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


                                    FORM 10-Q


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

                  For the quarterly period ended: June 30, 1999

                                       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 July 31,
1999: 19,879,070


<PAGE>

                             Williams Controls, Inc.

                                      Index


                                                                          Page
                                                                         Number
                                                                         ------
Part I.  Financial Information

  Item 1.       Financial Statements

                Consolidated Balance Sheets, June 30, 1999 (unaudited)
                   and September 30, 1998                                   1

                Unaudited Consolidated Statements of Operations,
                   three and nine months ended June 30, 1999 and 1998       2

                Unaudited Consolidated Statements of Cash Flows,
                   nine months ended June 30, 1999 and 1998                 3

                Notes to Unaudited Consolidated Financial Statements       4-8

  Item 2.       Management's Discussion and Analysis
                   of Financial Condition and Results of Operations       9-14


Part II.  Other Information

  Item 1.      Legal Proceedings                                           15

  Item 2.      Changes in Securities and Use of Proceeds                   15

  Item 3.      Defaults Upon Senior Securities                             15

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

  Item 5.      Other Information                                           15

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

                    Signature Page                                         16




<PAGE>
                                     Part I

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



                                                                            June 30,              September 30,
                                                                              1999                    1998
                                                                           (unaudited)
                                                                       -------------------    ---------------------
                           ASSETS
Current Assets:
   Cash and cash equivalents                                                 $   1,410                $   1,281
   Trade and other accounts receivable, less allowance of $157 and
     $325 at June 30, 1999 and September 30, 1998, respectively                 10,602                   11,765
   Inventories                                                                  10,430                   10,693
   Deferred taxes and other                                                      2,616                    2,231
   Net assets held for disposition                                               5,125                    5,117
                                                                       -------------------    ---------------------
     Total current assets                                                       30,183                   31,087

   Property plant and equipment, net                                            18,665                   20,013
   Investment in and note receivable from affiliate                              5,733                    6,140
   Note receivable                                                                   -                    3,200
   Property held for sale, net                                                   1,818                        -
   Net assets held for disposition                                               1,821                    1,847
   Other assets                                                                  1,851                    4,072
                                                                       ===================    =====================
     Total assets                                                            $  60,071               $   66,359
                                                                       ===================    =====================

            LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
   Accounts payable                                                          $  5,063                $   4,771
   Accrued expenses                                                             2,605                    3,399
   Current portion of long-term debt and capital leases                         2,257                    1,181
   Estimated loss on disposal                                                     589                    2,550
                                                                       -------------------     --------------------
      Total current liabilities                                                10,514                   11,901

Long-term debt and capital lease obligations                                   22,460                   27,846

Other liabilities                                                               2,737                    2,201

Commitments and contingencies

Shareholders' equity:
   Preferred  stock ($.01 par value,  50,000,000  authorized;
      79,450 and 80,000 issued at June 30, 1999 and
      September 30, 1998, respectively)                                             1                        1
   Common stock ($.01 par value, 50,000,000 authorized;
      18,524,286 and 18,311,288 issued at June 30, 1999
      and September 30, 1998, respectively)                                       185                      183
   Additional paid-in capital                                                  18,183                   17,917
   Retained earnings                                                            7,125                    7,444
   Unearned ESOP shares                                                           (73)                     (73)
   Treasury stock (130,200 shares at June 30, 1999 and
      September 30, 1998)                                                        (377)                    (377)
   Note receivable                                                               (500)                    (500)
   Pension liability adjustment                                                  (184)                    (184)
                                                                       -------------------     --------------------
      Total shareholders' equity                                               24,360                   24,411
                                                                       ===================     ====================
        Total liabilities and shareholders' equity                          $  60,071               $   66,359
                                                                       ===================     ====================
</TABLE>


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

                                       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        Nine months        Nine months
                                                                Ended              Ended              Ended              Ended
                                                               June 30,           June 30,           June 30,           June 30,
                                                                 1999               1998               1999               1998
                                                            --------------     --------------     --------------     --------------

Sales                                                            $ 16,262           $ 14,767           $ 47,828           $ 43,078
Cost of sales                                                      11,879             10,068             33,885             29,770
                                                            --------------     --------------     --------------     --------------
Gross margin                                                        4,383              4,699             13,943             13,308

Operating expenses:
  Research and development                                          1,017                720              2,683              2,004
  Selling                                                             493                543              1,501              1,519
  Administration                                                    1,010              1,061              2,884              2,745
  Loss from impairment of assets                                    5,278                  -              5,278                  -
                                                            --------------     --------------     --------------     --------------
    Total operating expenses                                        7,798              2,324             12,346              6,268
                                                            --------------     --------------     --------------     --------------

Earnings (loss) from continuing operations                         (3,415)             2,375              1,597              7,040

Other (income) expenses:
   Interest income                                                    (55)               (51)              (277)              (152)
   Interest expense                                                   389                340              1,187              1,040
   Other (income) expense                                             (44)                 7                 69                 10
   Equity interest in (income) loss of affiliate                      155                (25)               407                373
                                                            --------------     --------------     --------------     --------------
     Total other expenses                                             445                271              1,386              1,271
                                                            --------------     --------------     --------------     --------------


Earnings (loss) from continuing operations before income tax
   expense (benefit)                                               (3,860)             2,104                211              5,769
Income tax expense (benefit)                                       (1,482)               639                 81              2,060
                                                            --------------     --------------     --------------     --------------

Net earnings (loss) from continuing operations                     (2,378)             1,465                130              3,709

Discontinued operations:
   Net loss from operations of automotive accessories
     business unit                                                      -                  -                  -               (160)
   Net loss from operations of the agricultural equipment
     business unit                                                      -               (336)                 -               (639)
                                                            --------------     --------------     --------------     --------------
   Net loss from discontinued operations                         $      -           $   (336)          $      -           $   (799)
                                                            --------------     --------------     --------------     --------------


Net earnings (loss)                                              $ (2,378)          $  1,129           $    130           $  2,910
Dividends on preferred stock                                          149                120                449                120
                                                            --------------     --------------     --------------     --------------
Net earnings (loss) allocable to common shareholders             $ (2,527)          $  1,009           $   (319)          $  2,790
                                                            ==============     ==============     ==============     ==============


Earnings (loss) per common share from continuing operations
   - basic                                                       $   (.14)          $    .08           $   (.02)          $    .20
Loss per common share from discontinued operations - basic              -               (.02)                 -               (.04)
                                                            --------------     --------------     --------------     -------------
Net earnings (loss) per common share - basic                     $   (.14)          $    .06           $   (.02)          $    .16
                                                            ==============     ==============     ==============     =============

Earnings  per  common  share  from  continuing  operations
   - diluted                                                     $   (.14)          $    .07           $   (.02)          $    .19
Loss per common share from discontinued operations - diluted            -               (.02)                 -               (.04)
                                                            ==============     ==============     ==============     ==============
Net earnings per common share - diluted                          $   (.14)          $    .05           $   (.02)          $    .15
                                                            ==============     ==============     ==============     ==============

                  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>
                                                                                Nine months            Nine months
                                                                                   Ended                  Ended
                                                                               June 30, 1999          June 30, 1998
                                                                             ------------------    -------------------
Cash flows from operating activities:
  Net earnings                                                                      $    130               $  2,910
Adjustments to reconcile net earnings to net cash from
  continuing operations:
  Loss from discontinued operations                                                        -                    799
  Depreciation and amortization                                                        1,378                    864
  Equity interest in loss of affiliate                                                   407                    373
  Loss from impairment of assets                                                       5,278                      -
Changes in working capital of continuing operations:
  Receivables                                                                           (405)                   387
  Inventories                                                                            263                 (2,258)
  Accounts payable and accrued expenses                                                 (560)                (1,236)
  Other                                                                                   10                   (372)
                                                                             ------------------    -------------------
Net cash provided by operating activities of continuing operations                     6,501                  1,467

Cash flows from investing activities:
  Loans made for sale/leaseback financing                                                  -                 (3,200)
  Payments for property, plant and equipment                                          (1,994)                (1,482)
  Advances to affiliate                                                                 (100)                  (919)
  Investment in note receivable                                                         (575)                     -
                                                                             ------------------    -------------------
Net cash used in investing activities of continuing operations                        (2,669)                (5,601)

Cash flows from financing activities:
  Proceeds (repayments) of long-term debt and capital lease obligations               (3,964)                   265
  Borrowing under term notes                                                           2,500                      -
  Preferred dividends                                                                   (449)                  (120)
  Proceeds from issuance of preferred stock                                                -                  7,357
  Proceeds from issuance of common stock                                                 153                     62
                                                                             ------------------    -------------------
Net cash provided by (used in) financing activities of continuing operations          (1,760)                 7,564

Cash flows from discontinued operations:
  Proceeds from sale of Automotive Accessories business unit                               -                  1,124
  Net cash used in operations                                                         (1,943)                (3,639)
                                                                             ------------------    -------------------
Net cash used in discontinued operations                                              (1,943)                (2,515)

Net increase in cash and cash equivalents                                                129                    915

Cash and cash equivalents at beginning of period                                       1,281                    700

                                                                             ==================    ===================
Cash and cash equivalents at end of period                                          $  1,410               $  1,615

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

Supplemental disclosure of cash flow information:
  Interest paid                                                                     $ 1,354                $  1,385
  Income taxes paid                                                                 $   602                $     92
  Income tax refunds                                                                $   414                $      5
                                                                             ==================    ===================

Supplemental disclosure of non-cash investing and financing activities:
  Note receivable for capital lease obligation                                      $ 3,200                $      -
                                                                             ==================    ===================
  Tax benefits related to stock options                                             $   115                $      -
                                                                             ==================    ===================
  Capital lease obligations incurred                                                $   354                $      -
                                                                             ==================    ===================
  Exchange of note receivable from affiliate for investment in affiliate            $     -                $  5,000
                                                                             ==================    ===================

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.

</TABLE>
                                       3
<PAGE>

                             Williams Controls, Inc.
              Notes to Unaudited Consolidated Financial Statements
               Three and Nine Months  ended June 30,  1999 and 1998  (Dollars in
           thousands, except share and 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
acquires,  disposition  of any current  business of the Company,  including  its
Agricultural Equipment segment. 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");   ProActive
       Acquisition   Corporation   ("ProActive");  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.     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 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,
       1998 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.     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  income (loss) for the
       three and nine  months  ended  June 30,  1999 and 1998 was  $(2,378)  and
       $1,129,  and $130 and $2,910  respectively,  and consisted  solely of net
       earnings (loss).  As of June 30, 1999,  accumulated  other  comprehensive
       loss was $184 and consisted of pension liability adjustment.

4.     Earnings (loss) per Share

       Effective  in its fiscal  year ended  September  30,  1998,  the  Company
       adopted SFAS 128, "Earnings Per Share". SFAS 128 prescribes new Basic and
       Diluted Earnings Per Share ("EPS")  calculations  that replace the former
       calculations  for Primary and Fully Diluted EPS.  Prior periods have been
       restated  to  conform  to the  requirements  of SFAS  128.  Basic  EPS is
       calculated using the weighted average number of common shares outstanding
       for the period and diluted EPS is calculated  using the weighted  average
       number  of  common   shares  and  dilutive   common   equivalent   shares
       outstanding.


                                       4
<PAGE>

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
                                                  June 30, 1999                      June 30, 1998
                                         --------------------------------    -------------------------------
                                                                   Per                                Per
                                                                  Share                              Share
                                            Loss      Shares      Amount       Income     Shares     Amount
                                         ---------    ------      ------     ---------    ------     ------
Income (loss) from continuing
  Operations                             $(2,378)                             $ 1,465
Less-Preferred stock dividends              (149)                                (120)
                                         --------                            ---------
Basic EPS-
  Income (loss) from  continuing
  operations
  available to common
  shareholders                            (2,527)    18,363,343   $(.14)        1,345    17,874,989  $ .08
                                                                  ======                             ======
Effect of dilutive securities -
  Stock options and warrants                   -              -                     -       453,483
  Convertible preferred stock                  -              -                   120     2,365,922
  Shares expected to be issued                 -              -                     -       400,000
                                         --------    ----------              ---------   ----------
Diluted EPS -
  Income (loss) from continuing
  operations
  available to common
  shareholders                           $(2,527)    18,363,343   $(.14)      $ 1,465    21,094,394  $ .07
                                         ========    ==========   ======     =========   ==========  ======


                                                Nine Months Ended                  Nine Months Ended
                                                  June 30, 1999                      June 30, 1998
                                         --------------------------------    -------------------------------
                                                                   Per                                Per
                                                                  Share                              Share
                                           Income     Shares      Amount       Income     Shares     Amount
                                         ---------    ------      ------     ---------    ------     ------
Income (loss) from continuing
  operations                             $   130                              $ 3,709
Less-Preferred stock dividends              (449)                                (120)
                                         --------                            ---------
Basic EPS-
  Income (loss) from  continuing
  operations
  available to common
  shareholders                              (319)    18,313,559   $(.02)        3,589    17,854,660  $ .20
                                                                  ======                             ======
Effect of dilutive securities -
  Stock options and warrants                   -              -                     -       266,632
  Convertible preferred stock                  -              -                   120       788,641
  Shares expected to be issued                 -              -                     -       400,000
                                         --------    ----------              ---------   ----------
Diluted EPS -
  Income (loss) from continuing
  operations
  available to common
  shareholders                           $  (319)    18,313,559   $(.02)      $ 3,709    19,309,933  $ .19
                                         ========    ==========   ======     =========   ==========  ======
</TABLE>
       At June 30, 1999 and 1998, the Company had options and warrants  covering
       3,417,886 and 582,236 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 1999 conversion
       of the preferred shares would have been antidilutive and, therefore,  was
       not considered in the computation of diluted earnings per share.

5.     Inventories

       Inventories consisted of the following:
                                         June 30,              September 30,
                                           1999                     1998
                                   -------------------      --------------------
       Raw material                      $ 5,178                   $ 5,152
       Work in process                     2,088                     1,333
       Finished goods                      3,164                     4,208
                                   -------------------      --------------------
                                         $10,430                   $10,693
                                   ===================      ====================

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

                                       5
<PAGE>

6.     Sale Leaseback and Financing

       In  April  1997  the  Company  sold its  Portland,  Oregon  manufacturing
       facility in a sale-leaseback  transaction for approximately  $4,600.  The
       transaction  was accounted for as a financing and the  capitalized  lease
       obligations   of   approximately   $4,600  were  recorded  as  long  term
       liabilities. In April 1998, under the terms of the agreement, the Company
       provided a mortgage  note to the  purchaser in the amount of $3,200 which
       was  reported as a note  receivable  at September  30, 1998.  In December
       1998,  the Company  exercised  an option to  repurchase  the building for
       $4,700,  consisting of cash of $1,500 and the note  receivable of $3,200.
       Accordingly,  the  note  receivable  of  $3,200  and  the  capital  lease
       obligation of $4,600 have been  eliminated from the balance sheet at June
       30, 1999. The costs associated with the building  repurchase are reported
       in other expenses during the nine months ended June 30, 1999.

       The Company  borrowed  $2,500 from its bank under  amended  term loans to
       finance the  repurchase  transaction  and for working  capital  purposes.
       Approximately  $1,222 of the  additional  financing was borrowed under an
       amendment to the Company's  existing Term Loan I which increased the Term
       Loan I  balance  to  $4,105.  Term  Loan I is  payable  in equal  monthly
       installments of $60 with the remaining  balance of $2,897 due at maturity
       on July 1, 2001.  Approximately  $1,278 of the  additional  financing was
       provided  under an  amended  Term  Loan II  payable  in 18 equal  monthly
       installments of $71, plus variable interest (8.5% at June 30, 1999).

7.     Acquisition

       In July 1999 the  Company  purchased  the  ProActive  Pedals  division of
       Active Tools  Manufacturing  Co., Inc.  ProActive Pedal is a designer and
       developer of patented  adjustable  foot pedal  systems and modular  pedal
       systems.   The  purchase  price  was  $5,750,   plus  the  assumption  of
       approximately $350 in liabilities.  In addition, the Company entered into
       a patent license with the patent holder which required an initial payment
       of $600  and  minimum  annual  royalty  payments  of $95 per year for ten
       years.  Assets acquired  include tooling  designs,  technology and patent
       rights on adjustable  foot pedal  systems,  as well as designs of modular
       foot pedal systems.   The acquisition will be accounted for as a purchase
       which  may  result  in  a  charge  to  operations for acquired in-process
       research and development.

       The  purchase  was  financed  through the private  placement of 1,244,065
       shares of the Company's  common stock with net proceeds of  approximately
       $3,396.  In addition,  the Company  borrowed $2,500 from its bank under a
       new term loan facility ("Term Loan III"). The principal amount under Term
       Loan III is payable in three  equal  monthly  installments  of $139 (plus
       interest) beginning in November 1999 with the remaining balance of $2,083
       due in February 2000.  Interest on Term Loan III is computed at the prime
       rate plus 1.25%. (9.25% at July 29, 1999).

8.     Impairment of Assets

       During  the  three  and  nine  months  ended  June 30,  1999 the  Company
       recognized a $5,278 loss from the  impairment of assets related to Kenco,
       the Company's former Automotive  Accessories  business  unit,  consisting
       of the following items:

       Impairment of non-voting preferred stock and notes and
           accounts receivable                                    $ 4,655
       Impairment of property                                     $   623
                                                                  -------
       Total loss from impairment of assets                       $ 5,278
                                                                  =======

       At June 30, 1999,  the Company had non-voting  preferred  stock and notes
       and accounts  receivable  related to Kenco of $797 and $3,858.  Since the
       sale of the operating assets of Kenco  to Kenco Products, Inc. ("KPI") in
       1998, KPI has reported  operating  losses and  experienced  cash flow and
       other financing difficulties.  In addition, KPI has not been able to make
       payments on its  notes and accounts  payable to the  Company.  KPI's bank
       has  notified  KPI  it  is  in  default  under  its  loan  agreement.  In
       consideration of this and after  evaluation of the business  prospects of
       KPI and its need for additional  capital,  the Company  determined it was
       not probable that it would  recover the value of the preferred  stock and
       notes and accounts receivable, and an impairment loss totaling $4,655 was
       recorded for the three and nine months ended June 30, 1999.

                                        6
<PAGE>

       In addition,  the Company  recorded an impairment loss related to certain
       property  retained from the Kenco sale.   The  majority of the impairment
       loss for property related to the sale in July 1999 of a building and land
       which were being leased by KPI from the Company.  This  property was sold
       for cash resulting in estimated net proceeds of  $1,818.    In connection
       with this sale the Company retired $891 of debt secured by the  property.
       Net  proceeds to the Company of $927 are to be paid to a previous lender,
       on behalf of an affiliated company,  under the terms of  an intercreditor
       agreement.  The  estimated  loss on the sale of land and building,  which
       has  been recorded in loss from impairment of assets, is $528.   The land
       and buildings have  been reclassified  to property  held for  sale in the
       June 30, 1999  consolidated balance sheet  and  are  reflected  at  their
       estimated net realizable value.


9.     Reclassifications

       Certain amounts  previously  reported in the statements of operations for
       the three and nine months ended June 30, 1998 have been  reclassified  to
       conform to current fiscal year presentation.


                                       7
<PAGE>

10.    Segment Information

<TABLE>
<CAPTION>
<S>                                                        <C>                 <C>                <C>                <C>
                                                            Three months       Three months        Nine months        Nine months
                                                               Ended               Ended              Ended              Ended
                                                              June 30,           June 30,            June 30,           June 30,
                                                                1999               1998                1999               1998
                                                           ---------------     --------------     ---------------    ---------------

Sales by classes of similar products from continuing
  operations
Vehicle components                                               $ 15,379           $ 14,122            $ 45,604           $ 40,349
Electrical components and GPS                                         883                645               2,224              2,729
                                                           ---------------     --------------     ---------------    ---------------
                                                                 $ 16,262           $ 14,767            $ 47,828           $ 43,078
                                                           ===============     ==============     ===============    ===============

Earnings (loss) from continuing operations
Vehicle components:
   Before loss from impairment of assets                         $ 2,155            $  3,041            $  8,598           $  8,525
   Loss from impairment of assets                                 (5,278)                  -              (5,278)                 -
                                                           ---------------     --------------     ---------------    ---------------
Vehicle components                                               $(3,123)           $  3,041            $  3,320           $  8,525
Electrical components and GPS                                       (292)               (666)             (1,723)            (1,485)
                                                           ---------------     --------------     ---------------    ---------------
                                                                 $(3,415)           $  2,375            $  1,597           $  7,040
                                                           ===============     ==============     ===============    ===============

Capital expenditures
Vehicle components                                               $   417            $    901            $  1,517           $  1,139
Electrical components and GPS                                        269                 194                 477                343
                                                           ---------------     --------------     ---------------    ---------------
Total capital expenditures - continuing operations                   686               1,095               1,994              1,482
Agricultural equipment - discontinued operations                      31                  15                  62                119
                                                           ---------------     --------------     ---------------    ---------------
Total capital expenditures                                       $   717            $  1,110            $  2,056           $  1,601
                                                           ===============     ==============     ===============    ===============


Depreciation and amortization
Vehicle components                                               $   371            $    239            $  1,071           $    626
Electrical components and GPS                                        109                  73                 307                238
                                                           ---------------     --------------     ---------------    ---------------
Total depreciation and amortization - continuing operations          480                 312               1,378                864
Automotive accessories - discontinued operations                       -                  23                   -                120
Agricultural equipment - discontinued operations                      88                 167                 264                271
                                                           ---------------     --------------     ---------------    ---------------
Total depreciation and amortization                              $   568            $    502            $  1,642           $  1,255
                                                           ===============     ==============     ===============    ===============


Identifiable assets
Vehicle components                                                                                      $ 36,999           $ 41,800
Electrical components and GPS                                                                              8,575              8,212
Corporate                                                                                                  7,551              4,750
                                                                                                  ---------------    ---------------
Total assets - continuing operations                                                                      53,125             54,762
Agricultural equipment - discontinued operations                                                           6,946              7,308
                                                                                                  ---------------    ---------------
Total assets                                                                                            $ 60,071           $ 62,070
                                                                                                  ===============    ===============
</TABLE>




The Company has classified the investment in and note  receivable from affiliate
and the property held for sale as a corporate asset under  identifiable  assets.
Identifiable  assets  for discontinued  segments reflect the net assets held for
disposition.



                                       8
<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)


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

  The  Company's  principal  sources  of  liquidity  are  funds  generated  from
  operations,  borrowings  under its credit  facilities and leases for equipment
  purchases from various leasing  companies.  The Company  anticipates that cash
  generated from  operations,  bank  borrowings and leases will be sufficient to
  satisfy  working  capital and  capital  expenditure  requirements  for current
  operations for the next twelve months. At June 30, 1999, the Company's working
  capital was $19,669  compared to $19,186 at September 30, 1998 and the current
  ratio was 2.9 compared to 2.6 at September 30, 1998.

  Cash flows from  continuing  operations  were $6,501 for the nine months ended
  June 30, 1999 compared to $1,467 for the first nine months of fiscal 1998.  In
  the nine months ended June 30, 1999,  decreased earnings of $2,780,  offset by
  the non-recurring charge of $5,278 and the $2,521 decrease in inventory levels
  as compared to the 1998 period  contributed  to the  increased  cash flow from
  operations in 1999 as compared to 1998.

  Net cash used in  investing  activities  was $2,669 for the nine months  ended
  June 30,1999  compared to $5,601 for the 1998 period.  The primary  reason for
  the decrease is the loan made in 1998 for the sale/leaseback financing for the
  Company's Portland, Oregon manufacturing facility.

  During the nine  months  ended  June 30,  1999 the note  receivable  decreased
  $3,200 and total long-term debt and capital leases decreased $4,600 due to the
  repurchase of the Portland,  Oregon manufacturing  facility. In April 1997 the
  Company  sold the facility in a  sale/leaseback  transaction  for $4,600.  The
  transaction  was  accounted  for as a  financing  and  the  capitalized  lease
  obligations of $4,600 were recorded as long-term  liabilities.  In April 1998,
  under the terms of the agreement,  the Company provided a mortgage note to the
  purchaser in the amount of $3,200 which was reported as a note  receivable  at
  September  30,  1998.  In December  1998,  the Company  exercised a repurchase
  option on the property and repurchased  the building for $4,700  consisting of
  cash of  $1,500  and the note  receivable  of  $3,200.  Accordingly,  the note
  receivable  of $3,200 and the  capital  lease  obligation  of $4,600 have been
  eliminated from the balance sheet at June 30, 1999. The costs  associated with
  the building  repurchase are reported in other expenses during the nine months
  ended June 30, 1998.

  The Company  borrowed $2,500 from its bank under amended term loans to finance
  the repurchase  transaction  and for working capital  purposes.  Approximately
  $1,222 of the  additional  financing  was  borrowed  under an amendment to the
  Company's  existing  Term Loan I, the increased  principal  amount of which is
  payable in equal monthly  installments  of $60 with the  remaining  balance of
  $2,897 due at maturity on July 1, 2001. Approximately $1,278 of the additional
  financing  was  provided  under an amended Term Loan II which is payable in 18
  equal monthly  installments  of $71, plus variable  interest (8.5% at June 30,
  1999).

  Excluding  proceeds  from the sale of  assets  of the  Automotive  Accessories
  business unit,  the  Company's  discontinued  operations  used  cash of $1,943
  and $3,639 for the nine months  ended  June 30, 1999  and 1998,  respectively.
  Cash   used   by  discontinued   operations  declined  primarily  because  the
  discontinued Automotive Accessories business unit,  which was  discontinued in
  1998, used cash of $1,561 in the first nine months of fiscal 1998.

  In July 1999 the Company  consummated  the private  placement  of common stock
  with net  proceeds of $3,396.  In addition,  during July the Company  borrowed
  $2,500 from its bank under an additional term loan.  Proceeds from the initial
  proceeds  of the  common  stock  offering  and the new term  loan were used to
  purchase the net assets of ProActive  Pedals.  The purchase price of ProActive
  Pedals was $5,750 plus the assumption of  approximately  $350  in liabilities.
  In addition,  the Company entered into a patent license with the patent holder
  which required an initial payment of $600 and minimum annual royalty  payments
  of  $95  per year for ten  years.  The primary assets acquired include tooling
  designs, technology and patent rights on adjustable  foot  pedal  systems,  as
  well as modular foot pedal systems. The additional bank financing was borrowed
  under  an  amendment  to the  Company's existing financing facility under Term
  Loan III.  The  principal amount under Term Loan III is payable in three equal
  monthly  installments of $139 (plus interest) beginning in November  1999 with
  the remaining  balance of $2,083 due in February  2000.  Interest on Term Loan
  III is computed at the prime rate plus 1.25%.  (9.25% at July 29, 1999).


                                        9
<PAGE>


  Market  Risk  -  The  Company  has  not  entered  into  derivative   financial
  instruments. 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
  interest rates would have a material effect on the Company's cashflow.

  Recent FASB Pronouncements - The Financial Accounting Standards Board ("FASB")
  recently issued SFAS No. 131, "Disclosures about Segments of an Enterprise and
  Related  Information  ("SFAS  131")".  This  statement is effective for fiscal
  years  beginning  after  December  15,  1997.  SFAS No. 131  revises  existing
  standards for reporting  information about operating segments and requires the
  reporting of selected  information in interim financial reports.  SFAS No. 131
  also  establishes   standards  for  related  disclosures  about  products  and
  services,  geographic  areas,  and major customers.  Management  believes that
  implementation of SFAS No. 131 (which has not been adopted with this quarterly
  report) will not materially affect the Company's financial statements.

  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  137  establishes  accounting  and
  reporting  standards for all derivative instruments. SFAS 137 is effective for
  fiscal years beginning after June 15,  2000.   The  Company  does not have any
  derivative  instruments and accordingly,  the  adoption  of SFAS 137 will have
  no impact on the  Company's financial position or results of operations.

  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 costs associated with this
  problem, including communicating with suppliers, dealers and others with which
  it does business to coordinate Year 2000 conversion.  During 1998, the Company
  began  implementing  the  installation of new financial  software that is Year
  2000  compliant  for the purpose of  improving  operations  and service to its
  existing  and  prospective  truck and  automotive  customers.  The decision to
  upgrade the Company's  software was made  irrespective of Year 2000 compliance
  issues.

  Since  January  1998 the  Company  has been  engaged  in  achieving  Year 2000
  compliance. The Company's Year 2000 project is divided into several phases and
  is progressing  with corrective  actions for major systems well under way. All
  hardware,  software, services and business relationships with trading partners
  which could be  affected  by Year 2000 issues are being  audited for Year 2000
  compliance.

  The Company  relies on computer  systems and software to operate its business,
  including  applications  used  in  sales,  purchasing,  inventory  management,
  finance and various administrative  functions. The Company has determined that
  certain of its software applications will be unable to interpret appropriately
  the calendar Year 2000 and subsequent  years.  As of June 30, 1999, 90% of the
  Company's  systems which may have a material Year 2000 liability are Year 2000
  compliant. The target date for full compliance is September 30, 1999.

  The  Company's  total budget for its Year 2000 project is $150,  approximately
  $87 of which had been spent through June 1999. The Year 2000 budget represents
  approximately 17 percent of total information  technology ("IT")  expenditures
  budgeted for the period from October 1998 through  September 1999. The Company
  continues to manage total IT expenses by  re-prioritizing  or curtailing  less
  critical  investments,  incorporating  Year  2000  readiness  into  previously
  planned system  enhancements and by using existing staff to implement its Year
  2000  program.  The Company has hired  outside  consultants  for its Year 2000
  project, and it may need to purchase additional hardware or software.

  The  Company  acquires a  majority  of its  inventory  from  approximately  22
  vendors.  If these vendors have unresolved Year 2000 issues which affect their
  ability to supply merchandise,  the Company could be adversely  affected.  The
  Company has conducted an initial  assessment of vendors whose  potential  Year
  2000 liability could materially  affect  operations.  Based on this assessment
  the  Company  believes  that it is not  materially  at risk  from a Year  2000
  liability posed by its vendors.  The Company plans to complete a more detailed
  Year 2000  readiness  survey of its top vendors by August  1999.  In the event
  that it appears a vendor will be adversely  affected by Year 2000 issues,  the
  Company believes that it will be able to find alternative suppliers.

  Should the Company not achieve full  compliance in a timely manner or complete
  its Year 2000  project  within  its  current  cost  estimates,  the  Company's
  business,  financial  condition and results of  operations  could be adversely
  affected.  However,  in the event that the Company fails to meet the deadlines
  above,  the Company  believes that the  financial  impact will not be material
  since all systems  believed by the Company to be critical  are  expected to be
  Year 2000 compliant.



                                       10
<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 June 30, 1999 compared to the three months ended June 30,
    1998

    Sales

    Sales from continuing operations increased $1,495, or 10%, to $16,262 in the
    third  quarter of fiscal 1999 from  $14,767 in the second  quarter of fiscal
    1998  primarily due to higher unit sales  volumes in the  Company's  Vehicle
    Components segment.

    Sales  from  continuing  operations in the  Vehicle Components business unit
    increased $1,257, or 9%, to $15,379 in the third quarter of fiscal 1999 over
    levels  achieved  in  the  second  quarter  of  fiscal  1998  due  to higher
    electronic  throttle control  ("ETC")  unit sales.   Sales  from  continuing
    operations in the Company's  Electrical  Components  and   GPS business unit
    increased  $238,  or  37%,  due   to   increased  unit sales  of  electrical
    components.

    Gross margin

    Gross  margin from  continuing  operations was $4,383 or 27% of sales in the
    third  quarter of 1999, compared to $4,699 or 32% of sales in the comparable
    1998 period.   Gross margin  decreased  $316 or 7%, in the third  quarter of
    fiscal 1999 as  a result of reduced gross margins at the Vehicle  Components
    business  unit  of $508,  partially  offset by increases  at the  Electrical
    Components  and  GPS business unit of $192.  The reasons for the decrease in
    gross  margins at the Vehicle  Components  business  unit include  increased
    management    information   service  expenses  of  approximately   $125  for
    installation  of a management information system, wide area network and year
    2000  compliance,   increased  warranty  costs of $81, and a decrease in the
    gross   margin  realized  at the  Company's  plastic  injection  molding and
    tooling subsidiary of $208.

    The   Company's  plastic  injection  molding  and  tooling  subsidiary,  the
    operating  results of which are included in the Vehicle Components  business
    unit,  reported an increased loss from operations in the third quarter ended
    June  30, 1999 of $217.  Sales,  gross margin (loss) and operating  (losses)
    for  the  quarter  ended  June 30,  1999 were  $1,310,  ($267)  and  ($491),
    respectively   compared  to  $1,089,  $(59) and  ($274) in the prior  fiscal
    period.   The  operation  moved to a new  facility in the fourth  quarter of
    fiscal  1998 which has a higher  break-even  sales level and plant  capacity
    than  the prior facility. The operation has not achieved break-even sales to
    date  and is not expected to achieve  break-even  results until at least the
    first quarter of fiscal 2000.

    Operating expenses

    During  the three  months  ended June 30,  1999,  the Company  recognized  a
    $5,278  loss from the impairment of assets  related to Kenco,  the Company's
    former automotive  accessories business segment. The loss from impairment of
    assets consisted  of impairment of non-voting  preferred stock and notes and
    accounts  receivable  totaling  $4,655  and impairment of property  totaling
    $623.

    At June 30, 1999, the Company had non-voting  preferred  stock and notes and
    accounts  receivable related to Kenco of $797 and $3,858.  Since the sale of
    the operating  assets of Kenco to Kenco Products,  Inc. ("KPI") in 1998, KPI
    has reported  operating losses and experienced cash flow and other financing
    difficulties.  In  addition,  KPI has not been able to make  payments on its
    notes and accounts payable to the Company. KPI's bank has notified KPI it is
    in default  under its loan  agreement.  In  consideration  of this and after
    evaluation  of the  business  prospects  of KPI and its need for  additional
    capital,  the Company  determined  it was not probable that it would recover
    the value of the preferred stock and notes and accounts  receivable,  and an
    impairment loss totaling $4,655 was recorded for the three months ended June
    30, 1999.


                                       11
<PAGE>


    In addition,   the Company  recorded an  impairment  loss related to certain
    property  retained  from the Kenco sale. The majority of the impairment loss
    related  to  the sale in July 1999 of a  building  and land  which was being
    leased  by KPI from the Company.  This property was sold for cash  resulting
    in  estimated  net  proceeds of $1,818.   In  connection  with this sale the
    Company  retired  $891 of debt  securing the  property.  Net proceeds to the
    Company  of $927  are  to be paid to a  previous  lender,  on  behalf  of an
    affiliated  company,   under the terms of an  intercreditor  agreement.  The
    estimated  loss on the sale of land and building, which has been recorded in
    loss  from  impairment of assets,  is $528.  The land and building have been
    reclassified  to  property  held for sale in the June 30, 1999  consolidated
    balance sheet and are reflected at their net realizable value.

    Operating  expenses  before  loss  from  impairment of assets for continuing
    operations were $2,520 for the three months ended  June 30, 1999 compared to
    $2,324 for the comparable 1998 period, or an increase of  $196,  or  8% as a
    result of increased  research and development expenses.  Operating  expenses
    as a percent  of net sales  from  continuing operations  decreased to 15% in
    the third  quarter of  fiscal 1999 compared to 16% in  the  comparable  1998
    quarter.

    Research and development expenses for continuing  operations increased $297,
    or 41%, to $1,017  during the third  quarter of fiscal 1999 compared to $720
    in the  comparable  1998  quarter.  As a percent  of sales  from  continuing
    operations  research  and  development  expenses  increased  from 5% to  6%.
    Research  and  development  expenses  were  increased to support new product
    development  for existing  customers,  for development of the automotive ETC
    product and for development of sensor -related products.


    Interest and Other Expenses

    Interest expense from continuing  operations  increased $49, or 14%, to $389
    in the third  quarter  of fiscal  1999 from $340 in the  second  quarter  of
    fiscal 1998. Allocated interest expense included in discontinued  operations
    for  the  quarters  ended  June  30,  1999  and  1998  was  $149  and  $119,
    respectively.


    Discontinued operations

    The Company  reported a net loss from discontinued operations of $336 in the
    third  quarter  of fiscal 1998.  The Company  adopted a plan of disposal for
    the  Agriculture  Equipment business unit in late fiscal 1998, and a plan of
    disposal  for the Automotive  Accessories business unit in the third quarter
    of  fiscal 1997  and, accordingly,  the estimated future operating losses of
    the  business  units were expensed in the fourth  quarter of fiscal 1998 and
    third quarter of fiscal 1997, respectively.

    Net  sales from the  Agriculture  Equipment  business unit declined $244, or
    12%  to $1,850 in the third quarter of fiscal 1999 compared to $2,094 in the
    third   quarter of fiscal  1998.  The decline in sales was due to lower unit
    sales   attributable  primarily  to a  weak  farm  economy.  The  loss  from
    operations   for  the  discontinued   Agriculture  Equipment  business  unit
    increased  $90  to $630  due to a  decrease  in gross  margin  of $226 and a
    decrease in operating expenses of $136.

    Estimated future losses from discontinued  Automotive Accessories operations
    were  accrued  in  fiscal  1997.  The  discontinued  Automotive  Accessories
    operations were sold in the second quarter of fiscal 1998.


    Net earnings available to common shareholders

    Net earnings  (loss)  allocable to common  shareholders  was $(2,527) in the
    quarter ended June 30, 1999 compared to $1,009 in the comparative prior year
    period due to  decreased  gross  margins as a percent of sales and loss from
    impairment of assets.

    The  effective  income tax rate was 38.4% and 30.4% for the  quarters  ended
    June 30, 1999 and 1998, respectively.




                                       12
<PAGE>

    Results of Operations
    Nine months  ended June 30, 1999  compared to the nine months ended June 30,
    1998


    Sales

    Sales from  continuing  operations  increased  $4,750, or 11%, to $47,828 in
    the nine  months  ended June 30, 1999 from  $43,078 in the nine months ended
    June 30, 1998 due to higher  unit sales  volumes in the  Company's  Vehicle
    Components  business  unit  offset  by  lower  unit  sales  volumes  in the
    Electrical Components and GPS business unit.

    Sales  from continuing  operations in the Vehicle  Components  business unit
    increased  $5,255, or 13%, to $45,604 in the nine months ended June 30, 1999
    over  levels  achieved in the nine months  ended June 30, 1998 due to higher
    ETC  unit  sales.   Sales  from  continuing   operations  in  the  Company's
    Electrical  Components  and GPS business unit decreased $505, or 19%, due to
    lower unit sales of electrical components.

    Gross margin

    Gross margin  from continuing  operations  increased $635, or 5%, to $13,943
    (29% of sales)  compared  to $13,308 (31% of sales) in the nine months ended
    June  30,  1998.  Gross  margin  increased  $1,056 or 8%, in the nine months
    ended  June 30, 1999 in the Vehicle  Components  business unit due to higher
    unit  sales volumes of ETC products,  partially offset by increased warranty
    costs of $276.

    The  Company's   plastic  injection  molding  and  tooling  subsidiary,  the
    operating results  of which are included in the vehicle components  business
    unit,  reported an  increased loss from  operations in the nine months ended
    June 30, 1999 of $422.  The first nine months of 1998 benefited from a large
    tooling  order at the Company's plastic  injection molding  subsidiary which
    did  not recur in the same period in 1999.  Sales,  gross margin  (loss) and
    operating  loss for the nine months ended June 30, 1999 were $4,123,  (279),
    and  ($1,000)  respectively  compared to $3,599, $75 and ($578) in the prior
    fiscal  period. As noted  previously,  the operation moved to a new facility
    in the  fourth  quarter of fiscal  1998 which has a higher  breakeven  sales
    level and  plant  capacity  than the prior  facility.  The operation has not
    achieved  break-even sales to date and is not expected to achieve break-even
    results until at least the first quarter of fiscal 2000.

    Increases in the Vehicle Components business unit  were offset by a decrease
    in gross  margin of $213 in the Electrical Components and GPS  business unit
    attributable  to lower unit  sales  volumes.  Gross  margins as a percent of
    sales  decreased to 11.1% in the nine months ended June 30, 1999 compared to
    16.9% in the nine  months  ended June 30, 1998  primarily  due to lower unit
    sales.

    Operating expenses

    As  discussed  previously,  during the nine  months  ended June 30, 1999 the
    Company  recognized a $5,278 loss from the  impairment of assets  related to
    Kenco,  the  Company's  former  automotive  accessories  segment.  The  loss
    consisted  of an  impairment  of  non-voting  preferred  stock and notes and
    accounts  receivable  totaling  $4,655 and  impairment of property  totaling
    $623.

    Operating expenses before the loss from impairment of assets increased $800,
    or 13%, to $7,068 in the nine months ended June 30, 1999  compared to $6,268
    in the nine months  ended June 30, 1998  primarily  as a result of increased
    research and development expenses of $679. Research and development expenses
    were increased to support new product  development  for existing  customers,
    for  development  of the  automotive  ETC  product  and for  development  of
    sensor-related products.  Operating expenses before the loss from impairment
    of assets as a  percentage  of sales was 14.8% and 14.6% in the nine  months
    ended June 30, 1999 and 1998.  Operating  expenses  before the loss from the
    impairment of assets increased $774, or 17.9%, in the nine months ended June
    30,  1999 in the  Vehicle  Components business unit and $26, or 1.3%, in the
    Electrical  Components  and  GPS  business  unit  compared to the prior year
    period.


                                       13
<PAGE>


    Selling and administration  expenses remained relatively stable for the nine
    months ended June 30, 1999 and 1998. Selling and administration  expenses as
    a percent of sales  decreased  to 3.1% and 6.0%,  respectively,  in the nine
    months ended June 30, 1999  compared to 3.5% and 6.4%,  respectively  in the
    prior year period.


    Interest and Other Expenses

    Interest expense  increased $147 to $1,187 in the nine months ended June 30,
    1999 from $1,040 in the nine months  ended June 30, 1998.  Interest  expense
    increased  primarily  because  of  allocations  of  interest  expense to the
    Automotive  Accessories  discontinued  operations  in the prior year period.
    Allocated interest expense included in discontinued  operations for the nine
    months  ended  June 30,  1999 and  1998  was  $342 and  $393,  respectively.
    Interest  income  increased  $125 in the nine  months  ended  June 30,  1999
    primarily due to interest on a state tax refund of $85.


    Discontinued operations

    The  Company reported a net loss from discontinued operations of $799 in the
    nine  months ended June 30, 1998. The Company adopted a plan of disposal for
    the  Agriculture  Equipment  business unit in late fiscal 1998 and a plan of
    disposal  for the Automotive  Accessories business unit in the third quarter
    of  fiscal 1997, and  accordingly,  the estimated future operating losses of
    these  business units were expensed in the fourth quarter of fiscal 1998 and
    third  quarter of fiscal 1997, respectively.

    The  net loss from  operations  of the  discontinued  Agriculture  Equipment
    business   unit as $639,  net of taxes,  in the nine  months  ended June 30,
    1998.  Net sales from the Agriculture  Equipment  segment  declined $966, or
    15%  to $5,653 in the nine months ended June 30, 1999  compared to $6,619 in
    the  nine months ended June 30, 1998.  The decline in sales was due to lower
    unit  sales  attributable  primarily to a weak farm  economy.  The loss from
    operations  of   the  discontinued   Agriculture   Equipment  business  unit
    increased  $690 from $887 in fiscal 1998 to $1,577 for the nine months ended
    June 30, 1999 primarily as a result of a decrease in gross margin of $649.

    Net  losses from the discontinued  Automotive Accessories business unit were
    $160  net of taxes for the nine months ended June 30, 1998. Estimated future
    losses   from  discontinued  operations  were  accrued in fiscal  1997.  The
    Automotive   Accessories  business  unit  was  sold in  March  1998,  and an
    additional  loss of $160 was incurred on the sale  of  this  business  unit.
    Net sales  from the discontinued business unit in the nine months ended June
    30, 1998 was $2,928.

    Net earnings available to common shareholders

    Net earnings (loss) allocable to common shareholders were $(319) in the nine
    months  ended June 30, 1999  compared to $2,790 in the prior fiscal year due
    to decreased  earnings from operations as described above,  partially offset
    by decreased charges from discontinued operations totaling $799.

    The effective income tax rate for continuing  operations was 38.4% and 35.7%
    for the nine months ended June 30, 1999 and 1998.





                                       14
<PAGE>

                                     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

         None

Item 5.  Other Information

         None


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits
              27 - Financial Data Schedule

(b)      Reports on Form 8-K

              None




                                       15
<PAGE>

                             Williams Controls, Inc.

                                    Signature


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




                                            WILLIAMS CONTROLS, INC.




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



                                             By: /s/ Kim L. Childs
                                             -----------------------------------
                                             Kim L. Childs, Corporate Controller
                                             and Principal Accounting Officer







Date:  August 16, 1999









                                       16
<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:
                                             -----------------------------------
                                             Gerard A. Herlihy,
                                             Chief Financial Officer



                                             By:
                                             -----------------------------------
                                             Kim L. Childs, Corporate Controller
                                             and Principal Accounting Officer



Date: August 16, 1999





                                       16
<PAGE>