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 December 28, 1996

                                       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
                    (Address of principal executive offices)

                                     46268
                                   (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        X               No


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  February
10, 1997:

           Class

Common Stock, without par value                                        9,612,563



<PAGE>

                                     INDEX


Part  I. - Financial Information                                        Page No.

     Condensed Consolidated Statement of Operations -
              Second Quarter Ended December 28, 1996 
              and December 30, 1995                                          3

     Condensed Consolidated Balance Sheet -
              As of December 28, 1996, June 29, 1996 
              and December 30, 1995                                          4

     Condensed Consolidated Statement of Cash Flows -
              Second Quarter Ended December 28, 1996 
              and December 30, 1995                                          5

     Notes to Condensed 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







<PAGE>


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

<TABLE>
<CAPTION>
                                                       Second Quarter Ended                            Six Months Ended
                                              ----------------------------------------     ----------------------------------------
                                              December 28, 1996      December 30, 1995     December 28, 1996      December 30, 1995
                                              -----------------      -----------------     -----------------      -----------------
<S>                                             <C>                    <C>                    <C>                    <C>        
Net sales                                       $    68,288            $    56,275            $   114,944            $    99,818

Cost of sales 
(excludes ESOP compensation)                         33,951                 27,637                 64,073                 53,976

Selling, general, and                                                                                             
     administrative expenses                                                                                           
     (excludes ESOP compensation)                    23,594                 20,807                 44,035                 39,985

ESOP compensation                                                                                                 
     Current year service                             3,663                  3,166                  7,721                  5,926
     Prior year service                                  --                     --                     --                  4,033
                                                  ---------              ---------              ---------              ---------
Income (loss) from operations                         7,080                  4,665                   (885)                (4,102)

Interest income                                           3                     --                      8                    615
Interest expense                                      5,135                  5,344                 10,112                  8,848
                                                  ---------              ---------              ---------              ---------
Income (loss) before income taxes and                                                                             
     extraordinary item                               1,948                   (679)               (10,989)               (12,335)

Income taxes                                           (692)                   259                  3,901                  4,700
                                                  ---------              ---------              ---------              ---------
Net income (loss) before                                                                                          
     extraordinary item                               1,256                   (420)                (7,088)                (7,635)

Extraordinary item: Prepayment fee on the                                                                         
     senior ESOP notes retirement, less 
     applicable tax benefit of $3,621                    --                     --                     --                 (5,884)

Net income (loss)                               $     1,256            $      (420)           $    (7,088)           $   (13,519)
                                                  =========              =========              =========              =========

Income (loss) per common share                  $      0.63            $     (0.29)           $     (3.66)           $     (9.79)
                                                  =========              =========              =========              =========
Weighted average number of                                                                                        
     common shares outstanding                    2,007,307              1,452,569              1,935,281              1,380,544
                                                  =========              =========              =========              =========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

<PAGE>

 
                                Herff Jones, Inc.
                      Condensed Consolidated Balance Sheet
                     As of December 28, 1996, June 29, 1996,
                             and December 30, 1995
                        (Amounts in thousands of dollars)
 
 
                                    (Unaudited)                 (Unaudited)
                                    December 28,    June 29,    December 30, 
                                        1996          1996         1995
                                    ---------    ---------      ---------
Assets:
     Current Assets
     Cash and cash equivalents      $   2,638    $   8,680      $   2,653
     Accounts receivable               40,168       54,066         32,125
     Inventories                       44,585       36,941         40,994
     Prepaid expens                     7,859        2,651          6,256
     Deferred income taxes              5,321        5,321          2,412
                                    ---------    ---------      ---------
          Total Current Assets        100,571      107,659         84,440
Non-Current Assets                                             
     Property, plant, and                                      
     equipment                         90,602       87,741         74,383
     Accumulated depreciation         (41,741)     (38,700)       (35,942)
                                    ---------    ---------      ---------
        Net Property, Plant,                                      
        and Equipment                  48,861       49,041         38,441
                                                               
     Deferred financing cost,                                  
     net and other assets               5,122        5,603          6,460
                                    ---------    ---------      ---------
          Total Non-Current Assets     53,983       54,644         44,901
Total Assets                        $ 154,554    $ 162,303      $ 129,341
                                    =========    =========      =========
                                                             

Liabilities and Shareholders' Equity:
     Current Liabilities
       Trade accounts payable       $   5,547    $   7,541    $   2,911
       Salaries and wages payable       5,126        4,068        3,289
       Interest payable                 5,082        5,157        4,896
       Customer deposits               32,355       19,856       27,045
       Commissions payable              4,295       14,857        2,616
       Income taxes accrued            (4,236)       3,200       (8,255)
       Other accrued liabilities        8,759        9,749        9,879
       Current portion of
          long-term debt               35,097       22,315       32,057
                                    ---------    ---------      ---------
            Total Current Liabilities  92,025       86,743       74,438

     Non-Current Liabilities
       Other                            2,149        2,247        1,987
       Long-term debt                 160,278      173,574      175,850
       Deferred income taxes             (211)          81         (402)
                                    ---------    ---------      ---------
          Total Non-Current
            Liabilities               162,216      175,902      177,435

          Total Liabilities           254,241      262,645      251,873

     Shareholders' Equity (Deficit)
       Common stock                     5,728        5,728        5,737
       Retained earnings              112,056      119,525      104,955
       Deferred compensation         (214,696)    (222,953)    (231,195)
       Foreign currency translation         8           11           11
       Excess of cost over market
       (shares committed to be 
          released)                    (2,783)      (2,653)      (2,040)
                                    ---------    ---------      ---------
Total Shareholders' 
     Equity (Deficit)                 (99,687)    (100,342)    (122,532)
Total Liabilities and Shareholders' 
     Equity (Deficit)                $154,554     $162,303     $129,341
                                     ========     ========     ========

     
                                                   

See accompanying notes to unaudited condensed consolidated financial
statements.                         
<PAGE>

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

                                                       Six Months Ended
                                                  ------------------------------
                                                  December 28,      December 30,
                                                      1996              1995 
                                                  ------------      ------------
Cash flows from operating activities:
Net loss                                           $  (7,088)         $ (13,519)
  Adjustments to reconcile net 
     loss to net cash  (used)          
     provided by operating activities:                                   
  Depreciation                                                        
     and amortization                                  3,428              2,654
  Amortization and write                                              
     off of financing cost                               481                448
  ESOP compensation                                                   
     (before dividend exclusion)                       8,057             10,155
  Tax benefit of ESOP shares                                          
     (cost over market)                                   70              1,255
  Other                                                   (3)                 5
  (Gain) loss on disposal of property,                                
     plant and equipment, net                        (4)                21
  Increase (decrease) in cash                                         
     generated by changes in                                             
     assets and liabilities                                              
  Accounts receivable                                 13,898             19,983
  Inventories                                         (7,644)            (7,674)
  Prepaid expenses                                    (5,208)            (4,760)
  Trade accounts payable                              (1,994)            (1,494)
  Salaries and wages                                   1,058               (550)
  Interest payable                                       (75)             3,735
  Customer deposits                                   12,499             12,159
  Commissions payable                                (10,562)           (12,066)
  Income taxes payable                                (7,436)           (18,683)
  Deferred income taxes                                 (292)                -- 
  Other accrued liabilities                           (1,088)              (731)
  Other assets                                            --                (89)
                                                   ---------          ---------
     Total adjustments                                 5,185              4,368
                                                   ---------          ---------
Net cash (used) provided by operating activities   $  (1,903)         $  (9,151)

Cash flows from investing activities:                               
  Proceeds from disposal of property,                                 
     plant and equipment                                  10                 13
  Capital expenditures                                (3,254)            (2,546)
  Sale of marketable securities                           --              6,219
                                                   ---------          ---------
Net cash (used) provided                                            
     by investing activities                       $  (3,244)         $   3,686
                                                                    
Cash flows from financing activities:                               
  Purchase of shares by the ESOP trust                    --           (188,278)
  Redemption of common shares                             --                 (8)
  Premium on stock redemption                             --                (74)
  Dividends declared                                    (381)            (2,687)
  Increase (decrease) in revolver, net                10,122            (14,089)
  Recapitalization financing cost                         --             (5,854)
  Payment of long-term debt                           (4,679)            (2,250)
  Advance term payment                                (5,957)                --
  New borrowings                                          --            216,646
  Prepayment of senior ESOP notes                         --            (69,826)
                                                   ---------          ---------
Net cash (used) provided in financing                               
     activities                                    $    (895)         $ (66,420)
  Cash and cash equivalents:                                          
  Net increase (decrease)                             (6,042)           (71,885)
  Beginning of period                                  8,680             74,538
                                                   ---------          ---------
  End of period                                    $   2,638          $   2,653
                                                   =========          =========
                                                                    
                                                              
See accompanying notes to unaudited condensed consolidated financial statements.

<PAGE>

                         Part I - Financial Information
         Notes to Unaudited Condensed Consolidated Financial Statements
                       Six Months Ended December 28, 1996
                       (Amounts in thousands of dollars)

Note 1 - Adjustments 

The unaudited condensed  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 December 28, 1996, and the results of its
operations  for the three and six month  periods  ended  December 28, 1996,  and
December 30, 1995,  and cash flows for the six month periods ended  December 28,
1996, and December 30, 1995. These unaudited  condensed  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.
 
The  significant  accounting  policies  followed by the Company are set forth in
Note (3) of the Company's  consolidated  financial statements for the year ended
June 29, 1996,  which have been  included in the  Company's  Form 10-K which was
filed on September 24, 1996. Statement of Financial Accounting Standards No. 121
Accounting  for  Impairment  of Long Lived  Assets and Long Lived  Assets to be
Disposed of  was adopted by the Company on June 30, 1996 with no material impact
on results of operations.  The Company has restated  certain prior year items to
conform to the current year presentation.

The Company utilizes a 52/53 week fiscal year for accounting  purposes ending on
the last Saturday in June.  Fiscal 1996  contained 53 weeks with the  additional
week included in the first quarter  ended  September 30, 1995.  Fiscal 1997 will
contain 52 weeks.

Because of the  seasonality of the Company's  business,  operating  results on a
quarterly or six month basis are not necessarily indicative of operating results
for the full year.  Historically,  sales in the second fiscal quarter are at the
second  highest  level of the  year,  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

     December 28, 1996             June 29, 1996          December 30, 1995
     -----------------             -------------          -----------------
       $  2,841                     $  4,883                 $  1,052


Note 3 - Inventories

The components of inventory balances are summarized below:

                                  December 28,       June 29,     December 30,
                                       1996           1996            1995
                                     -------        -------         -------
Raw materials and supplies                                       
     (includes gold)                 $19,863        $16,017         $17,280
Work-in-process                       15,116         13,008          14,712
Finished goods                         9,606          7,916           9,002
                                     -------        -------         -------
                                     $44,585        $36,941         $40,994
                                     =======        =======         =======
                                                              
<PAGE>


Note 4 - Financing
                                    December 28,       June 29,     December 30,
                                       1996             1996            1995
                                  ------------    ------------    ------------
Long-Term Debt consists 
of the following:

Senior Bank Facility (Revolver)   $     25,161    $     15,039    $     22,557

Senior Bank Facility (Term)             42,614          53,250          57,750

Senior Subordinated Notes              120,000         120,000         120,000

1994 Industrial Development
Revenue Bonds Due in 2019                7,600           7,600           7,600
                                  ------------    ------------    ------------
                                       195,375         195,889         207,907

Less: Current Portion                  (35,097)        (22,315)        (32,057)
                                  ------------    ------------    ------------
Long-Term Debt                    $    160,278    $    173,574    $    175,850
                                  ============    ============    ============



Note 5 - Common Stock
                                    December 28,       June 29,     December 30,
                                       1996             1996            1995
                                  ------------    ------------    ------------
Common Shares
Authorized                          16,500,000      16,500,000      16,500,000
Outstanding                          9,618,996       9,618,996       9,636,923


Pursuant  to the  August  22,  1995  recapitalization  plan in  which  the  ESOP
purchased   substantially   all  remaining   shares  of  common  stock  held  by
shareholders  other than the ESOP, the weighted  average number of common shares
outstanding  was calculated on a pro forma basis  assuming the  recapitalization
occurred at June 25, 1995. The number of common shares  outstanding  immediately
after the recapitalization  took place was 1,236,494.  This number has been used
as the pro forma weighted  average number of common shares  outstanding  for the
first one and a half months of fiscal 1996.

The actual  weighted  average  number of common shares  outstanding  for the six
months ended December 30, 1995, was 3,722,253.  The actual loss per common share
for the six months ended December 30, 1995, was ($3.63).

<PAGE>

Note 6 - Statement of Shareholders' Equity

<TABLE>
<CAPTION>
                                                                              Foreign                                     Total
                                            Common Stock         Retained    Currency      Deferred      Excess Cost   Shareholders'
                                       Shares       Amount       Earnings   Translation  Compensation    Over Market     Equity    
                                       ------       ------       --------   -----------  ------------    -----------     ------    
<S>          <C> <C>                 <C>              <C>       <C>             <C>      <C>              <C>           <C>       
Balance June 29, 1996                9,618,996        $5,728    $119,525        $11      ($222,953)       ($2,653)      ($100,342)
Tax benefit of cost over market of                                                                                      
ESOP shares committed to be                                       
     released                           -             -           -              -               -             36              36
Foreign currency translation                     
adjustment                              -             -           -               1              -              -               1
Shares committed to be released         -             -           -               -          4,129           (100)          4,029   
Net loss for the quarter                -             -          (8,344)          -              -              -          (8,344)
                                     ---------       ------    --------         ---      ---------        -------       --------- 
Balance September 28, 1996           9,618,996       $5,728    $111,181         $12      ($218,824)       ($2,717)      ($104,620)
                                     =========       ======    ========         ===      =========        =======       ========= 
Tax benefit of cost over market of                                                                                      
ESOP shares committed to be                                       
     released                            -             -              -           -              -             34             34    
Dividends declared ($.25/shares)         -             -           (381)          -              -              -           (381) 
Foreign currency 
     translation adjustment              -             -              -          (4)             -              -             (4)
Shares committed to be released-         -             -              -           -          4,128           (100)         4,028
Net income for the quarter               -             -          1,256           -              -              -          1,256 
                                     ---------       ------    --------         ---      ---------        -------       --------- 
Balance  December 28, 1996           9,618,996       $5,728    $112,056        $  8      ($214,696)       ($2,783)    ($  99,687)   
                                     =========       ======    ========         ===      =========        =======       ========= 

</TABLE>

Excess of cost over market  represents  the  cumulative  difference  between the
estimated  market value of shares committed to be released and the cost of those
shares to the ESOP, net of tax effects.

<PAGE>


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  nonscholastic  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 1996
contained 53 weeks and the  additional  week was  included in the first  quarter
ended  September  30,  1995.  Fiscal 1997 will contain 52 weeks.  The  Company's
business is highly  seasonal.  Historically,  sales in the second fiscal quarter
are at the second highest level of the year. However, because of the seasonality
of the Company's  business,  operating results on a quarterly or six month basis
are not necessarily indicative of operating results for the full year.


     For the second quarter ended December 28, 1996 and December 30, 1995.

     General.  Net sales rose 21.3% to $68.3  million in fiscal  1997 from $56.3
million in fiscal  1996.  Operating  income  increased to $7.1 million in fiscal
1997 from $4.7 million in fiscal 1996.  Net income  increased to $1.3 million in
fiscal 1997 from a net loss of $.4 million in fiscal 1996.

     Net Sales.  Net sales  increased $12.0 million or 21.3% to $68.3 million in
fiscal 1997 from $56.3 million in fiscal 1996.  Such increases were due to sales
from  Delmar  (Delmar  was  acquired  as of April  29,  1996)  of $6.3  million,
increases in the Jewelry and Education product lines and additional increases in
the Yearbook and  Photography  product  lines.  Increases  were due primarily to
modest price increases and small unit growth.

     Cost Of  Sales.  Cost of sales  increased  $6.3  million  or 22.8% to $33.9
million  in fiscal  1997 from  $27.6  million  in fiscal  1996,  primarily  as a
function of increased sales and costs associated with Delmar. Cost of sales as a
percentage of sales is 49.7% in fiscal 1997 compared to 49.1% in fiscal 1996.

<PAGE>

     Selling,  General  And  Administrative   Expenses.   Selling,  general  and
administrative  expense  increased  $2.8  million  or 13.4% to $23.6  million in
fiscal 1997 from $20.8 million in fiscal 1996. The increase was  attributable to
an increase in the Company's  commission  expense  resulting  from increased net
sales  in  fiscal  1997   coupled  with   increases  to  selling,   general  and
administrative  expense  spending  related  to  Delmar.  Selling,   general  and
administrative  expense as a percentage of sales was 34.6% in fiscal 1997,  down
from 37.0% in fiscal 1996.  There are no  commissions  associated  with Delmar's
photography dealer sales, which contributed to the decline in this relationship.
Further,  the fiscal 1996 restructuring  program at one of the Scholastic plants
has reduced  general and  administrative  expenses in fiscal 1997 in  comparison
with the prior year.

     ESOP  Compensation.  ESOP  compensation  is $3.7  million  in  fiscal  1997
compared to $3.2 million in fiscal 1996. ESOP compensation expense increased $.5
million due to an increase in the estimated market value of the shares committed
to be released, partially offset by a dividend in the current quarter. There was
no such dividend in the prior year quarter.

     Income from  Operations.  Operating  income  increased $2.4 million to $7.1
million  in fiscal  1997 from $4.7  million in fiscal  1996.  The  increase  was
predominantly  due to  increases  in the  operating  income from Jewelry and the
Education product lines  attributable to increased margins and stronger sales in
those lines described above.

     Interest Expense. Interest expense decreased $.2 million to $5.1 million in
the second quarter of fiscal 1997 from $5.3 million in the corresponding quarter
of  fiscal  1996  due to  repayment  of debt  incurred  in  connection  with the
recapitalization.

     Income Tax. The second  quarter  income tax  increased to an expense of $.7
million in fiscal  1997 from a benefit of $.3  million  in fiscal  1996,  due to
income before taxes and  extraordinary  item increasing $2.6 million,  partially
offset by a lower fiscal 1997 effective tax rate.

     Net Income  (Loss).  The second  quarter net income  increased $1.7 million
from a loss of $.4  million  in  fiscal  1996 to a net  income of $1.3 in fiscal
1997.  The  increase was  predominantly  due to increases in the Jewelry and the
Education product lines.

     For the six months ended December 28, 1996 and December 30, 1995.

     General.  Net sales rose 15.2% to $114.9  million in fiscal 1997 from $99.8
million  in fiscal  1996.  Operating  losses  were $.9  million  in fiscal  1997
compared to of $4.1  million in fiscal  1996.  Net losses  were $7.1  million in
fiscal 1997 compared to a net loss before the extraordinary item of $7.6 million
in fiscal  1996.  Net losses  after the  extraordinary  item  decreased  to $7.1
million in fiscal 1997 from $13.5 million in fiscal 1996.

     Net Sales.  Net sales increased $15.1 million or 15.2% to $114.9 million in
fiscal 1997 from $99.8 million in fiscal 1996 due primarily to sales from Delmar
of $10.7 million  (Delmar was acquired as of April 29,  1996),  increases in the
Jewelry and Education  product lines,  and additional  increases in the Yearbook
and  Photography  product  lines.  Increases  were due primarily to modest price
increases and small unit growth.

     Cost Of Sales.  Cost of sales  increased  $10.1  million  or 18.7% to $64.1
million  in fiscal  1997 from  $54.0  million  in fiscal  1996,  primarily  as a
function of increased sales and costs associated with Delmar. Cost of sales as a
percentage of sales increased to 55.7% in fiscal 1997 from 54.1% in fiscal 1996,
primarily because of higher manufacturing costs at Delmar.

<PAGE>

     Selling,  General  And  Administrative   Expenses.   Selling,  general  and
administrative  expense  increased  $4.0  million  or 10.1% to $44.0  million in
fiscal  1997 from $40.0  million in fiscal  1996.  The  increase  was  primarily
attributable  to increases in the Company's  commission  expense  resulting from
increased net sales in fiscal 1997,  coupled with increases in selling,  general
and   administrative   expense   related  to  Delmar.   Selling,   general   and
administrative  expense as a  percentage  of sales  decreased to 38.3% in fiscal
1997,  from  40.1% in fiscal  1996.  There are no  commissions  associated  with
Delmar's  photography  dealer sales,  which  contributed  to the decline in this
relationship.  Further,  the  fiscal  1996  restructuring  program at one of the
Scholastic plants has reduced general and administrative expenses in fiscal 1997
in comparison with the prior year.

     ESOP Compensation. ESOP compensation decreased $2.2 million to $7.7 million
in  fiscal  1997  from  $9.9  million  in  fiscal  1996.  The  August  22,  1995
recapitalization  resulted in a significant  increase in the number of shares to
be allocated to employee  accounts  effective each December 31 from 1995 through
2009.  The shares  allocated  effective  December  31,  1995  related to service
rendered by employees  during calendar 1995. ESOP  compensation  expense for the
six months ended  December 30, 1995 includes  $4.0 million  relating to employee
service  rendered in fiscal 1995 and $5.9 million  relating to employee  service
rendered in fiscal 1996.  The increase in the current year service  expense over
the  comparable  prior year  amount  results  primarily  from an increase in the
market value of the shares committed to be released.

     Loss from  Operations.  Operating  losses  were $.9  million in fiscal 1997
compared to $4.1 million in fiscal 1996. The decrease was  predominantly  due to
increased profitability in the Jewelry and Education product lines, coupled with
a decrease in ESOP compensation expense as discussed above,  partially offset by
losses related to Delmar.

     Net Interest.  Net interest expense increased $1.9 million to $10.1 million
in the first six months of fiscal  1997 from $8.2  million in the  corresponding
six months of fiscal 1996,  due to a full six months in fiscal 1997 of increased
debt associated with the recapitalization.

     Income Tax  Benefit.  The income tax benefit  decreased  to $3.9 million in
fiscal  1997  compared  to $4.7  million in fiscal 1996 due to a decrease in the
loss before income taxes and the extraordinary item, coupled with a lower fiscal
1997 effective tax rate.

     Extraordinary Item. In fiscal 1996 the Company incurred a prepayment fee of
$5.9 million, net of the applicable tax benefit, on the retirement of the Senior
ESOP Notes.

     Net Income  (Loss).  Net losses  decreased  $6.4  million to a loss of $7.1
million in fiscal 1997 from a loss of $13.5 in fiscal 1996.  The decreased  loss
was  primarily  attributable  to  increased  profitability  in the  Jewelry  and
Education product lines,  coupled with a decrease in ESOP  compensation  expense
and the fiscal 1996 extraordinary  item as discussed above,  partially offset by
seasonal  losses  related  to  Delmar,  increased  interest  expense  due to the
recapitalization  debt being  outstanding  for a longer period,  and the virtual
elimination of interest income in the current year.


<PAGE>

FINANCIAL CONDITION AND LIQUIDITY

     The  Company's  business  is highly  seasonal.  Historically  the first six
months requires 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
pre-Christmas  photography and class ring activity; 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.

     Beginning  in the first  quarter  of  fiscal  1996,  the  August  22,  1995
recapitalization significantly changed the Company's financial condition, adding
substantial  indebtedness  and  resulting  in  a  deficit  shareholders'  equity
position.  The cash  flow  pattern  and  expectations  of the  Company's  highly
seasonal business result in the  classification,  at December 28, 1996, of $25.2
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.

     Capital  expenditures  were $3.3  million and $2.5 million in the first six
months of fiscal 1997 and 1996,  respectively.  The increase over the prior year
is attributable to increased  expenditures  for equipment in the Photography and
Yearbook product lines.

     A 25 cents per share  dividend was paid during the second quarter of fiscal
1997, totaling $2.4 million, which was less than the 35 cents per share dividend
paid in the first quarter of fiscal 1996. Substantially all of this dividend was
paid to the ESOP trust,  which used the funds to make  payments on the loan from
the Company.

     Income  taxes  accrued are a negative  $4.2  million at  December  28, 1996
compared  to $3.2  million  at June 29,  1996 and a  negative  $8.3  million  at
December 30, 1995.  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 decreased tax benefit at the
end of the second  quarter  compared to the prior year second quarter end is the
result of the lower  pre-tax  loss in this fiscal year  compared to the combined
pre-tax loss and pre-tax extraordinary item in the prior fiscal year.

     For the six months  ended  December  28,  1996,  cash and cash  equivalents
declined $6.0 million to $2.6 million as compared to a decrease of $71.9 million
to $2.7 million for the six months ended  December 30, 1995.  The  substantially
greater  decline  in the first six  months of 1996 was  primarily  the result of
funding the ESOP trust's  purchase of  substantially  all remaining  outstanding
shares of the Company's stock in the first quarter of fiscal 1996.

     Cash used in operating  activities was $1.9 million in the six months ended
December 28, 1996, compared to $9.2 million in the six months ended December 30,
1995, as described below.

     Net losses were $7.1  million in the six months of fiscal 1997  compared to
$13.5 million in fiscal 1996.  This was primarily  attributable  to increases in
the  Jewelry  and  Education  product  lines,  coupled  with a decrease  in ESOP
compensation expense and the fiscal 1996 extraordinary item, partially offset by
increased  seasonal losses related to Delmar,  increased interest expense due to
the recapitalization debt being outstanding for a longer period, and the virtual
elimination of interest income in the current year.

     Accounts  receivable  decreased  $13.9  million  in the first six months of
fiscal 1997 compared to a decline of $20.0 million in fiscal 1996. The reduction
in the decline was  primarily the result of increased  second  quarter sales and
additional  accounts  receivable  balances  related  to  Delmar in the first six
months of fiscal 1997 compared with fiscal 1996.


<PAGE>

     Customer deposits decreased $12.5 million in the first six months of fiscal
1997 compared to a decline of $12.2 million in fiscal 1996.  The larger  decline
was  attributable to increased  Delmar sales activity in the first six months of
fiscal 1997.

     Income  taxes  accrued  decreased  $7.4  million in the first six months of
fiscal 1997 compared to a decline of $18.7  million in fiscal 1996.  The decline
was primarily  attributable to the decreased  pre-tax loss of the Company in the
first six  months of fiscal  1997  compared  to the  combined  pre- tax loss and
pre-tax  extraordinary  item in fiscal  1996.  Additionally,  the payment of the
previous  year tax  liability  in fiscal 1997 was lower than the payment made in
fiscal 1996 related to the 1995 tax liability.

     Net cash used by investing  activities  was $3.2 million for the six months
ended  December  28, 1996  compared to $3.7  million  provided in the six months
ended  December  30, 1995.  The primary  reason for the decrease was the sale of
$6.2 million of marketable securities in fiscal 1996.

     Net cash used in  financing  activities  was $.9  million in the six months
ended  December 28, 1996  compared to $66.4 million used in the six months ended
December 30, 1995. The decrease was  attributable to the fiscal 1996 purchase of
substantially  all the  remaining  shares of Herff Jones stock by the ESOP trust
for $188.3 million,  partially  offset by the related net increase in borrowings
of $131.0 million. In addition,  there were higher seasonal borrowings under the
revolver  in fiscal  1997 of $10.1  million,  partially  offset by  payments  on
long-term debt of $10.6 million.

     Deferred Compensation at December 28, 1996 decreased to $214.7 million from
$223.0  million at June 29, 1996 and $231.2  million at December 30,  1995.  The
decrease is the result of recording ESOP shares committed to be released.

<PAGE>

                          PART II - OTHER INFORMATION

Exhibits and Reports on Form 8-K

Item 6.

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

     Exhibit 27 Financial Data Schedule

(b)  Reports on Form 8-K;
     No reports on Form 8-K were filed during the quarter for which the report
     is filed.

<PAGE>



                                   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



February 10, 1997