FORM 10-Q
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

For the quarterly period ended March 31, 2000

                                       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 0-19835

                                DAY RUNNER, INC.
             (Exact name of registrant as specified in its charter)

        DELAWARE                                             95-3624280
(State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                       Identification Number)

                               2750 W. MOORE AVENUE
                            FULLERTON, CALIFORNIA 92833
              (Address and zip code of principal executive offices)

                                 (714) 680-3500
              (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  registrant's
classes of Common Stock, as of the latest practicable date:

            Class                   Number of Shares Outstanding at  May 5, 2000
------------------------------     --------------------------------------------
Common Stock, $0.001 par value                     2,382,169

<PAGE>




<TABLE>
<CAPTION>


                                DAY RUNNER, INC.

                                      INDEX


                                                                                                      Page Reference

<S>                                                                                                           <C>
COVER PAGE.......................................................................................             1

INDEX    ........................................................................................             2

PART I -- FINANCIAL INFORMATION

         Item 1.     Consolidated Financial Statements

                     Consolidated Balance Sheets
                       March 31, 2000 and June 30, 1999..........................................             3

                     Consolidated Statements of Operations
                       Three and Nine Months Ended March 31, 2000 and 1999.......................             4

                     Consolidated Statements of Cash Flows
                       Nine Months Ended March 31, 2000 and 1999.................................             5

                     Notes to Consolidated Financial Statements..................................             6

         Item 2.     Management's Discussion and Analysis of
                     Financial Condition and Results of Operations...............................            12

PART II -- OTHER INFORMATION

         Item 4.     Submission of Matters to a Vote of Security Holders.........................            21

         Item 6.     Exhibits and Reports on Form 8-K............................................            21

SIGNATURES.......................................................................................            22

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                        DAY RUNNER, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                             (DOLLARS IN THOUSANDS)

                                     ASSETS

                                                                                        MARCH 31,        JUNE 30,
                                                                                          2000             1999
                                                                                      -----------      ----------
Current assets:
<S>                                                                                   <C>               <C>
    Cash and cash equivalents......................................................   $   8,598         $  9,132
    Accounts receivable (less allowance for doubtful accounts and
       sales returns and other allowances of $8,271 and $11,481 at
       March 31, 2000 and June 30, 1999, respectively).............................      16,107           43,215
    Inventories....................................................................      40,789           42,361
    Prepaid expenses and other current assets......................................       4,787            4,506
    Income taxes receivable........................................................                          434
    Deferred income taxes..........................................................      11,189           11,189
                                                                                      ---------         --------
       Total current assets........................................................      81,470          110,837
    Property and equipment, net ...................................................      14,451           17,851
    Goodwill and other intangible assets (net of accumulated amortization of $3,883
       and $1,934 at March 31, 2000 and June 30, 1999, respectively)...............      83,952           85,830
    Other assets (net of accumulated amortization of $692 and $410 at March
        31, 2000 and June 30, 1999, respectively)..................................       2,015            1,793
                                                                                       --------         --------
TOTAL  ............................................................................    $181,888         $216,311
                                                                                       ========         ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Line of credit.................................................................    $ 92,993
    Accounts payable...............................................................      10,773         $ 18,722
    Accrued expenses...............................................................      21,217           19,547
    Income taxes payable...........................................................       1,158
    Loan notes.....................................................................                        2,077
                                                                                      ---------         --------
       Total current liabilities...................................................     126,141           40,346
                                                                                      ---------         --------

Long-term liabilities:
    Line of credit.................................................................                      105,317
    Loan notes.....................................................................         254              251
                                                                                      ---------         --------
       Total long-term liabilities.................................................         254          105,568
                                                                                      ---------         --------

Commitments and contingencies

Stockholders' equity:
    Preferred stock (1,000,000 shares authorized; $0.001 par value; no shares
       issued or outstanding)......................................................
    Common stock  (29,000,000  shares  authorized;  $0.001 par value;  2,745,727
       shares  issued  and  2,382,169  shares  outstanding  at March  31,  2000;
       2,743,705 shares issued and 2,380,147 shares outstanding at
        June 30, 1999).............................................................          14               14
    Additional paid-in capital.....................................................      21,742           21,709
    Retained earnings..............................................................      46,610           61,078
    Accumulated other comprehensive income.........................................         485              954
    Treasury stock - At cost (157,572 shares at March 31, 2000 and
     June 30, 1999)................................................................     (13,358)         (13,358)
                                                                                      ---------         --------
       Total stockholders' equity..................................................      55,493           70,397
                                                                                      ---------         --------
TOTAL  ............................................................................    $181,888         $216,311
                                                                                      =========         ========

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



<PAGE>

<TABLE>
<CAPTION>


                        DAY RUNNER, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                                                                  Three Months Ended             Nine Months Ended
                                                                       March 31,                     March 31,
                                                                ----------------------        ----------------
                                                                    2000        1999             2000       1999
                                                                ----------  ----------        ---------   ------

<S>                                                             <C>         <C>               <C>         <C>
Net sales....................................................   $  29,976   $  36,216         $139,312    $148,512
Cost of goods sold...........................................      18,203      19,721           75,633      78,087
                                                                ---------   ---------         ---------   --------
Gross profit.................................................      11,773      16,495           63,679      70,425
                                                                ---------   ---------         ---------   --------

Operating expenses:
     Selling, marketing and distribution.....................      12,836      14,666           46,328      45,841
     General and administrative..............................       7,861       7,145           22,770      18,249
     Costs relating to activities associated
        with the Filofax acquisition.........................                                                1,072
     Facilities closure costs................................       3,030                        3,030
                                                                ---------   ---------        ---------   ---------
     Total operating expenses................................      23,727      21,811           72,128      65,162
                                                                ---------   ---------        ---------   ---------

(Loss) income from operations................................     (11,954)     (5,316)          (8,449)      5,263
Net interest expense.........................................       2,726       1,770            8,693       3,159
                                                                ---------   ---------        ---------   ---------

(Loss) income before (benefit) provision for income taxes....     (14,680)     (7,086)         (17,142)      2,104
(Benefit) provision for income taxes.........................      (2,305)     (2,638)          (2,674)        853
                                                                ---------   ---------        ---------   ---------
Net (loss) income............................................   $ (12,375)  $  (4,448)       $ (14,468)  $   1,251
                                                                =========   =========        =========   =========

(Loss) earnings per common share:
     Basic...................................................   $   (5.20)  $   (1.87)        $  (6.08)   $   0.53
                                                                =========   =========         ========    ========
     Diluted.................................................   $   (5.20)  $   (1.87)        $  (6.08)   $   0.50
                                                                =========   =========         ========    ========

Weighted-average number of common shares outstanding:
     Basic...................................................       2,382       2,380             2,381      2,381
                                                                =========   =========         =========   ========
     Diluted.................................................       2,382       2,380             2,381      2,495
                                                                =========   =========         =========   ========


</TABLE>















                See accompanying notes to consolidated financial
                                  statements.


<PAGE>


<TABLE>
<CAPTION>

                        DAY RUNNER, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)
                                                                                          Nine Months Ended
                                                                                               March 31,
                                                                                         --------------------
                                                                                           2000        1999
                                                                                         --------    --------
Cash flows from operating activities:
<S>                                                                                       <C>          <C>
    Net (loss) income.............................................................        $(14,468)    $ 1,251
    Adjustments to reconcile net (loss) income to net cash provided by
      operating activities:
       Depreciation and amortization..............................................           9,228       7,283
       Provision for doubtful accounts and sales returns and other allowances.....          17,214       8,576
       Loss on disposal of property and equipment.................................             861          18
       Changes in operating assets and liabilities, net of acquisition of business:
          Accounts receivable.....................................................          10,008      13,567
          Inventories.............................................................           1,617       6,881
          Prepaid expenses and other current assets...............................            (246)       (923)
          Income taxes receivable.................................................             452        (308)
          Accounts payable........................................................          (8,037)     (3,906)
          Accrued expenses........................................................           1,417      (3,241)
          Income taxes payable....................................................           1,101         905
                                                                                         ---------   ---------
Net cash provided by operating activities.........................................          19,147      30,103
                                                                                         ---------   ---------
Cash flows from investing activities:
    Acquisition of business.......................................................                     (90,364)
    Acquisition of property and equipment.........................................          (3,230)     (7,425)
    Other assets..................................................................             (35)        210
                                                                                         ---------   ---------
         Net cash used in investing activities....................................          (3,265)    (97,579)
                                                                                         ---------   ---------
Cash flows from financing activities:
    Net (repayments) borrowings under lines of credit.............................         (12,815)     79,647
    Repayment of loan notes.......................................................          (2,093)
    Borrowings under loan notes...................................................                       2,416
    Financing fees................................................................          (1,710)     (1,200)
    Net proceeds from issuance of common stock....................................              33         218
    Repurchase of common stock....................................................                      (1,491)
                                                                                         ---------   ---------
         Net cash (used in) provided by financing activities......................         (16,585)     79,590
                                                                                         ---------   ---------
Effect of exchange rate changes in cash and cash equivalents......................             169        (237)
                                                                                         ---------   ---------
Net (decrease) increase in cash and cash equivalents..............................            (534)     11,877
Cash and cash equivalents at beginning of period..................................           9,132       2,923
                                                                                         ---------   ---------
Cash and cash equivalents at end of period........................................       $   8,598   $  14,800
                                                                                         =========   =========
                See accompanying notes to consolidated financial
                                  statements.

</TABLE>

<PAGE>



                        DAY RUNNER, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              (THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999)


1.  BASIS OF PRESENTATION AND ACCOUNTING POLICIES

          The  accompanying  consolidated  balance  sheet as of March 31,  2000,
consolidated  statements of operations for the three and nine months ended March
31, 2000 and 1999 and consolidated  statements of cash flows for the nine months
ended March 31, 2000 and 1999 are unaudited  but, in the opinion of  management,
include all adjustments consisting of normal, recurring accruals necessary for a
fair  presentation  of the financial  position and the results of operations for
such periods.  Certain information and footnote disclosures normally included in
financial statements prepared in conformity with accounting principles generally
accepted  in the United  States of America  have been  omitted  pursuant  to the
requirements  of the  Securities and Exchange  Commission,  although the Company
believes  that the  disclosures  included in the financial  statements  included
herein  are  adequate  to make  the  information  therein  not  misleading.  The
financial  statements  included  herein should be read in  conjunction  with the
Company's audited consolidated  financial statements for the year ended June 30,
1999, and the notes thereto,  which are included in the Company's  Annual Report
on Form 10-K.

         The results of operations for the three and nine months ended March 31,
2000 and 1999 are not necessarily indicative of the results for a full year. The
seasonality of the Company's  financial results and the  unpredictability of the
factors  affecting  such  seasonality  make the  Company's  quarterly and yearly
financial results difficult to predict and subject to significant fluctuation.

         Certain  reclassifications  were  made to the  prior  period  financial
statements to conform to the current period presentation.

2.  INVENTORIES

         Inventories consist of the following (in thousands):

                                             March 31,              June 30,
                                                2000                 1999
                                           -----------           -----------

         Raw materials...................  $    8,879             $   12,026
         Work in process.................       2,566                  2,138
         Finished goods..................      29,344                 28,197
                                           ----------             ----------
                  Total..................  $   40,789             $   42,361
                                           ==========             ==========

3.  LINE OF CREDIT

         On  September  23,  1998,  the  Company  entered  into  a  $160,000,000
Revolving Loan Agreement (the "Loan Agreement") with Wells Fargo Bank,  National
Association  ("Wells  Fargo").  Effective  November  24,  1998,  this amount was
voluntarily  reduced  to  $145,000,000,   and  unamortized   financing  fees  of
approximately  $84,000 were charged to interest  expense.  The loan facility was
syndicated with a group of banks in December 1998.



<PAGE>



         On  October  12,  1999,  the  Company  and the banks  amended  the Loan
Agreement (the "Amended Loan Agreement").  The Amended Loan Agreement  converted
the  entire  outstanding  revolving  loan  balance  into a term loan  portion of
$90,444,000 and a revolving  credit loan portion of  $29,556,000.  The term loan
matures on September 30, 2001, and the revolving credit loan facility matures on
October 9, 2000.  The maturity date of the revolving  credit loan facility could
be automatically  extended through September 30, 2001, provided that the Company
achieves as of  September  30, 2000 a minimum  EBITDA,  a minimum  fixed  charge
coverage ratio and a maximum senior funded debt ratio, as defined in the amended
agreement. The Company does not, however,  anticipate that it will achieve these
requirements  and accordingly  expects the revolving  facility will terminate on
October 9, 2000 unless the credit facility is further  amended or  renegotiated.
As a result of the amendment of the Loan Agreement,  unamortized  financing fees
due under the Loan Agreement of approximately  $955,000 were charged to interest
expense  in  October  1999.  At March 31,  2000,  the  Company  had  $92,993,000
outstanding  under the Amended Loan  Agreement  and had  outstanding  letters of
credit totaling approximately $40,000.

         The  Amended  Loan  Agreement  is secured by the  Company's  assets and
includes, among other things, financial covenants requiring the maintenance of a
minimum fixed charge coverage ratio,  EBITDA,  stockholders'  equity and current
ratio, and a maximum senior funded debt coverage ratio and operating expenses to
net sales ratio, as defined in the amended agreement. The Amended Loan Agreement
also limits, among other things, the incurrence of liens and other indebtedness,
mergers,  consolidations,  the  sale of  assets,  annual  capital  expenditures,
advances, investments and loans by the Company and its subsidiaries,  dividends,
stock  repurchases and certain  transactions  with affiliates.  It permits up to
$10,000,000 of secured debt for currency  hedging  purposes and up to $1,500,000
of unsecured overdraft borrowings for foreign subsidiaries.

         The  outstanding  balances bear  interest at the Company's  election at
either (i) the higher of the Agent Bank's  prime rate or the Federal  Funds Rate
plus 50.00 basis  points,  plus an interest  rate margin  ranging  from 12.50 to
200.00 basis points,  or (ii) the  applicable  eurodollar  rate plus an interest
rate margin  ranging from 112.50 to 300.00 basis points,  depending on the level
of the funded  debt  ratio at the end of each  fiscal  quarter.  During the nine
months ended March 31, 2000, the  weighted-average  interest rate was 9.14%. The
interest rate at March 31, 2000 was 9.13%.

         Under the  Amended  Loan  Agreement,  the Company is  obligated  to pay
certain fees,  which include:  an unused  revolving loan  commitment fee ranging
from 37.50 to 67.50 basis points, which varies with the level of the funded debt
ratio at the end of each fiscal quarter, payable quarterly in arrears; letter of
credit fees  ranging  from 112.50 to 300.00  basis  points,  which vary with the
level of the funded  debt ratio at the time the letter of credit is issued;  and
amendment and other standard fees of approximately  $1,700,000,  which were paid
during the nine months ended March 31, 2000.

         On March 31,  2000,  the  Company and its banks  entered  into a waiver
agreement  which  modifies,  for  the  period  of  the  waiver  agreement,   the
stockholders'  equity covenant in the Amended Loan Agreement. In the waiver, the
revolving  credit loan facility was  voluntarily  reduced by $10,000,000 and the
availability  under the  revolving  facility  for the duration of the waiver was
limited to $5,000,000. The waiver expires as of June 1, 2000. Because the waiver
continues for less than a one year period, the Company's bank debt is classified
as short-term in its March 31, 2000  consolidated  balance sheet. The Company is
working with its banks to renegotiate the credit facility.


<PAGE>



4.  STOCKHOLDERS' EQUITY

         During  the  nine  months  ended  March  31,  2000,  certain  employees
exercised  options to purchase an  aggregate  of 2,022  shares of the  Company's
Common Stock for an aggregate of approximately $33,000.

5.  REVERSE STOCK SPLIT

         At a Special  Meeting of the Company's  stockholders  held on April 25,
2000, the Company's stockholders approved a reverse stock split of the Company's
outstanding shares of Common Stock.  Following the stockholders' vote, the Board
of Directors voted to amend the Company's Certificate of Incorporation to effect
a one-for-five  reverse stock split of each of the outstanding  shares of Common
Stock of the Company.  This action was effective May 1, 2000.  The reverse stock
split was  intended  to help the  Company  comply  with the Nasdaq  minimum  bid
requirements to maintain its listing on the Nasdaq National  Market.  All common
share  and per  share  data has  been  retroactively  restated  to  reflect  the
one-for-five  reverse  stock split in the  accompanying  consolidated  financial
statements.  (See "Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations - Liquidity and Capital  Resources - Nasdaq  National
Market Listing.)

6.  (LOSS) EARNINGS PER SHARE

         Basic  (loss)  earnings  per share are  computed by dividing net (loss)
income  by the  weighted-average  number of common  shares  outstanding  for the
period.  Diluted  (loss)  earnings per share are computed by dividing net (loss)
income by the sum of the  weighted-average  number of common shares  outstanding
for the  period  plus the  assumed  exercise  of all  dilutive  securities.  The
following  reconciles the numerator and denominator of the basic and diluted per
share  computations  for net  (loss)  income  (in  thousands,  except  per share
amounts):
<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED                            NINE MONTHS ENDED
                                                       MARCH 31,                                    MARCH 31,
                                         ---------------------------------------    -----------------------------------
                                                2000                  1999                 2000               1999
                                         -----------------      ----------------    -----------------    --------------

<S>                                            <C>                <C>                   <C>                   <C>
NET (LOSS) INCOME                              $(12,375)          $(4,448)              $(14,468)             $  1,251
                                               ========           =======               ========              ========


BASIC WEIGHTED-AVERAGE SHARES
   Weighted-average number of
     common shares outstanding                   2,382               2,380                 2,381                 2,381

EFFECT OF DILUTIVE SECURITIES
   Additional shares from the assumed
     exercise of options and warrants                                                                              526
   Shares assumed to be repurchased
     under the treasury stock method                                                                             (339)
   Non-qualified tax benefit                                                                                      (73)
                                               -------            --------              --------              -------

DILUTED WEIGHTED-AVERAGE SHARES
   Weighted-average number of
     common shares outstanding and
     common share equivalents                    2,382               2,380                 2,381                 2,495
                                               =======            ========              ========              ========

(LOSS) EARNINGS PER SHARE:

     Basic                                     $(5.20)        $   (1.87)$               $  (6.08)             $   0.53
                                               ======         ==========                ========              ========

     Diluted                                   $(5.20)        $   (1.87)                $  (6.08)             $   0.50
                                               ======         ==========                =========             ========
</TABLE>

         For the three and nine months ended March 31, 2000, dilutive securities
equivalent to approximately  648,700 and 533,800 shares,  respectively,  and for
the three months ended March 31, 1999, dilutive securities equivalent to 342,800
shares are not included as potential common share  equivalents  because they are
antidilutive.

7.  COMPREHENSIVE INCOME

         Comprehensive (loss) income is summarized as follows (in thousands):

                                                     NINE MONTHS ENDED MARCH 31,
                                                      2000             1999
                                                    -----------      ----------
         Net (loss) income                          $  (14,468)      $  1,251
         Foreign currency translation adjustment          (469)           279
                                                    ----------       ----------
         Comprehensive (loss) income                $  (14,937)      $  1,530
                                                    ==========       ==========

8.  FACILITIES CLOSURE COSTS

          On December 29, 1999,  the Company  announced that it was developing a
plan to restructure its operations to  substantially  cut costs. As part of this
restructuring, the Company closed its Irvine headquarters and consolidated those
activities into its Fullerton plant in mid-March.  Additionally,  the Company is
in the process of closing its Filofax  subsidiary's two manufacturing  plants in
the United Kingdom and moving those activities to subcontractors, a process that
the  Company  expects  to  complete  by  fiscal  year-end.  As a result of these
closures,  the Company  charged  $3,030,000  to  operating  expenses  during the
quarter  ended March 31, 2000,  all of which is included in accrued  expenses at
March 31,  2000.  Included in the  facilities  closure  costs of  $3,030,000  is
approximately  $825,000 in severance costs, which the Company expects to pay out
during the quarter ending June 30, 2000. The remaining  balance of approximately
$2,205,000  represents  a  provision  for  estimated  losses on the  disposal of
property and  equipment  and the  cancellation  of certain  leases and contracts
which the Company expects to substantially settle during the quarter ending June
30, 2000.

9.  SEGMENT INFORMATION

         The Company's operating segments have similar economic  characteristics
and, as such, the Company has  aggregated  six operating  segments into a single
reportable  segment  in  conformity  with  Statement  of  Financial   Accounting
Standards  ("SFAS") No. 131,  Disclosures  About  Segments of an Enterprise  and
Related Information.  The business activities of the Company's operating segment
are the development,  manufacturing and marketing of paper-based  organizers for
the retail  market.  In addition,  the Company also develops,  manufactures  and
markets a number of  related  organizing  products  including  telephone/address
books,  business  accessories,  products for students and  organizing  and other
wallboards.

         The Company groups its products into three  categories:  organizers and
planners;  their refills, which include calendars,  other pages and accessories;
and related organizing products. The following table sets forth, for the periods
indicated, approximate Day Runner net sales by product category (in thousands):

<TABLE>
<CAPTION>



                                                  THREE MONTHS ENDED                            NINE MONTHS ENDED
                                                       MARCH 31,                                    MARCH 31,
                                         ---------------------------------------    -----------------------------------
                                                2000                  1999                 2000               1999
                                         -----------------      ----------------    -----------------   ---------------



<S>                                       <C>                    <C>                 <C>                   <C>
      Organizers and planners..........   $   13,124             $   16,733          $   60,996            $   60,031
      Refills..........................        9,023                 12,305              51,884                51,402
      Related organizing products......        7,829                  7,178              26,432                37,079
                                          ----------             ----------          ----------            ----------
         Total.........................   $   29,976             $   36,216          $  139,312            $  148,512
                                          ==========             ==========          ==========            ==========
</TABLE>
<PAGE>

10.  OPERATIONS IN FOREIGN COUNTRIES

         The following is a summary of the financial  activity of the Company by
geographical area (in thousands):
<TABLE>
<CAPTION>

                                                           NINE MONTHS ENDED MARCH 31, 2000
                                                           --------------------------------
                                    UNITED STATES           EUROPE           OTHER         ELIMINATIONS           TOTAL
                                    -------------           ------           -----         ------------           -----

<S>                                  <C>                  <C>            <C>                                 <C>
Net sales to unaffiliated entities   $   86,695           $ 37,233       $   15,384                          $  139,312
Transfers between geographic areas        1,885                                 677          $   (2,562)
                                     ----------           --------       ----------          ----------
Net sales                            $   88,580           $ 37,233       $   16,061          $   (2,562)     $  139,312
                                     ==========           ========       ==========          ==========      ==========

(Loss) income from operations        $   (7,735)          $  1,420       $      (39)         $   (2,095)     $   (8,449)
                                     ==========           ========       ==========          ==========      ==========

Long-lived assets                    $   86,658           $ 81,202       $    3,268          $  (70,710)     $  100,418
                                     ==========           ========       ==========          ==========      ==========

                                                           NINE MONTHS ENDED MARCH 31, 1999
                                                           --------------------------------
                                    UNITED STATES           EUROPE           OTHER         ELIMINATIONS           TOTAL
                                    -------------           ------           -----         ------------           -----

Net sales to unaffiliated entities   $  111,493           $ 23,097       $   13,922                          $  148,512
Transfers between geographic areas        2,912                               1,435          $   (4,347)
                                     ----------           --------       ----------          ----------
Net sales                            $  114,405           $ 23,097       $   15,357          $   (4,347)     $  148,512
                                     ==========           ========       ==========          ==========      ==========

Income from operations               $    1,557           $  4,239       $      569          $   (1,102)     $    5,263
                                     ==========           ========       ==========          ==========      ==========

Long-lived assets                    $   86,155           $ 83,346       $    3,454          $  (67,532)     $  105,423
                                     ==========           ========       ==========          ==========      ==========

</TABLE>

11.  CONTINGENCIES

         In September 1999, two, and in October 1999, one additional,  purported
securities  class action lawsuits were filed in the United States District Court
for the Central District  California (the "District  Court") against the Company
and certain of its  officers  and  directors.  The  complaints  alleged that the
Company  violated  Section 10(b) of the  Securities  Exchange Act and Rule 10b-5
thereunder  through  the  misstatement  of the  Company's  financial  results of
operations  for the first through third  quarters of fiscal 1999.  These alleged
misstatements  purportedly  consisted of improper  accounting for  manufacturing
variances  and other  costs.  The  plaintiffs  in all these  actions  purport to
represent a class  consisting of all  purchasers  of the Company's  Common Stock
between October 20, 1998 and August 31, 1999.

         On January 14, 2000, a  consolidated  amended  complaint  (the "Amended
Complaint")  was filed in the District  Court against the Company and certain of
its officers and directors.  The Amended Complaint  extended the time period for
purported  class members to include  persons who purchased the Company's  Common
Stock  between  February 1, 1998  through  August 31,  1999.  In addition to the
alleged misstatements included in the earlier complaints,  the Amended Complaint
alleges  that the Company  failed to make certain  disclosures  during this time
period and that certain  officers  and  directors  sold shares of the  Company's
Common  Stock  during this period.  As they did in the earlier  complaints,  the
plaintiffs  are  seeking  unspecified   compensatory   damages  in  the  Amended
Complaint.

         In April  2000,  the  plaintiffs  agreed in  principle  to dismiss  the
Amended  Complaint without prejudice. Although no dismissal  has yet been filed,
plaintiffs have committed to file their dismissal prior to May 18, 2000.

         The Company is not a party to any other litigation that, in the opinion
of management,  would reasonably be expected to have a materially adverse effect
on the consolidated financial statements.
<PAGE>

12.  STATEMENTS OF CASH FLOW

         Supplemental disclosure of cash flow information (in thousands):

                                                    NINE MONTHS ENDED MARCH 31,
                                                       2000            1999
                                                    ----------      ----------

             Cash paid during the period for:
               Interest                             $  6,374         $  2,249
               Income taxes, net of refunds
                  received                          $ (4,111)       $   1,190

         Supplemental disclosure of noncash investing and financing activities:

                As of March 31, 1999,  the Company had purchased  703,308 shares
         of Filofax stock for approximately  (pound)1,477,000  (approximately US
         $2,438,000)  in loan notes that were issued to former  shareholders  of
         Filofax.



<PAGE>




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

         The following  discussion  should be read in  conjunction  with, and is
qualified in its entirety by, the  Consolidated  Financial  Statements and Notes
thereto  included  elsewhere in this Quarterly  Report.  Historical  results and
percentage   relationships  among  any  amounts  included  in  the  Consolidated
Financial  Statements  are not  necessarily  indicative  of trends in  operating
results for any future period.

         Since  the  Company's  introduction  of the  first  Day  Runner  System
organizer in 1982, the Company's revenues have been generated by sales primarily
of  organizers  and planners and  secondarily  of refills.  Since fiscal 1995, a
majority of the Company's internally generated growth has resulted from sales of
related  organizing  products.  For a number of years,  the Company  focused the
great majority of its product  development,  sales and marketing  efforts on the
U.S. office products channel,  which accounted for 33.6% of third quarter fiscal
2000 net sales and 34.1% of net sales for the nine months  ended March 31, 2000,
and the U.S.  mass market  channel,  which  accounted for 22.1% of third quarter
fiscal 2000 net sales and 20.0% of net sales for the nine months ended March 31,
2000.   With  the  October  30,  1998   acquisition  of  Filofax,   the  Company
substantially  increased its distribution in markets outside the U.S., and sales
to foreign customers  accounted for 33.2% of third quarter fiscal 2000 net sales
and 37.4% of net sales for the nine months ended March 31, 2000.

RESTRUCTURING OF OPERATIONS

          For a number of quarters,  the Company's  results have been  adversely
affected by changes in the supply chain  management  practices of the large U.S.
retailers  that account for the bulk of the Company's  U.S.  sales.  The Company
believes  that the U.S.  retail  environment  has  changed  and that  large U.S.
retailers  will  continue  to  emphasize   minimizing  on-hand  inventories  and
increasing inventory turns.

         On December 29, 1999,  the Company  announced  that it is  developing a
plan to  restructure  its  operations to  substantially  cut costs.

          As  part  of  this  restructuring,   the  Company  (i)  flattened  its
organization  and reduced  headcount  in January,  2000;  (ii) closed its Irvine
headquarters  and  consolidated  those  activities  into its Fullerton  plant in
mid-March;  and (iii) is in the process of closing its Filofax  subsidiary's two
manufacturing  plants in the United  Kingdom  and  moving  those  activities  to
subcontractors,  a  process  that the  Company  expects  to  complete  by fiscal
year-end.  The resulting  severance costs of $401,000 and the facilities closure
costs of $3,030,000 are included in third quarter fiscal 2000 operating expenses
of which $3,149,000 is included in accrued expenses at March 31, 2000.  Included
in the  facilities  closure  costs of $3,030,000  is  approximately  $825,000 in
severance costs,  which the Company expects to pay out during the quarter ending
June 30, 2000. The remaining  balance of approximately  $2,205,000  represents a
provision for estimated losses on the disposal of property and equipment and the
cancellation  of  certain  leases and  contracts  which the  Company  expects to
substantially settle during the quarter ending June 30, 2000.

         The Company's goal is to complete the bulk of its  restructuring by the
end of the fiscal  year.  The  Company  expects a  substantial  loss in the June
quarter,  reflecting  the  effects of a number of factors,  including  continued
constraints on its U.S.  sales,  the decision to eliminate some less  profitable
back-to-school promotional activity and additional restructuring costs.


<PAGE>



RESULTS OF OPERATIONS

         The  following  table  sets  forth,  for  the  periods  indicated,  the
percentages  that  statement  of  operations  items  bear to net  sales  and the
percentage change in the dollar amounts of such items.

<TABLE>
<CAPTION>

                                                                                               Percentage Change
                                                            Percentage of Sales               Three         Nine
                                                   -----------------------------------        Months       Months
                                                          Three               Nine            Ended        Ended
                                                      Months Ended        Months Ended       March 31,     March  31,
                                                        March 31,           March 31,         1999         1999
                                                   ---------------      --------------         to           to
                                                   2000       1999      2000      1999        2000         2000
                                                   ----       ----      ----      ----       -------      -------

<S>                                                <C>       <C>        <C>      <C>          <C>          <C>
Net sales........................................  100.0%    100.0%     100.0%   100.0%       (17.2)%      (6.2)%
Cost of goods sold...............................   60.7      54.5       54.3     52.6         (7.7)       (3.1)
                                                   -----     -----      -----    -----
Gross profit.....................................   39.3      45.5       45.7     47.4        (28.6)       (9.6)
                                                   -----     -----      -----    -----
Operating expenses:
   Selling, marketing and distribution...........   42.8      40.5       33.3     30.9        (12.5)        1.1
   General and administrative....................   26.3      19.7       16.3     12.3         10.0        24.8
   Costs related to activities associated with the
        Filofax acquisition......................                                               0.7      (100.0)
   Facilities closure costs......................   10.1                  2.2                  N/A          N/A
                                                   -----     ----       -----    -----
     Total operating expenses....................   79.2      60.2       51.8     43.9          8.8        10.7
                                                   -----     -----      -----    -----
(Loss) income from operations....................  (39.9)    (14.7)      (6.1)     3.5        124.9      (260.5)
Net interest expense.............................    9.1       4.9        6.2      2.1         54.0       175.2
                                                   -----     -----      -----    -----
(Loss) income before (benefit) provision for
  income taxes                                     (49.0)    (19.6)      (12.3)    1.4        107.2      (914.7)
(Benefit) provision for income taxes.............   (7.7)     (7.3)      (1.9)     0.6        (12.6)     (413.5)
                                                   -----     -----      -----    -----
Net (loss) income................................  (41.3)%   (12.3)%    (10.4)%    0.8%       178.2%    (1256.5)%
                                                   =====     =====      =====    =====
</TABLE>

         The  following  tables  set  forth,  for  the  periods  indicated,  the
Company's approximate net sales by distribution channel and product category and
as a percentage of total net sales.

<TABLE>
<CAPTION>

DISTRIBUTION CHANNEL:
                                       Three Months Ended March 31,                 Nine Months Ended March 31,
                                 ----------------------------------------    ------------------------------------------
                                         2000                 1999                  2000                  1999
                                 -------------------  -------------------    ------------------     -------------------
                                                            (Unaudited; dollars in thousands)

<S>                                 <C>        <C>     <C>          <C>         <C>        <C>        <C>        <C>
Office products.................    $10,088    33.6%   $ 10,614     29.3%       $ 47,561   34.1%      $ 52,830   35.6%
Mass market.....................      6,616    22.1      10,123     27.9          27,833   20.0         48,958   33.0
Foreign customers...............      9,941    33.2      11,065     30.6          52,044   37.4         35,375   23.8
Other...........................      3,331    11.1       4,414     12.2          11,874    8.5         11,349    7.6
                                    -------   -----     -------     ----        --------   ----      ---------  -----
   Total........................    $29,976   100.0%    $36,216    100.0%       $139,312  100.0%      $148,512  100.0%
                                    =======   =====     =======    =====        ========  =====       ========  =====
<PAGE>

PRODUCT CATEGORY:
                                       Three Months Ended March 31,                 Nine Months Ended March 31,
                                 ----------------------------------------    ------------------------------------------
                                         2000                 1999                  2000                  1999
                                 -------------------  -------------------    ------------------     -------------------
                                                         (Unaudited; dollars in thousands)

Organizers and planners.........    $13,124    43.8%   $ 16,733     46.2%      $60,996     43.8%   $ 60,031     40.4%
Refills.........................      9,023    30.1      12,305     34.0        51,884     37.2      51,402     34.6
Related organizing products.....      7,829    26.1       7,178     19.8        26,432     19.0      37,079     25.0
                                    -------   -----    --------   ------      --------    -----    --------    -----
   Total........................    $29,976   100.0%    $36,216    100.0%     $139,312    100.0%   $148,512    100.0%
                                    =======   =====     =======    =====      ========    =====    ========    =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH
THE THREE MONTHS ENDED MARCH 31, 1999

         Net Sales.  Net sales consist of revenues from gross product  shipments
net of  allowances  for returns,  rebates and credits.  In the third  quarter of
fiscal 2000,  net sales  decreased by  $6,240,000,  or 17.2%,  compared with the
third  quarter of fiscal 1999.  For a number of  quarters,  the Company has been
adversely  affected by changes in the retail  environment  related to the supply
chain  management  practices  of  its  large  U.S.  customers.  This  "inventory
tightening,"  which has resulted in lower gross shipments and increased returns,
continued to constrain the Company's net sales in the fiscal 2000 third quarter.
Other  major  factors  causing  lower  net  sales for the  quarter  include  the
reduction of certain kinds of promotional activity and the Company's decision to
de-emphasize sales to certain less profitable distribution channels.

         In the quarter ended March 31, 2000,  net sales to the office  products
channel  decreased  by  $526,000,  or 5.0%;  net sales to mass market  customers
decreased by $3,507,000,  or 34.6%, net sales to foreign customers  decreased by
$1,124,000,  or 10.2%, and net sales to miscellaneous customers grouped together
as "other," decreased by $1,083,000, or 24.5%.

         Net sales of organizers and planners declined by $3,609,000,  or 21.6%,
and net sales of refills declined by $3,282,000,  or 26.7%. Net sales of related
organizing products grew by $651,000, or 9.1%.

         Gross Profit.  Gross profit is net sales less cost of goods sold, which
is comprised of materials, labor and manufacturing overhead. Gross profit may be
affected by, among other  things,  product mix,  production  levels,  changes in
vendor and  customer  prices and  discounts,  net sales  volume and growth rate,
sales returns and other allowances,  purchasing and manufacturing  efficiencies,
tariffs,  duties and inventory  carrying costs.  Gross profit as a percentage of
net sales  decreased  from 45.5% in the third quarter of fiscal 1999 to 39.3% in
the third quarter of fiscal 2000  primarily  because lower volume  decreased the
Company's ability to absorb fixed costs and reduced production efficiency.

         Operating  Expenses.  Because of $3,030,000 in facilities closure costs
resulting  from  the  Company's  ongoing  restructuring  of  operations,   total
operating  expenses  increased by  $1,916,000,  or 8.8%, in the third quarter of
fiscal  2000,  compared  with the third  quarter of fiscal 1999.  Without  these
costs,  total  operating  expenses would have decreased by $1,114,000,  or 5.1%.
Selling,  marketing and distribution expenses decreased by $1,830,000,  or 12.5%
primarily  because of the  Company's  focus on  controlling  costs.  General and
administrative  expenses increased by $716,000,  or 10.0%,  primarily because of
higher  general  and  administrative  costs  incurred by the  Company's  Filofax
subsidiary.

         Net Interest  Expense.  Net interest  expense for the third  quarter of
fiscal 2000 rose to $2,726,000,  compared with  $1,770,000 for the third quarter
of fiscal 1999,  primarily  because of lower  interest  income due to lower cash
balances on hand throughout the quarter.

         Income Taxes.  The Company recorded an income tax benefit of $2,305,000
for the third  quarter of fiscal  2000,  compared  with an income tax benefit of
$2,638,000  for the third  quarter of fiscal 1999,  and an effective tax rate of
15.7%,  compared with 37.2%. The Company's tax benefit for the fiscal 2000 third
quarter was lower than it  otherwise  would have been,  however,  because of the
Company's inability to fully utilize its foreign tax credits and the pledging of
the capital stock of Day Runner Hong Kong Ltd. as part of the security  required
by the Company's Amended Loan Agreement.



<PAGE>



NINE MONTHS ENDED MARCH 31, 2000 COMPARED WITH
THE NINE MONTHS ENDED MARCH 31, 1999

         Net Sales.  During the nine  months  ended  March 31,  2000,  net sales
decreased by  $9,200,000,  or 6.2%,  primarily  because of the ongoing impact of
U.S. retailers' inventory tightening,  which reduced gross product shipments and
increased   returns.   Net  sales  to  office  products  customers  declined  by
$5,269,000,  or  10.0%,  and net sales to mass  market  customers  decreased  by
$21,125,000,  or 43.1%.  Because of the inclusion of Filofax's net sales for the
entire nine months, compared with five months of the same period of fiscal 1999,
net sales to foreign  customers grew by $16,669,000,  or 47.1%, and net sales to
miscellaneous  customers grouped together as "other"  increased by $525,000,  or
4.6%.

         Because of the  inclusion of  Filofax's  net sales for the entire first
nine months of fiscal 2000,  net sales of organizers  and planners  increased by
$965,000, or 1.6%, and net sales of refills grew by $482,000, or 0.9%. Net sales
of related  organizing  products decreased by $10,647,000,  or 28.7%.

         Gross Profit.  Gross profit as a percentage of net sales decreased from
47.4% in the first nine months of fiscal 1999 to 45.7% for the first nine months
of fiscal 2000. A decline in the gross profit of the Company's  U.S.  operations
resulting  primarily  from an increase in the  provision  for sales  returns was
partially  offset by the  inclusion  of  Filofax's  gross  profit for the entire
nine-month  period ended March 31, 2000,  compared  with five months of the same
period of last year.

         Operating  Expenses.  Total operating expenses increased by $6,966,000,
or 10.7%,  in the first nine months of fiscal 2000  compared with the first nine
months of fiscal  1999 and  increased  as a  percentage  of sales  from 43.9% to
51.8%.  The dollar increase  resulted  primarily from the inclusion of Filofax's
expenses  for the entire nine months ended March 31,  2000,  compared  with five
months  of the same  period  last  year,  and  secondarily  from  $3,030,000  in
facilities  closure costs resulting from the Company's ongoing  restructuring of
its operations.  Without the facilities  closure costs, total operating expenses
would have been 49.6% of sales.

         Selling,  marketing and distribution expenses increased by $487,000, or
1.1%,  and general and  administrative  expenses grew by  $4,521,000,  or 24.8%,
because of the inclusion of Filofax's  expenses for the entire nine-month period
compared  with five months of the same period last year.  As a percentage of net
sales,  selling,  marketing and  distribution  expenses  increased from 30.9% to
33.3%,  and general and  administrative  expenses  increased from 12.3% to 16.3%
because of the Company's decreased ability to absorb expenses as a result of the
decline in U.S. net sales.

         Net Interest Expense. Net interest expense for the first nine months of
fiscal 2000 was  $8,693,000,  compared with $3,159,000 for the first nine months
of fiscal 1999, primarily because the Company's bank debt, which was principally
incurred to finance  the Filofax  acquisition,  was  outstanding  for the entire
nine-month  period ended March 31, 2000,  compared with  approximately  four and
one-half months of the same period last year.  Additionally,  as a result of the
amendment of the Loan Agreement,  unamortized  financing fees due under the Loan
Agreement of approximately  $955,000 were charged to interest expense in October
1999 (see Note 3 to the Consolidated Financial Statements).

         Income Taxes.  The Company recorded an income tax benefit of $2,674,000
for the first nine months of fiscal 2000,  compared with an income tax provision
of $853,000 for the first nine months of fiscal 1999,  and an effective tax rate
of 15.6%,  compared  with 40.5%.  The  Company's tax benefit for the fiscal 2000
nine months was lower than it otherwise would have been, however, because of the
Company's inability to fully utilize its foreign tax credits and the pledging of
the capital stock of Day Runner Hong Kong Ltd. as part of the security  required
by the Company's Amended Loan Agreement.

SEASONAL FLUCTUATIONS

         The Company  has  historically  experienced  and expects to continue to
experience  significant  seasonal  fluctuations in its sales and other financial
results that it believes  have  resulted and will  continue to result  primarily
from its  customers'  and users'  buying  patterns.  These buying  patterns have
typically  adversely  affected  orders  for the  Company's  products  from North
American  customers in the third quarter of each fiscal year and from  customers
outside North America in the third and fourth quarter of each fiscal year.

         Although it is  difficult to predict the future  seasonality  of sales,
the Company  believes that future  seasonality  should be influenced at least in
part by customer and user buying  patterns  substantially  similar to those that
have historically  affected the Company.  In addition,  the Company expects that
the changes in the supply chain management practices of its large U.S. customers
and  the  Company's  efforts  to  respond  to  those  changes  will  reduce  its
back-to-school  sales in the June quarter of fiscal 2000 and may  exacerbate the
Company's  seasonality  in the  future.  Quarterly  financial  results  are also
affected by new product  introductions and line extensions,  the timing of large
orders,  changes in product sales or customer mix, vendor and customer  pricing,
production levels,  supply and manufacturing  delays, large customers' inventory
management and general industry and economic conditions.  The seasonality of the
Company's  financial results and the  unpredictability  of the factors affecting
such  seasonality  make the  Company's  quarterly and yearly  financial  results
difficult to predict and subject to significant fluctuation.

LIQUIDITY AND CAPITAL RESOURCES

         General.  The  Company's  cash and cash  equivalents  at March 31, 2000
decreased to $8,598,000 from $9,132,000 at June 30, 1999. During the nine months
ended  March  31,  2000,  net cash of  $19,147,000  was  provided  by  operating
activities  which was partially offset by net cash of $3,265,000 and $16,585,000
used in financing activities and investing activities, respectively.

         Of the  $19,147,000  net amount  provided  by the  Company's  operating
activities,  $17,214,000 was provided by the provision for doubtful accounts and
sales returns and other allowances,  $9,228,000 was provided by depreciation and
amortization,  $10,008,000  was  provided by a decrease in accounts  receivable,
$1,617,000 was provided by a decrease in inventories, $1,417,000 was provided by
a decrease in accrued  expenses  and  $1,101,000  was provided by an increase in
income  taxes  payable.  These  amounts were  partially  offset by a net loss of
$14,468,000 and a decrease of 8,037,000 in accounts payable.

         Accounts receivable (net) at March 31, 2000 decreased by 62.7% from the
fiscal  1999  year-end  amount  and by 35.5%  from the  March  31,  1999  amount
primarily  because of the decrease in U.S. sales and secondarily  because of the
improvement in the average  collection  period. The average collection period of
accounts receivable at March 31, 2000 was 55 days, compared with 74 days at June
30, 1999 and 65 days at March 31, 1999.

         Inventories  at March 31, 2000  decreased  by 3.7% from the fiscal 1999
year end amount and by 5.0% from the March 31, 1999 amount primarily  because of
lower forecasted sales.

         Of  the  $3,265,000   net  amount  used  in  the  Company's   investing
activities, $3,230,000 was used to acquire primarily machinery and equipment and
secondarily data processing equipment and software.

         Of  the  $16,585,000  net  amount  used  in  the  Company's   financing
activities, $12,815,000 was repaid on the line of credit and $2,093,000 was used
to repay loan notes  incurred in  connection  with the Filofax  acquisition  and
$1,710,000 was used for payment of financing fees in connection with the Amended
Loan Agreement.

         Bank  Loan.  On  September  23,  1998,  the  Company   entered  into  a
$160,000,000  Revolving Loan Agreement (the "Loan  Agreement")  with Wells Fargo
Bank, National  Association  ("Wells Fargo").  Effective November 24, 1998, this
amount was voluntarily reduced to $145,000,000,  and unamortized  financing fees
of approximately $84,000 were charged to interest expense. The loan facility was
syndicated with a group of banks in December 1998.

         On  October  12,  1999,  the  Company  and the banks  amended  the Loan
Agreement (the "Amended Loan Agreement").  The Amended Loan Agreement  converted
the  entire  outstanding  revolving  loan  balance  into a term loan  portion of
$90,444,000 and a revolving  credit loan portion of  $29,556,000.  The term loan
matures on September 30, 2001, and the revolving credit loan facility matures on
October 9, 2000.  The maturity date of the revolving  credit loan facility could
be automatically  extended through September 30, 2001, provided that the Company
achieves as of  September  30, 2000 a minimum  EBITDA,  a minimum  fixed  charge
coverage ratio and a maximum senior funded debt ratio, as defined in the amended
agreement. The Company does not, however,  anticipate that it will achieve these
requirements  and accordingly  expects the revolving  facility will terminate on
October 9, 2000 unless the credit facility is further  amended or  renegotiated.
As a result of the amendment of the Loan Agreement,  unamortized  financing fees
due under the Loan Agreement of approximately  $955,000 were charged to interest
expense  in  October  1999.  At March 31,  2000,  the  Company  had  $92,993,000
outstanding  under the Amended Loan  Agreement  and had  outstanding  letters of
credit totaling approximately $40,000.

         The  Amended  Loan  Agreement  is secured by the  Company's  assets and
includes, among other things, financial covenants requiring the maintenance of a
minimum fixed charge coverage ratio,  EBITDA,  stockholders'  equity and current
ratio, and a maximum senior funded debt coverage ratio and operating expenses to
net sales ratio, as defined in the amended agreement. The Amended Loan Agreement
also limits, among other things, the incurrence of liens and other indebtedness,
mergers,  consolidations,  the  sale of  assets,  annual  capital  expenditures,
advances, investments and loans by the Company and its subsidiaries,  dividends,
stock  repurchases and certain  transactions  with affiliates.  It permits up to
$10,000,000 of secured debt for currency  hedging  purposes and up to $1,500,000
of unsecured overdraft borrowings for foreign subsidiaries.

         The  outstanding  balances bear  interest at the Company's  election at
either (i) the higher of the Agent Bank's  prime rate or the Federal  Funds Rate
plus 50.00 basis  points,  plus an interest  rate margin  ranging  from 12.50 to
200.00 basis points,  or (ii) the  applicable  eurodollar  rate plus an interest
rate margin  ranging from 112.50 to 300.00 basis points,  depending on the level
of the funded  debt  ratio at the end of each  fiscal  quarter.  During the nine
months ended March 31, 2000, the  weighted-average  interest rate was 9.14%. The
interest rate at March 31, 2000 was 9.13%.

         Under the  Amended  Loan  Agreement,  the Company is  obligated  to pay
certain fees,  which include:  an unused  revolving loan  commitment fee ranging
from 37.50 to 67.50 basis points, which varies with the level of the funded debt
ratio at the end of each fiscal quarter, payable quarterly in arrears; letter of
credit fees  ranging  from 112.50 to 300.00  basis  points,  which vary with the
level of the funded  debt ratio at the time the letter of credit is issued;  and
amendment and other standard fees of approximately  $1,700,000,  which were paid
during the nine months ended March 31, 2000.

          On March 31,  2000,  the Company and its banks  entered  into a waiver
agreement  which  modifies,  for  the  period  of  the  waiver  agreement,   the
stockholders' equity covenant in the Amended Loan Agreement.  In the waiver, the
revolving  credit loan facility was  voluntarily  reduced by $10,000,000 and the
availability  under the  revolving  facility  for the duration of the waiver was
limited to $5,000,000. The waiver expires as of June 1, 2000. Because the waiver
continues for less than a one year period, the Company's bank debt is classified
as short-term in its March 31, 2000  consolidated  balance sheet. The Company is
working with its banks to renegotiate the credit facility.

         Foreign  Currency.  Certain of the Company's  international  operations
conduct business in whole or in part in foreign currencies,  and this can result
in significant  gains or losses as a result of fluctuations in foreign  currency
exchange  rates.  The  Company's  exposure  to the  impact of  foreign  currency
fluctuations  increased  as a result  of the  Filofax  acquisition  because  the
acquisition  significantly  expanded  the  Company's  international  operations.
Included in general and administrative  expenses in the consolidated  statements
of operations are approximately $784,000 and $273,000 of foreign exchange losses
for the nine months ended March 31, 2000 and 1999, respectively.

         A single currency  called the euro was introduced in certain  countries
in Europe on January 1, 1999, but will not, at least for the foreseeable future,
be introduced in the United Kingdom. The use of a single currency may affect the
ability of Day Runner and other companies to price their products differently in
various  European  markets.  The Company is continuing to evaluate the impact of
the single currency in these markets.

          Adequacy  of  Capital.   The  Company's   liquidity  is  significantly
dependent  upon its  continued  compliance  with the terms of the  Amended  Loan
Agreement  and its  ability  to  renegotiate  or  obtain  waivers  of terms  and
conditions of the Amended Loan Agreement.  These terms presently include,  among
others,  payment of interest and principal  when due and  maintenance of certain
financial  ratios.  There can be no  assurance  that the Company will be able to
continue to comply with the terms of the Amended Loan  Agreement  and/or  obtain
waivers  of these or other  terms in the  agreement  or  renegotiate  the credit
facility  (see Note 3 to the  Consolidated  Financial  Statements.)  The Company
believes that if it is able to continue to comply and/or obtain the  appropriate
waiver(s) and/or  renegotiate the facility,  cash flow from  operations,  vendor
credit,  its existing  working  capital and its term and revolving  credit loans
will be sufficient to satisfy the Company's  anticipated  cash  requirements  at
least through fiscal 2000. Nonetheless,  the Company may seek additional sources
of capital as  necessary  or  appropriate  to finance  the  Company's  growth or
operations; however, there can be no assurance that such funds if needed will be
available on favorable terms, if at all.


         Nasdaq National Market Listing. The Company's Common Stock is currently
traded on the Nasdaq National  Market System (the "NMS").  In February and March
of this year the Company was notified  that it had failed to satisfy two listing
requirements  for the NMS:  $5.00 minimum bid  requirement  and a minimum public
float value of $15,000,000. The Company was given until May 17 and June 5, 2000,
respectively, to achieve and maintain compliance with these requirements.

         In an effort to satisfy the minimum bid price requirement, the Board of
Directors voted to recommend a reverse stock split of the Company's  outstanding
shares of Common Stock. At a Special Meeting of the Company's  stockholders held
on April 25, 2000, the Company's  stockholders approved the reverse stock split.
Following  the  stockholders'  vote,  the Board of Directors  voted to amend the
Company's  Certificate of Incorporation  to effect a one-for-five  reverse stock
split of each of the  outstanding  shares of the  Company's  Common  Stock.  The
Company's  Common Stock traded on the NMS on a post-split basis beginning May 1,
2000.

         The Company's  Common Stock has failed to achieve or maintain a minimum
bid of $5.00 since May 1, 2000 and accordingly, the Company plans to appeal this
issue to the Nasdaq  Listing  Qualification  Panel  (the  "Panel")  pursuant  to
applicable  Nasdaq  rules.  The  hearing on the  Company's  appeal will stay the
delisting pending the Panel's decision. There can be no assurance that the Panel
will rule  favorably on the  Company's  appeal.  In the event that its appeal is
unsuccessful,  the Company  anticipates  that its Common  Stock will be delisted
shortly after the Panel's decision and its Common Stock will trade as a bulletin
board stock  following its  delisting  from NMS unless it is able to achieve and
maintain the listing requirements for the Nasdaq Small Cap Market at such time.

         The  Company's  failure to maintain  its NMS listing or qualify for the
Nasdaq Small Cap Market could negatively  impact its ability to raise capital in
the future.

FORWARD LOOKING STATEMENTS

         With the  exception  of actual  reported  financial  results  and other
historical  information,  the statements  contained in this Quarterly  Report on
Form 10-Q ("Quarterly  Report") constitute  "forward-looking  statements" within
the  meaning of the  federal  securities  laws and involve a number of risks and
uncertainties.  Such  statements  are  indicated  by  words or  phrases  such as
"believes," "will," "plan," "goals," "project,"  "expect," "intends" and similar
words or phrases.  These forward  looking  statements are based on  management's
expectations  as of the date set forth on the signature  page of this  document,
and the  Company  does not  undertake  any  obligation  to  update  any of these
statements.

           There  can  be  no  assurance   that  the  Company's   actual  future
performance  will meet its  expectations.  The Company is subject to a number of
risks, and its future operating  results are difficult to predict and subject to
significant fluctuations.  These include but are not limited to: (1) the Company
may not be  able  to  counteract  the  effects  of  large  customers'  inventory
tightening in any significant way, which may result in lower than expected sales
and/or higher than expected product  returns;  (2) the Company may not correctly
anticipate  the  product mix of  retailers'  "just-in-time"  inventory  demands,
resulting in the temporary unavailability of the products in demand by retailers
and  lower  sales;  (3) the  Company's  efforts  to  restructure  may not  prove
sufficient to prevent future  operating  losses;  and (4) the Company may not be
able to obtain  future  waivers of the terms of its bank loan  agreement  and/or
successfully  renegotiate that agreement,  and this would negatively  affect the
Company's ability to meet its cash requirements to finance its operations.

          Additional  factors that may cause future results to differ materially
from the Company's current  expectations  include,  among others: the timing and
size of orders from large customers; timing and size of orders for new products;
competition from both other paper-based and technology-based organizing products
and services;  consumer  demand;  market  acceptance  of new  products;  general
economic  conditions,  especially  the  sustainability  of the current  economic
expansion;  the  health  of  the  retail  environment;   foreign  exchange  rate
fluctuations;  supply and manufacturing constraints;  supplier performance;  and
changes in the Company's  effective tax rate. Among the effects of these factors
may be: lower than anticipated  sales;  higher than anticipated  product returns
and/or excess  inventory;  negative  effects on consumer  purchases;  lower than
anticipated gross profit; higher than anticipated operating expenses;  and lower
than anticipated net income.

         For additional risks and more detailed explanations of factors that may
cause the  Company's  results of  operations  to vary  materially  from  current
expectations, see the Company's Form 10-K for the year ended June 30, 1999 filed
with the SEC.

FOREIGN CURRENCY EXPOSURE

         The Company's  reporting  currency is the U.S. dollar, and interest and
principal  payments on its  long-term  debts will be in U.S.  dollars and pounds
Sterling.  A portion of revenues and operating  costs are derived from sales and
operations  outside the United  States and are incurred in a number of different
currencies.  Accordingly,  fluctuations  in currency  exchange  rates may have a
significant  effect on the  Company's  results of  operations  and balance sheet
data. The Company has no significant  exposure from financial  instruments which
would require quantitative disclosure.



PART II --OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

(a)      See Note 11 to Consolidated Financial Statements.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         (a)  On April 25, 2000, the Company held a Special Meeting of
              Stockholders (the "Annual Meeting").

         (b)  At the Special Meeting,  the stockholders  approved,  with
              11,173,527  votes  cast  in  favor,   143,517  votes  cast
              against,  10,901  abstentions  and 0  broker  nonvotes,  a
              reverse stock split of the Company's outstanding shares of
              Common Stock.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

         (a)         Exhibits

            3.1      Certificate of Incorporation of the Registrant,
                     as amended(1)

            3.2      Bylaws of the Registrant(2)

           27.1      Financial Data Schedule

         (b)         Reports on Form 8-K

                      No  reports  on Form 8-K  were  filed by the
                      Company during the quarter ended March 31, 2000.


(1)  Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     (File No. 0-19835) filed with the Commission on May 15, 1998.
(2)  Incorporated  by reference to the  Registrant's  Current Report on Form 8-K
     (File No. 0-19835) filed with the Commission on August 5, 1993.



<PAGE>





                                   SIGNATURES


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


                                          Date: May 9, 2000

                                          DAY RUNNER, INC.



                                       By: /s/ JAMES E. FREEMAN JR.
                                           -----------------------------
                                            James E. Freeman, Jr.
                                             Chief Executive Officer




                                       By: /s/ DAVID A. WERNER
                                           ------------------------
                                             David A. Werner
                                              Executive Vice President, Finance
                                                and Chief Financial Officer