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, 1998

                                       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  MAY 12, 1998
------------------------------     ---------------------------------------------
Common Stock, $0.001 par value                     11,696,334

<PAGE>



                                                           

<TABLE>
<CAPTION>


                                DAY RUNNER, INC.

                                      INDEX

<S>                                                                                                 <C> 
                                                                                                       PAGE REFERENCE

COVER PAGE.......................................................................................             1

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

PART I -- FINANCIAL INFORMATION

         Item 1.     Consolidated Financial Statements

                     Consolidated Balance Sheets
                       March 31, 1998 and June 30, 1997..........................................             3

                     Consolidated Statements of Income
                       Three and Nine Months Ended March 31, 1998
                        and 1997.................................................................             4

                     Consolidated Statements of Cash Flows
                       Nine Months Ended March 31, 1998 and 1997.................................             5

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

         Item 2.     Management's Discussion and Analysis of
                     Financial Condition and Results of Operations...............................            10

PART II -- OTHER INFORMATION

         Item 4.     Submission of Matters to a Vote of Security Holders.........................            15

         Item 6.     Exhibits and Reports on Form 8-K............................................            16

SIGNATURES.......................................................................................            17


<PAGE>

</TABLE>


PART I -- FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>

                        DAY RUNNER, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                     ASSETS
                                                                                                 March 31,       June 30,
                                                                                                   1998            1997
                                                                                                (unaudited)      (audited)
                                                                                                ----------     ---------
<S>                                                                                            <C>              <C>
Current assets:
     Cash and cash equivalents...............................................................    $  11,955      $  15,550
     Accounts receivable (less allowances for doubtful accounts and sales returns
          and other allowances of $11,143 and $8,664 at March 31, 1998 and
          June 30, 1997, respectively).......................................................        7,649         22,303
     Inventories.............................................................................       36,517         23,406
     Prepaid expenses and other current assets...............................................        1,770          2,409
     Income taxes receivable.................................................................          809
     Deferred income taxes...................................................................        6,386          6,386
                                                                                                 ---------      ---------
          Total current assets...............................................................       65,086         70,054
                                                                                                 ---------      ---------
Property and equipment -- At cost:
     Machinery and equipment.................................................................       13,534         10,316
     Data processing equipment and software..................................................        7,852          5,863
     Leasehold improvements..................................................................        2,130          1,838
     Vehicles................................................................................          242            214
                                                                                                 ---------      ---------
          Total..............................................................................       23,758         18,231
     Accumulated depreciation and amortization...............................................      (13,306)        (9,543)
                                                                                                 ---------      --------- 
     Property and equipment -- net...........................................................       10,452          8,688
                                                                                                 ---------      ---------
Goodwill and other assets (net of accumulated amortization of $64 at March 31, 1998).........        4,128            138
                                                                                                 ---------      ---------
Total assets.................................................................................    $  79,666        $78,880
                                                                                                 =========        =======


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Lines of credit.........................................................................    $     580      $     452
     Accounts payable........................................................................        6,096          8,320
     Accrued expenses........................................................................       10,417          9,500
     Income taxes payable....................................................................                       1,049
     Current portion of long-term debt and capital lease obligations.........................           97             23
                                                                                                 ---------      ---------
          Total current liabilities..........................................................       17,190         19,344
                                                                                                 ---------      ---------

Long-term debt and capital lease obligations.................................................           88             52
                                                                                                 ---------      ---------

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;  13,418,122
      and 12,728,858  issued and 11,696,334 and 11,702,658  outstanding at March
      31, 1998
      and June 30, 1997, respectively).......................................................           13             13
     Additional paid-in capital..............................................................       27,197         23,752
     Retained earnings.......................................................................       60,119         49,168
     Cumulative translation adjustment.......................................................          164             92
     Treasury stock:  at cost (1,721,788 and 1,026,200 shares at March 31, 1998 and
     June 30, 1997, respectively)............................................................      (25,105)       (13,541)
                                                                                                 ---------      --------- 
          Total stockholders' equity.........................................................       62,388         59,484
                                                                                                 ---------      ---------
Total liabilities and stockholders' equity...................................................    $  79,666      $  78,880
                                                                                                 =========      =========

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

<PAGE>

<TABLE>
<CAPTION>


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


                                                                  Three Months Ended            Nine Months Ended
                                                                       March 31,                     March 31,
                                                                    1998        1997            1998        1997
                                                                ---------   ---------        ----------   ---------
<S>                                                            <C>          <C>             <C>           <C> 

Sales........................................................   $  29,388   $  21,020        $  116,914   $  89,583
Cost of goods sold...........................................      14,135       9,996            55,793      42,462
                                                                ---------   ---------         ---------   ---------
Gross profit.................................................      15,253      11,024            61,121      47,121
                                                                ---------   ---------         ---------   ---------

Operating expenses:
     Selling, marketing and distribution.....................       9,399       6,312            30,788      22,195
     General and administrative..............................       4,075       3,469            12,429      10,276
     Costs incurred in pursuing acquisitions.................                   1,491                         1,491
                                                                ---------   ---------         ---------   ---------
     Total operating expenses................................      13,474      11,272            43,217      33,962
                                                                ---------   ---------         ---------   ---------

Income (loss) from operations................................       1,779        (248)           17,904      13,159
Net interest expense (income)................................          16        (345)              (49)       (858)
                                                                ---------   ----------        ----------  ----------

Income before provision for income taxes.....................       1,763          97            17,953      14,017
Provision for income taxes...................................         688          39             7,002       5,607
                                                                ---------   ---------         ---------   ---------
Net income...................................................   $   1,075   $      58         $  10,951   $   8,410
                                                                =========   =========         =========   =========

Earnings per common share:
     Basic...................................................   $    0.09   $    0.00         $   0.96    $   0.67
                                                                =========   =========         ========    ========
     Diluted.................................................   $    0.09   $    0.00         $   0.88    $   0.63
                                                                =========   =========         ========    ========

Weighted average number of common shares outstanding:
     Basic...................................................      11,571      12,603            11,452      12,632
                                                                =========   =========         =========   =========
     Diluted.................................................      12,520      13,229            12,452      13,349
                                                                =========   =========         =========   =========


                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)

                                                                                            Nine Months Ended
                                                                                                 March 31,
                                                                                             1998        1997
                                                                                         ---------     --------
<S>                                                                                    <C>              <C>      
Cash flows from operating activities:
    Net income....................................................................       $  10,951     $ 8,410
    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
       Depreciation and amortization..............................................           3,466       2,379
       Provision for losses on accounts receivable................................                         275
       Amortization of goodwill...................................................              64
       Changes in operating assets and liabilities:
          Accounts receivable.....................................................          14,404      13,571
          Inventories.............................................................          (9,694)     (3,096)
          Prepaid expenses and other current assets...............................             603        (520)
          Income taxes receivable.................................................            (809)       (415)
          Accounts payable........................................................          (4,016)     (2,551)
          Accrued expenses........................................................             430      (1,552)
          Income taxes payable....................................................          (1,049)
                                                                                         ----------  ---------
             Net cash provided by operating activities............................          14,350      16,501
                                                                                         ---------   ---------
Cash flows from investing activities:
    Purchase of business..........................................................          (4,113)
    Acquisition of property and equipment.........................................          (3,824)     (3,269)
    Other assets..................................................................             (45)          5
                                                                                         ----------  ---------
         Net cash used in investing activities....................................          (7,982)     (3,264)
                                                                                         ----------  ----------
Cash flows from financing activities:
    Net repayment under lines of credit...........................................          (1,224)
    Repayment of capital lease obligations........................................             (46)        (10)
    Repayment of long-term debt...................................................            (512)
    Net proceeds from issuance of common stock....................................           3,445         390
    Repurchase of common stock....................................................         (11,564)     (5,762)
                                                                                         ----------  ----------
         Net cash used in financing activities....................................          (9,901)     (5,382)
                                                                                         ----------  ----------
Effect of exchange rate changes in cash...........................................             (62)        218
                                                                                         ----------  ---------
Net (decrease) increase in cash and cash equivalents..............................          (3,595)      8,073
Cash and cash equivalents at beginning of period..................................          15,550      19,765
                                                                                         ---------   ---------
Cash and cash equivalents at end of period........................................       $  11,955   $  27,838
                                                                                         =========   =========

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

                        DAY RUNNER, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (INFORMATION RELATING TO THE THREE AND NINE MONTHS ENDED
                      MARCH 31, 1998 AND 1997 IS UNAUDITED)


1.  BASIS OF PRESENTATION AND ACCOUNTING POLICIES

         The  accompanying  consolidated  balance  sheet as of March  31,  1998,
consolidated  statements of income for the three and nine months ended March 31,
1998 and 1997,  and  consolidated  statements  of cash flows for the nine months
ended March 31, 1998 and 1997 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, 1997, 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,
1998 and 1997 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.

2.  INVENTORIES

         Inventories consist of the following (in thousands):

                                              March 31,             June 30,
                                                1998                  1997
                                           -----------            -----------
         Raw materials...................  $   11,003             $   10,204
         Work in process.................         546                    426
         Finished goods..................      24,968                 12,776
                                           ----------             ----------
                  Total..................  $   36,517             $   23,406
                                           ==========             ==========

3.  LINES OF CREDIT

         Effective  February  1, 1998,  the  Company  entered  into a new credit
agreement with a bank to allow the Company to borrow up to  $15,000,000  under a
line of credit through  February 1, 2000 and open  commercial or standby letters
of credit up to  $10,000,000,  with the aggregate of  borrowings  and letters of
credit not to exceed  $15,000,000.  Commercial letters of credit shall be issued
for a term not to exceed 180 days, provided,  however, that no letters of credit
shall have an expiration  date subsequent to May 1, 2000. At March 31, 1998, the
Company had no amounts outstanding under this line of credit but had outstanding
secured letters of credit totaling approximately $1,000,000.

         Under  this new  credit  agreement,  borrowings  bear  interest  at the
Company's  election  either at the bank's  prime rate (8.50% at March 31,  1998)
less certain  margins,  which range from .75 to 1.00 basis  points,  or at LIBOR
(5.69% at March 31,  1998) plus  certain  margins,  which range from .75 to 1.25
basis points,  with the margins  dependent  upon the Company's  meeting  certain
funded  debt-to-EBITDA  ratios.  The credit  agreement  requires the Company to:
maintain a current  ratio of not less than 1.50 to 1.00;  maintain  tangible net
worth of not less than $40,000,000, increasing to not less than $45,00,000 as of
June 30, 1998;  and maintain  funded  debt-to-EBITDA  ratio of less than 1.50 to
1.00.  The Company also is required to obtain the bank's  approval to declare or
pay dividends in excess of $200,000.

         Each of the Company's two Canadian  subsidiaries has a credit agreement
with a Canadian  bank.  The  aggregate  borrowings  under these lines of credit,
which are  guaranteed  by the Company and are used for working  capital by these
subsidiaries,  may not exceed Canadian $3,000,000 (approximately US $2,118,000),
bear  interest at the bank's prime rate (6.5% at March 31, 1998) and are due and
payable  on  demand.  At  March  31,  1998,   approximately   Canadian  $821,000
(approximately US $580,000) was outstanding under these lines of credit.

4.  STOCKHOLDERS' EQUITY

         At a Special  Meeting of the Company's  stockholders  held on March 17,
1998,  the  Company's  stockholders  approved  an  amendment  to  the  Company's
Certificate of Incorporation  to: (i) effect a two-for-one  split of each of the
outstanding  shares of Common Stock of the Company;  (ii) increase the number of
authorized  shares of all classes of stock of the  Company  from  15,000,000  to
30,000,000,  consisting of 29,000,000  shares of Common Stock,  $0.001 par value
per share, and 1,000,000 shares of Preferred Stock,  $0.001 par value per share.
Both actions  were  effective  March 18, 1998.  All share and per share data has
been retroactively restated to reflect the two-for-one stock split.

         During  the nine  months  ended  March  31,  1998,  certain  directors,
officers and employees  exercised  options and warrants to purchase an aggregate
of  689,264   shares  of  the  Company's   Common  Stock  for  an  aggregate  of
approximately $3,445,000.

 5.       TREASURY STOCK

         During the nine months  ended March 31, 1998,  the Company  repurchased
695,588  shares from  certain  officers  and  directors at a cost of $16.625 per
share for an aggregate of approximately $11,564,000.

6.  EARNINGS PER SHARE

         The Company adopted the Financial  Accounting Standards Board Statement
of  Financial  Accounting  Standards  (SFAS) No. 128,  Earnings  Per Share which
requires the Company to present basic and diluted earnings per share on the face
of the income  statement.  Basic  earnings per share is computed by dividing net
income  by the  weighted-average  number of common  shares  outstanding  for the
period. Diluted earnings per share is 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 diluted  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>
<S>                                    <C>                                              <C>





                                                  THREE MONTHS ENDED                            NINE MONTHS ENDED
                                                       MARCH 31,                                    MARCH 31,
                                         ---------------------------------------    -----------------------------------
                                                1998                  1997                 1998                  1997
                                         -----------------      ----------------    -----------------     -------------

NET INCOME                                     $ 1,075            $     58             $  10,951              $  8,410
                                         =================      ================    ==================    =============

BASIC WEIGHTED AVERAGE SHARES
   Weighted average number of
     common shares outstanding                  11,571              12,603                11,452                12,632

EFFECT OF DILUTED SECURITIES
   Additional shares from the assumed
     exercise of options and warrants            3,046               2,148                 3,166                 2,272
   Shares assumed to be repurchased
     under the treasury stock method            (1,521)             (1,230)               (1,628)               (1,203)
   Non-qualified tax benefit                      (576)               (292)                 (538)                 (352)
                                                -------             -------               -------               -------

DILUTED WEIGHTED AVERAGE SHARES
   Weighted average number of
     common shares outstanding and
     common share equivalents                   12,520               13,229                12,452                13,349
                                                ======              =======               =======                ========

BASIC                                          $ 0.09              $  0.00               $  0.96                $   0.67
                                                ======              =======               =======                ========

DILUTED                                        $ 0.09              $  0.00               $  0.88                $   0.63
                                                ======              =======               =======                ========
</TABLE>

7.  ACQUISITIONS

         On  July  29,  1997,   the  Company   purchased  the  stock  of  Ultima
Distribution  Inc.  ("Ultima"),  which  was  the  distributor  of the  Company's
products in Canada,  for approximately  $130,000.  The Company also entered into
non-competition  agreements  with certain of Ultima's  former  stockholders.  In
addition,  contingent  payments  may be paid over the next two  years,  based on
Ultima's operating performance during that period.

         On  October  1,  1997,  the  Company  purchased  substantially  all the
operating assets of Ram  Manufacturing,  Inc. ("Ram"),  a Little Rock,  Arkansas
developer,  manufacturer  and  marketer of wall boards.  The purchase  price was
approximately  $2,400,000, of which approximately $1,950,000 had been paid as of
March  31,  1998.  The  Company  also  assumed  certain   liabilities   totaling
approximately $3,000,000. In addition,  contingent payments may be paid over the
next three years, based upon Ram's operating performance during that period. The
owner of Ram,  who now  works for Day  Runner,  entered  into a  non-competition
agreement with the Company.

         On February 1, 1998,  the Company  purchased  the stock of  Timeposters
Inc.  ("Timeposters"),  a  Canadian  developer,  manufacturer  and  marketer  of
planning  and  presentation  products,  including  flexible  planners,  planning
boards,  other wall boards and easels, and entered into certain  non-competition
agreements with the founders, who continue to work for Timeposters. The purchase
price was approximately  $2,476,000,  of which approximately $2,033,000 had been
paid as of March 31, 1998. In addition, contingent payments may be paid over the
next two years, based on Timeposters' operating performance during that period.

         For  financial  statement  purposes,  all  goodwill  arising from these
acquisitions  is  being  amortized  over a period  of 20 years on the  Company's
financial statements.

8.  STATEMENTS OF CASH FLOW
<TABLE>
         The net cash  expended by the Company in its  acquisitions  made during the nine months  ended March 31, 1998 was
used as follows (in thousands):

<CAPTION>
             <S>                                                   <C>               <C>               <C>

                                                                          ULTIMA            RAM           TIMEPOSTERS
                                                                    --------------   --------------      ------------
              Working capital                                            $     30       $    624          $       52
              Property, plant and equipment                                  (150)          (970)               (293)
              Non-competition agreement                                                                          (706)
              Long-term debt                                                  197             54                 323
              Cost in excess of net assets of company acquired               (207)        (1,658)             (1,409)
                                                                    --------------   --------------      ------------
              Net cash used to acquire business                          $   (130)      $ (1,950)         $   (2,033)
                                                                    ==============   ==============      =============

</TABLE>

         Supplemental disclosure of cash flow information (in thousands):

                                                   NINE MONTHS ENDED MARCH 31,
                                                    1998               1997
                                              ----------------------------------

             Cash paid during the period for:
               Interest                               $    196     $    90
               Income taxes                           $  8,883     $ 5,958







<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, most
of the Company's growth has resulted from sales of related organizing  products,
virtually all of which have been  introduced  since January 1, 1995. The Company
focuses  the great  majority  of its product  development,  sales and  marketing
efforts on the  office  products  channel,  which  accounted  for 35.5% of third
quarter fiscal 1998 sales and 47.2% of sales for the nine months ended March 31,
1998, and the mass market  channel,  which  accounted for 44.4% of third quarter
fiscal 1998 sales and 38.4% of sales for the nine months ended March 31, 1998.

RESULTS OF OPERATIONS

         The  following  table  sets  forth,  for  the  periods  indicated,  the
percentages that income statement items bear to sales and the percentage  change
in the dollar amounts of such items.
<TABLE>
<CAPTION>



                                                                                               PERCENTAGE CHANGE
                                                                                              Three        Nine
                                                            PERCENTAGE OF SALES              Months       Months
                                                          Three               Nine            Ended        Ended
                                                      Months Ended        Months Ended      March 31,     March 31,
                                                        March 31,           March 31,         1997         1997
                                                    1998       1997      1998     1997       to 1998      to 1998
                                                   ------    ------     ------   ------      -------      -------
<S>                                                <C>        <C>       <C>      <C>         <C>          <C>  
Sales............................................  100.0%    100.0%     100.0%   100.0%        39.8%       30.5%
Cost of goods sold...............................   48.1      47.6       47.7     47.4         41.4        31.4
                                                   -----     -----      -----    -----
Gross profit.....................................   51.9      52.4       52.3     52.6         38.4        29.7
                                                   -----     -----      -----    -----
Operating expenses:
   Selling, marketing and distribution...........   32.0      30.0       26.4     24.8         48.9        38.7
   General and administrative....................   13.8      16.5       10.6     11.5         17.5        21.0
   Cost incurred in pursuing acquisitions........              7.1                 1.6          NM          NM
                                                   ----      -----      -----    -----
     Total operating expenses....................   45.8      53.6       37.0     37.9         19.5        27.3
                                                   -----     -----      -----    -----
Income (loss) from operations....................    6.1      (1.2)      15.3     14.7        817.3        36.1
Net interest expense (income)....................    0.1      (1.7)      (0.1)    (1.0)       104.6       (94.3)
                                                   -----     -----      -----    -----        
Income before provision for income taxes.........    6.0       0.5       15.4     15.7          NM         28.1
Provision for income taxes.......................    2.3       0.2        6.0      6.3          NM         24.9
                                                   -----     -----      -----    -----
Net income.......................................    3.7%      0.3%       9.4%     9.4%         NM         30.2
                                                   =====     =====      =====    =====



</TABLE>

<PAGE>




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

PRODUCT CATEGORY:

                                       Three months ended March 31,                 Nine months ended March 31,
                                           1998                 1997                  1998                 1997
                                      --------------    ----------------       -----------------    ------------------
                                                            (Unaudited; dollars in thousands)
<S>                                <C>        <C>      <C>        <C>          <C>        <C>      <C>         <C>
Organizers and planners.........    $14,346    48.8%   $ 11,636     55.4%      $56,936     48.7%   $ 52,876     59.0%
Refills.........................      9,176    31.2       7,598     36.1        35,985     30.8      31,023     34.6
Related organizing products.....      5,866    20.0       1,786      8.5        23,993     20.5       5,684      6.4
                                    -------   ------    -------    -----      --------    ------   --------    ------ 
 Total........................      $29,388   100.0%    $21,020    100.0%     $116,914    100.0%   $ 89,583    100.0%
                                    =======   ======    =======    ======     ========    ======   ========    ======


DISTRIBUTION CHANNEL:

                                       Three months ended March 31,                 Nine months ended March 31,
                                          1998                 1997                  1998                 1997
                                     ---------------    -----------------     ------------------   ------------------
                                                            (Unaudited; dollars in thousands)

Office products.................    $10,417    35.5%    $ 7,181     34.2%     $ 55,215     47.2%   $ 45,510     50.8%
Mass market.....................     13,052    44.4      10,224     48.6        44,908     38.4      33,229     37.1
Foreign customers...............      3,216    10.9       1,443      6.9         8,227      7.1       4,561      5.1
Other...........................      2,703     9.2       2,172     10.3         8,564      7.3       6,283      7.0
                                    -------   ------    -------    ------     --------    -----    --------    -----
   Total........................    $29,388   100.0%    $21,020    100.0%     $116,914    100.0%   $ 89,583    100.0%
                                    =======   ======    =======    ======     ========    ======   ========    ======
</TABLE>


THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH
THE THREE MONTHS ENDED MARCH 31, 1997

         SALES.  Sales consist of revenues  from gross product  shipments net of
allowances  for  returns,  rebates and credits.  In the third  quarter of fiscal
1998, sales increased by $8,368,000,  or 39.8%,  primarily  because of increased
sales of related organizing products. In the quarter ended March 31, 1998, sales
of  related  organizing  products  grew  by  $4,080,000,  or  228.4%;  sales  of
organizers  and  planners  grew by  $2,710,000,  or 23.3%;  and sales of refills
(which include calendars and accessories) grew by $1,578,000,  or 20.8%. Product
sales were primarily to mass market customers and secondarily to office products
customers.  Sales to office  products  customers grew by  $3,236,000,  or 45.1%;
sales to mass market  customers grew by $2,828,000,  or 27.7%;  sales to foreign
customers grew by $1,773,000,  or 122.9%;  and sales to miscellaneous  customers
grouped together as "other" increased by $531,000, or 24.4%.

         GROSS PROFIT.  Gross profit is 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,  sales volume and growth rate,  sales
returns,  purchasing  and  manufacturing   efficiencies,   tariffs,  duties  and
inventory  carrying costs.  Gross profit as a percentage of sales decreased from
52.4% in the third  quarter  of fiscal  1997 to 51.9% in the  third  quarter  of
fiscal  1998  primarily  because  the  gross  profit  levels of  certain  of the
Company's  subsidiaries  and its  Ram  Manufacturing  division  are  lower  as a
percentage of sales than those of the parent company.

         OPERATING  EXPENSES.  Total operating expenses increased by $2,202,000,
or 19.5%, in the third quarter of fiscal 1998 compared with the third quarter of
fiscal 1997 but decreased as a percentage of sales from 53.6% to 45.8% primarily
because third quarter  fiscal 1997  operating  expenses  included  $1,491,000 of
costs incurred in pursuing  acquisitions that did not come to fruition.  No such
costs were incurred in the third quarter of fiscal 1998.

         Excluding the third quarter fiscal 1997 costs of pursuing acquisitions,
total  operating  expenses would have grown by $3,693,000,  or 37.8%,  but would
have declined as a percentage of sales from 46.5% to 45.8%.

         Primarily  because of  expenses  associated  with  recently  introduced
products,  selling,  marketing and distribution expenses increased by $3,087,000
and from 30.0% to 32.0% as a  percentage  of sales.  General and  administrative
expenses increased by $606,000, but declined from 16.5% to 13.8% as a percentage
of sales primarily  because of the Company's  increased  ability to absorb fixed
costs as a result of higher sales.

         NET INTEREST EXPENSE  (INCOME).  Primarily because of a decrease in the
Company's cash available for short-term  investment resulting from the Company's
repurchase  of its common stock,  net interest  expense for the third quarter of
fiscal 1998 was $16,000  compared  with net interest  income of $345,000 for the
third quarter of fiscal 1997.

         INCOME TAXES.  Primarily  because of the improved  financial results of
the Company's  Hong Kong  subsidiary,  the Company's  third quarter  fiscal 1998
effective  tax rate was  39.0%,  compared  with  40.0% for the third  quarter of
fiscal 1997.

         NET INCOME.  Net income for the third  quarter of fiscal 1998  compared
with the same quarter of fiscal 1997 increased  $1,017,000 and from 0.3% to 3.7%
as a percentage of sales. Excluding the March quarter fiscal 1997 costs incurred
in pursuing acquisitions,  net income would have grown by $122,000 and decreased
from 4.5% to 3.7% as a percentage of sales.

NINE MONTHS ENDED MARCH 31, 1998 COMPARED WITH
THE NINE MONTHS ENDED MARCH 31, 1997

         SALES.  In the nine months ended March 31, 1998  compared with the nine
months ended March 31, 1997, sales increased by $27,331,000, or 30.5%, primarily
because of increased sales of related  organizing  products.  In the nine months
ended March 31, 1998, sales of related organizing  products grew by $18,309,000,
or  322.1%;  sales  of  refills  grew by  $4,962,000,  or  16.0%;  and  sales of
organizers  and  planners  grew by  $4,060,000,  or  7.7%.  Product  sales  were
primarily to office products customers and secondarily to mass market customers.
Sales to mass market  customers grew by $11,679,000,  or 35.1%;  sales to office
products customers grew by $9,705,000, or 21.3%; sales to foreign customers grew
by $3,666,000,  or 80.4%; and sales to miscellaneous  customers grouped together
as "other" increased by $2,281,000, or 36.3%.

         GROSS  PROFIT.  Gross profit as a percentage  of sales  decreased  from
52.6% in the first nine  months of fiscal 1997 to 52.3% in the first nine months
of fiscal  1998  primarily  because  the gross  profit  levels of certain of the
Company's  subsidiaries  and its  Ram  Manufacturing  division  are  lower  as a
percentage of sales than those of the parent company and secondarily  because of
a sales-growth related increase in the provision for sales rebates to be paid to
certain large customers.

         OPERATING  EXPENSES.  Total operating expenses increased by $9,255,000,
or 27.3%,  in the first nine months of fiscal 1998  compared with the first nine
months of fiscal 1997 but decreased as a percentage of sales from 37.9% to 37.0%
primarily  because  operating  expenses for the first nine months of fiscal 1997
included $1,491,000 of costs incurred in pursuing acquisitions that did not come
to  fruition.  No such costs were  incurred  in the first nine  months of fiscal
1998.

         Excluding the nine months  fiscal 1997 costs of pursuing  acquisitions,
total  operating  expenses  would  have  grown by  $10,746,000,  or  33.1%,  and
increased as a percentage of sales from 36.2% to 37.0%.

         Primarily  because  of  expenses   associated  with  new  and  recently
introduced products,  selling,  marketing and distribution expenses increased by
$8,593,000  and from  24.8%  to 26.4% as a  percentage  of  sales.  General  and
administrative  expenses  increased by  $2,153,000,  but declined  from 11.5% to
10.6% as a percentage  of sales  primarily  because of the  Company's  increased
ability to absorb fixed costs as a result of higher sales.
 ..................
         NET INTEREST EXPENSE  (INCOME).  Primarily because of a decrease in the
Company's cash available for short-term  investment resulting from the Company's
repurchase  of common  stock,  net  interest  income in the first nine months of
fiscal 1998  compared  with the first nine months of fiscal  1997  decreased  by
$809,000 and from 1.0% to 0.1% as a percentage of sales.

         INCOME TAXES.  Primarily  because of the improved  financial results of
the Company's  Hong Kong  subsidiary,  the effective tax rate for the first nine
months of fiscal 1998 was 39.0%,  compared  with 40.0% for the first nine months
of fiscal 1997.

         NET  INCOME.  Net  income  for the nine  months  ended  March 31,  1998
compared with the nine months ended March 31, 1997  increased by $2,541,000  and
was 9.4% of sales in both  periods.  Excluding the nine months fiscal 1997 costs
incurred in pursuing acquisitions, net income would have grown by $1,647,000 and
decreased from 10.4% to 9.4% as a percentage of sales.

         EARNINGS  PER  SHARE.  In  August  1997,  the  Company  repurchased  an
aggregate of 695,588 shares from certain  officers and directors of the Company.
Separately,  during fiscal 1997,  the Company  repurchased  1,026,200  shares of
Common Stock under the Company's stock repurchase program. 373,800 shares remain
for repurchase under this program. These repurchases reduce the number of shares
that would otherwise be used to calculate earnings per share.

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   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

         The Company's cash and cash  equivalents at March 31, 1998 decreased to
$11,955,000  from  $15,550,000  at June 30, 1997. In the nine months ended March
31, 1998, net cash of $14,350,000 provided by operating  activities,  was offset
by net cash of  $7,982,000  and  $9,901,000  used in  investing  activities  and
financing activities, respectively.

         Of the  $14,350,000  net amount  provided  by the  Company's  operating
activities,  $10,951,000 was provided by net income, $14,404,000 was provided by
a decrease in accounts  receivable and  $3,466,000 was provided by  depreciation
and  amortization.  These  amounts  were  partially  offset  by an  increase  of
$9,694,000 in inventories and a decrease of $4,016,000 in accounts payable.

        Of the $7,982,000 net amount used in the Company's investing activities,
$4,113,000 was used to acquire Ultima Distribution Inc., Ram Manufacturing, Inc.
and Timeposters Inc. and $3,824,000 was used to acquire primarily  machinery and
equipment and secondarily computer equipment and software.

         Of  the  $9,901,000   net  amount  used  in  the  Company's   financing
activities,  $11,564,000  was used to repurchase  695,588 shares of Common Stock
from certain officers and directors,  and $1,224,000 net was used to repay lines
of credit.  These amounts were partially  offset by $3,445,000 that was provided
by the issuance of Common Stock upon exercise of then-outstanding  stock options
and warrants.

         Because of the Company's seasonal sales patterns,  accounts  receivable
(net) at March 31, 1998 decreased by 65.7% from the fiscal 1997 year-end amount.
Compared with the March 31, 1997 amount,  accounts receivable (net) increased by
0.5% primarily  because of the growth in sales but did not grow as fast as sales
because of an increase in the allowances for sales returns and other allowances.
The average  collection  period of accounts  receivable at March 31, 1998 was 46
days, compared with 47 days at both June 30 and March 31, 1997.

         Inventories  at March 31, 1998  increased by 56.0% from the fiscal 1997
year-end  amount and by 57.5% compared with the March 31, 1997 amount  primarily
because of new and recently introduced products and the inventories of the three
companies acquired during the nine months ended March 31, 1998.

         Effective  February 1, 1998, the Company entered into a new $15,000,000
line of  credit.  Borrowings  under  this line of credit  bear  interest  at the
Company's  election at either the bank's prime rate less certain margins,  or at
LIBOR plus  certain  margins,  with the  margins  dependent  upon the  Company's
meeting  certain  funded  debt-to-EBITDA  ratios.  Prior to  February  1,  1998,
borrowings  under the line bore  interest  either at the bank's prime rate or at
LIBOR plus 1.75%.  At March 31,  1998,  the  Company had no amounts  outstanding
under its primary bank line but had used the line to secure outstanding  letters
of credit  totaling  approximately  $1,000,000,  which reduced the  availability
under  the  line  to  approximately  $14,000,000.  (See  Note 3 to  Consolidated
Financial Statements.)

         The Canadian  lines of credit  allow for  aggregate  borrowings  by the
Company's two Canadian subsidiaries of up to Canadian $3,000,000  (approximately
US  $2,118,000).  Borrowings bear interest at the Canadian bank's prime rate and
are due and  payable  on  demand.  At March  31,  1998,  approximately  Canadian
$821,000  (approximately  US  $580,000)  was  outstanding  under  these lines of
credit. (See Note 3 to Consolidated Financial Statements.)

         The Company has not incurred  significant  losses or gains from foreign
currency exchange rate fluctuations.  The continuing  expansion of the Company's
international  operations could, however,  result in larger gains or losses as a
result of fluctuations in foreign currency exchange rates as those  subsidiaries
conduct business in whole or in part in foreign currencies.

         The Company believes that cash flow from operations, vendor credit, its
existing  working  capital  and its bank lines of credit will be  sufficient  to
satisfy the Company's anticipated cash requirements at least through the next 12
months.  Nonetheless,  the  Company  may seek  additional  sources of capital as
necessary or appropriate for corporate  finance purposes or to otherwise 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.

         The "Year  2000"  issue  refers to the  inability  of certain  computer
systems to recognize accurate dates commencing on or after January 1, 2000. This
has the  potential  to affect  the  operation  of these  systems  adversely  and
materially.  Day Runner has reviewed its computer systems to identify areas that
may be affected and believes that by modifying  existing software and converting
to new software for certain tasks it can prevent the Year 2000  transition  from
posing significant  operational  problems.  The Company does not anticipate that
the  costs  of these  modifications  and  conversions  will be  material  to its
financial  position  or results of  operations  in any given  year.  The Company
currently estimates that total incremental cash requirements related to the Year
2000 issue will be  approximately  $500,000  to  $900,000  and to date has spent
approximately  $545,000.   Expenditures  will  be  expensed  or  capitalized  as
appropriate.

FORWARD LOOKING STATEMENTS

         With the exception of the actual reported  financial  results and other
historical  information,  the statements made in the Management's Discussion and
Analysis of Financial  Condition and Results of Operations and elsewhere in this
quarterly  report  are  forward  looking   statements  that  involve  risks  and
uncertainties   that  could  affect  actual  future  results.   Such  risks  and
uncertainties  include,  but are not limited to:  timing and size of orders from
large customers, timing and size of orders for new products,  competition, large
customers' inventory management,  general economic conditions, the health of the
retail  environment,  supply constraints,  supplier  performance and other risks
indicated in the Company's filings with the Securities and Exchange Commission.

PART II --OTHER INFORMATION

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

     (a) On March 17, 1998, the Company held a Special  Meeting of  Stockholders
(the "Special Meeting").

     (b) At the Special Meeting, the stockholders approved, with 4,407,055 votes
cast in favor  of,  124,136  votes  cast  against  and  6,648  abstentions,  the
amendment  to the  Company's  Certificate  of  Incorporation  to:  (i)  effect a
two-for-one  split of each of the  outstanding  shares  of  Common  Stock of the
Company;  (ii) to  increase  the number of  authorized  shares of all classes of
stock of the Company from  15,000,000  to  30,000,000,  consisting of 29,000,000
shares of Common  Stock,  $0.001 par value per share,  and  1,000,000  shares of
Preferred Stock, $0.001 par value per share.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

            (a)            Exhibits

                  3.1      Certificate of Incorporation of the Registrant,
                           as amended

                  3.2      Bylaws of the Registrant, as amended(1)

                  10.1     Credit Agreement dated as of February 1, 1998 between
                           the  Registrant   and  Wells  Fargo  Bank,   National
                           Association,   including  Revolving  Line  of  Credit
                           Note(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, 1998.
----------------
(1)  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.
(2)  Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     (File No. 0-19835) filed with the Commission on February 17, 1998.


<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 15, 1998
                                                
                                                DAY RUNNER, INC.



                                            By:    /S/ MARK A. VIDOVICH
                                                   ---------------------------
                                                    Mark A. Vidovich
                                                    Chairman of the Board and
                                                     Chief Executive Officer




                                            By:    /S/ DENNIS K. MARQUARDT
                                                   ----------------------------
                                                    Dennis K. Marquardt
                                                    Executive Vice President,
                                                     Finance & Administration
                                                     and Chief Financial Officer