  and consisted solely of
net  loss.  As of March  31,  2002,  accumulated  other  comprehensive  loss was
($2,379) and consisted of accumulated  benefit obligations in excess of the plan
assets for both the Hourly  Employees  Pension plan and the  Salaried  Employees
Pension Plan.

5.   Earnings  (loss) per Share

Basic  earnings per share ("EPS") and diluted EPS are computed using the methods
prescribed by Statement of Financial Accounting Standards No. 128, "Earnings Per
Share".  Basic EPS is  calculated  using the  weighted-average  number of common
shares  outstanding  for the  period  and  diluted  EPS is  computed  using  the
weighted-average  number of common shares and dilutive common  equivalent shares
outstanding.

Following  is a  reconciliation  of basic EPS and  diluted  EPS from continuing
  operations:

<TABLE>
<CAPTION>
<S>                                         <C>       <C>          <C>          <C>      <C>         <C>
                                               Three Months Ended                  Three Months Ended
                                                March 31, 2002                     March 31, 2001
                                         --------------------------------    -------------------------------
                                                                  Per                                Per
                                                                 Share                              Share
                                           Loss      Shares      Amount        Loss      Shares     Amount

       Net Loss from
         continuing operations           $(3,383)                             $(6,317)
       Less-Preferred stock dividends       (293)                                (602)
                                         ---------                           ---------
       Basic EPS-
         Net loss allocable to
         common shareholders              (3,676)   19,928,522   $ (0.18)      (6,919)  19,790,914   $(0.35)

       Effect of dilutive securities -
         Stock options and warrants            -           -                        -           -
         Convertible preferred stock           -           -                        -           -
         Convertible subordinated debt         -           -                        -           -
       Diluted EPS -                     ---------  ----------                --------  ----------
         Net loss allocable to
         common shareholders             $(3,676)   19,928,522   $ (0.18)     $(6,919)  19,790,914   $(0.35)
                                         ========= ============ =========    ========= =========== =========

                                                Six Months Ended                    Six Months Ended
                                                 March 31, 2002                      March 31, 2001

                                         --------------------------------    -------------------------------
                                                                  Per                                Per
                                                                 Share                              Share
                                           Loss      Shares      Amount        Loss      Shares     Amount

       Net loss from continuing
                     operations          $ (4,465)                           $(10,811)
       Less-Preferred stock dividends        (534)                               (749)
                                         ---------                           ---------
       Basic EPS-
         Net loss allocable to
         common shareholders               (4,999)   19,926,935   $ (0.25)     (11,560) 19,790,914   $(0.58)

       Effect of dilutive securities -
         Stock options and warrants            -           -                        -           -
         Convertible preferred stock           -           -                        -           -
         Convertible subordinated debt         -           -                        -           -
       Diluted EPS -                     ---------  ----------                --------  ----------
         Net loss allocable to
         common shareholders              $(4,999)   19,926,935   $ (0.25)    $(11,560) 19,790,914   $(0.58)
                                         ========= ============ =========    ========= =========== =========
</TABLE>

     At  March 31, 2002 and 2001,  the  Company  had  options  and  warrants
     covering 6,188,736 and  6,236,879  shares,  respectively  of the  Company's
     common  stock  outstanding  that  were  not  considered  in the  respective
     dilutive EPS calculations since they would have been antidilutive.  In both
     periods,  conversion of the preferred  shares and convertible  subordinated
     debt would have been  antidilutive  and therefore was not considered in the
     computation of diluted earnings per share.

6.   Inventories

     Inventories consisted of the following:


                                        March 31,              September 30,
                                           2002                     2001
                                   -------------------     ---------------------
       Raw material                      $2,718                    $3,056
       Work in process                      975                       932
       Finished goods                       481                       737
                                   ===================     =====================
                                         $4,174                    $4,725
                                   ===================     =====================


     Finished  goods  include  component  parts and finished  product  ready for
     shipment.


7.   Debt

On June 30, 1998, the Company  restructured its credit facility with a bank (the
"Bank") to consist of a revolving  credit  facility  of up to $16,500,  a $3,100
term loan (Term Loan I) and a $2,700 real estate  loan.  In December  1998,  the
Company  borrowed $2,500 under Term Loan II. In July 1999, the Company  borrowed
$2,500 under Term Loan III. In February 2000, the Company  borrowed $1,000 as an
overadvance  of its credit  agreement  (Term Loan IV).  Under the revolver,  the
Company can borrow up to $8,500 (pursuant to the credit  agreement,  as amended)
based upon a borrowing base availability  calculated using specified percentages
of eligible  accounts  receivable and inventory.  The advance under Term Loan II
was repaid  during 2000.  Term Loans III and IV and a portion of Term Loan I and
the Real Estate Loan were repaid in the Third  Quarter of 2001 from sales of the
land and building at the Aptek subisdary and sale of the GeoFocus subsidary. The
revolver bears interest at the Bank's prime rate plus 2.00%, (6.75% at March 31,
2002). Term Loan I bears interest at the Bank's prime rate plus 2.25%, (7.00% at
March 31, 2002). The loans and the revolving credit facility matured on July 11,
2001 and were  extended  through  December 31, 2001.  Subsequent to December 31,
2001, the Company  obtained an extension of the credit facility under an amended
forbearance  agreement  until June 30, 2002.  In addition to interest  payments,
which have been paid monthly,  principle  payments of $50 will commence on April
1, 2002. As part of the extention  through June 30, 2002, the Company  converted
certain unpaid fees to the Bank to a $397 Bridge Loan,  bearing  interest at the
Bank's  prime rate plus 3.25%.  This Bridge Loan is to be repaid with 18 monthly
payments of $22, plus interest,  beginning  April 2002. All loans are secured by
substantially all of the assets of the Company.


                                       5
<PAGE>

The loan agreement  prohibits payment of dividends by the Company except for the
Series A Preferred  dividend,  and  requires  the  Company to  maintain  minimum
working  capital of $12,000  and minimum  tangible  net worth,  as  defined,  of
$11,500.  The loan also  prohibits  additional  indebtedness  and  common  stock
repurchases except through the use of proceeds from stock options exercised, and
restricts  capital  expenditures  to an amount not to exceed $10,500 for the two
years ended September 30, 1999 and not to exceed $2,500 annually thereafter.  In
addition,  the loan  limits  incremental  operating  lease  obligations  to $600
annually.  Fees under the loan agreement  include an unused revolver fee of .25%
currently  and  $500 in loan  accommodation  fees in  connection  with  the loan
extensions granted in 2001. At March 31, 2002, the Company was not in compliance
with its debt  covenants  with the Bank.  No waivers have been  obtained and the
default has not been cured, however the company has obtained an extension of the
forbearance  agreement  until June 30, 2002. In connection  with this extension,
the Company will pay a $225 fee.  Accordingly,  all of the debt with the Bank of
$7,946  has  been  classified  as  current   liabilities  in  the   accompanying
Consolidated Balance Sheet at March 31, 2002.

8.   AIP Letter of Intent

The  Company  announced  it has entered  into a letter of intent  with  American
Industrial Partners (AIP) whereby AIP would invest approximately  $10,000,  less
fees and  expenses,  into the  Company  pursuant  to a new Series B  Convertible
Preferred Stock offering.  Completion of the proposed  financing  transaction is
subject to a number of conditions,  including, without limitation, customary due
diligence  and  consent  to the  transaction  by the  holders  of the  Company's
outstanding convertible  subordinated debt, secured subordinated debt and Series
A preferred  stock.  Following  completion  of a definitive  agreement  and upon
closing of the transaction,  AIP will be entitled to hold a majority of seats on
the Company's Board of Directors.


9.   Loss on Impairment of Assets - ProActive and PPT

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" (SFAS 121),  long-lived  assets held and used by the Company are
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that the  carrying  amount of an asset may not be  recoverable.  For purposes of
evaluating the recoverability of long-lived  assets, the recoverability  test is
performed using undiscounted net cash flows of the assets.

In July 1999, the Company purchased the ProActive Pedals (ProActive) division of
Active Tools  Manufacturing  Co., Inc.  ProActive is a designer and developer of
patented   adjustable  food  pedal  systems  and  modular  pedal  systems.   The
acquisition  was  accounted  for using the  purchase  method of  accounting  and
resulted in $1,820 being allocated to developed  technology,  $1,439 to a patent
and patent license agreement  acquired and $2,162 to goodwill,  representing the
excess of the  purchase  price over the fair value of the  assets  acquired  and
liabilities  assumed.  At March 31, 2001, the carrying value of the goodwill and
intangible assets of ProActive was $4,366.

ProActive's sales volumes of adjustable  and modular foot pedal systems
are limited to one contract that ProActive has with a third party. Additionally,
as a result of the Company's overall capital  constraints,  the Company did not
possess the financial  resources to further develop  additional sales volumes or
to achieve the sales volumes originally  projected for ProActive.

As a result of the above  factors,  management  performed an analysis to measure
the impairment of the long-lived assets of ProActive in accordance with SFAS 121
as of March 31, 2001.  Based on management's  analysis it was concluded that the
undiscounted  value of the projected cash flows of ProActive's  current business
was less than the  carrying  value of the  assets of  ProActive  as of March 31,
2001. As a result of this conclusion,  the Company recorded an impairment charge
related to ProActive's  remaining  carrying value of the goodwill and intangible
assets,  totaling $4,366. This amount has been reflected as a separate line item
within the operating  expenses of the consolidated  statements of operations for
the three and six month periods ended March 31, 2001.

In July 2000,  the Company  entered  into an  agreement to sell PPT, its plastic
injection molding subsidiary,  subject to certain  conditions.  This transaction
was  not  consummated.  As a  result  of the  inability  to sell  PPT and  after
reviewing   PPT's   history  of  operating   problems,   workforce   levels  and
profitability, PPT operations were terminated,effective March,2001. Prior to the
termination of operations,  management of PPT evaluated the realizability of the
assets of PPT and the Company  recorded an impairment  charge on PPT's property,
plant,  and equipment of $1,996 in the first  quarter of fiscal year 2001.  This
amount has been reflected as a separate line item within the operating  expenses
of the  consolidated  statements  of  operations  for the six month period ended
March 31, 2001. Management also established additional reserves of $100 and $598
for  obsolete  and  excess  inventory  and  estimated   un-collectible  accounts
receivable, respectively. Net sales and loss from operations of PPT were $1,827,
$(1,227)  for the  three  months  ended  March  31,  2001  and were  $4,026  and
$(4,833)for the six months ended March 31, 2001.


10.  Disposition of Geofocus

The company sold its GeoFocus  subsidiary  in the third fiscal  quarter of 2001.
GeoFocus was consolidated in the accompanying  consolidated financial statements
at March 31, 2001.  Total assets of GeoFocus at March 31, 2001 were not material
to the consolidated financial statements.  Net sales and (loss) of GeoFocus were
$204 and  $(194) for the three  months  ended  March 31,  2001 and were $332 and
$(380) for the six months ended March 31, 2001.

11.  Gain from Discontinued Operations

In  December  2001,   the  Company   exchanged  a  building  of  its  previously
discontinued  Agricultural  Equipment  segment  with a  carrying  value of $0 in
satisfaction  of mortgage debt of $417.  For the six months ended March 31, 2002
the  resulting  gain  has  been  recorded  in  discontinued  operations  on  the
accompanying  statement  of  operations  and  reflected  as a gain  on  sale  of
buildings, since the fair value of the building was estimated to equal or exceed
the carrying value of the debt.

                                        6
<PAGE>

12.  Potential Gain on Settlement of Debt Obligation

Included in Current  portion of long-term  debt and capital  leases at March 31,
2002 is $799 related to an obligation  of the parent,  Williams  Controls,  Inc.
arising from the discontinued Agricultural Equipment segment. This obligation is
payable  to a former  owner  of the  assets  of a  portion  of the  discontinued
Agricultural  Equipment  segment.  In January 2002,  the Company  entered into a
letter of intent to  transfer  to the prior owner all  remaining  machinery  and
inventory for a complete release of the $799 obligation.  The Company's carrying
value of the inventory and machinery and equipment was $0 at March 31, 2002. The
Company will  recognize  an  extraordinary  gain (it is estimated  that the fair
value of the assets exchanged is  insignificant) of $799, or $.04 per share,when
the transaction is completed.  Although it is anticipated  that this transaction
will be completed,  the Company can provide no assurance that such a transaction
will ultimately be completed.

13.  Employee Benefit Plans

In the six months ended March 31, 2002, the Company recorded $170 as an estimate
of  additional  liability  to  participants  of  the  Company's  Employee  Stock
Ownership  Plan.  As  previously  disclosed,  the  Company's  benefit  plans are
currently under audit by the Department of Labor (DOL). The Company continues to
cooperate  fully with the DOL in regards to the audits but  Management is unable
to determine if any additional liability will result from the audits.

14.    Segment Information
<TABLE>
<CAPTION>
<S>                                                              <C>            <C>                  <C>                 <C>
                                                        Three months        Three Months         Six months         Six months
                                                           Ended               Ended               Ended               Ended
                                                          March 31,           March 31,           March 31,           March 31,
                                                            2002                2001                2002                2001
                                                       ---------------     --------------     ---------------     --------------

Sales by classes of similar products
Vehicle components                                           $12,696             $14,457            $23,992             $29,109
Electrical components and GPS                                    152                 573                275                 900
                                                       ---------------     --------------     ---------------     --------------
                                                             $12,848             $15,030            $24,267             $30,009
                                                       ===============     ===============    ===============     ==============

Earnings (loss) from operations
Vehicle components
  Before loss on impairment of assets                        $ 1,153             $  (473)           $ 1,471             $  (714)
  Loss on impairment of assets                                     -              (4,366)                 -              (6,362)
                                                       ---------------     --------------      ---------------     --------------
  Total vehicle components                                     1,153              (4,839)             1,471              (7,076)
Electrical components and GPS                                   (354)               (427)              (843)             (1,619)
Loss on impairment of investment - Ajay Sports                (3,565)                  -             (3,565)                  -
                                                       ---------------     --------------      ---------------     --------------
                                                             $(2,766)            $(5,266)           $(2,937)            $(8,695)
                                                       ===============     ==============      ===============     ==============
Identifiable assets
Vehicle components                                                                                    $23,370           $31,329
Electrical components and GPS                                                                           2,470             3,566
Corporate                                                                                                 131             2,165
                                                                                               ---------------     --------------
Total assets                                                                                          $25,971           $37,060
                                                                                               ===============     ==============

Capital expenditures
Vehicle components                                      $     327                $   476            $   445             $   658
Electrical components and GPS                                   -                      8                  -                  13
                                                       ---------------     --------------      ---------------     --------------
Total capital expenditures                              $     327                $   484            $   445             $   671
                                                       ===============     ==============      ===============     ==============


Depreciation and amortization
Vehicle components                                      $     524                $ 1,131            $ 1,526             $ 2,034
Electrical components and GPS                                  40                     95                105                 159
                                                       ---------------     --------------      ---------------     --------------
Total depreciation and amortization                     $     564                $ 1,226            $ 1,631             $ 2,193
                                                       ===============     ==============      ===============     ==============
</TABLE>
15.   Investment in and notes Receivable from Affiliate

At December 31, 2001, the Company had notes and accounts receivable from Ajay
Sports, Inc. (Ajay) with  a  carrying  value of $3,565,  including  a $500 note
receivable reflected as a reduction in the Company's  shareholders'  equity. The
$500 note receivable  related to the issuance of 206,719 shares of the Company's
common stock to Ajay.

The Company's former chief executive  officer and current Chairman of the Board,
Thomas W. Itin,  who is an  officer  and  shareholder  of Ajay,  has  guaranteed
certain loans and  investments  made by the Company to and in Ajay. Mr. Itin has
taken the position  that,  as a result of his  retirement as President and Chief
Executive  Officer  of  the  Company,   his  guarantees  of  certain  loans  and
investments in and to Ajay are no longer in effect.  The Company  disagrees with
the position  taken by Mr. Itin. Mr Itin has filed suit in the Circuit Court for
Oakland County,  Michigan  seeking a determination as to the  enforceability  of
these  guarantees.  The Company has filed suit  against Ajay and Mr. Itin in the
Multnomah  Circuit Court for the State of Oregon seeking  payment of all amounts
due from Ajay and Mr. Itin. The Company  believes the guarantees of Mr. Itin are
enforceable  and if the Company is unable to collect  amounts owed it by Ajay it
will seek collections on the guarantees.

The Company had previously accounted for its investment in Ajay using the equity
method of accounting. As a result of various changes within both the Company and
Ajay,  the Company feels it no longer has influence  over the operations of Ajay
and accordingly has changed to the cost method of accounting for its investments
in and note receivable from Ajay. Accordingly,  in accordance with the Company's
accounting  policy for the  impairment  of long lived  assets,  the  Company has
evaluated the  realization of its investment in and note  receivable  from Ajay.
Based on the Company's  current  assessment and collection  efforts against Ajay
and Mr.  Itin's  guarantee,  the Company  believes  the  investment  in and note
receivable  from Ajay have been impaired and  accordingly an impairment loss for
the entire  carrying  value of $3,565 has been provided in the second quarter of
fiscal 2002, reflected on the Consolidated  Statements of Operations as "Loss on
impairment of Investment-Ajay".

The Company has, however, been pursuing,  and will continue to pursue collection
efforts  against both Ajay and the guarantees of Mr. Itin.  Any recoveries  from
Ajay or Mr. Itin will be reflected in the  financial  statements  at the time of
collection.  During the second  quarter of fiscal  2002 the  Company  obtained a
judgement  against Ajay in the amount of $ 500 for a portion of the amounts owed
by Ajay to the Company.

16.  Reclassifications

Certain  amounts  previously  reported in the financial  statements  for the six
months ended March 31, 2001 have been  reclassified to conform to current fiscal
year presentation.

                                       7
<PAGE>

Item 2.
                             Williams Controls, Inc.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                (Dollars in thousands, except per share amounts)

Critical Accounting Policies
----------------------------

In  response to the SEC's  Release No.  33-8040,  "Cautionary  Advice  Regarding
Disclosure About Critical Accounting  Policies,  the Company identified the most
critical  accounting  principles upon which our financial  status  depends.  The
Company determined the critical  principles by considering  accounting  policies
that  involve the most  complex or  subjective  decisions  or  assessments.  The
Company identified the most critical  accounting policies to be those related to
impairment of long-lived  assets,  warranty and product recall, and pensions and
post-retirement benefit obligations.

Impairment of Long-Lived Assets
-------------------------------

We account for the impairment of long-lived  assets in accordance with Financial
Accounting  Standards  Board (FASB)  Statement No. 121 and,  beginning in fiscal
year 2003,  will account for it in accordance  with FASB  Statement No. 144. The
Company tests for impairment  using  undiscounted  cash flows and calculates the
amount of impairment using discounted cash flows. Estimates of future cash flows
require judgment and may change based on, among other things, the market for our
products, technology advances, and customer relationships.


Warranty and Product Recall
---------------------------

The Company provides a warranty covering defects arising from products sold. The
Company has established a warranty  reserve based on historical  return rates of
products.  In addition,  the Company issued a product recall in late fiscal year
2001. The Company  recorded a reserve for this product recall based on estimates
of number of units to be  returned  and the  estimated  costs to  repair.  While
management  believes  the  estimates  used are  reasonable,  they are subject to
change and such change could be material.


Pensions and Post-retirement Benefit Obligations
------------------------------------------------

The Company  accounts for pensions and  post-retirement  benefits in  accordance
with FASB  Statement No. 87 and FASB  Statement  No. 106. FASB  Statement No. 87
requires us to calculate our pension  expense and  liabilities  using  actuarial
assumptions,  including a discount rate  assumption  and a long-term  asset rate
return  assumption.  Changes in interest rates and market performance can have a
significant  impact on our pension expense and future  payments.  FASB Statement
No. 106  requires  the  Company to accrue  the cost of  post-retirement  benefit
obligations.  The accruals  are based on interest  rates and the costs of health
care.   Changes  in  interest   rates  and  health   care  costs  could   impact
post-retirement expenses and future payments.


Financial Position and Capital Resources
Financial Condition, Liquidity and Capital Resources

At March 31, 2002,  essentially  all of the Company's  $8,556 of trade  accounts
payable was  significantly  past due, the working capital deficit was ($19,678),
and the Company  stockholders' equity was a deficit of ($14,790).  Additionally,
in February  2001 the Company  raised  $4,576,  net of expenses,  from a private
placement  of debt in the form of $4,950  of  secured  subordinated  debentures,
which were due March 1, 2002, bearing interest at 12%. The interest was deferred
until  the  maturity  of the  underlying  notes.  The  Company  did not make the
principal  and interest  payments  when due on March 1, 2002,  and is in current
discussions with the debenture  holders  regarding the ultimate  satisfaction of
this debt.  The Company also ceased paying of preferred  stock  dividends in the
second  quarter of fiscal  2001.  Also,  as  described in Note 7 of Notes to the
Unaudited Consolidated  Financial Statements,  the Company was not in compliance
with the  covenants of its credit  agreement  with its primary bank at March 31,
2002.  The  credit  agreement  matured on July 11,  2001,  and the  Company  has
obtained extensions on this debt through June 30, 2002. As a result, the Company
has  classified  the $7,946 owed to its primary  bank as a current  liability at
March 31, 2002.

The  Company has  outstanding  past due  payables  with  essentially  all of its
suppliers of raw  materials,  components and services and is currently on C.O.D.
or prepayment  status with essentially all of its vendors.  Although the Company
has not  experienced  any  significant  supply  disruptions  in the past several
months,  and is not anticipating any, these vendors could decide, as a result of
the past due  payables,  to  discontinue  or delay the  Company's  supply of raw
materials,  components  and  services  which  could  cause a  disruption  in the
Company's  production and operations.  Such disruption or delay could materially
adversely  affect the Company's  business,  prospects,  financial  condition and
results of operation.

At March 31, 2002, the Company's contractual  obligations consisted of bank debt
of $7,946,  capital  leases of $549,  debt of  discontinued  operations of $799,
Secured  Subordinated  debt and Convertible  Subordinated  debt,  excluding debt
discount, of $4,950 and $2,102,  respectively.  All of this debt except for $152
of capital leases is shown as a current liability because the debt is due within
the next twelve months or is in default.  The Company also has  operating  lease
commitments  which at March 31, 2002 are due $354 in 2002, $287 in 2003, and $93
in 2004.  The Company  does not have any  material  letters of credit,  purchase
commitments, or debt guarantee outstanding as of March 31, 2002.

To improve  liquidity,  the  Company  has  entered  into a letter of intent with
American  Industrial  Partners  (AIP)  whereby  AIP would  invest  approximately
$10,000,  less fees and  expenses,  into the Company  pursuant to a new Series B
Convertible  Preferred  Stock  offering.  See  Note  8  of  Notes  to  Unaudited
Consolidated   Financial  Statements.   Completion  of  the  proposed  financing
transaction is subject to a number of conditions, including, without limitation,
customary  due diligence  and consent to the  transaction  by the holders of the
Company's outstanding  convertible  subordinated debt, secured subordinated debt
and Series A preferred stock. Following completion of a definitive agreement and
upon  closing of the  transaction,  AIP will be  entitled  to hold a majority of
seats on the Company's Board of Directors.


An  investment  such  as  that  currently  under   consideration  by  AIP  would
significantly  improve the liquidity of the  corporation,  however no assurances
can be given that this transaction,  or any other investment  transaction,  will
ultimately  be  completed.  Until  the  transaction  is  completed,  or  another
alternative  becomes available,  the Company will continue to have a significant
lack of liquidity.


The above  matters  continue to raise a  substantial  doubt about the  Company's
ability to continue as a going concern.  The financial statements do not include
any  adjustments  relating to the  recoverability  and  classification  of asset
carrying  amounts or the amount and  classification  of  liabilities  that might
result should the Company be unable to continue as a going concern.

Cash flow from  operations  was negative for the six months ended March 31, 2002
at $202, compared to a source of $4,523 for the six months ended March 31, 2001.
Cash from operations improved through a reduction in the loss for the six months
ended March 31, 2002 over the corresponding  prior year's six month period.  The
large  improvement  in the net loss from  2001 to 2002 was more  than  offset by
changes in working capital. On a cash basis, the 2001 loss of $10,811 included a
$6,362 non-cash loss from the impairment of assets.  Additionally in fiscal 2001
reductions  of  receivables  and  inventory  and  increases in Accounts  Payable
improved cash flow.  The negative  cash flow from changes in working  capital in
2002 of $888 differs from the net working  capital gain in 2001 of $6,779 mainly
in the areas of inventory and receivable reduction.

Cash flow from investing was negative for the six months ended March 31, 2002 at
$400,  wholly from  purchase and sale of  property,  plant and  equipment.  This
compares  with $671  negative cash flow for the six months ended March 31, 2001,
also from the result of purchases of property, plant and equipment.

Cash flow from financing  activities was $640 for the six months ended March 31,
2002  compared to a use of $2,947 for the six months ended March 31,  2001.  The
net source of funds for the six months ended March 31, 2002 was primarily due to
the borrowing of $1,000 at December 31, 2001 under the revolving  loan agreement
discussed above offset by payments against borrowings. The net use of funds from
financing  activities  for the six months ended March 31, 2001 was primarily due
to repayment of debt and lease obligations of $7,376 offset by new borrowings of
$4,576.

                                       8

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

Financial Position and Capital Resources
Financial Condition, Liquidity and Capital Resources

Market Risk
-----------
The  Company may be exposed to future  interest  rate  changes on its debt.  The
Company does not believe that a hypothetical  10 percent change in end of period
interest rates would have a material effect on the Company's cash flow.


Recent FASB Pronouncements
--------------------------
In June 2000 the FASB issued  Statement of Financial  Accounting  Standards  No.
138,  "Accounting for Certain Derivative  Instruments and Hedging  Activities an
amendment of FASB Statement No. 133" ("SFAS 138").  In June 1999 the FASB issued
Statement of Financial  Accounting  Standards No. 137, Accounting for Derivative
Instruments  and Hedging  Activities."  ("SFAS 137") SFAS 137 is an amendment to
SFAS 133,  "Accounting for Derivative  Instruments and hedging Activities." SFAS
133,  as  amended  by SFAS  137 and 138  establishes  accounting  and  reporting
standards  for all  derivative  instruments.  SFAS 133 and 138 are effective for
fiscal years beginning after June 15, 2000. The Company adopted SFAS 138 in 2001
and it did not have any material impact on the Company's  financial  position or
results of operations.
In July 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations,"  and SFAS No.  142,  "Goodwill  and  Other  Intangible
Assets."  SFAS 141 requires  that the purchase  method of accounting be used for
all  business   combinations   initiated   after  June  30,  2001.  Use  of  the
pooling-of-interests method will be prohibited on a prospective basis only. SFAS
142  changes the  accounting  for  goodwill  from an  amortization  method to an
impairment-only  approach.  Thus,  amortization of goodwill,  including goodwill
recorded  in past  business  combinations,  will  cease  upon  adoption  of that
Statement, which for the Company was October 1, 2001. As of October 1, 2001, the
Company did not have any significant  remaining  goodwill.  The adoption of SFAS
141 and SFAS 142 did not have a significant impact on the financial condition or
results of operations of the Company. Goodwill amortization,  was $0, and $30 as
of March 31, 2002 and 2001, respectively.



In June and August 2001, the FASB issued SFAS No.'s 143 and 144, "Accounting for
Asset Retirement  Obligations" and "Accounting for the Impairment or Disposal of
long-lived  Assets."  Under SFAS 143, the fair value of a liability for an asset
retirement  obligation  must be recognized in the period in which it is incurred
if a  reasonable  estimate  of fair  value  can be made.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived asset. SFAS 144 retains SFAS 121's ("Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed  Of")  fundamental
provisions for the: 1) recognition  and  measurement of impairment of long-lived
assets  to be held and  used;  and 2)  measurement  of  long-lived  assets to be
disposed of by sale.  These  statements  are effective for the Company's  fiscal
year ended 2003. The Company has not performed an analysis of the effect of SFAS
143 or 144.


                                       9
<PAGE>

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

Results of Operations
Three months ended March 31, 2002 compared to the three months ended March
31, 2001.

Sales
-----

Total net sales decreased $2,182 to $12,848 in the second quarter of fiscal 2002
from $15,030 in the second  quarter of fiscal 2001.  Excluding  the sales in the
second fiscal quarter of 2001 of the PPT subsidiary,  which was shut down in the
second quarter of fiscal 2001, and the sales of the GeoFocus  subsidiary,  which
was sold in the third  quarter of fiscal 2001,  (See Note 9 and Note 10 of Notes
to  Consolidated  Unaudited  Financial  Statements)  net sales decreased $152 or
1.2%.

Net sales in the Vehicle  Components segment decreased $1,761, to $12,696 in the
second quarter of fiscal  2002 over the second quarter of fiscal  2001 while the
Electrical  Components and GPS business segment  experienced a decrease in sales
of $421 to $152 in the second quarter of fiscal 2002.

Excluding the sales volumes of PPT in the second quarter of fiscal 2002, Vehicle
Component  segment sales increased $65 or  0.5%.Increased  sales in the Portland
division  more  than  offset  sales  reductions  in the  Company's  natural  gas
conversion kit subsidiary,  NESC. Excluding the sales volumes of GeoFocus in the
second  quarter of fiscal  2001,  Electrical  Components  and GPS segment  sales
decreased  $217,  or  58.8%.  In the  Electrical  Components  and  GPS  segment,
decreased sales resulted from phasing out a number of its traditional electrical
component  products in the second half of fiscal 2001.  The Company is committed
to the  development  and  production  of sensors  and sensor  related  products,
however,  sales from this segment may be significantly  lower during fiscal 2002
as a result of the phase out of the traditional electrical component products in
fiscal 2001.

Gross margin
------------

Gross margins were $3,490, or 27.2% of net sales, in the second quarter of 2002,
compared to $2,823, or 18.8% of net sales, in the comparable fiscal 2001 period.
Included  in the gross  margin  for the  second  quarter  of  fiscal  2001 was a
negative gross margin of $620 related to PPT.

Excluding PPT, gross margins  increased $47 in the second quarter of fiscal 2002
over the second  quarter of fiscal  2001.  As a percent of net sales,  the gross
margin of 27.2% of sales in the second  fiscal  quarter of 2002 was higher  than
the 26.1% of sales, excluding PPT, in fiscal 2001.


Operating expenses
------------------

Operating  expenses  were  $2,691  for the three  months  ended  March 31,  2002
compared to $3,723,  excluding  the Loss on Impairment of investment in Ajay for
the fiscal 2002 period and the Loss on Impairment of assets at Proactive for the
comparable fiscal 2001 period.  Excluding the operating  expenses related to PPT
and Geofocus and the Proactive impairment loss, operating expenses for the three
months ended March 31, 2001 were $2,847.  The lower operating expenses in fiscal
2002 were the result of cost containment efforts.

Impairment Losses
-----------------

The Company had previously accounted for its investment in Ajay using the equity
method of accounting. As a result of various changes within both the Company and
Ajay,  the Company feels it no longer has influence  over the operations of Ajay
and  accordingly  has changed to the cost method of accounting for investment in
and note  receivable  from Ajay.  Accordingly,  in accordance with the Company's
accounting  policy for the  impairment  of long lived  assets,  the  Company has
evaluated the  realization of its investment in and note  receivable  from Ajay.
Based on the Company's  current  assessment and collection  efforts against Ajay
and Mr.  Itin's  guarantee,  the Company  believes  the  investment  in and note
receivable  from Ajay have been impaired and  accordingly an impairment loss for
the entire  carrying  value of $3,565 has been provided in the second quarter of
fiscal  2002.  This  amount  has been  reflected  as a  separate  line  "Loss on
impairment  of  investment  -  Ajay"  within  the  operating   expenses  of  the
consolidated  statements of operations for the three and six month periods ended
March 31, 2002.

In July 1999, the Company purchased the ProActive Pedals (ProActive) division of
Active Tools  Manufacturing  Co., Inc.  ProActive is a designer and developer of
patented   adjustable  food  pedal  systems  and  modular  pedal  systems.   The
acquisition  was  accounted  for using the  purchase  method of  accounting  and
resulted in $1,820 being allocated to developed  technology,  $1,439 to a patent
and patent license agreement  acquired and $2,162 to goodwill,  representing the
excess of the  purchase  price over the fair value of the  assets  acquired  and
liabilities  assumed.  At March 31, 2001, the carrying value of the goodwill and
intangible assets of ProActive was $4,366.

ProActive's sales volumes of adjustable  and modular foot pedal systems
are limited to one contract that ProActive has with a third party. Additionally,
as a result of the Company's overall capital  constraints,  the Company did not
possess the financial  resources to further develop  additional sales volumes or
to achieve the sales volumes originally  projected for ProActive.

As a result of the above  factors,  management  performed an analysis to measure
the impairment of the long-lived assets of ProActive in accordance with SFAS 121
as of March 31, 2001.  Based on management's  analysis it was concluded that the
undiscounted  value of the projected cash flows of ProActive's  current business
was less than the  carrying  value of the  assets of  ProActive  as of March 31,
2001. As a result of this conclusion,  the Company recorded an impairment charge
related to ProActive's  remaining  carrying value of the goodwill and intangible
assets, totaling $4,366. This amount has been reflected as a separate line "Loss
on  impairment  of  asset -  Proactive" within  the  operating  expenses  of the
consolidated  statements of operations for the three and six month periods ended
March 31, 2001.

Interest and Other Expenses
---------------------------

Interest  expense  decreased  $435 to $632 in the second  quarter of fiscal 2002
from $1,067 in the second quarter of fiscal 2001. Lower interest on reduced debt
levels and lower  interest  rates were  partially  offset by increased  costs of
amortization  of  the  Secured  Subordinated  Debenture  warrant  discounts.

Income Taxes
------------

The effective income tax rate was 0.00% for the quarters ended March 31, 2002
and 2001.  The Company is in a net operating loss  carryforward  position and is
providing a 100%  valuation  allowance  on all  deferred tax assets due to going
concern issues.

Net earnings available to common shareholders
---------------------------------------------

Net loss  allocable to common  shareholders  declined to $(3,676) in the quarter
ended March 31, 2002 compared to $(6,919) in the  comparative  prior year period
primarily due to losses  included in the second quarter of fiscal 2001 that were
not incurred in the second quarter of fiscal 2002.  These losses included losses
on impartment of assets at Proactive and other operating losses  attributable to
PPT and GeoFocus in fiscal 2001.

                                       10
<PAGE>
Results of Operations
Six months ended March 31, 2002 compared to the six months ended March 31, 2001.

Sales
-----

Total sales decreased  $5,742,  or 19.1%, to $24,267 for the first six months of
fiscal 2002 from $30,009 for the first six months of fiscal 2001,  primarily due
to lower unit sales volumes in the Company's Vehicle Components segment and to a
lesser degree, the Company's Electrical Components and GPS business segment.

Sales in the Vehicle  component  business segment  decreased $5,117, or 17.6% to
$23,992 from the sales  levels  achieved in the first six months of fiscal 2001.
The most significant  factor in the decline was the closing of the operations of
PPT in 2001. PPT sales for the six months ended March 31, 2001 were $4,026.  The
absense of PPT sales in fiscal 2002  accounts for 78.7% of the sales  decline in
this segment.

The Electrical  Components and GPS component  business  segment sales  decreased
$625 to $275 for the six months ended March 31, 2002 compared to the same period
in fiscal 2001 primarily as a result of lower sales volumes of the Company's
electronic sensors.  The company sold its  GeoFocus  subsidiary  in the third
fiscal  quarter of 2001. GeoFocus was consolidated in the accompanying
consolidated financial statements  at March 31, 2001.

Gross margin
------------

Gross Margins from  operations  were $6,181,  or 25.5% of sales in the first six
months of fiscal 2002 compared to $5,178, or 17.3% of sales in the corresponding
six month period of 2001. The increased gross profit margins were mainly due to
the the closing of the PPT operation, which had a negative margin of $(1,473)
for the six month period in 2001.  The gross profit margins for the six month
period in 2001 excluding the effect of PPT sales and margin was 25.6%.


Operating Expenses
------------------

Operating  expenses were $5,553 for the six months ended March 31, 2002 compared
to $7,511 for the comparable fiscal 2001 period, a decrease of $1,958, or 26.1%,
excluding the loss from  impairment of assets and investments in fiscal 2002 and
fiscal 2001.  The reduction was primarily as a result of elimination of expenses
for the Company's PPT subsidiary.

Research and development  expenses  decreased $308, to $1,659 during the first
six months of fiscal  2002  compared  to $1,967 in the  comparable  fiscal  2001
period,  a 15.7%  decline.  As a percent  of  sales,  research  and  development
expenses  increased  slightly from 6.6% to 6.8%.

Administrative  expenses  decreased $1,485 to $3,292 during the first six months
of fiscal  2002  compared  to $4,777 in the  comparable  fiscal  2001 period due
mainly to the elimination of expenses related to the closed PPT subsidiary.

Impairment Losses
-----------------

As discussed above,  the Company recorded an impairment loss of $ 3,565 related
to its  investment  in and note  receivable  from Ajay in the second  quarter of
fiscal year 2002.  Also as discussed  above the Company  recorded an impairment
loss of $ 4,366 related to the intangible  assets of Proactive pedal (Proactive)
in the second quarter of fiscal year 2001.

In July 2000,  the Company  entered  into an  agreement to sell PPT, its plastic
injection molding subsidiary,  subject to certain  conditions.  This transaction
was  not  consummated.  As a  result  of the  inability  to sell  PPT and  after
reviewing   PPT's   history  of  operating   problems,   workforce   levels  and
profitability, PPT operations were terminated,effective March,2001. Prior to the
termination of operations,  management of PPT evaluated the realizability of the
assets of PPT and the Company  recorded an impairment  charge on PPT's property,
plant,  and equipment of $1,996 in the first  quarter of fiscal year 2001.  This
amount has been reflected as a separate line item within the operating  expenses
of the  consolidated  statements  of  operations  for the six month period ended
March 31, 2001. Management also established additional reserves of $100 and $598
for  obsolete  and  excess  inventory  and  estimated   un-collectible  accounts
receivable, respectively. Net sales and loss from operations of PPT were $1,827,
$(1,227)  for the  three  months  ended  March  31,  2001  and were  $4,026  and
$(4,833)for the six months ended March 31, 2001.

Interest and Other Expenses
---------------------------

Interest  expense  decreased $548 or 25.6%, to $1,592 in the first six months of
fiscal 2002 from $2,140 in the first six months of fiscal 2001.  Lower  interest
on reduced  debt  levels and reduced  interest  rates were  partially  offset by
increased  costs of  amortization of Secured  Subordinated  Debentures warrent
discounts.

Discontinued Operations-Agricultural Segment
--------------------------------------------

Included in Current  portion of long-term  debt and capital  leases at September
30, 2001 is $417 related to the discontinued Agricultural Equipment segment. The
$417 related to a mortgage payable on a building of the  Agricultural  Equipment
segment.  The building's carrying value was $0 at September 30, 2001. During the
first  quarter of fiscal 2002 the  mortgage  holder sold the building at auction
for  approximately  the mortgage  value and  completely  and fully  released the
Company  from the  mortgage.  The Company  recognized  a gain from  discontinued
operations  in the six month  period ended March 31, 2002 of $417 related to the
satisfaction of the mortgage. Since the estimated fair value of the building was
equal to or greater  than the debt,  the gain was  recorded as a gain on sale of
building from discontinued operations.

Income Taxes
------------

The  effective  income tax rate was 0.00% for the six month  periods ended March
31, 2002 and 2001. The Company is in a net operating loss carryforward  position
and is  providing a 100%  valuation  allowance on all deferred tax assets due to
going concern issues.

Net earnings available to common shareholders
---------------------------------------------

Net loss allocable to common shareholders  improved to $(4,582) in the six month
period ended March 31, 2002 compared to $(11,560) in the comparative  prior year
period primarily due to losses included in fiscal 2001 that were not incurred in
the  corresponding  period of  fiscal  2002.  These  losses  included  losses on
impartment  of  assets  at  Proactive  and  PPT,  and  other  operating   losses
attributable to PPT and GeoFocus in fiscal 2001.



                                       11
<PAGE>


                                     Part II

Item 1.   Legal Proceedings

          None

Item 2.   Changes in Securities and Use of Proceeds

          None

Item 3.   Defaults Upon Senior Securities

          On November 15,  2000,  the Company  defaulted  under the terms of its
          credit  agreement with the Bank when it failed to repay Term Loans III
          and  IV in  the  remaining  principal  amounts  of  $694  and  $1,000,
          respectively,  both due on November 15, 2000. As of March 31, 2002,
          no waivers  have been  obtained  and the  default  has not been cured.
          Forebearance agreements have been reached with the Bank, most recently
          on January 8, 2002 to extend the loans to June 30, 2002.  All the debt
          with the Bank of $7,946 has been classified as current  liabilities in
          the accompanying Consolidated Balance Sheet at March 31, 2002.

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



<PAGE>


                             Williams Controls, Inc.

                                    Signature


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




                             WILLIAMS CONTROLS, INC.






                                                By: /s/ Thomas K. Ziegler
                                                    ----------------------------
                                                    Thomas K. Ziegler
                                                    President and
                                                    Chief Executive Officer



                                                By: /s/ Dennis E. Bunday
                                                    ----------------------------
                                                    Dennis E. Bunday,
                                                    Chief Financial Officer








Date:  May 20, 2002








                                       13
<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.






                                                    ----------------------------
                                                    Thomas K. Ziegler
                                                    Presidend and
                                                    Chief Executive Officer




                                                    ----------------------------
                                                    Dennis E. Bunday,
                                                    Chief Financial Officer






Date:  May 20, 2002





                                       14