================================================================================
                                                                           
                                  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, 1998.

                                       OR

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

                      For the transition period from    to
                                                    ---    ---

                         Commission file number 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, 1998: 17,932,040

================================================================================

                                       1
<PAGE>


                            Williams Controls, Inc.

                                      Index


                                                                           Page
                                                                          Number
                                                                          ------

Part I.  Financial Information

     Item 1. Financial Statements

               Consolidated Balance Sheets, March 31, 1998 (unaudited)
                and September 30, 1997                                        3

               Unaudited Consolidated Statement of Shareholders' Equity,
                six months ended March 31, 1998                               4

               Unaudited Consolidated Statements of Operations,
                three and six months ended March 31, 1998 and 1997            5

               Unaudited Consolidated Statements of Cash Flows,
                six months ended March 31, 1998 and 1997                      6

               Notes to Unaudited Consolidated Financial Statements        7-11

     Item 2. Management's Discussion and Analysis of Financial
              Condition and Results of Operations                         12-16


Part II.  Other Information

     Item 1. Legal Proceedings                                               17

     Item 2. Changes in Securites and Use of Proceeds                        17

     Item 3. Defaults Upon Senior Securities                                 17
     
     Item 4. Submission of Matters to a Vote of Security Holders             17

     Item 5. Other Information                                               17

     Item 6. Exhibits and Reports on Form 8-K                                18

             Signature Page                                                  19
















                                       2
<PAGE>



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

<TABLE>
<CAPTION>
                                                                                        March 31,    September 30,
                                                                                          1998           1997
                                                                                       (unaudited)
                                                                                        ---------    -------------
ASSETS
<S>                                                                                    <C>            <C>
Current Assets:
   Cash and cash equivalents                                                            $  1,064       $    700
   Trade and other accounts receivable, less allowance of $241 and
     $185 at March 31, 1998 and September 30, 1997, respectively                          13,038          8,468
   Inventories                                                                            13,998         14,517
   Prepaid expenses                                                                        1,377            713
   Net assets held for disposition                                                          --              638
   Other current assets                                                                    1,098          1,098
                                                                                        --------       --------
     Total current assets                                                                 30,575         26,134

Investment in affiliate                                                                      161            559
Property plant & equipment, net                                                           18,076         18,080
Receivables from affiliate                                                                 3,634          3,645
Net assets held for disposition                                                             --            1,610
Other assets                                                                               3,290          1,348
                                                                                        ========       ========
     Total assets                                                                       $ 55,736       $ 51,376
                                                                                        ========       ========

LIABILITIES AND SHAREHOLDERS'EQUITY

Current Liabilities:
   Accounts payable                                                                        6,372          5,070
   Accrued expenses                                                                        3,703          3,008
   Current portion of long-term debt and capital leases                                    1,517          1,428
   Other current liabilities                                                                  49            500
                                                                                        --------       --------
      Total current liabilities                                                           11,641         10,006

Long-term debt and capital lease obligations                                              23,522         22,857
Other liabilities                                                                          1,471          1,214

Commitments and contingencies                                                               --             --

Minority interest in consolidated subsidiaries                                               424            464

Shareholders' equity:
   Preferred stock ($.01 par value, 50,000,000 authorized)                                  --             --
   Common stock ($.01 par value,  50,000,000 authorized;
      18,062,240 and 17,912,240 issued at March 31, 1998
      and September 30, 1997, respectively)                                                  180            179
   Additional paid-in capital                                                              9,882          9,822
   Retained earnings                                                                       9,184          7,402
   Unearned ESOP shares                                                                     (191)          (191)
   Treasury stock (130,200 shares at March 31, 1998 and
     September 30, 1997, respectively)                                                      (377)          (377)
                                                                                        --------       --------
      Total shareholders' equity                                                          18,678         16,835
                                                                                        ========       ========
        Total liabilities and shareholders' equity                                      $ 55,736       $ 51,376
                                                                                        ========       ========
</TABLE>






        The accompanying notes are an integral part of these statements.


                                       3
<PAGE>



                            Williams Controls, Inc.
                 Consolidated Statement of Shareholders' Equity
                             (Dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                   Issued
                                                Common stock       Additional
                                           ----------------------    Paid in    Retained     Unearned      Treasury   Shareholders
                                             Shares      Amount      Capital    Earnings    ESOP Shares     Shares       Equity
                                           ----------  ----------  ----------  ----------  ------------   ----------   ----------

<S>                                       <C>         <C>         <C>         <C>         <C>            <C>          <C>
Balance, September 30, 1997                17,912,240  $      179  $    9,822  $    7,402  $       (191)  $     (377)  $   16,835

Net earnings                                     --          --          --         1,782          --           --          1,782
Common stock issued
   pursuant to exercise
   of warrants/options                        150,000           1          60        --            --           --             61
                                           ----------  ----------  ----------  ----------  ------------   ----------   ----------
Balance, March 31, 1998                    18,062,240  $      180  $    9,882  $    9,184  $       (191)  $     (377)  $   18,678
                                           ==========  ==========  ==========  ==========  ============   ==========   ==========


</TABLE>














































        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>



                            Williams Controls, Inc.
                      Consolidated Statements of Operations
         (Dollars in thousands, except share and per share information)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                            Three months       Three months       Six months         Six months
                                                               Ended              Ended              Ended              Ended
                                                             March 31,          March 31,          March 31,          March 31,
                                                               1998               1997               1998               1997
                                                          ---------------    ---------------    --------------     --------------
<S>                                                        <C>                <C>                <C>                <C>
Sales                                                       $     17,891       $     14,248       $    32,835        $    27,769
Cost of sales                                                     12,586             10,867            23,375             21,003
                                                          ---------------    ---------------    --------------     --------------
Gross margin                                                       5,305              3,381             9,460              6,766

Operating expenses:
  Research and development                                           730                489             1,289                960
  Selling                                                            736                777             1,427              1,453
  Administration                                                   1,347              1,028             2,425              1,937
                                                          ---------------    ---------------    --------------     --------------
    Total operating expenses                                       2,813              2,294             5,141              4,350
                                                          ---------------    ---------------    --------------     --------------

Earnings from continuing operations                                2,492              1,087             4,319              2,416

Other expenses:
   Interest expense                                                  431                455               806                972
   Equity interest in loss of affiliate                               40                 49               398                179
                                                          ---------------    ---------------    --------------     --------------
     Total other expenses                                            471                504             1,204              1,151
                                                          ---------------    ---------------    --------------     --------------


Earnings from  continuing  operations  before income tax
   expense                                                         2,021                583             3,115              1,265
Income tax expense                                                   791                241             1,212                513
                                                          ---------------    ---------------    --------------     --------------
Earnings from continuing operations before minority
   interest                                                        1,230                342             1,903                752
Minority interest in net loss of consolidated subsidiaries            17                 49                39                 31
                                                          ---------------    ---------------    --------------     --------------

Net earnings from continuing operations                            1,247                391             1,942                783

Discontinued operations:
   Loss from operations of automotive accessories segment          (160)              (521)             (160)              (901)
                                                          ---------------    ---------------    --------------     --------------
   Loss from discontinued operations                               (160)              (521)             (160)              (901)
                                                          ---------------    ---------------    --------------     --------------


Net earnings (loss)                                         $     1,087        $      (130)       $     1,782              (118)
                                                          ===============    ===============    ==============     ==============


Basic and diluted earnings per common share from
   continuing operations                                    $       0.07       $      0.02        $      0.11        $     0.04
Basic and diluted loss per common share from
   discontinued operations                                         (0.01)            (0.03)             (0.01)            (0.05)
                                                          ---------------    ---------------    --------------     --------------
Basic and diluted net earnings (loss) per common share      $       0.06       $     (0.01)       $      0.10        $    (0.01)
                                                          ===============    ===============    ==============     ==============


</TABLE>










        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>



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


                                             Six months         Six months
                                               Ended               Ended
                                           March 31, 1998      March 31, 1997
                                          ----------------    ----------------
Cash flows from operating activities:
   Net income (loss)                         $     1,782         $      (118)
   Adjustments to reconcile net income
     (loss) to net cash from continuing
     operations:
        Loss from discontinued operations            160                 901
        Depreciation and amortization                715                 726
        Minority interest in earnings (loss)
           in consolidated subsidiaries              (39)                (31)
        Equity interest in loss of affiliate         398                 179
    Changes in working capital of continuing 
     operations:
        Receivables                               (3,053)               (518)
        Prepaid expenses                            (659)               (830)
        Inventories                               (1,132)               (608)
        Accounts payable and accrued
           expenses                                2,219                (782)
        Other                                        (26)              1,106
                                          ----------------    ----------------
Net cash provided by operating activities
   of continuing operations                          365                  25

Cash flows from investing activities:
   Proceeds from the sale of discontinued
      operations                                   1,124                  --
   Payments for property, plant and
      equipment                                     (491)               (390)
                                          ----------------    ----------------
Net cash provided by (used in) investing 
   activities of continuing operations               633                (390)

Cash flows from financing activities:
   Proceeds (repayments) of long-term debt
      and capital lease obligations                  700                 (50)
   Proceeds from sale and issuance of
      common stock                                    62                  --
                                          ----------------    ----------------
Net cash provided by (used in) financing 
   activities of continuing operations               762                 (50)

Net cash provided by (used in)
   discontinued operations                        (1,396)              1,783

Net increase in cash and cash equivalents            364               1,368

Cash and cash equivalents at beginning
   of period                                         700               1,379

                                          ================    ================
Cash and cash equivalents at end of
   period                                    $     1,064         $     2,747
                                          ================    ================


Supplemental disclosure of non-cash investing and financing activities:

Disposition of Kenco:
   Net assets and liabilities sold           $     2,374         $        --
   Allowances                                      1,376                  --
   Preferred stock                                (2,000)                 --
   Other receivable                                 (250)                 --
   Receivable for inventory sold                    (430)                 --
   Net gain on disposition                            54                  --
                                          ----------------    ----------------
   Cash received                             $     1,124         $        --
                                          ================    ================






        The accompanying notes are an integral part of these statements.

                                       6
<PAGE>



                             Williams Controls, Inc.
                     Notes to Unaudited Financial Statements
               Three and Six Months  ended March 31,  1998 and 1997  
                (Dollars in thousands, except per share amounts)

Cautionary Statement: This report 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
has  acquired,  disposition  of any  current  business of the  Company,  and the
Company's  investment  in and  relationship  with Ajay  Sports,  Inc., a related
company.  These  forward-looking  statements  are  subject to the  business  and
economic risks faced by the Company.  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");  Williams Automotive,  Inc.; GeoFocus, 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.  The 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.  Certain  information and footnote disclosure made in the last annual
report on Form 10-K have been condensed or omitted for the interim  consolidated
statements.  Certain  costs are  estimated  for the full year and  allocated  to
interim   periods  based  on  activity   associated  with  the  interim  period.
Accordingly,  such costs are subject to year-end adjustment. It is the Company's
opinion that, when the interim  consolidated  statements are read in conjunction
with the  September  30, 1997 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 inter-company accounts and transactions have been
eliminated.

3.  Earnings (loss) per Share

As required, the Company adopted Statement of Financial Accounting Standards No.
128 during the quarter ended  December 31, 1997.  This  statement  requires dual
presentation of basic and diluted earnings per share (EPS) with a reconciliation
of the  numerator  and  denominator  of the EPS  computations.  Basic  per share
amounts are based on the weighted  average  shares of common stock  outstanding.
Diluted  earnings per share assume the  conversion,  exercise or issuance of all
potential  common stock  instruments  such as options,  warrants and convertible
securities,  unless  the  effect is to reduce a loss or  increase  earnings  per
share.  Accordingly,   this  presentation  has  been  adopted  for  all  periods
presented.  The basic and diluted  weighted  average shares  outstanding  are as
follows:
 <TABLE>
 <CAPTION>

                                               Three Months          Three Months           Six Months            Six Months
                                                  Ended                  Ended                 Ended                 Ended
                                              March 31, 1998         March 31, 1997        March 31, 1998        March 31, 1997
                                            ------------------     -----------------     -----------------     -----------------
<S>                                              <C>                   <C>                   <C>                   <C>

Weighted average shares outstanding               17,932,040            17,912,240            17,882,873            17,912,240
      Less unallocated ESOP shares                    86,000               140,000                86,000               140,000
                                            ------------------     -----------------     -----------------     -----------------
Weighted average outstanding shares
   used for basic EPS                             17,846,040            17,772,240            17,796,873            17,772,240
Plus incremental shares from assumed
   issuance of stock options and other
   contingent issuances                              653,960               127,760               703,127               127,760
                                            ==================     =================     =================     =================
Weighted average outstanding shares used
   for diluted EPS                                18,500,000            17,900,000            18,500,000            17,900,000
                                            ==================     =================     =================     =================
</TABLE>

                                       7
<PAGE>



                             Williams Controls, Inc.
                     Notes to Unaudited Financial Statements
               Three and Six Months  ended March 31,  1998 and 1997  
                (Dollars in thousands, except per share amounts)


4.  Inventories

Inventories consisted of the following:
                                          March 31,             September 30,
                                            1998                    1997
                                      ----------------        ----------------

     Raw material                        $     5,768             $     5,305
     Work in process                           2,013                   2,035
     Finished goods                            6,217                   7,177
                                      ----------------        ----------------
                                         $    13,998             $    14,517
                                      ================        ================


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


5.  Year 2000 Conversion

The Company  recognizes the need to ensure its operations  will not be adversely
impacted by Year 2000  software  failures.  Software  failures due to processing
errors  potentially  arising  from  calculations  using the Year 2000 date are a
known  risk.  The  Company  is  addressing  this  risk to the  availability  and
integrity of financial  systems and the reliability of the operational  systems.
The Company has established  processes for evaluating and managing the risks and
cost  associated  with this problem,  including  communicating  with  suppliers,
dealers  and  others  with  which  it does  business  to  coordinate  Year  2000
conversion.  The total cost of compliance and its effect on the Company's future
results of  operations is being  determined  as part of the detailed  conversion
planning process.


6.  Sale of Discontinued Operations

On March 16, 1998,  the Company  completed the sale of a substantial  portion of
the  assets  of  Kenco,  to  Kenco  Products,  Inc.  ("KPI")  and  entered  into
warehousing  and  lease  agreements  with KPI  (the  "Kenco  Transaction").  The
principal owner of KPI is Colfax Group, Inc., a Delaware corporation. One of the
principal  owners of Colfax  Group Inc.  had been  acting as general  manager in
charge of operating  the  business of Kenco for more than the past year.  Colfax
Group, Inc.is unrelated to the Registrant.

Consideration  to the  Registrant  consisted  of $1.1  million  cash, a $250,000
receivable, a $430,000 receivable for inventory sold, assumption of $1.0 million
of trade payables,  accrued expenses and other liabilities related to the assets
purchased and $2.0 million of Series A Senior  Preferred  Stock (2000 shares) of
KPI. The preferred  stock provides for annual  dividends of $80 per share and is
convertible  to common stock  according  to certain  terms and  conditions.  The
accounting principles followed in determining the consideration received was the
fair market value of the assets disposed of.

The  carrying  values of  assets  sold in the Kenco  Transaction  included  $1.4
million of productive  assets  (machinery and equipment,  furniture and fixtures
and tools and dies), $794,000 of accounts receivable,  $530,000 of inventory and
$325,000 of prepaid assets, after recording certain adjustments to inventory and
other accounts of approximately $1.3 million to the agreed upon sales price.

The  Registrant  has  agreed to  warehouse  certain  inventory  not  immediately
purchased  valued at $2.6  million  ("Warehouse  Agreement").  KPI has agreed to
purchase all  remaining  inventory  from Kenco on or before  September  30, 1998
subject to certain terms and conditions outlined in the Warehouse agreement.

The Registrant has agreed to lease to KPI the existing building and improvements
of Kenco for  $23,000  per month  ("Lease  Agreement").  The lease is  currently
scheduled  to  terminate  on  September  30,  1998,  subject  to  certain  early
termination provisions if Kenco sells the facility to a third party buyer.



                                       8
<PAGE>



                             Williams Controls, Inc.
                     Notes to Unaudited Financial Statements
               Three and Six Months  ended March 31,  1998 and 1997  
                (Dollars in thousands, except per share amounts)

6.  Sale of Discontinued Operations - continued

One of the principal owners of Colfax Group, Inc. has guaranteed the obligations
of KPI under the  Warehouse  Agreement  and Lease  Agreement  subject to certain
terms and conditions.

Simultaneously with the closing of the Kenco Transaction,  the Registrant repaid
$1.1 million  outstanding  under its  existing  credit  facility  with its bank.
Pursuant to the Intercreditor  Agreement among US Bank, Wells Fargo Bank and the
Registrant  dated July 14, 1997,  the Company is obligated to pay to US Bank the
first $2.34 million in proceeds from future sales of inventory to KPI.

The following  represents unaudited results of operations on a proforma basis as
if the  transaction  had been  consummated  as of  October  1,  1997  and  1996,
respectively.


                                Six Months Ended         Six Months Ended
                                 March 31, 1998           March 31, 1997
                                ----------------         ----------------
    Sales                          $    32,835              $    27,769

    Net Income                           2,102                      943
                                ================         ================

    Earnings per common share
       Basic                       $      0.12              $      0.05
                                ================         ================
       Diluted                     $      0.11              $      0.05
                                ================         ================
















                                       9
<PAGE>



                             Williams Controls, Inc.
                     Notes to Unaudited Financial Statements
               Three and Six Months  ended March 31,  1998 and 1997  
                (Dollars in thousands, except per share amounts)


7.  Business Segment Information
<TABLE>
<CAPTION>
                                                           Three months        Three months        Six months         Six months
                                                               Ended               Ended              Ended              Ended
                                                             March 31,           March 31,          March 31,          March 31,
                                                               1998                1997               1998               1997
                                                          --------------     ---------------    ---------------     --------------
<S>                                                        <C>                 <C>                <C>                 <C>
Net sales by classes of similar products from
   continuing operations
      Vehicle components                                    $   14,530          $   11,113         $   26,227          $  20,577
      Agricultural equipment                                     2,278               2,408              4,525              5,512
      Electrical components and GPS                              1,083                 727              2,083              1,680
                                                          --------------     ---------------    ---------------     --------------
                                                            $   17,891          $   14,248         $   32,835          $  27,769
                                                          ==============     ===============    ===============     ==============

Earnings (loss) from continuing operations
   Vehicle components                                            1,685               1,050              2,799              1,662
   Agricultural equipment                                         (173)               (329)              (364)              (297)
   Electrical components and GPS                                  (282)               (379)              (532)              (613)
                                                          --------------     ---------------    --------------      --------------
                                                                 1,230                 342              1,903                752
                                                          ==============     ===============    ===============     ==============

Capital expenditures
   Vehicle components                                              191                 110                238                177
   Agricultural equipment                                           --                  53                104                129
   Electrical components and GPS                                    64                  55                149                 84
                                                          --------------     ---------------    ---------------     --------------
Total capital expenditures - continuing operations                 255                 218                491                390
Automotive accessories - discontinued operations                    --                 168                 --                219
                                                          ==============     ===============    ===============     ==============

Total capital expenditures                                         255                 386                491                609
                                                          ==============     ===============    ===============     ==============


Depreciation and amortization
   Vehicle components                                              156                 228                387                439
   Agricultural equipment                                           82                  78                163                145
   Electrical components and GPS                                    85                  81                165                142
                                                          --------------     ---------------    ---------------     --------------
Total depreciation and amortization - continuing
   operations                                                      323                 387                715                726
Automotive accessories - discontinued operations                    60                  64                109                122
                                                          ==============     ===============    ===============     ==============
Total depreciation and amortization                         $      383          $      451         $      824          $     848
                                                          ==============     ===============    ===============     ==============


Identifiable assets
   Vehicle components                                                                              $   37,082          $  22,817
   Agricultural equipment                                                                              10,419             12,052
   Electrical components and GPS                                                                        8,235              7,891
                                                                                                ---------------     --------------
Total assets - continuing operations                                                                   55,736             42,760
Automotive accessories - discontinued operations                                                           --             11,999
                                                                                                ===============     ==============

Total assets                                                                                       $   55,736          $  54,759
                                                                                                ===============     ==============

</TABLE>




                                       10
<PAGE>



                             Williams Controls, Inc.
                     Notes to Unaudited Financial Statements
               Three and Six Months  ended March 31,  1998 and 1997  
                (Dollars in thousands, except per share amounts)


8.  Commitments and Contingencies

Environmental  Matters - The Company has identified certain  contaminants in the
soil and groundwater at and around its Portland,  Oregon manufacturing  facility
which the Company  believes may have been  disposed of by the previous  property
owner. The Company believes that the  contamination is not a reportable event as
defined under the current Oregon statutes.  Under Oregon  statutes,  the Company
and other potentially  responsible  parties are required to investigate  further
and  possibly  remediate  the  contamination.  The  Company  believes  that,  if
required, the remediation would take the form of permanent monitoring, but could
include the  treatment  and removal of the  contamination  or both.  The Company
cannot estimate the costs of permanent  monitoring,  treatment or cleanup at the
present time.

The acquisition  agreement  between the Company and the previous  building owner
contains provisions for indemnification of any environmental cleanup costs after
the  Company  spends $25  towards  such  cleanup.  The  Company  intends to seek
indemnification  from the prior  property  owner  for  permanent  monitoring  or
cleanup costs,  if any. The prior property owner has advised the Company that it
would dispute any liability for remediation  costs. The Company beleives that it
can enforce  available  claims against the prior property owner for any costs of
investigation or remediation or both.

9.  Subsequent  Events

Refinance  of  Sale/Leaseback  - Although the Company does not have a reportable
event with respect to environmental  matters  discussed in Note 8, in accordance
with  the  terms  of the  sale/leaseback  agreement  for  the  Portland,  Oregon
manufacturing  facility,  on April 20, 1998 the Company  provided $3,200 of debt
financing to the  purchaser  until the Company  receives a  "no-further  action"
letter from the Oregon  Department  of  Environmental  Quality  related to these
environmental  matters. This debt is due April 21, 2000 with an interest rate of
8.5% until  October  31,  1998,  when it  increases  to 9.75%.  The  Company may
repurchase  the facility  before the  maturity  date and has the  obligation  to
repurchase  the facility at the maturity date at the original  purchase price of
$4.6 million plus out-of-pocket  costs of the purchaser if a "no-further action"
letter is not obtained.

Private Equity  Placement - On April 21, 1998,  the Company  completed a private
placement offering of 80,000 shares of Series A convertible redeemable preferred
stock at $100 per share,  or $8 million.  The  preferred  stock bears a dividend
rate of 7.5%,  which is payable  quarterly,  and is convertible at the option of
the holder into 2,909,091  shares of the Company's  common stock.  The preferred
stock is redeemable after three years at the option of the Company. In addition,
the Company can force  conversion of the  preferred  stock into common shares if
the  Company's  common  stock trades at or above $4.125 for twenty out of thirty
consecutive  trading days.  Holders of the Series A preferred stock are entitled
to a number of votes  equal to those they would have  assuming  conversion  into
common stock, without taking into account fractional shares.

The Company intends to use the proceeds of offering to provide debt financing to
the purchaser of the Portland,  Oregon  manufacturing  facility,  repayment of a
bank term loan of $667 and an investment of $2 million to Ajay.  The  remaining
balance will be used for general working capital purposes.



                                       11
<PAGE>



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


See "Cautionary Statement" contained at the beginning of this report.

Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

The Company's  principal  sources of liquidity during the six months ended March
31,  1998 were  proceeds  from the sale of  discontinued  operations  of $1,124,
borrowings  under its credit  facilities  of $700 and cash provided by operating
activities  of  $365.  During  the  same  period,  the  Company  used  cash  for
discontinued  operations of $1,396. The six-month period in fiscal 1998 compares
to cash provided by discontinued operations of $1,783,  repayments of borrowings
of $50 and cash provided by continuing  operations of $25 for the same period in
fiscal 1997. At March 31, 1998 the Company's working capital improved to $18,934
from $16,128 at September  30, 1997.  The current ratio also improved to 2.63 at
March 31, 1998 from 2.61 at September 30, 1997.

The  Company  anticipates  that  cash  generated  from  continuing   operations,
borrowings and proceeds from the Company's Private Placement  completed in April
1998  will be  sufficient  to  satisfy  its  working  capital  requirements  for
continuing operations during the remainder of the current fiscal year.

In April 1997 the Company sold its Portland,  Oregon manufacturing facility in a
sale-leaseback transaction for $4,524. Under the terms of the agreement on April
20, 1998, the Company  provided  $3,200 of debt financing to the purchaser until
such time that the Company receives a "no further action" letter from the Oregon
Department  of  Environmental  Quality  related to  environmental  issues at the
property.  Upon  receipt  of such  letter  the  purchaser  will be  required  to
refinance  the mortgage  with a third party  lender.  If a  "no-further  action"
letter is not  obtained,  the Company may  repurchase  the  facility  before the
maturity date and has the  obligation to repurchase the facility at the maturity
date at the original purchase price of $4.6 million plus out-of-pocket  costs of
the purchaser.

The  purchaser  previously  informed the Company that it entered into a purchase
and sale agreement  with a third party who would  purchase the building  without
any contingent  repurchase  obligation subject to third party due diligence.  In
January 1998 the purchaser informed the Company that the third party declined to
purchase the building.

In  fiscal   1997  the   Company   and  Ajay   agreed  to  a  plan  (the   "Ajay
Recapitalization")  whereby  Ajay  plans  to  obtain  permanent  bank  financing
independent  of the  Company's  loan which,  management of Ajay has informed the
Company, when combined with a final investment by the Company to Ajay of $2,000,
would result in adequate  working  capital and  eliminate any  requirements  for
further  advances or guarantees from the Company.  Ajay management  informed the
Company it has signed a proposal  letter  with a lender for an asset based loan,
which Ajay  management  informed  the  Company  that it  believes  that based on
expected loan advance rates would result in an approximately $2,000 shortfall of
its projected  working capital needs. The Company intends to invest up to $2,000
to provide Ajay adequate  working  capital,  of which  approximately  $1,200 was
advanced on April 20, 1998. In addition, as quarantor,  the Company is obligated
to pay US Bank  the  first  $2.34  million  in  proceeds  from  future  sales of
inventory to KPI.

If Ajay successfully completes its bank financing, the Company has also proposed
to exchange up to $5,000 of loans and advances to Ajay into  convertible  voting
preferred  stock which Ajay management has informed the Company that it believes
would allow Ajay to meet the minimum net worth criteria for continued listing on
the NASDAQ.  The  preferred  stock would pay a dividend  rate of 9% and would be
convertible  into up to  12,000,000  shares of Ajay common  stock.  As presently
proposed,  the dividend rate would  increase two  percentage  points each in the
year 2002 and 2003 if Ajay does not achieve pre-tax earnings of at least $500 in
the two consecutive years prior to 2002 and 2003. The Company has also agreed to
purchase  in  fiscal  1998  approximately  $1,000  of notes  payable  by Ajay to
affiliated  parties  which had  provided  loans to Ajay,  to help  Ajay  finance
operations during the financial restructuring;  although such notes payable have
not yet been purchased.


                                       12
<PAGE>


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


Results of Operations
---------------------
Three months  ended March 31, 1998  compared to the three months ended March 31,
1997

Overview
--------

Net sales from  continuing  operations  increased  26% to $17,891 for the second
quarter  ended  March 31, 1998 from  $14,248 in the same period in fiscal  1997.
Increased  sales are  attributed  primarily to higher unit sales  volumes in the
Company's  vehicle component segment which were partially offset by a decline in
unit sales volumes in the agricultural equipment segment.

Net earnings from continuing  operations  increased 219% to $1,247 in the second
quarter  ended March 31,  1998 from $391 in the same fiscal 1997  quarter due to
increases in unit sales  volumes in the  Company's  vehicle  component  segment,
which were partially  offset by declining unit sales volumes in the agricultural
equipment  segment and additional  equity  interest in losses of affiliate (Ajay
Sports, Inc.).

Net income increased to $1,087 in the second quarter ended March 31, 1998 from a
net  loss  of  $130  in  the  comparable  fiscal  1997  quarter  due  to  higher
profitability  in the  vehicle  component  segment  and  reduced  losses  in the
Company's  discontinued  operations which were offset by increased losses in the
Company's  agricultural  equipment  segment and  additional  equity  interest in
losses of affiliate (Ajay Sports, Inc.).

Net sales from continuing operations
------------------------------------

Net sales  increased  $3,643,  or 26%, to $17,891 for the second  quarter  ended
March 31,  1998 from  $14,248 in the prior year  quarter.  Sales as a percent of
total sales in the vehicle  components,  agricultural  equipment and  electrical
components  segments  were 81%, 13% and 6% in the 1998 quarter  compared to 78%,
17% and 5% in the 1997  quarter.  Vehicle  component  sales in the quarter ended
March 31, 1998 increased  $3,417,  or 31%, due to higher unit sales of component
parts to heavy and medium truck manufacturers.  Sales of agricultural  equipment
declined $130, or 5%, in the quarter ended March 31, 1998 primarily due to lower
unit sales resulting from excess dealer  inventory.  Electrical  component sales
increased  $356  or 49%  primarily  due  to  increased  unit  sales  volumes  of
electrical components.

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

Gross margin from  continuing  operations  increased 57% to $5,305 in the second
quarter  ended  March 31,  1998 from  $3,381 in the prior  year  quarter.  Gross
margins as a percentage of net sales from continuing  operations were 30% in the
second quarter of fiscal 1998 and 24% in the same fiscal 1997 quarter. Increases
in dollar amount in the second  quarter of fiscal 1998 resulted  primarily  from
higher unit sales  volumes and  increased  utilization  of the  Company's  fixed
assets in the vehicle component and electrical component and GPS segments. Gross
margins as a percentage  of net sales for the vehicle  components,  agricultural
equipment  and   electrical   components   segments  were  32%,  15%,  and  31%,
respectively, during the second quarter of fiscal 1998 compared to 27%, 12%, and
14% for the same quarter in fiscal 1997.





                                       13
<PAGE>



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


Results of Operations (continued)
---------------------------------
Three months  ended March 31, 1998  compared to the three months ended March 31,
1997

Operating expenses - continuing operations
------------------------------------------

Operating  expenses for  continuing  operations  increased 23% during the second
quarter  ended March 31, 1998  compared to amounts in the same quarter in fiscal
1997.  Increases are  primarily  related to increased  research and  development
activities,  consulting  expenses  incurred  during  the  installation  of a new
management  information  system  and  completion  of  the  QS-9000  and  ISO9001
certification  process.  Operating  expenses as a  percentage  of net sales from
continuing  operations  were 16% in the second  quarter of fiscal 1998 and 1997.
Operating  expenses  increased  44% in the second  quarter of fiscal 1998 in the
vehicle component segment to $1,543 and 47% in the electronic components and GPS
segment to $760. Operating expenses decreased 28% in the agricultural  equipment
segment  to $510  compared  to amounts  in the  second  quarter of fiscal  1997.
Decreases in this segment are attributed to lower sales volumes.

Research and  development  expenses for continuing  operations  increased 49% to
$730 during the second  quarter of fiscal  1998  compared to amounts in the same
quarter in fiscal 1997. As a percentage of net sales from continuing operations,
research  and  development  expenses  increased to 4% from 3% in the 1997 second
quarter.

Selling  expenses for continuing  operations  decreased 5% to $736 in the second
quarter of fiscal 1998  compared to amounts in the same  quarter in fiscal 1997.
Selling  expenses  as a  percentage  of net  sales  from  continuing  operations
decreased to 4% in the second  quarter of fiscal 1998 compared to 5% in the same
1997 quarter.  Selling expenses decreased as a percentage of sales primarily due
to increased sales volumes in the vehicle components segment.

General and administrative  expenses for continuing  operations increased 31% in
the second  quarter  of fiscal  1998 to $1,347  compared  to amounts in the same
quarter in fiscal 1997. General and  administrative  expenses as a percentage of
net sales from  continuing  operations  increased to 8% in the second quarter of
fiscal 1998 from 7% in the same quarter in fiscal 1997. Increases were primarily
due to  increased  research  and  development  activities,  consulting  expenses
incurred due to the  installation  of a new  management  information  system and
completion of the QS-9000 and ISO9001 certification process.

Earnings from continuing operations
-----------------------------------

Earnings from continuing  operations increased $1,405, or 129%, to $2,492 in the
second quarter of fiscal 1998 from $1,087 in the same quarter of fiscal 1997 due
to increases in operating income of $1,166 and $250 in the automotive components
and agricultural equipment segments, respectively,  offset by an $11 decrease in
the electrical components and GPS business segment.

Discontinued operations
-----------------------

Net losses from the discontinued automotive accessories segment were $160 net of
tax benefits of $107 for the second  quarter  ended March 31, 1998,  compared to
$521 net of tax  benefits  of $411 in the  same  quarter  of  fiscal  1997.  The
Company's discontinued operations was sold on March 16, 1998.

Net sales from the  discontinued  segment  declined  $694, or 34%, in the second
quarter of fiscal 1998 to $1,346  compared to levels achieved in the same fiscal
1997 quarter.  The decline in automotive  accessory  sales was due to lower unit
sales and lower prices  resulting  from increased  competitive  pressure and the
decision to terminate sales to several unprofitable customers.


                                       14
<PAGE>



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


Results of Operations (continued)
---------------------------------
Six months ended March 31, 1998 compared to the six months ended March 31, 1997

Overview
--------

Net sales from continuing operations increased 18% to $32,835 for the six months
ended March 31, 1998 from $27,769 in the same period in fiscal  1997.  Increased
sales are  attributed  to higher  unit sales  volumes in the  Company's  vehicle
component  segment,  which were partially offset by declining unit sales volumes
in the agricultural equipment segment.

Net earnings from  continuing  operations  increased  148% to $1,942 for the six
months  ended  March 31,  1998 from $783 in the same  fiscal  1997 period due to
increases in unit sales  volumes in the  Company's  vehicle  component  segment,
which were partially  offset by declining unit sales volumes in the agricultural
equipment  segment and additional  equity  interest in losses of affiliate (Ajay
Sports, Inc.).

Net income  increased  to $1,782 for the six months  ended March 31, 1998 from a
net  loss  of  $118  in  the  comparable   fiscal  1997  period  due  to  higher
profitability  in the  vehicle  component  segment and  decreased  losses in the
Company's  discontinued  operations which were offset by increased losses in the
Company's  agricultural  equipment  segment and  additional  equity  interest in
losses of affiliate (Ajay Sports, Inc.).


Net sales from continuing operations
------------------------------------

Net sales  increased  $5,066,  or 18%, to $32,835 for the six months ended March
31, 1998 compared to $27,769 for the six months ended March 31, 1997. Sales as a
percent of total sales in the vehicle  components,  agricultural  equipment  and
electrical  components  segments  were 80%,  14% and 6% for the six months ended
March  31,  1998  compared  to 74%,  20%  and 6% in the  comparable  prior  year
six-month  period.  Vehicle  component  sales for the six months ended March 31,
1998 increased  $5,650,  or 27%, due to higher unit sales of component  parts to
heavy and medium truck manufacturers.  Sales of agricultural  equipment declined
$987,  or 18%,  for the six months  ended March 31, 1998 due to lower unit sales
resulting from excess dealer  inventory.  Electrical  component  sales increased
$403,  or 24%  primarily  due to  increased  unit sales  volumes  of  electrical
components.


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

Gross  margin from  continuing  operations  increased  40% to $9,460 for the six
months  ended March 31, 1998  compared to the six months  ended March 31,  1997.
Gross margins as a percentage of net sales from  continuing  operations were 29%
for the six  months  ended  March  1998 and 24% in the same  first six months of
fiscal 1997.  Increases in dollar amount for the six months ended March 31, 1998
resulted  primarily from higher unit sales volumes in the vehicle  component and
electrical  component  segments  offset by gross margin  decreases of 40% in the
Company's  agricultural  equipment  segment  due to lower sales  volumes.  Gross
margins as a percentage  of net sales for the vehicle  components,  agricultural
equipment  and   electrical   components   segments  were  32%,  14%,  and  24%,
respectively,  during the first  six months of fiscal 1998 compared to 27%, 19%,
and 14% for the same six-month period in fiscal 1997.



Operating expenses - continuing operations
------------------------------------------

Operating expenses for continuing operations increased 18% during the six months
ended  March 31, 1998  compared  to amounts in the same  period in fiscal  1997.
Increases are primarily due to increased  research and  development  activities,
consulting expenses related to the installation of a new management  information
system  and  completion  of  the  QS-9000  and  ISO9001  certification  process.
Operating expenses as a percentage of net sales from continuing  operations were
16% for the six  months  ended  March  31,  1998 and  1997.  Operating  expenses
increased  27% in the first six months of fiscal 1998 in the  vehicle  component
segment  to $2,848  and 53% in the  electronic  components  and GPS  segment  to
$1,324.  Operating expenses decreased 22% in the agricultural  equipment segment
to $969 compared to amounts in the first six months of fiscal 1997. Decreases in
this segment are attributed to lower unit sales volumes.


                                       15
<PAGE>



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


Results of Operations (continued)
---------------------------------
Six months ended March 31, 1998 compared to the six months ended March 31, 1997


Research and  development  expenses for continuing  operations  increased 34% to
$1,289  during the six months  ended March 31,  1998  compared to amounts in the
same  period in fiscal  1997.  As a  percentage  of net  sales  from  continuing
operations,  research  and  development  expenses  were 4% in the  1998 and 1997
six-month periods.

Selling expenses for continuing  operations  decreased 2% to $1,427 in the first
six months of fiscal 1998 compared to amounts in the same period in fiscal 1997.
Selling  expenses  as a  percentage  of net  sales  from  continuing  operations
decreased  to 4% in the six  months  ended  March  31,  1998 from 5% in the same
six-month period in fiscal 1997.  Selling expenses  decreased as a percentage of
sales due to increased sales volumes in the vehicle components segment.

General and administrative  expenses for continuing  operations increased 25% in
the first six months of fiscal  1998 to $2,425  compared  to amounts in the same
period in fiscal 1997.  General and  administrative  expenses as a percentage of
net sales from continuing  operations were 7% for the first six months of fiscal
1998  and  1997.   Increases  were  primarily  due  to  increased  research  and
development activities, consulting expenses related to the installation of a new
management  information  system  and  completion  of  the  QS-9000  and  ISO9001
certification process.

Earnings from continuing operations
-----------------------------------

Earnings from continuing  operations  increased $1,903, or 79%, to $4,319 in the
six months  ended  March 31,  1998 from $2,416 in the same period of fiscal 1997
due to a $2,224  increase  in  operating  income  in the  automotive  components
segment offset by a $139 decrease in the  agricultural  equipment  segment and a
$182 decrease in the electrical components and GPS business segment.

Discontinued Operations
-----------------------

Net losses from the discontinued automotive accessories segment were $160 net of
tax benefits of $107 for the six months  ended March 31, 1998,  compared to $901
net of tax benefits of $675 in the same period of fiscal 1997

Net sales from the discontinued  segment declined $2,326,  or 44%, for the first
six months of fiscal  1998 to $2,928  compared  to levels  achieved  in the same
period of fiscal  1997.  The decline in  automotive  accessory  sales was due to
lower unit sales resulting from increased  competitive pressure and the decision
to terminate sales to several unprofitable customers.



                                       16
<PAGE>



                             Williams Controls, Inc.

                                     Part II



Item 1.  Legal Proceedings

         None


Item 2.  Changes in Securities and Use of Proceeds

         None


Item 3.  Defaults Upon Senior Securities

         None


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

         On  March 27, 1998 the Company held its annual meeting of stockholders.
         The  stockholders  elected two  directors and  approved an amendment to
         increase the  number of shares  available for grant under the Company's
         1993 Stock Option Plan from 1,500,000 to 3,000,000 shares.

         The  tabulation  of  votes cast for the election  of the  directors and
         amendment to the Company's 1993 Stock Option Plan are as follows:

              Proposal Number One - Election of Directors

                                        For           Withheld
                                    ----------        --------
              Thomas W. Itin        16,743,344         227,324
              H. Samuel Greenawalt  16,736,744         234,024


              Proposal Number Two - Amendment to the 1993 Stock Option Plan
<TABLE>
<CAPTION>
             <S>                           <C>              <C>            <C>                <C>    

                                              For            Against       Abstentions        Not Voted
              Increase Shares from         ----------       ---------      -----------        ---------
                 1,500,000 to 3,000,000    10,476,050       1,232,313        155,973          5,106,432
</TABLE>


Item 5.  Other Information

         On April 21, 1998, the Company completed a private  placement  offering
         of 80,000 shares of Series A convertible redeemable preferred  stock at
         $100 per share,  or $8  million.  The preferred stock  bears a dividend
         rate of 7.5%, which is payable quarterly,  and  is  convertible  at the
         option of shareholders into  2,909,091  shares of the Company's  common
         stock.   The  preferred stock  is  redeemable  after three years at the
         option of the Company.   In addition,  the Company can force conversion
         of the preferred stock into common shares if the Company's common stock
         trades at or above $4.125 for twenty out of thirty consecutive  trading
         days.  Holders of the Series A preferred stock are entitled to a number
         of votes equal to those they would have assuming conversion into common
         stock, without taking into account fractional shares.

         The Company intends to use the proceeds of the offering to provide debt
         financing  to  the  purchaser  of  the  Portland, Oregon  manufacturing
         facility,  repayment of a bank term loan of  $667 and  an investment of
         $2  million to Ajay.   The  remaining  balance will be used for general
         working capital purposes.



                                       17
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

         Exhibits
         --------
         3.1 - Certificate to  Provide for the Designation, Preferences, Rights,
               Qualifications,  Limitations  or  Restrictions  Thereof,  of  the
               Series A Preferred Stock, 7 1/2% Redeemable Convertible Series.


         Reports on Form 8-K
         -------------------
         Sale of  Discontinued Operations filed on Form 8-K dated March 16, 1998
         and related Pro forma Financial Statements.



















                                       18
<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/ Gerard A. Herlihy
                                                   -----------------------
                                                   Gerard A. Herlihy
                                                   Chief Financial and
                                                   Administrative Officer




              
                                               By: /s/  William N. Holmes
                                                   ------------------------
                                                   Williams N. Holmes,
                                                   Corporate Controller and
                                                   Principal Accounting Officer






Date: April 30, 1998



















                                       19
<PAGE>