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 December 31, 1999

                                       OR

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

For the transition period from                 to                .
                               ---------------    ---------------

                         Commission file number 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)

                              15295 ALTON PARKWAY
                            IRVINE, CALIFORNIA 92618
             (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 February 11, 2000
---------------------------    -------------------------------------------------
Common Stock, $0.001 par value                    11,910,845

<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
                       December 31, 1999 and June 30, 1999.......................................             3

                     Consolidated Statements of Operations
                       Three and Six Months Ended December 31, 1999 and 1998.....................             4

                     Consolidated Statements of Cash Flows
                       Six Months Ended December 31, 1999 and 1998...............................             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.........................            20

         Item 6.     Exhibits and Reports on Form 8-K............................................            20

SIGNATURES.......................................................................................            21

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                        DAY RUNNER, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                             (DOLLARS IN THOUSANDS)

                                     ASSETS

                                                                                      DECEMBER 31,       JUNE 30,
                                                                                          1999             1999
                                                                                      -----------      -----------
Current assets:
<S>                                                                                   <C>              <C>
    Cash and cash equivalents......................................................   $   9,690        $   9,132
    Accounts receivable (less allowance for doubtful  accounts and sales returns
       and other allowances of $10,681 and $11,481 at
       December 31, 1999 and June 30, 1999, respectively)..........................      42,055           43,215
    Inventories....................................................................      38,878           42,361
    Prepaid expenses and other current assets......................................       5,026            4,506
    Income taxes receivable........................................................                          434
    Deferred income taxes..........................................................      11,189           11,189
                                                                                      ---------         --------
       Total current assets........................................................     106,838          110,837
    Property and equipment, net ...................................................      16,143           17,851
    Goodwill and other intangible assets (net of accumulated amortization of $3,220
       and $1,934 at December 31, 1999 and June 30, 1999, respectively)............      84,615           85,830
    Other assets (net of accumulated amortization of $447 and $410 at December 31,
        1999 and June 30, 1999, respectively)..    ................................       2,269            1,793
                                                                                      ----------       ---------
TOTAL  ............................................................................   $ 209,865        $ 216,311
                                                                                      ==========       =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Line of credit.................................................................   $   6,331
    Accounts payable...............................................................      16,367        $  18,722
    Accrued expenses...............................................................      24,608           19,547
    Income taxes payable...........................................................       3,919
    Loan notes.....................................................................                        2,077
                                                                                       --------         --------
       Total current liabilities...................................................      51,225           40,346
                                                                                       --------         --------
Long-term liabilities:
    Line of credit.................................................................      90,444          105,317
    Loan notes.....................................................................         257              251
                                                                                       --------         --------
       Total long-term liabilities.................................................      90,701          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;  13,728,633
       shares issued and  11,910,845  shares  outstanding  at December 31, 1999;
       13,718,524 shares issued and 11,900,736 shares outstanding at
        June 30, 1999).............................................................          14               14
    Additional paid-in capital.....................................................      21,742           21,709
    Retained earnings..............................................................      58,985           61,078
    Accumulated other comprehensive income.........................................         556              954
    Treasury stock - At cost (787,858 shares at December 31, 1999 and
     June 30, 1999)................................................................      (13,358)         (13,358)
                                                                                       ---------        ---------
       Total stockholders' equity..................................................       67,939           70,397
                                                                                       ---------        ---------
TOTAL  ............................................................................    $ 209,865        $ 216,311
                                                                                       =========        =========


          See accompanying notes to consolidated financial statements.

</TABLE>


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<TABLE>
<CAPTION>



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


                                                                  Three Months Ended            Six Months Ended
                                                                     December 31,                  December 31,
                                                                ----------------------        --------------------
                                                                    1999        1998             1999       1998
                                                                ----------  ----------        --------    --------

<S>                                                             <C>         <C>                <C>         <C>
Net sales....................................................   $  57,483   $  64,565          $109,336    $112,296
Cost of goods sold...........................................      31,459      33,506            57,430      58,366
                                                                ---------   ---------         ---------   ---------
Gross profit.................................................      26,024      31,059            51,906      53,930
                                                                ---------   ---------         ---------   ---------

Operating expenses:
     Selling, marketing and distribution.....................      17,822      18,910            33,492      31,175
     General and administrative..............................       7,974       6,447            14,909      11,104
     Costs relating to activities associated
        with the Filofax acquisition.........................                   1,072                         1,072
                                                                ---------   ---------         ---------   ---------
     Total operating expenses................................      25,796      26,429            48,401      43,351
                                                                ---------   ---------         ---------   ---------

Income from operations.......................................         228       4,630             3,505      10,579
Net interest expense.........................................       3,823       1,356             5,967       1,389
                                                                ---------   ---------         ---------   ---------

(Loss) income before (benefit) provision for income taxes....      (3,595)      3,274            (2,462)      9,190
(Benefit) provision for income taxes.........................        (902)      1,244              (369)      3,491
                                                                ---------   ---------         ---------   ---------
Net (loss) income............................................   $  (2,693)  $   2,030         $  (2,093)  $   5,699
                                                                =========   =========         =========   =========

(Loss) earnings per common share:
     Basic...................................................   $   (0.23)  $    0.17        $    (0.18)   $  0.48
                                                                =========   =========        ==========    ========
     Diluted.................................................   $   (0.23)  $    0.16        $    (0.18)   $  0.45
                                                                =========   =========        ==========    ========
Weighted-average number of common shares outstanding:
     Basic...................................................      11,901      11,883            11,901      11,907
                                                                =========   =========         =========   =========
     Diluted.................................................      11,901      12,564            11,901      12,619
                                                                =========   =========         =========   =========




                 See accompanying notes to consolidated financial statements.


</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                        DAY RUNNER, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

                                                                                            Six Months Ended
                                                                                              December 31,
                                                                                             1999       1998
                                                                                             ----       ----
Cash flows from operating activities:
<S>                                                                                       <C>          <C>
    Net (loss) income.............................................................        $ (2,093)    $ 5,699
    Adjustments to reconcile net (loss) income to net cash provided by (used in)
      operating activities:
       Depreciation and amortization..............................................           6,779       4,478
       Provision for doubtful accounts and sales returns and other allowances.....          13,827       4,582
       Loss on disposal of property and equipment.................................               2
       Changes in operating assets and liabilities, net of acquisition of business:
          Accounts receivable.....................................................         (12,282)     (6,052)
          Inventories.............................................................           3,668       5,882
          Prepaid expenses and other current assets...............................            (448)       (785)
          Income taxes receivable.................................................             434       2,646
          Accounts payable........................................................          (2,512)     (4,951)
          Accrued expenses........................................................           4,835       3,241
          Income taxes payable....................................................           3,825       1,398
                                                                                         ---------   ---------
Net cash provided by operating activities.........................................          16,035      16,138
                                                                                         ---------   ---------
Cash flows from investing activities:
    Acquisition of business.......................................................
(   88,764)
    Acquisition of property and equipment.........................................          (2,426)     (6,002)
    Other assets..................................................................          (1,667)       (385)
                                                                                         ---------   ----------
         Net cash used in investing activities....................................          (4,093)    (95,151)
                                                                                         ---------   ---------
Cash flows from financing activities:
    Net (repayments) borrowings under lines of credit.............................          (9,274)    102,146
    Repayment of loan notes.......................................................          (2,164)
    Net proceeds from issuance of common stock....................................              33         212
    Repurchase of common stock....................................................                      (1,274)
                                                                                         ---------   ----------
         Net cash (used in) provided by financing activities......................         (11,405)    101,084
                                                                                         ---------   ---------
Effect of exchange rate changes in cash and cash equivalents......................              21         259
                                                                                         ---------   ---------
Net increase in cash and cash equivalents.........................................             558      22,330
Cash and cash equivalents at beginning of period..................................           9,132       2,923
                                                                                         ---------   ---------
Cash and cash equivalents at end of period........................................       $   9,690   $  25,253
                                                                                         =========   =========

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


<PAGE>

                        DAY RUNNER, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998)


1.  BASIS OF PRESENTATION AND ACCOUNTING POLICIES

         The  accompanying  consolidated  balance sheet as of December 31, 1999,
consolidated  statements  of  operations  for the  three  and six  months  ended
December 31, 1999 and 1998 and consolidated statements of cash flows for the six
months  ended  December 31, 1999 and 1998 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 generally
accepted accounting principles 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 six months ended  December
31, 1999 and 1998 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):

                                            December 31,            June 30,
                                                1999                  1999
                                         ------------------      ---------

         Raw materials...................  $   10,184             $   12,026
         Work in process.................       3,017                  2,138
         Finished goods..................      25,677                 28,197
                                           ----------             ----------
                  Total..................  $   38,878             $   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.

         On  October  12,  1999,  the  Company  and the banks  amended  the Loan
Agreement (the "Amended and Restated Loan Agreement").  The Amended and Restated
Loan  Agreement  converts 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 will 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.  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
December  31,  1999,  the Company had  $96,775,000  outstanding  under this Loan
Agreement and had outstanding letters of credit totaling approximately $406,000.

         The Amended and Restated  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 and  Restated  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 six
months ended  December 31, 1999, the  weighted-average  interest rate was 9.15%.
The interest rate at December 31, 1999 was 9.11%.

         Under the Amended and Restated 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 $1,600,000, which
were paid during the six months ended December 31, 1999.

4.  STOCKHOLDERS' EQUITY

         During  the six months  ended  December  31,  1999,  certain  employees
exercised  options to purchase an  aggregate of 10,109  shares of the  Company's
Common Stock for an aggregate of approximately $33,000.

5.  EARNINGS PER SHARE

         Basic  earnings  per share are  computed by dividing  net income by the
weighted-average  number of common shares  outstanding  for the period.  Diluted
earnings  per  share  are  computed  by  dividing  net  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 income (in thousands, except per share amounts):
<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED                            SIX MONTHS ENDED
                                                     DECEMBER 31,                                 DECEMBER 31,
                                         ---------------------------------------    ----------------------------------
                                                1999                  1998                 1999                1998
                                         -----------------      ----------------    -----------------     ------------

<S>                                            <C>                <C>                   <C>                  <C>
NET (LOSS) INCOME                              $(2,693)           $  2,030              $(2,093)             $  5,699
                                               =======            ========              =======              ========


BASIC WEIGHTED-AVERAGE SHARES
   Weighted-average number of
     common shares outstanding                  11,901              11,883                11,901                11,907

EFFECT OF DILUTIVE SECURITIES
   Additional shares from the assumed
     exercise of options and warrants                0               3,047                     0                 2,952
   Shares assumed to be repurchased
     under the treasury stock method                 0             (1,949)                     0                (1,804)
   Non-qualified tax benefit                         0               (417)                     0                  (436)
                                               -------            --------              --------              --------

DILUTED WEIGHTED-AVERAGE SHARES
   Weighted-average number of
     common shares outstanding and
     common share equivalents                   11,901              12,564                11,901                12,619
                                              ========            ========              ========              ========

(LOSS) EARNINGS PER SHARE:

   Basic                                      $ (0.23)             $  0.17              $  (0.18)              $  0.48
                                              =======              =======              ========               =======

   Diluted                                    $ (0.23)             $  0.16              $  (0.18)              $  0.45
                                              =======              =======              ========               =======
</TABLE>


         For  the  three  and six  months  ended  December  31,  1999,  dilutive
securities   equivalent  to  approximately   2,831,000  and  2,390,000   shares,
respectively,  are not included as potential  common share  equivalents  because
they are antidilutive.


<PAGE>

<TABLE>
<CAPTION>


6.  COMPREHENSIVE INCOME

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

                                                                           SIX MONTHS ENDED DECEMBER 31,
                                                                            1999                  1998
                                                                         -----------           ----------
<S>                                                                      <C>                   <C>
         Net (loss) income                                               $   (2,093)           $    5,699
         Foreign currency translation adjustment                               (398)                   35
                                                                         ----------            ----------
         Comprehensive (loss) income                                     $   (2,491)           $    5,734
                                                                         ==========            ==========
</TABLE>

7.  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                            SIX MONTHS ENDED
                                                     DECEMBER 31,                                 DECEMBER 31,
                                         ---------------------------------------    ----------------------------------
                                                1999                  1998                 1999               1998
                                         -----------------      ----------------    -----------------     ------------
     <S>                                       <C>                    <C>                 <C>                  <C>
      Organizers and planners..........   $   26,692             $   26,230          $   47,872           $    43,298
      Refills..........................       24,381                 22,049              42,861                39,097
      Related organizing products......        6,410                 16,286              18,603                29,901
                                          ----------             ----------          ----------            ----------
         Total.........................   $   57,483             $   64,565          $  109,336           $   112,296
                                          ==========             ==========          ==========           ===========
</TABLE>



<PAGE>




8.   OPERATIONS IN FOREIGN COUNTRIES

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

                                                          SIX MONTHS ENDED DECEMBER 31, 1999
                                   UNITED STATES           EUROPE           OTHER         ELIMINATIONS       TOTAL
                                   -------------         ----------        ----------     ------------     ---------

<S>                                  <C>                  <C>            <C>                               <C>
Net sales to unaffiliated entities   $   66,833           $ 32,511       $    9,992                        $ 109,336
Transfers between geographic areas        1,578                                 553        $  (2,131)
                                     ----------           --------       ----------        ---------       ---------
Net sales                            $   68,411           $ 32,511       $   10,545        $  (2,131)      $ 109,336
                                     ==========           ========       ==========        =========       =========

(Loss) income from operations        $   (1,398)          $  6,931       $      101        $  (2,129)      $   3,505
                                     ==========           ========       ==========        =========       =========


Long-lived assets                    $   88,252           $ 82,089       $    3,381        $ (70,695)      $ 103,027
                                     ==========           ========       ==========        =========       =========


                                                          SIX MONTHS ENDED DECEMBER 31, 1998
                                   UNITED STATES           EUROPE           OTHER         ELIMINATIONS       TOTAL
                                   -------------         ----------        ----------     ------------     ---------
Net sales to unaffiliated entities   $   86,658           $ 16,138       $    9,500                        $ 112,296
Transfers between geographic areas        2,644                               1,435        $  (4,079)
                                     ----------           --------       ----------        ---------       ---------
Net sales                            $   89,302           $ 16,138       $   10,935        $  (4,079)      $ 112,296
                                     ==========           ========       ==========        =========       =========

Income from operations               $    9,680           $  4,141       $      658        $  (3,900)      $  10,579
                                     ==========           ========       ==========        =========       =========

Long-lived assets                    $   86,819           $ 83,979       $    3,474        $ (67,552)      $ 106,720
                                     ==========           ========       ==========        =========       =========
</TABLE>



9.  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.  There has been no discovery in this action. Based on the allegations
and the issues  raised by the Amended  Complaint,  the  Company  believes it has
meritorious defenses to the action and intends to defend it vigorously.

         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>

9.  STATEMENTS OF CASH FLOW

         Supplemental disclosure of cash flow information (in thousands):

                                                  SIX MONTHS ENDED DECEMBER 31,
                                                    1999                1998
                                                 ----------          ----------

             Cash paid during the period for:
               Interest                         $    4,168          $   1,217
               Income taxes, net of refunds
                  received                      $   (4,259)         $    (358)

         Supplemental disclosure of noncash investing and financing activities:

                As of December 31,  1998,  the Company had  purchased  1,400,000
         shares   of   Filofax   stock   for   approximately    (pound)2,821,000
         (approximately  US $4,794,000) 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 30.4% of second quarter fiscal
2000 net sales and 34.3% of net sales  for the six  months  ended  December  31,
1999,  and the U.S.  mass market  channel,  which  accounted for 17.2% of second
quarter  fiscal  2000 net sales and 19.4% of net sales for the six months  ended
December 31, 1999. 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 40.9% of second quarter fiscal 2000 net sales
and 38.5% of net sales for the six months ended December 31, 1999.

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
and allow the Company to operate more  effectively and become  profitable  under
these  conditions.  The Company's  goals are to fully develop its  restructuring
plan and to  complete  the bulk of its  restructuring  by the end of the  fiscal
year. The Company  expects a substantial  loss in the March quarter,  reflecting
the effects of a number of factors,  including the  seasonality of its business,
continued  constraints on its U.S. sales and certain costs  associated  with the
restructuring.    In   addition,    the   Company   expects   to   incur   other
restructuring-related costs at some point before the end of fiscal 2000.



<PAGE>

<TABLE>
<CAPTION>


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.

                                                                                               Percentage Change
                                                                                               -----------------

                                                            Percentage of Sales               Three         Six
                                                            --------------------              Months      Months
                                                          Three                Six            Ended        Ended
                                                      Months Ended        Months Ended    December 31, December 31,
                                                      December 31,         December 31,       1998           1998
                                                    1999      1998       1999     1998       to 1999        to 1999
                                                    ----      ----       ----     ----       -------        -------

<S>                                                <C>       <C>        <C>      <C>          <C>          <C>
Net sales........................................  100.0%    100.0%     100.0%   100.0%       (11.0)%      (2.6)%
Cost of goods sold...............................   54.7      51.9       52.5     52.0         (6.1)       (1.6)
                                                   -----     -----      -----    -----        ------       ----
Gross profit.....................................   45.3      48.1       47.5     48.0        (16.2)       (3.8)
                                                   -----     -----      -----    -----        -----        ----
Operating expenses:
   Selling, marketing and distribution...........   31.0      29.3       30.6     27.8         (5.8)        7.4
   General and administrative....................   13.9      10.0       13.7      9.9         23.7        34.3
   Costs related to activities associated with the
        Filofax acquisition......................              1.6                 0.9        (100.0)    (100.0)
                                                   ----      -----      ---      -----        ------      -----
     Total operating expenses....................   44.9      40.9       44.3     38.6         (2.4)       11.6
                                                   -----     -----      -----    -----        -----       -----
Income from operations...........................    0.4       7.2        3.2      9.4        (95.1)      (66.9)
Net interest expense.............................    6.7       2.1        5.4      1.2        181.9       329.6
                                                   -----     -----      -----    -----        -----       -----
(Loss) income before (benefit) provision for
  income taxes                                      (6.3)      5.1       (2.2)     8.2       (209.8)     (126.8)
(Benefit) provision for income taxes.............   (1.6)      1.9       (0.3)     3.1       (172.5)     (110.6)
                                                   -----     -----      -----     ----       -------     ------
Net (loss) income................................   (4.7)%     3.2%      (1.9)%    5.1%      (232.7)%    (136.7)%
                                                    ====       ===       ====      ===       ======      ======
</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 sales.
<TABLE>
<CAPTION>


DISTRIBUTION CHANNEL:
                                      Three Months Ended December 31,              Six Months Ended December 31,
                                 ----------------------------------------    -------------------------------------
                                         1999                 1998                  1999                 1998
                                 -------------------  -------------------    ------------------  -----------------
                                                            (Unaudited; dollars in thousands)

<S>                               <C>        <C>      <C>        <C>          <C>        <C>      <C>        <C>
Office products.................  $ 17,505   30.4%    $ 21,226   32.9%        $ 37,473   34.3%    $ 42,886   38.2%
Mass market.....................     9,871   17.2       18,139   28.1           21,217   19.4       37,787   33.6
Foreign customers...............    23,513   40.9       21,536   33.3           42,103   38.5       25,768   23.0
Other...........................     6,594   11.5        3,664    5.7            8,543    7.8        5,855    5.2
                                  --------   -----    --------  -----         --------   ----     --------   -----
   Total........................  $ 57,483   100.0%   $ 64,565  100.0%        $109,336  100.0%    $112,296  100.0%
                                  ========   =====    ========= =====         ========  =====     ========  =====
</TABLE>
<TABLE>
<CAPTION>

PRODUCT CATEGORY:

                                      Three Months Ended December 31,              Six Months Ended December 31,
                                 ----------------------------------------    -----------------------------------
                                         1999                 1998                  1999                 1998
                                 -------------------  -------------------    ------------------  ------------
                                                            (Unaudited; dollars in thousands)

<S>                                 <C>        <C>     <C>          <C>        <C>         <C>     <C>          <C>
Organizers and planners.........    $26,692    46.4%   $ 26,230     40.6%      $47,872     43.8%   $ 43,298     38.6%
Refills.........................     24,381    42.4      22,049     34.2        42,861     39.2      39,097     34.8
Related organizing products.....      6,410    11.2      16,286     25.2        18,603     17.0      29,901     26.6
                                    -------   -----    --------   ------      --------    -----    --------    -----
   Total........................    $57,483   100.0%    $64,565    100.0%     $109,336    100.0%   $112,296    100.0%
                                    =======   =====     =======    =====      ========    =====    ========    =====
</TABLE>
<PAGE>

THREE MONTHS ENDED DECEMBER 31,  1999 COMPARED WITH
THE THREE MONTHS ENDED DECEMBER 31,  1998

         Net Sales.  Net sales consist of revenues from gross product  shipments
net of allowances  for returns,  rebates and credits.  In the second  quarter of
fiscal 2000,  net sales  decreased by  $7,082,000,  or 11.0%,  compared with the
second quarter of fiscal 1999.  The Company  believes that the ongoing impact of
inventory  tightening on the part of certain of the large retailers that account
for the bulk of the  Company's  U.S.  net sales was the primary  factor  causing
lower  gross  product  shipments,  higher  returns  and  lower net sales for the
quarter, particularly in the mass market channel.

         In the  quarter  ended  December  31,  1999,  net  sales to the  office
products channel decreased by $3,721,000, or 17.5%, and net sales to mass market
customers  decreased  by  $8,268,000,  or 45.6%.  Because  of the  inclusion  of
Filofax's net sales for the entire fiscal 2000 second quarter  compared with two
months  of the  fiscal  1999  second  quarter,  net sales to  foreign  customers
increased  by  $1,977,000,  or 9.2%,  and net sales to  miscellaneous  customers
grouped together as "other," increased by $2,930,000, or 80.0%.

          Because of the  inclusion of the  additional  month of  Filofax's  net
sales,  net sales of organizers and planners grew by $462,000,  or 1.8%, and net
sales of refills increased by $2,332,000, or 10.6%, in the quarter. Net sales of
related  organizing  products  decreased by  $9,876,000,  or 60.6%,  because the
Company had fewer related organizing  products promotions in the mass market and
discontinued  its line of  non-licensed  appointment  books  after the fall 1998
selling season.

         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 48.1% in the second quarter of fiscal 1999 to 45.3% in
the second  quarter of fiscal  2000  primarily  because  of an  increase  in the
provision  for sales  returns,  which is based upon recent  higher sales returns
experience.

         Operating Expenses.  Total operating expenses decreased by $633,000, or
2.4%, in the second  quarter of fiscal 2000 compared with the second  quarter of
fiscal  1999 but  increased  as a  percentage  of net sales from 40.9% to 44.9%.
Selling,  marketing and distribution  expenses decreased by $1,088,000 primarily
because of the decrease in net sales and  secondarily  because of the  Company's
focus on controlling costs, but increased from 29.3% to 31.0% as a percentage of
net sales due to the Company's  decreased ability to absorb expenses as a result
of the decline in U.S. net sales. General and administrative  expenses increased
by  $1,527,000  and from 10.0% to 13.9% as a percentage  of net sales because of
the inclusion of Filofax's expenses for the entire second quarter of fiscal 2000
compared with two months of the quarter in fiscal 1999.

         Net Interest  Expense.  Net interest  expense for the second quarter of
fiscal 2000 was  $3,823,000,  compared with $1,356,000 for the second quarter of
fiscal 1999, primarily because the  Company's  bank debt,  which was principally
incurred to finance  the Filofax  acquisition,  was  outstanding  for the entire
fiscal 2000 second quarter,  compared with approximately six weeks of the second
quarter of fiscal 1999.

         Income  Taxes.  The Company  recorded an income tax benefit of $902,000
for the second quarter of fiscal 2000,  compared with an income tax provision of
$1,244,000  for the second  quarter of fiscal 1999, and an effective tax rate of
25.1%, compared with 38.0%. The Company's tax benefit for the fiscal 2000 second
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 and Restated Loan Agreement.

SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH
THE SIX MONTHS ENDED DECEMBER 31, 1998

         Net Sales.  During the six months ended  December  31, 1999,  net sales
decreased by  $2,960,000,  or 2.6%,  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
$5,413,000,  or  12.6%,  and net sales to mass  market  customers  decreased  by
$16,570,000,  or 43.9%.  Because of the inclusion of Filofax's net sales for the
entire six months,  compared  with two months of the same period of fiscal 1999,
net sales to foreign  customers grew by $16,335,000,  or 63.4%, and net sales to
miscellaneous customers grouped together as "other" increased by $2,688,000,  or
45.9%.

          Because of the  inclusion of Filofax's  net sales for the entire first
six-months  of fiscal 2000,  net sales of organizers  and planners  increased by
$4,574,000,  or 10.6%, and net sales of refills grew by $3,764,000, or 9.6%. Net
sales of related organizing products decreased by $11,298,000, or 37.8%, because
the Company  discontinued its line of non-licensed  appointment  books after the
fall 1998  selling  season and had fewer  second  fiscal  quarter  2000  related
organizing products promotions in the mass market.

         Gross  Profit.  Gross  profit as a  percentage  of net sales  decreased
slightly from 48.0% in the first six months of fiscal 1999 to 47.5% in the first
six 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  higher gross profit
for the entire  six-month  period ended  December 31,  1999,  compared  with two
months of the same period last year.

         Operating  Expenses.  Total operating expenses increased by $5,050,000,
or 11.6%,  in the first six months of fiscal  2000  compared  with the first six
months of fiscal 1999 and  increased as a percentage  of net sales from 38.6% to
44.3%.  Selling,  marketing and  distribution  expenses  increased by $2,317,000
because of the  inclusion of Filofax's  expenses for the entire six months ended
December 31, 1999,  compared  with two months of the same period last year. As a
percentage of net sales, selling,  marketing and distribution expenses increased
from  27.8% to 30.6%  because  of the  Company's  decreased  ability  to  absorb
expenses  as  a  result  of  the  decline  in  U.S.   net  sales.   General  and
administrative  expenses  increased  by  $3,805,000  and from 9.9% to 13.7% as a
percentage  of net sales  because of the  additional  four  months of  Filofax's
expenses.

         Net Interest Expense.  Net interest expense for the first six months of
fiscal 2000 was $5,967,000, compared with $1,389,000 for the first six 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
six-month period ended December 31, 1999,  compared with approximately six weeks
of the same period last year.


         Income  Taxes.  The Company  recorded an income tax benefit of $369,000
for the first six months of fiscal 2000,  compared  with an income tax provision
of $3,491,000 for the first six months of fiscal 1999, and an effective tax rate
of 15.0%, compared with 38.0%. The Company's tax benefit for the fiscal 2000 six
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 and Restated 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 in the third
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.  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 December 31, 1999
increased to $9,690,000 from $9,132,000 at June 30, 1999.  During the six months
ended  December  31,  1999,  net  cash  of  $16,035,000  provided  by  operating
activities  which was partially offset by net cash of $11,405,000 and $4,093,000
used in financing activities and investing activities, respectively.

         Of the  $16,035,000  net amount  provided  by the  Company's  operating
activities,  $13,827,000 was provided by the provision for doubtful accounts and
sales returns and other allowances,  $6,779,000 was provided by depreciation and
amortization,  $4,835,000  was  provided by an increase in accrued  expenses and
$3,825,000  was provided by an increase in income taxes  payable.  These amounts
were partially offset by an increase of $12,282,000 in accounts receivable and a
decrease of $2,512,000 in accounts payable.

         Accounts  receivable  (net) at December 31, 1999 decreased by 2.7% from
the fiscal 1999  year-end  amount and by 13.4% from the December 31, 1998 amount
primarily because of the decrease in U.S. sales.

         Inventories at December 31, 1999 decreased by 8.2% from the fiscal 1999
year end amount and by 12.2% from the December 31, 1998 amount primarily because
of the Company's improved inventory management.

         Of  the  $4,093,000   net  amount  used  in  the  Company's   investing
activities, $2,426,000 was used to acquire primarily machinery and equipment and
secondarily data processing  equipment and software,  and $1,667,000 was used by
an increase in other assets.

         Of  the  $11,405,000  net  amount  used  in  the  Company's   financing
activities,  $9,274,000 was repaid on the line of credit and $2,164,000 was used
to repay loan notes incurred in connection with the Filofax acquisition.

         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 and Restated Loan Agreement").  The Amended and Restated
Loan  Agreement  converts 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 will 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.  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
December  31,  1999,  the Company had  $96,775,000  outstanding  under this Loan
Agreement and had outstanding letters of credit totaling approximately $406,000.

         The Amended and Restated  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 and  Restated  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 six
months ended  December 31, 1999, the  weighted-average  interest rate was 9.15%.
The interest rate at December 31, 1999 was 9.11%.

         Under the Amended and Restated 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 $1,600,000, which
were paid during the six months ended December 31, 1999.

         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 $583,000 and $371,000 of foreign exchange losses
for the six months ended December 31, 1999 and 1998, 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 and Restated Loan
Agreement.  These terms 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 Loan
Agreement (see Note 3 to the  Consolidated  Financial  Statements.)  The Company
believes  that if it is able to continue to comply,  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.

YEAR 2000

         The Year  2000  issue  refers  to the  inability  of  certain  computer
systems,  as well as certain  hardware and equipment  containing  date-sensitive
data, to recognize  accurately  dates commencing on or after January 1, 2000. To
date the  Company  has not  experienced  any  significant  internal  or external
operational problems as a result of the commencement of Year 2000. Nevertheless,
computer  experts  have  warned  that there may still be  residual  consequences
stemming  from the  change  in  centuries,  and,  if these  consequences  become
widespread or impact the  Company's  systems or the systems or operations of any
third party on which the Company  relies,  there can be no  assurance  that such
occurrence will not have an adverse effect on the Company's systems,  operations
and/or financial condition.

         As of  December  31,  1999,  the  Company  had  incurred  approximately
$2,027,000  in total  costs  related  to the Year 2000  issue,  which  have been
expensed or capitalized as appropriate.

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;  and (3) the  Company's  efforts to  restructure  may not prove
sufficient to prevent future operating losses.

          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,   especially  for  retail  shelf  space;  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;  the Company's  continued ability to comply
with the terms of its bank loan  agreement and related  ability to meet its cash
requirements to finance its operations and growth;  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.




<PAGE>



PART II --OTHER INFORMATION

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

(a)                   On  December  9, 1999,  the  Company  held its 1999 Annual
                      Meeting of Stockholders (the "Annual Meeting").

(b)                   At the Annual Meeting, the Company's  stockholders elected
                      the  following  persons as directors  of the Company.  The
                      number  of votes  cast for each  director,  as well as the
                      number  of  votes  withheld,   are  listed  opposite  each
                      director's name.

                           Name                    Votes
                           of                    Cast for                Votes
                         Director                Director               Withheld
                         --------                --------              --------

                      James E. Freeman, Jr.      9,824,158              550,426
                      James P. Higgins           9,824,358              550,226
                      Jill Tate Higgins          9,824,358              550,226
                      Charles Miller             9,824,358              550,226
                      Alan R. Rachlin            9,824,158              550,426
                      Mark A.  Vidovich          9,824,158              550,426
                      Boyd I. Willat             9,824,218              550,366
                      Felice Willat              9,824,358              550,226

(c)                   At the Annual Meeting,  the  stockholders  approved,  with
                      9,277,029 votes cast in favor, 852,109 votes cast against,
                      245,446  abstentions and 0 broker nonvotes,  the amendment
                      to the  Company's  1995 Stock  Option Plan to increase the
                      aggregate   number  of  shares   authorized  for  issuance
                      thereunder from 1,925,000 to 2,400,000 shares.

(d)                   At the  Annual  Meeting,  with  10,374,384  votes  cast in
                      favor,  0 votes  cast  against  and 200  abstentions,  the
                      stockholders ratified the appointment of Deloitte & Touche
                      LLP as independent auditors for the Company for the fiscal
                      year ending June 30, 2000.




<PAGE>



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)

                  10.1     Consulting Agreement effective November 22, 1999
                           between the Registrant and Mr. Alan R. Rachlin(3)

                  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 December 31, 1999.





(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.
(3)  Constitutes  a  management  contract or  compensatory  plan or  arrangement
     required to be filed as an exhibit pursuant to Item 6 (a) of this Quarterly
     Report.



<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:  February 11, 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