<PAGE>   1
===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                          -----------------------------

                                    FORM 10-Q

   (MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997

                                       OR

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

                          COMMISSION FILE NUMBER 1-9965

                           KEITHLEY INSTRUMENTS, INC.
             (Exact name of registrant as specified in its charter)

                      OHIO                               34-0794417
         (State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization)              Identification No.)

                      28775 AURORA ROAD, SOLON, OHIO 44139
               (Address of principal executive offices) (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 248-0400

         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
                                      ---   ---

         As of April 30, 1997 the Registrant had outstanding 4,841,658 Common
Shares, without par value, and 2,794,278 Class B Common Shares, without par
value.

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


<PAGE>   2

                          PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements.
------------------------------

                           KEITHLEY INSTRUMENTS, INC.
                           CONSOLIDATED BALANCE SHEET

                            (In Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                   MARCH 31,              SEPTEMBER 30,
                                                                   ---------              -------------
                                                              1997         1996               1996
                                                              ----         ----               ----
Assets
------

Current assets:
<S>                                                        <C>               <C>             <C>
     Cash and cash equivalents                             $ 1,737           $ 4,289         $ 3,995
     Accounts receivable and other, net                     18,873            20,297          18,538
     Inventories:
           Raw materials                                     7,041             6,908           8,255
           Work in process                                   4,841             5,356           4,880
           Finished products                                 5,073             4,223           4,291
                                                           -------           -------         -------
             Total inventories                              16,955            16,487          17,426
     Other current assets                                    3,851             2,851           3,781
                                                           -------           -------         -------
             Total current assets                           41,416            43,924          43,740
                                                            ------            ------          ------
Property, plant and equipment, at cost                      41,346            35,843          37,873
Less-Accumulated depreciation                               24,148            23,471          22,531
                                                            ------            ------          ------
Total property, plant and equipment, net                    17,198            12,372          15,342
                                                            ------            ------          ------
Intangible assets, net                                       1,933             8,108           2,064
Other assets                                                11,613             8,735          12,688
                                                            ------           -------          ------
Total assets                                               $72,160           $73,139         $73,834
                                                            ======            ======          ======


Liabilities and Shareholders' Equity
------------------------------------

Current liabilities:
     Short-term debt and current
       installments on long-term debt                    $      47          $     72       $      61
     Accounts payable                                        8,675             7,440           8,162
     Accrued payroll and related expenses                    4,104             5,104           4,525
     Other accrued expenses                                  7,273             5,492           9,358
     Income taxes payable                                      756             2,696           2,955
                                                          --------           -------         -------
           Total current liabilities                        20,855            20,804          25,061
                                                            ------            ------          ------

Long-term debt                                              16,682             9,685          13,308
Other long-term liabilities                                  3,944             3,138           3,709

Shareholders' equity:
     Paid-in-capital                                         7,050             4,789           5,479
     Earnings reinvested in the business                    24,248            34,365          25,865
     Cumulative translation adjustment                         252               443             562
     Unamortized portion of restricted stock                  (680)               (4)            (14)
     Common shares held in treasury, at cost                  (191)              (81)           (136)
                                                          --------         ---------        ---------
           Total shareholders' equity                       30,679            39,512          31,756
                                                            ------            ------          ------
Total liabilities and shareholders' equity                 $72,160           $73,139         $73,834
                                                            ======            ======          ======
</TABLE>

                                       2

<PAGE>   3

                           KEITHLEY INSTRUMENTS, INC.
                        CONSOLIDATED STATEMENT OF INCOME
               (In Thousands of Dollars Except for Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            FOR THE THREE MONTHS                     FOR THE SIX MONTHS
                                                                 ENDED MARCH 31,                       ENDED MARCH 31,
                                                              1997            1996                    1997           1996
                                                              ----            ----                    ----           ----

<S>                                                        <C>             <C>                     <C>            <C>
Net sales                                                  $28,148         $30,019                 $56,034        $59,842

Cost of goods sold                                          11,746          10,967                  23,500         22,802

Selling, general and administrative expenses                11,821          12,336                  24,275         24,278

Product development expenses                                 4,410           4,336                   8,874          8,432

Special charges                                                375              --                     433             --

Amortization of intangible assets                               57             159                     114            291

Net financing expenses                                         203             176                     473            335
                                                           -------         -------                  ------         ------


Income (loss) before income taxes                             (464)          2,045                  (1,635)         3,704

Income taxes (benefit)                                        (126)            560                    (459)         1,074
                                                           -------         -------                 -------        -------


Net income (loss)                                         $   (338)        $ 1,485                $ (1,176)       $ 2,630
                                                           =======          ======                 =======         ======


Net income (loss) per share                              $   (0.04)       $   0.19               $   (0.16)      $   0.34
                                                          ========         =======                =========        ======

Cash dividends per Common Share                          $    .031        $   .031               $    .063       $   .063
                                                          ========         =======                ========        =======

Cash dividends per Class B
    Common Share                                         $    .025        $   .025               $    .050       $   .050
                                                          ========         =======                ========        =======
</TABLE>

                                       3

<PAGE>   4

                           KEITHLEY INSTRUMENTS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (In Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 FOR THE THREE MONTHS                  FOR THE SIX MONTHS
                                                                     ENDED MARCH 31,                     ENDED MARCH 31,
                                                               1997                 1996                1997         1996
                                                               ----                 ----                ----         ----
<S>                                                           <C>               <C>                 <C>           <C>
Cash flows from operating activities:
     Net income (loss)                                        $  (338)          $  1,485            $ (1,176)     $ 2,630
     Expenses not requiring outlay of cash                      1,273              1,084               2,456        2,202
     Changes in working capital                                (2,457)            (3,237)             (3,805)      (3,789)
     Other operating activities                                   (27)              (415)                801          677
                                                              -------             ------              ------       ------
     Net cash provided by (used in)
         operating activities                                  (1,549)            (1,083)             (1,724)       1,720
                                                                -----              -----               -----        -----

Cash flows from investing activities:
     Payments for property, plant, and equipment               (1,428)            (2,267)             (4,130)      (3,455)
     Acquisitions (excluding cash of $11)                          --             (1,208)                 --       (1,408)
     Other investing activities-net                                14                  3                  16            3
                                                              -------           --------             -------      -------
     Net cash used in investing activities                     (1,414)            (3,472)             (4,114)      (4,860)
                                                                -----              -----               -----        -----

Cash flows from financing activities:
     Net increase (decrease) in short term debt                   (16)                 1                 (15)           1
     Net borrowing (repayment) of long term debt                 (400)             4,256               3,617        3,687
     Cash dividends                                              (221)              (213)               (440)        (422)
     Other transactions-net                                       754                142                 774          349
                                                               ------             ------              ------       ------
     Net cash provided by financing activities                    117              4,186               3,936        3,615
                                                               ------              -----               -----        -----

Effect of exchange rate changes on cash                          (355)               (69)               (356)         (76)
                                                               ------             ------             -------       ------

Increase (decrease) in cash and cash equivalents               (3,201)              (438)             (2,258)         399
Cash and cash equivalents at beginning of period                4,938              4,727               3,995        3,890
                                                               ------             ------              ------       ------
Cash and cash equivalents at end of period                    $ 1,737            $ 4,289             $ 1,737      $ 4,289
                                                               ======             ======              ======       ======

Supplemental disclosures of cash flow information
-------------------------------------------------
     Cash paid during the period for:
           Income taxes                                       $   131            $   528             $ 1,307     $    686
           Interest                                               273                128                 513          347

Supplemental schedule of noncash investing activities
-----------------------------------------------------
     The company's acquisitions included the following
noncash transactions (See Notes E and F):
           Liabilities assumed                                     --            $   359                  --     $    916
           Common Shares issued                                    --                201                  --          201
                                                              -------             ------             -------       ------
                 Total noncash transactions                        --            $   560                  --      $ 1,117
                                                              =======             ======             =======        =====
</TABLE>

Disclosure of accounting policy
-------------------------------
     For purposes of this statement, the Company considers all highly liquid
investments with maturities of three months or less when purchased to be cash
equivalents.

                                       4

<PAGE>   5

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   ------------------------------------------

A.   The consolidated financial statements at March 31, 1997 and 1996 and for
     the three month periods then ended have not been examined by independent
     accountants, but in the opinion of the management of Keithley Instruments,
     Inc., all adjustments necessary to a fair statement of the consolidated
     balance sheet, consolidated statement of income and consolidated statement
     of cash flows for those periods have been included. All adjustments
     included are of a normal, recurring nature.

B.   The weighted average number of shares outstanding used in determining net
     income per share was 7,609,919 for the quarter ended March 31, 1997 and
     7,782,654 for the quarter ended March 31, 1996. For the six months ended
     March 31, 1997 and March 31, 1996, the weighted average number of shares
     outstanding was 7,541,830 and 7,764,418, respectively. Both Common Shares
     and Class B Common Shares are included in calculating the weighted average
     number of shares outstanding. Fully diluted net income per share is not
     materially different than net income per share.

C.   Special charges of $375 for the second quarter of fiscal 1997 relate to the
     relocation of the Keithley MetraByte operation to Cleveland from Taunton,
     Massachusetts. Special charges include the reversal of $200 of expense
     recorded during 1996 for accrued lease costs related to the relocation for
     which the space has since been sublet. The company estimates that an
     additional $300 to $500 will be expensed during the year on the transition
     of the business from Massachusetts to Cleveland, which should be complete
     by July 1997. At March 31, 1997, the company had $3,505 remaining on the
     Consolidated Balance Sheet ($3,164 in the caption "Other accrued expenses"
     and $341 in the caption "Other long-term liabilities") for the closing of
     the Taunton facility and European operating subleases.

D.   During the first quarter of fiscal 1997, $846 of income tax related
     accruals were released to income as circumstances giving rise to the
     accruals were no longer present. Also during the first quarter, and in
     response to a recent tax law change, the company decided to terminate
     existing corporate owned life insurance policies and a deferred tax charge
     of $888 was recorded, reflecting the tax on the excess of cash surrender
     value over premiums paid on the policies. The tax is payable over 4 years.

E.   On December 5, 1995, the company consummated the purchase of the principal
     assets of International Sensor Technology, Inc. (IST) of Pullman,
     Washington. IST pioneered the development of laser heating technology in
     thermoluminescence dosimetry (TLD) systems for personal radiation
     protection. The technology has potential uses in radiation therapy, nuclear
     waste management, radiation processing, environmental and radiation-hard
     electronics applications in government, medicine and the nuclear industry.

F.   On February 15, 1996, the company consummated the purchase of certain
     assets of Turner Engineering Technology (Turner) of Roanoke, Texas. Turner
     specializes in accelerated test methods for determining the quality of
     semiconductor wafers at various stages of manufacturing. These test methods
     are designed to save semiconductor manufacturers money by providing process
     control feedback to allow optimization and continued semiconductor process
     improvement.

                                       5

<PAGE>   6

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations.
--------------

                            (In Thousands of Dollars)

Results of Operations
---------------------

Second Quarter 1997 Compared with Second Quarter 1996
-----------------------------------------------------

The net loss for the second quarter of fiscal 1997 was $338, or $.04 per share,
compared with net income of $1,485, or $.19 per share, in last year's quarter.
The loss was the result of decreased sales and lower gross margins.

Net sales of $28,148 decreased 6 percent from $30,019 in the prior year's second
quarter. The decrease was due to lower sales of our automated parametric test
systems used by the semiconductor industry and lower sales of Keithley MetraByte
products. The company was pleased to report, however, that the second quarter's
sales included the first shipment of the new S600 next generation parametric
tester used by the semiconductor industry. Orders for the second quarter of
$33,648 increased 21 percent from the prior year's second quarter and 9 percent
from the first quarter of 1997. Order levels were the second highest reported in
the company's history and included good orders for the company's Quantox(R)
Silicon Oxide Monitoring System. Geographically, orders were up in the United
States and the Pacific Basin region and down somewhat in Europe. Backlog
increased $4,599 during the quarter to a record $16,978 at March 31, 1997.

Cost of goods sold as a percentage of net sales increased 5.2 percentage points
to 41.7 percent from 36.5 percent. This was due to expected lower margins and
start up costs of the company's new business initiatives, and higher fixed costs
resulting from the expansion of manufacturing facilities. The effect of the
company's hedging activities on cost of goods sold for the quarter was to
decrease cost of goods sold by 0.3 percentage points of net sales versus a
decrease of 0.2 percentage points in the prior year's quarter.

Selling, general and administrative expenses of $11,821 for the second quarter
decreased $515, or 4 percent from the prior year's quarter. The decrease was due
mainly to lower incentive compensation expense due to the loss.

Product development expenses of $4,410 increased less than 2 percent from $4,336
in the prior year's quarter. This was due primarily to increased costs
associated with the continued development of the company's new businesses,
offset by lower product development expenses for Keithley MetraByte.

Special charges of $375 for the quarter relate to the relocation of the Keithley
MetraByte operation to Cleveland from Taunton, Massachusetts. Special charges
include the reversal of $200 of expense recorded during 1996 for accrued lease
costs related to the relocation for which the space has since been sublet. The
company estimates that an additional $300 to $500 will be expensed during the
year on the transition from Taunton to Cleveland, which should be complete by
July 1997. At March 31, 1997, the company had $3,505 remaining on the
Consolidated Balance Sheet ($3,164 in the caption "Other accrued expenses" and
$341 in the caption "Other long-term liabilities") for the closing of the
Taunton facility and European operating subleases.

                                       6

<PAGE>   7

Despite higher debt levels during the quarter, net financing expenses of $203,
increased only $27 from last year's second quarter. This was due to interest
income received on a federal income tax refund as well as the absence of expense
related to corporate owned life insurance policies which were terminated during
the first quarter.

Six Months Ended March 31, 1997 Compared with Six Months Ended March 31, 1996
-----------------------------------------------------------------------------

The company recorded a net loss of $1,176, or $.16 per share for the six months
ended March 31, 1997, compared with net income of $2,630, or $.34 per share for
the prior year. The loss resulted primarily from lower sales and lower gross
margins during the first half of fiscal 1997 versus 1996.

Net sales of $56,034 decreased $3,808, or 6 percent, from $59,842 reported for
the six month period last year. The decrease was due to decreased sales of
parametric testers serving the semiconductor industry and decreased sales of the
company's data acquisition boards, offset somewhat by sales of the Quantox
product. Orders for the six month period were up 4 percent from last year. The
majority of the increase was due to orders for Quantox, along with a $4,084
contract with the Navy recorded in the first quarter.

Cost of goods sold as a percentage of net sales increased to 41.9 percent from
38.1 percent for the six month period last year. This was due to expected lower
margins and start up costs of the company's new business initiatives, and higher
fixed costs resulting from the expansion of manufacturing facilities. The
company's hedging activities decreased cost of goods sold by 0.2 percentage
points of net sales for the six months ended March 31, 1997, versus no effect on
cost of goods sold in last year's six month period.

Selling, general and administrative expenses of $24,275, or 43.3 percent of net
sales were flat against $24,278, or 40.6 percent of net sales in the same period
in the prior year. Decreased costs related to the Keithley MetraByte operation's
relocation were offset by increased costs for the company's new business
initiatives.

Product development expenses of $8,874, or 15.9 percent of net sales for the
first half of fiscal 1997, increased 5 percent from $8,432, or 14.1 percent of
net sales in the same period last year. Again, decreased expenses related to
Keithley MetraByte more than offset increased costs for the company's new
business initiatives.

Net financing expenses of $473 increased $138, or 41 percent due to higher
average debt levels during the period.

The effective tax rate was 28.0 percent for the six month period compared with
29.0 percent for the prior year's period. The effective rate is less than the
statutory rate of 34 percent due to the utilization of foreign sales corporation
(FSC) benefits.

                                       7

<PAGE>   8

Liquidity and Capital Resources
-------------------------------

Cash used in operations was $1,549 for the second quarter and $1,724 for the six
months ended March 31, 1997. Total debt of $16,729 at March 31, 1997, decreased
$677 during the quarter, but increased $3,360 from the beginning of the fiscal
year. The increase in debt and decrease in cash during the six month period were
used primarily to pay current liabilities, to purchase fixed assets, and fund
the expansion of the company's Semiconductor and Radiation Measurements
facilities. The facilities expansion was substantially complete by the end of
the second quarter. The total debt-to-capital ratio was 35.3 percent at March
31, 1997 compared with 29.6 percent at September 30, 1996.

During the quarter the company amended its $25,000 unsecured, multi-currency
debt facility. The agreement was extended until March 2002, and generally
includes lower overall borrowing costs than the previous agreement. The company
expects to finance capital spending and working capital requirements with cash
provided by operations and its available lines of credit. At March 31, 1997, the
Company had available unused lines of credit with domestic and foreign banks
aggregating $14,404, of which $6,086 were short term and $8,318 were long term.

Outlook
-------

The company believes based on recent order and backlog levels, that the worst of
the semiconductor capital equipment industry slump may be over. The company
expects to return to profitability in the third quarter of fiscal 1997, with
even higher profits in the fourth quarter.

Additionally, gross margins are not expected to improve for the remainder of the
fiscal year. This is due to higher fixed costs due to the expansion of
manufacturing facilities, and increased shipments of Quantox which carry lower
margins.

Factors That May Affect Future Results
--------------------------------------

Information included above in the Outlook section of Management's Discussion and
Analysis of Financial Condition and Results of Operations relating to
expectations as to earnings and gross margins, constitute "forward-looking"
statements, as that term is defined in the Private Securities Litigation Reform
Act of 1995. Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Some of
the factors that may affect future results are discussed below.

Although the company operates in a single industry segment, certain of its
products and product lines including the Quantox unit and the company's line of
parametric test systems, are sold into the semiconductor capital equipment
industry. Growth in demand for semiconductors and new technology drives the
demand for new semiconductor capital equipment. Although order growth in this
industry has recently increased, the sustainability of this trend cannot be
predicted.

In September 1996, the company announced its intention to relocate its Keithley
MetraByte operation to Cleveland from Taunton, Massachusetts, and form a new
business. This relocation could create a decline in sales of the company's
personal computer plug-in board business for several reasons,

                                       8

<PAGE>   9

including hiring and training qualified personnel to assume duties of employees
who will not relocate from Taunton, and assimilating and establishing sales
support and manufacturing processes in Cleveland to sell and produce the plug-in
board products.

The company's business relies on the development of new high technology products
and services to provide solutions to customer's complex measurement needs. This
requires anticipation of customers' changing needs and emerging technology
trends. The company must make long-term investments and commit significant
resources before knowing whether its predictions will eventually result in
products that achieve market acceptance. The company incurs significant expenses
developing new business opportunities that may or may not result in significant
sources of revenue and earnings in the future.

In many cases the company's products compete directly with those offered by
other manufacturers. If any of the company's competitors were to develop
products or services that are more cost-effective or technically superior,
demand for the company's product offerings could slow.

The company currently has ten subsidiaries or sales offices located outside the
United States, and non-U.S. sales made up 52 percent of total revenue for the
first half of fiscal 1997. The company's future results could be adversely
affected by several factors, including changes in foreign currency exchange
rates, changes in a country's or region's political or economic conditions,
trade protection measures, import or export licensing requirements, unexpected
changes in regulatory requirements and natural disasters.

                                       9

<PAGE>   10

                           PART II. OTHER INFORMATION
                           -------- -----------------

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

(a)        Exhibits.  The following exhibits are filed herewith:
           --------

          Exhibit
          Number                  Exhibit
          ------                  -------

          10(y)         First Amendment dated March 28, 1997, to the Credit
                        Agreement dated May 31, 1994.

          11            Statement Re Computation of Per Share Earnings

          27            Financial Data Schedule (EDGAR version only)



(b)        REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
               quarterly period ended March 31, 1997.

                                   SIGNATURES

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.

                                       KEITHLEY INSTRUMENTS, INC.
                                       (Registrant)

Date:  May 14, 1997             /s/  Joseph P. Keithley
                              -------------------------
                                    Joseph P. Keithley
                                    Chairman, President and Chief
                                      Executive Officer
                                    (Principal Executive Officer)

Date:  May 14, 1997             /s/  Ronald M. Rebner
                              -------------------------
                                    Ronald M. Rebner
                                    Vice President and Chief Financial Officer
                                    (Principal Financial and Accounting
                                      Officer)


                                    10