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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





Form 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended October 3, 2009

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 33 - 70572





EYE CARE CENTERS OF AMERICA, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|TEXAS                                                          |  | 74-2337775                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

11103 WEST AVENUE, SAN ANTONIO, TEXAS 78213

(Address of principal executive offices, including zip code)

(210) 340-3531

(Registrants telephone number,
including area code)





Indicate by check mark whether the registrant has (1) 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
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer
and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock as of the latest practicable date:



|                             |  |                                 
|---------------------------- |  | --------------------------------
|Class                        |  | Outstanding at November 12,
2009
|Common Stock, $.01 par value |  | 10,000 shares                   









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EYE CARE CENTERS OF AMERICA, INC.

INDEX



|                               |  |                                                                                                                                                                                                                                                 |  |           
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|                               |  |                                                                                                                                                                                                                                                 |  | PageNumber
|Part I - Financial Information |  |                                                                                                                                                                                                                                                
|                               |  |                                                                                                                                                                                                                                                
|Item 1.                        |  | Financial Statements                                                                                                                                                                                                                            |  |           
|                               |  |                                                                                                                                                                                                                                                
|                               |  | Condensed Consolidated Balance Sheets at January 3, 2009 (Unaudited) and October 3, 2009 (Unaudited)                                                                                                                                            |  | 2         
|                               |  |                                                                                                                                                                                                                                                
|                               |  | Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended September 27, 2008 (Unaudited) and October 3, 2009 (Unaudited) and for the Thirty-nine
 Weeks Ended September 27, 2008 (Unaudited) and October 3, 2009 (Unaudited) |  | 3         
|                               |  |                                                                                                                                                                                                                                                
|                               |  | Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended September 27, 2008 (Unaudited) and October 3, 2009 (Unaudited)                                                                                                  |  | 4         
|                               |  |                                                                                                                                                                                                                                                
|                               |  | Notes to Condensed Consolidated Financial Statements                                                                                                                                                                                            |  | 5-15      
|                               |  |                                                                                                                                                                                                                                                
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                           |  | 16-27     
|                               |  |                                                                                                                                                                                                                                                
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                      |  | 27-28     
|                               |  |                                                                                                                                                                                                                                                
|Item 4T.                       |  | Controls and Procedures                                                                                                                                                                                                                         |  | 28        
|                               | 
|Part II - Other Information    |  |                                                                                                                                                                                                                                                
|                               |  |                                                                                                                                                                                                                                                
|Item 1.                        |  | Legal Proceedings                                                                                                                                                                                                                               |  | 28        
|                               |  |                                                                                                                                                                                                                                                
|Item 1A.                       |  | Risk Factors                                                                                                                                                                                                                                    |  | 28        
|                               |  |                                                                                                                                                                                                                                                
|Item 6.                        |  | Exhibits                                                                                                                                                                                                                                        |  | 29        



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands / unaudited)



|                                        |  |                |         |                |   |        
|--------------------------------------- |  | -------------- | ------- | -------------- | - | -------
|                                        |  | January 3,2009 |         | October 3,2009
|ASSETS                                  |  |                |         |                |   |        
|CURRENT ASSETS:                         |  |                |         |                |   |        
|Cash and cash equivalents               |  | $              | 13,460  |                | $ | 36,850 
|Accounts receivable, net                |  |                | 13,851  |                |   | 11,972 
|Inventory, net                          |  |                | 33,884  |                |   | 34,292 
|Deferred income taxes, net              |  |                | 5,833   |                |   | 9,530  
|Prepaid expenses and other              |  |                | 9,509   |                |   | 9,646  
|                                        |  |                |         |                |   |        
|Total current assets                    |  |                | 76,537  |                |   | 102,290
|                                        |  |               
|PROPERTY & EQUIPMENT, net               |  |                | 76,520  |                |   | 81,092 
|GOODWILL                                |  |                | 523,377 |                |   | 517,340
|OTHER ASSETS                            |  |                | 7,862   |                |   | 7,475  
|DEFERRED INCOME TAXES, net              |  |                | 13,469  |                |   | 12,857 
|                                        |  |                |         |                |   |        
|Total assets                            |  | $              | 697,765 |                | $ | 721,054
|                                        |  |                |         |                |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY    |  |                |         |                |   |        
|CURRENT LIABILITIES:                    |  |                |         |                |   |        
|Accounts payable                        |  | $              | 28,652  |                | $ | 25,310 
|Current maturities of long-term debt    |  |                | 1,957   |                |   | 1,737  
|Deferred revenue                        |  |                | 3,919   |                |   | 3,195  
|Accrued taxes                           |  |                | 9,600   |                |   | 18,340 
|Accrued payroll expense                 |  |                | 12,200  |                |   | 10,450 
|Accrued interest                        |  |                | 6,657   |                |   | 2,330  
|Other accrued expenses                  |  |                | 7,318   |                |   | 6,626  
|                                        |  |                |         |                |   |        
|Total current liabilities               |  |                | 70,303  |                |   | 67,988 
|LONG TERM DEBT, less current maturities |  |                | 234,219 |                |   | 233,079
|OTHER LONG-TERM LIABILITIES             |  |                | 8,809   |                |   | 9,861  
|                                        |  |                |         |                |   |        
|Total liabilities                       |  |                | 313,331 |                |   | 310,928
|                                        |  |                |         |                |   |        
|                                        |  |               
|SHAREHOLDERS EQUITY:                   |  |                |         |                |   |        
|Common stock                            |  |                |        |                |   |       
|Additional paid-in capital              |  |                | 322,152 |                |   | 322,152
|Retained earnings                       |  |                | 62,282  |                |   | 87,974 
|                                        |  |                |         |                |   |        
|Total shareholders equity              |  |                | 384,434 |                |   | 410,126
|                                        |  |                |         |                |   |        
|                                        |  | $              | 697,765 |                | $ | 721,054
|                                        |  |                |         |                |   |        

See Notes to Consolidated Financial Statements



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EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands)



|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        
|-------------------------------------------- |  | -------------------- | ------- | ----------------------- | - | ----------------- |  | -------------- | ------- |  | - | -------
|                                             |  | Thirteen Weeks Ended |         | Thirty-Nine Weeks Ended
|                                             |  | September 27,2008    |         | October 3,2009          |   | September 27,2008 |  | October 3,2009
|                                             |  | (Unaudited)          |         | (Unaudited)             |   | (Unaudited)       |  | (Unaudited)   
|NET REVENUES:                                |  |                      |         |                         |   |                   |  |                |         |  |   |        
|Optical sales                                |  | $                    | 133,658 |                         | $ | 135,449           |  | $              | 407,196 |  | $ | 425,710
|Management fee                               |  |                      | 725     |                         |   | 672               |  |                | 2,283   |  |   | 1,980  
|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        
|Total net revenues                           |  |                      | 134,383 |                         |   | 136,121           |  |                | 409,479 |  |   | 427,690
|                                             |  |                      |         |                        
|OPERATING COSTS AND EXPENSES:                |  |                      |         |                         |   |                   |  |                |         |  |   |        
|Cost of goods sold                           |  |                      | 46,726  |                         |   | 49,749            |  |                | 139,381 |  |   | 153,807
|Selling, general and administrative expenses |  |                      | 68,286  |                         |   | 72,050            |  |                | 204,601 |  |   | 215,868
|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        
|Total operating costs and expenses           |  |                      | 115,012 |                         |   | 121,799           |  |                | 343,982 |  |   | 369,675
|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        
|                                             |  |                      |         |                        
|INCOME FROM OPERATIONS                       |  |                      | 19,371  |                         |   | 14,322            |  |                | 65,497  |  |   | 58,015 
|INTEREST EXPENSE, NET                        |  |                      | 5,561   |                         |   | 4,844             |  |                | 16,913  |  |   | 14,752 
|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        
|INCOME BEFORE INCOME TAXES                   |  |                      | 13,810  |                         |   | 9,478             |  |                | 48,584  |  |   | 43,263 
|INCOME TAX EXPENSE                           |  |                      | 5,601   |                         |   | 4,037             |  |                | 19,869  |  |   | 17,571 
|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        
|NET INCOME                                   |  | $                    | 8,209   |                         | $ | 5,441             |  | $              | 28,715  |  | $ | 25,692 
|                                             |  |                      |         |                         |   |                   |  |                |         |  |   |        

See Notes to Consolidated Financial Statements



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EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)



|                                                                                  |  |                         |         |   |                |   |         |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | -------------- | - | ------- | -
|                                                                                  |  | Thirty-Nine Weeks Ended |        
|                                                                                  |  | September 27,2008       |         |   | October 3,2009 |  
|                                                                                  |  | (Unaudited)             |         |   | (Unaudited)    |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                         |         |   |                |   |         |  
|Net income                                                                        |  | $                       | 28,715  |   |                | $ | 25,692  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |         |   |                |   |         |  
|Depreciation and amortization                                                     |  |                         | 14,100  |   |                |   | 15,721  |  
|Amortization of debt issue costs                                                  |  |                         | 223     |   |                |   | 306     |  
|Deferred liabilities and other                                                    |  |                         | 2,736   |   |                |   | 328     |  
|Increase in operating assets and liabilities                                      |  |                         | 11,136  |   |                |   | 2,950   |  
|                                                                                  |  |                         |         |   |                |   |         |  
|Net cash provided by operating activities                                         |  |                         | 56,910  |   |                |   | 44,997  |  
|                                                                                  |  |                         |         |   |                |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                         |         |   |                |   |         |  
|Acquisition of property and equipment                                             |  |                         | (21,369 | ) |                |   | (20,097 | )
|                                                                                  |  |                         |         |   |                |   |         |  
|Net cash used in investing activities                                             |  |                         | (21,369 | ) |                |   | (20,097 | )
|                                                                                  |  |                         |         |   |                |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                         |         |   |                |   |         |  
|Payments on debt and capital leases                                               |  |                         | (1,673  | ) |                |   | (1,510  | )
|                                                                                  |  |                         |         |   |                |   |         |  
|Net cash used in in financing activities                                          |  |                         | (1,673  | ) |                |   | (1,510  | )
|                                                                                  |  |                         |         |   |                |   |         |  
|NET INCREASE IN CASH                                                              |  |                         | 33,868  |   |                |   | 23,390  |  
|CASH AND CASH EQUIVALENTS, beginning of period                                    |  |                         | 5,637   |   |                |   | 13,460  |  
|                                                                                  |  |                         |         |   |                |   |         |  
|CASH AND CASH EQUIVALENTS, end of period                                          |  | $                       | 39,505  |   |                | $ | 36,850  |  
|                                                                                  |  |                         |         |   |                |   |         |  

See Notes to Consolidated Financial Statements



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EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The Unaudited Condensed Consolidated
Financial Statements of Eye Care Centers of America, Inc. which is referred to as the Company, we, our and us herein, include all of our accounts, our wholly owned subsidiaries accounts and the
accounts of certain private optometrists for whom we perform management services (the ODs). All significant intercompany accounts and transactions have been eliminated in consolidation. The fiscal year-end balance sheet data was
derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). The information
reflects all normal and recurring adjustments which in the opinion of the management are necessary for a fair presentation of our financial position and our results of operations for the interim periods set forth herein.

Operating results for the thirteen and thirty-nine week periods ended October 3, 2009 are not necessarily indicative of the results
that may be expected for the fiscal year ending January 2, 2010 (fiscal 2009). For further information, refer to the consolidated financial statements and footnotes thereto included our Annual Report on Form 10-K for the year ended
January 3, 2009 (fiscal 2008).

2. Related Party Transactions

On August 1, 2006, ECCA Holdings Corporation (ECCA Holdings) was merged with a wholly-owned subsidiary of HVHC Inc.
(HVHC), a subsidiary of Highmark Inc. (Highmark), with ECCA Holdings being the surviving corporation and becoming a wholly-owned subsidiary of HVHC (the Highmark Acquisition). We are owned by ECCA Holdings and as
a result of the merger became an indirect wholly-owned subsidiary of Highmark. We paid Highmark and its affiliates $0.6 million for management fees during the thirty-nine weeks ended September 27, 2008 and October 3, 2009 respectively. As
part of our tax sharing arrangement, we paid Highmark $6.2 million and $3.9 million for state and federal taxes during the thirty-nine weeks ended September 27, 2008 and October 3, 2009, respectively.

HVHC also owns Davis Vision, Inc. (together with its subsidiaries, Davis), a national vision managed care and optical retail
company, and Viva Optique, Inc. (together with its subsidiaries, Viva), an international designer and distributor of eyewear and sun wear. We recorded revenue of $12.8 million and $15.8 million, during the thirty-nine weeks ended
September 27, 2008 and October 3, 2009, respectively, related to managed care reimbursements due from Davis and have a receivable of $1.8 million and $1.6 million, related to these revenues for the periods ended January 3, 2009 and
October 3, 2009, respectively. In addition, in January 2009, we began contracting the administration of our self-insured employees vision plan through Davis. We paid $0.6 million in claims and administrative fees to Davis during the
thirty-nine weeks ended October 3, 2009.

We purchased $7.4 million and $7.7 million of frame product from Viva during
the thirty-nine weeks ended September 27, 2008 and October 3, 2009, respectively. We recorded cost of goods sold related to products purchased from Viva that were sold to our customers of $7.3 million and $5.6 million, during the
thirty-nine weeks ended September 27, 2008 and October 3, 2009, respectively. We had a



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related payable to Viva of $1.7 million and $1.3 million as of January 3, 2009 and October 3, 2009, respectively.

From June 2007 through December 2008, we contracted directly with Highmark for the administration of our self-insured employees health
insurance. We incurred $8.4 million and $2.4 million in employee health claims and administrative fees during the thirty-nine weeks ended September 27, 2008 and October 3, 2009, respectively that were administered and paid by Highmark. In
January 2009, HVHC began contracting the administration of all the self-insured employees health insurance for us, Davis and Viva through Highmark. We paid $15.6 million in claims and administrative fees to HVHC during the thirty-nine weeks
ended October 3, 2009.

On May 7, 2009, Highmark acquired $65.4 million of ECCAs 103/4% Senior Subordinated Notes due 2015 (the
Notes). On June 8, 2009, Highmark acquired an additional $0.2 million in Notes. The accumulated interest on the $65.6 million in bonds is $1.0 million through October 3, 2009. We paid $2.0 million in interest to Highmark during
the thirty-nine weeks ended October 3, 2009.

3. Income Taxes

We record income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, which is based on our expected
annual income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. This includes recognition of deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns to the extent pervasive evidence exists that they will be realized in future periods. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on
currently enacted tax laws, which are expected to be in effect in the years in which the temporary differences are expected to reverse. Items qualifying or discrete are separately recognized in the quarter in which they occur.

The FASB provides additional guidance on accounting for uncertainty in income taxes using the liability method. We use this guidance to
determine any impact of unrecognized tax benefits or liabilities that would affect our effective tax rate. At January 3, 2009 and October 3, 2009, we had approximately $3.9 million and $4.5 million, respectively, of gross liabilities
related to unrecognized tax benefits which would affect our effective tax rate if recognized. We dont expect that there will be any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
significantly increase or decrease within the next twelve months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



|                                                              |  |   |       |  
|------------------------------------------------------------- |  | - | ----- | -
|Balance at January 3, 2009                                    |  | $ | 3,868 |  
|Additions based on tax provisions related to the prior year   |  |   | 103   |  
|Additions based on tax provisions related to the current year |  |   | 612   |  
|Release based on tax provisions related to the prior year     |  |   | (103  | )
|                                                              |  |   |       |  
|Balance at October 3, 2009                                    |  | $ | 4,480 |  
|                                                              |  |   |       |  



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An IRS audit of the fifty-nine day period ended March 1, 2005 was completed in fiscal
2006 with no material impact on income taxes. With the exception of this audit, the tax years 2003 through 2008 remain open to examination by the Internal Revenue Service. Additionally, we operate in multiple taxing jurisdictions and are subject to
various state income tax examinations for the 2003 through 2008 calendar tax years. We are not currently under any state income tax examinations.

At the time of the Highmark Acquisition in August 2006, we had approximately $15.1 million of unamortized deferred financing costs related to its previously issued debt. We appropriately recorded the fair
value of debt at the acquisition date; however, we did not recognize the long term deferred tax asset related to the continuing amortization expense that was deductible for income tax purposes. We adjusted Goodwill by $6 million to reflect the
unamortized balance of this tax asset at April 4, 2009. The adjustment does not affect net income for any period.

4. Accounting
Standards and Disclosures

In April 2009, the Financial Standards Board (FASB) issued accounting guidance on fair value
measurements. This guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This accounting guidance does not require any new fair value measurements, rather, its
application will be made pursuant to other accounting pronouncements that require or permit fair value measurements. This guidance is effective for interim reporting periods ending after June 15, 2009 and applies to our disclosures beginning
with our second fiscal quarter of 2009. Our adoption of this standard did not have a material impact on our financial condition, results of operations or liquidity.

In April 2009, the FASB also issued additional accounting guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This guidance is
effective for interim reporting periods ending after June 15, 2009 and applies to our disclosures beginning with our second fiscal quarter of 2009. Our adoption of this standard did not have a material impact on our financial condition, results
of operations or liquidity.

In April 2009, the FASB also issued guidance on the recognition and presentation of
other-than-temporary impairments, which amends previous guidance on the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary
impairments on debt and equity securities in the financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009 and applies to our disclosures beginning with our second fiscal quarter of 2009. Our
adoption of this standard did not have a material impact on our financial condition, results of operations or liquidity.

In
May 2009, the FASB issued guidance on subsequent events which expands disclosures of subsequent events and requires management to disclose the date through which subsequent events have been evaluated. This guidance is effective for interim reporting
periods ending after June 15, 2009. Our adoption of this guidance did not have an impact on our financial condition or results of operations. Refer to Note 5 for the additional disclosure required by the new standard.

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for transfers of financial assets. This amendment
requires greater transparency and additional disclosures for transfers of financial assets and the entitys continuing involvement with them and changes the requirements for derecognizing financial assets. In addition, this amendment eliminates
the concept of a qualifying special-purpose entity (QSPE). This amendment is effective for financial statements issued for fiscal years beginning after November 15, 2009. This amendment will not have a material effect on our financial position,
results of operations or liquidity.



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In June 2009, the FASB also issued an amendment to the accounting and disclosure
requirements for the consolidation for variable interest entities (VIEs). The elimination of the concept of a QSPE, as discussed above, removes the exception from applying guidance within this amendment. This amendment requires an enterprise
to perform a qualitative analysis when determining whether or not it must consolidate a VIE. Additionally, the amendment requires enhanced disclosures about an enterprises involvement with VIEs and any significant change in risk exposure
due to that involvement, as well as how its involvement with VIEs impacts the enterprises financial statements. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to
consolidate a VIE. This amendment is effective for fiscal years beginning after November 15, 2009.

In June 2009, the
FASB also issued the FASB Accounting Standards Codification (Codification). The Codification is the single source for all authoritative GAAP recognized by the FASB and should be applied for financial statements issued for periods ending after
September 15, 2009. The Codification does not change GAAP and did not have an effect on our financial position, results of operations or liquidity.

We do not expect our adoption of these new accounting pronouncements will have a material impact on our financial condition or results of operations.

5. Subsequent Events

Management has evaluated subsequent events through November 12, 2009, which is the date the financial statements were issued and has determined that no material reportable events have occurred through that date.

6. Long Term Debt

Long-term debt outstanding, including capital lease obligations, consists of the following:



|                                                                                                             |  |                |         |   |                |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | - | -------------- | - | ------- | -
|                                                                                                             |  | January 3,2009 |         |   | October 3,2009 |  
|Exchange Notes, face amount of $152,000, net of unamortized debt discount of $1,408 and $1,258, respectively |  | $              | 150,592 |   |                | $ | 150,742 |  
|Term Loan Facility                                                                                           |  |                | 85,225  |   |                |   | 83,988  |  
|Capital Lease                                                                                                |  |                | 359     |   |                |   | 86      |  
|Revolver                                                                                                     |  |                |        |   |                |   |        |  
|                                                                                                             |  |                |         |   |                |   |         |  
|                                                                                                             |  |                | 236,176 |   |                |   | 234,816 |  
|Less current portion                                                                                         |  |                | (1,957  | ) |                |   | (1,737  | )
|                                                                                                             |  |                |         |   |                |   |         |  
|                                                                                                             |  |                | 234,219 |   |                |   | 233,079 |  
|                                                                                                             |  |                |         |   |                |   |         |  

7. Fair Value of Financial Instruments

As of January 3, 2009 and October 3, 2009 the fair value of our Notes was approximately $144.4 million and $156.2 million,
respectively. The fair value of the capital lease obligations was approximately $0.4 and $0.1 million, respectively. The estimated fair value of the Notes is based primarily on quoted market prices for the same or similar issues and the estimated
fair value of the capital lease obligation is



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based on the present value of estimated future cash flows. The carrying amounts of the variable rate credit facilities approximate their fair values.

Our receivables, payables, and accrued liabilities are current assets and obligations on normal terms and, accordingly, the recorded values
are believed by management to approximate fair value.

8. Condensed Consolidating Information

On February 4, 2005, we issued $152.0 million aggregate principal amount of our 103/4% Senior Subordinated Notes (the Initial Notes) due
2015. We filed a registration statement with the Securities and Exchange Commission with respect to an offer to exchange the Initial Notes for notes which have terms substantially identical in all material respects to the Initial Notes, except such
exchanged notes are freely transferable by the holders thereof and are issued without any covenant regarding registration (the Notes). The registration statement was declared effective on September 26, 2005. The exchange period
ended October 31, 2005. The Notes are the only notes we have which are currently outstanding.

The Notes were
issued by us and are guaranteed by all of our subsidiaries (as the Guarantor Subsidiaries), but are not guaranteed by the ODs. The Guarantor Subsidiaries are wholly owned by us and the guarantees are full, unconditional and joint and
several.

Presented on the following pages are our condensed consolidating financial statements (the issuer of the Notes), the
Guarantor Subsidiaries and the non-guarantor subsidiaries as of and for the thirty-nine weeks ended October 3, 2009. The equity method has been used with respect to our investments in our subsidiaries.

As of October 3, 2009, the Guarantor Subsidiaries include Enclave Advancement Group, Inc., ECCA Managed Vision Care, Inc., Visionworks,
Inc., Visionary Retail Management, Inc., Visionary Properties, Inc., Vision World, Inc., Stein Optical, Inc., Eye DRx Retail Management, Inc., Visionary Lab Services, Ltd., EyeMasters of Texas, Ltd., EyeMasters, Inc., ECCA Management Services, Ltd.,
ECCA Distribution Services, Ltd., ECCA Enterprises, Inc., ECCA Management Investments, Inc., ECCA Management, Inc., EyeMasters of Texas Investments, Inc., EyeMasters of Texas Management, Inc., ECCA Distribution Investments, Inc., ECCA Distribution
Management, Inc., Visionary Lab Investments, Inc., Visionary Lab Management, Inc., Visionworks Holdings, Inc., Metropolitan Vision Services, Inc., Hour Eyes, Inc., and Eye Care Holdings, Inc.

The following condensed consolidating financial information presents: (i) our financial position, results of operations and cash flows,
as parent, as if we accounted for our subsidiaries using the equity method; (ii) the Guarantor Subsidiaries; and (iii) the ODs. There were no transactions between the subsidiaries during any of the periods presented. Separate financial
statements of the subsidiaries are not presented herein as we do not believe that such statements would be material to investors.



9



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Condensed Consolidating Balance Sheet

January 3, 2009

(in thousands)

(unaudited)



|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|---------------------------------------------- |  | ------ | ------- | --------------------- | - | ------- | --- |  | - | ------------ | - |  | ------------------- | -------- | - |  | - | -------
|                                               |  | Parent |         | GuarantorSubsidiaries |   |         | ODs |  |   | Eliminations |   |  | ConsolidatedCompany
|ASSETS                                         |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Current assets:                                |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Cash and cash equivalents                      |  | $      | 782     |                       | $ | 11,868  |     |  | $ | 810          |   |  | $                   |         |   |  | $ | 13,460 
|Accounts and notes receivable                  |  |        | 66,648  |                       |   | 9,978   |     |  |   | (218         | ) |  |                     | (62,557  | ) |  |   | 13,851 
|Inventory                                      |  |        |        |                       |   | 31,718  |     |  |   | 2,166        |   |  |                     |         |   |  |   | 33,884 
|Deferred income taxes, net                     |  |        | 5,833   |                       |   |        |     |  |   |             |   |  |                     |         |   |  |   | 5,833  
|Prepaid expenses and other                     |  |        |        |                       |   | 9,461   |     |  |   | 48           |   |  |                     |         |   |  |   | 9,509  
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Total current assets                           |  |        | 73,263  |                       |   | 63,025  |     |  |   | 2,806        |   |  |                     | (62,557  | ) |  |   | 76,537 
|Property and equipment                         |  |        |        |                       |   | 76,520  |     |  |   |             |   |  |                     |         |   |  |   | 76,520 
|Intangibles                                    |  |        | 416,095 |                       |   | 107,195 |     |  |   | 87           |   |  |                     |         |   |  |   | 523,377
|Other assets                                   |  |        | 7,572   |                       |   | 291     |     |  |   | (1           | ) |  |                     |         |   |  |   | 7,862  
|Deferred income taxes, net                     |  |        | 13,469  |                       |   |        |     |  |   |             |   |  |                     |         |   |  |   | 13,469 
|Investment in subsidiaries                     |  |        | 177,370 |                       |   |        |     |  |   |             |   |  |                     | (177,370 | ) |  |   |       
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Total Assets                                   |  | $      | 687,769 |                       | $ | 247,031 |     |  | $ | 2,892        |   |  | $                   | (239,927 | ) |  | $ | 697,765
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|                                               |  |        |         |                       |  
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT) |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Current liabilities:                           |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Accounts payable                               |  | $      | 45,240  |                       | $ | 43,668  |     |  | $ | 2,301        |   |  | $                   | (62,557  | ) |  | $ | 28,652 
|Current portion of long-term debt              |  |        | 1,650   |                       |   | 307     |     |  |   |             |   |  |                     |         |   |  |   | 1,957  
|Deferred revenue                               |  |        |        |                       |   | 2,852   |     |  |   | 1,067        |   |  |                     |         |   |  |   | 3,919  
|Accrued payroll expense                        |  |        |        |                       |   | 11,079  |     |  |   | 1,121        |   |  |                     |         |   |  |   | 12,200 
|Accrued taxes                                  |  |        | 13,814  |                       |   | (4,918  | )   |  |   | 704          |   |  |                     |         |   |  |   | 9,600  
|Accrued interest                               |  |        | 5,911   |                       |   | 746     |     |  |   |             |   |  |                     |         |   |  |   | 6,657  
|Other accrued expenses                         |  |        | 379     |                       |   | 6,569   |     |  |   | 370          |   |  |                     |         |   |  |   | 7,318  
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Total current liabilities                      |  |        | 66,994  |                       |   | 60,303  |     |  |   | 5,563        |   |  |                     | (62,557  | ) |  |   | 70,303 
|Long-term debt, less current maturities        |  |        | 234,168 |                       |   | 51      |     |  |   |             |   |  |                     |          |   |  |   | 234,219
|Other long-term liabilities                    |  |        | 2,173   |                       |   | 6,585   |     |  |   | 51           |   |  |                     |          |   |  |   | 8,809  
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Total liabilities                              |  |        | 303,335 |                       |   | 66,939  |     |  |   | 5,614        |   |  |                     | (62,557  | ) |  |   | 313,331
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Shareholders equity (deficit):                |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Common stock                                   |  |        |        |                       |   |        |     |  |   |             |   |  |                     |          |   |  |   |       
|Additional paid-in capital                     |  |        | 322,152 |                       |   |        |     |  |   |             |   |  |                     |         |   |  |   | 322,152
|Retained earnings                              |  |        | 62,282  |                       |   | 180,092 |     |  |   | (2,722       | ) |  |                     | (177,370 | ) |  |   | 62,282 
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|Total shareholders equity (deficit)           |  |        | 384,434 |                       |   | 180,092 |     |  |   | (2,722       | ) |  |                     | (177,370 | ) |  |   | 384,434
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        
|                                               |  | $      | 687,769 |                       | $ | 247,031 |     |  | $ | 2,892        |   |  | $                   | (239,927 | ) |  | $ | 697,765
|                                               |  |        |         |                       |   |         |     |  |   |              |   |  |                     |          |   |  |   |        



10



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##### Table of Contents

Condensed Consolidating Statement of Operations

For the Thirteen Weeks Ended September 27, 2008

(in thousands)

(unaudited)



|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|-------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- | --- |  | - | ------------ | - |  | ------------------- | ------- | - |  | - | -------
|                                             |  | Parent |        |   | GuarantorSubsidiaries |   |         | ODs |  |   | Eliminations |   |  | ConsolidatedCompany
|Revenues:                                    |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Optical sales                                |  | $      | (200   | ) |                       | $ | 106,718 |     |  | $ | 27,140       |   |  | $                   |        |   |  | $ | 133,658
|Management fees                              |  |        |       |   |                       |   | 9,321   |     |  |   |             |   |  |                     | (8,596  | ) |  |   | 725    
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Total net revenues                           |  |        | (200   | ) |                       |   | 116,039 |     |  |   | 27,140       |   |  |                     | (8,596  | ) |  |   | 134,383
|Operating costs and expenses:                |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Cost of goods sold                           |  |        |       |   |                       |   | 36,721  |     |  |   | 10,005       |   |  |                     |         |   |  |   | 46,726 
|Selling, general and administrative expenses |  |        | 1,163  |   |                       |   | 58,177  |     |  |   | 17,542       |   |  |                     | (8,596  | ) |  |   | 68,286 
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Total operating costs and expenses           |  |        | 1,163  |   |                       |   | 94,898  |     |  |   | 27,547       |   |  |                     | (8,596  | ) |  |   | 115,012
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Income (loss) from operations                |  |        | (1,363 | ) |                       |   | 21,141  |     |  |   | (407         | ) |  |                     |        |   |  |   | 19,371 
|Interest expense (income), net               |  |        | 5,609  |   |                       |   | (48     | )   |  |   |             |   |  |                     |        |   |  |   | 5,561  
|Income tax expense                           |  |        | 5,601  |   |                       |   |        |     |  |   |             |   |  |                     |        |   |  |   | 5,601  
|Equity earnings in subsidiaries              |  |        | 20,782 |   |                       |   |        |     |  |   |             |   |  |                     | (20,782 | ) |  |   |       
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Net income (loss)                            |  | $      | 8,209  |   |                       | $ | 21,189  |     |  | $ | (407         | ) |  | $                   | (20,782 | ) |  | $ | 8,209  
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        

Condensed Consolidating Statement of Operations

For the Thirty-Nine Weeks Ended September 27, 2008

(in thousands)

(unaudited)



|                                             |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|-------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- |  | - | ------------ | - |  | ------------------- | ------- | - |  | - | -------
|                                             |  | Parent |        |   | GuarantorSubsidiaries |   | ODs     |  |   | Eliminations |   |  | ConsolidatedCompany
|Revenues:                                    |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|Optical sales                                |  | $      | (200   | ) |                       | $ | 323,407 |  | $ | 83,989       |   |  | $                   |        |   |  | $ | 407,196
|Management fees                              |  |        |       |   |                       |   | 29,691  |  |   |              |   |  |                     | (27,408 | ) |  |   | 2,283  
|                                             |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|Total net revenues                           |  |        | (200   | ) |                       |   | 353,098 |  |   | 83,989       |   |  |                     | (27,408 | ) |  |   | 409,479
|Operating costs and expenses:                |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|Cost of goods sold                           |  |        |       |   |                       |   | 108,504 |  |   | 30,877       |   |  |                     |        |   |  |   | 139,381
|Selling, general and administrative expenses |  |        | 3,582  |   |                       |   | 174,908 |  |   | 53,519       |   |  |                     | (27,408 | ) |  |   | 204,601
|                                             |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|Total operating costs and expenses           |  |        | 3,582  |   |                       |   | 283,412 |  |   | 84,396       |   |  |                     | (27,408 | ) |  |   | 343,982
|                                             |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|Income (loss) from operations                |  |        | (3,782 | ) |                       |   | 69,686  |  |   | (407         | ) |  |                     |        |   |  |   | 65,497 
|Interest expense, net                        |  |        | 16,274 |   |                       |   | 639     |  |   |             |   |  |                     |        |   |  |   | 16,913 
|Income tax expense                           |  |        | 19,869 |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   | 19,869 
|Equity earnings in subsidiaries              |  |        | 68,640 |   |                       |   |         |  |   |              |   |  |                     | (68,640 | ) |  |   |        
|                                             |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        
|Net income (loss)                            |  | $      | 28,715 |   |                       | $ | 69,047  |  | $ | (407         | ) |  | $                   | (68,640 | ) |  | $ | 28,715 
|                                             |  |        |        |   |                       |   |         |  |   |              |   |  |                     |         |   |  |   |        



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##### Table of Contents

Condensed Consolidating Statements of Cash Flows

For the Thirty-Nine Weeks Ended September 27, 2008

(in thousands)

(unaudited)



|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | --- |  | - | ------------ | - |  | ------------------- | ------- | - |  | - | ------- | -
|                                                                                                   |  | Parent |         |   | GuarantorSubsidiaries |   |         | ODs |  |   | Eliminations |   |  | ConsolidatedCompany |        
|Cash flows from operating activities:                                                              |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net income (loss)                                                                                  |  | $      | 28,715  |   |                       | $ | 69,045  |     |  | $ | (407         | ) |  | $                   | (68,638 | ) |  |   | 28,715  |  
|Adjustments to reconcile net income (loss) to net Cash provided by (used in) operating activities: |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Depreciation and amortization                                                                      |  |        | 206     |   |                       |   | 13,894  |     |  |   |             |   |  |                     |        |   |  |   | 14,100  |  
|Amortization of debt issue costs                                                                   |  |        | 214     |   |                       |   | 9       |     |  |   |             |   |  |                     |        |   |  |   | 223     |  
|Deferred liabilities and other                                                                     |  |        | (288    | ) |                       |   | 3,001   |     |  |   | 23           |   |  |                     |        |   |  |   | 2,736   |  
|Equity earnings in subsidiaries                                                                    |  |        | (68,641 | ) |                       |   |        |     |  |   |             |   |  |                     | 68,641  |   |  |   |        |  
|Increase/(decrease) in operating assets and liabilities                                            |  |        | 41,028  |   |                       |   | (30,646 | )   |  |   | 757          |   |  |                     | (3      | ) |  |   | 11,136  |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net cash provided by operating activities                                                          |  |        | 1,234   |   |                       |   | 55,303  |     |  |   | 373          |   |  |                     |        |   |  |   | 56,910  |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Cash flows from investing activities:                                                              |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Acquisition of property and equipment                                                              |  |        |        |   |                       |   | (21,369 | )   |  |   |             |   |  |                     |         |   |  |   | (21,369 | )
|Dividend distributions                                                                             |  |        | 37,013  |   |                       |   | (37,013 | )   |  |   |             |   |  |                     |        |   |  |   |        |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net cash used in investing activities                                                              |  |        |        |   |                       |   | (21,369 | )   |  |   |             |   |  |                     |        |   |  |   | (21,369 | )
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Cash flows from financing activities:                                                              |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Capital contributions                                                                              |  |        | (16,760 | ) |                       |   | 16,760  |     |  |   |             |   |  |                     |        |   |  |   |        |  
|Payments on debt and capital leases                                                                |  |        | (1,237  | ) |                       |   | (436    | )   |  |   |             |   |  |                     |         |   |  |   | (1,673  | )
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net cash used in financing activities                                                              |  |        | (17,997 | ) |                       |   | 16,324  |     |  |   |             |   |  |                     |        |   |  |   | (1,673  | )
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                               |  |        | (16,763 | ) |                       |   | 50,258  |     |  |   | 373          |   |  |                     |        |   |  |   | 33,868  |  
|Cash and cash equivalents at beginning of period                                                   |  |        | (53     | ) |                       |   | 5,211   |     |  |   | 479          |   |  |                     |         |   |  |   | 5,637   |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                                         |  | $      | (16,816 | ) |                       | $ | 55,469  |     |  | $ | 852          |   |  | $                   |        |   |  | $ | 39,505  |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  



12



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##### Table of Contents

Condensed Consolidating Balance Sheet

October 3, 2009

(in thousands)

(unaudited)



|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|---------------------------------------------- |  | ------ | ------- | --------------------- | - | ------- |  | - | ------------ | - |  | ------------------- | -------- | - |  | - | -------
|                                               |  | Parent |         | GuarantorSubsidiaries |   | ODs     |  |   | Eliminations |   |  | ConsolidatedCompany
|ASSETS                                         |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Current assets:                                |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Cash and cash equivalents                      |  | $      | 1,989   |                       | $ | 33,824  |  | $ | 1,037        |   |  | $                   |         |   |  | $ | 36,850 
|Accounts and notes receivable                  |  |        | 36,804  |                       |   | 76,137  |  |   | 4,576        |   |  |                     | (105,545 | ) |  |   | 11,972 
|Inventory                                      |  |        |        |                       |   | 31,319  |  |   | 2,973        |   |  |                     |         |   |  |   | 34,292 
|Deferred income taxes, net                     |  |        | 9,530   |                       |   |        |  |   |             |   |  |                     |         |   |  |   | 9,530  
|Prepaid expenses and other                     |  |        | 271     |                       |   | 9,324   |  |   | 51           |   |  |                     |         |   |  |   | 9,646  
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Total current assets                           |  |        | 48,594  |                       |   | 150,604 |  |   | 8,637        |   |  |                     | (105,545 | ) |  |   | 102,290
|Property and equipment                         |  |        |        |                       |   | 81,092  |  |   |             |   |  |                     |         |   |  |   | 81,092 
|Intangibles                                    |  |        | 410,058 |                       |   | 107,195 |  |   | 87           |   |  |                     |         |   |  |   | 517,340
|Other assets                                   |  |        | 7,163   |                       |   | 313     |  |   | (1           | ) |  |                     |         |   |  |   | 7,475  
|Deferred income taxes, net                     |  |        | 12,857  |                       |   |        |  |   |             |   |  |                     |         |   |  |   | 12,857 
|Investment in subsidiaries                     |  |        | 239,148 |                       |   |        |  |   |             |   |  |                     | (239,148 | ) |  |   |       
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Total Assets                                   |  | $      | 717,820 |                       | $ | 339,204 |  | $ | 8,723        |   |  | $                   | (344,693 | ) |  | $ | 721,054
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|                                               |  |        |         |                       |  
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT) |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Current liabilities:                           |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Accounts payable                               |  | $      | 54,076  |                       | $ | 67,286  |  | $ | 9,493        |   |  | $                   | (105,545 | ) |  | $ | 25,310 
|Current portion of long-term debt              |  |        | 1,650   |                       |   | 87      |  |   |             |   |  |                     |         |   |  |   | 1,737  
|Deferred revenue                               |  |        |        |                       |   | 2,294   |  |   | 901          |   |  |                     |         |   |  |   | 3,195  
|Accrued payroll expense                        |  |        |        |                       |   | 9,496   |  |   | 954          |   |  |                     |         |   |  |   | 10,450 
|Accrued taxes                                  |  |        | 14,899  |                       |   | 2,966   |  |   | 475          |   |  |                     |         |   |  |   | 18,340 
|Accrued interest                               |  |        | 1,591   |                       |   | 739     |  |   |             |   |  |                     |         |   |  |   | 2,330  
|Other accrued expenses                         |  |        | 226     |                       |   | 5,553   |  |   | 847          |   |  |                     |         |   |  |   | 6,626  
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Total current liabilities                      |  |        | 72,442  |                       |   | 88,421  |  |   | 12,670       |   |  |                     | (105,545 | ) |  |   | 67,988 
|Long-term debt, less current maturities        |  |        | 233,079 |                       |   |        |  |   |             |   |  |                     |          |   |  |   | 233,079
|Other long-term liabilities                    |  |        | 2,173   |                       |   | 7,364   |  |   | 324          |   |  |                     |          |   |  |   | 9,861  
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Total liabilities                              |  |        | 307,694 |                       |   | 95,785  |  |   | 12,994       |   |  |                     | (105,545 | ) |  |   | 310,928
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Shareholders equity (deficit):                |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Common stock                                   |  |        |        |                       |   |        |  |   |             |   |  |                     |          |   |  |   |       
|Additional paid-in capital                     |  |        | 322,152 |                       |   |        |  |   |             |   |  |                     |         |   |  |   | 322,152
|Retained earnings                              |  |        | 87,974  |                       |   | 243,419 |  |   | (4,271       | ) |  |                     | (239,148 | ) |  |   | 87,974 
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|Total shareholders equity (deficit)           |  |        | 410,126 |                       |   | 243,419 |  |   | (4,271       | ) |  |                     | (239,148 | ) |  |   | 410,126
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        
|                                               |  | $      | 717,820 |                       | $ | 339,204 |  | $ | 8,723        |   |  | $                   | (344,693 | ) |  | $ | 721,054
|                                               |  |        |         |                       |   |         |  |   |              |   |  |                     |          |   |  |   |        



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Condensed Consolidating Statement of Operations

For the Thirteen Weeks Ended October 3, 2009

(in thousands)

(unaudited)



|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|-------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- | --- |  | - | ------------ | - |  | ------------------- | ------- | - |  | - | -------
|                                             |  | Parent |        |   | GuarantorSubsidiaries |   |         | ODs |  |   | Eliminations |   |  | ConsolidatedCompany
|Revenues:                                    |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Optical sales                                |  | $      |       |   |                       | $ | 106,801 |     |  | $ | 28,648       |   |  | $                   |        |   |  | $ | 135,449
|Management fees                              |  |        |       |   |                       |   | 9,426   |     |  |   |             |   |  |                     | (8,754  | ) |  |   | 672    
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Total net revenues                           |  |        |       |   |                       |   | 116,227 |     |  |   | 28,648       |   |  |                     | (8,754  | ) |  |   | 136,121
|Operating costs and expenses:                |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Cost of goods sold                           |  |        |       |   |                       |   | 38,194  |     |  |   | 11,555       |   |  |                     |         |   |  |   | 49,749 
|Selling, general and administrative expenses |  |        | 1,035  |   |                       |   | 61,867  |     |  |   | 17,902       |   |  |                     | (8,754  | ) |  |   | 72,050 
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Total operating costs and expenses           |  |        | 1,035  |   |                       |   | 100,061 |     |  |   | 29,457       |   |  |                     | (8,754  | ) |  |   | 121,799
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Income (loss) from operations                |  |        | (1,035 | ) |                       |   | 16,166  |     |  |   | (809         | ) |  |                     |        |   |  |   | 14,322 
|Interest expense (income), net               |  |        | 4,881  |   |                       |   | (37     | )   |  |   |             |   |  |                     |        |   |  |   | 4,844  
|Income tax expense                           |  |        | 4,037  |   |                       |   |        |     |  |   |             |   |  |                     |        |   |  |   | 4,037  
|Equity earnings in subsidiaries              |  |        | 15,396 |   |                       |   |        |     |  |   |             |   |  |                     | (15,396 | ) |  |   |       
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Net income (loss)                            |  | $      | 5,443  |   |                       | $ | 16,203  |     |  | $ | (809         | ) |  | $                   | (15,396 | ) |  | $ | 5,441  
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        

Condensed Consolidating Statement of Operations

For the Thirty-Nine Weeks Ended October 3, 2009

(in thousands)

(unaudited)



|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|-------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- | --- |  | - | ------------ | - |  | ------------------- | ------- | - |  | - | -------
|                                             |  | Parent |        |   | GuarantorSubsidiaries |   |         | ODs |  |   | Eliminations |   |  | ConsolidatedCompany
|Revenues:                                    |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Optical sales                                |  | $      |       |   |                       | $ | 336,751 |     |  | $ | 88,959       |   |  | $                   |        |   |  | $ | 425,710
|Management fees                              |  |        |       |   |                       |   | 29,654  |     |  |   |              |   |  |                     | (27,674 | ) |  |   | 1,980  
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Total net revenues                           |  |        |       |   |                       |   | 366,405 |     |  |   | 88,959       |   |  |                     | (27,674 | ) |  |   | 427,690
|Operating costs and expenses:                |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Cost of goods sold                           |  |        |       |   |                       |   | 118,526 |     |  |   | 35,281       |   |  |                     |        |   |  |   | 153,807
|Selling, general and administrative expenses |  |        | 3,704  |   |                       |   | 184,630 |     |  |   | 55,208       |   |  |                     | (27,674 | ) |  |   | 215,868
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Total operating costs and expenses           |  |        | 3,704  |   |                       |   | 303,156 |     |  |   | 90,489       |   |  |                     | (27,674 | ) |  |   | 369,675
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Income (loss) from operations                |  |        | (3,704 | ) |                       |   | 63,249  |     |  |   | (1,530       | ) |  |                     |        |   |  |   | 58,015 
|Interest expense (income), net               |  |        | 14,810 |   |                       |   | (58     | )   |  |   |             |   |  |                     |        |   |  |   | 14,752 
|Income tax expense                           |  |        | 17,571 |   |                       |   |        |     |  |   |             |   |  |                     |         |   |  |   | 17,571 
|Equity earnings in subsidiaries              |  |        | 61,777 |   |                       |   |        |     |  |   |             |   |  |                     | (61,777 | ) |  |   |       
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        
|Net income (loss)                            |  | $      | 25,692 |   |                       | $ | 63,307  |     |  | $ | (1,530       | ) |  | $                   | (61,777 | ) |  | $ | 25,692 
|                                             |  |        |        |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |        



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##### Table of Contents

Condensed Consolidating Statements of Cash Flows

For the Thirty-Nine Weeks Ended October 3, 2009

(in thousands)

(unaudited)



|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | --- |  | - | ------------ | - |  | ------------------- | ------- | - |  | - | ------- | -
|                                                                                                   |  | Parent |         |   | GuarantorSubsidiaries |   |         | ODs |  |   | Eliminations |   |  | ConsolidatedCompany |        
|Cash flows from operating activities:                                                              |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net income (loss)                                                                                  |  | $      | 25,692  |   |                       | $ | 63,323  |     |  | $ | (1,546       | ) |  | $                   | (61,777 | ) |  |   | 25,692  |  
|Adjustments to reconcile net income (loss) to net Cash provided by (used in) operating activities: |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Depreciation and amortization                                                                      |  |        | 253     |   |                       |   | 15,468  |     |  |   |             |   |  |                     |        |   |  |   | 15,721  |  
|Amortization of debt issue costs                                                                   |  |        | 306     |   |                       |   |        |     |  |   |             |   |  |                     |        |   |  |   | 306     |  
|Deferred liabilities and other                                                                     |  |        |        |   |                       |   | 221     |     |  |   | 107          |   |  |                     |        |   |  |   | 328     |  
|Equity earnings in subsidiaries                                                                    |  |        | (61,777 | ) |                       |   |        |     |  |   |             |   |  |                     | 61,777  |   |  |   |        |  
|Increase/(decrease) in operating assets and liabilities                                            |  |        | 37,971  |   |                       |   | (36,687 | )   |  |   | 1,666        |   |  |                     |        |   |  |   | 2,950   |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net cash provided by operating activities                                                          |  |        | 2,445   |   |                       |   | 42,325  |     |  |   | 227          |   |  |                     |        |   |  |   | 44,997  |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Cash flows from investing activities:                                                              |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Acquisition of property and equipment                                                              |  |        |        |   |                       |   | (20,097 | )   |  |   |             |   |  |                     |         |   |  |   | (20,097 | )
|Dividend distributions                                                                             |  |        | 17,585  |   |                       |   | (17,585 | )   |  |   |             |   |  |                     |        |   |  |   |        |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net cash used in investing activities                                                              |  |        | 17,585  |   |                       |   | (37,682 | )   |  |   |             |   |  |                     |        |   |  |   | (20,097 | )
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Cash flows from financing activities:                                                              |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Capital contributions                                                                              |  |        | (11,750 | ) |                       |   | 11,750  |     |  |   |             |   |  |                     |        |   |  |   |        |  
|Payments on debt and capital leases                                                                |  |        | (1,238  | ) |                       |   | (272    | )   |  |   |             |   |  |                     |         |   |  |   | (1,510  | )
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net cash used in financing activities                                                              |  |        | (12,988 | ) |                       |   | 11,478  |     |  |   |             |   |  |                     |        |   |  |   | (1,510  | )
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Net increase in cash and cash equivalents                                                          |  |        | 7,042   |   |                       |   | 16,121  |     |  |   | 227          |   |  |                     |        |   |  |   | 23,390  |  
|Cash and cash equivalents at beginning of period                                                   |  |        | 782     |   |                       |   | 11,868  |     |  |   | 810          |   |  |                     |         |   |  |   | 13,460  |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                                         |  | $      | 7,824   |   |                       | $ | 27,989  |     |  | $ | 1,037        |   |  | $                   |        |   |  | $ | 36,850  |  
|                                                                                                   |  |        |         |   |                       |   |         |     |  |   |              |   |  |                     |         |   |  |   |         |  

9. Commitments and contingencies

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on the Companys consolidated financial position or consolidated results of operations.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Forward-Looking Statements

Some statements in this quarterly report are forward-looking statements. Forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this
filing that are not historical facts. Many statements under the captions Summary, Risk factors, Managements discussion and analysis of financial condition and results of operations, Business, and
elsewhere in this filing are forward-looking statements. These forward-looking statements may relate to, among other things, our future performance generally, business development activities, strategy, projected synergies, future capital
expenditures, financing sources and availability and the effects of regulation and competition. When used in this filing, the words expect, anticipate, intend, plan, believe,
seek, estimate, may, will or should or, in each case, their negative and similar expressions are generally intended to identify forward-looking statements although not all forward-looking
statements contain such identifying words.

You should not place undue reliance on these forward-looking statements, which
reflect our managements view and various assumptions only as of the date of this report. Because these forward-looking statements involve risks and uncertainties, many of which are beyond our control, there are important factors that could
cause actual results to differ materially from those expressed or implied by these forward-looking statements, including our assumptions, plans, objectives, expectations and intentions with respect to the following:



| |  |  | Our competitive environment;
| | - |  | ----------------------------



| |  |  | The cost and effect of legal, tax or regulatory proceedings;
| | - |  | ------------------------------------------------------------



| |  |  | Changes in general economic conditions;
| | - |  | ---------------------------------------



| |  |  | Changes to our regulatory environment;
| | - |  | --------------------------------------



| |  |  | Our ability to maintain our relationships with optometrists;
| | - |  | ------------------------------------------------------------



| |  |  | The adequacy and perception of our customer service;
| | - |  | ----------------------------------------------------



| |  |  | The ability to hire, train, energize and retain qualified sales associates, managerial and other employees;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | The ability to secure and protect trademarks and other intellectual property rights;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | Exposure to the risks associated with terrorist activities and natural disasters;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Franchise claims by optometrists;
| | - |  | ---------------------------------



| |  |  | Reduction of third-party reimbursement;
| | - |  | ---------------------------------------



| |  |  | Technological advances in vision care;
| | - |  | --------------------------------------



| |  |  | Conflicts of interest between our controlling shareholders and noteholders;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Failure to realize anticipated cost savings;
| | - |  | --------------------------------------------



| |  |  | Changes in the costs of manufacturing, labor and advertising;
| | - |  | -------------------------------------------------------------



| |  |  | The ability of our suppliers to timely produce and deliver frames, lenses and contact lenses;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | The risks and uncertainties associated with reliance on foreign vendors, including the impact of work stoppages, transportation delays and other
interruptions, political or civil instability, imposition of and changes in tariffs and import and export controls such as quotas, changes in governmental policies in or towards foreign countries, currency exchange rates and other similar factors;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Exposure to liability claims if we are unable to obtain adequate insurance;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Changes in general industry and market conditions and growth rates;
| | - |  | -------------------------------------------------------------------



| |  |  | The extent of financial difficulties that may be experienced by our customers;
| | - |  | ------------------------------------------------------------------------------



| |  |  | Loss of key management personnel;
| | - |  | ---------------------------------



| |  |  | Changes in accounting policies applicable to our business;
| | - |  | ----------------------------------------------------------



| |  |  | The impact of unusual items resulting from the implementation of new business strategies, acquisitions and divestitures or future restructuring
activities;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our substantial indebtedness;
| | - |  | -----------------------------



| |  |  | Restrictions imposed on our business by the terms of our indebtedness;
| | - |  | ----------------------------------------------------------------------



| |  |  | Our ability to fund our capital requirements;
| | - |  | ---------------------------------------------



| |  |  | Long-term impact of laser surgery on the optical industry;
| | - |  | ----------------------------------------------------------



| |  |  | The performance, implementation and integration of management information systems;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | Our ability to open new stores and the financial impact derived from those openings; and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | Our ability to implement and maintain our merchandising and marketing business strategy.
| | - |  | ----------------------------------------------------------------------------------------

In light of these risks, uncertainties and assumptions, the forward-looking statements and events discussed in this report might not occur.
You should assume the information appearing in this report is accurate only as of the date on the front cover of this report, as our business, financial condition, results of operations and prospects may have changed since that date. Unless required
by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Some of these risks, uncertainties, assumptions and other factors can be found in our filings with the Securities and Exchange Commission, including the factors discussed under Item 1A. Risk
Factors in our Annual Report on Form 10-K for the year ended January 3, 2009 (2008 Form 10-K) and any update thereto in our Forms 10-Q.

Introduction

The following managements discussion and
analysis (MD&A) section is intended to help the reader better understand our results of operations and financial condition. This section is provided as a supplement to, and should be read in conjunction with, our condensed
consolidated financial statements and the accompanying notes thereto contained elsewhere in this report and our MD&A section, financial statements and accompanying notes to the financial statements in our 2008 Form 10-K.

We are the third largest operator of optical retail stores in the United States as measured by revenue. We currently operate 439 stores in
36 states, including 368 directly-owned stores and 71 stores owned by a professional corporation or other entity owned by an optometrist (an OD PC), which we manage under long-term management agreements. Our consolidated financial
information includes the results of our 368 directly-owned stores, as well as the results of 58 of the 71 stores operated by an OD PC. The remaining 13 stores operated by an OD PC are not consolidated and we recognize as management fee revenue only
the cash flows we earn pursuant to the terms of management agreements for those 13 OD PC-operated stores.

Our net revenues
are comprised of optical sales, net of discounts and promotions, from our 426 consolidated stores as well as management fees from the 13 stores owned by OD PCs that are not consolidated in our results. Optical sales include sales of frames, lenses
(including lens treatments), contact lenses and eyeglass warranties at all of our 426 consolidated stores, as well as the professional



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fees of the optometrists at 227 of the stores. These 227 stores include 116 stores where the optometrist is our employee or an independent contractor, the 58 stores operated by an OD PC that are
consolidated in our results and the 53 stores with independent optometrists for whom we provide management services. The management fee from the 13 unconsolidated OD PC-operated stores are based on the performance of the stores.

Our operating costs and expenses are comprised of costs of goods sold and selling, general and administrative expenses. Cost of goods sold
primarily includes the cost of eyeglass frames, ophthalmic lenses, contact lenses, lab manufacturing costs and buying, warehousing, distribution, shipping and delivery costs and doctor payroll and expenses. Selling, general and administrative
expenses primarily include retail payroll, occupancy, overhead, advertising and depreciation. Occupancy, overhead and depreciation are less variable relative to sales levels than other components of selling, general and administrative expenses.

In this MD&A section we use the terms gross profit, gross margin, comparable store
sales, comparable transaction volume and average ticket price to compare our period-over-period performance. Gross profit is defined as optical sales less cost of goods sold in a period. Gross margin is defined as gross
profit as a percentage of optical sales in a period. Comparable store sales is calculated by comparing net revenues for a period to net revenues of the equivalent prior period for all stores open at least twelve months during such prior period.
Comparable transaction volume is based on the number of comparable store sales in a period. Average ticket price is calculated by dividing comparable net revenues by comparable transaction volume in a period.

We believe that the key driver of our performance is our ability to grow revenue without increasing costs at the same rate by:
(i) increasing comparable transaction volume by offering value and convenience; (ii) actively managing our store base in targeted markets; and (iii) pursuing fee-for-service funded managed vision care relationships. Our performance is
also affected by general economic conditions and consumer confidence.

We primarily grow optical sales by offering value and
convenience to our customers. Since the fiscal year ended December 29, 2001, we have focused on our value strategy, which includes a promotion of two complete pairs of single vision eyewear for $99. We believe our value strategy results in
increased comparable transaction volume and also believe it encourages customers to purchase higher margin lenses, lens treatments and accessories, which increases average ticket price.

We also grow optical sales and leverage costs through selective store base expansion by opening new stores in targeted markets. Until a new
store matures, its operating costs as a percentage of optical sales are generally higher than that of an established store. Accordingly, the expense related to opening new stores adversely affects our results in that period. Over the longer term,
opening a new store in an existing market allows us to leverage existing advertising, field management and overhead to mitigate margin pressure. When entering a new market, we seek to achieve sufficient market penetration to generate brand awareness
and economies of scale in advertising, field management and overhead. Consistent with our strategic objectives, we opened 2 new stores during the thirteen weeks ended October 3, 2009, bringing our year to date total to 18, and we believe the
opportunity exists to open approximately 2 additional new stores in fiscal 2009 in existing markets. We opened 22 new stores in fiscal 2008; 7 of those locations opening during the thirteen weeks ended September 27, 2008. We also manage costs
by closing stores that do not meet our performance expectations. Store openings and store closures affect period over period comparisons.

We have made a strategic decision to pursue participation in fee-for-service funded managed vision care plans. Fee-for-service funded managed vision care plans consist of insurance relationships where we
receive set fees for services provided to participants of a plan as opposed to capitated funded



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managed vision care plans where we receive a set fee per plan participant to provide any and all services
requested by participants of such plan. Under a fee-for-service funded managed vision care plan we benefit from participants utilization of the plan, whereas under a capitated funded managed vision care plan we bear risk related to the level
at which participants utilize such plan. Substantially all of our current funded managed vision care plan participation is in fee-for-service funded managed vision care plans. Our participation in managed vision care plans also includes discount
managed vision care plans where participants receive a set discount on eye care products. We believe that participation in managed vision care plans will continue to benefit us and other large optical retail chains with strong local market shares,
broad geographic coverage and sophisticated management information and billing systems. We expect that optical revenues derived from managed vision care plans will continue to account for approximately 30% of our net revenues, but that the
percentage attributable to fee-for-service funded managed vision care plans will increase as revenues from discount managed vision care plans decline. While the average ticket price on products purchased under managed vision care plans is typically
slightly lower than a non-managed vision care sale, managed vision care plan transactions generally earn comparable operating profit margins as they require less promotional spending and advertising support. We believe that the increased volume
resulting from managed vision care plans also compensates for the lower average ticket price.

Results of Operations

The following table sets forth the percentage relationship to net revenues of certain income statement data. The period-to-period comparison
of financial results is not necessarily indicative of future results.



|                                             |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|-------------------------------------------- |  | ------------------- | - |  | ------------------- | - |  | ---------------------- | - |  | ---------------------- | -
|                                             |  | Thirteen WeeksEnded |   |  | Thirteen WeeksEnded |   |  | Thirty-NineWeeks Ended |   |  | Thirty-NineWeeks Ended |  
|                                             |  | September 27,2008   |   |  | October 3,2009      |   |  | September 27,2008      |   |  | October 3,2009         |  
|Statement of Income Data:                    |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|NET REVENUES:                                |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|Optical sales                                |  | 99.5                | % |  | 99.5                | % |  | 99.4                   | % |  | 99.5                   | %
|Management fee                               |  | 0.5                 |   |  | 0.5                 |   |  | 0.6                    |   |  | 0.5                    |  
|                                             |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|Total net revenues                           |  | 100.0               |   |  | 100.0               |   |  | 100.0                  |   |  | 100.0                  |  
|OPERATING COSTS AND EXPENSES:                |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|Cost of goods sold                           |  | 35.0                | * |  | 36.7                | * |  | 34.2                   | * |  | 36.10                  | *
|Selling, general and administrative expenses |  | 51.1                | * |  | 53.2                | * |  | 50.2                   | * |  | 50.7                   | *
|Total operating costs and expenses           |  | 85.6                |   |  | 89.5                |   |  | 84.0                   |   |  | 86.4                   |  
|                                             |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|INCOME FROM OPERATIONS                       |  | 14.4                |   |  | 10.5                |   |  | 16.0                   |   |  | 13.6                   |  
|INTEREST EXPENSE, NET                        |  | 4.1                 |   |  | 3.6                 |   |  | 4.1                    |   |  | 3.5                    |  
|INCOME TAX EXPENSE                           |  | 4.2                 |   |  | 3.0                 |   |  | 4.9                    |   |  | 4.1                    |  
|                                             |  |                     |   |  |                     |   |  |                        |   |  |                        |  
|NET INCOME                                   |  | 6.1                 | % |  | 4.0                 | % |  | 7.0                    | % |  | 6.0                    | %
|                                             |  |                     |   |  |                     |   |  |                        |   |  |                        |  



|* | Percentages based on optical sales only
|- | ---------------------------------------



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##### Table of Contents

The Thirteen Weeks Ended October 3, 2009 Compared to the Thirteen Weeks Ended September 27,
2008.

Net Revenues.Net revenues increased to $136.1 million for the thirteen weeks ended October 3, 2009 from $134.4 million
for the thirteen weeks ended September 27, 2008. The increase in revenues was driven by new store openings. Net revenues attributable to new stores opened in the third quarter of fiscal 2009 were $0.4 million. The increase in net revenues
attributable to the effect of new stores opened in fiscal 2008 being open in the third quarter of fiscal 2009 was $4.5 million. Comparable store sales declined to a negative -2.0% for the third quarter of fiscal 2009. This decline was driven by a
decrease in comparable transactions of negative -7.1%, a reflection of the slower volumes most retailers are experiencing in the current economic climate. This decline was offset by an increase of 5.4% in average ticket price, primarily driven by
the continued increase in the sale of premium lenses and lens treatments. Total managed vision care sales increased by 11.7%, or $4.9 million. In addition, we opened 2 new stores in the third quarter of fiscal 2009 compared to 7 new stores in the
third quarter of fiscal 2008.

Gross Profit.Gross profit on optical sales decreased to $85.7 million for the thirteen weeks ended
October 3, 2009 from $86.9 million for the thirteen weeks ended September 27, 2008. Gross profit as a percentage of optical sales decreased to 63.3% for the thirteen weeks ended October 3, 2009 from 65.0% for the thirteen weeks ended
September 27, 2008. The decrease in gross profit as a percentage of optical sales was largely the result of the increase in the sale of lower margin specialty and contact lenses and an increase in doctor payroll and lab expenses. Consistent
with our strategy of investing in our customers and to provide the appropriate and expected level of service, both in eye exams and one hour lab processing, we maintain staffing levels that are not as efficient in periods of slower transaction
volumes. This inefficiency was further impacted by increases in employee benefit spending related to our 2009 annual medical plan enhancements. This increased spending is consistent with our strategy of investing in our employees and has led to
decreased employee turnover when compared to fiscal 2008, an improvement that will result in future customer service and training expense benefits.

Selling General & Administrative Expenses (SG&A).SG&A increased to $72.1 million for the thirteen weeks ended October 3, 2009 from $68.3 million for the thirteen weeks ended September 27, 2008. SG&A,
as a percentage of optical sales, increased to 53.2% for the thirteen weeks ended October 3, 2009 from 51.1% for the thirteen weeks ended September 27, 2008. This percentage increase was largely due to an increase in employee benefit
expenses and the deleveraging of occupancy expenses offset by expense control initiatives in retail expenditures.

Net Interest Expense.Net interest expense decreased to $4.8 million for the thirteen weeks ended October 3, 2009 from $5.6 million for the thirteen weeks ended September 27, 2008. This decrease was primarily due to lower interest rates on the portion of
our debt that has variable interest rates as well as lower outstanding debt balances as a result of a principal payment made during fiscal 2008.

Income Tax Expense.Income tax expense decreased to $4.0 million for the thirteen weeks ended October 3, 2009 from $5.6 million for the thirteen weeks ended September 27, 2008 primarily due to a $4.3 million decrease in
income before taxes. Our effective tax rate was 42.6% for the thirteen weeks ended October 3, 2009 and 40.6% for the thirteen weeks ended September 27, 2008.

Net Income.Net income decreased to $5.4 million for the thirteen weeks ended October 3, 2009 compared from $8.2 million for the thirteen weeks ended September 27, 2008.



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The Thirty-nine Weeks Ended October 3, 2009 Compared to the Thirty-nine Weeks Ended
September 27, 2008.

Net Revenues.Net revenues increased to $427.7 million for the thirty-nine weeks ended October 3,
2009 from $409.5 million for the thirty-nine weeks ended September 27, 2008. The increase in revenues was primarily driven by a 0.8% increase in comparable store sales and new store openings. Net revenues attributable to new stores that opened
in the first thirty-nine weeks of fiscal 2009 were $7.6 million. The increase in net revenues attributable to the effect of new stores opened in fiscal 2008 being open in the first three quarters of fiscal 2009 was $8.3 million. While comparable
sales increased 0.8% for the thirty-nine week period ended October 3, 2009, the increase was driven by an increase in average ticket of 5.5%, which was partially offset by a decline in comparable transactions of negative -3.2%. The increase in
average ticket was driven by the continued increase in the sale of premium lenses. The decline in comparable transactions was a reflection of the slower volumes experienced by most retailers in the current economic climate. Total managed vision care
sales increased by 14.5%, or $18.1 million. In addition, we opened 18 new stores in the first thirty-nine weeks of fiscal 2009 and closed 4.

Gross Profit.Gross profit on optical sales increased to $271.9 million for the thirty-nine weeks ended October 3, 2009 from $267.8 million for the thirty-nine weeks ended September 27, 2008. Gross profit as a percentage of
optical sales decreased to 63.9% for the thirty-nine weeks ended October 3, 2009 from 65.8% for the thirty-nine weeks ended September 27, 2008. The decrease in gross profit as a percentage of optical sales was largely the result of the
increase in the sale of lower margin specialty lenses and an increase in doctor payroll and lab expenditures. Consistent with our strategy of investing in our customers and to provide the appropriate and expected level of service to customers, both
in eye exams and one hour lab processing, we maintain staffing levels that are not as efficient in periods of slower transaction volumes. This inefficiency was further impacted by increases in employee benefit spending related to our 2009 annual
medical plan enhancements. This increased spend is consistent with our strategy of investing in our employees and has led to decreased employee turnover when compared to fiscal 2008, an improvement that will result in future customer service and
training expense benefits.

Selling General & Administrative Expenses (SG&A).SG&A increased to $215.9 million for the
thirty-nine weeks ended October 3, 2009 from $204.6 million for the thirty-nine weeks ended September 27, 2008. SG&A, as a percentage of optical sales, increased to 50.7% for the thirty-nine weeks ended October 3, 2009 from 50.2%
for the thirty-nine weeks ended September 27, 2008. This percentage increase was largely due to an increase in employee benefit expenses offset by leveraging of overhead expenditures and expense control initiatives in retail expenditures and
advertising.

Net Interest Expense.Net interest expense decreased to $14.8 million for the thirty-nine weeks ended October 3,
2009 from $16.9 million for the thirty-nine weeks ended September 27, 2008. This decrease was primarily due to lower interest rates on the portion of our debt that has variable interest rates as well as lower outstanding debt balances as a
result of a principal payment made during fiscal 2008.

Income Tax Expense.Income tax expense decreased to $17.6 million for the
thirty-nine weeks ended October 3, 2009 from $19.9 million for the thirty-nine weeks ended September 27, 2008, primarily due to the $5.3 million decrease in income before taxes. Our effective tax rate was 40.6% for the thirty-nine weeks
ended October 3, 2009 compared to 40.9% for the thirty-nine weeks ended September 27, 2008.

Net Income.Net income decreased
to $25.9 million for the thirty-nine weeks ended October 3, 2009 compared to $28.7 million for the thirty-nine weeks ended September 27, 2008.



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Liquidity and Capital Resources

Our capital requirements are driven principally by our obligations to service debt and to fund the following costs:



| |  |  | Construction of new stores;
| | - |  | ---------------------------



| |  |  | Repositioning of existing stores;
| | - |  | ---------------------------------



| |  |  | New lab and distribution facilities; and
| | - |  | ----------------------------------------



| |  |  | Purchasing inventory and equipment
| | - |  | ----------------------------------

The amount of capital available to us will affect our ability to service our debt obligations and to continue to grow our business through expanding the number of stores and increasing comparable store
sales.

Sources of Capital

Our short-term and long-term liquidity needs arise primarily from: (i) interest payments primarily related to our Credit Facility (as defined below) and the Notes; (ii) capital expenditures,
including those for opening new stores; and (iii) working capital requirements as may be needed to support our business. We intend to fund our operations, interest payments, capital expenditures and working capital requirements principally from
cash from operations and HVHC capital contributions. We are a holding company with no direct operations. Our principal assets are the equity interests we hold in our subsidiaries. As a result, we are dependent upon dividends and other payments from
our subsidiaries to generate the cash necessary to fund our operations, interest payments, capital expenditures and working capital requirements. There are currently no restrictions on the ability of our subsidiaries to transfer funds to us.

Cash flows from operating activities provided net cash of $45.0 million for the thirty-nine weeks ended October 3, 2009
and $56.9 million for the thirty-nine weeks ended September 27, 2008. This decrease was primarily related to our declining income, which also lead to decreases in our tax liabilities. Our other sources of working capital are cash on hand and
funding from the revolving portion of our Credit Facility (as defined below). As of October 3, 2009, we had $36.9 million of cash available to meet our obligations. We had $23.2 million of borrowings available under the $25.0 million Revolver
(as defined below), excluding $1.8 million letters of credit outstanding. These letters of credit are held by our insurance carriers in lieu of actual cash deposits. The Revolver terminates on March 1, 2010, with any outstanding balances due at
that time. The outstanding letters of credit will be converted at that time.

Payment on debt has been our principal financing
activity. Cash flows used in financing activities were $1.5 million for the thirty-nine weeks ended October 3, 2009 and $1.7 million for the thirty-nine weeks ended September 27, 2008, respectively and related solely to the payment of
debt.

Our working capital primarily consists of cash and cash equivalents, accounts receivable, inventory, accounts payable
and accrued expenses and was $34.3 million as of October 3, 2009. Our working capital was $6.2 million as of January 3, 2009. The increase in working capital is primarily due to accumulation of cash as we have made no voluntary prepayments
of our Credit Facility during the first three quarters of fiscal 2009.

Capital expenditures were $20.1 million for the
thirty-nine weeks ended October 3, 2009 compared to $21.4 million for the thirty-nine weeks ended September 27, 2008. Capital expenditures for all of fiscal 2009 are projected to be approximately $27.5 million. Of the planned fiscal 2009
capital expenditures, approximately $10.2 million is related to commitments for new stores and approximately



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$17.3 million is expected to be for improvement of existing facilities and systems including the completion of our central lab facility relocation.

Based upon current operations, we believe that our cash flows from operations will be adequate to meet our anticipated requirements for
working capital, capital expenditures and scheduled principal and interest payments through the next twelve months with the exception of capital contributions from HVHC. Any such future HVHC contributions will be used for capital expenditures and
are not part of our annual maximum capital expenditure limit under the Credit Facility. Our ability to satisfy our financial covenants under our Credit Facility, meet our debt service obligations and reduce our debt will be dependent on our future
performance, which, in turn, will be subject to general economic conditions and to financial, business, and other factors, including factors beyond our control. We believe that our ability to repay amounts outstanding under our Credit Facility and
the Notes at maturity will likely require additional financing, which may not be available to us in the future on acceptable terms, if at all. A portion of our debt bears interest at floating rates; therefore, our financial condition is and will
continue to be affected by changes in prevailing interest rates.

Long-Term Debt

Credit Facility

In
March 2005, we entered into a credit agreement which provided for $165.0 million in term loans (the Term Loan Facility) and $25.0 million in revolving credit facilities (the Revolver and together with the Term Loan Facility,
the Credit Facility). The borrowings under the Credit Facility together with the net proceeds from the offering of the Initial Notes (as defined below) and the equity investment of Moulin Global Eyecare Holdings Limited and Golden Gate
Capital were used to: (i) pay a cash portion of the purchase price for the equity interests held by Thomas H. Lee Partners in us and sold to ECCA Holdings Corporation in March 2005, (ii) repay debt outstanding under a previous credit
facility, (iii) retire old notes, (iv) pay the related tender premium and accrued interest and (v) pay the related transaction fees and expenses. The remainder of the Credit Facility is available to finance working capital
requirements and general corporate purposes.

On December 21, 2006, we obtained a second amendment and consent to our
Credit Facility (the 2006 Amendment). The 2006 Amendment primarily reduced the interest rate on the Credit Facility and changed several covenants. A prepayment of $25.0 million in principal was made in conjunction with the lenders
approval of the 2006 Amendment and a prepayment of $9.0 million in principal was made in conjunction with the filing of the Form 10-K in March, 2007, as required under the 2006 Amendment. Additional voluntary prepayments totaling $20.0 million were
made throughout the fiscal year ended December 29, 2007 (fiscal 2007).

On October 3, 2008, we entered
into a Third Amendment and Consent to our Credit Facility (the 2008 Amendment). The 2008 Amendment provides for an increase in the annual capital expenditures limit under the Credit Facility from $22 million to $28 million in
consideration for (i) a $20 million prepayment of principal due under the loan terms made under the Credit Facility and (ii) an amendment fee of 10 basis points. The 2008 Amendment further provides that all capital contributions made to us
by HVHC or its affiliates for the purposes of funding capital expenditures shall be excluded from the annual capital expenditure limit set forth in the Credit Facility. The prepayment of $20.0 million in principal was made on October 3, 2008.
On October 9, 2008, HVHC provided us with a $5.0 million capital contribution to be utilized to fund improvements to our lab equipment and infrastructure.

Amortization payments. Prior to the maturity date of March 2010, funds borrowed under the Revolver may be borrowed, repaid and re-borrowed, without premium or penalty. The Term Loan



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Facility began amortizing in the third quarter of fiscal year ended December 31, 2005 and continues through the date of maturity in fiscal 2012 according to the following schedule:



|     |  |               |      
|---- |  | ------------- | -----
|Year |  | (in millions)
|2009 |  |               | 0.41 
|2010 |  |               | 1.65 
|2011 |  |               | 1.65 
|2012 |  |               | 80.28
|     |  |               |      
|     |  | $             | 83.99
|     |  |               |      

Interest.Our borrowings under the Credit Facility bear interest
at a floating rate, which can either be, at our option, a base rate or a Eurodollar rate, in each case plus an applicable margin. The base rate is defined as the higher of (i) the JPMorgan Chase Bank prime rate or (ii) the federal funds
effective rate, plus one half percent (0.5%) per annum. The Eurodollar rate is defined as the rate for Eurodollar deposits for a period of one, two, three, six, nine or twelve months (as selected by us). The applicable margins are:



|                   |  |                  |   |  |                   |  
|------------------ |  | ---------------- | - |  | ----------------- | -
|Facility           |  | Base Rate Margin |   |  | Eurodollar Margin |  
|Term Loan Facility |  | 1.50             | % |  | 2.50              | %
|Revolver           |  | 1.75             | % |  | 2.75              | %

In addition to paying interest on outstanding principal under the Credit Facility, we
are required to pay a commitment fee to the lenders under the Revolver in respect of the unutilized commitments thereunder at a rate equal to 0.50%. We will also pay customary letter of credit fees.

Security and guarantees. The Credit Facility is secured by a valid first-priority perfected lien or pledge on: (i) 100% of the
capital stock of each of our present and future direct and indirect domestic subsidiaries; (ii) 65% of the capital stock of each of our future first-tier foreign subsidiaries; (iii) 100% of the capital stock of Eye Care Centers of America,
Inc.; and (iv) substantially all our present and future property and assets and those of each guarantor, subject to certain exceptions. Our obligations under the Credit Facility are guaranteed by each of our existing and future direct and
indirect domestic subsidiaries and ECCA Holdings.

Covenants. The Credit Facility documentation contains customary
affirmative and negative covenants and financial covenants. During the term of the Credit Facility, the negative covenants restrict our ability to do certain things, including but not limited to:



| |  |  | incur additional indebtedness, including guarantees;
| | - |  | ----------------------------------------------------



| |  |  | create, incur, assume or permit to exist liens on property and assets;
| | - |  | ----------------------------------------------------------------------



| |  |  | make loans and investments and enter into acquisitions and joint ventures;
| | - |  | --------------------------------------------------------------------------



| |  |  | engage in sales, transfers and other dispositions of our property or assets;
| | - |  | ----------------------------------------------------------------------------



| |  |  | prepay, redeem or repurchase our debt (including the Notes), or amend or modify the terms of certain material debt (including the Notes) or certain
other agreements;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | declare or pay dividends to, make distributions to, or make redemptions and repurchases from, equity holders; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | agree to restrictions on the ability of our subsidiaries to pay dividends and make distributions.
| | - |  | -------------------------------------------------------------------------------------------------

The following financial covenants are included:



| |  |  | maximum consolidated leverage ratio;
| | - |  | ------------------------------------



| |  |  | maximum capital expenditures; and
| | - |  | ---------------------------------



| |  |  | minimum rent-adjusted interest coverage ratio.
| | - |  | ----------------------------------------------

As of October 3, 2009 we were in compliance with all of our financial covenants.

Mandatory prepayment. We are required to make a mandatory annual prepayment of the Term Loan Facility based on our excess cash flows which is determined by our leverage ratio as defined in the Credit Facility. In 2007, we made
voluntary prepayments of $21.3 million and an additional prepayment of $9.0 million related to the 2006 Amendment. Due to this $30.2 million prepayment, no excess cash flow payment was necessary for our 2007 results. In 2008, we made a prepayment of
$20.0 million in principal related to the 2008 Amendment. Due to this $20.0 million prepayment, no excess cash flow payment was necessary for our Fiscal 2008 results. In addition, we are required to make a mandatory prepayment of the Term Loan
Facility with:



| |  |  | 100% of the net cash proceeds of any property or asset sale or casualty, subject to certain exceptions and reinvestment rights;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | 100% of the net cash proceeds of certain debt issuances, subject to certain exceptions; and
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | 50% of the net cash proceeds from the issuance of additional equity interests, subject to certain exceptions.
| | - |  | -------------------------------------------------------------------------------------------------------------

Mandatory prepayments will be applied to the Term Loan Facility, first to the scheduled installments of the Term Loan Facility occurring
within the next 12 months in direct order of maturity, and second, ratably to the remaining installments of the Term Loan Facility. We may voluntarily repay outstanding loans under the Credit Facility at any time without premium or penalty, other
than customary breakage costs (as defined in the Credit Facility) with respect to Eurodollar loans.

Notes

On February 4, 2005, we issued $152.0 million aggregate principal amount of our 103/4% Senior Subordinated Notes (the Initial
Notes) due 2015. We filed a registration statement with the Securities and Exchange Commission with respect to an offer to exchange the Initial Notes for notes which have terms substantially identical in all material respects to the Initial
Notes, except such notes are freely transferable by the holders thereof and are issued without any covenant regarding registration (the Notes). The registration statement was declared effective on September 26, 2005. The exchange
period ended October 31, 2005. The Notes are the only notes we have which are currently outstanding.

The Notes:



| |  |  | are our general unsecured, senior subordinated obligations;
| | - |  | -----------------------------------------------------------



| |  |  | mature on February 15, 2015;
| | - |  | ----------------------------



| |  |  | are subordinated in right of payment to all existing and future Senior Indebtedness (as defined in that certain Indenture between us and the Bank of
New York as Trustee, dated February 4, 2005 (the Indenture)), including the Credit Facility;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | rank equally in right of payment to any future Senior Subordinated Indebtedness (as defined in our Indenture);
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | are unconditionally guaranteed on a senior subordinated basis by each of our existing Subsidiaries (as defined in the Indenture) and any future
Restricted Subsidiary (as defined in the Indenture) of ours that is not a Foreign Subsidiary (as defined in the Indenture);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | are effectively subordinated to any future Indebtedness (as defined in the Indenture) and other liabilities of Subsidiaries (as defined in the
Indenture) of ours that are not guaranteeing the notes; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | may default in the event there is a failure to make an interest or principal payment under the Credit Facility.
| | - |  | ---------------------------------------------------------------------------------------------------------------

Interest.Interest on the Notes compounds semi-annually and:



| |  |  | accrues at the rate of 10.75% per annum;
| | - |  | ----------------------------------------



| |  |  | is payable in cash semi-annually in arrears on February 15 and August 15;
| | - |  | -------------------------------------------------------------------------



| |  |  | is payable to the holders of record on the February 1 and August 1 immediately preceding the related interest payment dates; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | is computed on the basis of a 360-day year comprised of twelve 30-day months.
| | - |  | -----------------------------------------------------------------------------

Optional redemption.At any time prior to February 15, 2010, we may redeem all or part of the Notes upon not less than 30
nor more than 60 days prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) the Applicable Premium (as defined in the Indenture) as of the date of redemption, plus
(iii) accrued and unpaid interest on the Notes, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On and after February 15, 2010, we may redeem all or, from time to time, a part of the Notes upon not less than 30 nor more than 60
days notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest on the Notes, if any, to the applicable redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on February 15 of the years indicated below:



|                    |  |                  |  
|------------------- |  | ---------------- | -
|YEAR                |  | REDEMPTION PRICE |  
|2010                |  | 105.375          | %
|2011                |  | 103.583          | %
|2012                |  | 101.792          | %
|2013 and thereafter |  | 100.000          | %



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Covenants.The Notes contain customary negative covenants including but not limited
to:



| |  |  | limitation on indebtedness;
| | - |  | ---------------------------



| |  |  | limitation on restricted payments;
| | - |  | ----------------------------------



| |  |  | limitation on liens;
| | - |  | --------------------



| |  |  | initial and future subsidiary guarantors; and
| | - |  | ---------------------------------------------



| |  |  | change of control.
| | - |  | ------------------

Off-balance sheet arrangements.As of October 3, 2009, our only off-balance sheet arrangements were letters of credit, in the amount of $1.8 million, issued under our old credit facility primarily to insurance
companies and remain outstanding under our Credit Facility. These letters of credit are held by our insurance carriers in lieu of actual cash deposits and can be called to cover our claims payments if we fail to directly pay the carriers. By
maintaining these letters of credit we are able to utilize the cash for operating purposes and pay minimal fees under the Credit Facility.

There has been no material change in our operating contractual obligations, including our operating leases, other than in the ordinary course of business since the end of fiscal 2008. See our 2008 Form
10-K for additional information regarding our off-balance sheet arrangements and contractual obligations.

Future Capital
Resources.Based upon current operations, anticipated cost savings and future growth, we believe that our cash flows from operations are adequate to meet our anticipated requirements for working capital, capital expenditures and
scheduled principal and interest payments through the next 12 months. Our ability to satisfy our financial covenants under the Credit Facility to meet our debt service obligations and to reduce our debt will depend on our future performance, which
in turn, will be subject to general economic conditions and to financial, business, and other factors, including factors beyond our control. In the event we do not satisfy our financial covenants set forth in the Credit Facility, we may attempt to
renegotiate the terms of the Credit Facility with our lenders for further amendments to, or waivers of, the financial covenants of the Credit Facility. We believe that our ability to repay the Credit Facility at maturity will likely require
additional financing. We cannot assume that additional financing will be available to us. A portion of our debt bears interest at floating rates; therefore, our financial condition is and will continue to be affected by changes in prevailing
interest rates.

Seasonality and Quarterly Results

Our sales fluctuate seasonally. Historically, our highest sales and earnings occur in the first and third fiscal quarters; therefore, quarterly results are not necessarily indicative of results for the
entire year, and the opening of new stores may affect seasonal fluctuations.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

We are exposed to various market risks. Market risk is the potential risk of loss arising from adverse changes in market prices and rates. We do not enter into derivative or other financial instruments
for trading or speculative purposes. There has been no material change in our market risk during the thirteen weeks ended October 3, 2009. For further information, refer to the consolidated financial statements and footnotes thereto included in
our 2008 Form 10-K.



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Our primary market risk exposure is interest rate risk. As of October 3, 2009,
approximately $84.0 million of our long-term debt bore interest at variable rates. Accordingly, our net income is affected by changes in interest rates. For every one hundred basis point change in the average interest rate under our $84.0 million in
long-term borrowings, our annual interest expense would change by approximately $0.8 million.

In the event of an adverse
change in interest rates, we could take actions to mitigate our exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, this analysis assumes no such actions.



|ITEM 4T. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this report. Based upon such evaluation, such officers have concluded that our disclosure controls and procedures are effective as of the end of such period.

There has been no change in our internal controls over financial reporting that occurred during the thirteen weeks ended October 3,
2009 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

We are
a party to routine litigation in the ordinary course of our business. There are no such pending matters, individually or in the aggregate that we believe to be material to our business or our financial condition that has arisen during the thirteen
weeks ended October 3, 2009. For further discussion, please refer to our 2008 Form 10-K.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

In addition
to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors, in our 2008 Form 10-K, filed with the Securities and Exchange Commission on March 24,
2009. The risks described in our 2008 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial
condition and operating results. In our judgment, there were no material changes in the risk factors as previously disclosed in Part I, Item 1A. Risk Factors.



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|ITEM 6. | EXHIBITS
|------- | --------

(a) The following documents
are filed as part of this report.



|     |  |                                                                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.                                               
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.                                               
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURE

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.



|                                  |  |                                                     
|--------------------------------- |  | ----------------------------------------------------
|EYE CARE CENTERS OF AMERICA, INC.
|                                  | 
|Date:                             |  | November 12, 2009                                   
|                                  | 
|by:                               |  | /S/    JENNIFER L.
TAYLOR                           
|                                  |  | Jennifer L. Taylor                                  
|                                  |  | Executive Vice President and Chief Financial Officer



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