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, 1997

                                       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 12, 1998
------------------------------ -------------------------------------------------
Common Stock, $0.001 par value                       5,834,167
<PAGE>


                                                           



                                DAY RUNNER, INC.

                                      INDEX


                                                                  Page Reference

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

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

PART I -- FINANCIAL INFORMATION

         Item 1.     Consolidated Financial Statements

                     Consolidated Balance Sheets
                       December 31, 1997 and June 30, 1997...........      3

                     Consolidated Statements of Income
                       Three and Six Months Ended December 31, 1997
                        and 1996.....................................      4

                     Consolidated Statements of Cash Flows
                       Six Months Ended December 31, 1997 and 1996...      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................................................................18


<PAGE>


PART I -- FINANCIAL INFORMATION
Item 1.  Consolidated Financial Statements.
<TABLE>
<CAPTION>

                        DAY RUNNER, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
                                     ASSETS
                                                                                               December 31,      June 30,
                                                                                                   1997            1997
                                                                                               (unaudited)      (audited)
                                                                                               -----------      ---------
<S>                                                                                            <C>              <C>         
     Cash and cash equivalents...............................................................    $   9,411      $  15,550
     Accounts receivable (less allowances for doubtful accounts and sales returns
          and other allowances of $11,585 and $8,664 at December 31, 1997 and
          June 30, 1997, respectively).......................................................       24,514         22,303
     Inventories.............................................................................       30,597         23,406
     Prepaid expenses and other current assets...............................................        2,137          2,409
     Deferred income taxes...................................................................        6,386          6,386
                                                                                                 ---------      ---------
          Total current assets...............................................................       73,045         70,054
                                                                                                 ---------      ---------
Property and equipment -- At cost:
     Machinery and equipment.................................................................       12,642         10,316
     Data processing equipment and software..................................................        6,993          5,863
     Leasehold improvements..................................................................        2,094          1,838
     Vehicles................................................................................          242            214
                                                                                                 ---------      ---------
          Total..............................................................................       21,971         18,231
     Accumulated depreciation and amortization...............................................      (11,838)
                                                                                                 ----------
(9,543)
     Property and equipment -- net...........................................................       10,133          8,688
                                                                                                 ---------      ---------
Other assets.................................................................................        2,097            138
                                                                                                 ---------      ---------
Total assets.................................................................................    $  85,275      $  78,880
                                                                                                 =========      =========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Lines of credit.........................................................................                   $     452
     Accounts payable........................................................................    $   7,280          8,320
     Accrued expenses........................................................................       14,879          9,500
     Income taxes payable....................................................................        3,268          1,049
     Current portion of long-term debt and capital lease obligations.........................           99             23
                                                                                                 ---------      ---------
          Total current liabilities..........................................................       25,526         19,344
                                                                                                 ---------      ---------

Long-term debt and capital lease obligations.................................................           76             52
                                                                                                 ---------      ---------

Stockholders' equity:
     Preferred stock (1,000,000 shares authorized, $0.001 par value; no shares issued
      or outstanding)........................................................................
     Common stock (14,000,000 shares authorized, $0.001 par value; 6,530,748 and ...6,364,429
      issued and 5,669,854 and 5,851,329 outstanding at December 31,. 1997 and June 30, 1997,
      respectively)..........................................................................              7            6
     Additional paid-in capital..............................................................         25,638       23,759
     Retained earnings.......................................................................         59,044       49,168
     Cumulative translation adjustment.......................................................             89           92
     Treasury stock:  at cost (860,894 and 513,100 shares at December 31, 1997 and
     June 30, 1997, respectively)............................................................        (25,105)     (13,541)
                                                                                                  ----------    ---------
          Total stockholders' equity.........................................................         59,673       59,484
                                                                                                  ----------    ---------
Total liabilities and stockholders' equity...................................................     $   85,275    $  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            Six Months Ended
                                                                     December 31,                  December 31,
                                                                    1997        1996             1997       1996
                                                                    ----        ----             ----       ----

<S>                                                            <C>          <C>              <C>         <C>   
Sales........................................................   $  49,388   $  35,014         $  87,526   $  68,563
Cost of goods sold...........................................      23,626      16,502            41,658      32,466
                                                                ---------   ---------         ---------   ---------
Gross profit.................................................      25,762      18,512            45,868      36,097
                                                                ---------   ---------         ---------   ---------

Operating expenses:
     Selling, marketing and distribution.....................      12,087       7,895            21,389      15,883
     General and administrative..............................       4,590       3,413             8,354       6,807
                                                                ---------   ---------         ---------   ---------
     Total operating expenses................................      16,677      11,308            29,743      22,690
                                                                ---------   ---------         ---------   ---------

Income from operations.......................................       9,085       7,204            16,125      13,407
Net interest expense (income)................................          30        (303)              (65)       (513)
                                                                ---------   ----------        ----------  ----------

Income before provision for income taxes.....................       9,055       7,507            16,190      13,920
Provision for income taxes...................................       3,531       3,003             6,314       5,568
                                                                ---------   ---------         ---------   ---------
Net income...................................................   $   5,524   $   4,504         $   9,876   $   8,352
                                                                =========   =========         =========   =========

Earnings per common share:
     Basic...................................................   $    0.98   $    0.71         $    1.73   $    1.32
                                                                =========   =========         =========   =========
     Diluted.................................................   $    0.90   $    0.67          $   1.59   $    1.25
                                                                =========   ==========        =========    ========

Weighted average number of common shares outstanding:
     Basic...................................................       5,637       6,332             5,697       6,323
                                                                =========   =========         =========   =========
     Diluted.................................................       6,162       6,699             6,207       6,705
                                                                =========   =========         =========   =========

</TABLE>


















          See accompanying notes to consolidated financial statements.





<PAGE>
<TABLE>
<CAPTION>


                        DAY RUNNER, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Dollars in thousands)

                                                                                            Six Months Ended
                                                                                               December 31,
                                                                                             1997        1996
                                                                                             ----        ----
<S>                                                                                     <C>           <C>         
Cash flows from operating activities:
    Net income....................................................................        $  9,876     $ 8,352
    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
       Depreciation and amortization..............................................           2,255       1,566
       Provision for losses on accounts receivable................................                         214
       Changes in operating assets and liabilities:
          Accounts receivable.....................................................            (959)      1,091
          Inventories.............................................................          (4,423)      1,867
          Prepaid expenses and other current assets...............................             293        (171)
          Income taxes receivable.................................................                       1,930
          Accounts payable........................................................          (2,657)     (2,571)
          Accrued expenses........................................................           5,011         785
          Income taxes payable....................................................           2,261         482
                                                                                         ---------   ---------
             Net cash provided by operating activities............................          11,657      13,545
                                                                                         ---------   ---------
Cash flows from investing activities:
    Purchase of business..........................................................          (2,080)
    Acquisition of property and equipment.........................................          (2,565)     (2,080)
    Other assets..................................................................              (6)          2
                                                                                         ----------  ---------
         Net cash used in investing activities....................................          (4,651)     (2,078)
                                                                                         ----------  ----------
Cash flows from financing activities:
    Net repayment under lines of credit...........................................          (2,697)
    Repayment of capital lease obligations........................................             (39)
    Repayment of long-term debt...................................................            (678)
    Net proceeds from issuance of common stock....................................           1,879         388
    Repurchase of common stock....................................................         (11,564)
                                                                                         ----------  ---------
         Net cash (used in) provided by financing activities......................         (13,099)        388
                                                                                         ----------  ---------
Effect of exchange rate changes in cash...........................................             (46)         91
                                                                                         ----------  ---------
Net (decrease) increase in cash and cash equivalents..............................          (6,139)     11,946
Cash and cash equivalents at beginning of period..................................          15,550      19,765
                                                                                         ---------   ---------
Cash and cash equivalents at end of period........................................       $   9,411   $  31,711
                                                                                         =========   =========
          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 six months ended
                    December 31, 1997 and 1996 is unaudited)


1.  Basis of Presentation and Accounting Policies

         The accompanying consolidated balance sheet as of December 31, 1997 and
consolidated  statements  of income  and cash flows for the three and six months
ended  December  31,  1997  and  1996  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 six months ended  December
31, 1997 and 1996 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):

                                            December 31,            June 30,
                                               1997                  1997
                                               ----                  ----

         Raw materials...................  $   10,877             $   10,204
         Work in process.................         268                    426
         Finished goods..................      19,452                 12,776
                                           ----------             ----------
                  Total..................  $   30,597             $   23,406
                                           ==========             ==========

3.  Lines of Credit

         At December 31, 1997,  the Company had no amounts  outstanding  under a
line of  credit  with a bank  but had  outstanding  secured  letters  of  credit
totaling  approximately  $1,623,000.  Effective  February  1, 1998,  the Company
entered into a new credit agreement with the 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
borrowing 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.

         Under  this new  credit  agreement,  borrowings  bear  interest  at the
Company's  election either at the bank's prime rate (8.50% at December 31, 1997)
less certain  margins,  which range from .75 to 1.00 basis  points,  or at LIBOR
(5.985% at December 31, 1997) plus certain margins, which range from .75 to 1.25
basis points,  the margins being dependent on the Company 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 at any time from
and including  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.

         The  Company's  Canadian  subsidiary  has a  credit  agreement  with  a
Canadian  bank  which the  Company  guarantees.  Borrowings  under  this line of
credit, which are used for working  capital  purposes by the Company's  Canadian
subsidiary,  may not exceed  Canadian  $2,000,000,  bear  interest at the bank's
prime rate (6.0% at December 31, 1997) and are due and payable on demand.  Prior
to October 17, 1997, borrowings under the line bore interest at the bank's prime
rate plus 0.50%.  At December 31, 1997,  the Canadian  subsidiary had no amounts
outstanding under this line of credit.

4.  Stockholders' Equity

         During the six months  ended  December  31,  1997,  certain  directors,
officers and employees  exercised  options and warrants to purchase an aggregate
of  166,319   shares  of  the  Company's   Common  Stock  for  an  aggregate  of
approximately $1,880,000.

 5.  Treasury Stock

         During the six months ended December 31, 1997, the Company  repurchased
347,794 shares from certain officers and directors at a cost of $33.25 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, for the
period ended  December  31,  1997.  SFAS No. 128 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>


                                                  Three Months Ended                        Six Months Ended
                                                     December 31,                             December 31,
                                        ----------------------------------------    -------------------------------
                                                 1997                1996                  1997              1996
                                        ---------------        -----------------    ----------------   ------------
<S>                                           <C>                <C>                 <C>               <C>    
Net Income                                     $ 5,524            $  4,504             $  9,876          $  8,352
                                               =======            ========             ========          ========

Basic Weighted Average Shares
   Weighted average number of
     common shares outstanding                   5,637               6,332                5,697             6,323

Effect of Diluted Securities
   Additional shares from the assumed
     exercise of options and warrants            1,666               1,116                1,603             1,327
   Shares assumed to be repurchased
     under the treasury stock method             (869)               (567)                (833)             (753)
   Non qualified tax benefit                     (272)               (182)                (260)             (192)
                                                 -----               -----                -----             -----

Diluted Weighted Average Shares
   Weighted average number of
     common shares outstanding and
     common share equivalents                    6,162               6,699                6,207             6,705
                                                ======              ======               ======            ======

Basic EPS                                       $ 0.98              $ 0.71               $ 1.73            $ 1.32
                                                ======              ======               ======            ======

Diluted EPS                                     $ 0.90              $ 0.67               $ 1.59            $ 1.25
                                                ======              ======               ======            ======
</TABLE>

7.  Acquisitions

         On  July  29,  1997,   the  Company   purchased  the  stock  of  Ultima
Distribution  Inc.,  which was the  distributor  of the  Company's  products  in
Canada, for approximately $130,000. 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., 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 December 31,
1997.  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.


<PAGE>



8.  Statements of Cash Flow

     The net cash  expended by the Company in its  acquisitions  made during the
six months ended December 31, 1997 was used as follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                                           <C>             <C>
                                                                                Ultima                Ram
                                                                                ------                ---
              Working capital                                                   $    30          $     624
              Property, plant and equipment                                        (150)              (970)
              Long-term debt                                                        197                 54
              Cost in excess of net assets of company acquired                     (207)            (1,658)
                                                                                --------         ----------
              Net cash used to acquire business                                 $  (130)         $   (1,950)
                                                                                ========         ===========
</TABLE>


         Supplemental disclosure of cash flow information (in thousands):
<TABLE>
<CAPTION>

                                                         Six Months Ended December 31,
                                                        1997                    1996
                                                   ------------------------------------
              <S>                                <C>                        <C>   

             Cash paid during the period for:
               Interest                              $     149                $      56
               Income taxes                          $   4,146                $   3,174
</TABLE>

9.  Subsequent Events

         On January  20,  1998,  the  Company's  Board of  Directors  approved a
two-for-one  stock split and a doubling of the  Company's  number of  authorized
shares  from 15  million to 30  million  shares.  Both  actions  are  subject to
stockholder approval at a special meeting to be held on March 17, 1998.

         On February 1, 1998,  the Company  purchased  the stock of  Timeposters
Inc.,  a  Canadian   developer,   manufacturer  and  marketer  of  planning  and
presentation products,  including flexible planners, planning boards, other wall
boards  and  easels,  for  approximately  $2,500,000.  In  addition,  contingent
payments may be paid over the next two years,  based on  Timeposters'  operating
performance during that period.


<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 54.4% of second
quarter  fiscal 1998 sales and 51.2% of sales for the six months ended  December
31,  1997,  and the mass market  channel,  which  accounted  for 32.6% of second
quarter  fiscal 1998 sales and 36.4% of sales for the six months ended  December
31, 1997.

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
                                                                                               -----------------
                                                             Percentage of Sales              Three        Six
                                                            ---------------------             Months      Months
                                                          Three                Six            Ended       Ended
                                                      Months Ended        Months Ended     December 31,  December 31,
                                                      December 31,        December 31,       1996 to      1996 to
                                                     1996     1997       1996      1997       1997        to 1997
                                                     --------------      -------------       -------      -------     
<S>                                               <C>       <C>        <C>      <C>          <C>          <C>
Sales............................................  100.0%    100.0%     100.0%   100.0%        41.1%       27.7%
Cost of goods sold...............................   47.8      47.1       47.6     47.4         43.2        28.3
                                                   -----     -----      -----    -----
Gross profit.....................................   52.2      52.9       52.4     52.6         39.2        27.1
                                                   -----     -----      -----    -----
Operating expenses:
   Selling, marketing and distribution...........   24.5      22.6       24.4     23.2         53.1        34.7
   General and administrative....................    9.3       9.7        9.6      9.9         34.5        22.7
                                                   -----     -----      -----    -----
     Total operating expenses....................   33.8      32.3       34.0     33.1         47.5        31.1
                                                   -----     -----      -----    -----
Income from operations...........................   18.4      20.6       18.4     19.5         26.1        20.3
Net interest expense (income)....................    0.1      (0.9)      (0.1)    (0.8)      (109.9)      (87.3)
                                                    ----    ------      ------  -------      ------
Income before provision for income taxes.........   18.3      21.5       18.5     20.3         20.6        16.3
Provision for income taxes.......................    7.1       8.6        7.2      8.1         17.6        13.4
                                                   -----     -----      -----    -----
Net income.......................................   11.2%     12.9%      11.3%    12.2%        22.6        18.2
                                                   =====     =====      =====    =====
</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 December 31,              Six Months Ended December 31,
                                         1997                 1996                  1997                 1996
                                         ----                 ----                  ----                 ----
                                                            (Unaudited; dollars in thousands)
<S>                               <C>         <C>       <C>         <C>       <C>        <C>       <C>         <C>
Organizers and planners.........    $21,912    44.4%   $ 20,179     57.6%     $ 43,100     49.2%   $ 41,240     60.1%
Refills.........................     16,255    32.9      12,981     37.1        27,130     31.0      23,425     34.2
Related organizing products.....     11,221    22.7       1,854      5.3        17,296     19.8       3,898      5.7
                                     ------   ------    -------    -----      --------    -----    --------    -----
                                                                                                          
   Total........................    $49,388   100.0%    $35,014    100.0%     $ 87,526    100.0%   $ 68,563    100.0%
                                    =======   ======    =======    ======     ========    ======   ========    ======

</TABLE>
<TABLE>
<CAPTION>

Distribution Channel:

                                      Three Months Ended December 31,              Six Months Ended December 31,
                                         1997                 1996                  1997                 1996
                                         ----                 ----                  ----                 ----
                                                            (Unaudited; dollars in thousands)
<S>                                 <C>       <C>       <C>        <C>       <C>         <C>       <C>         <C>
Office products.................    $26,874    54.4%    $20,546     58.7%     $ 44,798     51.2%   $ 38,329     55.9%
Mass market.....................     16,106    32.6      10,525     30.1        31,856     36.4      23,005     33.6
Foreign customers...............      2,596     5.3       1,754      5.0         5,011      5.7       3,118      4.5
Other...........................      3,812     7.7       2,189      6.2         5,861      6.7       4,111      6.0
                                    -------     ----    -------     -----     --------      ----   --------     ----
   Total........................    $49,388   100.0%    $35,014    100.0%     $ 87,526    100.0%   $ 68,563    100.0%

                                  =======   ======    =======    ======     ========    ======   ========    ======
</TABLE>


Three Months Ended December 31, 1997 Compared with
the Three Months Ended December 31, 1996

         Sales.  Sales consist of revenues  from gross product  shipments net of
allowances  for returns,  rebates and credits.  In the second  quarter of fiscal
1998, sales increased by $14,374,000,  or 41.1%,  primarily because of increased
sales of related  organizing  products.  In the quarter ended December 31, 1997,
sales of related  organizing  products grew by $9,367,000,  or 505.2%;  sales of
refills (which include calendars and accessories) grew by $3,274,000,  or 25.2%;
and sales of organizers and planners grew by $1,733,000,  or 8.6%. Product sales
were  primarily to office  products  customers  and  secondarily  to mass market
customers.  Sales to office  products  customers grew by  $6,328,000,  or 30.8%;
sales  to  mass  market  customers  grew  by  $5,581,000,  or  53.0%;  sales  to
miscellaneous customers grouped together as "other" increased by $1,623,000,  or
74.1%; and sales to foreign customers grew by $842,000, or 48.0%.

         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
slightly from 52.9% in the second  quarter of fiscal 1997 to 52.2% in the second
quarter of fiscal 1998 primarily  because of a sales-growth  related increase in
the  provision  for sales  rebates to be paid to  certain  large  customers  and
secondarily  because  the  gross  profit  levels  of  certain  of the  Company's
subsidiaries and of its Ram Manufacturing  division are lower as a percentage of
sales than those of the parent company.

         Operating  Expenses.  Total operating expenses increased by $5,369,000,
or 47.5%,  in the second quarter of fiscal 1998 compared with the second quarter
of fiscal  1997 and  increased  as a  percentage  of sales  from 32.3% to 33.8%.
Primarily  because of expenses  associated  with the  expanded  distribution  of
recently  introduced  products,  selling,  marketing and  distribution  expenses
increased  by  $4,192,000  and from  22.6% to 24.5% as a  percentage  of  sales.
General and administrative expenses increased by $1,177,000,  but decreased from
9.7% to  9.3% 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  expense was $30,000 for the second
quarter of  fiscal 1998  compared  with net  interest income of $303,000 for the
second quarter of fiscal 1997.

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

Six Months Ended December 31, 1997 Compared with
the Six Months Ended December 31, 1996

         Sales.  In the six months ended December 31, 1997 compared with the six
months ended  December  31, 1996,  sales  increased  by  $18,963,000,  or 27.7%,
primarily because of increased sales of related organizing products.  In the six
months ended  December 31, 1997,  sales of related  organizing  products grew by
$13,398,000, or 343.7%; sales of refills grew by $3,705,000, or 15.8%; and sales
of  organizers  and planners  grew by  $1,860,000,  or 4.5%.  Product sales were
primarily to office products customers and secondarily to mass market customers.
Sales to mass market  customers  grew by $8,851,000,  or 38.5%;  sales to office
products customers grew by $6,469,000, or 16.9%; sales to foreign customers grew
by $1,893,000,  or 60.7%; and sales to miscellaneous  customers grouped together
as "other" increased by $1,750,000, or 42.6%.

         Gross  Profit.  Gross profit as a percentage  of sales  decreased  from
52.6% in the first six months of fiscal 1997 to 52.4% in the first six months of
fiscal  1998  primarily  because  of a  sales-growth  related  increase  in  the
provision  for  sales  rebates  to be  paid  to  certain  large  customers  and
secondarily  because  the  gross  profit  levels  of  certain  of the  Company's
subsidiaries and of its Ram Manufacturing  division are lower as a percentage of
sales than those of the parent company.

         Operating  Expenses.  Total operating expenses increased by $7,053,000,
or 31.1%,  in the first six months of fiscal  1998  compared  with the first six
months of fiscal  1997 and  increased  as a  percentage  of sales  from 33.1% to
34.0%.  Primarily because of expenses associated with the expanded  distribution
of recently introduced products,  selling,  marketing and distribution  expenses
increased  by  $5,506,000  and from  23.2% to 24.4% as a  percentage  of  sales.
General and administrative expenses increased by $1,547,000,  but decreased from
9.9% to  9.6% 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 six  months of
fiscal  1998  compared  with the first six months of fiscal  1997  decreased  by
$448,000 and from 0.8% 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 six
months of fiscal 1998 was 39.0%, compared with 40.0% for the first six months of
fiscal 1997.

         Earnings Per Share. During fiscal 1997, the Company repurchased 513,100
shares of Common Stock under the Company's  stock  repurchase  program.  186,900
shares remain for repurchase under this program. Separately, in August 1997, the
Company  repurchased  an aggregate of 347,794  shares from certain  officers and
directors of the Company. The repurchases reduce the number of shares that would
otherwise be used to  calculate  earnings per share for the 1998 fiscal year and
subsequent fiscal years.

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 December 31, 1997 decreased
to  $9,411,000  from  $15,550,000  at June 30,  1997.  In the six  months  ended
December 31, 1997, net cash of $11,657,000 provided by operating activities, was
offset by net cash of $4,651,000 and  $13,099,000  used in investing  activities
and financing activities, respectively.

         Of the  $11,657,000  net amount  provided  by the  Company's  operating
activities, $9,876,000 was provided by net income, $5,011,000 was provided by an
increase in accrued  expenses,  $2,261,000 was provided by an increase in income
taxes payable and  $2,255,000  was provided by  depreciation  and  amortization.
These amounts were partially  offset by an increase of $4,423,000 in inventories
and a decrease of $2,657,000 in accounts payable.

         Of  the  $4,651,000   net  amount  used  in  the  Company's   investing
activities, $2,565,000 was used to acquire primarily machinery and equipment and
secondarily computer equipment and software,  and $2,080,000 was used to acquire
Ultima Distribution Inc. and Ram Manufacturing, Inc.

         Of  the  $13,099,000  net  amount  used  in  the  Company's   financing
activities,  $11,564,000  was used to repurchase  347,794 shares of Common Stock
from certain  officers and directors,  and $2,697,000 was used to repay lines of
credit.  These amounts were partially  offset by $1,879,000 that was provided by
the issuance of Common Stock upon exercise of then-outstanding stock options and
warrants.

         Accounts  receivable  (net) at December 31, 1997 increased by 9.9% from
the fiscal 1997 year-end amount and by 21.4% compared with the December 31, 1996
amount primarily  because of the Company's sales growth but did not grow as fast
as sales because  substantial  sales to a large  customer  occurred early in the
quarter.  The average  collection period of accounts  receivable at December 31,
1997 was 46 days,  compared  with 47 days at both June 30, 1997 and December 31,
1996.

          Inventories  at December  31, 1997  increased by 30.7% from the fiscal
1997 year-end  amount  and by  67.5% compared with the  December 31, 1996 amount
primarily  because  of the  continuing  expansion  of  distribution  of new  and
recently  introduced  products and the  inventories  of the  companies  acquired
during the six months ended December 31, 1997.

         At December 31, 1997, Day Runner had no amounts  outstanding  under its
primary  $15,000,000  bank  line but had used  the  line to  obtain  outstanding
letters of credit of  approximately  $1,623,000,  which reduced the availability
under the line to  approximately  $13,377,000.  Effective  February 1, 1998, the
Company entered into a new $15,000,000 line of credit with borrowings under this
line of credit  bearing  interest  at the  Company's  election  at either at the
bank's prime rate, less certain margins, or at LIBOR, plus certain margins,  the
margins being  dependent on the Company  meeting  certain  funded debt to EBITDA
ratios.Prior to February 1, 1998, borrowings under the line bore interest at the
bank's prime rate or at LIBOR plus 1.75%. (See Note 3 to Consolidated Financial
Statements.)

         The  Canadian  line of  credit  allows  for  borrowings,  by one of the
Company's Canadian subsidiaries,  of up to Canadian $2,000,000 (approximately US
$1,400,000).  Borrowings bear interest at the Canadian bank's prime rate and are
due and payable on demand. Prior to October 17, 1997,  borrowings under the line
bore  interest at the bank's prime rate plus 0.50%.  At December  31, 1997,  the
Canadian subsidiary had no amounts outstanding under this line 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 Company has conducted a review of its computer  systems to identify
those areas that will be affected by the "Year 2000" issue and is  developing an
implementation  plan to resolve the issue.  The "Year 2000" issue  refers to the
inability of certain  computer  systems to recognize dates commencing on January
1, 2000.  Such  inability has the potential to materially  adversely  affect the
operation of computer systems.  The Company currently believes that by modifying
existing  software and  converting to new software for certain  tasks,  the Year
2000  problem  will  not  pose  significant  operational  problems  and  is  not
anticipated to be material to its financial position or results of operations in
any given year. At the present time, the Company  estimates that the incremental
cash requirements related to the  Year  2000  issue  will  total  approximately
$500,000 to $900,000. Such  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.


<PAGE>



PART II --OTHER INFORMATION

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

                   (a)On November  25,  1997,  the Company  held its 1997 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.
<TABLE>
<CAPTION>

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

                             <S>                                  <C>                                  <C>  
                             James E. Freeman, Jr.                 5,557,263                            6,458
                             James P. Higgins                      5,559,363                            4,358
                             Jill Tate Higgins                     5,557,363                            6,358
                             Charles Miller                        5,557,463                            6,258
                             Alan R. Rachlin                       5,559,763                            3,958
                             Mark A.  Vidovich                     5,557,463                            6,258
                             Boyd I. Willat                        5,559,628                            4,093
                             Felice Willat                         5,559,363                            4,358
</TABLE>

                   (c)At the Annual Meeting,  the  stockholders  approved,  with
                      4,709,044 votes cast in favor, 812,194 votes cast against,
                      14,056   abstentions  and  28,427  broker  nonvotes,   the
                      amendment  to the  Company's  1995  Stock  Option  Plan to
                      increase the  aggregate  number of shares  authorized  for
                      issuance thereunder from 500,000 to 775,000 shares.

                   (d)At the Annual Meeting,  the  stockholders  approved,  with
                      5,492,114 votes cast in favor,  30,922 votes cast against,
                      12,258   abstentions  and  28,427  broker  nonvotes,   the
                      amendment to the Company's  Employee  Stock Option Plan to
                      increase  the  aggregate  number  of shares  for  issuance
                      thereunder from 100,000 to 175,000.

                   (e)At the  Annual  Meeting,  with  5,554,893  votes  cast  in
                      favor, 3,285 votes cast against and 5,543 abstentions, the
                      stockholders ratified the appointment of Deloitte & Touche
                      LLP as independent auditors for the Company for the fiscal
                      year ending June 30, 1998.



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, as amended(2)

        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

        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, 1997.


(1)  Incorporated  by reference to the  Registrant's  Transition  Report on Form
     10-K (File No. 0-19835) filed with the Commission on September 27, 1994.
(2)  Incorporated  by reference to the  Registrant's  Current Report on Form 8-K
     (File No. 0-19835) filed with the Commission on August 5, 1993.


<PAGE>




                                   SIGNATURES


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


                                         Date:  February 17, 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