FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                  For the Quarterly Period Ended March 27, 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  33-96680



                                HERFF JONES, INC.
             (Exact Name of registrant as specified in its charter)


              INDIANA                                  35-1637714
--------------------------------------------------------------------------------
    (State or other Jurisdiction of      (I.R.S. Employer Identification Number)
    Incorporation or Organization)


4501 West 62nd Street, Indianapolis, Indiana            46268
--------------------------------------------------------------------------------
 (Address of principal executive offices)            (Zip Code)



                                 (317) 297-3740
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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          No  X   *
                                                         ------      ------


* Effective  January 30, 1998,  registrant  is no longer  subject to such filing
requirements.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Number of shares outstanding of the issuer's Common Stock as of May 7, 1999:


           Class
Common Stock, without par value                           9,522,114




<PAGE>




Voluntary filing - effective  January 30, 1998, Herff Jones, Inc. is not subject
to filing requirements of the Securities Exchange Act of 1934.


                                      INDEX

Part  I. - Financial Information                                        Page No.

       Consolidated Statement of Operations -
          Third Quarter and Nine Months Ended March 27, 1999
          and March 28, 1998                                                3

       Consolidated Balance Sheet -
          As of March 27, 1999, June 27, 1998 and March 28, 1998            4

       Consolidated Statement of Cash Flows -
          Nine Months Ended March 27, 1999 and March 28, 1998               5

       Notes to Consolidated Financial Statements                       6 - 8

       Management's Discussion and Analysis of
          Financial Condition and Results of Operations                9 - 13


Part II. - Other Information                                               14


Item 6.    Exhibits and Reports on Form 8-K






                                       2

<PAGE>

                         Part I - Financial Information
                                Herff Jones, Inc.
                      Consolidated Statement of Operations
            (Amounts in thousands of dollars, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                              Third Quarter Ended                     Nine Months Ended
                                                      ----------------------------------      ----------------------------------
                                                      March 27, 1999      March 28, 1998      March 27, 1999      March 28, 1998
                                                      --------------      --------------      --------------      --------------
                                                             
<S>                                                    <C>                 <C>                 <C>                 <C>        
Net sales                                              $    68,968         $    64,114         $   199,225         $   188,752

Cost of sales (excludes ESOP compensation)                  30,930              29,013              98,761              94,672

Selling, general, and administrative expenses
(excludes ESOP compensation)                                38,446              31,245             100,419              80,960

ESOP compensation                                            6,911               5,125              19,842              14,682

                                                       -----------         -----------         -----------         -----------
Income (loss) from operations                               (7,319)             (1,269)            (19,797)             (1,562)

Interest income                                                 12                   7                  95                  59

Interest expense                                             3,616               4,492              11,189              13,583
                                                       -----------         -----------         -----------         -----------

Income (loss) before income taxes 
and extraordinary item                                     (10,923)             (5,754)            (30,891)            (15,086)

Income taxes                                                 5,549               2,097              15,817               5,497
                                                       -----------         -----------         -----------         -----------

Net income (loss) before extraordinary item                 (5,374)             (3,657)            (15,074)             (9,589)

Extraordinary loss on early extinguishment 
of debt, net of taxes                                          ---                (743)               (685)               (743)
                                                       -----------         -----------         -----------         -----------

Net income (loss)                                      $    (5,374)        $    (4,400)        $   (15,759)        $   (10,332)
                                                       ===========         ===========         ===========         ===========

Earnings per common share:
Income (loss) before extraordinary item                $     (1.66)        $     (1.35)        $     (4.90)        $     (3.79)
Extraordinary item                                             ---               (0.28)              (0.22)              (0.28)
                                                       -----------         -----------         -----------         -----------
Net income (loss)                                      $     (1.66)        $     (1.63)        $     (5.12)        $     (4.07)
                                                       ===========         ===========         ===========         ===========

Weighted average number of common shares outstanding     3,242,130           2,700,878           3,077,028           2,535,606
                                                       ===========         ===========         ===========         ===========

</TABLE>

See accompanying notes to unaudited consolidated financial statements.




                                       3
<PAGE>


                               Herff Jones, Inc.
                           Consolidated Balance Sheet
             As of March 27, 1999, June 27, 1998, and March 28, 1998
                        (Amounts in thousands of dollars)
<TABLE>
<CAPTION>

                                                            (Unaudited)                        (Unaudited)
                                                           March 27, 1999     June 27, 1998   March 28, 1998
                                                           --------------     -------------   --------------
<S>                                                           <C>              <C>              <C>      
Assets:                                                                            
      Current Assets
        Cash and cash equivalents                             $   3,523        $   8,964        $   3,617
        Accounts receivable                                      64,545           64,689           58,625
        Inventories                                              60,206           39,526           58,484
        Prepaid expense                                           8,673            2,321            8,378
        Deferred income taxes                                    10,887           10,887            9,106
                                                              ---------        ---------        ---------
           Total Current Assets                                 147,834          126,387          138,210

      Non-Current Assets
        Property, plant, and equipment                          109,215           99,897          101,740
        Accumulated depreciation                                (59,266)         (51,029)         (51,059)
                                                              ---------        ---------        ---------
           Net Property, Plant, and Equipment                    49,949           48,868           50,681

        Deferred income taxes                                     1,668            1,668               --
        Deferred financing cost, net and other assets             3,548            3,454            3,925
                                                              ---------        ---------        ---------
           Total Non-Current Assets                              55,165           53,990           54,606

Total Assets                                                  $ 202,999        $ 180,377        $ 192,816
                                                              =========        =========        =========


Liabilities and Shareholders' Equity:
      Current Liabilities
        Trade accounts payable                                $   8,207        $   6,625        $   7,186
        Salaries and wages payable                                6,177            5,430            5,687
        Interest payable                                          1,288            4,190            1,712
        Customer deposits                                        58,803           18,861           53,369
        Commissions payable                                      14,830           22,064           12,685
        Income taxes accrued                                    (16,187)          12,199           (5,036)
        Other accrued liabilities                                 8,965            9,201            8,675
        Current portion of long term debt                        46,000           19,678           38,309
                                                              ---------        ---------        ---------
           Total Current Liabilities                            128,083           98,248          122,587

      Non-Current Liabilities
        Other                                                    17,919            6,232            4,679
        Long term debt                                          101,044          122,903          137,639
        Deferred income taxes                                        --               --              442
                                                              ---------        ---------        ---------
           Total Non-Current Liabilities                        118,963          129,135          142,760

Total Liabilities                                               247,046          227,383          265,347

Shareholders' Equity (Deficit)
      Common stock                                                5,679            5,683            5,691
      Retained earnings                                         127,909          137,885          117,034
      Deferred compensation                                    (177,542)        (189,927)        (194,055)
      Foreign currency translation                                  (93)             (60)             (29)
      Excess of cost over market, net (shares committed
      to be released)                                                --             (587)          (1,172)
                                                              ---------        ---------        ---------
Total Shareholders' Equity (Deficit)                            (44,047)         (47,006)         (72,531)

Total Liabilities and Shareholders' Equity (Deficit)          $ 202,999        $ 180,377        $ 192,816
                                                              =========        =========        =========

       
</TABLE>
See accompanying notes to unaudited consolidated financial statements.





                                       4
<PAGE>

                               Herff Jones, Inc.
                      Consolidated Statement of Cash Flows
                        (Amounts in thousands of dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                   Nine Months Ended
                                                                             -------------------------------
                                                                             March 27, 1999   March 28, 1998
                                                                             --------------   --------------
<S>                                                                             <C>              <C>      
Cash flows from operating activities:
     Net income (loss)                                                          $(15,759)        $(10,332)
        Adjustments to reconcile net income (loss) to net cash (used)
        provided by operating activities:
           Depreciation and amortization                                           6,974            5,747
           Amortization and write off of financing cost                              655              665
           ESOP compensation (before dividend exclusion)                          20,628           15,105
           Tax benefit (effect) of ESOP                                             (576)            (990)
           Long-term incentive plan expense                                        9,375            2,511
           Other                                                                     (33)             (31)
           (Gain) loss on disposal of property, plant and equipment, net               6               (1)
           Increase (decrease) in cash generated by changes in assets
           and liabilities
              Accounts receivable                                                    144           (2,916)
              Inventories                                                        (20,680)         (20,521)
              Prepaid expenses                                                    (6,352)          (6,562)
              Trade accounts payable                                               1,582            1,330
              Salaries and wages                                                     747              639
              Interest payable                                                    (2,902)          (3,370)
              Customer deposits                                                   39,942           33,861
              Commissions payable                                                 (7,234)          (4,179)
              Income taxes payable                                               (28,386)         (14,583)
              Deferred income taxes                                                   --               (1)
              Other accrued liabilities                                            2,076           (1,009)
              Other assets                                                          (749)              --
                                                                                --------         --------
        Total adjustments                                                         15,217            5,695
                                                                                --------         --------
Net cash (used) provided by operating activities                                    (542)          (4,637)

Cash flows from investing activities:
     Proceeds from disposal of property, plant and equipment                          16                2
     Capital expenditures                                                         (8,077)          (7,415)
                                                                                --------         --------
Net cash (used) provided by investing activities                                  (8,061)          (7,413)

Cash flows from financing activities:
     Redemption of common shares                                                      (4)             (12)
     Premium on stock redemption                                                    (345)            (186)
     Dividends declared                                                             (952)            (570)
     Increase (decrease) in revolver, net                                         33,635           27,269
     Decrease in long term debt                                                  (29,172)         (16,677)
                                                                                --------         --------
Net cash (used) provided by financing activities                                   3,162            9,824

Cash and cash equivalents:
     Net increase (decrease)                                                      (5,441)          (2,226)
     Beginning of period                                                           8,964            5,843
                                                                                --------         --------
     End of period                                                              $  3,523         $  3,617
                                                                                ========         ========

</TABLE>
See accompanying notes to unaudited consolidated financial statements.




                                       5
<PAGE>


                                Herff Jones, Inc.
              Notes to Unaudited Consolidated Financial Statements
                        Nine Months Ended March 27, 1999
                        (Amounts in thousands of dollars)

Note 1 - Adjustments
     The unaudited  consolidated financial statements presented herein have been
     prepared by the Company and  contain all  adjustments  (consisting  of only
     normal  recurring  adjustments)  necessary to present  fairly the Company's
     financial  position as of March 27, 1999, and the results of its operations
     and cash flows for the three and nine month  periods  ended March 27, 1999.
     These  unaudited  consolidated  financial  statements have been prepared in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial information and with the instructions to Form 10-Q and Rule 10-01
     of Regulation S-X. Accordingly,  they do not include all of the information
     and footnotes  required by generally  accepted  accounting  principles  for
     complete  financial   statements.   These  statements  should  be  read  in
     conjunction  with the consolidated  financial  statements and notes thereto
     included in the Company's Form 10-K for the year ended June 27, 1998.

     The  Company  utilizes a 52/53 week  fiscal  year for  accounting  purposes
     ending on the last  Saturday  in June.  Fiscal  1998 and  fiscal  1999 each
     contains 52 weeks.

     Because of the seasonality of the Company's business,  operating results on
     a quarterly  basis are not  indicative  of  operating  results for the full
     year.  Historically,  the third fiscal  quarter is the third  highest sales
     quarter,  while  the  fourth  fiscal  quarter  is  the  highest,  typically
     including over 40% of the year's sales.



Note 2 - Allowance for Doubtful Accounts and Returns

                          March 27, 1999    June 27, 1998    March 28, 1998
                          --------------    -------------    --------------
                             $4,226          $   5,744            $4,654


Note 3 - Inventories

    The components of inventory balances are summarized below:
<TABLE>
<CAPTION>


                                            March 27, 1999     June 27, 1998       March 28, 1998
                                            --------------     -------------       --------------
<S>                                              <C>               <C>               <C>    
Raw materials and supplies (includes gold)       $19,366           $17,023           $19,467
Work-in-process                                   29,010            14,169            27,446
Finished goods                                    11,830             8,334            11,571
                                                 -------           -------           -------
                                                 $60,206           $39,526           $58,484
                                                 =======           =======           =======
</TABLE>




                                       6
<PAGE>



<TABLE>
<CAPTION>

Note 4 - Financing
                                    March 27, 1999    June 27, 1998   March 28, 1998
                                    --------------    -------------   --------------
Long-Term Debt consists of the following:

<S>                                   <C>              <C>              <C>      
Senior Bank Facility (Revolver)       $  33,635        $   8,417        $  27,269

Senior Bank Facility (Term)              18,989           27,379           30,029

Senior Subordinated Notes                86,820           99,185          111,050

1994 Industrial Development
Revenue Bonds Due in 2019                 7,600            7,600            7,600
                                      ---------        ---------        ---------

                                        147,044          142,581          175,948

Less:  Current Portion                  (46,000)         (19,678)         (38,308)
                                      ---------        ---------        ---------

Long-Term Debt                        $ 101,044        $ 122,903        $ 137,640
                                      =========        =========        =========
</TABLE>




Note 5 - Earnings Per Share

Earnings  per  share  have  been  computed  by  dividing  income  (loss)  before
extraordinary  item,  extraordinary  item, and net income (loss) by the weighted
average number of allocated and committed to be released ESOP shares outstanding
for the period.

Note 6 - Statement of Shareholders' Equity
<TABLE>
<CAPTION>

                                         Common Stock                      Foreign                                       Total
                                      -------------------      Retained    Currency      Deferred       Excess Cost    Shareholders'
                                      Shares       Amount      Earnings   Translation  Compensation  Over Market, Net     Equity
                                      ------       ------      --------   -----------  ------------  ----------------  -------------
<S>                                  <C>            <C>       <C>            <C>         <C>            <C>              <C>      
Balance June 27, 1998                9,530,156      $5,683    $137,885       ($60)       ($189,927)     ($587)           ($47,006)
---------------------                                                                                                           
Stock Purchases                          -            -          -            -            -               -                 -
Tax effect of cost over market of
ESOP shares committed to be
released, net                            -            -          -            -            -             (576)               (576)
Foreign currency translation             
adjustment                               -            -          -            (28)         -               -                  (28)
Shares committed to be released          -            -          1,584         -            4,129       1,163               6,876
Net income for the quarter               -            -         (8,299)        -           -               -               (8,299)
                                     ---------      ------    --------      -----      ----------      -----             --------
Balance  September 26, 1998          9,530,156      $5,683    $131,170       ($88)      ($185,798)         -             ($49,033)
---------------------------          =========      ======    ========      =====      ==========      =====             ========
Stock Purchases                         (4,446)         (2)       (191)        -           -               -                 (193)
Dividends declared on allocated
shares ($.35/share)                      -            -           (952)        -           -               -                 (952)
Foreign currency translation             
adjustment                               -            -          -            (22)         -               -                  (22)
Shares committed to be released          -            -          2,748         -            4,128          -                6,876
Net income for the quarter               -            -         (2,086)        -           -               -               (2,086)
                                     ---------      ------    --------      -----      ----------      -----             --------
Balance  December 26, 1998           9,525,710      $5,681    $130,689      ($110)      ($181,670)         -             ($45,410)
--------------------------           =========      ======    ========     ======      ==========      =====             ========
Stock Purchases                         (3,596)         (2)       (154)        -           -               -                 (156)
Foreign currency translation
adjustment                               -            -          -             17          -               -                   17
Shares committed to be released          -            -          2,748        -             4,128          -                6,876
Net income for the quarter               -            -         (5,374)       -            -               -               (5,374)
                                     ---------      ------    --------      -----      ----------      -----             --------
Balance  March 27, 1999              9,522,114      $5,679    $127,909       ($93)      ($177,542)         -             ($44,047)
-----------------------              =========      ======    ========      =====      ==========      =====             ========

</TABLE>


                                       7
<PAGE>



Prior to  fiscal  1998 the cost of ESOP  shares  committed  to be  released  was
greater than the  estimated  fair value of such shares.  The excess of cost over
market was recorded as a charge to a separate component of shareholders' equity,
net of the related tax effect.  Beginning in fiscal  1998,  the  estimated  fair
value of ESOP shares  committed  to be  released  exceeded  cost.  The excess of
market over cost has been credited to equity,  net of the related tax effect, to
the extent of the  previous  net  charges  recorded.  Thereafter,  the excess is
credited to retained earnings.

Note 7 - Comprehensive Income

The comprehensive  income (loss) for the third quarter of fiscal 1999 and fiscal
1998 was  ($5,357)  and ($963),  respectively,  and for the first nine months of
1999 and 1998 was ($15,852) and ($10,396),  respectively.  These amounts include
the  reported  net loss  adjusted  by the  non-cash  effect  of  changes  in the
cumulative translation adjustment.

Note 8 - Extraordinary Item

During the first nine  months of fiscal  1999,  the  Company  repurchased  $12.4
million of its Senior Subordinated Notes from existing noteholders at a premium.
As a result,  the Company  recorded a $.7 million charge  reflecting the premium
cost and the  write  off of  previously  deferred  financing  costs,  net of the
applicable tax benefit of $.5 million for fiscal 1999 and $.4 million for fiscal
1998.

Note 9 - Income Taxes

Income taxes, excluding the extraordinary item, are computed on the basis of the
anticipated  annual effective tax rate of 50.8% for fiscal 1999. The significant
tax rate increase results from the effect of a rising estimated share value, and
the related  effect on ESOP  compensation,  for  financial  reporting  purposes.
Estimated market value per share is used in determining ESOP  compensation.  The
excess of market  value over cost per share is a permanent  non-deductible  item
for use in computing income taxes payable. Substantially, all of the increase in
the  estimated  effective  tax rate to slightly  over 51.0% for fiscal 1999 from
slightly  over 36.0% in fiscal  1998 is  attributable  to this item for both the
third quarter and the nine month period.


                                       8
<PAGE>


Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS


                                HERFF JONES, INC.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



OVERVIEW

         Herff Jones is one of the leading  manufacturers of recognition awards,
educational products and  graduation-related  products for the scholastic market
in the United States. Its product lines include class rings,  medals and awards,
diplomas  and  graduation  announcements  (also  referred  to as "fine  paper"),
yearbooks,  caps and gowns, school photography services and multimedia education
products. The Company historically has sold approximately 80% of its products to
the high school and elementary  market and  approximately 20% of its products to
the  college  and  commercial  or  non-scholastic  market  through a network  of
approximately  700  primarily  independent  sales  representatives.  The Company
believes  that  the  Herff  Jones  name is  widely  recognized  in  schools  and
universities nationwide.


RESULTS OF OPERATIONS

         The Company utilizes a 52/53 week year for accounting purposes.  Fiscal
1998 and fiscal 1999 each contains 52 weeks.  The  Company's  business is highly
seasonal. Historically, fiscal third quarter sales are the weakest period except
for the first  quarter.  However,  because of the  seasonality  of the Company's
business,  operating results on a quarterly basis are not necessarily indicative
of operating results for the full year.


         For the third quarter ended March 27, 1999 and March 28, 1998


         General. Net sales rose 7.6% to $69.0 million in fiscal 1999 from $64.1
million in fiscal 1998.  Operating profit decreased to a loss of $7.3 million in
fiscal 1999 from a loss of $1.3 million in fiscal 1998. Net income  decreased to
a loss of $5.4  million  in fiscal  1999 from a loss of $4.4  million  in fiscal
1998.

         Net Sales. Net sales increased $4.9 million or 7.6% to $69.0 million in
fiscal 1999 from $64.1 million in fiscal 1998. Such increases were due primarily
to modest price  increases  in all product  lines and unit growth in the Jewelry
and Fine  Paper  product  lines,  partially  offset by lower  unit  sales in the
Education product line.

         Cost Of Sales.  Cost of sales  increased  $1.9 million or 6.6% to $30.9
million in fiscal  1999 from $29.0  million in fiscal  1998.  Cost of sales as a
percentage of sales decreased to 44.8% in fiscal 1999 from 45.3% in fiscal 1998.
The decrease was due primarily to  improvement  in operating  performance in the
Jewelry product line.



                                       9
<PAGE>



         Selling,  General And  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased  $7.2  million or 23.0% to $38.4  million in
fiscal 1999 from $31.2  million in fiscal 1998.  Such expense as a percentage of
sales is 55.7% in fiscal 1999,  compared to 48.7% in fiscal  1998.  The increase
was predominantly  attributable to increases in Long-Term  Management  Incentive
Plan  expense  and  information  technology  consulting,   which  accounted  for
approximately 21% and 24%,  respectively,  of the increase,  coupled with higher
commission and selling expenses resulting from increased fiscal 1999 sales.

         ESOP  Compensation.  ESOP  compensation  increased $1.8 million to $6.9
million in fiscal 1999 from $5.1 million in fiscal 1998.  The ESOP  compensation
expense increase resulted from a 36.5% increase in the estimated market value of
the shares committed to be released.

         Interest  Expense.  Interest  expense  decreased  $.9  million  to $3.6
million  in  the  third  quarter  of  fiscal  1999  from  $4.5  million  in  the
corresponding period of fiscal 1998 due primarily to a reduction of average debt
outstanding.

         Income Tax  Benefit.  The third  quarter  income tax  benefit  was $5.5
million in fiscal  1999,  compared to $2.1  million in fiscal  1998,  due to the
higher fiscal 1999 loss before  income taxes and a higher fiscal 1999  effective
tax rate.  The  increase in the  effective  tax rate is a result of increases in
ESOP per share values.  Rising share values increase ESOP  compensation  expense
for financial reporting purposes;  however, ESOP compensation in excess of share
cost is not deductible for income tax purposes.

         Extraordinary  Item.  During  the third  quarter  of fiscal  1998,  the
Company  repurchased $9.0 million of its Senior Subordinated Notes from existing
noteholders at a premium. As a result, the Company recorded a $.7 million charge
reflecting the premium cost and the write off of previously  deferred  financing
costs,  net of the applicable tax benefit.  There was no repurchase  activity in
the third quarter of fiscal 1999.

         Net Loss. The third quarter net loss was $5.4 million, compared to $4.4
million in fiscal 1998.  The  unfavorable  comparison  was due  primarily to the
aforementioned  increases in selling,  general and  administrative  expenses and
higher  ESOP  compensation  cost,  partially  offset by the impact of the higher
effective  tax rate,  marginal  improvement  in gross  profit and the absence of
Senior Subordinated Note repurchases, all as discussed above.


         For the nine months ended March 27, 1999 and March 28, 1998


         General.  Net sales  rose 5.5% to $199.2  million  in fiscal  1999 from
$188.8 million in fiscal 1998.  Operating  losses  increased to $19.8 million in
fiscal 1999,  compared to $1.6 million in fiscal 1998.  Net losses  increased to
$15.8 million in fiscal 1999 from $10.3 million in fiscal 1998.

         Net sales.  Net sales increased $10.4 million or 5.5% to $199.2 million
in fiscal 1999. The increase was due primarily to modest price  increases in all
product  lines  and unit  growth  in the  Jewelry,  Cap & Gown,  Fine  Paper and
Photography product lines.

         Cost of Sales.  Cost of sales  increased  $4.1 million or 4.3% to $98.8
million in fiscal  1999 from $94.7  million in fiscal  1998.  Cost of sales as a
percentage of sales decreased to 49.6% in fiscal 1999 from 50.2% in fiscal 1998.
The decrease was due to improvement in operating performance in the Photography,
Education and Jewelry product lines.



                                       10
<PAGE>

         Selling,  General And  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased  $19.4 million or 24.0% to $100.4 million in
fiscal 1999 from $81.0  million in fiscal 1998.  The increase was  predominantly
attributable  to increases in Long-Term  Management  Incentive  Plan expense and
information  technology  consulting,  which accounted for  approximately 35% and
13%, respectively,  of the increase,  coupled with higher commission and selling
expenses resulting from increased fiscal 1999 sales.

         ESOP  Compensation.  ESOP compensation  increased $5.2 million to $19.8
million in fiscal 1999 from $14.6 million in fiscal 1998. The ESOP  compensation
expense increase resulted from a 36.5% increase in the estimated market value of
the shares committed to be released.

         Interest  Expense.  Interest  expense  decreased  $2.4 million to $11.2
million in fiscal 1999 from $13.6  million in fiscal  1998,  due  primarily to a
reduction of average debt outstanding.

         Income Tax  Benefit.  The income  tax  benefit  for the period is $15.8
million for fiscal 1999,  compared to $5.5  million in fiscal  1998,  due to the
increase in the loss before taxes and a higher  fiscal 1999  effective tax rate.
The  increase in the  effective  tax rate is a result of  increases  in ESOP per
share  values.  Rising  share  values  increase  ESOP  compensation  expense for
financial reporting purposes; however, ESOP compensation in excess of share cost
is not deductible for income tax purposes.

         Extraordinary  Item.  During the nine months ended March 27, 1999,  the
Company repurchased $12.4 million of its Senior Subordinated Notes from existing
noteholders  at a premium,  compared to a repurchase of $9.0 million  during the
same period in the prior year. As a result,  the Company  recorded a $.7 million
charge in each year  reflecting the premium cost and the write-off of previously
deferred financing costs, net of the applicable tax benefit.

         Net Loss.  The net loss for the period  increased to $15.8 million from
$10.3   million  in  fiscal  1998.   The  increase  was  due  primarily  to  the
aforementioned  increases  in  selling,  general  and  administrative  and  ESOP
compensation expenses, partially offset by the higher effective tax rate and the
impact of the marginally increased gross profit.



FINANCIAL CONDITION AND LIQUIDITY

          The Company's business is highly seasonal. Historically the first nine
months require the use of working capital due to losses from operations,  caused
by relatively  low shipping of product;  the  absorption of fixed costs that are
incurred evenly  throughout the year; the build up of inventories for the spring
shipments of graduation  related  products;  the payment of the Company's income
taxes from the previous  fiscal year; and the settlement of commission  accounts
with the Company's independent sales  representatives.  This is partially offset
by the  reduction  of accounts  receivable  resulting  from payment for products
shipped prior to graduations  in the fourth quarter of the previous  fiscal year
and the receipt of customer deposits for products that ship in the spring.

         The cash flow pattern and expectations of the Company's highly seasonal
business  result in the  classification,  at March 27, 1999, of $33.6 million of
the senior bank facility  (revolver) as a current  liability,  although  payment
within the next year is not  necessarily  required by the terms of the Company's
financing arrangements.

                                       11
<PAGE>


         Effective May 6, 1999,  the Company  restated its prior bank  revolving
credit facility. The term portion of the facility,  with $19.0 million remaining
outstanding,  was not changed. The amount available under the revolving facility
is $60.0 million through July 1999;  $90.0 million from August 1999 through July
2000;  and,  $110.0  million from August 2000 through May 6, 2004.  The restated
revolver is expected to provide adequate liquidity for the Company's  operations
at least through fiscal 2000,  including funds necessary to prepay or repurchase
Subordinated Notes from time-to-time.

         Capital  expenditures  were $8.1  million and $7.4 million in the first
nine months of fiscal 1999 and 1998,  respectively.  The increase from the prior
year is mostly related to information technology purchases.

         Other  non-current  liabilities  were $17.9  million at March 27, 1999,
compared to $4.7 million at March 28, 1998.  The increase is primarily due to an
increase in the  accrual of  expenses  for the  Long-Term  Management  Incentive
Plan expense.

         Income taxes  accrued are a negative  $16.2  million at March 27, 1999,
compared to $12.2  million  payable at June 27, 1998 and a negative $5.0 million
at March 28, 1998.  The decrease from June is the result of the payment of taxes
for the prior  fiscal  year,  coupled  with the  provision  for the tax  benefit
associated  with the seasonal losses this year. The increased tax benefit at the
end of the third  quarter,  compared to the prior year third  quarter end is the
result of the higher  pre-tax loss in this fiscal  year,  and an increase in the
effective tax rate for fiscal 1999.

         Cash used in operating  activities  was $.5 million for the nine months
ended March 27,  1999,  compared to $4.6 million for the nine months ended March
28, 1998, as described below.

         Net  losses  were  $15.8  million  in the nine  months of fiscal  1999,
compared to $10.3  million in fiscal 1998.  This was primarily  attributable  to
increases in Long-Term  Management  Incentive  Plan expense,  ESOP  compensation
expense and information  technology  consulting,  partially  offset by increased
gross profit and an increased tax benefit.

         Customer  deposits  increased $39.9 million in the first nine months of
fiscal 1999,  compared to $33.8 million in fiscal 1998. The larger  increase was
attributable  to increases in deposits for spring sales in the Yearbook and Fine
Paper product lines.

         Income taxes payable  decreased $28.4 million in fiscal 1999,  compared
to a decline  of $14.6  million  in  fiscal  1998.  The  decline  was  primarily
attributable  to the  increased  pre-tax  loss of the  Company  in fiscal  1999,
compared to the pre-tax loss in fiscal 1998,  the higher  effective  tax rate as
previously  discussed,  and higher tax  payments in fiscal 1999  relating to the
fiscal 1998 earnings improvement over fiscal 1997.

         Net cash  provided by financing  activities  was $3.2 million in fiscal
1999,  compared to $9.8 million in fiscal 1998. During the nine months of fiscal
1999, the Company made its scheduled  payment on long-term debt and  repurchased
$12.4  million of Senior  Subordinated  Notes with funds drawn on its  Revolving
Credit Agreement.


                                       12
<PAGE>




YEAR 2000

         In fiscal 1994, the Company  adopted the client server  platform as its
information  technology  strategy  for the  future.  Development  of the initial
client server business system was begun at that time and was completed in fiscal
1998.  In  fiscal  1996,  the  Company  began  addressing  the year  2000  issue
specifically.  Other business  systems which required  replacement in the normal
course of business or which would not be year 2000  compliant  were  identified.
Four  business  systems  fell into this class and  installation  of  replacement
systems was scheduled for completion in fiscal 1999. The implementation plan for
these four systems is slightly behind  schedule,  but completion by December 31,
1999 is anticipated.  The company  believes its most significant risk associated
with the year 2000 lies in the completion of the four business systems scheduled
for completion prior to December 31, 1999.

         Information technology systems that won't be converted to client server
by the end of  fiscal  1999 have  either  been  modified  to make them year 2000
compliant or have been replaced.

         Non-information  technology  systems are under a review  program by the
Resident Manager at each facility. All locations are anticipated to be year 2000
compliant by December, 1999 with compliant systems.

         The  Company  maintains   material  business   relationships  with  its
suppliers of raw materials,  services and utilities.  The Company will conduct a
survey of its critical  suppliers,  but believes  most of its raw  materials are
generic enough to allow for easy substitution. However, if alternative suppliers
are  unable  to meet the  Company's  delivery  requirements,  or if its  utility
suppliers are unable to operate,  the Company's  business or operations could be
adversely affected.

         The total year 2000 project cost is approximately  $1.5 million,  which
includes  $1.0 million to purchase and  implement new hardware and software that
was capitalized during fiscal 1998 and $.5 million that was expensed as incurred
in fiscal 1998.  Spending on the new systems scheduled for installation prior to
December 31, 1999 relates to on-going technology upgrades and is not viewed as a
response to the year 2000 issue.

         The Company is currently  considering  contingency planning which would
address business  operations if the systems are not completed by January 2000. A
contingency  plan would be  implemented  at such time as it is  determined  that
installation  of the replacement  systems will not be completed  before December
31, 1999. Regarding  contingency plans for its material supplier  relationships,
the Company  believes the nature of its  business and  diversity of its supplier
base minimizes the risk to its operations;  however, all significant vendors are
being contacted regarding their preparedness for operations after December 1999.

         The  foregoing   information   regarding  year  2000  preparations  and
compliance  are  forward-looking  statements  subject to important  factors that
could cause management's expectations to be materially inaccurate.  Such factors
include  unpredictability  of the  timing  of full  implementation  of year 2000
compliant  systems and the year 2000 compliant status of information  systems of
the Company's existing and potential alternative suppliers.


                                       13
<PAGE>
                           PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a)   The following Exhibits are filed as a part of this report:

      None.


(b)   Reports on Form 8-K;

      No reports on Form 8-K were filed  during the quarter for which the report
      is filed.

                                    SIGNATURE

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



                                                HERFF JONES, INC.
                                                (Registrant)


                                                 By:  /s/ Lawrence F. Fehr
                                                      --------------------------
                                                      Lawrence F. Fehr
                                                      Vice President and
                                                      Chief Financial Officer



May 11, 1999