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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

|  |  |                                                                                                                                    
|- |  | -----------------------------------------------------------------------------------------------------------------------------------
|X |  | Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended February 2, 2002, or
| 
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|  |  |                                                                                                                                    
| 
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|  |  | 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 33-66342

COLE NATIONAL GROUP,
INC.
(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 34-1744334                          
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. employer identification no.)



|                                                    |  |               
|--------------------------------------------------- |  | --------------
|5915 Landerbrook Drive, Mayfield Heights, Ohio      |  | 44124         
|                                                   
|                                                   
|                                                   
|                                                   
|(Address of principal executive offices)            |  | (Zip code)    
|                                                   
|Registrants telephone number, including area code: |  | (440) 449-4100

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act: None

The registrant meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore filing this form in the reduced
disclosure format.

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X YES  NO

All of the outstanding capital stock of the registrant is held by Cole National
Corporation.

As of March 29, 2002, 1,100 shares of the registrants common stock, $.01 par
value, were outstanding.

Documents incorporated by reference: None



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TABLE OF CONTENTS



|                                                         |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                  
|                                                         | Item 1. Business                                                                             
|                                                         | Item 2. Properties                                                                           
|                                                         | Item 3. Legal Proceedings                                                                    
|                                                         | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II                                                 
|                                                         | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|                                                         | Item 6. Selected Financial Data                                                              
|                                                         | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                         | Item 7a. Quantitative and Qualitative Disclosures About Market Risk                          
|                                                         | Item 8. Financial Statements and Supplementary Data                                          
|                                                         | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                                                
|                                                         | Item 10. Directors and Executive Officers of the Registrant                                  
|                                                         | Item 11. Executive Compensation                                                              
|                                                         | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|                                                         | Item 13. Certain Relationships and Related Transactions                                      
|PART IV                                                 
|                                                         | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES                                              
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
|EX-24                                                   
|EX-99                                                   



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TABLE OF CONTENTS

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|Part I   |  |  |     |  |  |                                                                                       |  | Page
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|         |  |  | 3.  |  |  | Legal Proceedings                                                                     |  |      | 4  | 
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|         |  |  | 4.  |  |  | Submission of Matters to a Vote of Security Holders                                   |  |      | 4  | 
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|Part II  |  |  |     |  |  |                                                                                       |  |      |    | 
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|Item     |  |  | 5.  |  |  | Market for Registrants Common Equity and Related Stockholder Matters                 |  |      | 5  | 
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|         |  |  | 6.  |  |  | Selected Financial Data                                                               |  |      | 5  | 
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|         |  |  | 7.  |  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |      | 6  | 
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|         |  |  | 7a  |  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 10 | 
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|         |  |  | 8.  |  |  | Financial Statements and Supplementary Data                                           |  |      | 11 | 
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|         |  |  | 9.  |  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  |      | 11 | 
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|Part III |  |  |     |  |  |                                                                                       |  |      |    | 
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|Item     |  |  | 10. |  |  | Directors and Executive Officers of the Registrant                                    |  |      | 11 | 
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|         |  |  | 11. |  |  | Executive Compensation                                                                |  |      | 11 | 
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|         |  |  | 12. |  |  | Security Ownership of Certain Beneficial Owners and Management                        |  |      | 11 | 
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|         |  |  | 13. |  |  | Certain Relationships and Related Transactions                                        |  |      | 11 | 
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|Part IV  |  |  |     |  |  |                                                                                       |  |      |    | 
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|Item     |  |  | 14. |  |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  |      | 12 | 





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PART I




Item 1. Business

General

Cole National Group, Inc., a wholly owned subsidiary of Cole National
Corporation, was incorporated as a Delaware corporation in July 1993 as a
successor to companies that began operations approximately 60 years ago. Cole
National Group is a leading provider of vision care products and services,
managed vision care programs and personalized gifts with 2,917 retail locations
in 50 states, Canada and the Caribbean. References herein to the Company
include Cole National Group, its direct and indirect subsidiaries, and its
predecessor companies. The Companys retail vision locations do business
primarily under the names Pearle Vision, Sears Optical, Target Optical
and BJs Optical and its managed vision care programs are offered primarily
through Cole Managed Vision. Collectively these businesses are referred to
herein as Cole Vision. Personalized gifts are offered through retail
locations, e-commerce and catalogs by Things Remembered. The Company believes
that, based on industry data, it is one of the largest retail optical companies
in the world and operates the only nationwide chain of personalized gift
stores. The Company differentiates itself from other specialty retailers by
providing value-added services at the point of sale at all of its retail
locations.

Cole Vision

Cole Vision contributed 75% of the Companys net revenue in fiscal 2001
with 2,143 company-owned and franchised retail locations throughout the United
States, Canada and the Caribbean as of February 2, 2002. The Cole Managed
Vision programs provide vision care benefits to participants through access to
a network of company-owned, franchised and third-party optical locations.

Cole Licensed Brands

Cole Licensed Brands operates principally under the Sears Optical,
Target Optical and BJs Optical names. As of February 2, 2002, Cole
Licensed Brands operated 1,280 retail locations in 47 states and Canada,
including 816 departments on the premises of Sears department stores, 124
freestanding Sears Optical stores, 116 departments in BJs Wholesale Club
stores, and 224 departments in Target stores. Retail locations are generally
operated under a lease or license arrangement through which the host store
collects the sales receipts, retains an agreed upon percentage of sales and
remits the remainder on a weekly or monthly basis.

Locations are, in most cases, retail eyecare stores offering brand name
and private label prescription eyeglasses, contact lenses and accessories,
which make available services of a doctor of optometry who performs complete
eye examinations and prescribes eyeglasses and contact lenses. Most optical
departments, which are typically 1,000 square feet in size, operate with a
department manager and support staff of one to seven associates depending on
store sales volume. In a majority of the stores, eye examination services are
available from independent doctors of optometry, as is often required by state
law, with the remainder being employed by Cole Licensed Brands.

Each of the United States retail locations is computer linked to six
centralized laboratory facilities, which grind, cut and fit lenses to order and
ship them to the stores. The Canadian retail locations are served by a
centralized laboratory located near Toronto. Next day delivery is provided on
most eyewear when requested by customers. All of the frames and most lenses
used in eyeglasses are purchased from outside suppliers, both in the United
States and several foreign countries.

A variety of marketing and promotional efforts, primarily host
advertising, newspaper, direct mail, magazines and yellow pages are used to
build and maintain the customer base for each of the Cole Licensed Brands
stores. Host advertising includes the placement of promotional material within
sales circulars or credit card billings sent out by the host store to its
customers.

The Company believes it has developed excellent relationships with the
host stores in which Cole Licensed Brands operates. The Company has maintained
its relationships in the optical business with Sears for over 40 years.
Although leases and licenses with major hosts are terminable upon relatively
short notice, Cole Licensed Brands has never had a lease terminated other than
in connection with a store closing, relocation or major remodeling.

Pearle

At February 2, 2002, Pearles operations consisted of 423 company-owned
and 440 franchised stores located in 45 states, Canada, and the Caribbean.
Most Pearle stores operate in either an Express or Mainline store format.
Express stores contain a full surfacing lab that can produce most glasses in
approximately one hour. Mainline stores can produce over 50% of

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prescriptions on-site in approximately one hour. Other prescriptions are sent to Pearles
central laboratory in Dallas. At February 2, 2002, 275 of the company-owned
stores and 129 of the franchised stores were Express, with the balance being
Mainline.

The Express stores typically are located in high traffic freestanding,
strip centers and mall locations with most stores averaging 3,000 square feet.
The Express stores are usually staffed with a manager and a support staff of
four to eight associates. Mainline stores have an average size of 1,700 square
feet and are also located in freestanding buildings, or in smaller strip or
regional centers. Mainline stores are usually staffed with a manager and two to
three associates. Most Pearle stores make exams available by on site doctors of
optometry with approximately 80% leasing space from Pearle on an independent
basis with most of the remaining being direct employees of Pearle. In
California, eye exams are provided by doctors of optometry employed by Pearle
Vision Care, Inc. a licensed health care service plan.

Pearles marketing strategy employs a wide range of media at both the
national and local levels. The franchised and company-owned stores each
contribute a percentage of revenues to Pearles marketing budget with a
significant amount of Pearles marketing expenditures devoted to television.
Pearles brand positioning of high quality eyecare products and services has
been reinforced by an advertising and promotions program, which includes
Pearles long standing advertising slogan: Nobody Cares for Eyes More Than
Pearle.

Pearle operates a central lab and distribution center in Dallas that
inventories and distributes a comprehensive product line, including frames,
eyeglass lenses, contact lenses, optical supplies and eyewear accessories to
company-owned and franchised locations.

Pearle has maintained a franchise program since 1980. Most of the
franchised stores are single store franchise operations, with no franchisee
operating more than ten stores. Each franchisee is required to enter into a
franchise agreement requiring payment of an initial franchise fee. The term of
the typical franchise agreement is equal to the lesser of ten years or the term
of the underlying base lease. Royalty and advertising contributions typically
have been based on a percentage of the franchisees gross revenues from the
retail operation, excluding nonsurgical professional fees and third party
revenues. The total monthly advertising contribution is distributed to Pearles
system-wide advertising fund and the local co-op market advertising fund.
Franchisees are generally eligible to participate in Cole Visions managed
vision care programs. In fiscal 2001, 27 new franchise locations were opened.

Cole Managed Vision

Cole Visions managed vision care programs provide comprehensive eyecare
benefits primarily marketed directly to large employers, HMOs and other
organizations. Its Vision One discount program gives plan sponsors the
opportunity to offer their members a group discount at locations within Coles
managed vision care network with minimal direct cost to the plan sponsor. It
also offers enhanced programs to plan sponsors to provide their members with
prepaid eye examinations, as well as pricing discounts or funded materials
benefits.

Cole Managed Vision offers multiple provider panels to its clients,
including a network of more than 20,000 providers. Managed vision care programs
generated approximately 37% of Cole Visions revenues in fiscal 2001.

Things Remembered

Things Remembered contributed 25% of the Companys net revenue in fiscal
2001. As of February 2, 2002, Things Remembered operated 774 stores and kiosks
generally located in large, enclosed shopping malls located in 46 states. Each
location carries a wide assortment of engravable items and provides while you
shop personalization services for any occasion including holiday, wedding,
business recognition and other special occasion gift events. Engraving is
offered for items purchased at the store as well as for items purchased
elsewhere. Customers can also access Things Remembereds broad gift assortment
through its catalogs (1-800-274-7367) and its e-commerce site,
www.thingsremembered.com.

Merchandise sold at Things Remembered stores and through the catalog and
internet consists of a broad selection of moderately priced gift categories and
items at prices generally ranging from $15 to $150. The gift offerings include
writing instruments, clocks, music boxes, picture frames and albums, executive
desk sets and accessories, engravable jewelry, glassware, lighters, keys and
key rings, door knockers and Christmas ornaments. Things Remembered features
brand name merchandise as well as higher margin private label merchandise. At
some locations computer-controlled embroidery equipment is utilized for the
personalization of merchandise, such as throws, pillows, polo shirts,
bathrobes, jackets, baby apparel and baby blankets. These softgoods are also
available in most of Things Remembereds other locations with personalization
services provided from a central fulfillment facility.

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At February 2, 2002, Things Remembered locations consisted of 456 stores
and 318 kiosks. The typical store consists of about 1,300 square feet, while
kiosks, which are units generally located in the center of the common mall
area, are typically 200 square feet in size.

Things Remembered locations are usually operated by one or two employees
during nonpeak periods and up to 15 employees during the peak Christmas
season. Locations typically employ a store manager on a full-time basis, an
assistant store manager on a full or part-time basis and the balance of
employees are part-time sales associates.

Nearly all locations are equipped with computerized engravers and key
duplicating machines. Most stores also have equipment for etching glassware
items. All locations are equipped with point-of-sale terminals.

Most of Things Remembereds store merchandise is shipped through its
centralized warehouse and distribution facility located near Youngstown, Ohio.
The warehouse utilizes a computerized carousel system to automate the process
of locating merchandise needed to fulfill store orders. Systems and support
are also provided to handle e-commerce, catalog and direct mail fulfillment.

Purchasing

The merchandise, supplies and component parts required for the various
products sold by the Company are purchased from a large number of suppliers and
manufacturers and are generally readily available. In most cases, such
purchases are not made under long-term contracts. The Company believes that the
loss of any one supplier or manufacturer would not have a material adverse
effect on its operations.

Competition

The Company operates in highly competitive businesses. Cole Vision
competes with other optical companies, private ophthalmologists, optometrists
and opticians and HMOs and other managed vision care companies in a highly
fragmented marketplace on the basis of the service it provides, as well as
price and product quality. In addition, Pearle competes on the basis of its
highly recognized brand name and one-hour express service. The Company believes
that, based on industry data, Cole Vision is one of the largest optical retail
companies in the world. Although Things Remembered operates the only nationwide
chain of gift stores offering while you shop gift engraving, key duplicating,
glass etching and monogramming, as well as related merchandise, it competes
with many other retailers that sell gift items. Things Remembered competes with
such other retailers primarily on the basis of the value-added point of sale
services, as well as price and product quality. Some competitors have greater
financial resources than the Company.

Employees

As of February 2, 2002, the Company and its subsidiaries had approximately
9,600 full-time employees. This full-time work force is supplemented by 7,400
part-time and seasonal employees. Approximately 140 Pearle employees are
represented by labor unions. The Company considers its present labor relations
to be satisfactory.

Segment Information

Information for the Companys two reportable segments and geographical
information are contained in Note 8 of the Notes to Consolidated Financial
Statements.




Item 2. Properties

The Company leases its executive offices in Mayfield Heights, Ohio.

In January 2001, the Company completed a third party sale and leaseback of
its office facility in Twinsburg, Ohio, which comprises approximately 175,000
square feet of space. The lease expires in 2019 and includes two options to
renew for ten-year terms. Cole Visions home office functions are located in
this facility.

All Cole Licensed Brands retail locations are leased or operated under a
license with the host store, and none of the individual retail locations is
material to operations. Leases for departments operated in Sears, Target and
BJs Wholesale Club stores are terminable upon relatively short notice.
Freestanding stores operated under the name Sears Optical are leased for
five year terms.

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Cole Licensed Brands leases six optical laboratory facilities, located in
Columbus, Ohio; Knoxville, Tennessee (two); Memphis, Tennessee; Salt Lake City,
Utah; and Richmond, Virginia, pursuant to leases expiring (including renewal
options) between 2005 and 2017.

Pearle leases most of their retail stores under noncancelable operating
leases with terms generally ranging from five to ten years and which generally
contain renewal options for additional periods. Pearle is the principal lessee
on a majority of stores operated by franchisees who sublease the facilities
from Pearle.

In January 2002, Pearle completed a sale and leaseback of its Dallas
Support Center, which comprises approximately 129,000 square feet of laboratory
and distribution facilities. The lease expires in 2017 and includes four
options to renew for five-year terms. An adjoining office facility no longer
used for operations was sold in April 2001. Pearle also owns a small
headquarters and laboratory in Puerto Rico.

Cole Vision also leases a home office, an optical laboratory and a
distribution facility, near Toronto, Ontario for its Canadian operations
pursuant to leases expiring in 2004.

Leases for Things Remembered stores and kiosks are generally for terms of
ten and five years, respectively. Things Remembereds home office functions are
located in a 50,000 square foot leased facility in Highland Heights, Ohio. The
lease expires (including renewal options) in 2007. Things Remembered leases its
210,000 square foot warehouse and distribution facility located near
Youngstown, Ohio. The lease expires in 2013 and includes three options to renew
for five-year terms.




Item 3. Legal Proceedings

From time to time during the ordinary course of business, the Company is
threatened with, or may become a party to a variety of legal actions and other
proceedings incidental to its business.

A complaint was filed on February 14, 2002 in the Superior Court of
California, County of San Diego against Cole National Corporation, its
affiliates and certain of its officers by the Attorney General of the State of
California. An amended complaint was filed on February 22, 2002. The case,
captioned State of California v. Cole National Corporation, Cole National
Group, Inc., Cole Vision Corporation, Cole Vision Services, Inc., Pearle, Inc.,
Pearle Vision, Inc., Pearle Visioncare, Inc., Stanley Pearle, Jeffrey Cole,
Peggy Deal, Joseph Gaglioti, Steven Holden, Dennis Osgood, Larry Pollock, David
Sherriff and David Stefko, Case No. GIC783135, alleges claims for various
statutory violations related to the operation of 24 Pearle Vision Centers in
California. The claims include untrue or misleading advertising, illegal
dilation fees, unlawful advertising of eye exams, maintaining an optometrist on
or near the premises by a registered dispensing optometrist, unlawful
advertising of an optometrist, unlicensed practice of optometry, and illegal
relationships between dispensing opticians, optical retailers and optometrists.
The action seeks unspecified damages, restitution and injunctive relief.

The case is in its very early stages. The Company intends to defend the
suit vigorously and believes it is in compliance with California law. The
Company believes that the outcome of the suit will not be material to the
Company.




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

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

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PART II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters

The Registrant is a wholly owned subsidiary of Cole National Corporation
and has no equity securities that trade.

The covenants in certain debt instruments to which the Company and certain
of its subsidiaries are parties restrict the ability of the Company and such
subsidiaries to make distributions to Cole National Corporation or the Company,
respectively. A credit facility to which the Company and its subsidiaries are
parties permits payment of dividends by the Companys subsidiaries to the
Company annually of up to $8.0 million plus 0.25% of the net annual sales of
the Companys subsidiaries to meet expenses of the Company or Cole National
Corporation, together with amounts necessary to pay principal and interest on
the Companys 8-5/8% Senior Subordinated Notes due 2007 and 9-7/8% Senior
Subordinated Notes due 2006 and to meet tax obligations. In addition, dividends
of up to $30.0 million are permitted to repurchase the 8-5/8% notes and/or
9-7/8% notes.

So long as no default or event of default has occurred under the
indentures relating to the 8-5/8% notes and/or the 9-7/8% notes and the Company
has met a specified fixed charge coverage ratio test, payments of dividends to
Cole National Corporation of amounts contributed by Cole National Corporation
to the equity of the Company subsequent to September 30, 1993, plus up to
one-half of the consolidated net income of the Company since October 31, 1993
are permitted. No dividends were paid during 2001, 2000 or 1999.




Item 6. Selected Financial Data

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

Certain information required by this item has been omitted pursuant to
General Instruction I of Form 10-K.

Fiscal years end on the Saturday closest to January 31 and are identified
according to the calendar year in which they begin. For example, the fiscal
year ended February 2, 2002 is referred to as fiscal
2001. Fiscal 2001 and
fiscal 1999 each consisted of a 52-week period, and fiscal 2000 consisted of a
53-week period.

The Company has two reportable segments: Cole Vision, which accounted for
75% of total revenue in fiscal 2001, and Things Remembered, which accounted for
25% of total revenue in fiscal 2001. Most of Cole Visions revenue represents
sales of prescription eyewear, accessories and services through its Cole
Licensed Brands and Pearle retail locations. Cole Visions revenue also
includes sales of merchandise to franchisees, royalties based on franchise
sales, interest income on franchise notes receivable, initial franchise fees
and fees from managed vision care programs. Things Remembereds revenue
represents sales of engravable gift merchandise and personalization and other
services primarily through retail stores and kiosks. See Note 8 of the Notes to
Consolidated Financial Statements for further discussion of reportable
segments.

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Results of Operations

The following is a discussion of the results of continuing operations for
the three fiscal years ended February 2, 2002. This discussion should be read
in conjunction with the consolidated financial statements and notes thereto
included in Item 8 of this Form 10-K. The following table sets forth certain
operating information for each period (dollars in millions):

|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |     |      |   
|---------------------------------------------------- | ----------------------------------- | ------------------- | ----- | ----------- | ------- | ------ | ----- | ----- | ------- | ---- | ----- | ----- | ------- | -- | ---- | -------- | --- | -------- | ---- | --- | ---- | --
|                                                     |                                     |                     |       | Fiscal Year |         | Change
|                                                     |                                     |                     |       |             |         |       
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      | 2001 vs. |     | 2000 vs.
|                                                     |                                     |                     |       | 2001        |         | 2000   |       | 1999  |         | 2000 |       | 1999 
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |      
|Net revenue:                                         |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cole Vision                         |                     | $     | 829.3       |         |        | $     | 800.5 |         |      | $     | 779.0 |         |    |      | 3.6      | %   |          |      | 2.8 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Things Remembered                   |                     |       | 272.0       |         |        |       | 275.9 |         |      |       | 258.6 |         |    |      | (1.4     | )   |          |      | 6.7 |     
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                     |                                     | Total net revenue   |       | $           | 1,101.3 |        |       | $     | 1,076.4 |      |       | $     | 1,037.6 |    |      |          | 2.3 | %        |      |     | 3.7  | % 
|                                                    
|                                                    
|                                                    
|                                                    
|Gross margin                                         |                                     | $                   | 736.6 |             |         | $      | 718.4 |       |         | $    | 673.0 |       |         |    | 2.5  | %        |     |          | 6.7  | %  
|                                                    
|                                                    
|                                                    
|                                                    
|Operating expenses                                   |                                     |                     | 694.4 |             |         |        | 678.5 |       |         |      | 633.1 |       |         |    | 2.4  |          |     |          | 7.2  |    
|                                                    
|                                                    
|                                                    
|                                                    
|Goodwill and tradename amortization                  |                                     |                     | 5.8   |             |         |        | 5.8   |       |         |      | 5.3   |       |         |    | (1.2 | )        |     |          | 10.6 |    
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                     |                                     | Operating income    |       | $           | 36.4    |        |       | $     | 34.1    |      |       | $     | 34.6    |    |      |          | 6.7 | %        |      |     | (1.3 | )%
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                    
|                                                    
|                                                    
|                                                    
|Percentage of net revenue:                           |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Gross margin                        |                     |       | 66.9        | %       |        |       | 66.7  | %       |      |       | 64.9  | %       |    |      | 0.2      |     |          |      | 1.8 |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Operating expenses                  |                     |       | 63.1        |         |        |       | 63.0  |         |      |       | 61.1  |         |    |      | 0.1      |     |          |      | 1.9 |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Goodwill and tradename amortization |                     |       | 0.5         |         |        |       | 0.5   |         |      |       | 0.5   |         |    |      |         |     |          |      |    |     
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                     |                                     | Operating income    |       |             | 3.3     | %      |       |       | 3.2     | %    |       |       | 3.3     | %  |      |          | 0.1 |          |      |     | (0.1 | ) 
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|Number of retail locations at the end
of the period: |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cole Licensed Brands                |                     |       | 1,280       |         |        |       | 1,164 |         |      |       | 1,056 |         |    |      |          |     |          |      |     |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Pearle company-owned                |                     |       | 423         |         |        |       | 439   |         |      |       | 454   |         |    |      |          |     |          |      |     |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Pearle franchised                   |                     |       | 440         |         |        |       | 426   |         |      |       | 416   |         |    |      |          |     |          |      |     |     
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                     |                                     | Total Cole Vision   |       |             | 2,143   |        |       |       | 2,029   |      |       |       | 1,926   |    |      |          |     |          |      |     |      |   
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Things Remembered                   |                     |       | 774         |         |        |       | 784   |         |      |       | 796   |         |    |      |          |     |          |      |     |     
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                     |                                     | Total Cole National |       |             | 2,917   |        |       |       | 2,813   |      |       |       | 2,722   |    |      |          |     |          |      |     |      |   
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|Comparable store sales growth:                       |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cole Licensed Brands (U.S.)         |                     |       | 3.8         | %       |        |       | 3.7   | %       |      |       | (2.7  | )%      |    |      |          |     |          |      |     |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Pearle company-owned (U.S.)         |                     |       | 2.6         |         |        |       | 2.0   |         |      |       | (5.5  | )       |    |      |          |     |          |      |     |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                     | Total Cole Vision   |       |             | 2.6     |        |       |       | 3.1     |      |       |       | (3.5    | )  |      |          |     |          |      |     |      |   
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Things Remembered                   |                     |       | (1.8        | )       |        |       | 5.4   |         |      |       | 7.2   |         |    |      |          |     |          |      |     |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                     | Total Cole National |       |             | 1.4     | %      |       |       | 3.7     | %    |       |       | (0.8    | )% |      |          |     |          |      |     |      |   
|                                                     |                                     |                     |       |             |         |        |       |       |         |      |       |       |         |    |      |          |     |          |      |    
|Pearle U. S. Franchise stores                        |                                     |                     |      | %           |         |        | 3.3   | %     |         |      | 0.4   | %     |         |    |      |          |     |          |      |    
|                                                    
|                                                    
|                                                    
|                                                    
|Pearle U. S. chain-wide                              |                                     |                     | 1.2   | %           |         |        | 2.7   | %     |         |      | (2.4  | )%    |         |    |      |          |     |          |      |    

7



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##### Table of Contents



Fiscal 2001 Compared to Fiscal 2000

The increase in net revenue for fiscal 2001 was attributable to increases
in consolidated comparable store sales, the Target Optical expansion, growth in
managed vision care revenue and increases in direct channel revenues (both
catalog and Internet) at Things Remembered. These increases were partially
offset by one less week of revenue in fiscal 2001. The 53rd week in fiscal 2000
provided approximately $18.5 million in revenue.

At Cole Licensed Brands, the comparable store sales increased by 3.8%
primarily reflecting an increase in the average spectacle selling price. At
Pearle company-owned stores, the comparable store sales increased 2.6%
reflecting an increase in average transaction selling price for the first nine
months and an increase in the number of transactions for the fourth quarter.
The increase in average transaction selling price was due, in part, to not
repeating
a 50% off frame promotion that ran during the entire first quarter of fiscal
2000. At Things Remembered, the comparable store sales decline was attributable
to the general slowdown in mall traffic which worsened following the events of
September 11 and from not repeating February 2000s aggressive merchandise
clearance promotion. However, the average transaction selling price increased
as a result of sales of new merchandise at higher average unit retails, more
personalization and less promotion.

The gross margin dollar increase in fiscal 2001 resulted from increased
net revenue at Cole Vision and improvements in gross margin rate at Things
Remembered. The gross margin rate at Cole Vision was flat compared to the prior
year, inclusive of a 0.7 percentage point decline in the second half of fiscal 2001 primarily
because more customers selected merchandise from Cole Licensed Brands new,
higher cost frame assortment at Sears. Higher revenue from managed vision care
partially offset the impact of the decline in frame margins in fiscal 2001. The
offset equaled 0.3% of the gross margin rate. At Things Remembered, the gross
margin rate improved 0.5 percentage points compared to the prior year
reflecting the improvement in average selling price and less inventory
shrinkage.

Operating expenses as a percentage of net revenue were flat with fiscal
2000. The dollar increase in operating expenses was primarily due to higher
store payroll, store occupancy and other store costs incurred to support the
increases in revenues and the Target Optical expansion. The Company opened 107
new Target Optical stores during fiscal 2001. Operating margin improvements
from non-store overhead expenses and reduced advertising expenditures were
offset by the negative operating margin impact of fixed payroll and occupancy
costs due to lower sales volume following September 11. In fiscal 2000,
operating expenses also included a $1.8 million first quarter severance charge
in connection with a personnel reduction at Cole Vision.

In fiscal 2001, the Companys operating income improved 6.7% from $34.1
million to $36.4 million while maintaining expense ratios despite one less week
of sales, the absorption of increased losses from the continued expansion of
Target Optical and the third quarter decrease in operating expense leverage
attributable to the modest growth in net revenues following September 11.
The losses associated
with the Target Optical expansion are expected to decline as older stores ramp up to
profitability, as a result of the new focus on opening only in Super Target stores
 and with a switch from fixed to percentage rent. The average time to store level profitability
is also expected to reduce.

Interest and other (income) expense, net, decreased $1.9 million in fiscal
2001. Contributing factors included one less week of interest expense, no
seasonal borrowing during fiscal 2001 and higher interest income from increased
temporary cash investments and a $0.7 million gain from the sale of a Dallas
office facility no longer needed for Pearles operations.

The effective income tax rate was 53.0% in fiscal 2001 compared to 69.8%
in fiscal 2000. The effective rates are significantly above the statutory rate
because of the impact of nondeductible goodwill. The decrease in the rate for
fiscal 2001 versus fiscal 2000 was primarily a result of the increase in pretax
income. A more complete discussion of income taxes is included in Note 6 of the
Notes to Consolidated Financial Statements.

Fiscal 2000 Compared to Fiscal 1999

The increase in net revenue for fiscal 2000 was primarily attributable to
increases in consolidated comparable store sales, the 53rd week, revenue
associated with the MetLife vision care business acquired in October 1999 and
the Target Optical expansion. These increases were partially offset by the
closing of poor performing stores at Pearle and Things Remembered and the
closing of 150 optical departments at Montgomery Ward in December 1999. See
Note 2 of the Notes to Consolidated Financial Statements for further discussion
of the closing of the Montgomery Ward departments.

At Cole Licensed Brands and Pearle company-owned stores, the comparable
store sales increases primarily reflected increases in the average selling
price. The number of transactions at Cole Licensed Brands was even with last
year. At Pearle company-owned stores, the average transaction increase was
partially offset by a decrease in the number of transactions during the first
half of the year. At Things Remembered, the comparable store sales
increase reflected an increase in sales of new merchandise at higher average
unit retails.

8



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##### Table of Contents



The gross margin dollar increase was attributable to the revenue increase
at Pearle and Things Remembered, the additional revenue associated with the
MetLife vision care business and an improvement in gross margin as a percentage
of net revenue. The improvement in the gross margin rate was primarily the
result of higher average selling prices in the optical businesses. Other
factors in the improvement were additional MetLife vision
care revenues, resolution of problems experienced during 1999s integration of
new manufacturing and merchandise/inventory management systems at Pearle and
1999s inventory write-off due to the closing of the Ward Optical departments.
At Cole Vision, the gross margin rate improved 2.5 percentage points in fiscal
2000 compared to fiscal 1999. The gross margin rate at Things Remembered
decreased 0.3 percentage points to fiscal 1999 reflecting the impact of an
aggressive merchandise clearance promotion in the first quarter of fiscal 2000.

The fiscal 2000 operating expense increase was due primarily to increases
in staffing for improved service levels in the optical businesses, increases in
expenses associated with the 53rd week and the Target Optical expansion,
increases in managed vision care costs (primarily associated with the MetLife
vision care business) and increases in incentive bonus expense due to improved
performance at Cole Vision. As a percentage of net revenue, operating expenses
lost leverage in fiscal 2000 because payroll costs increased 2.0 percentage
points compared to a year ago for the reasons discussed above. A decline in
comparable store sales at Pearle company-owned stores during the first six
months of fiscal 2000 and a $1.8 million first quarter 2000 charge for
severance costs recorded in connection with a personnel reduction at Cole
Vision also impacted the comparison.

Operating income in fiscal 2000 was slightly below fiscal 1999 reflecting
improved operating results at both Cole Vision and Things Remembered offset by
increased Corporate expenses and the first quarter severance costs. The
operating income at Cole Vision improved despite absorbing increased losses
associated with the Target Optical start up and store opening program.

Interest and other (income) expense, net, increased in fiscal 2000
compared to fiscal 1999 because of increased interest expense from the 53rd
week, seasonal borrowing and less income from reduced temporary cash
investments.

The effective income tax rate was 69.8% in fiscal 2000 compared to 47.4%
in fiscal 1999. The rates reflect the significant impact of nondeductible
goodwill in both years. In fiscal 2000, the increase in rate was primarily a result of the lower pretax income.

Significant Accounting Policies

Management relies on the use of estimates and makes assumptions that
impact the Companys financial position and results of operations. These
estimates are based on historical results and trends as well as our forecasts
as to how these might change in the future. A more complete discussion of the
Companys accounting policies is included in Note 1 of the Notes to
Consolidated Financial Statements. Some of the most critical accounting
policies that might materially impact the Companys results include:

Allowance for Doubtful Accounts Most of the Companys accounts and notes
receivable are due from Licensed Brands host stores, managed vision care
accounts and Pearle franchisees. Estimates are used in determining the
Companys allowance for bad debts and are based on historical experience,
current trends, credit policy and a percentage of accounts receivable by aging
category.

Reserve for Excess and Obsolete Inventory Inventories are valued at the lower
of cost or market value and have been reduced by a reserve for excess and
obsolete inventories. The estimated reserve is based on managements review of
inventories on hand compared to estimated future usage and sales. Factors
considered include inventory age, condition and whether reorder of the product
has been or is about to be discontinued.

Valuation of Systems Development Costs and Software Systems development costs
and software are amortized over the useful life of the software. Useful lives
are based on managements estimates of the period the software will be in
service. These assets are reviewed for impairment whenever events or changes in
circumstances indicate that the softwares future usefulness has been adversely
impacted.

Valuation of Long-Lived Assets Property and equipment, goodwill and other
intangibles are amortized over their useful lives. Useful lives are based on
managements estimates of the period that the assets will generate revenue.
These assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. The
Company is subject to financial statement risk to the extent goodwill and
tradenames become impaired. A discussion of the fiscal 2002 impact of a change
in accounting required by the Financial Accounting Standards Board (FASB) that
will affect the Companys accounting for goodwill and
tradenames is included in New Accounting Pronouncements below.

9



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##### Table of Contents



Valuation of Deferred Income Taxes Deferred tax assets and liabilities are
recognized based on the differences between the financial statement carrying
amounts and the tax bases of assets and liabilities. Management regularly
reviews its deferred tax assets for recoverability and establishes a valuation
allowance for tax assets based on historical taxable income, projected future
taxable income and the expected timing of the reversals of existing temporary
differences. In determining the valuation allowance related to deferred tax
assets, management estimates taxable income into the future. Future taxable
income could be materially different from amounts estimated, in which case the
valuation allowance and future net income would need to be adjusted.

New Accounting Pronouncements

In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 142, Goodwill and Other Intangible Assets (SFAS 142). This statement
requires that goodwill and certain intangible assets deemed to have indefinite
useful lives will no longer be amortized, but instead, will be subject to
annual reviews for impairment. The Company will apply these rules in accounting
for its goodwill and tradenames beginning in the first quarter of fiscal 2002.
The Company is in the process of quantifying the impact of adopting each of the
provisions of SFAS 142.

Amortization of goodwill and tradenames totaled $5.8 million in fiscal
2001. A substantial portion of the goodwill amortization is nondeductible for
tax purposes. Upon adoption of SFAS 142, the Company expects to stop amortizing
goodwill and tradenames which would have the effect of increasing net income
and reducing the Companys annual effective tax rate.

The FASB has also issued Statement of Financial Accounting Standards No.
141, Business Combinations (SFAS 141), No. 143 Accounting for Asset
Retirement Obligations (SFAS 143) and No. 144 Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS 144). SFAS 141 changes the accounting
for business combinations by, among other things, prohibiting the use of the
pooling of interests method. SFAS 143 provides guidance for legal obligations
arising from the retirement of long-lived assets. SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
None of these standards is expected to have a material effect on the Companys
financial position or operations.

Forward-Looking Information

The Companys management expects its continued emphasis on becoming better
retailers to have an ongoing positive impact on the Companys results in
fiscal 2002, enabling the Company to continue the earnings turnaround that
began with the fourth quarter 2000. Management estimates that net income could
increase approximately 15% to 20% in fiscal 2002 from fiscal 2001 with fiscal
2001 adjusted for the pro forma impacts of SFAS 142 and fiscal 2002s estimated
annual effective tax rate of 40%. Achieving these results assumes, among other
things, that the current economic environment does not worsen.

Certain sections of this Annual Report Form 10-K, including this
Managements Discussion and Analysis, contain forward-looking statements within
the meaning of the Private Securities Litigation Act of 1995. Actual results
may differ materially from those forecast due to a variety of factors that can
adversely affect operating results, liquidity and financial condition, such as
risks associated with the timing and achievement of improvements in the
operations of the optical business, the nature and extent of disruptions of the
economy from terrorist activities and from governmental and consumer responses
to such acts, the success of new store openings and the rate at which new
stores achieve profitability, the Companys relationships with host stores and
franchisees, the Companys ability to select, stock and price merchandise
attractive to customers, success of systems development and integration,
competition and regulation in the optical industry, integration of acquired businesses,
economic, political and weather factors affecting consumer spending, operating
factors affecting customer satisfaction, including manufacturing quality of
optical and engraved goods, the mix of goods sold, pricing and other
competitive factors, the seasonality of the Companys business and the actual
effect of implementation of new accounting standards. Forward-looking
statements are made based upon managements expectations and beliefs concerning
future events impacting the Company. All forward-looking statements involve
risk and uncertainty.




Item 7a. Quantitative and Qualitative Disclosures About Market Risk

The Companys major market risk exposure is to changes in foreign currency
exchange rates, which could impact its results of operations and financial
condition. Foreign exchange risk arises from the Companys exposure to
fluctuations in foreign currency exchange rates because the Companys reporting
currency is the United States dollar. Management seeks to minimize the exposure
to foreign currency fluctuations through natural internal offsets to the
fullest extent possible.

10



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##### Table of Contents






Item 8. Financial Statements and Supplementary Data

Information required by this item appears on pages F-1 through F-22 of
this Form 10-K and is incorporated herein by reference. Other financial
statements and schedules are filed herewith as Financial Statement Schedules
pursuant to Item 14.




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Arthur Andersen LLP has been the independent auditor of the Company, and
the Company presently intends to utilize Arthur Andersen LLP in the review of
its quarterly results during the fiscal year ending February 1, 2003.

However, in light of the current environment, the Audit Committee has met
with senior management of Arthur Andersen LLP and is closely monitoring the
evolving events. The Audit Committee has taken appropriate contingency
planning steps to interview and evaluate other independent auditors in the
event that the Audit Committee exercises its right to change independent
auditors.




PART III




Item 10. Directors and Executive Officers of the Registrant

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.




Item 11. Executive Compensation

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.




Item 12. Security Ownership of Certain Beneficial Owners and Management

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.




Item 13. Certain Relationships and Related Transactions

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

11



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##### Table of Contents






PART IV




Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

|               |  |                                                                                                                                                                                                                                                      
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)(1) and (2) |  | Financial Statements and Financial Statement Schedules                                                                                                                                                                                               
|              
|              
|              
|              
|               |  | The consolidated financial statements and the related financial
statement schedules filed as part of this Form 10-K for Cole
National Group, Inc. and its consolidated subsidiaries are located
as set forth in the index on page F-1 of this report.
|              
|(a)(3)         |  | Exhibits                                                                                                                                                                                                                                             
|              
|              
|              
|              
|               |  | See Exhibit Index on pages X-1 through X-4.                                                                                                                                                                                                          
|              
|(b)            |  | Reports on Form 8-K                                                                                                                                                                                                                                  
|              
|              
|              
|              
|               |  | No reports on Form 8-K have been filed by the Registrant during the
quarter ended February 2, 2002.                                                                                                                                                  

Supplemental information to be furnished with reports filed pursuant to Section
15(d) of the Act by Registrants which have not registered securities pursuant
to Section 12 of the Act.

No annual report or proxy statement covering Cole National Groups last
fiscal year has been or will be circulated to security holders.

12



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of section 13 or 15(d) 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.

|               |  |                                                                                                                     
|-------------- |  | --------------------------------------------------------------------------------------------------------------------
|               |  | COLE NATIONAL GROUP, INC.                                                                                           
|              
|              
|              
|              
|April 15, 2002 |  | By: /s/ Tracy L. Burmeister.

             Tracy L. Burmeister
             Vice President, Accounting and Reporting

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

|                                             |  |                                                                                    |  |               
|-------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | --------------
|*

Jeffrey A. Cole                           |  | Chairman and Chief Executive Officer
and Director (Principal Executive Officer)    |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*
Larry Pollock                              |  | President and Chief Operating Officer
and Director                                 |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*

Thomas T.S. Kaung                         |  | Executive Vice President and
Chief Financial Officer
(Principal Financial Officer) |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|/s/ Tracy L. Burmeister

Tracy L. Burmeister |  | Vice President, Accounting and Reporting
(Principal Accounting Officer)            |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*

Timothy F. Finley                         |  | Director                                                                           |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*

Irwin N. Gold                             |  | Director                                                                           |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*
Melchert Frans Groot                       |  | Director                                                                           |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*

Peter V. Handal                           |  | Director                                                                           |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*

Charles A. Ratner                         |  | Director                                                                           |  | April 15, 2002
|                                            
|                                            
|                                            
|                                            
|*

Walter J. Salmon                          |  | Director                                                                           |  | April 15, 2002

*     The undersigned, by signing his name hereto, does sign and execute this
report on Form 10-K pursuant to the Powers of Attorney executed by the
above-named officers and directors of Cole National Group, Inc. and which are
being filed herewith with the Securities and Exchange Commission on behalf of
such officers and directors.

|                                                                     |  | 
|-------------------------------------------------------------------- |  | 
|                                                                     |  | 
|/s/ Tracy L. Burmeister

      Tracy L. Burmeister, Attorney-in-Fact |  | 

13



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##### Table of Contents






INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

|                                                                                                                                                                                                  |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                                  |  | Page
|                                                                                                                                                                                                  |  |     
|Report of Independent Public Accountants                                                                                                                                                          |  | F-2 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Consolidated Balance Sheets as of February 2, 2002 and February 3, 2001                                                                                                                           |  | F-3 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Consolidated Statements of Operations for the 52 weeks ended February 2, 2002,   the
53 weeks ended February 3, 2001 and the 52 weeks ended January 29, 2000                                      |  | F-4 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Consolidated Statements of Cash Flows for the 52 weeks ended February 2, 2002,   the
53 weeks ended February 3, 2001 and the 52 weeks ended January 29, 2000                                      |  | F-5 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Consolidated Statements of Stockholders Equity and Comprehensive Income for   the
52 weeks ended February 2, 2002, the 53 weeks ended February 3, 2001 and   the
52 weeks ended January 29, 2000 |  | F-6 
|                                                                                                                                                                                                 
|Notes to Consolidated Financial Statements                                                                                                                                                        |  | F-7 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Financial Statement Schedules:                                                                                                                                                                    |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Report of Independent Public Accountants on the Financial Statement Schedules                                                                                                                     |  | F-19
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Schedule I  Condensed Financial Information of Registrant                                                                                                                                        |  | F-20
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                  |  |     
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|                                                                                                                                                                                                 
|Schedule II  Valuation and Qualifying Accounts                                                                                                                                                   |  | F-23

All financial statement schedules not included have been omitted because they
are not applicable or because the required information is otherwise furnished.

F-1



---



##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Cole National Group, Inc.:

We have audited the accompanying consolidated balance sheets of Cole National
Group, Inc. (a Delaware corporation) and Subsidiaries as of February 2, 2002
and February 3, 2001, and the related consolidated statements of operations,
cash flows and stockholders equity and comprehensive income for each of the
three years in the period ended February 2, 2002. These financial statements
are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cole National Group, Inc. and
Subsidiaries as of February 2, 2002 and February 3, 2001, and the results of
their operations and their cash flows for each of the three years in the period
ended February 2, 2002 in conformity with accounting principles generally
accepted in the United States.

ARTHUR ANDERSEN LLP

Cleveland, Ohio,
March 19, 2002.

F-2



---



##### Table of Contents



COLE NATIONAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |         | 
|---------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | ------- | ----------- | ------- | -------- | ------- | 
|                                                                                                                       |                                                                                                |                                            |         | February 2, |         | February 3,
|                                                                                                                       |                                                                                                |                                            |         | 2002        |         | 2001       
|                                                                                                                       |                                                                                                |                                            |         |             |         |            
|Assets                                                                                                                 |                                                                                                |                                            |         |             |         |             |         |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Current assets:                                                                                                        |                                                                                                |                                            |         |             |         |             |         |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Cash and cash equivalents                                                                      |                                            | $       | 63,656      |         |             | $       | 36,725   |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accounts receivable, less allowance for doubtful accounts
of $4,008 in 2001 and $7,348 in 2000 |                                            |         | 39,544      |         |             |         | 40,429   |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Current portion of notes receivable                                                            |                                            |         | 2,825       |         |             |         | 4,272    |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Inventories                                                                                    |                                            |         | 111,098     |         |             |         | 122,238  |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Refundable income taxes                                                                        |                                            |         | 502         |         |             |         | 571      |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Prepaid expenses and other                                                                     |                                            |         | 22,613      |         |             |         | 16,154   |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Deferred income tax benefits                                                                   |                                            |         | 430         |         |             |         | 2,009    |        
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|                                                                                                                       |                                                                                                | Total current assets                       |         |             | 240,668 |             |         |          | 222,398 | 
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Property and equipment, at cost                                                                                        |                                                                                                |                                            | 291,148 |             |         |             | 284,794 |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Less  accumulated depreciation and amortization                                               |                                            |         | (169,851    | )       |             |         | (161,775 | )      
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|                                                                                                                       |                                                                                                | Total property and equipment, net          |         |             | 121,297 |             |         |          | 123,019 | 
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Notes receivable, excluding current portion, less allowance for
doubtful accounts of $5,209 in 2001 and $4,537 in 2000 |                                                                                                |                                            | 3,899   |             |         |             | 6,573   |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Deferred income tax benefits and other assets                                                                          |                                                                                                |                                            | 49,371  |             |         |             | 57,422  |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Intangible assets, net                                                                                                 |                                                                                                |                                            | 146,544 |             |         |             | 151,588 |         
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|                                                                                                                       |                                                                                                | Total assets                               |         | $           | 561,779 |             |         | $        | 561,000 | 
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|Liabilities
and Stockholders Equity                                                                                  
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Current liabilities:                                                                                                   |                                                                                                |                                            |         |             |         |             |         |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Current portion of long-term debt                                                              |                                            | $       | 54          |         |             | $       | 49       |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accounts payable                                                                               |                                            |         | 57,242      |         |             |         | 55,644   |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Payable to affiliates, net                                                                     |                                            |         | 73,548      |         |             |         | 81,789   |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accrued interest                                                                               |                                            |         | 6,130       |         |             |         | 6,337    |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accrued liabilities                                                                            |                                            |         | 78,725      |         |             |         | 76,620   |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accrued income taxes                                                                           |                                            |         | 546         |         |             |         | 502      |        
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|                                                                                                                       |                                                                                                | Total current liabilities                  |         |             | 216,245 |             |         |          | 220,941 | 
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Long-term debt, net of discount and current portion                                                                    |                                                                                                |                                            | 274,318 |             |         |             | 274,262 |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Other long-term liabilities                                                                                            |                                                                                                |                                            | 12,040  |             |         |             | 11,506  |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Stockholders equity:                                                                                                  |                                                                                                |                                            |         |             |         |             |         |         
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Common stock                                                                                   |                                            |         |            |         |             |         |         |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Paid-in capital                                                                                |                                            |         |            |         |             |         | 195,676  |        
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accumulated other comprehensive loss                                                           |                                            |         |            |         |             |         | (1,198   | )      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                       | Accumulated deficit                                                                            |                                            |         |            |         |             |         | (135,302 | )      
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|                                                                                                                       |                                                                                                | Total stockholders equity                 |         |             |        |             |         |          | 59,176  | 
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        
|                                                                                                                       |                                                                                                | Total liabilities and stockholders equity |         | $           | 502,603 |             |         | $        | 561,779 | 
|                                                                                                                       |                                                                                                |                                            |         |             |         |             |         |          |        

The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.

F-3



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##### Table of Contents



COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)

|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |         |           | 
|------------------------------------ | ----------------------------------- | ---------------------------------------------- | --------- | ----------- | --------- | ----------- | --------- | ----------- | --------- | - | --------- | ------- | --------- | 
|                                     |                                     |                                                |           | Fifty-Two   |           | Fifty-Three |           | Fifty-Two  
|                                     |                                     |                                                |           | Weeks Ended |           | Weeks Ended |           | Weeks Ended
|                                     |                                     |                                                |           | February 2, |           | February 3, |           | January 29,
|                                     |                                     |                                                |           | 2002        |           | 2001        |           | 2000       
|                                     |                                     |                                                |           |             |           |             |           |            
|Net revenue                          |                                     | $                                              | 1,101,333 |             |           | $           | 1,076,420 |             |           | $ | 1,037,581 |        
|                                    
|                                    
|                                    
|                                    
|Costs and expenses:                  |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|                                    
|                                    
|                                    
|                                    
|                                     | Cost of goods sold                  |                                                |           | 364,752     |           |             |           | 358,030     |           |   |           | 364,580 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Operating expenses                  |                                                |           | 694,450     |           |             |           | 678,456     |           |   |           | 633,162 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Goodwill and tradename amortization |                                                |           | 5,769       |           |             |           | 5,840       |           |   |           | 5,279   |          
|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|                                     |                                     | Total costs and expenses                       |           |             | 1,064,971 |             |           |             | 1,042,326 |   |           |         | 1,003,021 | 
|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|Operating income                     |                                     |                                                | 36,362    |             |           |             | 34,094    |             |           |   | 34,560    |        
|                                    
|                                    
|                                    
|                                    
|Interest and other (income) expense: |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|                                    
|                                    
|                                    
|                                    
|                                     | Interest expense                    |                                                |           | 27,553      |           |             |           | 28,402      |           |   |           | 27,405  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Interest and other income           |                                                |           | (1,632      | )         |             |           | (541        | )         |   |           | (722    | )        
|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|                                     |                                     | Total interest and other (income) expense, net |           |             | 25,921    |             |           |             | 27,861    |   |           |         | 26,683    | 
|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|Income before income taxes           |                                     |                                                | 10,441    |             |           |             | 6,233     |             |           |   | 7,877     |        
|                                    
|                                    
|                                    
|                                    
|Income tax provision                 |                                     |                                                | 5,530     |             |           |             | 4,350     |             |           |   | 3,737     |        
|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |        
|Net income                           |                                     | $                                              | 4,911     |             |           | $           | 1,883     |             |           | $ | 4,140     |        
|                                     |                                     |                                                |           |             |           |             |           |             |           |   |           |        

The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.

F-4



---



##### Table of Contents



COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |        |         |         |  
|------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ----------------------------------------------------------- | ---------------------------------------------------- | ------ | ----------- | ------- | ----------- | ------ | ----------- | ------- | ------- | ------ | ------- | ------- | -
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        | Fifty-Two   |         | Fifty-Three |        | Fifty-Two  
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        | Weeks Ended |         | Weeks Ended |        | Weeks Ended
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        | February 2, |         | February 3, |        | January 29,
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        | 2002        |         | 2001        |        | 2000       
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |            
|Cash flows from operating activities: |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Net income                                                                        |                                                                                 | $                                                           | 4,911                                                |        |             | $       | 1,883       |        |             | $       | 4,140   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Depreciation and amortization                                                   |                                                             |                                                      | 39,445 |             |         |             | 37,351 |             |         |         | 38,485 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Non-cash interest, net                                                          |                                                             |                                                      | 1,205  |             |         |             | 1,150  |             |         |         | 1,050  |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Gain on sale of fixed assets                                                    |                                                             |                                                      | (683   | )           |         |             |       |             |         |         |       |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Deferred income tax provision                                                   |                                                             |                                                      | 818    |             |         |             | 2,528  |             |         |         | 3,239  |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Increases (decreases) in cash resulting from changes in
assets and liabilities: |                                                             |                                                      |        |             |         |             |        |             |         |         |        |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                 | Accounts and notes receivable, prepaid expenses             |                                                      |        | (1,519      | )       |             |        | (3,826      | )       |         |        | 4,871   |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                 | Inventories                                                 |                                                      |        | 10,929      |         |             |        | (5,724      | )       |         |        | 3,367   |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                 | Accounts payable, accrued liabilities and other liabilities |                                                      |        | 3,228       |         |             |        | (369        | )       |         |        | (32,481 | )      
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                 | Accrued interest                                            |                                                      |        | (207        | )       |             |        | 247         |         |         |        | (126    | )      
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                 | Accrued, refundable and deferred income taxes               |                                                      |        | 7,292       |         |             |        | 433         |         |         |        | 1,559   |        
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|                                      |                                                                                   |                                                                                 |                                                             | Net cash provided by operating activities            |        |             | 65,419  |             |        |             | 33,673  |         |        |         | 24,104  |  
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|Cash flows from investing activities: |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Purchases of property and equipment, net                                          |                                                                                 |                                                             | (35,122                                              | )      |             |         | (35,030     | )      |             |         | (25,877 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Net proceeds from sale and sale/leasebacks of fixed assets                        |                                                                                 |                                                             | 12,481                                               |        |             |         |            |        |             |         |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Systems development costs                                                         |                                                                                 |                                                             | (6,875                                               | )      |             |         | (8,444      | )      |             |         | (13,639 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Acquisitions of businesses, net of cash acquired                                  |                                                                                 |                                                             | (747                                                 | )      |             |         |            |        |             |         |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                        |                                                                                 |                                                             | (728                                                 | )      |             |         | 127         |        |             |         | (2,618  | )     
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|                                      |                                                                                   |                                                                                 |                                                             | Net cash used for investing activities               |        |             | (30,991 | )           |        |             | (43,347 | )       |        |         | (42,134 | )
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|Cash flows from financing activities: |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Repayment of long-term debt                                                       |                                                                                 |                                                             | (42                                                  | )      |             |         | (576        | )      |             |         | (409    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Advances from (to) affiliates, net                                                |                                                                                 |                                                             | (7,360                                               | )      |             |         | 18,971      |        |             |         | (3,848  | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Payment of deferred financing fees                                                |                                                                                 |                                                             |                                                     |        |             |         | (422        | )      |             |         | (281    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                        |                                                                                 |                                                             | (95                                                  | )      |             |         | (527        | )      |             |         | 464     |       
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|                                      |                                                                                   |                                                                                 |                                                             | Net cash provided by (used for) financing activities |        |             | (7,497  | )           |        |             | 17,446  |         |        |         | (4,074  | )
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|Cash and cash equilvalents:           |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Net increase (decrease) during the period                                         |                                                                                 |                                                             | 26,931                                               |        |             |         | 7,772       |        |             |         | (22,104 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Balance, beginning of the period                                                  |                                                                                 |                                                             | 36,725                                               |        |             |         | 28,953      |        |             |         | 51,057  |       
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       
|                                      | Balance, end of the period                                                        |                                                                                 | $                                                           | 63,656                                               |        |             | $       | 36,725      |        |             | $       | 28,953  |       
|                                      |                                                                                   |                                                                                 |                                                             |                                                      |        |             |         |             |        |             |         |         |       

The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.

F-5



---



##### Table of Contents



COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
(Dollars in thousands )

|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|------------------------------------- | ------------------------------------- | - | ----------- | -------- | ----------- | - | ----------- | -------- | - | - | ------ | -------- | -
|                                      |                                       |   | February 2, |          | February 3, |   | January 29,
|                                      |                                       |   | 2002        |          | 2001        |   | 2000       
|                                      |                                       |   |             |          |             |   |            
|Common Stock:                         |                                       |   |             |          |             |   |             |          |   |   |        |         
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at beginning of period        |   | $           |         |             |   | $           |         |   |   | $      |         |  
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at end of period              |   |             |         |             |   |             |         |   |   |        |         |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|Paid-in Capital:                      |                                       |   |             |          |             |   |             |          |   |   |        |         
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at beginning of period        |   |             | 195,162  |             |   |             | 195,162  |   |   |        | 195,139  |  
|                                     
|                                     
|                                     
|                                     
|                                      | Tax benefit of stock option exercises |   |             | 514      |             |   |             |         |   |   |        | 23       |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|                                      | Balance at end of period              |   |             | 195,676  |             |   |             | 195,162  |   |   |        | 195,162  |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|Accumulated Deficit:                  |                                       |   |             |          |             |   |             |          |   |   |        |         
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at beginning of period        |   |             | (140,213 | )           |   |             | (142,096 | ) |   |        | (146,236 | )
|                                     
|                                     
|                                     
|                                     
|                                      | Net income                            |   |             | 4,911    |             |   |             | 1,883    |   |   |        | 4,140    |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|                                      | Balance at end of period              |   |             | (135,302 | )           |   |             | (140,213 | ) |   |        | (142,096 | )
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|Accumulated Other Comprehensive Loss: |                                       |   |             |          |             |   |             |          |   |   |        |         
|                                     
|                                     
|                                     
|                                     
|                                      | Balance at beginning of period        |   |             | (658     | )           |   |             | (117     | ) |   |        | (657     | )
|                                     
|                                     
|                                     
|                                     
|                                      | Other comprehensive income (loss)     |   |             | (540     | )           |   |             | (541     | ) |   |        | 540      |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|                                      | Balance at end of period              |   |             | (1,198   | )           |   |             | (658     | ) |   |        | (117     | )
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|Total Stockholders Equity            |                                       | $ | 59,176      |          |             | $ | 54,291      |          |   | $ | 52,949 |         
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|Comprehensive Income:                 |                                       |   |             |          |             |   |             |          |   |   |        |         
|                                     
|                                     
|                                     
|                                     
|                                      | Net income                            |   | $           | 4,911    |             |   | $           | 1,883    |   |   | $      | 4,140    |  
|                                     
|                                     
|                                     
|                                     
|                                      | Cumulative translation adjustment     |   |             | (540     | )           |   |             | (541     | ) |   |        | 540      |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  
|                                      | Total comprehensive income            |   | $           | 4,371    |             |   | $           | 1,342    |   |   | $      | 4,680    |  
|                                      |                                       |   |             |          |             |   |             |          |   |   |        |          |  

The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.

F-6



---



##### Table of Contents



COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(1) |  | Summary of Significant Accounting Policies
|--- |  | ------------------------------------------

Basis of Presentation



| |                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cole National Group, Inc. is a wholly owned subsidiary of Cole
National Corporation. The consolidated financial statements include the
accounts of Cole National Group and its wholly owned subsidiaries
(collectively, the Company). All significant intercompany transactions
have been eliminated in consolidation.      
|
| | Fiscal years end on the Saturday closest to January 31 and are
identified according to the calendar year in which they begin. For
example, the fiscal year ended February 2, 2002 is referred to as fiscal
2001. Fiscal 2001 and fiscal 1999 each consisted of 52-week periods,
fiscal 2000 consisted of a 53-week period.

Nature of Operations



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is a specialty service retailer operating in both host
and non-host environments, whose primary lines of business are eyewear
products and services and personalized gifts. The Company sells its
products through 2,477 company-owned retail locations and 440 franchised
locations in 50 states, Canada, and the Caribbean, and differentiates
itself from other specialty retailers by providing value-added services at
the point of sale at all of its retail locations. The Company has two
reportable segments: Cole Vision and Things Remembered (see Note 8).

Inventories



| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Inventories are valued at the lower of first-in, first-out
(FIFO) cost or market.

Property and Depreciation



| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The policy is to provide depreciation using the straight-line method
over a period which is sufficient to amortize the cost of the asset over
its useful life or lease term.



| |                                                          
| | ---------------------------------------------------------
| | The estimated useful lives for depreciation purposes are:

|                           |  |              
|-------------------------- |  | -------------
|Buildings and improvements |  | 5 to 40 years
|                          
|                          
|                          
|                          
|Equipment                  |  | 3 to 10 years
|                          
|                          
|                          
|                          
|Furniture and fixtures     |  | 2 to 10 years
|                          
|                          
|                          
|                          
|Leasehold improvements     |  | 2 to 20 years



| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | Property and equipment, at cost, consist of the following at February 2, 2002 and February 3, 2001 (000s omitted):

|                                  |                              |   |         |         |      |   |         |         | 
|--------------------------------- | ---------------------------- | - | ------- | ------- | ---- | - | ------- | ------- | 
|                                  |                              |   | 2001    |         | 2000
|                                  |                              |   |         |         |     
|Land and buildings                |                              | $ | 2,408   |         |      | $ | 13,322  |        
|                                 
|                                 
|                                 
|                                 
|Furniture, fixtures and equipment |                              |   | 182,420 |         |      |   | 173,060 |        
|                                 
|                                 
|                                 
|                                 
|Leasehold improvements            |                              |   | 106,320 |         |      |   | 98,412  |        
|                                  |                              |   |         |         |      |   |         |        
|                                  | Total property and equipment |   | $       | 291,148 |      |   | $       | 284,794 | 
|                                  |                              |   |         |         |      |   |         |        

Store Opening Expenses



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Store opening expenses are charged to operations in the period the
expenses are incurred.

F-7



---



##### Table of Contents



Notes Receivable



| |                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys notes receivable are primarily from Pearles
franchisees throughout the United States. The franchise notes are
collateralized by inventory, equipment, and leasehold improvements at each
location, generally bear interest at the prime rate plus 3.0%, and require
monthly payments of principal and interest over periods of up to ten
years.

Intangible Assets



| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Intangible assets, net, consist of the following at February 2, 2002
and February 3, 2001 (000s omitted):

|           |  |      |         |      |  |   |         | 
|---------- |  | ---- | ------- | ---- |  | - | ------- | 
|           |  | 2001 |         | 2000
|           |  |      |         |     
|Goodwill   |  | $    | 103,552 |      |  | $ | 107,360 | 
|          
|          
|          
|          
|Tradenames |  |      | 42,992  |      |  |   | 44,228  | 
|           |  |      |         |      |  |   |         | 
|           |  | $    | 146,544 |      |  | $ | 151,588 | 
|           |  |      |         |      |  |   |         | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Goodwill is being amortized on a straight-line basis over periods
from 5 to 40 years, based on managements assessment of the estimated
useful life, and is presented net of accumulated amortization of
$50,723,000 and $46,194,000 at February 2, 2002 and February 3, 2001,
respectively. Amortization of goodwill in fiscal 2001, 2000 and 1999 was
$4,533,000, $4,580,000 and $4,043,000, respectively. Management regularly
evaluates its accounting for goodwill considering primarily such factors
as historical profitability, current operating profits and cash flows. The
Company believes that, at February 2, 2002, the assets are realizable and
the amortization periods are appropriate.
|
| | Tradenames acquired in connection with the Pearle acquisition in 1996
are being amortized on a straight-line basis over 40 years and are
presented net of accumulated amortization of $6,467,000 and $5,231,000 at
February 2, 2002 and February 3, 2001, respectively. Amortization of
tradenames in fiscal 2001, 2000 and 1999 was $1,236,000, $1,260,000 and
$1,236,000, respectively.                                                                                                                                                                                                                                                                                                                
|
| | In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). This statement requires that goodwill and
certain intangible assets deemed to have indefinite useful lives will no
longer be amortized, but instead, will be subject to annual reviews for
impairment. The Company will apply these rules of accounting for its
goodwill and tradenames beginning in the first quarter of fiscal 2002. The
Company is in the process of quantifying the impact of adopting each of
the provisions of SFAS 142.                                                                                     

Other Long-Term Assets



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Financing costs incurred in connection with obtaining long-term debt
are capitalized in other assets and amortized over the life of the related
debt using the effective interest method. At February 2, 2002 and February
3, 2001, deferred financing costs net of accumulated amortization were
$4,980,000, and $6,082,000, respectively. Amortization of financing costs
in fiscal 2001, 2000 and 1999 was $1,102,000, $1,054,000 and $965,000,
respectively.                                                                                                                              
|
| | Direct costs to develop or obtain internal use software, including
internal costs, are capitalized in other assets and amortized over the
estimated useful life of the software using the straight-line method.
Amortization periods range from two to seven years, and begin when the
software is placed in service. At February 2, 2002 and February 3, 2001,
these costs, net of accumulated amortization, were $34,352,000 and
$36,370,000, respectively. Amortization of systems development costs in
fiscal 2001, 2000 and 1999 was $7,614,000, $7,695,000 and $6,703,000,
respectively.

Valuation of Long-Lived Assets



| |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Long-lived assets, such as property and equipment, goodwill and other
intangibles, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
If the total of the expected future undiscounted cash flows is less than
the carrying amount of the asset, a loss is recognized for the difference
between the fair value and the carrying value of the asset.

F-8



---



##### Table of Contents



Other Long-Term Liabilities



| |                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other long-term liabilities consist primarily of certain employee
benefit obligations, deferred lease credits and other lease-related
obligations, deferred revenue and other obligations not expected to be
paid within 12 months. Deferred lease credits are amortized on a
straight-line basis over the life of the applicable lease.

Capital Stock



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | At February 2, 2002 and February 3, 2001, there were 1,100 shares of
common stock, par value $.01 per share, authorized, issued and
outstanding.

Foreign Currency Translation



| |                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The assets and liabilities of the Companys foreign subsidiary are
translated to United States dollars at the rates of exchange on the
balance sheet date. Income and expense items are translated at average
monthly rates of exchange. Translation adjustments are presented as a
component of accumulated other comprehensive loss within stockholders
equity.

Net Revenues



| |                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenues include sales of goods and services to retail customers at
company-operated stores, sales of merchandise inventory to franchisees and
other outside customers, other revenues from franchisees such as royalties
based on sales, interest income on notes receivable and initial franchise
fees, and capitation and other fees associated with Cole Visions managed
vision care business.



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Franchise revenues based on sales by franchisees are accrued as
earned. Initial franchise fees are recorded as revenue when all material
services or conditions relating to the sale of the franchises have been
substantially performed or satisfied by the Company and when the related
store begins operations.

Advertising



| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net advertising production costs and other advertising costs are
expensed as incurred, a portion of which are reimbursed by franchisees
based on a percentage of their sales. Advertising expense is summarized
as follows (000s omitted):

|                             |  |      |         |      |  |      |         |   |  |   |         |  
|---------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                             |  | 2001 |         | 2000 |  | 1999
|                             |  |      |         |      |  |     
|Gross advertising expense    |  | $    | 86,364  |      |  | $    | 89,329  |   |  | $ | 88,525  |  
|                            
|                            
|                            
|                            
|Less: Franchise contribution |  |      | (20,486 | )    |  |      | (20,562 | ) |  |   | (19,930 | )
|                             |  |      |         |      |  |      |         |   |  |   |         |  
|Net advertising expense      |  | $    | 65,878  |      |  | $    | 68,767  |   |  | $ | 68,595  |  
|                             |  |      |         |      |  |      |         |   |  |   |         |  

Earnings Per Share



| |                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Earnings per share and weighted average number of common shares
outstanding data for 2001, 2000 and 1999 have been omitted as the
presentation of such information, considering the Company is a wholly
owned subsidiary of Cole National Corporation, is not meaningful.

Cash Flows



| |                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For purposes of reporting cash flows, all temporary cash investments
which have original maturities of three months or less are considered to
be cash equivalents. The carrying amounts of cash and cash equivalents
approximate fair value due to the short maturity of those instruments.
|
| | Net cash flows from operating activities reflect cash payments for
income taxes and interest as follows (000s omitted):                                                                                                                                                                   

|             |  |      |        |      |  |      |        |  |  |   |        | 
|------------ |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|             |  | 2001 |        | 2000 |  | 1999
|             |  |      |        |      |  |     
|Income taxes |  | $    | 1,049  |      |  | $    | 844    |  |  | $ | 623    | 
|            
|            
|            
|            
|Interest     |  |      | 26,555 |      |  |      | 27,007 |  |  |   | 26,229 | 



| |                                                             
| | ------------------------------------------------------------
| | No dividends were declared during fiscal 2001, 2000 or 1999.

F-9



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##### Table of Contents



Use of Estimates



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The preparation of financial statements, in conformity with
accounting principles generally accepted in the United States, requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Reclassifications



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Certain prior year amounts have been reclassified to conform with
the current year presentation.



|(2) |  | Acquisition and Disposition of Businesses
|--- |  | -----------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company made the following acquisition, which has
been accounted for under the purchase method of accounting, including
any contingent payments that may be made in the future. Pro forma
financial results have not been presented for this acquisition, as
it did not have a material effect on results of operations.                                                                                                            
|
| | In October 1999, the Company acquired MetLifes managed vision
care benefits business. The business consisted of vision care
contracts with approximately 250 institutional customers and generated
approximately $15.0 million of revenue annually. The purchase price
paid to date totals $3.3 million, with additional amounts contingently
due upon certain conditions being met over the four years following
the date of purchase.
|
| | In fiscal 1999, the Company closed 150 optical departments in
Montgomery Ward stores resulting in a pretax loss of $2.0 million,
consisting primarily of inventory and fixed asset write-offs. Annual
revenues in fiscal 1999 for the Wards Optical Departments were $21.2
million.                                                                                                                                                    



|(3) |  | Long-Term Debt
|--- |  | --------------



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Long-term debt at February 2, 2002 and February 3, 2001 is summarized
as follows (000s omitted):

|                                  |                      |                                        |         |         |         |      |         |         |         | 
|--------------------------------- | -------------------- | -------------------------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | 
|                                  |                      |                                        |         | 2001    |         | 2000
|                                  |                      |                                        |         |         |         |     
|9-7/8% Senior Subordinated Notes: |                      |                                        |         |         |         |      |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Face Value           |                                        | $       | 150,000 |         |      | $       | 150,000 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Unamortized discount |                                        |         | (682    | )       |      |         | (785    | )      
|                                  |                      |                                        |         |         |         |      |         |        
|                                  |                      | Total 9-7/8% Senior Subordinated Notes |         |         | 149,318 |      |         |         | 149,215 | 
|                                 
|                                 
|                                 
|                                 
|8-5/8% Senior Subordinated Notes  |                      |                                        | 125,000 |         |         |      | 125,000 |        
|                                 
|                                 
|                                 
|                                 
|Capital lease obligations         |                      |                                        | 54      |         |         |      | 96      |        
|                                  |                      |                                        |         |         |         |      |         |        
|                                  |                      |                                        | 274,372 |         |         |      | 274,311 |        
|                                 
|                                 
|                                 
|                                 
|Less current portion              |                      |                                        | (54     | )       |         |      | (49     | )      
|                                  |                      |                                        |         |         |         |      |         |        
|Net long-term debt                |                      | $                                      | 274,318 |         |         | $    | 274,262 |        
|                                  |                      |                                        |         |         |         |      |         |        



| |                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On August 22, 1997, the Company issued $125.0 million of 8-5/8%
Senior Subordinated Notes that mature in 2007 with no earlier scheduled
redemption or sinking fund payments. Interest on the 8-5/8% notes is
payable semi-annually on February 15 and August 15.
|
| | On November 15, 1996, the Company issued $150 million of 9-7/8%
Senior Subordinated Notes that mature in 2006 with no earlier scheduled
redemption or sinking fund payments. Interest on the 9-7/8% notes is
payable semi-annually on June 30 and December 31.  
|
| | The 8-5/8% notes and the 9-7/8% notes are general unsecured
obligations of the Company, subordinated in right of payment to senior
indebtedness of the Company and senior in right of payment to any current
or future subordinated indebtedness of the Company.

F-10



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The indentures pursuant to which the 8-5/8% notes and the 9-7/8%
notes were issued restrict dividend payments to Cole National Corporation
to 50% of the Companys net income after October 31, 1993, plus amounts
due to Cole National Corporation under a tax sharing agreement and for
administrative expenses of Cole National Corporation not to exceed 0.25%
of the Companys net revenue. The indentures also contain certain optional
and mandatory redemption features and other financial covenants. The
Company was in compliance with these covenants at February 2, 2002.
|
| | At February 2, 2002 the fair value of long-term debt was
approximately $266.8 million compared to a carrying value of $274.4
million. The fair value was estimated primarily by using quoted market
prices. The Company has no significant principal payment obligations under
its outstanding indebtedness until the 9-7/8% notes mature in 2006.                                                                                                                                                                                                                                    



|(4) |  | Credit Facility
|--- |  | ---------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The operating subsidiaries of the Company have a working capital
commitment ranging from $50.0 million to $75.0 million based on the
Companys current debt leverage ratio described in the credit facility.
This credit facility extends until January 31, 2003. Borrowings under the
credit facility presently bear interest based on leverage ratios at a rate
equal to, at the option of the principal operating subsidiaries of the
Company, either (a) the Eurodollar Rate plus 2.5% or (b) 1.5% plus the
highest of (i) the prime rate, (ii) the three-week moving average of the
secondary market rates for three-month certificates of deposit plus 1.0% and
(iii) the federal funds rate plus 0.5%. The Company pays a commitment fee
of between .375% and .75% per annum on the total unused portion of the
facility based on the percentage of revolving credit commitments used.
Cole National Corporation, the Companys parent, guarantees this credit
facility.
|
| | The credit facility requires the principal operating subsidiaries of
Cole National Group to comply with various operating covenants that
restrict corporate activities, including covenants restricting the ability
of the subsidiaries to incur additional indebtedness, pay dividends,
prepay subordinated indebtedness, dispose of certain investments or make
acquisitions. The credit facility also requires the Company to comply with
certain financial covenants, including covenants regarding minimum
interest coverage, maximum leverage and consolidated net worth. The
Company and its principal operating subsidiaries were in compliance with
these covenants at February 2, 2002.                                                                                                                                                                                                                                                                              
|
| | The credit facility restricts dividend payments to the Company to
amounts needed to pay interest on the 9-7/8% notes and the 8-5/8% notes,
and certain amounts related to taxes, along with up to $8.0 million plus
0.25% of the Companys consolidated net revenue annually for other direct
expenses of Cole National Corporation or the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | No borrowings under the credit facility were outstanding as of
February 2, 2002 and February 3, 2001, or at anytime during fiscal 2001.
The maximum amount of borrowings outstanding during fiscal 2000 was $20.2
million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



|(5) |  | Stock Compensation and Warrants
|--- |  | -------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cole National Corporation has various stock-based compensation plans
in which key employees of the Company are eligible to participate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | The Company applies APB Opinion 25 and related Interpretations in
accounting for Cole National Corporations stock-based compensation plans.
Had compensation cost for Cole National Corporations stock-based
compensation plans been determined based on the fair value at the dates of
awards consistent with the method of SFAS No.123, the Companys net income
would have been $3,703,000 in fiscal 2001, $489,000 in fiscal 2000 and
$2,583,000 in fiscal 1999, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | For SFAS No. 123 purposes, the fair value of each option granted was
estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: risk-free interest rates of 4.8%,
6.2% and 5.9% for grants in fiscal 2001, 2000 and 1999, respectively,
volatility of 47-49%, 4547% and 3945% in fiscal 2001, 2000 and 1999,
respectively, and expected lives of six years for options granted in all
fiscal years. The weighted average fair value of options granted during
fiscal 2001, 2000 and 1999 at the date of grant were $6.31, $3.59 and
$4.58, respectively. The fair value of each share granted under the
Employee Stock Purchase Plan was similarly estimated using the following
assumptions: risk-free interest rate of 2.7%, 6.0% and 5.2% in fiscal
2001, 2000 and 1999, respectively, volatility of 49%, 46-47% and 42% in
fiscal 2001, 2000 and 1999, respectively, and

F-11



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | expected lives of 5 to 6
months. The weighted average fair value of purchase plan shares granted
during fiscal 2001, 2000 and 1999 was $2.93, $2.11 and $1.63,
respectively. The effects of applying SFAS No. 123 in the pro forma
disclosure above are not necessarily indicative of future amounts.



|(6) |  | Income Taxes
|--- |  | ------------



| |                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is included in the consolidated federal income tax
returns of Cole National Corporation and has been charged (credited) an
amount equal to the taxes that would have been payable by it if it were a
corporation filing a separate return.



| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The income tax provision reflected in the accompanying consolidated
statements of operations for fiscal 2001, 2000 and 1999 are detailed
below (000s omitted):

|                  |                                                |  |       |       |      |  |       |       |  |  |       |        |  
|----------------- | ---------------------------------------------- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ------ | -
|                  |                                                |  | 2001  |       | 2000 |  | 1999 
|                  |                                                |  |       |       |      |  |      
|Current
payable - |                                                |  |       |       |      |  |       |       |  |  |       |       
|                 
|                 
|                 
|                 
|                  | Federal                                        |  | $     | 3,885 |      |  | $     | 860   |  |  | $     |       |  
|                 
|                 
|                 
|                 
|                  | State and local                                |  |       | 784   |      |  |       | 972   |  |  |       | 824    |  
|                 
|                 
|                 
|                 
|                  | Foreign                                        |  |       | 43    |      |  |       | 89    |  |  |       | 339    |  
|                  |                                                |  |       |       |      |  |       |       |  |  |       |       
|                  |                                                |  | 4,712 |       |      |  | 1,921 |       |  |  | 1,163 |       
|                  |                                                |  |       |       |      |  |       |       |  |  |       |       
|Deferred -        |                                                |  |       |       |      |  |       |       |  |  |       |       
|                 
|                 
|                 
|                 
|                  | Federal                                        |  |       | 895   |      |  |       | 2,002 |  |  |       | 8,199  |  
|                 
|                 
|                 
|                 
|                  | Foreign                                        |  |       | (77   | )    |  |       | 427   |  |  |       | (179   | )
|                 
|                 
|                 
|                 
|                  | Tax benefit of net operating
loss carryforward |  |       |      |      |  |       |      |  |  |       | (5,446 | )
|                  |                                                |  |       |       |      |  |       |       |  |  |       |       
|                  |                                                |  | 818   |       |      |  | 2,429 |       |  |  | 2,574 |       
|                  |                                                |  |       |       |      |  |       |       |  |  |       |       
|                  | Income tax provision                           |  | $     | 5,530 |      |  | $     | 4,350 |  |  | $     | 3,737  |  
|                  |                                                |  |       |       |      |  |       |       |  |  |       |       



| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | The income tax provision differs from the federal statutory rate as
follows (000s omitted):

|                                |                |                                                |                      |  |       |       |       |  |       |       |       |  |       |       | 
|------------------------------- | -------------- | ---------------------------------------------- | -------------------- |  | ----- | ----- | ----- |  | ----- | ----- | ----- |  | ----- | ----- | 
|                                |                |                                                |                      |  | 2001  |       | 2000  |  | 1999 
|                                |                |                                                |                      |  |       |       |       |  |      
|Tax provision at statutory rate |                | $                                              | 3,654                |  |       | $     | 2,182 |  |       | $     | 2,757 | 
|                               
|                               
|                               
|                               
|                                | Tax effect of- |                                                |                      |  |       |       |       |  |       |       |       |  |      
|                               
|                               
|                               
|                               
|                                |                | Amortization of goodwill                       |                      |  | 1,252 |       |       |  | 1,252 |       |       |  | 1,230 |      
|                               
|                               
|                               
|                               
|                                |                | State income taxes, net of federal
tax benefit |                      |  | 510   |       |       |  | 632   |       |       |  | 536   |      
|                               
|                               
|                               
|                               
|                                |                | Decrease in valuation allowance                |                      |  |      |       |       |  |      |       |       |  | (669  | )    
|                               
|                               
|                               
|                               
|                                |                | Other, net                                     |                      |  | 114   |       |       |  | 284   |       |       |  | (117  | )    
|                                |                |                                                |                      |  |       |       |       |  |       |       |       | 
|                                |                |                                                | Income tax provision |  | $     | 5,530 |       |  | $     | 4,350 |       |  | $     | 3,737 | 
|                                |                |                                                |                      |  |       |       |       |  |       |       |       | 

F-12



---



##### Table of Contents





| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The income tax effects of temporary differences that give rise to
significant portions of the Companys deferred tax assets and deferred tax
liabilities at February 2, 2002 and February 3, 2001 are as follows (000s
omitted):

|                          |                                  |                                |   |        |        |      |   |        |        |  
|------------------------- | -------------------------------- | ------------------------------ | - | ------ | ------ | ---- | - | ------ | ------ | -
|                          |                                  |                                |   | 2001   |        | 2000
|                          |                                  |                                |   |        |        |     
|Deferred tax assets:      |                                  |                                |   |        |        |      |   |       
|                         
|                         
|                         
|                         
|                          | Employee benefit accruals        |                                | $ | 316    |        |      | $ | 1,738  |       
|                         
|                         
|                         
|                         
|                          | Other non-deductible accruals    |                                |   | 3,267  |        |      |   | 6,200  |       
|                         
|                         
|                         
|                         
|                          | State and local taxes            |                                |   | 599    |        |      |   | 818    |       
|                         
|                         
|                         
|                         
|                          | Net operating loss carryforwards |                                |   | 1,859  |        |      |   | 3,025  |       
|                         
|                         
|                         
|                         
|                          | Intangibles                      |                                |   | 4,387  |        |      |   | 4,446  |       
|                         
|                         
|                         
|                         
|                          | Inventory reserves               |                                |   | 2,187  |        |      |   | 3,665  |       
|                         
|                         
|                         
|                         
|                          | Bad debt reserves                |                                |   | 1,677  |        |      |   | 1,657  |       
|                         
|                         
|                         
|                         
|                          | Other                            |                                |   | 2,101  |        |      |   | 2,297  |       
|                          |                                  |                                |   |        |        |      |   |       
|                          | Total deferred tax assets        |                                |   | 16,393 |        |      |   | 23,846 |       
|                         
|                         
|                         
|                         
|                          | Valuation allowance              |                                |   | (1,141 | )      |      |   | (1,141 | )     
|                          |                                  |                                |   |        |        |      |   |       
|                          |                                  | Net deferred tax assets        |   |        | 15,252 |      |   |        | 22,705 |  
|                          |                                  |                                |   |        |        |      |   |       
|                          |                                  |                                |   |        |        |      |   |       
|                         
|                         
|                         
|                         
|Deferred tax liabilities: |                                  |                                |   |        |        |      |   |       
|                         
|                         
|                         
|                         
|                          | Depreciation and amortization    |                                |   | (3,261 | )      |      |   | (4,750 | )     
|                         
|                         
|                         
|                         
|                          | Other                            |                                |   | (3,948 | )      |      |   | (2,856 | )     
|                          |                                  |                                |   |        |        |      |   |       
|                          |                                  | Total deferred tax liabilities |   |        | (7,209 | )    |   |        | (7,606 | )
|                          |                                  |                                |   |        |        |      |   |       
|                          |                                  | Net deferred tax assets        |   | $      | 8,043  |      |   | $      | 15,099 |  
|                          |                                  |                                |   |        |        |      |   |       



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At February 2, 2002, the Company had approximately $14.2 million of
tax net operating loss carryforwards in the United States that expire in
the years 2005 through 2019. Of that amount, $5.3 million resulted from
the Companys acquisition of American Vision Centers (AVC). Due to the
change in ownership requirements of the Internal Revenue Code, utilization
of AVCs net operating loss is limited to $0.3 million per year. A
valuation allowance of $1.1 million has been established to reduce the
deferred tax asset related to the net operating loss to the amount that
will likely be realized. The Companys balance sheet reflects an amount
due from its parent for the benefit the parent will receive on the U.S.
consolidated federal income tax return as a result of the net operating
losses generated by the Company.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | No provision of United States federal and state income taxes has been
provided for the undistributed earnings of the Companys foreign
subsidiaries because those earnings are considered to be indefinitely
reinvested. Upon distribution of those earnings in the form of dividends
or otherwise, the Company would be subject to both United States income
taxes (subject to an adjustment for foreign tax credits) and withholding
taxes payable.



|(7) |  | Retirement Plans
|--- |  | ----------------



| |                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company maintains a noncontributory defined benefit pension plan
that covers employees who have met eligibility service requirements and
are not members of certain collective bargaining units. The pension plan
calls for
benefits to be paid to eligible employees at retirement based primarily
upon years of service and their compensation levels near retirement.



| |                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys policy is to fund amounts necessary to keep the pension
plan in full force and effect, in accordance with the Internal Revenue
Code and the Employee Retirement Income Security Act of 1974. Actuarial
present values of benefit obligations are determined using the projected
unit credit method.

F-13



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In January 2002, the Company approved a plan freeze for all
participants except for participants who are age 50 with 10 years of
benefit service as of March 31, 2002. These participants will have their
average pay frozen as of March 31, 2002, and covered compensation frozen
as of December 31, 2001, but their benefit service will continue to grow.
The plan freeze resulted in a curtailment gain of $3,443,000 that reduced
the plans actuarial unrecognized net loss at December 31, 2001.



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Pension expense for fiscal 2001, 2000 and 1999 includes the
following components (000s omitted):

|                                                  |                         |                     |        |      |        |      |        |      |        |   |        |   |        |  
|------------------------------------------------- | ----------------------- | ------------------- | ------ | ---- | ------ | ---- | ------ | ---- | ------ | - | ------ | - | ------ | -
|                                                  |                         |                     |        | 2001 |        | 2000 |        | 1999
|                                                  |                         |                     |        |      |        |      |        |     
|Service cost  benefits earned during the period  |                         | $                   | 1,639  |      |        | $    | 1,398  |      |        | $ | 1,636  |  
|                                                 
|                                                 
|                                                 
|                                                 
|Interest cost on the projected benefit obligation |                         |                     | 2,122  |      |        |      | 1,882  |      |        |   | 1,733  |  
|                                                 
|                                                 
|                                                 
|                                                 
|Less:                                             |                         |                     |        |      |        |      |        |      |        |   |        |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Return on plan assets - |                     |        |      |        |      |        |      |        |   |        |   |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                         | Actual              |        |      | 483    |      |        |      | (359   | ) |        |   | (2,205 | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                         | Deferred            |        |      | (3,203 | )    |        |      | (2,086 | ) |        |   | (9     | )
|                                                  |                         |                     |        |      |        |      |        |      |        |   |        |  
|                                                  |                         |                     | (2,720 | )    |        |      | (2,445 | )    |        |   | (2,214 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Amortization of transition asset over 17.9 years  |                         |                     | (179   | )    |        |      | (179   | )    |        |   | (179   | )
|                                                 
|                                                 
|                                                 
|                                                 
|Prior service cost                                |                         |                     | 25     |      |        |      | 28     |      |        |   | 28     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                         |                     |        |      |        |      |        |      |        |   |        |  
|                                                  |                         | Net pension expense |        | $    | 887    |      |        | $    | 684    |   |        | $ | 1,004  |  
|                                                  |                         |                     |        |      |        |      |        |      |        |   |        |  



| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following sets forth changes in the benefit obligation and the
plan assets during the year and reconciles the funded status of the
pension plan with the amounts recognized in the consolidated balance
sheets (000s omitted):

|                                 |                                                                           |                                                      |   |        |        |      |   |        |        | 
|-------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------------- | - | ------ | ------ | ---- | - | ------ | ------ | 
|                                 |                                                                           |                                                      |   | 2001   |        | 2000
|                                 |                                                                           |                                                      |   |        |        |     
|Change in benefit obligation:    |                                                                           |                                                      |   |        |        |      |   |       
|                                
|                                
|                                
|                                
|                                 | Benefit obligation at beginning of period                                 |                                                      | $ | 25,200 |        |      | $ | 22,660 |       
|                                
|                                
|                                
|                                
|                                 | Service cost                                                              |                                                      |   | 1,639  |        |      |   | 1,398  |       
|                                
|                                
|                                
|                                
|                                 | Interest cost                                                             |                                                      |   | 2,122  |        |      |   | 1,882  |       
|                                
|                                
|                                
|                                
|                                 | Actuarial loss                                                            |                                                      |   | 3,149  |        |      |   | 633    |       
|                                
|                                
|                                
|                                
|                                 | Effects of curtailment                                                    |                                                      |   | (3,443 | )      |      |   |       |       
|                                
|                                
|                                
|                                
|                                 | Benefits paid                                                             |                                                      |   | (1,056 | )      |      |   | (1,011 | )     
|                                
|                                
|                                
|                                
|                                 | Expenses paid                                                             |                                                      |   | (372   | )      |      |   | (362   | )     
|                                 |                                                                           |                                                      |   |        |        |      |   |       
|                                 |                                                                           | Benefit obligation at end of period                  |   | $      | 27,239 |      |   | $      | 25,200 | 
|                                 |                                                                           |                                                      |   |        |        |      |   |       
|Change in plan assets:           |                                                                           |                                                      |   |        |        |      |   |       
|                                
|                                
|                                
|                                
|                                 | Fair value of plan assets at beginning of year                            |                                                      | $ | 26,077 |        |      | $ | 25,410 |       
|                                
|                                
|                                
|                                
|                                 | Actual return of plan assets                                              |                                                      |   | (483   | )      |      |   | 359    |       
|                                
|                                
|                                
|                                
|                                 | Employer contributions                                                    |                                                      |   | 4,696  |        |      |   | 1,681  |       
|                                
|                                
|                                
|                                
|                                 | Benefits paid                                                             |                                                      |   | (1,056 | )      |      |   | (1,011 | )     
|                                
|                                
|                                
|                                
|                                 | Expenses paid                                                             |                                                      |   | (372   | )      |      |   | (362   | )     
|                                 |                                                                           |                                                      |   |        |        |      |   |       
|                                 |                                                                           | Fair value of plan assets at end of year             |   | $      | 28,862 |      |   | $      | 26,077 | 
|                                 |                                                                           |                                                      |   |        |        |      |   |       
|Reconciliation of funded status: |                                                                           |                                                      |   |        |        |      |   |       
|                                
|                                
|                                
|                                
|                                 | Benefit obligation at end of period                                       |                                                      | $ | 27,239 |        |      | $ | 25,200 |       
|                                
|                                
|                                
|                                
|                                 | Fair value of plan assets, primarily money market
and equity mutual funds |                                                      |   | 28,862 |        |      |   | 26,077 |       
|                                 |                                                                           |                                                      |   |        |        |      |   |       
|                                 | Funded status                                                             |                                                      |   | 1,623  |        |      |   | 877    |       
|                                
|                                
|                                
|                                
|                                 | Unrecognized prior service cost                                           |                                                      |   |       |        |      |   | 25     |       
|                                
|                                
|                                
|                                
|                                 | Net unrecognized loss                                                     |                                                      |   | 3,671  |        |      |   | 762    |       
|                                
|                                
|                                
|                                
|                                 | Unamortized transition (asset) obligation                                 |                                                      |   | (519   | )      |      |   | (698   | )     
|                                 |                                                                           |                                                      |   |        |        |      |   |       
|                                 |                                                                           | Pension asset included in prepaid expenses and other |   | $      | 4,775  |      |   | $      | 966    | 
|                                 |                                                                           |                                                      |   |        |        |      |   |       

F-14



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The weighted average discount rate used to measure the projected benefit
obligation was 7.9% for fiscal 2001 and 8.4% for fiscal 2000, the rate of
increase in future compensation levels was 5.0% and the expected long-term
rate of return on plan assets was 9.5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | The Company has a defined contribution plan, including features under
Section 401(k) of the Internal Revenue Code, which provides retirement
benefits to its employees. Eligible employees may contribute up to 17% of
their compensation to the plans. In the United States, the Company
provides for a mandatory company match of 10% of employee contributions,
and may also make a discretionary matching contribution for each plan year
equal to such dollar amount or percentage of employee contributions as
determined by the Companys Board of Directors. In Puerto Rico, the
Company provides for a mandatory match of 50% of the first 6.0% of employee
contributions. The Company also has a deferred compensation plan for
executives and other senior management which generally allows deferral of
income without regard to limitations imposed by the Companys 401(k) plan.
The Company makes a contribution of its common stock equal to 10% of the
participants deferrals. Total company matches of $785,000, $726,000 and
$659,000 were recorded as expense for 2001, 2000 and 1999, respectively.
|
| | The Company has several Supplemental Executive Retirement Plans that
provide for the payment of retirement benefits to participating executives
supplementing amounts payable under the Companys noncontributory defined
benefit pension plan. The first plan is an excess benefit plan designed to
replace benefits that would otherwise have been payable under the pension
plan but that were limited as a result of certain tax law changes.
Benefits payable under this plan are also subject to the Retirement Plan
freeze discussed above. The second plan is a defined contribution plan
under which participants receive an annual credit based on a percentage of
base salary, subject to vesting requirements. The third plan is a defined
benefit plan designed to provide additional retirement benefits for
certain management and highly compensated employees. Expenses for these
plans for fiscal 2001, 2000 and 1999 were $689,000, $619,000 and $696,000,
respectively.                                                                                                                              
|
| | The Company provides no additional significant post retirement or
post employment benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|(8) |  | Segment Information
|--- |  | -------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has two reportable segments: Cole Vision and Things
Remembered. Most of Cole Visions revenue is provided by sales of
prescription eyewear, accessories and services through its Cole Licensed
Brands and Pearle retail locations. Cole Visions revenue is also provided
by sales of merchandise to franchisees and other outside customers, by
royalties based on sales, interest income on notes receivable and initial
franchise fees from franchisees and by fees from managed vision care
programs. The Cole Licensed Brands and Pearle business units have been
aggregated in accordance with SFAS No. 131 based on the similarity of
their economic characteristics, nature of products, services and
production processes, types of customers, distribution methods and
regulatory environment. Things Remembereds revenue is provided by sales
of engravable gift merchandise, personalization and other services
primarily through retail stores and kiosks. The accounting policies of the
segments are the same as those described in the Summary of Significant
Accounting Policies (see Note 1).
|
| | The reportable segments are strategic business units that offer
different products and services. They are managed separately as each
business requires different technology and marketing strategies.
Performance is evaluated based on operating income from operations before
interest, income taxes, and non-recurring or unusual
charges. Cole Vision is subject to various state regulations related to
the dispensing of prescription eyewear, its relationship with the doctors
of optometry and other matters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-15



---



##### Table of Contents





| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | Reported segment revenue, depreciation and amortization, income or
loss, with reconciliations to consolidated amounts are as follows (000s
omitted):

|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |         |           |  
|------------------------------ | ------------------------------- | ------------------------------------------- | - | ------- | --------- | ---- | - | ------- | --------- | - | - | ------- | --------- | -
|                               |                                 |                                             |   | 2001    |           | 2000 |   | 1999   
|                               |                                 |                                             |   |         |           |      |   |        
|Net revenue:                   |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                              
|                              
|                              
|                              
|                               | Cole Vision                     |                                             | $ | 829,287 |           |      | $ | 800,561 |           |   | $ | 778,995 |          
|                              
|                              
|                              
|                              
|                               | Things Remembered               |                                             |   | 272,046 |           |      |   | 275,859 |           |   |   | 258,586 |          
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                               |                                 | Consolidated net revenue                    |   | $       | 1,101,333 |      |   | $       | 1,076,420 |   |   | $       | 1,037,581 |  
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|Depreciation and amortization: |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                              
|                              
|                              
|                              
|                               | Cole Vision                     |                                             | $ | 25,404  |           |      | $ | 24,820  |           |   | $ | 26,266  |          
|                              
|                              
|                              
|                              
|                               | Things Remembered               |                                             |   | 11,352  |           |      |   | 10,260  |           |   |   | 10,916  |          
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                               |                                 | Total segment depreciation and amortization |   |         | 36,756    |      |   |         | 35,080    |   |   |         | 37,182    |  
|                              
|                              
|                              
|                              
|                               | Corporate                       |                                             |   | 2,689   |           |      |   | 2,271   |           |   |   | 1,303   |          
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                               |                                 | Consolidated depreciation and amortization  |   | $       | 39,445    |      |   | $       | 37,351    |   |   | $       | 38,485    |  
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|Income or loss:                |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                              
|                              
|                              
|                              
|                               | Cole Vision                     |                                             | $ | 22,999  |           |      | $ | 20,755  |           |   | $ | 17,915  |          
|                              
|                              
|                              
|                              
|                               | Things Remembered               |                                             |   | 23,403  |           |      |   | 25,811  |           |   |   | 22,706  |          
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                               |                                 | Total segment profit                        |   |         | 46,402    |      |   |         | 46,566    |   |   |         | 40,621    |  
|                              
|                              
|                              
|                              
|                               | Unallocated amounts:            |                                             |   |         |           |      |   |         |           |   |   |         |          
|                              
|                              
|                              
|                              
|                               |                                 | Corporate expenses                          |   |         | (10,040   | )    |   |         | (12,472   | ) |   |         | (6,061    | )
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                               | Consolidated operating income   |                                             |   | 36,362  |           |      |   | 34,094  |           |   |   | 34,560  |          
|                              
|                              
|                              
|                              
|                               | Interest and other expense, net |                                             |   | (25,921 | )         |      |   | (27,861 | )         |   |   | (26,683 | )        
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        
|                               | Income before income taxes      |                                             | $ | 10,441  |           |      | $ | 6,233   |           |   | $ | 7,877   |          
|                               |                                 |                                             |   |         |           |      |   |         |           |   |   |        



| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Reported segment assets, expenditures for capital additions and
systems developments costs and acquisitions of businesses, with
reconciliations to consolidated amounts, are as follows (000s omitted):

|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |         |         | 
|----------------------------------------------------------------- | --------------------------------------------- | -------------------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                  |                                               |                            |   | 2001    |         | 2000 |   | 1999   
|                                                                  |                                               |                            |   |         |         |      |   |        
|Segment assets:                                                   |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Cole Vision                                   |                            | $ | 401,837 |         |      | $ | 423,709 |         |  | $ | 418,687 |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Things Remembered                             |                            |   | 140,787 |         |      |   | 141,484 |         |  |   | 141,511 |        
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                  |                                               | Total segment assets       |   |         | 542,624 |      |   |         | 565,193 |  |   |         | 560,198 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Elimination of intercompany receivables       |                            |   | (47,385 | )       |      |   | (43,949 | )       |  |   | (52,917 | )      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Corporate cash and temporary cash investments |                            |   | 50,650  |         |      |   | 26,416  |         |  |   | 21,024  |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Other corporate assets                        |                            |   | 15,890  |         |      |   | 13,340  |         |  |   | 59,966  |        
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                  |                                               | Consolidated assets        |   | $       | 561,779 |      |   | $       | 561,000 |  |   | $       | 588,271 | 
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        
|Expenditures for capital additions
and systems development costs: |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Cole Vision                                   |                            | $ | 27,410  |         |      | $ | 31,857  |         |  | $ | 33,728  |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Things Remembered                             |                            |   | 12,751  |         |      |   | 11,457  |         |  |   | 5,709   |        
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                  |                                               | Total segment expenditures |   |         | 40,161  |      |   |         | 43,314  |  |   |         | 39,437  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Corporate                                     |                            |   | 1,836   |         |      |   | (160    | )       |  |   | 79      |        
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                  |                                               | Consolidated expenditures  |   | $       | 41,997  |      |   | $       | 43,474  |  |   | $       | 39,516  | 
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        
|Expenditures for acquisitions of businesses,
net of cash acquired |                                               |                            |   |         |         |      |   |         |         |  |   |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Cole Vision                                   |                            | $ | 747     |         |      | $ |        |         |  | $ | 2,956   |        
|                                                                  |                                               |                            |   |         |         |      |   |         |         |  |   |        

F-16



---



##### Table of Contents





| |                                                                                                              
| | -------------------------------------------------------------------------------------------------------------
| | Revenue from external customers of each group of similar products and
services is as follows (000s omitted):

|                                                            |                               |   |         |           |      |   |         |           |  |   |         |           | 
|----------------------------------------------------------- | ----------------------------- | - | ------- | --------- | ---- | - | ------- | --------- |  | - | ------- | --------- | 
|                                                            |                               |   | 2001    |           | 2000 |   | 1999   
|                                                            |                               |   |         |           |      |   |        
|Sales of optical products and services                      |                               | $ | 749,314 |           |      | $ | 733,410 |           |  | $ | 724,546 |          
|                                                           
|                                                           
|                                                           
|                                                           
|Royalties, interest income and initial fees
from franchises |                               |   | 20,109  |           |      |   | 21,653  |           |  |   | 22,361  |          
|                                                           
|                                                           
|                                                           
|                                                           
|Fees from managed vision care programs                      |                               |   | 59,864  |           |      |   | 45,498  |           |  |   | 32,088  |          
|                                                            |                               |   |         |           |      |   |         |           |  |   |         |          
|                                                            | Total Cole Vision net revenue |   |         | 829,287   |      |   |         | 800,561   |  |   |         | 778,995   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Retail sales of gift merchandise and services               |                               |   | 272,046 |           |      |   | 275,859 |           |  |   | 258,586 |          
|                                                            |                               |   |         |           |      |   |         |           |  |   |         |          
|                                                            | Consolidated net revenue      |   | $       | 1,101,333 |      |   | $       | 1,076,420 |  |   | $       | 1,037,581 | 
|                                                            |                               |   |         |           |      |   |         |           |  |   |         |          



| |                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company operates primarily in the United States. Net revenue
attributable to Cole Visions Canadian operations was $29.9 million, $31.3
million and $28.6 million in fiscal 2001, 2000 and 1999, respectively.
Long-lived assets located in Canada at February 2, 2002, February 3, 2001
and January 29, 2000 totaled $3.0 million, $3.4 million and $3.1 million,
respectively.



|(9) |  | Commitments
|--- |  | -----------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company leases a substantial portion of its equipment and
facilities including laboratories, office and warehouse space, and retail
store locations. These leases generally have initial terms of up to 10
years and often contain renewal options. Certain of the store locations
have been sublet to franchisees. In most leases covering retail store
locations, additional rents are payable based on store sales. In addition,
Cole Vision operates departments in various host stores paying occupancy
costs solely as a percentage of sales under agreements containing
short-term cancellation clauses. Generally, the Company is required to pay
taxes and normal expenses of operating the premises for laboratory,
office, warehouse and retail store leases; the host stores pay these
expenses for departments operated on a percentage-of-sales basis. The
following amounts represent rental expense for fiscal 2001, 2000 and 1999
(000s omitted):

|                               |                           |   |         |         |      |   |         |         |  |   |         |         | 
|------------------------------ | ------------------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                               |                           |   | 2001    |         | 2000 |   | 1999   
|                               |                           |   |         |         |      |   |        
|Occupancy costs based on sales |                           | $ | 56,652  |         |      | $ | 54,854  |         |  | $ | 52,623  |        
|                              
|                              
|                              
|                              
|All other rental expense       |                           |   | 102,173 |         |      |   | 96,924  |         |  |   | 96,084  |        
|                              
|                              
|                              
|                              
|Sublease rental income         |                           |   | (19,719 | )       |      |   | (21,354 | )       |  |   | (21,672 | )      
|                               |                           |   |         |         |      |   |         |         |  |   |         |        
|                               | Total rental expense, net |   | $       | 139,106 |      |   | $       | 130,424 |  |   | $       | 127,035 | 
|                               |                           |   |         |         |      |   |         |         |  |   |         |        

At February 2, 2002, future minimum lease payments and sublease income
receipts under noncancellable leases are as follows (000s omitted):

|                                    |  |                  |         |          |  |   |         |  
|----------------------------------- |  | ---------------- | ------- | -------- |  | - | ------- | -
|                                    |  | Operating Leases
|                                    |  |                 
|                                    |  | Payments         |         | Receipts
|                                    |  |                  |         |         
|2002                                |  | $                | 76,483  |          |  | $ | (10,565 | )
|                                   
|                                   
|                                   
|                                   
|2003                                |  |                  | 67,836  |          |  |   | (7,997  | )
|                                   
|                                   
|                                   
|                                   
|2004                                |  |                  | 59,535  |          |  |   | (6,557  | )
|                                   
|                                   
|                                   
|                                   
|2005                                |  |                  | 48,129  |          |  |   | (4,750  | )
|                                   
|                                   
|                                   
|                                   
|2006                                |  |                  | 37,346  |          |  |   | (3,201  | )
|                                   
|                                   
|                                   
|                                   
|2007 and thereafter                 |  |                  | 92,900  |          |  |   | (5,520  | )
|                                    |  |                  |         |          |  |   |         |  
|Total future minimum lease payments |  | $                | 382,229 |          |  | $ | (38,590 | )
|                                    |  |                  |         |          |  |   |         |  

F-17



---



##### Table of Contents



In fiscal 2001, under a sale and leaseback agreement, the Company received
approximately $5.7 million, net of related costs, from the sale of its Cole
Vision lab and distribution facility in Dallas, Texas and leased it back under
a fifteen-year lease agreement with four five-year renewal options. The
transaction produced a gain of approximately $0.6 million that was deferred and
is being amortized over the fifteen-year lease period.

In fiscal 2000, under a sale and leaseback agreement, the Company received
approximately $13.8 million, net of related costs, from the sale of its Cole
Vision office facility in Twinsburg, Ohio and leased it back under an
eighteen-year lease agreement with two ten-year renewal options. The
transaction produced a gain of approximately $4.8 million that was deferred and
is being amortized over the eighteen-year initial lease period.

In the ordinary course of business, the Company is involved in various
legal proceedings. The Company is of the opinion that the ultimate resolution
of these matters will not have a material adverse effect on the results of
operations, liquidity or financial position of the Company.

F-18



---



##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON THE FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of Cole National Group, Inc.:

We have audited in accordance with auditing standards generally accepted in the
United States the consolidated financial statements of Cole National Group,
Inc. and Subsidiaries included in Form 10-K, and have issued our report thereon
dated March 19, 2002. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The financial statement schedules
are the responsibility of the Companys management and are presented for
purposes of complying with the Securities and Exchange Commissions rules and
are not part of the consolidated financial statements. These schedules have
been subjected to the auditing procedures applied in the audits of the
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the consolidated financial statements taken as a whole.

ARTHUR ANDERSEN LLP



Cleveland, Ohio,
     March 19, 2002.

F-19



---



##### Table of Contents



Schedule I

COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT



---

Cole National Group, Inc.
Condensed Balance Sheets
February 2, 2002 and February 3, 2001
(Dollars in millions)

|                                      |                                            |   |       |       |      |   |       |       | 
|------------------------------------- | ------------------------------------------ | - | ----- | ----- | ---- | - | ----- | ----- | 
|                                      |                                            |   | 2001  |       | 2000
|                                      |                                            |   |       |       |     
|Assets:                               |                                            |   |       |       |      |   |       |      
|                                     
|                                     
|                                     
|                                     
|                                      |                                            |   |       |       |      |   |       |      
|                                     
|                                     
|                                     
|                                     
|Cash                                  |                                            | $ | 50.7  |       |      | $ | 26.4  |      
|                                     
|                                     
|                                     
|                                     
|Deferred income tax benefits          |                                            |   |      |       |      |   | 2.5   |      
|                                     
|                                     
|                                     
|                                     
|Investment in subsidiaries            |                                            |   | 387.0 |       |      |   | 391.8 |      
|                                     
|                                     
|                                     
|                                     
|Property and equipment, net           |                                            |   | 6.0   |       |      |   | 3.6   |      
|                                     
|                                     
|                                     
|                                     
|Other                                 |                                            |   | 12.8  |       |      |   | 9.0   |      
|                                      |                                            |   |       |       |      |   |       |      
|                                      | Total assets                               |   | $     | 456.5 |      |   | $     | 433.3 | 
|                                      |                                            |   |       |       |      |   |       |      
|Liabilities and stockholders equity: |                                            |   |       |       |      |   |       |      
|                                     
|                                     
|                                     
|                                     
|                                      |                                            |   |       |       |      |   |       |      
|                                     
|                                     
|                                     
|                                     
|Accounts payable and accrued expenses |                                            | $ | 15.4  |       |      | $ | 13.5  |      
|                                     
|                                     
|                                     
|                                     
|Deferred income taxes                 |                                            |   | 3.0   |       |      |   |      |      
|                                     
|                                     
|                                     
|                                     
|Payable to affiliates                 |                                            |   | 99.8  |       |      |   | 85.9  |      
|                                     
|                                     
|                                     
|                                     
|Long-term debt                        |                                            |   | 274.4 |       |      |   | 274.4 |      
|                                     
|                                     
|                                     
|                                     
|Other long-term liabilities           |                                            |   | 4.7   |       |      |   | 5.2   |      
|                                     
|                                     
|                                     
|                                     
|Stockholders equity                  |                                            |   | 59.2  |       |      |   | 54.3  |      
|                                      |                                            |   |       |       |      |   |       |      
|                                      | Total liabilities and stockholders equity |   | $     | 456.5 |      |   | $     | 433.3 | 
|                                      |                                            |   |       |       |      |   |       |      

F-20



---



##### Table of Contents



Schedule I

|                                                                                                                                                                                                      |  |            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|Cole National Group,
Inc.Condensed Statements of Operations and Cash Flows
52 Weeks Ended February 2, 2002,
53 Weeks Ended February 3, 2001 and
52 Weeks Ended January 29, 2000
(Dollars in millions) |  | (continued)

|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |      |      |  
|--------------------------------------------------------------------------------------- | ---------------------------------------- | ---------------------------------------------------- | ---- | ----------- | ---- | ----------- | ---- | ----------- | ---- | - | ----- | ---- | ---- | -
|                                                                                        |                                          |                                                      |      | February 2, |      | February 3, |      | January 29,
|                                                                                        |                                          |                                                      |      | 2002        |      | 2001        |      | 2000       
|                                                                                        |                                          |                                                      |      |             |      |             |      |            
|Revenue  services to affiliates                                                        |                                          | $                                                    | 29.7 |             |      | $           | 16.4 |             |      | $ | 10.4  |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Operating expenses                                                                      |                                          |                                                      | 29.8 |             |      |             | 14.3 |             |      |   | 10.4  |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Interest expense                                                                        |                                          |                                                      | (0.5 | )           |      |             | 0.3  |             |      |   | 0.1   |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|Pre-tax income (loss)                                                                   |                                          |                                                      | 0.4  |             |      |             | 1.8  |             |      |   | (0.1  | )   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Income tax benefit                                                                      |                                          |                                                      | (0.8 | )           |      |             | (0.4 | )           |      |   | (0.9  | )   
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|Income before equity in undistributed earnings
of subsidiaries and extraordinary items  |                                          |                                                      | 1.2  |             |      |             | 2.2  |             |      |   | 0.8   |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Equity in undistributed earnings (loss) of subsidiaries                                 |                                          |                                                      | 3.7  |             |      |             | (0.4 | )           |      |   | 3.7   |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Net income                                                                              |                                          |                                                      | 4.9  |             |      |             | 1.8  |             |      |   | 4.5   |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Adjustments to reconcile net income to cash provided by
(used for) operating activities |                                          |                                                      | 9.5  |             |      |             | 6.8  |             |      |   | (7.1  | )   
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          | Net cash provided by (used for) operating activities |      |             | 14.4 |             |      |             | 8.6  |   |       |      | (2.6 | )
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Investing activities:                                                                   |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Purchases of property and equipment, net |                                                      |      | (3.4        | )    |             |      |            |      |   |       |     |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Systems development costs                |                                                      |      | (1.0        | )    |             |      | (1.8        | )    |   |       | (2.1 | )   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Other, net                               |                                                      |      |            |      |             |      | 0.2         |      |   |       |     |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          | Net cash used for investing activities               |      |             | (4.4 | )           |      |             | (1.6 | ) |       |      | (2.1 | )
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Financing activities:                                                                   |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Repayment of long-term debt              |                                                      |      | (0.1        | )    |             |      | (0.4        | )    |   |       | (0.3 | )   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Advances from (to) affiliates            |                                                      |      | 13.9        |      |             |      | (0.8        | )    |   |       | (9.0 | )   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Payment of financing fees                |                                                      |      |            |      |             |      | (.4         | )    |   |       | (0.3 | )   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Other, net                               |                                                      |      | 0.5         |      |             |      |            |      |   |       | 0.6  |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          | Net cash provided by (used for) financing activities |      |             | 14.3 |             |      |             | (1.6 | ) |       |      | (9.0 | )
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Net change in cash                                                                      |                                          |                                                      | 24.3 |             |      |             | 5.4  |             |      |   | (13.7 | )   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Cash, beginning of period                                                               |                                          |                                                      | 26.4 |             |      |             | 21.0 |             |      |   | 34.7  |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     
|Cash, end of period                                                                     |                                          | $                                                    | 50.7 |             |      | $           | 26.4 |             |      | $ | 21.0  |     
|                                                                                        |                                          |                                                      |      |             |      |             |      |             |      |   |       |     

F-21



---



##### Table of Contents



Schedule I

(continued)

Note to Condensed Financial Information of Registrant



---

The accompanying financial information of Cole National Group, Inc., a
wholly-owned subsidiary of Cole National Corporation, is as of February 2, 2002
and February 3, 2001 and for the 52 weeks ended February 2, 2002 and January
29, 2000 and the 53 weeks ended February 3, 2001. Cole National Group is a
holding company for its wholly-owned subsidiaries, Things Remembered, Inc.,
Cole Vision Corporation and Pearle, Inc., except for expenses associated with
Cole National Groups corporate offices, consisted of no other operations.

This financial information should be read in connection with the Notes to
Consolidated Financial Statements of Cole National Group, Inc. and
Subsidiaries, contained elsewhere in this Form 10-K.

F-22



---



##### Table of Contents



|                                                                                                                                                                                                       |  |            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------
|Cole National Group, Inc.
and Subsidiaries
Valuation and Qualifying Accounts
52 Weeks Ended February 2, 2002
53 Weeks Ended February 3, 2001 and
52 Weeks Ended January 29, 2000
(Dollars in millions) |  | Schedule II

|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |   | 
|---------------------------------------------- | ----------- | --------- | ---------- | -------- | ----------- | ---------- | ------- | ------ |  | - | ------- | ---- | - | - | --- | - | 
|                                               |             |           |            |          |             |            | Charged |        |  |   |         |      |   |   |    
|                                               |             |           | Balance at |          | (Reversals) |            |         |        |  |   | Balance
|                                               |             |           | Beginning  |          | to Cost and |            |         |        |  |   | End of 
|Description                                    |             | of Period |            | Expenses |             | Deductions |         | Period
|                                               |             |           |            |          |             |            |         |       
|February 2, 2002                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Allowance for doubtful accounts                |             | $         | 7.3        |          |             | $          | 0.1     |        |  | $ | (3.4    | )(A) |   | $ | 4.0 |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Franchise note allowance for doubtful accounts |             |           | 4.5        |          |             |            | 1.6     |        |  |   | (0.9    | )(A) |   |   | 5.2 |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|February 3, 2001                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Allowance for doubtful accounts                |             | $         | 7.6        |          |             | $          | 4.6     |        |  | $ | (4.9    | )(A) |   | $ | 7.3 |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Franchise allowance for uncollectable notes    |             |           | 4.2        |          |             |            | 0.8     |        |  |   | (0.5    | )(A) |   |   | 4.5 |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|January 29, 2000                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Allowance for doubtful accounts                |             | $         | 7.2        |          |             | $          | 4.3     |        |  | $ | (3.9    | )(A) |   | $ | 7.6 |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Franchise note allowance for doubtful accounts |             |           | 5.2        |          |             |            | 0.3     |        |  |   | (1.3    | )(A) |   |   | 4.2 |  
|                                              
|                                              
|                                              
|                                              
|                                               |             |           |            |          |             |            |         |        |  |   |         |      |   |   |     |  
|                                              
|                                              
|                                              
|                                              
|Restructuring-
 1998 Charge                    |             | $         | 6.1        |          |             | $          | (0.1    | )      |  | $ | (6.0    | )    |   | $ |    |  
|                                              
|                                              
|                                              
|                                              
|                                               | 1996 Charge |           |            | 1.0      |             |            |         |       |  |   |         | (1.0 | ) |   |     |  | 



---

|(A) |  | Receivable balances written off, net of recoveries
|--- |  | --------------------------------------------------

Reserve balances presented in the Notes to Consolidated Financial Statements are not presented in this schedule.

F-23



---



##### Table of Contents

]'

EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3.1(i)  |  | Certificate of Incorporation of Cole National Group, incorporated by
reference to Exhibit 3.1(i) to Cole National Groups Registration
Statement on Form S-1 (Registration No. 33-66342)                                                                                                                                                                                                                                            
|       
|       
|       
|       
|3.2(ii) |  | By-Laws of Cole National Group, incorporated by reference to Exhibit
3.2(ii) to Cole National Groups Registration Statement on Form S-1
(Registration No. 33-66342)                                                                                                                                                                                                                                                                
|       
|       
|       
|       
|4.1     |  | Indenture dated November 15, 1996, by and among Cole National Group
and Norwest Bank Minnesota, National Association, as trustee,
relating to the 9 7/8% Senior Subordinated Notes due 2006 (the form
of which Senior Subordinated Note is included in such Indenture),
incorporated by reference to Exhibit 4.1 of Cole National
Corporations Report on Form 8-K, filed with the Commission on
December 2, 1996 (File No. 1-12814)
|       
|       
|       
|       
|4.2     |  | Indenture dated August 22, 1997, between Cole National Group, Inc.
and Norwest Bank Minnesota, National Association, as Trustee,
relating to the 8-5/8% Senior Subordinated Notes Due 2007,
incorporated by reference to Exhibit 4.4 of Cole National Group,
Inc.s Registration Statement on Form S-1(Registration No.
333-34963)                                                                                                  
|       
|       
|       
|       
|4.3     |  | Cole National Group by this filing agrees, upon request, to file
with the Commission the instruments defining the rights of holders
of long-term debt of Cole National Group and its subsidiaries where
the total amount of securities authorized thereunder does not exceed
10% of the total assets of Cole National Group and its subsidiaries
on a consolidated basis.                                                           
|       
|       
|       
|       
|10.1    |  | Lease Agreement (Knoxville) dated as of November 28, 1979 by and
between Tommy Hensley, as agent for the real property of Mrs. Don
Siegel and Cole Vision Corporation, as amended and supplemented,
incorporated by reference to Exhibit 10.15 to Cole National Groups
Registration Statement on Form S-1(Registration No. 33-66342)                                                                                               
|       
|       
|       
|       
|10.2    |  | Lease Agreement (Memphis) dated as of October 2, 1991 by and between
Shelby Distribution Park and Cole Vision Corporation, incorporated
by reference to Exhibit 10.16 to Cole National Groups Registration
Statement on Form S-1 (Registration No. 33-66342)                                                                                                                                                                       
|       
|       
|       
|       
|10.3    |  | Lease Agreement (Richmond) dated as of April 23, 1982 by and between
Daniel, Daniel & Daniel and Cole Vision Corporation, as amended and
supplemented, incorporated by reference to Exhibit 10.17 to Cole
National Groups Registration Statement on Form S-1 (Registration
No. 33-66342)                                                                                                                                           
|       
|       
|       
|       
|10.4    |  | Lease for Multi-Tenancy Space (Salt Lake) dated as of October 30,
1981 by and between East Centennial Joint Venture and Cole Vision
Corporation, as amended and supplemented, incorporated by reference
to Exhibit 10.18 to Cole National Groups Registration Statement on
Form S-1 (Registration No. 33-66342)                                                                                                                    
|       
|       
|       
|       
|10.5    |  | Form of Lease Agreement Finite 19518 dated as of December 29, 1988
between Sears, Roebuck and Co. and Cole Vision Corporation,
incorporated by reference to Exhibit 10.23 to Cole National Groups
Registration Statement on Form S-1 (Registration No. 33-66342)                                                                                                                                                                   
|       
|       
|       
|       
|10.6    |  | Lease Agreement (Knoxville) dated as of April 11, 1995 by and
between Richard T. Fox and Cole Vision Corporation, incorporated by
reference to Exhibit 10.29 to Cole National Corporations Annual
Report on Form 10-K for the period ended February 3, 1996 (File No.
1-12814)                                                                                                                                                     
|       
|       
|       
|       
|10.7    |  | Form of Indemnification Agreement for Directors of Cole National
Group, incorporated by Reference to Exhibit 10.19 to Cole National
Groups Registration Statement on Form S-1 (Registration No.
33-66342)                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.8    |  | Form of Indemnification Agreement for Officers of Cole National
Group, incorporated by reference to Exhibit 10.20 to Cole National
Groups Registration Statement on Form S-1 (Registration No.
33-66342)                                                                                                                                                                                                                           
|       
|       
|       
|       
|10.9    |  | Form of License Agreement (Optical), incorporated by reference to
Exhibit 10.24 to Cole National Groups Registration Statement on
Form S-1(Registration No. 33-66342)                                                                                                                                                                                                                                                              

X-1



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##### Table of Contents



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|       
|       
|       
|       
|10.10   |  | Form of License/Lease Agreement (Optical), incorporated by reference
to Exhibit 10.25 to Cole National Groups Registration Statement on
Form S-1 (Registration No. 33-66342)                                                                                                                                                                                                                     
|       
|       
|       
|       
|10.11   |  | Agreement for the Allocation of Federal Income Tax Liability and
Benefits among Members of the Parent Group dated August 23, 1985, as
amended, incorporated by reference to Exhibit 10.26 to Cole National
Groups Registration Statement onForm S-1 (Registration No.
33-66342)                                                                                                                  
|       
|       
|       
|       
|10.12   |  | Assignment and Assumption Agreement dated as of September 30, 1993
between Cole National Corporation and Cole National Group,
incorporated by reference to Exhibit 10.24 to Cole National
Corporations Annual Report on Form 10-K for the period ended
February 3, 1996 (File No. 1-12814)                                                                                                       
|       
|       
|       
|       
|10.13   |  | Lease agreement (Salt Lake) dated as of November 1, 1996 by and
between Gibbons Realty Company and Cole Vision Corporation,
incorporated by reference to Exhibit 10.01 of Cole National
Corporations quarterly report of Form 10-Q for the period ended
November 2, 1996 (File No. 1-12814)                                                                                                      
|       
|       
|       
|       
|10.14   |  | Credit Agreement, dated as of November 15, 1996, among Cole Vision
Corporation, Things Remembered, Inc., Cole Gift Centers, Inc.,
Pearle, Inc. and Pearle Service Corporation and Canadian Imperial
Bank of Commerce, incorporated by reference to Exhibit 99.1 of Cole
National Corporations Report on Form 8-K, filed with the Commission
on December 2, 1996 (File No. 1-12814)               
|       
|       
|       
|       
|10.15   |  | Cole National Group Guarantee and Cash Collateral Agreement, dated
as of November 15, 1996, by Cole National Group and Cole National
Corporation, incorporated by reference to Exhibit 99.3 of Cole
National Corporations Report on Form 8-K, filed with the Commission
on December 2, 1996 (File No. 1-12814)                                                                                   
|       
|       
|       
|       
|10.16   |  | Guarantee and Collateral Agreement, dated as of November 15, 1996,
by Cole Vision Corporation, Things Remembered, Inc., Cole Gift
Centers, Inc., Pearle, Inc. and Pearle Service Corporation and
Canadian Imperial Bank of Commerce, incorporated by reference to
Exhibit 99.4 of Cole National Corporations Report on Form 8-K,
filed with the Commission on December 2, 1996 (File No. 1-12814)
|       
|       
|       
|       
|10.17   |  | First Amendment to the Credit Agreement, dated as of January 13,
1997, among Cole Vision Corporation, Things Remembered, Inc., Cole
Gift Centers, Inc., Pearle, Inc., and Pearle Service Corporation and
Canadian Imperial Bank of Commerce, incorporated by reference to
Exhibit 10.33 of Cole National Group, Inc.s Registration Statement
on Form S-1 (Registration No. 333-34963)            
|       
|       
|       
|       
|10.18   |  | Second Amendment to Credit Agreement, dated as of August 8, 1997,
among Cole Vision Corporation, Things Remembered, Inc., Cole Gift
Centers, Inc., Pearle, Inc. and Pearle Service Corporation and
Canadian Imperial Bank of Commerce, incorporated by reference to
Exhibit 10.34 of the Cole National Group, Inc.s Registration
Statement on Form S-1 (Registration No. 333-34963)              
|       
|       
|       
|       
|10.19   |  | Third Amendment to the Credit Agreement, dated as of May 15, 1998,
among Cole Vision Corporation and Canadian Imperial Bank of
Commerce, incorporated by reference to Exhibit 10.1 of Cole National
Corporations Quarterly Report onForm 10-Q for the period ended May
2, 1998 (File No. 1-12814)                                                                                                
|       
|       
|       
|       
|10.20   |  | Fourth Amendment to the Credit Agreement, dated as of March 5, 1999,
among Cole Vision Corporation, Things Remembered, Inc. and Pearle,
Inc., and Canadian Imperial Bank of Commerce, incorporated by
reference to Exhibit 10.45 to Cole National Corporations Annual
Report on Form 10-K for the period ended January 30, 1999 (File No.
1-12814)                                               
|       
|       
|       
|       
|10.21*  |  | Cole National Group, Inc. 1999 Supplemental Retirement Benefit Plan
dated as of December 17, 1998, incorporated by reference to Exhibit
10.51 to Cole National Corporations Annual Report on Form 10-K for
the period ended January 30, 1999 (File No. 1-12814)                                                                                                                                  
|       
|       
|       
|       
|10.22*  |  | Amended and Restated Instrument Designating Participants of the Cole
National Group, Inc. 1999 Supplemental Retirement Benefit Plan dated
January 25, 2002, incorporated by reference to Exhibit 10.39 to Cole
National Corporations Annual Report on Form 10-K for the period
ended February 2, 2002 (File No. 1-12814)                                                                         

X-2



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##### Table of Contents



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                              
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|10.23*  |  | Cole National Group, Inc. Deferred Compensation Plan effective as of
February 1, 1999, incorporated by reference to Exhibit 10.53 to Cole
National Corporations Annual Report on Form 10-K for the period
ended January 30, 1999 (File No. 1-12814)                                                                                                         
|       
|       
|       
|       
|10.24*  |  | Amendment No. 1, dated as of December 17, 1998, to the Cole National
Group, Inc. Supplemental Pension Plan, incorporated by reference to
Exhibit 10.54 to Cole National Corporations Annual Report on Form
10-K for the period ended January 30, 1999 (File No. 1-12814)                                                                                    
|       
|       
|       
|       
|10.25*  |  | Employment Agreement entered into as of December 17, 1998 by and
among Cole National Corporation, Cole National Group, Inc., Cole
Vision Corporation, Pearle Inc., Things Remembered, Inc. and Jeffrey
A. Cole, incorporated by reference to Cole National Corporations
Annual Report on Form 10-K in the period ended January 30, 1999
(File No. 1-12814)  
|       
|       
|       
|       
|10.26   |  | Fifth Amendment to the Credit Agreement, dated as of August 20,
1999, among Cole Vision Corporation, Things Remembered, Inc. and
Pearle, Inc., and Canadian Imperial Bank of Commerce, incorporated
by reference to Exhibit 10.1 to Cole National Corporations
Quarterly Report on Form 10-Q for the period ended July 31, 1999
(File No. 1-12814)          
|       
|       
|       
|       
|10.27   |  | Sixth Amendment and Waiver to the Credit Agreement, dated as of
March 7, 2000, among Cole Vision Corporation, Things Remembered,
Inc. and Pearle, Inc., and Canadian Imperial Bank of Commerce,
incorporated by reference to Exhibit 10.50 to Cole National
Corporations Annual Report on Form 10-K for the period ended
February 3, 2001 (File No. 1-12814)
|       
|       
|       
|       
|10.28*  |  | Instrument Designating Participant of the Cole National Group, Inc.
1999 Supplemental Retirement Benefit Plan dated January 1, 2000,
incorporated by reference to Exhibit 10.66 to Cole National
Corporations Annual Report onForm 10-K for the period ended
February 3, 2001 (File No. 1-12814)                                                            
|       
|       
|       
|       
|10.29*  |  | Addendum to Employment Agreement dated June 4, 1999 among Jeffrey A.
Cole, Cole National Corporation and certain of its subsidiaries,
incorporated by reference to Exhibit 10.67 to Cole National
Corporations Annual Report on Form 10-K for the period ended
February 3, 2001 (File No. 1-12814)                                                          
|       
|       
|       
|       
|10.30   |  | Seventh Amendment to the Credit Agreement, dated as of April 21,
2000 among Cole Vision Corporation, Things Remembered, Inc., and
Canadian Imperial Bank of Commerce, incorporated by reference to
Exhibit 10.69 to Cole National Corporations Annual Report on Form
10-K for the period ended February 3, 2001 (File No. 1-12814)                          
|       
|       
|       
|       
|10.31   |  | Eighth Amendment to the Credit Agreement, dated as of June 9, 2000
among Cole Vision Corporation, Things Remembered, Inc., and Pearle,
Inc. and Canadian Imperial Bank of Commerce, incorporated by
reference to Exhibit 10.1 of Cole National Corporations Quarterly
Report on Form 10-Q for the period ended July 29, 2000(File No.
1-12814)              
|       
|       
|       
|       
|10.32*  |  | Amendment No. 1 to the Cole National Group, Inc. Deferred
Compensation Plan for Senior Executives and other Senior Management,
dated January 25, 2002 incorporated by reference to Exhibit 10.63 to
Cole National Corporations Annual Report on Form 10-K for the
period ended February 2, 2002 (File No. 1-12814)                                          
|       
|       
|       
|       
|10.33*  |  | Amendment No. 2 to the Cole National Group, Inc. Supplemental
Pension Plan, dated January 25, 2002 incorporated by reference to
Exhibit 10.64 to Cole National Corporations Annual Report on Form
10-K for the period ended February 2, 2002 (File No. 1-12814)                                                                                             
|       
|       
|       
|       
|10.34*  |  | Amendment No. 2 to the Cole National Group, Inc. Supplemental
Retirement Benefit Plan, dated January 25, 2002 incorporated by
reference to Exhibit 10.66 to Cole National Corporations Annual
Report on Form 10-K for the period ended February 2, 2002 (File No.
1-12814)                                                                                  

X-3



---



##### Table of Contents



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                 
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                 
|Number  |  | Description                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                 
|       
|       
|       
|       
|10.35*  |  | Amendment No. 1 to the Cole National Group, Inc. 1999 Supplemental
Retirement Benefit Plan, dated January 25, 2002 incorporated by
reference to Exhibit 10.67 to Cole National Corporations Annual
Report on Form 10-K for the period ended February 2, 2002 (File No.
1-12814)
|       
|       
|       
|       
|24     |  | Power of Attorney.                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|99     |  | Letter to Securities and Exchange Commission regarding Arthur
Andersen LLP.                                                                                                                                                                                                     
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                 
|       
|       
|       
|       
|       |  | Filed herewith.                                                                                                                                                                                                                                                                 

X-4