<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


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


     For the Quarter Ended September 30, 1998 Commission File No. 001-10887



                               JENNY CRAIG, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



           DELAWARE                                    33-0366188
--------------------------------------------------------------------------------
   (State of Incorporation)                 (I.R.S. Employer Identification No.)



        11355 NORTH TORREY PINES ROAD, LA JOLLA, CA           92037        
--------------------------------------------------------------------------------
        (Address of principal executive offices)            (Zip Code)



        Registrant's telephone number, including area code(619) 812-7000

        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 [ ]

        Number of shares of common stock, $.000000005 par value, outstanding as
        of the close of business on November 10, 1998 - 20,688,971.

<PAGE>   2

ITEM 1.     FINANCIAL STATEMENTS


                       JENNY CRAIG, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                                              June 30,         September 30,
                                                                                1998              1998
                                                                              ---------        -------------
                                                                                               (unaudited)
<S>                                                                           <C>              <C>   
ASSETS
Cash and cash equivalents ............................................        $  42,124            39,774
Short-term investments ...............................................            1,236             3,429
Accounts receivable, net .............................................            2,617             3,213
Inventories ..........................................................           14,469            15,863
Prepaid expenses and other assets ....................................           12,548            11,378
                                                                              ---------         ---------
        Total current assets .........................................           72,994            73,657
Cost of reacquired area franchise rights, net ........................            8,419             8,193
Property and equipment, net ..........................................           24,832            24,627
                                                                              ---------         ---------
                                                                              $ 106,245           106,477
                                                                              =========         =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable .....................................................           15,256            13,493
Accrued liabilities ..................................................           19,399            19,638
Income taxes payable .................................................               --               193
Deferred service revenue .............................................           10,278             9,895
                                                                              ---------         ---------
         Total current liabilities ...................................           44,933            43,219
Note payable .........................................................            5,526             5,479
                                                                              ---------         ---------
         Total liabilities ...........................................           50,459            48,698


Stockholders' equity:
  Common stock $.000000005 par value, 100,000,000 shares
    authorized; 27,580,260 shares issued; 20,688,971 shares
    outstanding at June 30, 1998 and September 30, 1998 ..............               --                --
  Additional paid-in capital .........................................           71,622            71,622
  Retained earnings ..................................................           57,179            59,669
  Accumulated other comprehensive income .............................            1,747             1,250
  Treasury stock at cost, 6,891,289 shares at June 30, 1998 and
    September 30, 1998 ...............................................          (74,762)          (74,762)
                                                                              ---------         ---------
        Total stockholders' equity ...................................           55,786            57,779
Commitments and contingencies
                                                                              ---------         ---------
                                                                              $ 106,245           106,477
                                                                              =========         =========
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                      -2-
<PAGE>   3

                       JENNY CRAIG, INC. AND SUBSIDIARIES

                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                   ($ in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                           September 30,
                                                                    -------------------------
                                                                      1997             1998
                                                                    --------         --------
<S>                                                                 <C>              <C>   
Revenues:
   Company-owned operations:
     Product sales .........................................        $ 73,579           74,992
     Service revenue .......................................           5,446            4,082
                                                                    --------         --------
                                                                      79,025           79,074
                                                                    --------         --------
   Franchise operations:
     Product sales .........................................           6,672            5,726
     Royalties .............................................           1,007              826
     Initial franchise fees ................................              --               --
                                                                    --------         --------
                                                                       7,679            6,552
                                                                    --------         --------
        Total revenues .....................................          86,704           85,626
                                                                    --------         --------
Costs and expenses:
   Company-owned operations:
     Product ...............................................          75,656           68,880
     Service ...............................................           4,211            2,740
                                                                    --------         --------
                                                                      79,867           71,620
                                                                    --------         --------
   Franchise operations:
     Product ...............................................           4,989            3,930
     Other .................................................             644              551
                                                                    --------         --------
                                                                       5,633            4,481
                                                                    --------         --------
                                                                       1,204            9,525
General and administrative expenses ........................           9,110            5,958
                                                                    --------         --------
     Operating income (loss) ...............................          (7,906)           3,567
Other income, net, principally interest ....................             349              465
                                                                    --------         --------
     Income (loss) before taxes ............................          (7,557)           4,032
Provision (credit) for income taxes ........................          (2,940)           1,542
                                                                    --------         --------
        Net income (loss) ..................................        $ (4,617)           2,490
                                                                    ========         ========

        Basic and diluted net income (loss) per share ......        $   (.22)             .12
                                                                    ========         ========
</TABLE>



     See accompanying notes to unaudited consolidated financial statements.



                                      -3-
<PAGE>   4

                       JENNY CRAIG, INC. AND SUBSIDIARIES

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                ($ in thousands)

<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                               September 30,
                                                                                        -------------------------
                                                                                          1997             1998
                                                                                        --------         --------
<S>                                                                                     <C>              <C>  
Cash flows from operating activities:
    Net income (loss) ..........................................................        $ (4,617)           2,490
    Adjustments to reconcile net income (loss) to net cash  provided
      by (used in) operating activities:
      Depreciation and amortization ............................................           1,684            1,370
      Decrease in other assets - forgiveness of officer loan ...................           1,500               --
      Loss on disposal of property and equipment ...............................              68               30
      (Increase) decrease in:
              Accounts receivable ..............................................            (260)            (596)
              Inventories ......................................................             (39)          (1,394)
              Prepaid expenses and other assets ................................           3,889            1,170
      Increase (decrease) in:
              Accounts payable .................................................             149           (1,763)
              Accrued liabilities ..............................................           2,157              239
              Income taxes payable .............................................          (4,907)             193
              Deferred service revenue .........................................          (1,467)            (383)
                                                                                        --------         --------
                       Net cash provided by (used in) operating activities .....          (1,843)           1,356
                                                                                        --------         --------

Cash flows from investing activities:
   Purchase of property and equipment ..........................................          (1,703)            (969)
   Purchase of short-term investments ..........................................          (6,582)          (3,145)
   Proceeds from maturity of short-term investments ............................             508              952
                                                                                        --------         --------
                       Net cash used in investing activities ...................          (7,777)          (3,162)
                                                                                        --------         --------

Cash flows from financing activities:
   Principal payments on note payable ..........................................             (47)             (47)
                                                                                        --------         --------
                       Net cash used in financing activities ...................             (47)             (47)
                                                                                        --------         --------

Effect of exchange rate changes on cash and cash equivalents ...................            (426)            (497)
                                                                                        --------         --------
Net decrease in cash and cash equivalents ......................................         (10,093)          (2,350)
Cash and cash equivalents at beginning of period ...............................          37,438           42,124
                                                                                        --------         --------
Cash and cash equivalents at end of period .....................................          27,345           39,774
                                                                                        ========         ========

Supplemental disclosure of cash flow information:
   Income taxes paid ...........................................................        $  1,967            1,565
</TABLE>



     See accompanying notes to unaudited consolidated financial statements.



                                      -4-
<PAGE>   5

                       JENNY CRAIG, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998


1. The accompanying unaudited consolidated financial statements do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair presentation have been included. Operating results for any
interim period are not necessarily indicative of the results for any other
interim period or for the full year. These statements should be read in
conjunction with the June 30, 1998 consolidated financial statements.

2. The weighted average number of shares used to calculate basic net income
(loss) per share was 20,687,771 and 20,688,971 for the quarters ended September
30, 1997 and 1998, respectively. The impact of outstanding stock options during
the periods presented did not create a difference between calculated basic net
income (loss) per share and diluted net income (loss) per share. Stock options
had the effect of increasing the number of shares used in the calculation by
application of the treasury stock method by 5,196 shares for the quarter ended
September 30, 1998. The calculation of diluted net loss per share for the
quarter ended September 30, 1997 was not applicable as inclusion of the effect
of stock options would be antidilutive; however, an additional 52,612 shares
would have been included in the calculation of diluted net income (loss) per
share for the quarter ended September 30, 1997.

3. During the quarter ended September 30, 1998 the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). SFAS 130 requires the disclosure of comprehensive income to reflect
changes in equity that result from transactions and economic events from
non-owner sources. Comprehensive income (loss) for the quarters ended September
30, 1997 and 1998 presented below includes foreign currency translation items.
There was no tax expense or tax benefit associated with the foreign currency
items.

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                 September 30,
                                                            -----------------------
                                                              1997            1998
                                                            -------         -------
<S>                                                         <C>             <C>  
            Net income (loss)                               $(4,617)          2,490
            Foreign currency translation adjustments
                                                               (546)           (497)
                                                            -------         -------
            Comprehensive income (loss)                      (5,163)          1,993
                                                            =======         =======
</TABLE>



                                      -5-
<PAGE>   6

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


Forward-Looking Statements

        Information provided in this Report on Form 10-Q may contain, and the
Company may from time to time disseminate material and make statements which may
contain "forward-looking" information, as that term is defined by the Private
Securities Litigation Reform Act of 1995 (the "Act"). These forward-looking
statements may relate to anticipated financial performance, business prospects
and similar matters. The words "expects," "anticipates," "believes," and similar
words generally signify a "forward-looking" statement. These cautionary
statements are being made pursuant to the provisions of the Act and with the
intention of obtaining the benefit of "safe-harbor" provisions of the Act. The
reader is cautioned that all forward-looking statements are necessarily
speculative and there are certain risks and uncertainties that could cause
actual events or results to differ materially from those referred to in such
forward-looking statements. Among the factors that could cause actual results to
differ materially are: increased competition; technological and scientific
developments, including appetite suppressants and other drugs which can be used
in weight-loss programs; increases in cost of food or services; lack of market
acceptance of additional products and services; legislative and regulatory
restrictions or actions; effectiveness of marketing and advertising programs;
prevailing domestic and foreign economic conditions; and the risk factors set
forth from time to time in the Company's annual reports and other reports and
filings with the SEC. In particular, the reader should carefully review the
cautionary statements contained under the caption "Forward-Looking Statements"
in Item 1 of the Company's Annual Report on Form 10-K for the year ended June
30, 1998.

Quarter Ended September 30, 1998 as Compared to Quarter Ended September 30, 1997

Revenues from United States Company-owned operations increased 2% from
$66,218,000 for the quarter ended September 30, 1997 to $67,487,000 for the
quarter ended September 30, 1998. The average number of United States
Company-owned centres in operation decreased 4% from an average of 551 centres
for the quarter ended September 30, 1997 to an average of 531 centres for the
quarter ended September 30, 1998. This decrease in the average number of centres
reflects the net closure of 26 centres between the periods. At September 30,
1998 there were 529 United States Company-owned centres in operation. Average
revenue per United States Company-owned centre increased 6% from $120,000 for
the quarter ended September 30, 1997 to $127,000 for the quarter ended September
30, 1998. Service revenue from United States Company-owned operations for the
quarter ended September 30, 1998 decreased 27%, to $3,393,000 from $4,617,000
for the comparable year earlier period. This decrease in service revenue was
primarily due to a 13% decrease in the number of new participants enrolled in
the Program during the quarter ended September 30, 1998 compared to the quarter
ended September 30, 1997, and a decrease in the amortization of deferred service
revenue resulting from the decrease in the number of new enrollments in the
periods preceding the September 1998 quarter compared to the periods preceding
the September 1997 quarter. Product sales, which consists primarily of food
products, from United States Company-owned operations increased 4% from
$61,601,000 for the quarter ended September 30, 1997 to $64,094,000 for the
quarter ended September 30, 1998. This increase was principally due to an
increase in the average food amount purchased per client. Revenues from foreign
Company-owned operations decreased 10% from $12,807,000 to $11,587,000 for the
quarters ended September 30, 1997 and 1998, respectively, due to a 17% weighted
average decrease in the Australian and Canadian currencies in relation to the
U.S. dollar between the periods. There were 108 foreign Company-owned centres at
September 30, 1997 compared to 110 at September 30, 1998.



                                      -6-
<PAGE>   7

                                   (Continued)


Costs and expenses of United States Company-owned operations decreased 11% from
$69,355,000 to $62,063,000 for the quarters ended September 30, 1997 and 1998,
respectively. Costs and expenses of United States Company-owned operations in
the prior year quarter included $2,437,000 of costs related to the weight loss
medication program which was terminated in August 1997 and $3,047,000 of
additional advertising expenses associated with the launch of the Company's ABC
weight management program. The decrease in costs and expenses of United States
Company-owned operations for the quarter ended September 30, 1998 reflects the
absence of these costs and expenses, and resulted in costs and expenses of
United States Company-owned operations as a percentage of United States
Company-owned revenues decreasing from 105% to 92% between the periods. After
including the allocable portion of general and administrative expenses, United
States Company-owned operations had operating income of $1,074,000 for the
quarter ended September 30, 1998 compared to an operating loss of $9,980,000 for
the quarter ended September 30, 1997. Costs and expenses of foreign
Company-owned operations decreased 9% from $10,512,000 to $9,557,000 for the
quarters ended September 30, 1997 and 1998, respectively, due to the 17%
weighted average decrease in the Australian and Canadian currencies in relation
to the U.S. dollar between the periods. After including the allocable portion of
general and administrative expenses, foreign Company-owned operations had
operating income of $1,421,000 for the quarter ended September 30, 1998 compared
to operating income of $1,545,000 for the quarter ended September 30, 1997.

       Revenues from franchise operations decreased 15% from $7,679,000 to
$6,552,000 for the quarters ended September 30, 1997 and 1998, respectively.
This decline was principally due to a 5% decrease in the average number of
franchise centres in operation between the periods and a decrease in the number
of new participants enrolled in the program at franchise centres, resulting in
reduced product sales and royalties. The decrease in the average number of
franchise centres reflects the Company's acquisition of two centres from a
franchisee and the net closure of three franchised centres between the periods.
As of September 30, 1998 there were 135 franchised centres in operation.

      Costs and expenses of franchised operations, which consist primarily of
product costs, decreased 20% from $5,633,000 to $4,481,000 for the quarters
ended September 30, 1997 and 1998, respectively, principally because of the
reduced level of franchise operations and a reduction in the purchase of
national television advertising, a portion of which is allocated to franchise
operations. The decrease in franchise costs and expenses as a percent of
franchise revenues was principally due to the reduced national television
advertising.

      General and administrative expenses decreased 35% from $9,110,000 to
$5,958,000 and decreased from 10.5% to 7.0% of total revenues for the quarters
ended September 30, 1997 and 1998, respectively. The decrease in general and
administrative expenses is principally due to expenses totalling $3,500,000
included in the prior year quarter related to the separation of a former senior
executive of the Company. These expenses included $1,500,000 for the forgiveness
of a loan made to the former senior executive in 1995, $1,000,000 for the
payment of the former senior executive's salary and benefits through December
31, 1998, and $1,000,000 for the cancellation of stock options which were
exercisable by the former senior executive.

      The elements discussed above combined to result in operating income of
$3,567,000 for the quarter ended September 30, 1998 compared to an operating
loss of $7,906,000 for the quarter ended September 30, 1997.



                                      -7-
<PAGE>   8

                                   (Continued)

Year 2000

The Company is in the process of assessing the functionality of both its
information technology ("IT") and non-IT systems with respect to the "year 2000"
millenium change. The Company utilizes two primary IT systems: the corporate
office system, which includes the general ledger and related applications, and
the point-of-sale system, which is used at each of the 555 Company-owned centres
in North America to record sales to customers. With respect to the corporate
office system, the Company has determined that its current system, implemented
in 1991, is not year 2000 compliant. Accordingly, the Company accelerated the
planned replacement of this system by purchasing new corporate office system
software in the first quarter of fiscal 1999. The implementation process for
this new system has begun and the Company expects the implementation to be
completed by April 1, 1999. The cost of the new corporate office system software
of $189,000 was capitalized and is being amortized over the five year estimated
useful life of the new software. The cost of new hardware, which will be
purchased in the second quarter of fiscal 1999, necessary to install the new
corporate office system is estimated to be $200,000 and will be depreciated over
the five year estimated useful life of the new hardware. Additional
implementation costs, comprised principally of external consultants, are
estimated to be $380,000 and will be expensed as incurred in fiscal 1999. With
respect to the point-of-sale system, there are two basic components: the
software and the hardware. The point-of-sale software continues to be assessed.
Estimated costs to modify this software to effect year 2000 compliance totalling
approximately $150,000 will be expensed as incurred in fiscal 1999. The
point-of-sale hardware is essentially a personal computer ("PC") network
consisting of a file server and three PCs at the Company-owned and franchised
centres in North America. The Company is conducting an analysis of the hardware
at these centres for year 2000 compliance. This analysis is expected to be
completed by December 31, 1998. A preliminary estimate of the cost to both
modify certain hardware and replace other hardware is approximately $4,000 per
Company-owned centre, or $2,236,000 in aggregate. The Company expects that
substantially all of these hardware costs will be incurred prior to the planned
completion date of May 31, 1999 and that substantially all of these costs will
be capitalized and depreciated over their estimated useful life of five years.
With respect to non-IT systems, the Company is assessing its embedded systems
contained in the corporate office building and centre locations. This assessment
is principally focusing on the Company's telephone system hardware and software.
The Company plans to complete the assessment of non-IT systems by December 31,
1998. The final area of significance pertaining to the Company's year 2000
planning relates to third parties with whom the Company transacts business. This
includes the Company's food suppliers, banks, advertising agencies,
telecommunications suppliers, and utility providers. The Company is sending
written questionnaires to significant suppliers and vendors in an effort to
assess their year 2000 readiness and the effect these third parties could have
on the Company. The Company plans to maintain communication with significant
suppliers and vendors with respect to this issue.

      As detailed above, the Company estimates that approximately $3,155,000
will be expended in connection with year 2000 compliance. The Company expects
that its cash flow from operations, together with cash, cash equivalents and
short-term investments currently on hand, will be sufficient to fund these
disbursements. Costs incurred through September 30, 1998 related to year 2000
compliance totalled $346,000, of which $271,000 was expended in the quarter
ended September 30, 1998 principally comprised of the new corporate office
system software and external consultants. The Company does not separately track
the internal costs, principally compensation costs for the Information Systems
department, incurred with respect to the year 2000 project.



                                      -8-
<PAGE>   9

                                   (Continued)


      Although the Company believes that its planning, as detailed above, will
enable the Company to be adequately prepared for the year 2000, a contingency
plan is also being developed. With respect to the point-of-sale system, the
Company has a manual back-up system which is currently used during computer
downtimes and was the Company's primary point-of-sale system from the Company's
inception in 1983 through 1990. The Company believes that this manual
point-of-sale system could be utilized in the event of a delay in the
implementation of the plan to have the point-of-sale system year 2000 compliant
during 1999. With respect to the corporate office system, the Company believes
that a third party provider of data processing services could provide the basic
services necessary for the Company to maintain adequate books and records,
similar to the methodology utilized by the Company prior to 1991. The Company
expects to have the specific third party provider to be utilized as a
contingency plan identified by March 31, 1999.

       The statements set forth above relating to the Company's analysis and
plans with respect to the year 2000 issue in many cases constitute
forward-looking statements which are necessarily speculative. Actual results may
differ materially from those described above. The factors which could cause
actual results to differ materially include, without limitation, the following:
the Company's assessment of the impact of year 2000 is not complete and further
analysis and study, as well as the testing and implementation of planned
solutions, could disclose additional remedial work, with the resultant
additional time and expense, necessary to permit the Company's IT and non-IT
systems to be year 2000 compliant; third party consultants and software and
hardware suppliers could fail to meet timetables and projected cost estimates;
third party suppliers of products and services to the Company could make
mistakes in their advice to the Company with respect to their year 2000
readiness, and their failure to be year 2000 compliant could have a material
adverse effect on the Company; the Company's estimates of the periods of time
and costs necessary to complete certain analysis and implementation could be
impacted by future events and conditions such as a shortage of personnel,
including Company employees and outside consultants, to perform the necessary
analysis and remediation work.


Legal Proceedings

      The Company along with other weight loss programs and certain
pharmaceutical companies has been named as a defendant in an action filed in the
Circuit Court for the Eleventh Judicial Circuit in Pickens County, Alabama (the
"Alabama Litigation"). The action was commenced in August 1997 by three
plaintiffs who are seeking to maintain the action as a class action on behalf of
all persons in the United States and United States Territories who have suffered
or may in the future suffer injury due to the administration of phentermine,
fenfluramine (commonly known as "phen-fen" when taken together) and/or
dexfenfluramine (trade name "Redux"), which were manufactured or sold by the
defendants. The complaint includes claims against the Company and other
defendants, acting separately and in concert, for alleged unlawful and tortious
acts, including sale of allegedly dangerous and defective products, negligent
marketing and distribution, failure to warn of the risks associated with the
weight loss medications, breach of warranty, fraud, and negligent
misrepresentation. The complaint seeks compensatory and punitive damages in
unspecified amounts and equitable relief including the establishment of a
medical fund to cover future medical expenses resulting from the use of the
weight loss medications, and a requirement that the defendants adequately warn
the public of the risks associated with use of the weight loss medications.



                                      -9-
<PAGE>   10

                                   (Continued)



        The Company along with certain pharmaceutical companies has also been
named as a defendant in an action filed in the Court of Common Pleas,
Philadelphia County, Pennsylvania (the "Pennsylvania Litigation"). The action
was commenced in November 1997 by a plaintiff, a participant in the Company's
program, who is seeking to maintain the action as a class action on behalf of
all persons in the Commonwealth of Pennsylvania who have purchased and used
fenfluramine, dexfenfluramine and phentermine, alone or in combination. The
complaint includes claims against the Company and the other defendants for
alleged false and misleading statements concerning the safety and
appropriateness of using fenfluramine, dexfenfluramine, and phentermine and the
benefits, uses and ingredients of these drugs, negligence in the distribution,
sale and prescribing of these medications and breach of the warranty of
merchantability. The complaint seeks compensatory and punitive damages in
unspecified amounts and a Court-supervised program funded by the defendants
through which class members would undergo periodic medical examination and
testing.

        The Company has tendered the Alabama Litigation and the Pennsylvania
Litigation matters to its insurance carriers. The Company and the provider of
the independent physicians who prescribed the weight loss medications in the
Company's centres have each asserted their rights with respect to these
litigations under contractual provisions for indemnification in the agreement
between them. The claims have not progressed sufficiently for the Company to
estimate a range of possible loss, if any. The Company intends to defend the
matters vigorously.


Financial Condition

      At September 30, 1998, the Company had cash, cash equivalents, and
short-term investments totalling $43,203,000 compared to $43,360,000 at June 30,
1998. The Company believes that its cash, cash equivalents, and short-term
investments and its cash flow from operations will be adequate for its needs in
the foreseeable future.


Recent Accounting Pronouncement

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131").  SFAS 131 establishes
standards for the manner in which public business enterprises report information
about operating segments and also establishes standards for related disclosures
about products and services, geographic areas, and major customers.  SFAS 131 is
effective for years beginning after December 15, 1997.




                                      -10-
<PAGE>   11

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company is exposed to a variety of risks, including changes in
interest rates affecting the return on its investments and the cost of its debt,
and foreign currency fluctuations.

      At September 30, 1998, the Company maintains a portion of its cash and
cash equivalents in financial instruments with original maturities of three
months or less. The Company also maintains a short-term investment portfolio
containing financial instruments with original maturities of greater than three
months but less than twelve months. These financial instruments, principally
comprised of high quality commercial paper, are subject to interest rate risk
and will decline in value if interest rates increase. Due to the short duration
of these financial instruments, an immediate 10 percent increase in interest
rates would not have a material effect on the Company's financial condition or
results of operations. The Company has not used derivative financial instruments
in its investment portfolio.

       The Company's only long-term debt at September 30, 1998 is comprised of a
note payable to a bank, secured by the Company's corporate office building, with
a total balance of $5,669,000. The note bears interest at the London Interbank
Offered Rate plus one percent, with quarterly interest rate adjustments. Due to
the relative immateriality of the note payable, an immediate 10 percent change
in interest rates would not have a material effect on the Company's financial
condition or results of operations.

Approximately 15% of the Company's revenues for the quarter ended September 30,
1998 were generated from foreign operations, located principally in Australia
and Canada. In the quarter ended September 30, 1998, the Company was subjected
to a 17% weighted average decrease in the Australian and Canadian currencies in
relation to the U.S. dollar compared to the quarter ended September 30, 1997. In
October, 1998 the Company entered into a foreign exchange put option for
Australian dollars at a strike price of $.60 which expires on June 30, 1999. The
Company may, from time to time, enter into similar agreements to protect the
Company from foreign currency fluctuations.




                                      -11-
<PAGE>   12

PART II - OTHER INFORMATION


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

         (a)   Exhibits

               27.    Financial Data Schedule

         (b)   No reports on Form 8-K have been filed during the quarter for
               which this report is filed.



                                      -12-
<PAGE>   13

                                    SIGNATURE


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


                                       JENNY CRAIG, INC.



                                       By:   /S/ Michael L. Jeub
                                          --------------------------------------
                                          Michael L. Jeub
                                          Senior Vice President,
                                          Chief Financial Officer, and Treasurer



Date:  November 12, 1998



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