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, 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
                                                    FEBRUARY 10, 1999
------------------------------          ----------------------------------------
Common Stock, $0.001 par value                         11,899,963

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<TABLE>
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                                DAY RUNNER, INC.

                                      INDEX

                                                                                                            PAGE REFERENCE

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

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

PART I -- FINANCIAL INFORMATION

         Item 1.     Consolidated Financial Statements

                     Consolidated Balance Sheets

                       December 31, 1998 and June 30, 1998.......................................             3

                     Consolidated Statements of Income

                       Three and Six Months Ended December 31, 1998 and 1997.....................             4

                     Consolidated Statements of Cash Flows

                       Six Months Ended December 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...............................            11

PART II -- OTHER INFORMATION

         Item 6.     Exhibits and Reports on Form 8-K............................................            17

SIGNATURES.......................................................................................            18
</TABLE>
<TABLE>
<CAPTION>


<PAGE>



PART I -- FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS.

                        DAY RUNNER, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                             (DOLLARS IN THOUSANDS)

                                     ASSETS

                                                                                                         December 31,      June 30,
                                                                                                             1998            1998
                                                                                                        ------------     ----------
Current assets:
<S>                                                                                                        <C>              <C>
     Cash and cash equivalents ...................................................................         $ 25,253        $  2,923
     Accounts receivable (net of allowances for doubtful accounts and sales returns
          and other allowances of $8,654 and $9,942 at December 31, 1998 and
          June 30, 1998, respectively) ...........................................................           48,580          32,542
     Inventories .................................................................................           47,887          37,610
     Prepaid expenses and other current assets ...................................................            4,830           1,670
     Income taxes receivable .....................................................................                9           2,606
     Deferred income taxes .......................................................................            7,218           7,218
                                                                                                           --------        --------
          Total current assets ...................................................................          133,777          84,569
Property and equipment -- net ....................................................................           17,793          11,888
Goodwill (net of accumulated amortization of $648 and $108 at December 31, 1998 and June 30, 1998,
 respectively) ...................................................................................           86,807           3,564
Other assets (net of accumulated amortization of $132 and $60 at December 31,
     1998 and June 30, 1998, respectively) .......................................................            2,120           1,158
                                                                                                           --------        --------
Total assets .....................................................................................         $240,497        $101,179
                                                                                                           ========        ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Lines of credit..............................................................................                         $  2,716
     Accounts payable.............................................................................         $  9,095           9,969
     Accrued expenses.............................................................................           25,004          13,876
     Income taxes payable.........................................................................            4,131
     Current portion of capital lease obligations.................................................               32              33
                                                                                                          ---------       ---------
          Total current liabilities...............................................................           38,262          26,594
                                                                                                          ---------       ---------
Long-term liabilities:
     Capital lease obligations....................................................................                               53
     Line of credit...............................................................................          118,351
     Loan notes...................................................................................            2,457
                                                                                                          ---------       ---------
       Total long-term debt.......................................................................          120,808              53
                                                                                                          ---------       ---------
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;  13,697,001
         and 13,677,386  issued and  11,899,213  and  11,955,598  outstanding at
         December 31, 1998 and June 30, 1998, respectively).......................................              14               14
     Additional paid-in capital...................................................................          34,658           34,445
     Retained earnings............................................................................          72,998           65,076
     Cumulative translation adjustment............................................................             136              102
     Treasury stock: at cost (1,797,788 and 1,721,788 shares at December 31, 1998
         and June 30, 1998, respectively).........................................................         (26,379)         (25,105)
                                                                                                         ---------       ----------
          Total stockholders' equity..............................................................          81,427           74,532
                                                                                                         ---------       ----------
Total liabilities and stockholders' equity........................................................       $ 240,497        $ 101,179
                                                                                                         =========       ==========



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

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<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,
                                                                    1998        1997             1998       1997
                                                                    ----        ----             ----       ----

<S>                                                             <C>         <C>               <C>         <C>
Net sales....................................................   $  64,565   $  49,388         $ 112,296   $  87,526
Cost of goods sold...........................................      32,100      23,626            54,780      41,658
                                                                ---------   ---------         ---------   ---------
Gross profit.................................................      32,465      25,762            57,516      45,868
                                                                ---------   ---------         ---------   ---------

Operating expenses:

     Selling, marketing and distribution.....................      18,910      12,087            31,175      21,389
     General and administrative..............................       6,447       4,590            11,104       8,354
     Costs relating to activities associated
        with the Filofax acquisition.........................       1,072                         1,072
                                                                ---------   ---------         ---------   ---------
     Total operating expenses................................      26,429      16,677            43,351      29,743
                                                                ---------   ---------         ---------   ---------

Income from operations.......................................       6,036       9,085            14,165      16,125
Net interest expense (income)................................       1,356          30             1,389         (65)
                                                                ---------   ---------         ---------   ---------

Income before provision for income taxes.....................       4,680       9,055            12,776      16,190
Provision for income taxes...................................       1,778       3,531             4,854       6,314
                                                                ---------   ---------         ---------   ---------
Net income...................................................   $   2,902   $   5,524         $   7,922   $   9,876
                                                                =========   =========         =========   =========

Earnings per common share:

     Basic...................................................   $    0.24   $    0.49         $    0.67   $    0.87
                                                                =========   =========         ==========  ==========
     Diluted.................................................   $    0.23   $    0.45         $    0.63   $    0.80
                                                                =========   =========         ==========  ==========

Weighted average number of common shares outstanding:

     Basic...................................................      11,883      11,273            11,907      11,393
                                                                =========   =========         =========   =========
     Diluted.................................................      12,564      12,323            12,619      12,415
                                                                =========   =========         =========   =========














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


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<TABLE>
<CAPTION>



                        DAY RUNNER, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                             (DOLLARS IN THOUSANDS)

                                                                                             Six Months Ended
                                                                                               December 31,
                                                                                             1998        1997
                                                                                             ----        ----

Cash flows from operating activities:

<S>                                                                                       <C>          <C>
    Net income....................................................................        $  7,922     $ 9,876
    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:

       Depreciation and amortization..............................................           4,478       2,255
       Provision for losses on accounts receivable................................              12
       Changes in operating assets and liabilities, net of acquisition:
          Accounts receivable.....................................................          (1,482)       (959)
          Inventories.............................................................           2,296      (4,423)
          Prepaid expenses and other current assets...............................            (785)        293
          Income taxes receivable.................................................           2,646
          Accounts payable........................................................          (4,951)     (2,657)
          Accrued expenses........................................................           3,294       5,011
          Income taxes payable....................................................           2,761       2,261
                                                                                         ---------   ---------
         Net cash provided by operating activities................................          16,191      11,657
                                                                                         ---------   ---------
Cash flows from investing activities:
    Purchase of business..........................................................         (88,764)     (2,080)
    Acquisition of property and equipment.........................................          (6,002)     (2,565)
    Other assets..................................................................            (385)         (6)
                                                                                         ----------  ----------
         Net cash used in investing activities....................................         (95,151)     (4,651)
                                                                                         ----------  ----------
Cash flows from financing activities:
    Net borrowings (repayments) under lines of credit.............................         102,146      (2,697)
    Repayment of capital lease obligations........................................             (53)        (39)
    Repayment of long-term debt...................................................                        (678)
    Net proceeds from issuance of common stock....................................             212       1,879
    Repurchase of common stock....................................................          (1,274)    (11,564)
                                                                                         ----------  ----------
         Net cash provided by (used in) financing activities......................         101,031     (13,099)
                                                                                         ---------   ----------
Effect of exchange rate changes in cash...........................................             259         (46)
                                                                                         ---------   ----------
Net increase (decrease) in cash and cash equivalents..............................          22,330      (6,139)
Cash and cash equivalents at beginning of period..................................           2,923      15,550
                                                                                         ---------   ---------
Cash and cash equivalents at end of period........................................       $  25,253   $   9,411
                                                                                         =========   =========

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


<PAGE>





                        DAY RUNNER, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             (THREE AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997)

1.  BASIS OF PRESENTATION AND ACCOUNTING POLICIES

         The  accompanying  consolidated  balance sheet as of December 31, 1998,
consolidated  statements  of income for the three and six months ended  December
31, 1998 and 1997, and consolidated  statements of cash flows for the six months
ended  December  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, 1998,  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, 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):

                                            December 31,            June 30,
                                                1998                  1998

         Raw materials...................  $   10,101             $   14,087
         Work in process.................       1,719                    831
         Finished goods..................      36,067                 22,692
                                           ----------             ----------
                  Total..................  $   47,887             $   37,610
                                           ==========             ==========

3.  LINES OF CREDIT

          On  September  23,  1998,  the  Company  entered  into a  $160,000,000
Revolving Loan Agreement (the "Loan Agreement") with Wells Fargo Bank,  National
Association ("Wells Fargo"). Effective November 24, 1998 this amount was reduced
to  $145,000,000.  The loan  facility  was  syndicated  with a group of banks in
December 1998. The Loan Agreement  provides for borrowings through September 30,
2005 (the "Maturity Date"). Borrowings bear interest either at fixed rates based
on the higher of Wells Fargo's  prime rate and the Federal Funds Rate  published
by the Federal  Reserve  Bank of New York or at  floating  rates  calculated  by
reference  to the interest  rates at which Wells Fargo  offers  deposits in U.S.
dollars in amounts  approximately  equal to the amount of the relevant  loan and
for a period of time  comparable  to the number of days the  relevant  loan will
remain outstanding, together with a margin. During the six months ended December
31, 1998, the weighted average  interest rate was 6.70%.The  maximum amount that
may be outstanding under the Loan Agreement is $145,000,000 through December 31,
2000 and is  reduced  thereafter  by  $5,000,000  in  calendar  year 2001 and by
$10,000,000  in each of the following  calendar  years up to the Maturity  Date.
Under the terms of the Loan Agreement,  the Company paid Wells Fargo a financing
fee of  $1,200,000.  The Company  will also pay  commitment  fees for the unused
portion of the loan facility  during the term of the Loan Agreement and will pay
certain  legal,  accounting  and other fees and expenses in connection  with the
Loan Agreement.  At December 31, 1998, the Company had $118,351,000  outstanding
under this Loan Agreement.

         The Loan  Agreement  requires  the  Company to meet  certain  financial
covenants,  including:  (i) a fixed charge  coverage  ratio of less than 2.00 to
1.00; (ii) a funded debt ratio declining over the term from 3.75 to 1.00 to 2.50
to 1.00; (iii) limits on annual capital expenditures increasing from $11,000,000
to  $17,000,000  over the  seven-year  term;  (iv)  stockholders'  equity,  on a
quarterly  basis,  of not less than (a) 50% of net  income  plus 75% of net cash
proceeds from any stock  issuances plus (b) the greater of $67,000,000 or 80% of
stockholders' equity at March 31, 1999.

         The  Company's  Canadian  subsidiary  had a  credit  agreement  with  a
Canadian  bank which  allowed for  borrowings  up to Canadian  $3,000,000,  bore
interest  at the  bank's  prime  rate and was due and  payable  on  demand.  The
borrowings  under this credit agreement were repaid in full on October 22, 1998,
and the Canadian  subsidiary  now borrows funds as a co-borrower  under the Loan
Agreement.

4.  LOAN NOTES

         Loan Notes in the amount of $2,457,000  were issued in connection  with
the  Filofax  acquisition  are  unsecured  obligations  of  the  Company's  U.K.
subsidiary  and bear  interest at 1% below LIBOR (5.63% at December  31,  1998).
Interest on the Loan Notes is paid annually in arrears  beginning  September 30,
1999. The Loan Notes are redeemable, in whole or in part, at the holder's option
or each interest  payment date.  Unless they have previously been redeemed,  all
Loan Notes will be redeemed on September 30, 2003.

5.  STOCKHOLDERS' EQUITY

         During  the six months  ended  December  31,  1998,  certain  employees
exercised  options to purchase an  aggregate  of 6,650  shares of the  Company's
Common Stock for an aggregate of approximately $213,000.

         During the six months ended December 31, 1998, the Company  repurchased
76,000  shares of its Common Stock at an average cost of $16.76 per share for an
aggregate of approximately $1,274,000.

6.  EARNINGS PER SHARE

         Effective  December  1997, the Company  adopted  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 dilutive securities.  The following reconciles the numerator and
denominator of the basic and diluted per share  computations  for net income (in
thousands, except per share amounts):


<PAGE>

<TABLE>
<CAPTION>





                                                  THREE MONTHS ENDED                            SIX MONTHS ENDED
                                                     DECEMBER 31,                                 DECEMBER 31,
                                         ---------------------------------------    --------------------------------------
                                                1998                  1997                 1998                  1997
                                         -----------------      ----------------    -----------------     ----------------

<S>                                            <C>                <C>                   <C>                   <C>
NET INCOME                                     $ 2,902            $  5,524              $  7,922              $  9,876
                                               =======            ========              ========              ========

BASIC WEIGHTED AVERAGE SHARES
   Weighted average number of
     common shares outstanding                  11,883              11,273                11,907                11,393

EFFECT OF DILUTED SECURITIES
   Additional shares from the assumed
     exercise of options and warrants            3,047               3,333                 2,952                 3,206
   Shares assumed to be repurchased
     under the treasury stock method           (1,949)             (1,739)               (1,804)               (1,666)
   Non-qualified tax benefit                     (417)               (544)                 (436)                 (518)
                                               -------            --------              --------              --------

DILUTED WEIGHTED AVERAGE SHARES
   Weighted average number of
     common shares outstanding and
     common share equivalents                   12,564              12,323                12,619                12,415
                                               =======            ========             =========              ========

BASIC                                            $0.24            $   0.49              $   0.67              $   0.87
                                               =======            ========             =========              ========

DILUTED                                        $  0.23            $   0.45              $   0.63              $   0.80
                                               =======            ========              ========              ========
</TABLE>

7.   COMPREHENSIVE INCOME

          In June 1997, the Financial Accounting Standards Board issued SFAS No.
130 REPORTING  COMPREHENSIVE  INCOME.  The statement  establishes  standards for
reporting and displaying  comprehensive  income and its components in a full set
of general-purpose  financial statements.  Comprehensive income is summarized as
follows:

                                                   SIX MONTHS ENDED DECEMBER 31,
                                                  1998                  1997
                                              -------------         ------------
         Net income                           $   7,922              $   9,876
         Foreign currency translation
           adjustment                                35                     (3)
                                              -------------         ------------
         Comprehensive income                 $   7,957              $    9,873
                                              =============         ============

8.   ACQUISITION

         On October 30,  1998,  the Company  announced  that it had control of a
majority of the outstanding  shares of Filofax Group plc ("Filofax") as a result
of its previously announced cash tender offer for the Filofax stock. The Company
acquired all the remaining  outstanding  shares of Filofax on December 26, 1998.
This acquisition will be accounted for under the purchase method of accounting.

         The total  purchase price of  $91,221,000,  which includes costs of the
transaction,  was paid in cash and Loan Notes (see Note 4). The Company borrowed
the cash  portion of this amount  under a Loan  Agreement  with a group of banks
(see Note 3).

          The  following  table  sets  forth the  unaudited  proforma  condensed
combined  statements  of income data for the six months ended  December 31, 1998
and  1997  as if the  acquisition  had  occurred  on July 1,  1997  (dollars  in
thousands):
<PAGE>
<TABLE>
<CAPTION>
                                             PRO FORMA SIX MONTHS
                                           ENDED DECEMBER 31, 1998
                                        ----------------------------------


                                           1998             1997
                                        ----------         -------

<S>                                    <C>                   <C>
Net sales                              $    136,853         $    131,908
                                       ============          ===========
Income before provision for
  income taxes                         $     12,687          $    24,499
                                       ============          ===========

Net income                             $      7,739          $    14,944
                                       ============          ===========

Earnings per common share:

    Basic                              $       0.65          $      1.31
                                       ============          ===========

    Diluted                            $       0.61          $      1.20
                                       ============          ===========

Weighted average number of common
  shares outstanding:

    Basic                                    11,907               11,393
                                       ============          ============

    Diluted                                  12,619               12,415
                                       ============          ============


</TABLE>


9.       FINANCIAL INSTRUMENTS

         On September 29, 1998, the Company  entered into a call option in order
to limit its foreign exchange risk on the purchase of Filofax shares, which were
paid for in pound Sterling.  The Company's objective was to protect itself from
the risk  that the  purchase  price of the  Filofax  shares  would be  adversely
affected by changes in exchange  rates.  During the quarter  ended  December 31,
1998, the Company expensed  $765,000 to operating expenses for the call option.
At December 31, 1998, the Company had not entered into any additional  financial
instruments.  The Company  does not trade in financial  instruments  nor does it
enter into such contracts for speculative purposes.

10.  STATEMENTS OF CASH FLOWS

         Supplemental disclosure of cash flow information (in thousands):

                                                  SIX MONTHS ENDED DECEMBER 31,

                                                  1998                    1997
                                               ---------------------------------

             Cash paid during the period for:

               Interest                         $   1,217           $     149
               Income taxes, net of
                 refunds received               $    (358)          $   4,146


         Supplemental disclosure of noncash investing and financing activities:

         During  the six  months  ended  December  31,  1998,  the  Company  had
purchased  703,308  shares of  Filofax's  outstanding  common  stock by  issuing
$2,457,000 in Loan Notes to former shareholders of Filofax.

         The net cash expended by the Company in its acquisition of Filofax made
during the quarter  ended  December 31, 1998 was used as follows (in  thousands)
(see Note 8):

         Fair value of assets acquired                          $   (116,113)
         Liabilities assumed                                          27,349
                                                                ------------
         Cash paid                                              $    (88,764)
                                                               =============



<PAGE>




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

         THE FOLLOWING  DISCUSSION  SHOULD BE READ IN  CONJUNCTION  WITH, AND IS
QUALIFIED IN ITS ENTIRETY BY, THE  CONSOLIDATED  FINANCIAL  STATEMENTS AND NOTES
THERETO  INCLUDED  ELSEWHERE IN THIS QUARTERLY  REPORT.  HISTORICAL  RESULTS AND
PERCENTAGE   RELATIONSHIPS  AMONG  ANY  AMOUNTS  INCLUDED  IN  THE  CONSOLIDATED
FINANCIAL  STATEMENTS  ARE NOT  NECESSARILY  INDICATIVE  OF TRENDS IN  OPERATING
RESULTS FOR ANY FUTURE PERIOD.

         Since  the  Company's  introduction  of the  first  Day  Runner  System
organizer in 1982, the Company's revenues have been generated by sales primarily
of  organizers  and planners and  secondarily  of refills.  Since fiscal 1995, a
majority of the Company's  growth has resulted from sales of related  organizing
products, virtually all of which have been introduced since January 1, 1995. For
a number  of years  the  Company  focused  the  great  majority  of its  product
development,  sales and marketing  efforts on the U.S. office products  channel,
which  accounted for 32.9% of second  quarter fiscal 1999 net sales and 38.2% of
net sales for the six months ended  December 31, 1998,  and the U.S. mass market
channel,  which  accounted for 28.1% of second quarter fiscal 1999 net sales and
33.6% of net sales for the six months ended December 31, 1998.  With the October
30,  1998  acquisition  of  Filofax,  the Company  substantially  increased  its
emphasis on markets outside the U.S., and sales to foreign  customers  accounted
from 33.3% of second  quarter  fiscal  1999 net sales and 23.0% of net sales for
the six months ended December 31, 1998.

RESULTS OF OPERATIONS

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

                                                                                              PERCENTAGE CHANGE
                                                                                              Three         Six
                                                            PERCENTAGE OF SALES              Months       Months
                                                          Three                Six            Ended        Ended
                                                      Months Ended        Months Ended    December 31, December 31,
                                                      December 31,          December 31,      1997          1997
                                                   1998       1997      1998      1997       to 1998      to 1998
                                                   ----       ----      ----      ----       -------      -------

<S>                                                <C>       <C>        <C>      <C>           <C>         <C>
Net sales........................................  100.0%    100.0%     100.0%   100.0%        30.7%       28.3%
Cost of goods sold...............................   49.7      47.8       48.8     47.6         35.9        31.5
                                                   -----     -----      -----    -----
Gross profit.....................................   50.3      52.2       51.2     52.4         26.0        25.4
                                                   -----     -----      -----    -----
Operating expenses:

   Selling, marketing and distribution...........   29.3      24.5       27.8     24.4         56.4        48.8
   General and administrative....................   10.0       9.3        9.9      9.6         40.5        32.9
   Costs related to activities associated with
        Filofax acquisition......................    1.6                  0.9                   NA          NA
                                                   -----      ----       -----    ----
     Total operating expenses....................   40.9      33.8       38.6     34.0         58.5        45.8
                                                   -----      ----      -----     ----
Income from operations...........................    9.4      18.4       12.6     18.4        (33.6)      (12.2)
Net interest expense (income)....................    2.1       0.1         1.2    (0.1)         NM          NM
                                                   -----     -----      -----    -----
Income before provision for income taxes.........    7.3      18.3       11.4     18.5        (48.3)      (21.1)
Provision for income taxes.......................    2.8       7.1        4.3      7.2        (49.6)      (23.1)
                                                   -----     -----      -----    -----
Net income.......................................    4.5%     11.2%       7.1%    11.3%       (47.5)      (19.8)
                                                   =====     =====      =====    =====

</TABLE>


<PAGE>




         The  following  tables  set  forth,  for  the  periods  indicated,  the
Company's approximate net 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,
                                      -----------------------------------          ---------------------------------
                                         1998                  1997                    1998               1997
                                      ---------             ---------              ----------           --------
                                                            (Unaudited; dollars in thousands)

<S>                                 <C>        <C>     <C>          <C>        <C>         <C>     <C>          <C>
Organizers and planners.........    $26,230    40.6%   $ 21,912     44.4%      $43,298     38.6%   $ 43,100     49.2%
Refills.........................     22,049    34.2      16,255     32.9        39,097     34.8      27,130     31.0
Related organizing products.....     16,286    25.2      11,221     22.7        29,901     26.6      17,296     19.8
                                    -------   -----    --------    ------     --------    -----    --------    -----
   Total........................    $64,565   100.0%    $49,388    100.0%     $112,296    100.0%   $ 87,526    100.0%
                                    =======   ======    =======    ======     ========    ======   ========    ======


DISTRIBUTION CHANNEL:

                                      THREE MONTHS ENDED DECEMBER 31,              SIX MONTHS ENDED DECEMBER 31,
                                      ----------------------------------           --------------------------------
                                         1998                  1997                    1998               1997
                                      ---------             ---------              ----------           --------
                                                              (Unaudited; dollars in thousands)

Office products.................    $21,226    32.9%    $26,874     54.4%     $ 42,886     38.2%   $ 44,798     51.2%
Mass market.....................     18,139    28.1      16,106     32.6        37,787     33.6      31,856     36.4
Foreign customers...............     21,536    33.3       2,596      5.3        25,768     23.0       5,011      5.7
Other...........................      3,664     5.7       3,812      7.7         5,855      5.2       5,861      6.7
                                    -------   ------    -------    ------     --------    ------   --------

   Total........................    $64,565   100.0%    $49,388    100.0%     $112,296    100.0%   $ 87,526    100.0%
                                    =======   ======    =======    ======     ========    ======   ========    ======
</TABLE>


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

          NET SALES. Net sales consist of revenues from gross product  shipments
net of allowances  for returns,  rebates and credits.  In the second  quarter of
fiscal  1999,  net sales  increased  by  $15,177,000,  or 30.7%,  because of the
Filofax  acquisition.  In the quarter ended December 31, 1998,  sales of refills
(which include calendars and accessories) grew by $5,794,000, or 35.6%; sales of
related  organizing  products  grew  by  $5,065,000,  or  45.1%;  and  sales  of
organizers and planners  increased by $4,318,000,  or 19.7%.  Product sales were
primarily to foreign  customers and  secondarily to office  products  customers.
Sales to foreign customers grew by $18,940,000,  or 729.6%; sales to mass market
customers  grew by  $2,033,000,  or 12.6%;  sales to office  products  customers
declined by $5,648,000,  or 21.0%; and sales to miscellaneous  customers grouped
together as "other" decreased by $148,000, or 3.9%.

         GROSS PROFIT.  Gross profit is net sales less cost of goods sold, which
is comprised of materials, labor and manufacturing overhead. Gross profit may be
affected by, among other  things,  product mix,  production  levels,  changes in
vendor and customer  prices and discounts,  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
52.2% in the  second  quarter of fiscal  1998 to 50.3% in the second  quarter of
fiscal  1999  primarily  because  the  gross  profit  levels of  certain  of the
Company's smaller  subsidiaries are lower as a percentage of sales than those of
the parent company.

          OPERATING EXPENSES.  Total operating expenses increased by $9,752,000,
or 58.5%,  in the second quarter of fiscal 1999 compared with the second quarter
of fiscal  1998 and  increased  as a  percentage  of sales  from 33.8% to 40.9%.
Excluding  the  operating  expense  portion of the costs  related to  activities
associated  with the Filofax  acquisition,  second quarter fiscal 1999 operating
expenses would have increased by $8,680,000 and would have been 39.3% of sales.

          Selling,  marketing and distributiuon expenses increased by $6,823,000
primarily because of the addition of Filofax's expenses and secondarily  because
of costs associated with new and recently  introduced  products.  These expenses
grew from 24.5% to 29.3% as a  percentage  of sales  primarily  because of costs
associated with new and recently introduced products. General and administrative
expenses increased by $1,857,000  primarily because of the addition of Filofax's
expenses and  increased  from 9.3% to 10.0% as a percentage  of sales  primarily
because of the  Company's  inability to absorb higher costs as a result of lower
than anticipated sales.

          NET  INTEREST  EXPENSE  (INCOME).  Because  of  the  increase  in  the
Company's  long-term debt,  which was incurred  primarily to finance the Filofax
acquisition,  net  interest  expense  for the second  quarter of fiscal 1999 was
$1,356,000  compared with net interest expense of $30,000 for the second quarter
of fiscal  1998.  As a result of the bank debt and Loan  Notes  incurred  in the
Filofax  acquisition,  interest  expense in future periods will be substantially
higher than in the periods prior to September  30, 1998.  (See Notes 3, 4, and 8
to Consolidated Financial Statements.)

          INCOME TAXES.  The Company's  second quarter fiscal 1999 effective tax
rate was 38.0%, compared with 39.0% for the second quarter of fiscal 1998.

SIX MONTHS ENDED DECEMBER 31, 1998 COMPARED WITH
THE SIX MONTHS ENDED DECEMBER 31, 1997

         NET  SALES.  In the six  months  ended  December  31,  1998,  net sales
increased by $24,770,000, or 28.3%, primarily because of the Filofax acquisition
and secondarily because of increased sales to mass market customers.  In the six
months ended  December 31, 1998,  sales of related  organizing  products grew by
$12,605,000, or 72.9%; sales of refills grew by $11,967,000, or 44.1%; and sales
of organizers and planners  increased by $198,000,  or 0.5%.  Product sales were
primarily to office products customers and secondarily to mass market customers.
Sales to foreign customers grew by $20,757,000,  or 414.2%; sales to mass market
customers  grew by  $5,931,000,  or 18.6%;  sales to office  products  customers
declined by $1,912,000,  or 4.3%; and sales to miscellaneous  customers  grouped
together as "other" decreased by $6,000, or 0.1%.

         GROSS  PROFIT.  Gross profit as a percentage  of sales  decreased  from
52.4% in the first six  months  fiscal  1998 to 51.2% in the first six months of
fiscal  1999  primarily  because  the  gross  profit  levels of  certain  of the
Company's smaller  subsidiaries are lower as a percentage of sales than those of
the parent company.

          OPERATING EXPENSES. Total operating expenses increased by $13,608,000,
or 45.8%,  in the first six months of fiscal  1999  compared  with the first six
months of fiscal  1998 and  increased  as a  percentage  of sales  from 34.0% to
38.6%.  Excluding  the  operating  expense  portion  of  the  costs  related  to
activities  associated with the Filofax acquisition,  operating expenses for the
first six months ended December 31, 1998 would have increased by $12,536,000 and
would have been 37.6% of sales.

          Selling,  marketing and distribution  expenses increased by $9,786,000
primarily because of costs associated with new and recently  introduced products
and secondarily  because of the addition of Filofax's  expenses.  These expenses
grew from 24.4% to 27.8% as a  percentage  of sales  primarily  because of costs
associated with new and recently introduced products. General and administrative
expenses increased by $2,750,000  primarily because of the addition of Filofax's
expenses  and  increased  from 9.6% to 9.9% as a percentage  of sales  primarily
because of the  Company's  inability to absorb higher costs as a result of lower
than anticipated sales.

          NET  INTEREST  EXPENSE  (INCOME).  Because  of  the  increase  in  the
Company's  long-term debt,  which was incurred  primarily to finance the Filofax
acquisition,  net  interest  expense for the first six months of fiscal 1999 was
$1,389,000 compared with net interest income of $65,000 for the first six months
of fiscal  1998.  As a result of the bank debt and Loan  Notes  incurred  in the
Filofax  acquisition,  interest  expense in future periods will be substantially
higher than in the periods prior to September  30, 1998.  (See Notes 3, 4, and 8
to Consolidated Financial Statements.)

          INCOME TAXES. The Company's effective tax rate was 38.0% for the first
six  months of fiscal  1999,  compared  with  39.0% for the first six  months of
fiscal 1998.

SEASONAL FLUCTUATIONS

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

          Although it is difficult to predict the future  seasonality  of sales,
the Company  believes that future  seasonality  should be influenced at least in
part by customer and user buying  patterns  substantially  similar to those that
have  historically  affected the Company.  Quarterly  financial results are also
affected by new product  introductions and line extensions,  the timing of large
orders,  changes in product sales or customer mix, vendor and customer  pricing,
production levels,  supply and manufacturing  delays, large customers' inventory
management and general industry and economic conditions.  The seasonality of the
Company's  financial results and the  unpredictability  of the factors affecting
such  seasonality  make the  Company's  quarterly and yearly  financial  results
difficult to predict and subject to significant fluctuation.

LIQUIDITY AND CAPITAL RESOURCES

          The Company's cash and cash equivalents at December 31, 1998 increased
to  $25,253,000  from  $2,923,000 at June 30, 1998.  During the six months ended
December  31,  1998,  net  cash of  $16,191,000  and  $101,031,000  provided  by
operating  activities  and  financing  activities,  respectively,  was partially
offset by net cash of $95,151,000 used in investing activities.

          Of the  $16,191,000  net amount  provided by the  Company's  operating
activities,  $7,922,000  was provided by net income,  $4,478,000 was provided by
depreciation and amortization, $3,294,000 was provided by an increase in accrued
expenses,  $2,761,000  was  provided  by an increase  in income  taxes  payable,
$2,646,000 was provided by a decrease in income taxes  receivable and $2,296,000
was provided by a decrease in inventories.  These amounts were partially  offset
by a decrease of $4,951,000 in accounts payable and an increase of $1,482,000 in
accounts receivable.

          Accounts receivable (net) at December 31, 1998 increased by 49.3% from
the fiscal 1998  year-end  amount and by 98.2% from the December 31, 1997 amount
primarily because an increase in sales and secondarily  because of a decrease in
the allowance for sales returns based upon  improvement in the Company's  actual
sales returns experience duruing the prior twelve months. The average collection
period of accounts receivable at December 31, 1998 was 48 days, compared with 45
and 46 days at Juen 30, 1998 and December 31, 1997, respectively.

          Inventories  at December  31, 1998  increased by 27.3% from the fiscal
1998  year-end  amount and by 56.5%  compared  with the December 31, 1997 amount
primarily  because of the  inventories  of  Filofax,  which Day Runner  acquired
during the second  quarter of fiscal 1999,  and  secondarily  because of new and
recently introduced products.

          Of  the  $95,151,000  net  amount  used  in  the  Company's  investing
activities,  $88,764,000 was used to acquire Filofax, and $6,002,000 was used to
acquire  primarily  machinery  and  equipment and  secondarily  data  processing
equipment and software.

          Of the  $101,031,000  net amount  provided by the Company's  financing
activities, $102,146,000 was provided by borrowings under the Company's lines of
credit which amount was partially offset by $1,274,000 used to repurchase 76,000
shres of the Company's Common Stock.

          At December 31, 1998, the Company had $118,351,000  outstanding  under
its $145,000,000  bank line of credit (the "Loan  Agreement").  Borrowings under
this Loan Agreement  bear interest  either at fixed rates based on the higher of
the  bank's  prime rate and the  Federal  Funds Rate  published  by the  Federal
Reserve  Bank of New York or at floating  rates  calculated  by reference to the
interest  rates at which the bank  offers  deposits  in U.S.  dollars in amounts
approximately  equal to the amount of the relevant loan and for a period of time
comparable  to the number of days the  relevant  loan will  remain  outstanding,
together  with a margin.  During the six months ended  December  31,  1998,  the
weighted  average  interest  rate was  6.70%.  The  maximum  amount  that may be
outstanding under the Loan Agreement is $145,000,000  through December 31, 2000.
Thereafter,  the maximum amount of borrowings that may be outstanding  under the
Loan  Agreement is reduced by $5,000,000 in calendar 2001 and by  $10,000,000 in
each of the following  calendar  years up to September 30, 2005.  (See Note 3 to
Consolidated Financial Statements.)

          On October 30, 1998,  the Company  announced  that it had control of a
majority of the outstanding  shares of Filofax Group plc ("Filofax") as a result
of its  previously  announced  cash tender  offer for the Filofax  stock.  As of
December 26, 1998,  the Company had acquired 100% of the  outstanding  shares of
Filofax.  This  acquisition  will be accounted for under the purchase  method of
accounting. The Company currently estimates that the aggregate fees and expenses
of the transaction,  including investment banking,  legal,  accounting and other
fees and expenses,  will be $5,000,000 to $6,000,000.  The fees and expenses, as
well as  payments  for the  Filofax  shares,  have  been and  will be paid  with
available  cash,  borrowings  under the Loan Agreement and the Loan Notes.  (See
Notes 3, 4 and 8 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's
exposure to the impact of interest changes and foreign currency fluctuations has
increased as a result of its  acquisition of Filofax because the acquisition has
significantly  expanded the  Company's  international  operations  and because a
portion of the debt incurred to fund the acquisition is in pound Sterling.  The
Company  entered  into a call  option  with  respect to the  purchase of Filofax
shares in the tender  offer to limit the effect of exchange  rate  fluctuations.
The Company may in the future enter into foreign  currency  exchange  contracts,
call  options,  swap  agreements  or other  financial  instruments  as hedges to
moderate the impact of foreign currency fluctuations. The Company does not trade
in financial instruments,  nor does it enter into such contracts for speculative
purposes.

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

          The Company  believes that cash flow from  operations,  vendor credit,
its existing  working  capital and its bank line 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  to finance  acquisitions  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,  as well as certain  hardware and equipment  containing  date-sensitive
data, to recognize  accurately dates commencing on or after January 1, 2000, and
even  possibly  certain  dates in 1999.  This has the  potential  to affect  the
operation of these systems  adversely and materially.  Day Runner has identified
four  phases  in  its  Year  2000  compliance  efforts:  discovery;  assessment;
remediation; and applicable testing and verification.  The Company has completed
the discovery and assessment  phases for its own systems and  applications,  has
substantially  completed  the  remediation  phase and  expects to  complete  the
remediation and applicable testing and verification phases by June 30, 1999. Day
Runner  believes  that by  modifying  existing  software and  converting  to new
software for certain tasks it can prevent the Year 2000  transition  from posing
significant internal operational problems.

          The Company  currently  estimates that total incremental costs related
to the Year 2000 issue will be approximately $2,000,000 to $2,500,000,  of which
approximately  $900,000 had been  incurred as of December 31, 1998.  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. Expenditures will be expensed or capitalized as appropriate.

          Day Runner is surveying  its vendors,  customers and others on whom it
relies to assess their state of Year 2000 readieness.  However,  there can be no
assurance that the systems of other parties on which the Company's  systems rely
will also be  compliant  or that any  failure  to be  compliant  in this area by
another  party  will  not  have an  adverse  effect  on the  Company's  systems.
Furthermore,  no assurance can be given that any or all of the Company's systems
are or will be Year 2000 compliant,  that the ultimate costs required to address
the Year 2000 issue will not exceed the  amounts  indicated  above,  or that the
impact of any failure to achieve  substantial Year 2000 compliance will not have
a material adverse effect on the Company's financial condition.

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,  foreign exchange rate  fluctuations,  supply  constraints,
supplier performance and other risks indicated in the Company's filings with the
Securities and Exchange Commission.

PART II --OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

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

         3.2      Bylaws of the Registrant(2)

         27.1     Financial Data Schedule

         (b)      Reports on Form 8-K

                  1)       On  October  2,  1998,  the  Company  filed  with the
                           Commission a Current Report on Form 8-K reporting the
                           Company's additional purchases of Filofax shares.

                  2)       On  October  30,  1998,  the  Company  filed with the
                           Commission a Current Report on Form 8-K attaching the
                           Company's  press release  announcing that the Company
                           had  acquired a majority of the  outstanding  Filofax
                           shares.

                  3)       On November  12,  1998,  the  Company  filed with the
                           Commission a Current Report on Form 8-K reporting the
                           Company's   acquisition   of  a   majority   of   the
                           outstanding Filofax shares.


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

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



<PAGE>





                                   SIGNATURES

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

                                     Date:  February 16, 1999

DAY RUNNER, INC.
                                   By:     /S/ JAMES E. FREEMAN JR.
                                           ------------------------------------
                                           James E. Freeman, Jr.
                                           Chief Executive Officer


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