<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 December 31, 1997 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 February 6, 1998- 20,688,971.


                                      -1-
<PAGE>   2
                              JENNY CRAIG, INC. AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEETS
                                       ($ in thousands)
<TABLE>
<CAPTION>
                                                              June 30,      December 31,
                                                                1997           1997
                                                              ---------     ----------
                                                                           (unaudited)
<S>                                                             <C>            <C>   
ASSETS
Cash and cash equivalents ................................      $37,438        19,666
Short-term investments ...................................        1,506         6,225
Accounts receivable, net .................................        2,967         2,869
Inventories ..............................................       15,285        18,829
Prepaid expenses and other assets ........................       16,497        14,596
                                                               --------      --------
         Total current assets ............................       73,693        62,185
Cost of reacquired area franchise rights, net ............        9,550         8,954
Property and equipment, net ..............................       27,554        27,311
Other assets .............................................        1,500            --
                                                               --------      --------
                                                               $112,297        98,450
                                                               ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable .........................................       14,938        16,558
Accrued liabilities ......................................       19,117        18,149
Income taxes payable .....................................        4,050            --
Deferred service revenues ................................       14,558        10,550
                                                               --------      --------
         Total current liabilities .......................       52,663        45,257
Note payable .............................................        5,716         5,621
                                                               --------      --------
                Total liabilities ........................       58,379        50,878
Stockholders' equity:
Common stock $.000000005 par value, 100,000,000 shares
authorized; 27,580,260 shares issued; 20,687,771 and
20,688,971 shares outstanding at June 30, 1997 and
December 31, 1997, respectively ..........................           --            --
Additional paid-in capital ...............................       71,615        71,622
Retained earnings ........................................       55,053        50,719
Equity adjustment from foreign currency translation ......        2,012            (7)
Treasury stock at cost, 6,888,089 shares at June 30, 1997
  and December 31, 1997, respectively ....................      (74,762)      (74,762)
                                                               --------      --------
     Total stockholders' equity ..........................       53,918        47,572
Commitments and contingencies ............................    
                                                               --------      --------
                                                               $112,297        98,450
                                                               ========       =======

</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       Six Months Ended
                                                         December 31,             December 31,
                                                    -----------------------    ------------------
                                                      1996         1997         1996        1997
                                                      ----         ----         ----        ----
<S>                                                  <C>          <C>        <C>          <C>    
Revenues:
  Company-owned operations:
    Product sales ..............................     $68,786      66,588     143,174      140,167
    Service revenues ...........................       6,208       5,053      12,473       10,499
                                                    --------    --------    --------     --------
                                                      74,994      71,641     155,647      150,666
                                                    --------    --------    --------     --------
  Franchise operations:
    Product sales ..............................       7,014       5,984      15,579       12,656
    Royalties ..................................       1,355       1,213       2,964        2,220
    Initial franchise fees .....................          25           5         210            5
                                                    --------    --------    --------     --------
                                                       8,394       7,202      18,753       14,881
                                                    --------    --------    --------     --------
        Total revenues .........................      83,388      78,843     174,400      165,547
                                                    --------    --------    --------     --------

Costs and expenses:
  Company-owned operations:
    Product ....................................      66,129      64,389     135,121      140,045
    Service ....................................       4,055       3,554       7,911        7,765
                                                    --------    --------    --------     --------
                                                      70,184      67,943     143,032      147,810
                                                    --------    --------    --------     --------
  Franchise operations:
    Product ....................................       4,900       4,426      11,538        9,415
    Other ......................................         381         385         906        1,029
                                                    --------    --------    --------     --------
                                                       5,281       4,811      12,444       10,444
                                                    --------    --------    --------     --------
                                                       7,923       6,089      18,924        7,293
General and administrative expenses ............       7,172       5,929      14,524       15,039
                                                    --------    --------    --------     --------
       Operating income (loss) .................         751         160       4,400       (7,746)
Other income, net, principally interest ........         450         297         983          646
                                                    --------    --------    --------     --------
       Income (loss) before taxes and cumulative
        effect of accounting change ............        1201         457       5,383       (7,100)
Provision (credit) for income taxes ............         322         174       2,015       (2,766)
                                                    --------    --------    --------     --------
       Income (loss) before cumulative effect of
        accounting change ......................         879         283       3,368       (4,334)
Cumulative effect on prior years of change in
  accounting for service revenue net of
  $4,498 income tax benefit ....................          --          --      (7,509)          --
                                                    --------    --------    --------     --------
              Net income (loss) ................    $    879         283      (4,141)      (4,334)
                                                    ========    ========    ========     ========

Basic and Diluted per share amounts:
Income (loss) before cumulative effect of
  accounting change ............................         .04         .01         .16         (.21)
Cumulative effect of accounting change .........          --          --        (.36)          --
                                                    --------    --------    --------     --------
             Net income (loss) per share .......    $    .04         .01        (.20)        (.21)
                                                    ========    ========    ========     ========
</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>
                                                                                 Six Months Ended
                                                                                   December 31,
                                                                              ------------------------
                                                                                  1996          1997
                                                                                  ----          ----
<S>                                                                             <C>           <C>    
Cash flows from operating activities:
    Net loss ..............................................................     $(4,141)      (4,334)
    Adjustments to reconcile net loss to net cash
     used in operating activities:
    Depreciation and amortization .........................................       3,488        3,477
    Decrease in other assets - forgiveness of officer loan ................          --        1,500
    Cumulative effect of change in accounting for service revenue .........       7,509           --
    Loss on disposal of property and equipment ............................          --          664
   (Increase) decrease in:
              Accounts receivable .........................................        (427)        (159)
              Inventories .................................................      (2,356)      (3,494)
              Prepaid expenses and other assets ...........................      (1,179)       1,901
   Increase (decrease) in:
              Accounts payable ............................................      (4,352)       1,620
              Accrued liabilities .........................................      (1,615)        (968)
              Income taxes payable ........................................         537       (4,050)
              Deferred service revenue ....................................      (2,620)      (4,008)
                                                                               --------     --------
                       Net cash used in operating activities ..............      (5,156)      (7,851)
                                                                               --------     --------

Cash flows from investing activities:
  Purchase of property and equipment ......................................     (13,944)      (3,630)
  Purchase of short-term investments ......................................      (5,975)      (8,363)
  Proceeds from maturity of short-term investments ........................       6,850        3,644
  Payment for acquisition of franchised centres ...........................      (1,803)        (145)
                                                                               --------     --------
                       Net cash used in investing activities ..............     (14,872)      (8,494)
                                                                               --------     --------

Cash flows from financing activities:
   Purchase of treasury stock .............................................      (1,258)          --
   Proceeds from note payable .............................................       5,975           --
   Principal payments on note payable .....................................          --          (95)
   Proceeds from exercise of stock options ................................         106            7
                                                                               --------     --------
                       Net cash provided by (used in) financing activities        4,823          (88)
                                                                               --------     --------

Effect of exchange rate changes on cash and cash equivalents...............         (63)      (1,340)
                                                                               --------     --------
Net decrease in cash and cash equivalents .................................     (15,268)     (17,773)
Cash and cash equivalents at beginning of period ..........................      43,535       37,439
                                                                               --------     --------
Cash and cash equivalents at end of period ................................     $28,267       19,666
                                                                               ========     ========
Supplemental disclosure of cash flow information:
   Income taxes paid ......................................................      $1,478        3,863
   Acquisition of franchised centres:
      Cancellation of accounts receivable .................................      $  732          256
      Fair value of assets acquired .......................................      $2,362          401
      Liabilities assumed .................................................      $1,630           --

</TABLE>

     See accompanying notes to unaudited consolidated financial statements 


                                      -4-
<PAGE>   5

                       JENNY CRAIG, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

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, 1997 consolidated financial statements.

2. During the quarter ended December 31, 1997 the Company adopted Statement of
Financial Accounting Standards No. 128 "Earnings per Share" (Statement 128). As
required by Statement 128, all prior period information has been restated to
conform to the provisions of Statement 128. The weighted average number of
shares used to calculate basic net income per share was 20,794,000 and
20,688,000 for the quarters ended December 31, 1996 and 1997, respectively and
20,822,000 and 20,688,000 for the six months ended December 31, 1996 and 1997,
respectively. The impact of outstanding stock options during the periods
presented did not create a difference between calculated basic net income per
share and diluted net income 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 404,000 and 81,000 for the quarters ended December 31,
1996 and 1997, respectively, and by 643,000 for the six month period ended
December 31, 1996. The calculation of diluted earnings per share for the six
months ended December 31, 1997 and for the cumulative effect of accounting
change and net loss for the six months ended December 31, 1996 was not
applicable as inclusion of the effect of stock options would be antidilutive.

3. In the fourth quarter of fiscal 1997, the Company changed its method of
accounting for service fees received from customers, retroactively effective as
of July 1, 1996. The results for the periods ended December 31, 1996 reflect the
effect of the change in accounting method as if the change had occurred on 
July 1, 1996.



                                      -5-
<PAGE>   6

                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS

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, 1997.

Quarter Ended December 31, 1997 as Compared to Quarter Ended December 31, 1996

        The Company has operated in a difficult and dynamic environment since
April 1996, when the United States Food and Drug Administration ("FDA") approved
dexfenfluramine, commonly referred to by its trade name Redux, for use as a
doctor-prescribed medication for the treatment of obesity. The Company believes
that the extensive publicity that accompanied the introduction of Redux
heightened the public's interest in weight loss pharmaceuticals, including
interest in a combination of two other medications (phentermine and
fenfluramine) commonly known as "phen-fen", and resulted in significantly
reduced demand for the Company's program. In July 1996, the Company began test
marketing an adjunct to its traditional weight loss program which incorporated
weight loss pharmaceuticals. This program adjunct utilized
independently-contracted physicians to examine clients and prescribe Redux only
to persons who met the FDA's protocol and phen-fen to persons who met the
appropriate medical criteria for this medication. In January 1997, the weight
loss medication adjunct was incorporated into virtually all of the Company's
centres in the United States. In August 1997, the Company ceased offering a
weight loss medication adjunct to its program following reports from the medical
community as to possible health risks associated with the use of Redux and
phen-fen. In September 1997, Redux and fenfluramine were withdrawn from the
United States market at the request of the FDA.

        Revenues from United States Company-owned operations decreased 5% from
$62,704,000 for the quarter ended December 31, 1996 to $59,869,000 for the
quarter ended December 31, 1997. At December 31, 1996 there were 526 United
States Company-owned Centres in operation compared to 547 at December 31, 1997.
The increase in the number of United States Company-owned Centres reflects the
Company's acquisition of 17 Centres from franchisees and the net opening of four
Centres between the periods. Average revenue per United States Company-owned
Centre decreased 9% from $119,000 for the quarter ended December 31, 1996 to
$108,000 for the quarter ended December 31, 1997. Service revenues from United
States Company-owned operations for the quarter ended December 31, 1997
decreased 19% to $4,302,000 from $5,295,000 for the comparable year earlier

                                      -6-
<PAGE>   7
                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
                                   (Continued)


period. This decrease in service revenues was principally due to a 17% decrease
(22% on an average per centre basis) in the number of new participants enrolled
in the Program. Product sales, which consists primarily of food products, from
United States Company-owned operations decreased 3% from $57,409,000 for the
quarter ended December 31, 1996 to $55,567,000 for the quarter ended December
31, 1997. This decrease was principally due to a 7% decrease in the number of
active clients, offset, in part, by an increase in the average food amount
purchased per client. Revenues from foreign Company-owned operations decreased
4% from $12,290,000 to $11,772,000 for the quarters ended December 31, 1996 and
1997, respectively, primarily due to a 12% weighted average decrease in the
Australian and Canadian currencies in relation to the U.S. dollar between the
periods. There were 104 foreign Company-owned Centres at December 31, 1996
compared to 107 at December 31, 1997.

        Costs and expenses of United States Company-owned operations decreased
4% from $60,379,000 to $58,153,000 for the quarters ended December 31, 1996 and
1997, respectively. The decrease in costs and expenses for the quarter ended
December 31, 1997 reflects the decreased variable costs related to the lower
level of operations including reduced compensation expense related to lower
staffing levels maintained at the centres. Costs and expenses of United States
Company-owned operations as a percentage of United States Company-owned revenues
increased from 96% to 97% between the periods principally due to the higher
proportion of fixed costs when compared to the reduced level of revenues. After
including the allocable portion of general and administrative expenses, United
States Company-owned operations incurred an operating loss of $2,531,000 for the
quarter ended December 31, 1997 compared to an operating loss of $2,821,000 for
the quarter ended December 31, 1996. Costs and expenses of foreign Company-owned
operations decreased less than one percent from $9,805,000 to $9,790,000 for the
quarters ended December 31, 1996 and 1997, respectively. After including the
allocable portion of general and administrative expenses, foreign Company-owned
operations had operating income of $1,313,000 for the quarter ended December 31,
1997 compared to operating income of $1,887,000 for the quarter ended December
31, 1996.

        Revenues from franchise operations decreased 14% from $8,394,000 to
$7,202,000 for the quarters ended December 31, 1996 and 1997, respectively. This
decline was principally due to a 14% decrease in the number of franchise Centres
in operation, from 161 at December 31, 1996 to 138 at December 31, 1997. The
decrease in the number of franchise Centres reflects the Company's acquisition
of 17 Centres from franchisees and the net closure of six franchised centres
between the periods.

        Costs and expenses of franchised operations, which consist primarily of
product costs, decreased 9% from $5,281,000 to $4,811,000 for the quarters ended
December 31, 1996 and 1997, respectively, principally because of the reduced
level of franchise operations. The increase in franchise costs and expenses as a
percentage of franchise revenues was principally due to the reduced royalty
revenue which has a higher margin than product sales.

        General and administrative expenses decreased 17% from $7,172,000 to
$5,929,000 and decreased from 8.6% to 7.5% of total revenues for the quarters
ended December 31, 1996 and 1997, respectively. The decrease was principally due
to a decrease in consulting and professional fees.

        The elements discussed above combined to result in a 79% decrease in
operating income from $751,000 for the quarter ended December 31, 1996 to
$160,000 for the quarter ended December 31, 1997.

                                      -7-
<PAGE>   8
                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
                                   (Continued)


        Other income, net, principally interest, decreased 34% from $450,000 to
$297,000 for the quarters ended December 31, 1996 and 1997, respectively. This
decline was principally due to a decrease in the average balance of cash
investments between the periods.

         The Company is in the process of assessing the functionality of its
computer applications with respect to the "year 2000" millennium change.
Preliminary estimates of the total costs to be incurred prior to 2000 amount to
approximately $500,000. Maintenance or modification costs will be expensed as
incurred, while the costs of new software will be capitalized and amortized over
the software's useful life.

        The Company and the Federal Trade Commission have entered into a
proposed Consent Order settling all contested issues raised in a complaint filed
in September 1993 against the Company alleging that the Company violated the
Federal Trade Commission Act by the use and content of certain advertisements
for the Company's weight loss program featuring testimonials, claims for the
program's success and safety, and statements as to the program's costs to
participants. The proposed Consent Order does not admit any issue of fact or law
or any violation by the Company of any law or regulation, and does not involve
payment by the Company of any civil money penalty, damages, or other financial
relief. The proposed Consent Order requires certain procedures and disclosures
in connection with the Company's advertisements of its products and services.
The full Commission accepted the proposed Consent Order and it has been
published for public comment. The Company will seek certain modifications to the
Consent Order based upon a proposed consent order the FTC staff recently
announced with another participant in the weight loss industry. The Company does
not believe that compliance with the proposed Consent Order will have a material
adverse effect on the Company's consolidated financial position or results of
operations or its current advertising and marketing practices.

        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.

         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, 

                                      -8-
<PAGE>   9
                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
                                   (Continued)


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.

                                      -9-
<PAGE>   10
                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
                                   (Continued)


Six Months Ended December 31, 1997 as Compared to Six Months Ended December 31,
1996

        Revenues from United States Company-owned operations decreased 3% from
$130,015,000 for the six months ended December 31, 1996 to $126,086,000 for the
six months ended December 31, 1997. At December 31, 1996 there were 526 United
States Company-owned Centres in operation compared to 547 at December 31, 1997.
The increase in the number of United States Company-owned Centres reflects the
Company's acquisition of 17 Centres from franchisees and the net opening of four
centres between the periods. Average revenue per United States Company-owned
Centre decreased 11% from $256,000 for the six months ended December 31, 1996 to
$229,000 for the six months ended December 31, 1997. Service revenues from
United States Company-owned operations for the six months ended December 31,
1997 decreased 16% to $8,919,000 from $10,675,000 for the comparable year
earlier period. This decrease in service revenues was primarily due to a
decrease in the average service fee charged per new participant and is the
principal reason for the decrease in deferred service revenue on the
accompanying balance sheet. Product sales, which consists primarily of food
products, from United States Company-owned operations decreased 2% from
$119,340,000 for the six months ended December 31, 1996 to $117,167,000 for the
six months ended December 31, 1997. This decrease was principally due to a 6%
decrease in the number of active clients, offset, in part, by an increase in the
average food amount purchased per client. Revenues from foreign Company-owned
operations decreased 4% from $25,632,000 to $24,580,000 for the six months ended
December 31, 1996 and 1997, respectively, primarily due to a 9% weighted average
decrease in the Australian and Canadian currencies in relation to the U.S.
dollar between the periods. There were 104 foreign Company-owned Centres at
December 31, 1996 compared to 107 at December 31, 1997.

        Costs and expenses of United States Company-owned operations increased
4% from $122,237,000 to $127,509,000 for the six months ended December 31, 1996
and 1997, respectively. The increase in costs and expenses of United States
Company-owned operations for the six months ended December 31, 1997 is
principally due to $2,437,000 of costs related to the now terminated weight loss
medication program adjunct incurred in the quarter ended September 30, 1997,
$3,047,000 of additional advertising expenses associated with the launch of the
Company's new ABC weight management program in the quarter ended September 30,
1997, and the additional fixed costs associated with the increased number of
centres. Costs and expenses of United States Company-owned operations as a
percentage of United States Company-owned revenues increased from 94% to 101%
between the periods principally due to the aforementioned expenses. After
including the allocable portion of general and administrative expenses, United
States Company-owned operations incurred an operating loss of $12,511,000 for
the six months ended December 31, 1997 compared to an operating loss of
$2,364,000 for the six months ended December 31, 1996. Costs and expenses of
foreign Company-owned operations decreased 2% from $20,795,000 to $20,301,000
for the six month periods ended December 31, 1996 and 1997, respectively,
principally because of the 9% 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 $2,861,000 for the six months
ended December 31, 1997 compared to operating income of $3,628,000 for the six
months ended December 31, 1996.

        Revenues from franchise operations decreased 21% from $18,753,000 to
$14,881,000 for the six months ended December 31, 1996 and 1997, respectively.
This decline was principally due to a 14% decrease in the number of franchise
Centres in operation, from 161 at December 31, 1996 to 138 at December 31, 1997
and a decrease in the number of new participants enrolled in the Program at
franchised Centres resulting in reduced product sales and royalties. The
decrease in the number of 

                                      -10-
<PAGE>   11

                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
                                   (Continued)

franchise Centres reflects the Company's acquisition of 17 Centres from
franchisees and the net closure of six franchised centres between the periods.

        Costs and expenses of franchised operations, which consist primarily of
product costs, decreased 16% from $12,444,000 to $10,444,000 for the six month
periods ended December 31, 1996 and 1997, respectively, principally because of
the reduced level of franchise operations. The increase in franchise costs and
expenses as a percentage of franchise revenues was principally due to the
reduced royalty revenue which has a higher margin than product sales.

        General and administrative expenses increased 4% from $14,524,000 to
$15,039,000 and increased from 8.3% to 9.1% of total revenues for the six months
ended December 31, 1996 and 1997, respectively. This increase was principally
due to expenses totalling $3,500,000 related to the separation of a former
senior executive of the Company incurred in the quarter ended September 30,
1997. These expenses include $1,500,000 for the forgiveness of a loan made to
the former senior executive in 1995 (which is reflected on the accompanying
balance sheet as a decrease in other assets), $1,000,000 for the payment (in
semi-monthly installments) of the former senior executive's salary and benefits
through December 31, 1998, and $1,000,000 for the cancellation of stock options
(payable in five equal annual installments) which were exercisable by the former
senior executive.

        The elements discussed above combined to result in an operating loss of
$7,746,000 for the six months ended December 31, 1997 compared to operating
income of $4,400,000 for the six months ended December 31, 1996.

        Other income, net, principally interest, decreased 34% from $983,000 to
$646,000 for the six months ended December 31, 1996 and 1997, respectively. This
decline was principally due to a decrease in the average balance of cash
investments between the periods.



                                      -11-
<PAGE>   12
                       JENNY CRAIG, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
                                   (Continued)

Financial Condition

        At December 31, 1997, the Company had cash, cash equivalents and
short-term investments totalling $25,891,000 compared to $38,944,000 at June 30,
1997, reflecting a decrease during the six month period ended December 31, 1997
of $13,053,000. This decrease was principally due to a $3,494,000 increase in
inventory associated with the introduction of six new food products and
$3,630,000 for the purchase of property and equipment. In addition, $4,008,000
of revenues recognized during the six month period ended December 31, 1997
reflected the amortization of deferred service revenue for which the cash was
received in a prior period. The Company believes that its cash, cash equivalents
and short-term investments and its cash flow from operations are adequate for
its needs in the foreseeable future.


                                      -12-
<PAGE>   13

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company along with certain pharmaceutical companies has been named
         as a defendant in an action filed in the Court of Common Pleas,
         Philadelphia County, Pennsylvania. 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 this matter 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 repect to this litigation under
         contractual provisions for indemnification in the agreement between
         them. The claim has not progressed sufficiently for the Company to
         estimate a range of possible loss, if any. The Company intends to
         defend the matter vigorously.

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

         The Company's 1997 Annual Meeting of Stockholders was held on November
         5, 1997. At the meeting the stockholders of the Company elected the six
         incumbent directors for terms of one year each and until their
         successors are duly elected and qualified and ratified the appointment
         of KPMG Peat Marwick LLP as the independent certified public
         accountants of the Company and its subsidiaries for the fiscal year
         ending June 30, 1998.

         The results of the vote to elect the six directors were as follows:
<TABLE>
<CAPTION>

                             SHARES VOTED                    SHARES FOR WHICH
NAME                              FOR                     AUTHORITY WAS WITHHELD
                          -----------------------      -----------------------------
<S>                           <C>                                 <C>   
Sidney Craig                  20,145,846                          36,825
Jenny Craig                   20,146,546                          36,125
Scott Bice                    20,146,646                          36,025
Marvin Sears                  20,146,346                          36,325
Andrea Van de Kamp            20,152,546                          30,125
Robert Wolf                   20,152,315                          30,356

</TABLE>



                                      -13-
<PAGE>   14

Item 4.  Submission of Matters to a Vote of Security Holders  (continued)

         The results of the vote to ratify the appointment of KPMG Peat Marwick
         LLP as independent certified public accountants of the Company and its
         subsidiaries for the fiscal year ending June 30, 1998 were as follows:
<TABLE>
<CAPTION>
                                  
     SHARES VOTED FOR             SHARES VOTED AGAINST                    SHARES ABSTAINING
---------------------------   -----------------------------    ----------------------------------------
<S>                                      <C>                                    <C>  
        20,109,631                       4,320                                  8,720
</TABLE>


There were no broker non-votes on any of the matters submitted to a vote of
security holders.


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

         (a)   Exhibits

               10.1  Agreement and Release dated as of October 1, 1997 between
                     Jenny Craig, Inc. and C. Joseph LaBonte.

               10.2  Stock Option Termination Agreement dated November 4,1997
                     between Jenny Craig, Inc. and C. Joseph LaBonte.

               27.   Financial Data Schedule.

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


                                      -14-
<PAGE>   15

                                    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
                                        Sr. Vice President
                                        and Chief Financial Officer



Date:  February 12, 1998

                                      -15-