<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ----------------

                                   FORM 10-K

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
   OF 1934 (FEE REQUIRED)

   For the fiscal year ended December 31, 1999

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934 (NO FEE REQUIRED)

                         Commission file number 0-22033

                               ----------------

                         WESLEY JESSEN VISIONCARE, INC.
             (Exact name of registrant as specified in its charter)

                 Delaware                               36-4023739
         (State of Incorporation)           (I.R.S Employer Identification No.)

                             333 East Howard Avenue
                        Des Plaines, Illinois 60018-5903
                                  847-294-3000
 (Address and telephone number, including area code, of registrant's principal
                               executive office)

                               ----------------

          Securities registered pursuant to Section 12(b) of the Act:

                                 Not applicable

          Securities registered pursuant to section 12(g) of the Act:

                     Common Stock, par value $.01 per share

                               ----------------

                                (Title of Class)

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

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the registrant's knowledge, in any definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment of this Form 10-K. [_]

   The aggregate market value of voting stock held by non-affiliates of the
Registrant as of March 15, 2000 at a closing sale price of $24.75 as reported
by the Nasdaq National Market was approximately $415,690,135. Shares of Common
Stock held by each officer and director and by each person who owns or may be
deemed to own 10% or more of the outstanding Common Stock have been excluded
since such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.

   As of March 15, 2000, the Registrant had 17,620,087 shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the Registrant's Proxy Statement to be used in connection with
the solicitation of proxies for the Registrant's 2000 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated by reference in Part III
of this Annual Report on Form 10-K (the "Form 10-K").

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.
                      INDEX TO ANNUAL REPORT ON FORM 10-K

<TABLE>
<CAPTION>
                                                                   Page No.
                                                                   --------

 <C>      <S>                                                      <C>      <C>
                              PART I

 Item 1.  Business..............................................       1
 Item 2.  Properties............................................      14
 Item 3.  Legal Proceedings.....................................      15
 Item 4.  Submission of Matters to a Vote of Security-Holders...      15
 Item 4A. Executive Officers of the Registrant..................      15

                             PART II

          Market for the Registrant's Common Equity and Related
 Item 5.   Stockholder Matters..................................      17
 Item 6.  Selected Financial Data...............................      18
 Item 7.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations..................      18
          Quantitative and Qualitative Disclosure About Market
 Item 7A.  Risk.................................................      25
 Item 8.  Financial Statements and Supplementary Data...........      26
 Item 9.  Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure..................      26

                             PART III

 Item 10. Directors and Executive Officers of the Registrant....      27
 Item 11. Executive Compensation................................      27
          Security Ownership of Certain Beneficial Owners and
 Item 12.  Management...........................................      27
 Item 13. Certain Relationships and Related Transactions........      27

                             PART IV

          Exhibits, Financial Statement Schedules and Reports on
 Item 14.  Form 8-K.............................................      28
</TABLE>
<PAGE>

                                     PART I

Item 1. Business

   Market data used throughout this report were obtained from industry
publications and internal Company surveys. Industry publications generally
state that the information contained therein has been obtained from sources
believed to be reliable, but that the accuracy and completeness of such
information are not assured. The Company has not independently verified these
market data. Similarly, internal Company surveys, while believed by the Company
to be reliable, have not been verified by any independent sources.

General

   Wesley Jessen VisionCare, Inc. (the "Company" or "Wesley Jessen") is the
leading worldwide developer, manufacturer and marketer of specialty soft
contact lenses, based on its share of the specialty lens market. The Company's
products include cosmetic lenses, which change or enhance the wearer's eye
color appearance; toric lenses, which correct vision for people with
astigmatism; and premium lenses, which offer value-added features such as
improved comfort for dry eyes and protection from ultraviolet ("UV") light. The
Company offers a broad range of conventional contact lenses, which can
typically be used for up to 24 months, disposable contact lenses, which are
intended to be replaced at least every two weeks and planned replacement
lenses, which are designed to be changed as often as every month or up to every
three months. Founded in 1946 by pioneers in the contact lens industry, the
Company has a long-standing reputation for innovation and new product
introductions.

   The Company operates primarily in the specialty segment of the soft lens
market. In recent years, in both the clear and specialty lens segments, there
has been a pronounced shift in consumers' preferences toward disposable lenses
and away from conventional lenses, which has led to a significant increase in
contact lens expenditures per wearer. The Company estimates that more than 65%
of U.S. soft lens wearers use disposable or planned replacement lenses, up from
21% in 1993. The Company also offers a complete line of conventional and
disposable clear lenses, which are positioned as companion products to the
Company's cosmetic lenses.

   According to an independent research firm, more than 75% of all contact lens
prescribers in the United States offer the Company's products, which permits
the Company to rapidly launch new categories of products. Wesley Jessen
develops proprietary technologies, manufacturing processes and products through
a combination of its in-house staff of more than 100 engineers and scientists
and Company-sponsored research by third-party experts. The Company is among the
largest advertisers in the industry and markets its products to consumers
through advertising campaigns and to eyecare practitioners through its 222
person salesforce and network of independent distributors, which together sell
the Company's products in more than 75 countries.

   The Company was founded by Drs. Newton K. Wesley and George Jessen, who went
on to pioneer the design, manufacture and fitting techniques of hard contact
lenses. From 1980 to 1995, the Company operated as a wholly owned subsidiary of
Schering-Plough Corporation ("Schering-Plough"). On June 29, 1995, Bain Capital
Inc. ("Bain Capital") and management acquired the Wesley Jessen division of
Schering-Plough (the "Predecessor") in a leveraged acquisition (the "Wesley
Jessen Acquisition"). On October 2, 1996, the Company acquired the Barnes-Hind
division ("Barnes-Hind") of Pilkington plc (the "Barnes-Hind Acquisition"). At
the time of the acquisition, Barnes-Hind was the third largest manufacturer of
speciality contact lenses in the world, with a leading market position in
premium and toric lenses.

Industry Overview

   Industry analysts estimate that over 50% of the world's population needs
some type of corrective eyewear. In the United States alone, vision correction
is required by over 158 million people. Most individuals who wear contact
lenses begin to do so in their early teens and the majority of wearers are
between the ages of 18 and 39. The Company believes that the number of contact
lens wearers will expand as technology improves the convenience, comfort and
fit of contact lenses, so that lenses provide cost-effective and comfortable
vision correction to a larger segment of the population.

                                       1
<PAGE>

   The contact lens industry is large and rapidly growing. In 1999,
manufacturers' sales of soft contact lenses worldwide totaled $2.6 billion,
representing a compound annual growth rate of approximately 10% from
$1.1 billion in 1990. The Company believes that market growth outside the
United States will likely exceed domestic growth because of lower contact lens
penetration rates internationally. Since 1991, the number of contact lens
wearers in the United States has increased by 4% per year while revenue per
wearer has increased by 5% per year as conventional users have shifted to more
costly specialty and disposable lenses. While the market for hard contact
lenses has been relatively flat since 1991 with approximately 5.7 million U.S.
wearers, the number of people wearing soft contact lenses has grown at a
compound annual growth rate of 6% since that time.

   The contact lens industry can be divided into the soft lens portion, which
represents approximately 83% of U.S. wearers, and the hard lens portion,
primarily rigid gas permeable ("RGP"), which represents approximately 17% of
U.S. wearers. Within the soft contact lens market, there are three principal
replacement regimes: conventional, disposable and planned replacement.
Conventional lenses are typically replaced after 12 to 24 months and require
periodic cleaning throughout the life of the lens. Disposable soft contact
lenses were introduced in the late 1980s based on the concept that changing
lenses on a more frequent basis helped to improve comfort, convenience and
health of the eye for many wearers. Disposable lenses are intended to be
changed as often as daily or up to every two weeks depending on the product.
Planned replacement lenses are designed to be changed as often as every month
or up to every three months and currently represent approximately 15% of the
overall soft lens market.

   The two primary segments within the soft lens market are clear and
specialty. Clear lenses, which do not provide value-added features that
specialty lenses offer, represent approximately 67% of the U.S. soft lens
market and include both conventional and disposable products. Growth in the
clear lens segment has been driven primarily by growth in the population of 14-
to 25-year-olds, the prime age group for new lens wearers, the substitution of
soft for hard contact lenses and the continuous evolution in the contact lens
market toward more frequent replacement of contact lenses.

   Specialty lenses represent the remaining 33% of the U.S. soft lens market
and generally command a premium price because they are designed for patients
who have a medical need for a specialized lens or who desire a lens with
additional features. Specialty lenses include cosmetic lenses which change or
enhance the natural color of eyes while correcting vision, toric lenses for
astigmatics, bifocal lenses for presbyobes and premium lenses that offer
protein deposit resistance, improved visual acuity, enhanced comfort for dry
eyes or UV protection. The specialty lens segment of the soft contact lens
market has higher projected growth rates than the clear lens segment. During
the past several years the number of specialty lens wearers has increased at a
rate of 11% per year; more than double the rate of increase of clear wearers.
The Company believes that continued rapid growth in sales of specialty lenses
will result from (i) the continued trend toward disposables; (ii) increased
awareness among consumers and eyecare practitioners of the value-added features
available with specialty lenses; and (iii) new product innovations, such as
disposable toric contact lenses, new cosmetic designs, UV protection lenses and
effective bifocal contact lenses.

   An important characteristic of the contact lens industry is that an
individual's need for corrective eyewear is chronic. The need for vision
correction is often diagnosed at an early age and increases over time. Contact
lenses represent an alternative to eyeglasses, while offering improved
peripheral vision and additional features, such as eye color enhancement and UV
protection. Contact lens wearers will typically purchase lenses regularly for
several years.

   Contact lenses require a prescription specifying a particular brand of
lenses. Such prescriptions are written by either ophthalmologists or
optometrists referred to in the contact lens industry as "fitters". An
ophthalmologist is a physician with a Doctor of Medicine ("MD") degree who
specializes in eyecare and an optometrist is a state-licensed eyecare
specialist who holds a Doctor of Optometry ("OD") degree. Fitters have the
ability to influence patients' choice of which contact lens brand they will
wear. Therefore, if a contact lens manufacturer successfully markets its
products to a fitter, that fitter will carry that manufacturer's brand of

                                       2
<PAGE>

contact lenses in inventory and offer it to patients. Once the brand is in the
fitter's inventory, the manufacturer will likely receive a stream of revenues
from new patients for whom the brand is prescribed as well as from patients who
are refitted, change lens types or need different prescriptions. Also, the
manufacturer will be more likely to successfully place new products in the
fitter's inventory. Prescriptions for contact lenses are filled by either
ophthalmologists, optometrists, optical chains, health maintenance
organizations (HMOs), pharmacies or mail order houses.

   The contact lens industry is characterized by high brand loyalty. The
Company believes that wearers resist switching brands once a particular brand
is prescribed and fitted successfully. By staying with an existing brand, a
customer can replace his or her current lens without an eye examination. Even
for an adjusted prescription, customers typically acclimate to a particular
lens design and may experience discomfort if refitted with a new brand.
Typically, only when a customer is experiencing difficulty with a lens or the
customer wants to switch from conventional to disposable lenses or from clear
to specialty lenses will a fitter refit with a different brand of lens. The
Company believes, based on historical patterns in the contact lens industry
that once a product category has matured, brand loyalty causes competitive
market share to remain relatively constant. However, overall market share may
shift because of different growth rates of each category or the creation of new
categories.

   No new significant competitors have entered the soft contact lens industry
in the last ten years. To compete successfully in the industry entails
substantial risks and requires significant investment of time and resources. In
particular, the Company believes a new entrant must successfully (i) develop
innovative product offerings; (ii) master the sophisticated processes required
to manufacture contact lenses; (iii) invest the significant capital required to
develop manufacturing capacity; (iv) overcome existing patent protections
covering the design, materials and manufacturing processes of contact lenses;
and (v) obtain FDA product clearances, each of which may take several years.

Products

   The following table sets forth the approximate composition, by product line,
of the Company's net sales for the year ended December 31, 1999:

                           Net Sales by Product Line
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                   Year Ended
                                                                  December 31,
                                                                      1999
                                                                ----------------
     Product Line                                                Amount  Percent
     ------------                                               -------- -------
     <S>                                                        <C>      <C>
     Specialty Lenses.......................................... $266,041    85%
     Clear Lenses..............................................   37,816    12%
     Hard/Other Lenses.........................................    7,832     3%
                                                                --------   ---
       Total Lenses............................................ $311,689   100%
                                                                ========   ===
</TABLE>

   Specialty Lenses. The Company's products primarily consist of specialty soft
contact lenses, including cosmetic, toric and premium lenses. With the broadest
product offering in the industry, the Company captured nearly 38% of the U.S.
specialty lens segment in 1999. The Company's specialty soft contact lens
products include the following:

   Cosmetic Lenses. Cosmetic lenses enhance or change the color of a wearer's
eyes. The Company's opaque color lenses, which change the color of dark eyes
(e.g., brown to green), utilize a patented dot matrix technology that the
Company believes allows for superior cosmetic appeal. As a result, the
Company's opaque cosmetic lens products have become the standard in the market.
In early 1996, the Company introduced its new enhancer color lenses, which
enhance the natural color of light eyes with a patented color printing process
that

                                       3
<PAGE>

allows the pupil-covering zone of the lens to remain clear. In September 1998
the Company launched FreshLook ColorBlends(R) in North America and has since
expanded into markets in Europe, Latin America and Asia. This new cosmetic
disposable lens is made with patented technology which imprints three distinct
color patterns on a lens to better replicate the natural iris coloration. The
Company manufactures a complete line of cosmetic lenses, including: (i) the
conventional DuraSoft(R) 2 daily wear lens, which is removed and cleaned daily
and typically is replaced after 12 to 24 months; (ii) the conventional DuraSoft
3 extended wear lens, which can be worn overnight for up to seven days and is
also typically replaced after 12 to 24 months; and (iii) the disposable
FreshLook(R) contact lens, which is intended to be replaced weekly. With the
broadest product offering in the cosmetic lens segment, the Company has
obtained over a 60% share of the U.S. cosmetic lens market in 1999.

   Toric Lenses. Toric lenses are designed to correct vision for people with
astigmatism, which is characterized by an irregularly shaped cornea. Prior to
the introduction of the Company's toric lenses and other competing products in
the late 1980s, this condition was not effectively correctable through the use
of soft contact lenses. Over 30% of the U.S. population requiring vision
correction are diagnosed with astigmatism, of which only about 5% currently
wear soft contact lenses. The Company's FreshLook Toric, Optifit,(R)
Hydrocurve(R) and CSI(R) toric lens sales represented approximately 15% of the
U.S. toric lens market in 1999.

   Premium Lenses. Premium lenses offer the wearer value-added features such as
protein deposit resistance, improved visual acuity, enhanced comfort for dry
eyes and UV protection. The Company manufactures the premium CSI lens, which
has long been regarded by eyecare practitioners and optical retailers as having
superior visual acuity and deposit resistance. The Company also recently
repositioned Precision UV,(R) the first disposable lens available with UV
protection, which is gaining share from many clear disposable lenses. The
Company's Gentle Touch(R) product, which is typically replaced every one to
three months, was the first lens designed specifically for and approved by the
FDA for use without intensive cleaning or special handling required of
conventional lenses and offers the unique combination of enhanced comfort for
dry eyes, deposit resistance and low cost relative to disposable alternatives.

   The following table sets forth certain of the brand names under which the
Company's specialty contact lenses are sold:

<TABLE>
<CAPTION>
                                     Specialty Contact Lens
                     ------------------------------------------------------
   Type of Lens            Cosmetic               Toric          Premium
   ------------            --------               -----          -------
<S>                  <C>                   <C>                 <C>
Conventional:        DuraSoft              CSI                 Aquaflex
                     Elegance(a)           Optifit             CSI
                     Natural Touch(a)      Hydrocurve          Hydrocurve
                     Wild Eyes
Disposable/ Planned
 Replacement:        FreshLook Colors      FreshLook           Gentle Touch
                     FreshLook Enhancers   Optifit ColorBlends Precision UV
                     FreshLook ColorBlends Optifit UV
</TABLE>
--------
(a)Used only in international markets.

   The Company has successfully entered into the private label market with the
offering of a private label UV protection lens. The Company sells its specialty
contact lenses under private label primarily in Japan, the United Kingdom,
France, Belgium, Spain, Italy and Canada. The Company believes that the private
label market offers significant growth opportunities due to the Company's
unique product offerings and low-cost manufacturing capabilities.

   Clear Lenses. Wesley Jessen manufactures a complete line of conventional and
disposable clear lenses that are positioned as companion lenses to the DuraSoft
and FreshLook cosmetic product lines. The Company

                                       4
<PAGE>

believes that eyecare practitioners can increase their revenues and
profitability, as well as the value provided to lens wearers, by fitting
patients with either a DuraSoft or FreshLook clear or cosmetic lens and then
selling the patient a companion cosmetic or clear lens with no additional
fitting expense. In fact, approximately 70% of color lens wearers also own
clear lenses.

   Hard/Other Lenses. The Company also sells Polycon(R) RGP lenses to a large
base of eyecare practitioners who fit RGP lenses. In addition, the Company
manufactures prosthetic lenses, which are custom cosmetic products that return
damaged or disfigured eyes to normal appearance. The Company's intentions are
to donate any profits generated from its prosthetic product line to
professional associations to generate goodwill with eyecare practitioners.

Research and Development

   The Company's research and development efforts are focused on product
development and process technology to support its specialty lens business. The
Company maintains a core research and development staff of over 100 engineers
and scientists, which oversees the Company's research projects. Most such
projects are conducted in-house by the technical staff. Other projects are
conducted by independent laboratories and universities at the Company's
direction and expense. The Company's research and development expenses totaled
$12.6 million, or 4.0% of net revenues, for the year ended December 31, 1999.

   In the last twelve months, the Company's new product program developed and
introduced five new products. Capitalizing on the significant growth of the
toric market segment, the Company introduced two new toric products: DuraSoft
Optifit ColorBlends, a quarterly replacement, made-to-order lens that extends
the availability of the ColorBlends technology to virtually all consumers with
astigmatism and DuraSoft Optifit UV, a quarterly replacement made-to-order lens
that provides protection from harmful UV rays. The WildEyes(R) novelty lens
line, successfully introduced in 1998, was expanded to include three new
designs: Alien, Bloodshot and Year 2000. EmblemEyes(R), which are printed with
school logos, were introduced featuring the logos of the Universities of
Michigan and Nebraska. The Company plans to expand the EmblemEyes line to other
universities in the U.S. FreshLook Olive Gold, a disposable lens that changes a
dark colored eye to an olive gold color, was introduced in selected markets
throughout Latin America.

   The Company has a history of innovation and new product introductions. The
Company is currently investing in the development of, among other specialty
products, extensions to its lines of cosmetic contact lenses, new disposable
UV-protections lenses, new disposable bifocal contact lenses (for persons,
typically over age 45, who experience both farsightedness and nearsightedness),
a photochromic contact lens, which darkens or lightens depending on light
intensity and new premium disposable lenses. Finally, the Company has targeted
additional research and development projects to cut manufacturing costs in the
cosmetic, premium and toric product lines.

Manufacturing

   Substantially all of the Company's products are manufactured in the
Company's four principal production facilities, which are located in Cidra,
Puerto Rico; Des Plaines, Illinois; San Diego, California; and Southampton,
United Kingdom. See "--Properties." The Company utilizes state-of-the-art
manufacturing equipment and process technology to control the quality of its
products and to minimize costs. The Company engages in manufacturing processes
that are designed to handle short production runs. As a result, the Company
believes that it enjoys a competitive advantage over other contact lens
manufacturers because it can be more versatile and cost-competitive in market
segments that require special features and products manufactured to meet more
stringent specifications. With the addition of disposable lens capacity in the
fourth quarter of 1999, the Company's disposable lens manufacturing facilities
are operating at 80% of their capacity.

   The Company produces its hard and soft contact lens products primarily
through manufacturing processes known as lathing and cast molding. Lathing is a
machining process through which a piece of rigid lens material is shaped into a
concave form with refractive characteristics by using a high-precision lathe.
Following this

                                       5
<PAGE>

machining, soft lenses are hydrated in a saline solution and sterilized, while
RGP lenses are produced using polymers that do not absorb moisture and do not
require sterilization. Lathing technology is particularly well suited for use
in short production runs and is used by the Company to produce soft lenses at
its Cidra, Puerto Rico; San Diego, California; and Southampton, United Kingdom
facilities and to produce RGP lenses at its Farnham, United Kingdom facilities.
In connection with the Barnes Hind Acquisition, the Company continues the
process of closing its manufacturing operations in San Diego, California and
shifting conventional lens production to its plant in Cidra, Puerto Rico.

   The Company uses cast molded technology to produce its disposable contact
lenses. In this process, a disposable plastic mold is made through the use of
an automated injection molding press containing highly-engineered optical
tooling. A liquid monomer is then dispensed into the mold which polymerizes to
form the lens. In dry cast molding, the lenses are formed in a rigid state and
are hydrated to their final characteristics after being removed from the mold.
In wet cast molding, the lenses are formed fully hydrated. The Company uses dry
cast molded technology at its Southampton, United Kingdom facility and wet cast
molded technology at its Des Plaines, Illinois facility.

Sales and Marketing

   The Company uses a two-pronged sales and marketing strategy that reflects
the Company's belief that both consumers and eyecare practitioners influence
the consumer purchase process. The Company estimates that 50% of all cosmetic
lens sales are unplanned and made in-store, while the other 50% are planned
purchases influenced by the Company's year round consumer advertising campaign.
In 1999 the Company spent approximately $32 million worldwide for the
advertisement and promotion of its disposable cosmetic lenses including a
campaign for FreshLook ColorBlends featuring supermodel Elsa Benitez. The
Company also developed comprehensive in-store merchandising programs, such as
customized point-of-purchase materials, rebate pads, and office training
programs to increase sales of its cosmetic lenses.

   Due to the fitter's influence over a patient's choice of contact lens brand,
the Company believes that developing and maintaining strong relationships with
eyecare practitioners is the most critical aspect of its sales and marketing
strategy. The Company has a salesforce of 222 persons who market the Company's
products to eyecare practitioners. The Company's salesforce seeks to train new
ODs and MDs to fit the Company's lenses and to inform them of the revenue
potential and value-added features of the Company's products. In marketing to
eyecare practitioners, the Company stresses the quality and features offered by
its products, the breadth of its product line and the ability of such
practitioners to generate more revenue per patient by offering the Company's
value-added products. The Company also advertises its products to eyecare
practitioners through promotional materials, trade publications and
conventions.

   The Company currently sells through a direct salesforce in North America,
U.K, Italy, France, Spain, Belgium, Netherlands, Luxembourg, Germany, Mexico,
Brazil, Argentina, Japan, Australia and the middle east. Countries in Europe,
Asia and Latin America not directly served by the Company are serviced by a
broad network of distributors.

   The following table sets forth the Company's net sales to the geographic
regions indicated for the year ended December 31, 1999:

                        Net Sales to Geographic Regions
                             (dollars in thousands)

<TABLE>
<CAPTION>
   Region                                                        Amount  Percent
   ------                                                       -------- -------
   <S>                                                          <C>      <C>
   United States..............................................  $185,022    59%
   Rest of World..............................................   126,667    41%
                                                                --------   ---
     Total....................................................  $311,689   100%
                                                                ========   ===
</TABLE>

                                       6
<PAGE>

   For additional information about the Company's geographic sales, refer to
Footnote 14 of the Company's Consolidated Financial Statements.

Customers

   The Company currently sells its products through a variety of channels
including fitters and wholesalers who sell to fitters and lens-replacement
suppliers. The Company sells to a highly fragmented account base with no one
customer accounting for more than 10% of its revenues for the year ended
December 31, 1999. Furthermore, the Company's top 10 customers accounted for
less than 20% of its revenues for the year ended December 31, 1999.

   In the United States, the Company sells to three customer segments: private
practitioners, chain warehouses and wholesalers. There are approximately 17,500
private practitioners (MDs and ODs not affiliated with a retail chain) who fit
the Company's products. In addition, the Company has distribution in over
11,000 retail chain locations, such as Cole National Corporation, LensCrafters,
National Vision Association and Wal-Mart Stores, Inc., that advertise, promote
and fill prescriptions for the Company's products. Wholesalers supply but do
not fit the Company's lenses. The chart below illustrates the mix of
distribution channels used by Wesley Jessen in the United States in 1999:

                       Net Sales by Distribution Channel
                         (as a percentage of net sales)

<TABLE>
<CAPTION>
                                                                 Percent of 1999
      Distribution Channel                                         U.S. Sales
      --------------------                                       ---------------
      <S>                                                        <C>
      Private practitioners.....................................      59.7%
      Chain warehouses..........................................       9.7%
      Wholesalers...............................................      30.6%
                                                                      ----
        Total...................................................       100%
                                                                      ====
</TABLE>

   In Europe, key corporate accounts like Boots in the United Kingdom and Optic
2000 in France have selected the Company's lenses as their private label as
well as offering its branded products. In Japan, the world's second largest
contact lens market, the Company has a direct sales force and also has formed
strategic relationships with several hard and soft contact lens manufacturers.

Distribution

   The Company performs most warehousing, inventory management, order taking
and order fulfillment functions in-house. The Company's fulfillment system
provides the flexibility to receive, fill and ship orders as small as a single
lens and as large as a full truckload. Approximately 13,800 orders are received
daily, primarily by telephone and facsimile in eleven customer service centers
in North America, Europe, Asia, Argentina and Australia.

   In the U.S., approximately 60% of the Company's lenses are shipped primarily
by common carriers directly to eyecare practitioners from a distribution center
in Des Plaines, Illinois. The remaining 40% are shipped to wholesalers, who
resell lenses to practitioners and mail-order houses. In several key markets
outside the U.S., the Company sells and distributes lenses directly to eyecare
practitioners. In other international markets, the Company serves customers
through its network of independent distributors.

Competition

   The contact lens market is highly competitive. The Company faces competition
from other companies within each segment of the contact lens market in which it
operates. In the specialty segment of the market, the

                                       7
<PAGE>

Company principally competes with divisions of large medical and pharmaceutical
companies, including Ciba Vision (a division of Novartis Corporation) and
Bausch & Lomb, Inc. as well as with smaller companies. To the extent the
Company operates in the clear lens segment, it faces competition primarily from
Vistakon (a division of Johnson & Johnson) and other large contact lens
manufacturers such as Ciba Vision, Bausch & Lomb, Inc. and Ocular Sciences,
Inc. Certain of the Company's competitors in each segment have lower costs of
operations, products with enhanced features, substantially greater resources to
invest in product development and customer support, greater vertical
integration and greater access to financial and other resources than the
Company. While the Company is the leading manufacturer and distributor of
specialty contact lenses, the Company ranks fourth in the contact lens market
overall in terms of net revenues. To a lesser extent, the Company also competes
with manufacturers of eyeglasses and providers of other methods of vision
correction, including refractive surgical procedures.

   Within the contact lens market, the Company believes that the principal
competitive factors in the specialty segment include product innovation, brand
awareness, product quality and price. Due to the manner in which contact lenses
are distributed (i.e., through prescription), the Company also competes on the
basis of its reputation and relationships with eyecare practitioners.

Suppliers

   The Company has a broad base of suppliers. The Company has qualified
multiple vendors to supply substantially all of the materials used by the
Company in its manufacturing processes and actively seeks to qualify new
vendors to insure adequate access to such materials. The primary raw materials
used by the Company in the production of contact lenses are specialty
chemicals. For the year ended December 31, 1999, no supplier accounted for more
than 5% of the Company's costs of goods sold.

   The Company utilizes a number of advanced polymers and other sophisticated
materials in the production of its contact lenses. Due to the highly technical
and specialized nature of certain of its production materials, the Company
relies from time to time on single suppliers to provide it with sufficient
quantities of certain materials used in the production of one or more of its
product lines. To minimize its reliance on a particular vendor, the Company
continually seeks to identify multiple vendors qualified to supply its
production materials. Although the Company believes that it is not dependent on
any single supplier, the inability of the Company to obtain sufficient
quantities of certain production inputs could have a material adverse effect on
the Company's financial condition or results of operations.

Patents and Trademarks

   The Company's business and competitive position benefit from the validity
and enforcement of its intellectual property protection. The Company owns a
variety of patents, trademarks, trade secrets, know-how and other intellectual
property which it believes to be important to its current and future success.
The market for the Company's products rewards product innovation, which tends
to amplify the importance of intellectual property protection.

   The Company holds numerous U.S. and foreign patents and patent applications
which relate to aspects of the technology used in the Company's products. The
Company's policy is to file patent applications to protect technology,
inventions and improvements that are considered important to the development of
its business. There can be no assurance that patent applications filed by the
Company will result in the issuance of patents or that any of the Company's
intellectual property will continue to provide competitive advantages for the
Company's products or will not be challenged, circumvented by others or
invalidated.

   The Company holds more than 70 U.S. patents, many of which have been
extended into key foreign countries. The most important part of the Company's
patent portfolio relates to the design and production techniques of the
Company's cosmetic lenses. These patents begin to expire in the year 2004. The
Company's patents include patterns for changing the color of and enhancing the
iris, as well as methods for performing the printing operation and promoting
the adhesion of the printed ink to the lens. This group of patents covers both

                                       8
<PAGE>

the technology used by the Company in the production of its cosmetic lenses, as
well as many viable alternatives which could be used to replicate such
production techniques. Another important group of patents covers the Company's
newest lens molding technology, which accommodates a high degree of automation
with correspondingly lower manufacturing cost. The features covered are casting
cup design, numerous process techniques and blister package design. The Company
has filed but not yet received a patent for its automatic lens inspection
system. The Company also holds patents covering a UV-absorbing compound used
for making UV-absorbing lenses, the design and manufacture of toric lenses,
lens materials and bifocal lens technology.

   The Company's policy is to aggressively prosecute and defend its patents and
other proprietary technology. The Company is currently seeking to enforce its
intellectual property rights to cosmetic lenses in lawsuits filed by the
Company in Italy and in Germany and has similar actions planned in other
countries. The prosecution and defense of intellectual property protections,
like any lawsuit, is inherently uncertain and carries no guarantee of success.
The protection of intellectual property in certain foreign countries is
particularly uncertain. There can be no assurance that the prosecution and
defense of its intellectual property will be successful or that the Company
will be able to secure adequate intellectual property protections in the
future.

   The Company's trademarks include the following well recognized brand names:
Aquaflex(R), CSI(R), DuraSoft(R), Elegance, FreshLook(R), FreshLook
ColorBlends(R), Gentle Touch(R), Hydrocurve(R), Optifit(R), Polycon(R),
Precision UV(R) and SoftPerm(R). The Company's policy is to register trademarks
in countries where registration is available and deemed necessary or
appropriate. Trademark applications are pending for various marks in the United
States and other countries. There are gaps in registrations, and some marks may
not be available for use in various countries.

   In addition to patents and trademarks, the Company owns certain trade
secrets, copyrights, know-how and other intellectual property. The Company
seeks to protect these assets, in part, by entering into confidentiality
agreements with its business partners, consultants and vendors and appropriate
non-competition agreements with its officers and employees. There can be no
assurance that these agreements will not be breached, that the Company will
have adequate remedies for any such breach or that the Company's trade secrets
and other intellectual property will not otherwise become known or be
independently developed by others and thereby become unprotected.

Government Regulation

   The Company's products are generally regulated in the United States and in
foreign countries as "medical devices." As a manufacturer of medical devices,
the Company is subject to regulation in the United States by the Food and Drug
Administration (the "FDA") and corresponding state and foreign regulatory
agencies where the Company sells its products. These regulations generally
govern the introduction of new medical devices, the maintenance of certain
records, the tracking of devices and other matters. The regulatory environment
in which the Company operates can be expensive, time-consuming and uncertain.

 FDA Regulation

   Pursuant to the Federal Food, Drug and Cosmetic Act (the "FDC Act"), and the
regulations promulgated thereunder, the FDA regulates the preclinical and
clinical testing, manufacture, labeling, distribution, and promotion of medical
devices.

   Noncompliance with applicable requirements can result in, among other
things, fines, injunctions, civil penalties, recall or seizure of products,
total or partial suspension of production, failure of the government to grant
premarket clearance or premarket approval ("PMA") for devices, withdrawal of
marketing clearances or approvals and criminal prosecution. The FDA also has
the authority to request the recall, repair, replacement or refund of the cost
of any device manufactured or distributed by the Company.

   Under the FDC Act, clearance or approval by the FDA is required prior to the
commercialization of a medical device. The FDA classifies medical devices as
Class I, Class II or Class III, depending on the nature of

                                       9
<PAGE>

the medical device and the existence in the market of any similar devices. The
nature of the clearance or approval procedures is dependent on the
classification of the medical device in question. Class I medical devices are
subject to general controls, including labeling, premarket notification and
adherence to the FDA's good manufacturing practice regulations ("GMP
Regulations"). Class II medical devices are subject to general and special
controls, including performance standards, postmarket surveillance, patient
registries and FDA guidelines. Class III medical devices are those which must
receive premarket approval by FDA to ensure their safety and effectiveness, are
generally life-sustaining, life-supporting devices or implantable devices or
new devices which have been found not to be substantially equivalent to
currently marketed medical devices. The Company's products are generally
regulated as Class II medical devices, with some products (extended wear
lenses) regulated as Class III medical devices.

   Before a new device can be introduced into the U.S. market, it must receive
from the FDA clearance or approval, either premarket notification clearance
under Section 510(k) of the FDC Act or approval pursuant to the more costly and
time-consuming PMA procedure. The Company's daily wear contact lenses are
generally subject to the 510(k) clearance procedure while its extended wear
contact lenses are subject to the PMA requirements. A PMA application must be
supported by valid scientific evidence to demonstrate the safety and
effectiveness of the device, typically including the results of clinical
trials, bench tests, laboratory and animal studies. The PMA must also contain a
complete description of the device and its components, and a detailed
description of the methods, faculties and controls used to manufacture the
device. In addition, the submission must include the proposed labeling,
advertising literature and any training materials. The PMA process can be
expensive, uncertain and lengthy, and a number of devices for which FDA
approval has been sought by other companies have never been approved for
marketing. Modifications to a device that is the subject of an approved PMA,
its labeling, or manufacturing process may require approval by the FDA of PMA
supplements or new PMAs. Supplements to a PMA often require the submission of
the same type of information required for an initial PMA, except that the
supplement is generally limited to that information needed to support the
proposed change from the product covered by the original PMA.

   A 510(k) clearance will be granted if the submitted information establishes
that the proposed device is "substantially equivalent" to a legally marketed
Class I or Class II medical device or a Class III medical device for which the
FDA has not called for PMAs. For any devices that are cleared through the
510(k) process, modifications or enhancements that could significantly affect
safety or effectiveness, or constitute a major change in the intended use of
the device, will require new 510(k) submissions. While less expensive and time-
consuming than obtaining PMA clearance, securing 510(k) clearance may involve
the submission of a substantial volume of data, including clinical data, and
may require a substantive review of six months or more. The Company markets
contact lenses which have received 510(k) clearances as well as lenses which
have been the subject of approved PMA applications.

   Any products manufactured or distributed pursuant to 510(k) clearance or an
approved PMA are subject to pervasive and continuing regulation by the FDA,
including recordkeeping requirements and reporting of adverse experience with
the use of the device.

   The Company currently has over 20 PMAs and 510(k) clearances for its
products marketed in the United States. New products may require clinical
studies to support a PMA or 510(k) clearance. There is no certainty that
clinical studies involving new products will be completed in a timely manner or
that the data and information obtained will be sufficient to support the filing
of a PMA or 510(k) clearance. There can be no assurance that the Company will
be able to obtain necessary approvals to market new devices or any other
products under development on a timely basis, if at all, and delays in receipt
or failure to receive such approvals, the loss of previously received
approvals, or failure to comply with existing or future regulatory requirements
could have a material adverse effect on the Company's business, financial
condition and results of operations.

   The Company has made modifications to its devices which the Company believes
do not require the submission of new 510(k) notices or PMA supplements. There
can be no assurance, however, that the FDA

                                       10
<PAGE>

would agree with any of the Company's determinations not to submit a new 510(k)
notice or PMA supplement for any of these changes or would not require the
Company to submit a new 510(k) notice or PMA supplement for any of the changes
made to the device. If the FDA requires the Company to submit a new 510(k)
notice or PMA supplement for any device modification, the Company may be
prohibited from marketing the modified device until the 510(k) notice or PMA
supplement is cleared by the FDA. There can be no assurance that future
clearances or approvals, whether under the 510(k) clearance procedure or the
PMA procedure, will be obtained in a timely fashion or at all. The failure to
obtain such clearances or approvals in a timely fashion or at all, could have a
material adverse effect on the Company's business, financial condition or
results of operations.

   If human clinical trials of a device are required, whether for a 510(k) or a
PMA, and the device presents a "significant risk," the sponsor of the trial
(usually the manufacturer or the distributor of the device) is required to file
an investigational device exemption ("IDE") application prior to commencing
human clinical trials. IDE regulations generally require FDA approval and
approval by an independent institutional review board before a clinical study
may begin. Conforming with IDE regulations can add significant cost and/or
delay to the process of obtaining FDA approval for a medical device. Submission
of an application IDE does not give assurance that the FDA will approve the IDE
application and, if it is approved, there can be no assurance that the FDA will
determine that the data derived from these studies support the safety and
efficacy of the device or warrant the continuation of clinical studies.
Sponsors of clinical trials are permitted to sell investigational devices
distributed in the course of the study provided such compensation does not
exceed recovery of the costs of manufacture, research, development and
handling. An IDE supplement must be submitted to and approved by the FDA before
a sponsor or investigator may make a change to the investigational plan that
may affect its scientific soundness or the rights, safety or welfare of human
subjects.

   As a manufacturer of medical devices, the Company is required to register
with the FDA and comply with the FDA's good manufacturing practice regulations.
GMP Regulations require that the Company manufacture its products and maintain
its manufacturing, testing and control activities records in a prescribed
manner. Further, the Company is required to comply with FDA requirements for
labeling and promoting its products. The Company is subject to periodic
inspections by the FDA and can be subjected to a number of regulatory actions
if it is found not to be in compliance with applicable laws and regulations. If
the FDA believes that a company may not be operating in compliance with
applicable laws and regulations, it can record its observations on a form FDA
483; place the company under observation and reinspect the facilities;
institute proceedings to issue a warning letter apprising of violative conduct;
detain or seize products; mandate a recall; enjoin future violations; and
assess civil and criminal penalties against that company, its officers or its
employees. In addition, clearances or approvals could be withdrawn in
appropriate circumstances. Failure to comply with regulatory requirements or
any adverse regulatory action could have a material adverse affect on the
Company. On occasion, the Company has received notifications from the FDA of
alleged deficiencies in the Company's compliance with FDA requirements. In
1999, inspections were performed in Southampton, United Kingdom and Cidra,
Puerto Rico. A form FDA 483 was issued for several items requiring corrective
action in Southampton. The Company corrected these items and notified the FDA
of its readiness for a re-inspection. The date of the re-inspection is pending.
The Company does not expect such inspections to give rise to any material FDA
compliance issues or to otherwise have a material adverse effect on the
Company.

   Manufacturers of medical devices for marketing in the United States must
also comply with medical device reporting ("MDR") requirements that a firm
report to FDA any incident in which its product may have caused or contributed
to a death or serious injury, or in which its product malfunctioned and, if the
malfunction were to recur, it would be likely to cause or contribute to a death
or serious injury. Labeling and promotional activities are subject to scrutiny
by the FDA and, in certain circumstances, by the FTC. Current FDA enforcement
policy prohibits the marketing of approved medical devices for unapproved uses.

   The Company is subject to routine inspection by the FDA and certain state
agencies for compliance with GMP requirements, MDR requirements, and other
applicable regulations. The FDA has recently finalized changes to the GMP
regulations, including the addition of design control requirements, which will
likely increase the cost of compliance with GMP requirements. There can be no
assurance that the Company will not

                                       11
<PAGE>

incur significant costs to comply with laws and regulations in the future or
that laws and regulations will not have a material adverse effect upon the
Company's business, financial condition or results of operation. The Company
believes that all of its products offered for sale have received all required
FDA approvals or clearance, and that it is in substantial compliance with FDA
regulations, including GMP and MDR requirements.

 International Regulation

   The Company's products are also subject to regulation in other countries in
which it sells its products. The laws and regulations of such countries range
from comprehensive medical device approval procedures such as those described
above to simple requests for product data or certifications. The number and
scope of these laws and regulations are increasing. In particular, medical
devices in the EU are subject to the EU's new medical devices directive (the
"Directive").

   Under the system established by the Directive, all medical devices other
than active implants and in vitro diagnostic products must qualify for CE
marking. "CE marking" means the manufacturer certifies that its product bearing
the CE mark satisfies all requirements essential for the product to be
considered safe and fit for its intended purpose.

   In order to qualify for CE marking, the manufacturer must comply with the
"Essential Requirements" of the Directive, relating to the safety and
performance of the product. In order to demonstrate compliance, a manufacturer
is required to undergo a conformity assessment, which includes assessment of
the manufacturer's quality assurance system by self-selected certification
organizations referred to as a "Notified Body." After all necessary conformity
assessment tests have been completed to the satisfaction of the Notified Body
and the manufacturer is convinced that it is in full compliance with the
Directive, CE marking may be affixed on the products concerned. The Company has
undergone such conformity assessment, with two Dutch and one British non-
governmental entities chosen by the Company as its Notified Bodies. The Company
has received CE marking authorization for all products it currently markets in
the EU.

   Although member countries must accept for marketing medical devices bearing
a CE marking without imposing further requirements related to product safety
and performance, each country may require the use of its own language or labels
and instructions for use. "National Competent Authorities" who are required to
enforce compliance with the requirements of the Directive, can restrict,
prohibit and recall CE-marked products if they are unsafe. Such a decision must
be confirmed by the European Commission in order to be valid. Member countries
can impose additional requirements as long as they do not violate the Directive
or constitute technical barriers to trade.

   Additional approvals from foreign regulatory authorities may be required for
international sale of the Company's products in non-EU countries. Failure to
comply with applicable regulatory requirements can result in the loss of
previously received approvals and other sanctions and could have a material
adverse effect on the Company's business, financial condition and results of
operations.

 Additional Regulation

   The Company also is subject to numerous federal, state and local laws
relating to such matters as safe working conditions, manufacturing practices,
environmental protection, fire hazard control and disposal of hazardous or
potentially hazardous substances. There can be no assurance that the Company
will not be required to incur significant costs to comply with such laws and
regulations in the future or that such laws or regulations will not have a
material adverse effect upon the Company's ability to do business.

   The Company's success depends to a significant extent upon the success of
its customers in the retail optical industry. These customers are subject to a
variety of federal, state and local laws, regulations and ordinances, including
those regarding advertising, location and design of stores, products sold and
qualifications

                                       12
<PAGE>

and practices of the industry. The state and local legal requirements vary
widely among jurisdictions and are subject to frequent change. Furthermore,
numerous health-care related legislative proposals have been made in recent
years in the United States Congress and in various state legislatures. The
potential impact of these proposals with respect to the business of the
Company's customers is uncertain, and there is no assurance that the proposals,
if adopted, would not have a material adverse impact on the Company.

Employees

   As of December 31, 1999, the Company had 2,602 full-time and part-time
employees, including 1,701 in the United States (including Puerto Rico), 732 in
Europe, and 169 in the rest of the world. The Company has no collective
bargaining agreements with any union and believes that its overall relations
with employees are satisfactory.

Environmental, Health and Safety Matters

   The Company is subject to federal, state, local and foreign environmental
laws and regulations and is subject to liabilities and compliance costs
associated with the past and current handling, processing, storing and
disposing of hazardous substances and wastes. The Company's operations are also
subject to federal, state and local occupational health and safety laws and
regulations. The Company devotes resources to maintaining environmental
regulatory compliance and managing environmental risk and believes that it
conducts its operations in substantial compliance with applicable environmental
and occupational health and safety laws and regulations. The Company does not
expect to incur material capital expenditures for environmental controls in the
current or succeeding fiscal year.

   In connection with the Wesley Jessen Acquisition and the Barnes-Hind
Acquisition, the respective sellers, subject to certain limitations, agreed to
retain responsibility for, and indemnify the Company from and against, certain
environmental matters. These matters include addressing a limited area of
historical contamination at the Company's Des Plaines facility and settling any
liability of Barnes-Hind at a Superfund site located in Whittier, California
and Santa Barbara County, California. Notwithstanding these contractual
agreements, the Company could be pursued in the first instance by governmental
authorities or third parties with respect to certain indemnified matters,
subject to the Company's right to seek indemnification from the appropriate
seller. Management does not currently believe that any such matter will have a
material adverse effect on the business or financial condition of the Company.


                                       13
<PAGE>

Item 2. Properties

   The Company's principal manufacturing facilities are located in Cidra,
Puerto Rico; Des Plaines, Illinois; San Diego, California; and Southampton,
United Kingdom. The Company's headquarters is located in Des Plaines, Illinois
(a suburb of Chicago).

   The Company believes that substantially all of its property and production
equipment is in good condition and, after the completion of the expansion at
the Des Plaines, Illinois facility in the fourth quarter of 1999, that it has
sufficient capability to meet its current and projected manufacturing and
distribution needs for the foreseeable future. All of the Company's owned
properties are subject to a mortgage as collateral under the bank credit
agreement. The following table describes the principal properties of the
Company as of December 31, 1999:

<TABLE>
<CAPTION>
                                                           Square
Location           Function                                Footage Owned/Leased
--------           --------                                ------- ------------
<S>                <C>                                     <C>     <C>
Des Plaines,       Corporate Headquarters/Disposable       340,000     Owned
 Illinois          Manufacturing/R&D/Distribution
Des Plaines,
 Illinois          Distribution Center                      62,883    Leased
Chicago, Illinois  Distribution Center (1)                  48,000    Leased
San Diego,
 California        Conventional Manufacturing/Distribution  69,700    Leased
Cidra, Puerto
 Rico              Conventional Manufacturing               65,000     Owned
Southampton,
 United Kingdom    Disposable Manufacturing/R&D             66,200    Leased
Southampton,
 United Kingdom    Conventional Manufacturing               12,250    Leased
Farnham, United
 Kingdom           RGP Manufacturing                         5,000    Leased
Chandlers Ford,
 United Kingdom    Conventional Manufacturing               20,000    Leased
Eastleigh, United
 Kingdom           Distribution Center                      25,000    Leased
Mississauga,
 Ontario           Sales Office/Distribution                 7,000    Leased
Rome, Italy        Sales Office/Distribution                 7,750    Leased
Paris, France      Sales Office/Distribution                12,000    Leased
Sydney, Australia  Sales Office/Distribution                 7,500    Leased
Sydney, Australia  Manufacturing                             7,050    Leased
Tokyo, Japan       Sales Office/Distribution                 5,000    Leased
Madrid, Spain      Sales Office/Distribution                  *       Leased
Rotterdam,
 Holland           Sales Office                               *       Leased
Sao Paulo, Brazil  Sales Office/Distribution                  *       Leased
Munich, Germany    Sales Office                               *       Leased
Hong Kong          Sales Office                               *       Leased
Singapore          Sales Office                               *       Leased
Mexico City,
 Mexico            Sales Office                               *       Leased
Buenos Aires,
 Argentina         Manufacturing                              *       Leased
Buenos Aires,
 Argentina         Sales Office/Distribution                  *       Leased
</TABLE>
--------
*Less than 5,000 square feet.
(1)This facility was sublet in September 1998

   Cidra, Puerto Rico. This 65,000 square foot facility was completed in 1991
and primarily produces the Company's CSI spherical, Durasoft and Optifit
conventional clear and specialty lenses.

   Des Plaines, Illinois. This 340,000 square foot facility currently produces
all of the Company's FreshLook disposable lenses and also houses its corporate
headquarters, research and development activities and other administrative
services.

                                       14
<PAGE>

   San Diego, California. This 69,700 square foot facility produces the
Company's CSI and Hydrocurve toric lenses and Gentle Touch lenses.
Additionally, the facility is used for customer service. The U.S. distribution
function was transferred to the Des Plaines, Illinois facility in February
1999. For additional information about the phase out of this facility, refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

   Southampton, United Kingdom. This 66,200 square foot facility was
substantially completed in 1996 and supports production of the Company's
Precision UV lenses.

Item 3. Legal Proceedings

   The Company is currently a party to various claims and legal actions which
arise in the ordinary course of business. The Company believes such claims and
legal actions, individually and in the aggregate, will not have a material
adverse effect on the business, financial condition or results of operations of
the Company. The Company carries insurance coverage in the types and amounts
that management considers reasonably adequate to cover the risks it faces in
the industry in which it competes. There can be no assurance, however, that
such insurance coverage will be adequate to cover all losses which the Company
may incur in future periods.

   In connection with the Barnes-Hind Acquisition, Pilkington plc agreed,
subject to certain limitations, to retain responsibility for, and indemnify the
Company from and against, certain litigation and other claims. Notwithstanding
these contractual agreements, the Company could be pursued in the first
instance by third parties with respect to certain indemnified matters, subject
to the Company's right to seek indemnification from such seller. Management
does not currently believe that any such matter will have a material adverse
effect on the business or financial condition of the Company.

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

   No matters were submitted to a vote of the Company's security-holders in the
fourth quarter of 1999.

Item 4A. Executive Officers of the Registrant

<TABLE>
<CAPTION>
Name                     Age Position
----                     --- --------
<S>                      <C> <C>
Kevin J. Ryan...........  60 Chairman of the Board, President, Chief Executive Officer and Director
Edward J. Kelley........  51 Vice President, Finance, Chief Financial Officer and Director
Raleigh S. Althisar,
 Jr.....................  51 Vice President, Worldwide Manufacturing
Ronald J. Artale........  50 Vice President and Controller
Lawrence L. Chapoy......  57 Vice President, Research & Development
William M. Flynn........  41 Vice President, Pan Asia
Joseph F. Foos..........  48 Vice President, Scientific Affairs
George H. McCrary.......  57 Vice President, Americas
Daniel M. Roussel.......  51 Vice President, Europe
Thomas F. Steiner.......  54 Vice President, Marketing
</TABLE>

   Kevin J. Ryan has served as President, Chief Executive Officer and a
Director of the Company since June 1995 and has served as Chairman of the Board
since February 1999. From 1991 to 1995, Mr. Ryan was President of BioSource
Genetics Corporation. From 1987 to 1990, Mr. Ryan served as President of the
Barnes-Hind contact lens business; from 1983 to 1987, as President of Revlon
VisionCare (a division of Revlon, Inc.); and from 1978 to 1983, as President of
Barnes-Hind (then a part of Revlon VisionCare).

   Edward J. Kelley has served as Vice President, Finance, Chief Financial
Officer and a Director of the Company since June 1995. Prior to joining the
Company, Mr. Kelley served as the President, Asia Pacific and Latin America of
Barnes-Hind and its Chief Financial Officer. Prior to joining Barnes-Hind, Mr.
Kelley held positions of increasing responsibility with Simon & Schuster,
Revlon Health Care and Peat Marwick Mitchell & Company.

                                       15
<PAGE>

   Raleigh S. Althisar, Jr. has served as Vice President, Worldwide
Manufacturing of the Company since October 1996. Prior to joining the Company,
Mr. Althisar served as Executive Vice President, Worldwide Manufacturing of
Barnes-Hind. Prior thereto, he held positions of increasing responsibility with
the Sola division of Barnes-Hind, Syntex Ophthalmics, Retail Optical Management
and Milton Roy Ophthalmics.

   Ronald J. Artale has served as Vice President of the Company since February
1997 and Controller since March 1996. Prior to joining the Company, Mr. Artale
served as Corporate Vice President, Planning with Simon & Schuster. In
addition, Mr. Artale has held positions of increasing responsibility with
Revlon VisionCare, including Vice President, Finance for Barnes-Hind.

   Lawrence L. Chapoy has served as Vice President, Research & Development of
the Company since 1993. Prior to joining the Company, Dr. Chapoy spent eight
years with Montedison Chemical Company as a Project Researcher and fifteen
years as a Chemical Engineering Professor at the Polytechnic University of
Denmark. In these positions, Dr. Chapoy conducted and managed research in a
variety of materials science related areas. Dr. Chapoy holds more than 25
patents, has authored more than 75 publications and presented over 100 lectures
during the course of his career.

   William M. Flynn has served as the Vice President, Pan Asia of the Company
since 1994. Prior to being named to his current position, Mr. Flynn served as
International Finance Manager for two years and in other positions in the
Finance Department of Schering-Plough Corporation for two years. In addition,
Mr. Flynn held a variety of finance positions with Prudential Insurance Company
of America and RCA Records.

   Joseph F. Foos has served as Vice President, Scientific Affairs of the
Company since 1994. Mr. Foos joined Wesley Jessen in 1987 and has served as
Manager, Quality Assurance for two years, Project Manager for Research and
Development Pilot Manufacturing and various other positions of increasing
responsibility.

   George H. McCrary has served as Vice President, Americas of the Company
since 1996. Prior to joining the Company, Mr. McCrary held the position of
Senior Vice President of Sales, Marketing and Distribution for Foster Grant
Corporation and prior to that, Vice President Sales and Marketing, Consumer
Products Division for Revlon VisionCare. Before joining Revlon VisionCare, he
held sales and marketing positions of increasing responsibility with the
Warner-Lambert Company.

   Daniel M. Roussel has served as Vice President, Europe for Wesley Jessen
since 1995. Mr. Roussel opened the Company's French subsidiary and served for
three years as General Manager Wesley Jessen, France. Previously, Mr. Roussel
held positions in marketing and sales with Schering-Plough in Hong Kong, Japan,
and Portugal. Mr. Roussel also worked as Regional Director, Asia Pacific, for
Goupit Labs based in Hong Kong.

   Thomas F. Steiner has served as Vice President, Marketing of the Company
since 1996. Mr. Steiner has served in various marketing-related positions since
joining the Company in 1982. Prior to joining the Company, Mr. Steiner worked
at Sara Lee Corporation for seven years as Group Product Manager and Project
Research Manager. Mr. Steiner also worked at J. Walter Thompson Company as
Associate Research Director.

   There are no family relationships between any of the executive officers of
the Company.

                                       16
<PAGE>

                                    PART II

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

Market Information

   The Common Stock is traded on the Nasdaq National Market ("Nasdaq") under
the symbol "WJCO." The following table sets forth on a per share basis, the
high and low bid sale prices per share for the Common Stock as reported by the
Nasdaq for the period indicated:

<TABLE>
<CAPTION>
                                                                    High   Low
                                                                   ------ ------
   <S>                                                             <C>    <C>
   1998:
   First Quarter.................................................. $40.25 $31.38
   Second Quarter.................................................  35.63  18.19
   Third Quarter..................................................  26.38  16.13
   Fourth Quarter.................................................  28.25  16.13

   1999:
   First Quarter.................................................. $28.13 $20.25
   Second Quarter.................................................  35.13  25.00
   Third Quarter..................................................  33.25  26.88
   Fourth Quarter.................................................  40.94  25.31
</TABLE>

Holders

   As of the close of business on March 15, 2000, there were approximately
3,909 beneficial holders of record of Common Stock. A recent reported last sale
price of the Common Stock on the Nasdaq is set forth on the cover page of this
report.

Dividends

   Since its incorporation in 1995, the Company has not declared or paid any
cash or other dividends on its Common Stock and does not expect to pay
dividends for the forseeable future. Instead, the Company currently intends to
retain earnings to support its growth strategy and reduce indebtedness. As a
holding company, the ability of the Company to pay dividends in the future is
dependent upon the receipt of dividends or other payments from its principal
operating subsidiary. The Company's bank credit agreement permits the payment
of dividends of up to $3.0 million annually plus certain excess cash available
at the time of payment, if any. Any future determination to pay dividends will
be at the discretion of the Company's Board of Directors and will depend upon,
among other factors, the Company's results of operations, financial condition,
capital requirements and contractual restrictions.

Recent Sales of Unregistered Securities

   No securities of the Company that were not registered under the Securities
Act have been issued or sold by the Company within the period covered by this
report.

                                       17
<PAGE>

Item 6. Selected Financial Data

   The selected financial data presented below have been derived from the
consolidated financial statements of the Company. The financial statements for
each of the years in the five year period ended December 31, 1999 have been
audited by PricewaterhouseCoopers LLP, independent accountants. This selected
financial data should be read in conjunction with "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the Company's
Consolidated Financial Statements and Notes.

<TABLE>
<CAPTION>
                                              Company
                          --------------------------------------------------
                                                                             Predecessor
                                                                  June 29     January 1
                            Twelve Months Ended December 31       through      through
                          ------------------------------------  December 31,  June 28,
                            1999     1998     1997      1996        1995        1995
                          -------- -------- --------  --------  ------------ -----------
<S>                       <C>      <C>      <C>       <C>       <C>          <C>
Statements of Income:
Net sales...............  $311,689 $292,259 $282,178  $156,752    $ 54,315    $ 51,019
Income (loss) before
 income taxes and
 extraordinary loss.....    51,487   43,847   12,388    (4,108)    (33,737)    (22,544)
Income (loss) before
 extraordinary loss.....    35,011   29,597    8,200    (1,071)    (19,715)    (13,143)
Extraordinary loss, net
 of income tax benefit..       --       --    (4,902)   (1,671)        --          --
Net income (loss).......    35,011   29,597    3,298    (2,742)    (19,715)    (13,143)

Income (loss) per common
 share:
 Basic
  Income (loss) before
   extraordinary loss...  $   2.03 $   1.70 $   0.49  $  (0.07)   $  (1.37)
  Extraordinary loss,
   net of income tax
   benefit..............  $    --  $    --  $  (0.29) $  (0.12)   $    --
  Net income (loss).....  $   2.03 $   1.70 $   0.20  $  (0.19)   $  (1.37)

 Diluted
  Income (loss) before
   extraordinary loss...  $   1.88 $   1.57 $   0.45  $  (0.07)   $  (1.37)
  Extraordinary loss,
   net of income tax
   benefit..............  $    --  $    --  $  (0.27) $  (0.12)   $    --
  Net income (loss).....  $   1.88 $   1.57 $   0.18  $  (0.19)   $  (1.37)

Balance Sheets:
Working capital.........  $ 80,350 $ 83,717 $ 65,835  $ 77,747    $ 30,262
Total assets............   223,014  204,518  173,076   180,600      67,330
Total debt..............    50,441   69,000   57,000   102,975      42,000
Stockholders' equity
 (deficit)..............    90,868   49,952   36,846   (13,292)    (12,190)
</TABLE>

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

Overview

   Wesley Jessen is the leading worldwide developer, manufacturer and marketer
of specialty soft contact lenses, based on its share of the specialty lens
market. The Company's products include cosmetic lenses, which change or enhance
the wearer's eye color appearance; toric lenses, which correct vision for
people with astigmatism; and premium lenses, which offer value-added features
such as improved comfort for dry eyes and protection from UV light. Founded in
1946 by pioneers in the contact lens industry, the Company has a long-standing
reputation for innovation and new product introductions. Wesley Jessen develops
technology, manufacturing processes and products through a combination of its
in-house staff of more than 100 engineers

                                       18
<PAGE>

and scientists and Company-sponsored research by third-party experts. The
Company markets and sells its products to consumers through one of the largest
advertising campaign in the industry and to eyecare practitioners through its
222 person salesforce and network of independent distributors, which together
sell the Company's products in more than 75 countries.

Barnes-Hind Acquisition

   On October 2, 1996, the Company acquired the contact lens business of
Pilkington plc, operating as the Pilkington Barnes Hind Group (the "Barnes-Hind
Acquisition"). The Barnes-Hind Acquisition was completed for a total purchase
price of $117.6 million, consisting of cash paid of $62.3 million and
liabilities assumed of $55.3 million. In addition, the Company paid
acquisition-related fees and expenses of $4.4 million. The acquisition was
financed through borrowings on the Company's then-existing credit agreement and
a $5.0 million seller note.

   In connection with the Barnes-Hind Acquisition, the Company identified
significant operating synergies and substantial cost saving opportunities. The
Company has completed its initial cost reduction measures which, as expected,
have improved the Company's operating results. The Company is in the process of
closing its manufacturing operations in San Diego, California and continues to
shift conventional lens production to its plant in Cidra, Puerto Rico. The
Company believes this consolidation of facilities will generate additional cost
savings and further operating leverage. However, there can be no assurance that
the Company will be able to achieve such cost savings in future periods.

   As a result of the Barnes-Hind Acquisition, the Company recognized a
significant non-cash increase in cost of goods sold of $22.7 million in 1997
related to the amortization of the Barnes-Hind purchased inventory step-up to
fair value at the acquisition date. An adjustment for this non-recurring charge
has been reflected in the pro forma column of the Company's Unaudited Statement
of Operations Data. See "Results of Operations."

The IPO and the Offering

   In February and March, 1997, the Company consummated an initial public
offering (the "IPO") of 2.8 million shares of Common Stock at $15.00 per share.
A secondary public offering (the "Offering") of 4.3 million shares of Common
Stock at $23.50 per share was completed in August and September, 1997, of which
3.8 million shares were sold by certain selling stockholders and 0.5 million
shares were sold by the Company.

   In connection with the IPO, the Company incurred a non-recurring charge for
extraordinary debt extinguishment costs of $7.4 million ($4.9 million, net of
income tax benefit) related to the write-off of capitalized financing fees
incurred in connection with the Barnes-Hind Acquisition financing.
Additionally, the Company incurred and capitalized financing fees of $2.5
million, which are being amortized over 60 months.

   Interest expense reductions as if the IPO had occurred on January 1, 1997
are reflected in the pro forma column of the Company's Unaudited Statement of
Operations Data. See "Results of Operations." However, there can be no
assurance that the Company's interest expense will not increase in future
periods either as a result of increased borrowings or higher interest rates.

Results of Operations

   The Barnes-Hind Acquisition occurred on October 2, 1996. Because of the
revaluation of the assets and liabilities, the related impact on cost of sales
and expenses and the several cost-reduction and operating improvements
undertaken in connection with such Acquisition, the financial statements of the
Company for the years ended December 31, 1999, 1998 and 1997 are not
comparable. In addition, the Company completed its IPO in February, 1997, which
had a significant impact on the Company's ongoing interest expense. To improve
the comparability of the Company's last three fiscal years, and to assist the
reader in better understanding the changes in the Company's operations over
such periods, the Company has set forth below certain pro forma

                                       19
<PAGE>

operating results for the year ended December 31, 1997 giving effect to the
cost-reduction and operating improvements as if such transactions occurred on
January 1, 1997. The pro forma adjustments are set forth in the note to the
table. The pro forma information included herein for the prior year period is
presented for informational purposes only and should not be viewed as a
substitute for the Company's results of operations calculated in accordance
with generally accepted accounting principles. In addition, the following pro
forma information does not purport to represent the results of operations of
the Company had such transactions in fact occurred on such date, nor do they
purport to be indicative of the results of operations of any future periods.
The following pro forma information should be read in conjunction with the
Consolidated Financial Statements of the Company included herein.

                     Unaudited Statement of Operations Data
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                             Pro
                                        Actual    Actual    Forma     Actual
                                         1999      1998    1997(a)     1997
                                       --------  --------  --------  --------
<S>                                    <C>       <C>       <C>       <C>
Net sales............................. $311,689  $292,259  $282,178  $282,178
Operating costs and expenses:
  Cost of goods sold..................   98,109    90,471    92,780   115,446
  Marketing and administrative........  146,458   143,309   136,565   137,650
  Research and development............   12,618    10,818    11,997    11,997
  Amortization of goodwill, net.......     (845)     (997)     (862)     (862)
                                       --------  --------  --------  --------
  Income from operations..............   55,349    48,658    41,698    17,947
Other (income) expense:
  Equity in net loss of affiliate.....      380       --        --        --
  Interest expense, net...............    3,482     4,811     5,148     5,559
                                       --------  --------  --------  --------
Income before income taxes and
 extraordinary loss...................   51,487    43,847    36,550    12,388
Income tax expense....................  (16,476)  (14,250)  (12,244)   (4,188)
                                       --------  --------  --------  --------
Income before extraordinary loss......   35,011    29,597    24,306     8,200
Extraordinary loss, net of related
 income tax benefit...................      --        --        --     (4,902)
                                       --------  --------  --------  --------
Net income............................ $ 35,011  $ 29,597  $ 24,306  $  3,298
                                       ========  ========  ========  ========
Net income per common share:
  Basic............................... $   2.03  $   1.70  $   1.40  $   0.20
                                       ========  ========  ========  ========
  Diluted............................. $   1.88  $   1.57  $   1.29  $   0.18
                                       ========  ========  ========  ========
Weighted average common shares
 outstanding:
  Basic...............................   17,248    17,432    17,302    16,898
                                       ========  ========  ========  ========
  Diluted.............................   18,624    18,904    18,856    18,451
                                       ========  ========  ========  ========
</TABLE>
--------
(a) The pro forma results include adjustments for (i) the elimination of
    inventory step-up amortization of $22,666; (ii) the cost savings of $1,085
    relating to the reduction of certain operating expenses including the
    consolidation of corporate offices, a reduction in the number of corporate-
    level employees and related expenses, and the curtailment of certain
    manufacturing activities; (iii) the net decrease in interest expense of
    $411 associated with the refinancing in connection with the IPO; (iv) the
    elimination of the extraordinary write-off of capitalized financing fees of
    $4,902; and (v) the adjusted income tax expense resulting from the
    preceding adjustments at an effective income tax rate of 33.5%.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

   Net sales for the year ended December 31, 1999 increased $19.4 million, or
6.6%, to $311.7 million from $292.3 million for the year ended December 31,
1998. This increase resulted primarily from 32.4% growth in

                                       20
<PAGE>

the sales of disposable and planned replacement contact lenses driven by the
introduction of FreshLook ColorBlends(R) and FreshLook(R) Toric, from $124.8
million to $165.2 million, offset by a 12.5% decline in the sales of
conventional lenses, from $167.4 million to $146.5 million. Sales of disposable
and planned replacement lenses grew 40.1% in the U.S. and 23.5% internationally
while sales of conventional lenses fell 11.5% domestically and 14.1% in the
rest of the world. For the year, total U.S. sales increased 8.7% while total
international sales grew 3.8%.

   Gross profit for the year ended December 31, 1999 increased $11.8 million,
or 5.8%, to $213.6 million from $201.8 million in the comparable 1998 period.
Gross profit margin decreased 0.5% to 68.5% in 1999, reflecting short term
production inefficiencies during the first six months of the year related to
meeting the sales demand for new disposable products.

   Marketing and administrative expenses increased by $3.2 million, or 2.2%, to
$146.5 million in 1999 from $143.3 million in 1998. This increase was largely
due to additional selling and distribution expenses to support the expansion of
the international direct salesforce and sales markets principally in the Asia
Pacific region. As a percentage of net sales, marketing and administrative
expenses decreased to 47.0% in 1999 from 49.0% in 1998.

   Research and development expenses for 1999 increased by $1.8 million, or
16.6%, to $12.6 million from $10.8 million in 1998. As a percentage of net
sales, research and development expenses rose to 4.0% from 3.7% in the prior
year period. The increase was driven by spending for the development of
capacity enhancements, bi-focal and other new products and regulatory costs for
gaining approval to market an expanded product line in Japan.

   Equity in net loss of affiliate represents the Company's percentage
ownership of the operations of Inoveon Corporation, in which the Company holds
a minority interest investment. There was no comparable expense in the prior
year.

   Interest expense, net decreased 27.6% to $3.5 million in 1999 from $4.8
million in 1998 due to lower current year interest rates and debt balances
along with the capitalization of interest costs in the 1999 period related to
the construction of additional production capacity. Excluding the impact of
capitalization, interest expense decreased 15.6%.

   Net income for the year ended December 31, 1999 increased $5.4 million, or
18.3%, to $35.0 million from $29.6 million for the year ended December 31, 1998
as increased marketing and administrative costs and higher research and
development expenses were more than offset by gross profit gains. The Company's
effective tax rate decreased slightly to 32% in 1999 from 32.5% in 1998.

Year Ended December 31, 1998 Compared to Pro Forma Year Ended December 31, 1997
(Unaudited)

   Net sales for the year ended December 31, 1998 increased $10.1 million, or
3.6%, to $292.3 million from $282.2 million for the year ended December 31,
1997. This increase resulted primarily from 27.3% growth in the sales of
disposable and planned replacement contact lenses, from $98.0 million to $124.8
million, offset by a 9.1% decline in the sales of conventional lenses, from
$184.1 million to $167.4 million. Sales of disposable and planned replacement
lenses grew 40.4% in the U.S. and 15.0% internationally while sales of
conventional lenses fell 8.4% domestically and 10.2% in the rest of the world.
For the year, total U.S. sales increased 6.1% while international sales were
flat. The sales returns and allowances reserve increased slightly from $10.4
million at December 31, 1997 to $10.6 million at December 31, 1998. This
increase resulted primarily from a price rebate provision, which was only
partially offset by lower distributor return reserve requirements in the
current year.

   Gross profit for the year ended December 31, 1998 increased $12.4 million,
or 6.5%, to $201.8 million from $189.4 million in the comparable 1997 period.
Gross margin improved 1.9% to 69.0% in 1998, reflecting

                                       21
<PAGE>

sales-driven increases in production of the high margin disposable and planned
replacement lenses, as well as cost savings from improved plant utilization and
other operating efficiencies including those associated with benefits of
consolidation.

   Marketing and administrative expenses increased by $6.7 million, or 4.9%, to
$143.3 million in 1998 from $136.6 million in 1997. As a percentage of net
sales, marketing and administrative expenses increased to 49.0% in 1998 from
48.4% in 1997. This increase was largely due to added promotional spending to
support the launch of the FreshLook toric lens and the market expansion of the
disposable and planned replacement product lines, along with higher performance
related compensation expenses.

   Research and development expenses for 1998 decreased by $1.2 million, or
9.8%, to $10.8 million from $12.0 million in 1997. As a percentage of net
sales, research and development expenses declined to 3.7% from 4.3% in the
prior year period. The decrease was driven by the realization of operational
synergies related to the Barnes-Hind Acquisition, successful completion of
various production-related development projects and non-recurring development
efforts in 1997.

   Interest expense, net decreased 6.5% to $4.8 million in 1998 from $5.1
million in 1997 due to the paydown of debt throughout 1997 and early 1998 with
proceeds from the offerings and funds generated from operations.

   Net income for the year ended December 31, 1998 increased by $5.3 million to
$29.6 million from $24.3 million for the year ended December 31, 1997 due to
improvement in gross margin partially offset by higher spending in marketing
and administrative expenses and a more favorable year-over-year effective tax
rate.

Liquidity and Capital Resources

   The Company finances its operations primarily through funds provided from
operations and through borrowings under its revolving credit facility. For the
year ended December 31, 1999, the Company provided approximately $47.6 million
in cash from operating activities driven primarily by profitability gains and
net working capital improvements. For the year ended December 31, 1998, the
Company provided approximately $31.2 million in cash from operating activities.
This source of funds resulted from improved profitability, along with higher
income taxes payable and accounts payable balances, partially offset by
increased inventory and accounts receivable levels. For the year ended December
31, 1997, the Company provided approximately $6.9 million in cash from
operating activities, primarily as a result of increases in profitability
(giving effect to the inventory step-up amortization and the extraordinary
loss), partially offset by working capital requirements and payments under the
plan to integrate the Barnes-Hind operations. Since December 31, 1998, the
Company has made net payments against long term debt of approximately $21.0
million.

   For the years ended December 31, 1999, 1998 and 1997, the Company made
capital expenditures of approximately $30.9 million, $17.2 million and $16.3
million, respectively. The majority of these capital expenditures were for
production capacity expansion, information technology enhancements and site
consolidations. The Company anticipates additional capital expenditures of
approximately $35.0 million to be made throughout 2000 to continue capacity
expansion, complete facility consolidations and improve management information
systems. The Company expects to fund these capital expenditures primarily by
cash generated from operating activities and borrowings under its revolving
credit facility.

   In 2000 the Company expects to incur $4.4 million of costs to complete its
integration of the Barnes-Hind operations which were acquired in 1996.

   The Company maintains a $170 million revolving credit facility, as amended
in August, 1999, the availability of which will be reduced by $20 million in
September 2000 and $20 million in September 2001. The credit agreement imposes
certain restrictions on the Company, including restrictions on its ability to
incur indebtedness, declare dividends or other distributions, make investments
and capital expenditures, grant liens,

                                       22
<PAGE>

sell its assets and engage in certain other activities. The most recent
amendment to the credit agreement relaxes certain restrictions on the Company's
use of loan proceeds by increasing the levels allowed for intercompany loans,
capital contributions to foreign subsidiaries, investments, stock repurchases
and capital expenditures. In addition, the indebtedness of the Company under
the credit agreement is secured by substantially all of the assets of the
Company, including the Company's real and personal property, inventory,
accounts receivable, intellectual property and other tangible assets. As of
December 31, 1999, the Company had approximately $122.0 million available under
this facility.

   Management believes that, based on current levels of operations and
anticipated internal growth, cash flow from operations, together with other
available sources of funds including borrowings under the credit agreement and
cash on hand at December 31, 1999, of $8.9 million, will be adequate over the
next twelve months to make required payments of principal and interest on the
Company's indebtedness, to fund anticipated capital expenditures and working
capital requirements, including the aforementioned restructuring and
integration costs, and to enable the Company to comply with the terms of their
debt agreements. However, actual capital requirements may change, particularly
as a result of any acquisitions the Company may pursue. The ability of the
Company to meet its debt service obligations and reduce its total debt will be
dependent upon the future performance of the Company and its subsidiaries
which, in turn, will be subject to general economic conditions and to
financial, business and other factors, including factors beyond the Company's
control. A significant portion of the consolidated debt of the Company bears
interest at floating rates; therefore, the Company's financial condition is and
will continue to be affected by changes in prevailing interest rates. In
December, 1999, the Company purchased an interest rate cap on $35.0 million
notional principal amount at a fixed rate of 8.5%, which expires on December
31, 2001. The cap is intended to provide partial protection from exposure
relating to the Company's variable rate debt instruments.

   Approximately 41% of the Company's net sales for the year ended December 31,
1999 were to international customers and the Company expects that sales to
international customers will continue to represent a material portion of its
net sales. Historically, fluctuations in foreign currency exchange rates have
had only a minor impact on the Company's results of operations and the Company
does not expect such fluctuations to be material in the foreseeable future.

Share Repurchase Program

   The Board of Directors approved a share repurchase plan on June 10, 1998
which the Company completed on September 18, 1998. Under the plan, the Company
repurchased one million shares of its outstanding common stock at an average
cost of $21 per share. Repurchases were made in normal market trading at
prevailing prices and were funded from operating cash flow and the existing
bank facility. Currently, the Company reissues its treasury stock to satisfy
share requirements related to employee stock incentive plans, employee stock
purchase plans and employee stock awards.

Investments and Acquisitions

   In June 1999, the Company purchased a 16.4% minority interest in Inoveon
Corporation ("Inoveon") for $2.4 million, represented by shares of convertible
Series A preferred stock. In January 2000, the Company made an additional
investment of $1.0 million which increased its ownership to 23.2%. Inoveon, an
Internet disease management company, has granted the Company exclusive U.S.
rights to market a proprietary national system to help optometrists manage
diabetic retinopathy, a leading cause of preventable blindness. After an
initial implementation period, during which Inoveon will deploy the system to
integrated health care providers, the Company will begin marketing it to the
optometric community. The investment is accounted for under the equity method
of accounting.

   In May 1999, the Company, through its Hong Kong subsidiary, acquired certain
assets of Eycon Lens (Hong Kong) Co., Ltd. from its sole shareholder. In June
and July 1998, the Company completed two other international acquisitions. The
total adjusted purchase price for the three acquisitions of approximately $3.2

                                       23
<PAGE>

million, including additional fees and expenses, was funded with existing
liquidity. The Company accounted for the acquisitions under the purchase method
of accounting. None of these acquisitions was material to the Company's
financial statements.

Recent events

   On March 19, 2000, the Company signed a definitive merger agreement ("Merger
Agreement") with Ocular Sciences, Inc. ("Ocular"). Ocular manufactures and
distributes disposable soft contact lenses. Under the merger agreement, the
Company plans to issue approximately 16.9 million shares of its common stock to
Ocular shareholders who will receive .721 shares of Wesley Jessen stock for
each share of Ocular stock held. The merger is subject to approval by the
shareholders of both Wesley Jessen and Ocular Sciences, and is expected to be
accounted for as a pooling-of-interests.

Inflation

   Management believes that inflation has not had a material impact on results
of operations for the Company during the three years ended December 31, 1999.

Recently Issued Accounting Pronouncements

   Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities" issued in June 1998,
establishes accounting and reporting standards for derivative instruments and
for hedging activities. Amending SFAS 52, "Foreign Currency Translation" and
SFAS 107, "Disclosures about Fair Value of Financial Instruments" and
superceding SFAS 80, "Accounting for Futures Contracts," SFAS 105, "Disclosure
of Information about Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit Risk" and SFAS 119,
"Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments," SFAS 133 requires the recognition of all derivatives as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. The effective date for this Statement is
fiscal years beginning after June 15, 2000. Retroactive application to prior
period financial statements is not permitted. The Company expects to adopt this
Statement in its financial statements for the year ending December 31, 2001.
This Statement is not expected to have a material impact on the Company's
financial statements.

Year 2000

   The Company utilizes and relies upon computer technology in many facets of
its operations, such as in the manufacture of contact lenses, the distribution
of lenses to customers, the arrangement of credit in connection with the
purchase of goods and the internal and external reporting of financial and
operational information. The technologies employed by the Company throughout
its operation include hardware and software as well as microprocessors and
other electronic devices which are components of production equipment
("embedded chips"). In the past, certain computer programs were written using
two digits rather than four to define the applicable year. Consequently, any of
the Company's systems and equipment that involve the use of time-sensitive
software programmed in that manner could have recognized a date using "00" as
the year "1900" rather than "2000", possibly resulting in miscalculations or
system failures. This is commonly referred to as the "Year 2000" or "Y2K"
issue.

   The Company undertook a global approach to addressing the Year 2000 issue,
identifying the areas of its operations in which the Year 2000 issue could
arise and conducting a global survey of all personal computer software and
other essential equipment to identify components to be modified or replaced. A
formal program to acquire and repair existing Company personal computers and
associated software was completed. The Company's critical systems including
manufacturing and application software were modified, tested and implemented.
In addition, the Company initiated written communications with significant
suppliers and all banking institutions with which the Company has financial
arrangements to determine the extent to which the Company's systems and
operations were vulnerable to those third parties' failures to remediate their
Year 2000

                                       24
<PAGE>

compliance problems. Contingency plans were developed, concentrating on
critical functions such as order entry, distribution and manufacturing.

   The Company used both internal and external resources to identify and test
systems for Year 2000 compliance and to modify or replace them where necessary.
In achieving Year 2000 compliance, the Company expects to incur total costs of
$3.4 million, of which $1.8 million and $0.8 million was spent in 1999 and
1998, respectively, and has projected additional spending of $0.8 million in
future periods, primarily for payments on leased computer equipment. The
majority of these costs were expensed as incurred, with the remainder treated
as capital expenditures. Costs related to Year 2000 compliance were not
significant in the years prior to 1998.

   The Company believes that, as a result of its actions, the Year 2000 issue
did not pose operational problems for its computer systems. In addition, the
systems of third parties were made compliant in a timely manner and did not
have an adverse effect on the Company. Management believes the Year 2000 issue
did not have a material impact on the Company's results of operations,
liquidity and financial condition. Continued monitoring of systems and
equipment will occur during 2000.

Conversion to Euro Currency

   On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between their existing currencies ("legacy
currencies") and one common currency--the euro. The conversion to the euro will
eliminate currency exchange risk between member countries. Beginning in January
2002, new euro-denominated bills and coins will be issued, and legacy
currencies will be withdrawn from circulation. The transition period for the
introduction of the euro will be between January 1, 1999 and June 30, 2002.

   The Company conducts business in some member countries affected. The more
important issues facing the Company include: converting information technology
systems; negotiating and amending business agreements and contracts; processing
tax and accounting records; and potentially the competitive impact of cross-
border price transparency. The Company's operating subsidiaries affected by the
euro currency conversion have addressed the significant issues involved,
primarily order processing, banking and assessment of financial systems. Based
on our work to date, we believe the euro currency conversion did not have a
material impact on the Company's consolidated financial condition and results
of operations.

Forward-Looking Statements

   The Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A") contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"). Such forward-looking statements are based on the beliefs of the
Company's management as well as on assumptions made by and information
currently available to the Company at the time such statements were made. When
used in this MD&A, the words "anticipate," "believe," "estimate," "expect,"
"intends," and similar expressions, as they relate to the Company are intended
to identify forward-looking statements, which include statements relating to,
among other things, (i) the ability of the Company to continue to compete
successfully in the contact lens market; (ii) the anticipated benefits from new
product introductions; (iii) the completion of the integration of Barnes-Hind
with the Company; (iv) the continued effectiveness of the Company's sales and
marketing strategy; and (v) the ability of the Company to continue to
successfully develop and launch new products. Actual results could differ
materially from those projected in the forward-looking statements as a result
of the matters discussed herein and certain economic and business factors, some
of which may be beyond the control of the Company.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

   The Company is primarily exposed to market risks that relate to interest
rates and foreign currency exchange rates. The Company attempts to manage these
risks to an acceptable level based on management's judgment of the appropriate
trade-off between risk, opportunity and costs. Selectively, the Company enters
into

                                       25
<PAGE>

interest rate caps and foreign currency forward exchange contracts to manage
market risks. The Company does not hold financial instruments for trading or
speculative purposes.

Foreign currency exchange rate risk

   The Company uses forward exchange contracts to minimize the effects of
foreign currency fluctuations between the British Pound Sterling and the
Japanese Yen. These contracts are used to hedge certain intercompany amounts
owed, and the notional amounts and fair values of those contracts were not
material at December 31, 1999.

Interest rate risk

   Virtually all of the Company's debt bears interest at floating rates,
approximately 6.4% at December 31, 1999. Therefore, increases and decreases in
interest rates have significant impact on the Company's overall profitability,
but do not have a significant impact on the fair value of the debt overall. A
10% increase in the interest rate would increase the Company's 1999 interest
expense by approximately 10%, or $412,000 as compared to $544,000 in 1998. The
Company purchased an interest rate cap of 8.5% on $35.0 million of notional
principal amount in order to partially offset adverse impacts of potential
interest rate increases. The Company currently does not expect to incur any
expense or receive any significant benefit from the interest rate cap because
of the large difference between the current interest rate and the interest rate
cap.

Item 8. Financial Statements and Supplementary Data

   The information required by Item 8 is set forth on pages 31 through 52 of
this Form 10-K. The supplementary financial information required by Item 302 of
Regulation S-K is set forth on page 54 of this Form 10-K.

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

   None.

                                       26
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

   Information with respect to Directors of the Company is set forth in the
Proxy Statement under the heading "Election of Directors," which information is
incorporated herein by reference. Information regarding the executive officers
of the Company is included as Item 4A of Part I of the Form 10-K as permitted
by Instruction 3 to Item 401(b) of Regulation S-K. Information required by Item
405 of Regulation S-K is set forth in the Proxy Statement under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance," which information is
incorporated herein by reference.

Item 11. Executive Compensation

   Information with respect to executive compensation is set forth in the Proxy
Statement under the heading "Compensation of Executive Officers," which
information is incorporated herein by reference (except for the Compensation
Committee Report on Executive Compensation and the Performance Graph).

Item 12. Security Ownership of Certain Beneficial Owners and Management

   Information with respect to security ownership of certain beneficial owners
and management is set forth in the Proxy Statement under the heading
"Beneficial Ownership of Common Stock," which information is incorporated
herein by reference.

Item 13. Certain Relationships and Related Transactions

   Information with respect to certain relationships and related transactions
is set forth in the Proxy Statements under the headings "Election of
Directors--Compensation Committee Interlocks and Insider Participation" and
"Election of Directors--Certain Relationships and Related Transactions," which
information is incorporated herein by reference.

                                       27
<PAGE>

                                    PART IV

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

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

    1. Financial Statements. The following consolidated financial
       statements of the Company and the report of the independent auditors
       thereon, are included in this Form 10-K on pages 31 through 51:

       Report of Independent Accountants

       Consolidated Statements of Income of the Company for the years ended

       December 31, 1999, 1998 and 1997

       Consolidated Balance Sheets of the Company at December 31, 1999 and
    1998

       Consolidated Statements of Cash Flows of the Company for the years
    ended

       December 31, 1999, 1998 and 1997

       Consolidated Statements of Changes in Stockholders' Equity of the
       Company for the years ended December 31, 1997, 1998 and 1999

       Notes to Consolidated Financial Statements

    2. Supplemental Unaudited Financial Data. Quarterly Financial Data is
       included in the Form 10-K on page 52.

    3. Financial Statement Schedules. The following financial statement
       schedule of the Company for the years ended December 31, 1997, 1998
       and 1999 is included in the Form 10-K on page 54.

<TABLE>
<CAPTION>
         Schedule
         No.            Description
         --------       -----------
          <S>           <C>
         Schedule II    Valuation and Qualifying Accounts
</TABLE>

       All other financial statement schedules have been omitted because
    they are inapplicable or the required information is included or
    incorporated by reference elsewhere herein.

       Report of Independent Accountants on Financial Statement Schedule

    4. Exhibits. The Company will furnish to any eligible stockholder, upon
       written request of such stockholder, a copy of any exhibit listed
       below upon the payment of a reasonable fee equal to the Company's
       expenses in furnishing such exhibit.

<TABLE>
<CAPTION>
       Exhibit No.                           Exhibit
       -----------                           -------
       <C>         <S>
         2.1       Purchase and Sale Agreement, dated as of May 5, 1995,
                   between Schering Corporation and WJ Acquisition Corp. +(1)

         2.2       Agreement for Purchase and Sale, dated as of July 5, 1996,
                   between the Company and Pilkington plc. +(1)

         3.1(i)    Amended and Restated Certificate of Incorporation. (2)

         3.1(ii)   Amended and Restated By-laws. (2)

         4.1       Certificate representing shares of Common Stock, $0.01 par
                   value per share. (1)

         4.2       Stockholders Agreement, dated October 22, 1996, among the
                   Company and the stockholders named therein. (1)

         4.3       Amended and Restated Registration Agreement, dated as of
                   October 22, 1996 between the Company and the stockholders
                   named therein. (1)
</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.                               Exhibit
 -----------                               -------
 <C>         <S>
     4.4     Credit Agreement, dated as of February 19, 1997 and as amended as
             of September 10, 1997, among Wesley Jessen VisionCare, Inc.,
             Wesley-Jessen Corporation, various lending institutions and
             Bankers Trust Company, as agent. +(3)

     4.5     Security Agreement, dated as of February 19, 1997, among Wesley
             Jessen VisionCare, Inc., Wesley-Jessen Corporation, certain other
             subsidiaries of Wesley Jessen VisionCare, Inc. and Bankers Trust
             Company, as Collateral Agent. +(2)

     4.6     Pledge Agreement, dated as of February 19, 1997, by Wesley Jessen
             VisionCare, Inc., Wesley-Jessen Corporation and certain other
             subsidiaries of Wesley Jessen VisionCare, Inc. in favor of Bankers
             Trust Company, as Collateral Trustee and Agent. +(2)

     4.7     Subsidiary Guaranty, dated as of February 19, 1997, made by each
             subsidiary of Wesley-Jessen Corporation named therein and Bankers
             Trust Company, as Agent. (2)

     4.8     Subordinated seller's note, dated as of October 2, 1996, by
             Wesley-Jessen Corporation in favor of Pilkington plc. (1)

     4.9     Second Amendment, dated August 18, 1999, to the Credit Agreement,
             dated as of February 19, 1997 and reinstated as of September 10,
             1997 and further amended by a First Amendment and Consent dated as
             of June 9, 1998, among Wesley, Jessen VisionCare, Inc., Wesley
             Jessen Corporation, various lending institutions, and Bankers
             Trust Company, as Agent. (6)

     4.10    Rights Agreement dated as of November 16, 1999, between Wesley
             Jessen VisionCare, Inc. and American Stock Transfer and Trust
             Company, as Rights Agent. (7)

    10.1     Wesley Jessen VisionCare, Inc. Stock Incentive Plan, as amended.
             (5) *

    10.2     Wesley Jessen VisionCare, Inc. Non-Employee Director Stock Option
             Plan. (2) *

    10.3     Amended and Restated Advisory Agreement, dated as of October 2,
             1996, between Wesley-Jessen Corporation and Bain Capital, Inc. (1)

    10.4     Stock Purchase Agreement, dated as of June 28, 1995, among Wesley-
             Jessen Holding, Inc. and the various purchasers named therein. (1)

    10.5     Agreement, dated as of December 21, 1992, between Wesley-Jessen
             Corporation and Tech Medical Inc, regarding casting cups, as
             amended. (1) *

    10.6     Employment Agreement, dated June 28, 1995 between the Company and
             Kevin J. Ryan. (1) *

    10.7     Employment Agreement, dated June 28, 1995 between the Company and
             Edward J. Kelley. (1) *

    10.8     Wesley-Jessen Holding, Inc. 1995 Stock Purchase and Option Plan.
             (1) *

    10.9     Wesley-Jessen Holding, Inc. 1996 Stock Option Plan. (1) *

    10.10    Management Agreement, effective as of June 28, 1995 and dated as
             of April 5, 1996, by and between the Company and Kevin J. Ryan
             (with an attached schedule setting forth the terms of other Named
             Executives). (1) *

    10.11    Indemnification Agreement, dated as of March 4, 1997 and effective
             as of February 12, 1997, between Kevin J. Ryan and the Company
             with an attached schedule listing the other officers and directors
             who entered into such an agreement. (2) *

    10.12    Lease agreements relating to the Company's Southampton, United
             Kingdom manufacturing facility. (1)

    10.13    Lease agreements relating to the Company's San Diego, California
             manufacturing facility. (1)

    10.14    Wesley-Jessen Corporation Professional Incentive Program (1996).
             (1) *

    10.15    Wesley Jessen VisionCare, Inc. Employee Stock Discount Purchase
             Plan. (2) *

    10.16    Asset Purchase Agreement, dated as of January 24, 1997 by and
             among Wesley-Jessen Corporation, PBH, Inc. and The Cooper
             Companies, Inc. +(2)
</TABLE>

                                       29
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.                               Exhibit
 -----------                               -------

 <C>         <S>
    10.17    Unsecured promissory note, dated as of May 7, 1997, by Kevin J.
             Ryan in favor of Wesley-Jessen Corporation. (4)

    10.18    Unsecured promissory note, dated July 27, 1999, by Kevin J. Ryan
             in favor of Wesley Jessen Corporation. (6)

    10.19    Employment Agreement dated October 1, 1999 between the Company and
             Kevin J. Ryan.*

    11.1     Earnings Per Share.

    21.1     Subsidiaries of the Company.

    23.1     Consent of PricewaterhouseCoopers LLP.

    27.1     Financial Data Schedule.
</TABLE>
--------
(1) Incorporated by reference to the applicable exhibit to the Registrant's
    Registration Statement on Form S-1, Registration No. 333-17353.
(2) Incorporated by reference to the applicable exhibit to the Registrant's
    Quarterly Report on Form 10-Q for the quarterly period ended March 29,
    1997, File No. 0-22033.
(3) Incorporated by reference to the applicable exhibit to the Registrant's
    Quarterly Report on Form 10-Q for the quarterly period ended September 27,
    1997, File No. 0-22033
(4) Incorporated by reference to the applicable exhibit to the Registrant's
    Registration Statement on Form S-1, Registration No. 333-32493.
(5) Incorporated by reference to the applicable exhibit to the Registrant's
    Quarterly Report on Form 10-Q for the quarterly period ended July 3, 1999,
    File No. 0-22033.
(6) Incorporated by reference to the applicable exhibit to the Registrant's
    Quarterly Report on Form 10-Q for the quarterly period ended October 2,
    1999, File No. 0-22033.
(7) Incorporated by reference to exhibit 1.1 to the Registrant's Registration
    Statement on Form 8-A12G filed with the Commission on November 22, 1999.
+  The Company agrees to furnish supplementally to the Commission a copy of
   any omitted schedule or exhibit to such agreement upon request by the
   Commission.
*  Management contract, compensatory plan or arrangement required to be filed
   as an exhibit pursuant to Item 14 (c) of this report.

   (b) Reports on Form 8-K.

   November 23, 1999--Item 5. Other Events--Announcing the adoption of the
Stockholder Rights Plan.

                                      30
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Wesley Jessen VisionCare, Inc.

   In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of cash flows and of changes in
stockholders' equity present fairly, in all material respects, the financial
position of Wesley Jessen VisionCare, Inc. and its subsidiaries (the "Company")
at December 31, 1999 and 1998 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
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 of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.


PricewaterhouseCoopers LLP

Chicago, Illinois
February 18, 2000

                                       31
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.

                       CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                    Twelve Months Ended
                                                        December 31,
                                                 ----------------------------
                                                   1999      1998      1997
                                                 --------  --------  --------
<S>                                              <C>       <C>       <C>
Net sales....................................... $311,689  $292,259  $282,178
                                                 --------  --------  --------
Operating costs and expenses:

  Cost of goods sold............................   98,109    90,471    92,780
  Cost of goods sold--inventory step-up.........      --        --     22,666
  Marketing and administrative..................  146,458   143,309   137,650
  Research and development......................   12,618    10,818    11,997
  Amortization of goodwill, net.................     (845)     (997)     (862)
                                                 --------  --------  --------

Income from operations..........................   55,349    48,658    17,947
Other (income) expense:
  Interest income...............................     (642)     (633)     (522)
  Interest expense..............................    4,124     5,444     6,081
  Equity in net loss of affiliate...............      380       --        --
                                                 --------  --------  --------
Income before income taxes and extraordinary
 loss...........................................   51,487    43,847    12,388
Income tax expense..............................   16,476    14,250     4,188
                                                 --------  --------  --------
Income before extraordinary loss................   35,011    29,597     8,200
Extraordinary loss, net of related income tax
 benefit of $2,526..............................      --        --     (4,902)
                                                 --------  --------  --------
    Net income.................................. $ 35,011  $ 29,597  $  3,298
                                                 ========  ========  ========

Income per common share:
 Basic
  Income before extraordinary loss.............. $   2.03  $   1.70  $   0.49
  Extraordinary loss, net of income tax
   benefit...................................... $    --   $    --   $  (0.29)
    Net income.................................. $   2.03  $   1.70  $   0.20

 Diluted
  Income before extraordinary loss.............. $   1.88  $   1.57  $   0.45
  Extraordinary loss, net of income tax
   benefit...................................... $    --   $    --   $  (0.27)
    Net income.................................. $   1.88  $   1.57  $   0.18

Weighted average common shares outstanding
  Basic.........................................   17,248    17,432    16,898
  Diluted.......................................   18,624    18,904    18,451
</TABLE>


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

                                       32
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.

                          CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                              December 31,
                                                            ------------------
                                                              1999      1998
                                                            --------  --------
<S>                                                         <C>       <C>
                          ASSETS
                          ------
Current assets:
  Cash and cash equivalents................................ $  8,945  $  8,859
  Accounts receivable--trade, net..........................   48,372    47,363
  Other receivables........................................    5,935     6,840
  Inventories..............................................   57,507    62,055
  Deferred income taxes....................................   18,324    18,602
  Prepaid expenses.........................................    7,063     6,977
  Assets held for sale.....................................      --      1,222
                                                            --------  --------
    Total current assets...................................  146,146   151,918
                                                            --------  --------
Property, plant and equipment, net.........................   61,178    36,338
Other assets...............................................   12,970    13,693
Goodwill, net..............................................    2,720     2,569
                                                            --------  --------
    Total assets........................................... $223,014  $204,518
                                                            ========  ========

           LIABILITIES AND STOCKHOLDERS' EQUITY
           ------------------------------------
Current liabilities:
  Trade accounts payable................................... $ 17,281  $ 17,689
  Accrued compensation and benefits........................   27,776    25,565
  Accrued advertising......................................    3,778     4,060
  Other accrued liabilities................................    8,964     9,744
  Transition reserve.......................................    4,404     7,886
  Income taxes payable.....................................    1,152     3,257
  Short term debt..........................................    2,441       --
                                                            --------  --------
    Total current liabilities..............................   65,796    68,201
                                                            --------  --------
Negative goodwill, net.....................................   11,492    12,587
Long term debt.............................................   48,000    69,000
Other liabilities..........................................    6,858     4,778
                                                            --------  --------
    Total liabilities......................................  132,146   154,566
                                                            --------  --------

Commitments and contingencies (Note 12)....................      --        --

Stockholders' equity :
  Junior participating preferred stock, Series A, $0.01 par
   value, 50,000 shares authorized, none issued ...........      --        --
  Common stock, $.01 par value, 50,000,000 shares
   authorized, 18,175,585 and 17,994,884 issued at December
   31, 1999 and 1998, respectively.........................      182       180
  Additional paid in capital...............................   59,851    60,847
  Accumulated earnings.....................................   45,449    10,438
  Treasury stock, at cost, 613,812 and 1,000,000 shares at
   December 31, 1999 and 1998, respectively................  (13,077)  (21,306)
  Accumulated other comprehensive loss.....................   (1,537)     (207)
                                                            --------  --------
    Total stockholders' equity.............................   90,868    49,952
                                                            --------  --------
    Total liabilities and stockholders' equity............. $223,014  $204,518
                                                            ========  ========
</TABLE>

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


                                       33
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                            Twelve Months Ended December 31,
                                            -----------------------------------
                                               1999        1998        1997
                                            ----------  ----------  -----------
<S>                                         <C>         <C>         <C>
Operating activities:
 Net income...............................  $   35,011  $   29,597  $     3,298
 Adjustments to reconcile net income to
  net cash provided by operating
  activities:
  Extraordinary loss on early
   extinguishment of debt.................         --          --         7,428
  Depreciation expense....................       5,351       2,121          901
  Purchased inventory step-up.............         --          --        22,666
  Amortization of capitalized financing
   fees...................................         625         584          508
  Amortization of goodwill, net...........        (845)       (997)        (862)
  Equity in net loss of affiliate.........         380         --           --
  Loss (gain) on disposal of property,
   plant, and equipment...................          37          17         (120)
  Deferred income tax.....................       1,648       7,772       (1,622)
  Stock compensation......................          58         --           257
 Changes in balance sheet items:
  Accounts receivable--trade, net.........      (1,445)     (3,057)      (3,941)
  Other receivables.......................         718      (1,716)        (545)
  Inventories.............................       3,258     (11,198)      (3,723)
  Prepaid expenses........................         (99)        750       (1,192)
  Other assets............................         282         882         (491)
  Notes receivable........................         (38)        (30)      (1,227)
  Trade accounts payable..................        (235)      2,458        2,179
  Accrued liabilities.....................      (1,841)       (562)     (14,139)
  Other liabilities.......................       1,804       1,740        2,181
  Income taxes payable....................       2,914       2,807       (4,679)
                                            ----------  ----------  -----------
  Cash provided by operating activities...      47,583      31,168        6,877
                                            ----------  ----------  -----------
Investing activities:
 Cash paid for assets acquired............      (2,415)     (2,994)         --
 Proceeds from Natural Touch sale.........         617       1,000        6,000
 Capital expenditures.....................     (30,879)    (17,238)     (16,298)
 Proceeds from the sale of property, plant
  and equipment...........................       1,546         133          417
                                            ----------  ----------  -----------
  Cash used in investing activities.......     (31,131)    (19,099)      (9,881)
                                            ----------  ----------  -----------
Financing activities:
 Issuance of stock........................       2,256       2,150       48,513
 Repurchase of shares.....................         --      (21,306)         --
 Proceeds from debt.......................      11,205      43,000      150,000
 Payments of debt.........................     (30,000)    (31,000)    (194,375)
 Payment of financing fees................         --         (279)      (3,076)
                                            ----------  ----------  -----------
  Cash (used in) provided by financing
   activities.............................     (16,539)     (7,435)       1,062
                                            ----------  ----------  -----------
 Effect of exchange rates on cash and cash
  equivalents.............................         173        (534)        (372)
 Net increase (decrease) in cash and cash
  equivalents.............................          86       4,100       (2,314)
Cash and cash equivalents:
 Beginning of period......................       8,859       4,759        7,073
                                            ----------  ----------  -----------
 End of period............................  $    8,945  $    8,859  $     4,759
                                            ==========  ==========  ===========
Supplemental disclosure of cash flow
 information
 Cash paid during the period for
  interest................................  $    3,971  $    4,074  $     6,287
                                            ==========  ==========  ===========
 Cash paid during the period for taxes,
  net.....................................  $   10,233  $    3,316  $     7,474
                                            ==========  ==========  ===========
</TABLE>

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

                                       34
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                  Accumulated  Compre-
                          Common Stock  Treasury Stock    Additional Accumulated Other Compre- hensive
                          ------------- ----------------   Paid in    Earnings    hensive In-  Income
                          Shares Amount Shares   Amount    Capital    (Deficit)   come (Loss)  (Loss)
                          ------ ------ ------  --------  ---------- ----------- ------------- -------
<S>                       <C>    <C>    <C>     <C>       <C>        <C>         <C>           <C>
Balance at December 31,
 1996...................  14,276  $143    --    $    --    $ 7,654    $(22,457)     $ 1,368    $(1,374)
                                                                                               =======
 Issuance of stock......   3,460    34    --         --     47,261         --           --         --
 Stock compensation.....     --    --     --         --        257         --           --         --
 Stock option related
  tax benefit...........     --    --     --         --      1,218         --           --         --
 Comprehensive income
 Net income.............     --    --     --         --        --        3,298          --       3,298
 Other comprehensive
  income
  Currency translation
   adjustment...........     --    --     --         --        --          --        (1,930)    (1,930)
                          ------  ----  -----   --------   -------    --------      -------    -------
Balance at December 31,
 1997...................  17,736  $177    --    $    --    $56,390    $(19,159)     $  (562)   $ 1,368
                                                                                               =======
 Issuance of stock......     259     3    --         --      2,147         --           --         --
 Repurchase of common
  stock.................     --    --   1,000    (21,306)      --          --           --         --
 Stock option related
  tax benefit...........     --    --     --         --      2,310         --           --         --
 Comprehensive income
 Net income.............     --    --     --         --        --       29,597          --      29,597
 Other comprehensive
  income
  Currency translation
   adjustment...........     --    --     --         --        --          --           355        355
                          ------  ----  -----   --------   -------    --------      -------    -------
Balance at December 31,
 1998...................  17,995  $180  1,000   $(21,306)  $60,847    $ 10,438      $  (207)   $29,952
                                                                                               =======
 Issuance of stock......     181     2   (386)     8,229    (5,917)        --           --         --
 Stock option related
  tax benefit...........     --    --     --         --      4,921         --           --         --
 Comprehensive income
 Net income.............     --    --     --         --        --       35,011          --      35,011
 Other comprehensive
  income
  Currency translation
   adjustment...........     --    --     --         --        --          --        (1,330)    (1,330)
                          ------  ----  -----   --------   -------    --------      -------    -------
Balance at December 31,
 1999...................  18,176  $182    614   $(13,077)  $59,851    $ 45,449      $(1,537)   $33,681
                          ======  ====  =====   ========   =======    ========      =======    =======
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                       35
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of business

   The Company's primary business activity is the research, development,
manufacture, marketing and sale of conventional and disposable soft contact
lenses in the United States and certain other countries. The Company is
headquartered in Des Plaines, Illinois and operates in one business segment.

   On June 29, 1995, Bain Capital, together with new and certain then-existing
members of management, acquired the Wesley Jessen contact lens business from
Schering-Plough Corporation (the "Wesley Jessen Acquisition"), for a total
purchase price of $76.6 million. On October 2, 1996, the Company acquired the
contact lens business of Pilkington plc, operating as the Pilkington Barnes
Hind Group (the "Barnes-Hind Acquisition"), for a total purchase price of
$117.6 million. The purchase method of accounting was used to record the
acquisitions. The excess of the estimated fair values of the net assets
acquired over the purchase prices paid for the Wesley Jessen Acquisition of
$11.8 million and the Barnes-Hind Acquisition of $4.0 million were recorded as
negative goodwill (Note 2). The Company's total inventories were written up to
fair value at the date of acquisition for the Wesley Jessen Acquisition and the
Barnes-Hind Acquisition by $40.6 million and $36.7 million, respectively. Of
these amounts, $22.7 million was charged to cost of goods sold during the year
ended December 31, 1997.

   In connection with the Barnes-Hind Acquisition, the Company entered into a
voluntary consent order with the Federal Trade Commission which provided, among
other things, that the Company divest Barnes-Hind's U.S. Natural Touch product
line. On March 17, 1997, the Company completed the sale of the product line,
for which it received aggregate consideration of $7.5 million, consisting of
$3.0 million in cash and a four-year $4.5 million promissory note. The
purchaser made voluntary prepayments of $4.0 million on the promissory note in
1997 and 1998, and made the remaining principal and interest payments in 1999.

2. Summary of significant accounting policies

 Principles of consolidation

   The consolidated financial statements include the accounts of Wesley Jessen
VisionCare, Inc., its wholly owned subsidiary, Wesley Jessen Corporation, and
Wesley Jessen Corporation's wholly owned subsidiaries (collectively, the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation. The investment in Inoveon (Note 3) has been
accounted for under the equity method of accounting.

 Use of estimates

   The preparation of financial statements in accordance with generally
accepted accounting principles 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 period.
Actual results could differ from those estimates.

 Revenue recognition

   Revenue is recognized when product is shipped. Net sales include estimates
for returns and allowances. The Company grants credit terms to its customers
consistent with normal industry practices and does not require collateral. No
individual customer accounts for more than 10 percent of sales or accounts
receivable.

 Inventories

   Inventories are stated at the lower of cost, determined by the first-in,
first-out method, or market value. Market value for raw materials is based on
replacement costs and for other inventory classifications on net realizable
value. Consideration is given to deterioration, obsolescence and other factors
in evaluating net realizable value.

                                       36
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Prepaid expenses

   Prepaid expenses include sample inventory to be used for promotional
purposes. The sample value is charged to promotional expense during the period
in which the samples are shipped.

 Property, plant and equipment

   Property, plant and equipment is recorded at cost. Depreciation is
determined using the straight-line method over the estimated useful lives of
the assets, which are as follows (in years):

<TABLE>
   <S>                                                                   <C>
   Buildings and improvements........................................... 5 to 25
   Machinery and equipment..............................................       7
   Furniture and fixtures...............................................       7
   Automobiles..........................................................       3
</TABLE>

   Expenditures for renewals and betterments are capitalized. Maintenance and
repairs are charged to operations.

 Goodwill

   Goodwill is being amortized on a straight line basis over a period of
fifteen years. Goodwill was $2.7 million and $2.6 million, net of $0.3 million
and $0.1 million of accumulated amortization at December 31, 1999 and 1998,
respectively.

   Negative goodwill is being amortized on a straight line basis as a credit to
income over a period of fifteen years. Negative goodwill was $11.5 million and
$12.6 million, net of $4.2 million and $3.1 million of accumulated
amortization, at December 31, 1999 and 1998, respectively.

 Capitalized financing fees

   Capitalized financing fees are amortized over the term of the underlying
debt utilizing the effective interest method.

 Research and development costs

   Expenditures related to the development of new products and processes,
including significant improvements and refinements of existing products, are
expensed as incurred.

 Foreign currency translation

   The functional currency of each of the Company's foreign subsidiaries is the
local currency of its respective country. Asset and liability accounts of each
entity are translated at the exchange rate in effect at each period-end, and
income and expense accounts are translated at average exchange rates prevailing
during the period. Gains and losses resulting from the translation of these
foreign currency financial statements are included in the other comprehensive
loss in stockholders' equity.

 Concentration of credit risk

   The Company provides credit, in the normal course of business, to
distributors, optical store chains and physicians' offices. The Company
performs ongoing credit evaluations of its customers and maintains reserves for
potential credit losses.

                                       37
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Fair value of financial instruments

   Cash, accounts receivable, accounts payable, accrued liabilities and short
term debt are reflected in the financial statements at cost which approximates
fair value, primarily because of the short-term maturity of those instruments.
The Company believes that due to the adjustable interest rates applicable to
its long-term debt, the fair value approximates the carrying value of the
obligations. The fair value of the Company's interest rate cap (Note 6) is not
material.

 Earnings per share

   The difference between the weighted average shares used in the computations
of basic and diluted earnings per share is the dilutive effect of outstanding
stock options, using the treasury stock method from the date of grant.

3. Acquisitions and Affiliates

   In May 1999 the Company, through its Hong Kong subsidiary, acquired certain
assets of Eycon Lens (Hong Kong) Co., Ltd. from its sole shareholder. In June
and July 1998, the Company completed two other international acquisitions. The
total adjusted purchase price for the three acquisitions of approximately
$3.2 million, including related fees and expenses, was funded with existing
liquidity. The Company accounted for these acquisitions under the purchase
method of accounting. Pro forma disclosures of the impact of these acquisitions
as if they had occurred on January 1, 1999 are not included because the impact
was not material.

   In June 1999, the Company purchased a 16.4% minority interest in Inoveon
Corporation ("Inoveon") for $2.4 million represented by shares of convertible
preferred stock. In January 2000, the Company made an additional investment of
$1.0 million, which increased its ownership to 23.2%. Inoveon, an Internet
disease management company, has granted the Company exclusive U.S. rights to
market a proprietary national system to help optometrists manage diabetic
retinopathy, a leading cause of preventable blindness. After an initial
implementation period, during which Inoveon will deploy the system to
integrated health care providers, the Company will begin marketing it to the
optometric community. The excess of the Company's investment over the equity in
the net assets of Inoveon represents purchased technology which is being
amortized over 5 years.

                                       38
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


4. Transition reserve and restructuring charge

   In connection with the Barnes-Hind Acquisition, management approved a plan
to integrate the acquired operations, for which an accrual of $20.4 million
("transition reserve") was established in purchase accounting. The transition
reserve includes costs related to the closure of the Barnes-Hind corporate
offices in Sunnyvale, California which was completed in the third quarter of
1997 and resulted in the termination of 123 employees. The Company is currently
closing its manufacturing operations in San Diego, California, and continues to
shift conventional lens production to its plant in Cidra, Puerto Rico. The
plant closing will result in the termination of 471 employees (of whom 348 had
been terminated as of December 31, 1999). Payments related to the transition
reserve are as follows (in thousands):

<TABLE>
<CAPTION>
                                Employee     Lease
                                Related   Termination  Facility Exit
                                 Costs       Costs    and Other Costs  Total
                                --------  ----------- --------------- -------
<S>                             <C>       <C>         <C>             <C>
Transition reserve at October
 2, 1996....................... $16,772     $ 2,243       $ 1,385     $20,400
Charges against reserve........  (1,149)       (223)         (134)     (1,506)
                                -------     -------       -------     -------
Transition reserve at December
 31, 1996......................  15,623       2,020         1,251      18,894
Charges against reserve........  (6,072)     (1,323)         (274)     (7,669)
                                -------     -------       -------     -------
Transition reserve at December
 31, 1997......................   9,551         697           977      11,225
Charges against reserve........  (2,382)       (155)         (802)     (3,339)
                                -------     -------       -------     -------
Transition reserve at December
 31, 1998...................... $ 7,169     $   542       $   175     $ 7,886
Charges against the reserve....  (2,894)       (369)         (219)     (3,482)
Reallocation of reserve........    (700)        (80)          780         --
                                -------     -------       -------     -------
Transition reserve at December
 31, 1999...................... $ 3,575     $    93       $   736     $ 4,404
                                =======     =======       =======     =======

   In addition to the transition plan, the Company committed to a plan to
restructure the Wesley Jessen operations following the Barnes-Hind Acquisition.
Pursuant to the restructuring plan, the Chicago distribution facilities were
consolidated with those at Des Plaines, Illinois in October, 1997. The
restructuring reserve of $0.1 million at December 31, 1999 was dedicated to
lease termination and other restructuring costs associated with the
consolidation of certain Wesley Jessen facilities in Europe with facilities
acquired in the Barnes-Hind Acquisition. Usage of the restructuring reserve is
as follows (in thousands):

<CAPTION>
                                Employee     Lease
                                Related   Termination
                                 Costs       Costs      Other Costs    Total
                                --------  ----------- --------------- -------
<S>                             <C>       <C>         <C>             <C>
Restructuring reserve at
 December 31, 1996............. $   813     $   897       $ 1,690     $ 3,400
Charges against reserve........    (437)       (235)       (1,480)     (2,152)
                                -------     -------       -------     -------
Restructuring reserve at
 December 31, 1997.............     376         662           210       1,248
Charges against the reserve....    (189)       (374)          (96)       (659)
                                -------     -------       -------     -------
Restructuring reserve at
 December 31, 1998.............     187         288           114         589
Charges against the reserve....    (196)        (93)          (55)       (344)
Reallocation of reserve........       9         (20)           11         --
Reversed to income.............     --         (172)          --         (172)
                                -------     -------       -------     -------
Restructuring reserve at
 December 31, 1999............. $   --      $     3       $    70     $    73
                                =======     =======       =======     =======
</TABLE>

                                       39
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5. Other balance sheet accounts

   Accounts receivable-trade, net consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                       December 31, December 31,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Trade receivables..................................   $58,452      $ 62,968
   Less allowances:
     Doubtful accounts................................    (4,258)       (4,992)
     Sales returns and adjustments....................    (5,822)      (10,613)
                                                         -------      --------
                                                         $48,372      $ 47,363
                                                         =======      ========
</TABLE>

   Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                       December 31, December 31,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Raw materials......................................   $  6,744     $  7,484
   Work-in-process....................................      7,896        7,261
   Finished goods.....................................     58,569       61,823
   Less reserves......................................    (15,702)     (14,513)
                                                         --------     --------
                                                         $ 57,507     $ 62,055
                                                         ========     ========
</TABLE>

   Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                      December 31, December 31,
                                                          1999         1998
                                                      ------------ ------------
   <S>                                                <C>          <C>
   Buildings and improvements........................     11,478     $ 9,449
   Machinery, equipment, furniture and fixtures......     43,617      19,638
   Construction-in-progress..........................     14,845      11,450
                                                        --------     -------
                                                          69,940      40,537
   Less accumulated depreciation.....................     (8,762)     (4,199)
                                                        --------     -------
                                                        $ 61,178     $36,338
                                                        ========     =======
</TABLE>

6. Long-term debt

   At December 31, 1999 the Company maintained a $170 million credit facility,
the availability of which will be reduced by $20 million in September 2000 and
$20 million in September 2001. The facility matures on September 11, 2002. This
agreement became effective in August 1999 when the then-existing bank credit
agreement was amended to increase the levels allowed for intercompany loans,
capital contributions to foreign subsidiaries, investments, stock repurchases
and capital expenditures. The Company incurred $3.4 million of financing fees
relating to this agreement which are being amortized through September, 2002.

   In connection with a refinancing of the Company's credit arrangements in
1997, the Company recognized an extraordinary loss of $7.4 million ($4.9
million, net of income tax benefit), relating to the write off of capitalized
financing fees incurred in connection with the Barnes-Hind Acquisition.

   At December 31, 1999, the weighted average borrowing rate was 6.3581%.
Additionally, the Company is required to pay a commitment fee on the unutilized
revolving loan commitments, as defined in the credit agreement, ranging from
0.175% to 0.400% based on leverage ratios calculated as of certain dates. The

                                       40
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

unutilized portion of the credit facilities at December 31, 1999 was $122
million. The credit facilities are guaranteed by each of the Company's domestic
subsidiaries and secured by essentially all assets of the domestic
subsidiaries. Amounts borrowed under the amended bank credit agreement bear
interest at either the Base Rate (higher of (i) 0.5% in excess of the Federal
Reserve reported adjusted certificate of deposit rate and (ii) the lender's
prime lending rate plus a margin up to 0.5% based on leverage ratios calculated
as of certain dates) or the Eurodollar Rate as determined by the lenders plus a
margin of 0.375% to 1.500% based on the type of loan and leverage ratios
calculated as of certain dates as defined in the credit agreement.

   The credit agreement contains a number of covenants restricting the Company
and its subsidiaries with respect to the incurrence of additional indebtedness,
the creation of liens, the consummation of certain transactions such as sales
of substantial assets, mergers or consolidations, the making of certain
investments, capital expenditures, and payment of dividends. In addition, the
Company is required to maintain certain financial covenants and ratios.

 Interest rate instrument

   The Company has purchased an interest rate cap on $35.0 million of notional
principal amount at 8.5%, which expires on December 31, 2001. The cap is
intended to provide partial protection to the Company from potential exposure
relating to its variable rate debt instruments.

7. Stockholders' equity

 Capital structure

   The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, 5,000,000 shares of Serial Preferred Stock and 50,000 shares of
Junior Participating Preferred Stock, Series A.

   Holders of the Common Stock shares, subject to the prior rights of the
Serial Preferred Stock and Junior Participating Preferred Stock, Series A, are
entitled to receive dividends, are entitled to one vote per share and are
entitled to receive, pro rata, the assets of the Company which are legally
available for distribution, after payment of all debts and other liabilities.

   The Company's Board of Directors may, without further action by the
Company's stockholders, direct the issuance of shares of Serial Preferred Stock
and may at the time of issuance, determine the rights, preferences and
limitations of each series.

 Shareholders' Rights Plan

   In November 1999, the Company adopted a shareholders' rights plan having a
duration of 10 years, under which the Company declared a dividend of one
preferred share purchase right for each outstanding share of Common Stock.

   If an acquirer buys 15 percent or more of the Company's stock, the plan
allows other shareholders to buy, with each right, additional Company shares at
a 50 percent discount. If the Company is acquired in a merger or other business
combination transaction, rights holders will be entitled to buy shares of the
acquiring company at a 50 percent discount. If an acquirer buys between 15 and
50 percent of the Company's outstanding stock, the Company can exchange part or
all of the rights of other holders for shares of the Company's stock on a one-
for-one basis, or shares of the Junior Participating Preferred stock, Series A
on a one-to-one-thousandth basis. Before an acquirer buys 15 percent or more of
the Company's common stock, the Company may redeem the rights.


                                       41
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Treasury stock purchase plan

   The Board of Directors approved a share repurchase plan on June 10, 1998
which the Company completed on September 18, 1998. Under the plan, the Company
repurchased one million shares of its outstanding common stock. Repurchases
were made periodically in normal market trading at prevailing prices. The
funding of the program came from operating cash flow and the existing bank
facility. Currently, the Company reissues its treasury stock to satisfy share
requirements related to the Company's stock incentive plans, the employee stock
purchase plans and employee stock awards.

8. Stock options

   The Company applies Accounting Principles Board Opinion 25 and related
Interpretations in accounting for its stock-based compensation plans. Had
compensation cost for the Company's stock-based compensation plans been
determined based on the fair value of the options at the grant dates for the
awards under the plan consistent with the alternative accounting method of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," the pro forma effect on the Company's net income and
income per share for the periods presented would have been as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                       Year ended December 31,
                                                       -----------------------
                                                        1999    1998    1997
                                                       ------- ------- -------
   <S>                                                 <C>     <C>     <C>
   Pro forma income
     Income before extraordinary loss................. $34,344 $29,253 $ 7,785
     Extraordinary loss, net of income tax benefit....     --      --   (4,902)
     Net income.......................................  34,344  29,253   2,883
   Pro forma basic income per share
     Income before extraordinary loss................. $  1.99 $  1.68 $  0.46
     Extraordinary loss, net of income tax benefit....     --      --    (0.29)
     Net income.......................................    1.99    1.68    0.17
   Pro forma diluted income per share
     Income before extraordinary loss................. $  1.84 $  1.55 $  0.42
     Extraordinary loss, net of income tax benefit....     --      --    (0.27)
     Net income.......................................    1.84    1.55    0.15
</TABLE>

   The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions for options granted in 1999, 1998 and 1997, respectively: expected
volatility of 53.50 %, 26.37 % and 31.29 %; risk-free interest rate of 6.06 %,
4.69 % and 6.38 %; and expected lives of 5 years, 3 years and 3 years.

 1995 and 1996 stock option plans

   The Board of Directors granted non-qualified stock options to certain
members of management for an aggregate of 2,193,051 shares of Common Stock
pursuant to the Company's 1995 Stock Purchase and Option Plan. The stock option
grants are of two types: time options and target options. Of the 783,233 time
option grants, all remaining options outstanding are immediately exercisable.
The time options were granted at the fair market value of the Common Stock on
the date of grant. The 1,409,818 target option grants are exercisable
immediately and were granted at prices that were in excess of fair market value
of the Common Stock on the date of grant. All options expire in 10 years from
the date of grant.

   In October, 1996, pursuant to the 1996 Stock Option Plan, the Board of
Directors authorized and granted options to purchase an aggregate of 424,519
shares of Common Stock at an exercise price which approximates fair market
value at the date of grant. Options to purchase 337,501 shares are immediately
exercisable.


                                       42
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Stock Incentive Plan

   The Wesley Jessen VisionCare, Inc. Stock Incentive Plan (the "Incentive
Plan") was approved by the Board of Directors in February 1997 and was amended
in May 1999. The Incentive Plan provides for the issuance of the following
types of incentive awards: stock options, stock appreciation rights, restricted
stock, performance grants and other types of awards. An aggregate of 1,800,000
shares of Common Stock of the Company have been reserved for issuance under the
Incentive Plan, subject to certain adjustments reflecting changes in the
Company's capitalization. The Incentive Plan provides that individual
participants will be limited to receiving awards of no more than 50,000 shares
of Common Stock per year.

   Options granted under the Incentive Plan may be subject to time vesting and
certain other restrictions. Subject to certain exceptions, the right to
exercise an option generally will terminate at the earlier of (i) the first
date on which the initial grantee of such option is not employed by the Company
for any reason other than termination without cause, death or permanent
disability or (ii) the expiration date of the option. All outstanding awards
under the Incentive Plan will terminate immediately prior to consummation of a
liquidation or dissolution of the Company, unless otherwise provided by the
Board. In the event of the sale of all or substantially all of the assets of
the Company or the merger of the Company with another corporation, all
restrictions on any outstanding awards will terminate and participants will be
entitled to the full benefit of their awards immediately prior to the closing
date of such sale or merger, unless otherwise provided by the Board.

 Non-Employee Director Stock Option Plan

   The 1997 Non-Employee Director Stock Option Plan (the "Director Option
Plan") was approved by the Board of Directors in February 1997. The Director
Option Plan provides for the granting of options to non-employee Directors, as
defined, covering an aggregate of 250,000 shares of Common Stock of the
Company.

   The Board of Directors is authorized under the Director Option Plan to make
discretionary grants of options and determine the terms and conditions of such
options. In addition, the Director Option Plan provides for an initial one-time
grant of options to purchase 10,000 shares of Common Stock to each non-employee
Director serving as a member of the board or to any new non-employee Director
upon being elected to the board. The Director Option Plan also provides that
each non-employee Director shall automatically be granted options to purchase
2,000 shares of Common Stock upon each anniversary of the Director's election
to the Board. The Director Option Plan requires that the exercise price for
each option granted under the plan must equal 100% of the fair market value of
the Company's Common Stock on the date the option is granted. The initial one-
time grants will be immediately exercisable and the annual grants will vest in
three equal installments commencing on the first anniversary of the grant date.

                                       43
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A summary of the Company's stock option plans as of December 31, 1999, 1998
and 1997, and changes during the periods then ended is presented below:

<TABLE>
<CAPTION>
                                  1999                  1998                  1997
                          --------------------- --------------------- ---------------------
                                      Weighted-             Weighted-             Weighted-
                                       Average               Average               Average
                                      Exercise              Exercise              Exercise
                            Shares      Price     Shares      Price     Shares      Price
                          ----------  --------- ----------  --------- ----------  ---------
<S>                       <C>         <C>       <C>         <C>       <C>         <C>
Outstanding at beginning
 of period..............   2,895,357   $ 5.76    2,816,658   $ 3.97    2,617,570   $ 2.13
Granted.................     359,350    28.91      294,100    20.72      326,700    17.24
Exercised...............    (503,582)    1.91     (203,786)    2.13     (127,612)    0.27
Forfeited...............      (8,950)   18.74      (11,615)   11.60          --       --
                          ----------            ----------            ----------
Outstanding at end of
 year...................   2,742,175     9.47    2,895,357   $ 5.76    2,816,658   $ 3.97
                          ==========            ==========            ==========
Options exercisable at
 year-end...............   2,040,718     4.40    2,075,143   $ 3.22    2,001,695   $ 2.89
                          ==========            ==========            ==========
Weighted-average fair
 value of options
 granted during the
 year...................  $    15.41            $     5.02            $     5.23
                          ==========            ==========            ==========
</TABLE>

   The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                          Options Outstanding              Options Exercisable
                 ------------------------------------- ----------------------------
                                              Weighted
                   Number    Weighted-Average Average    Number
                 Outstanding    Remaining     Exercise Exercisable Weighted-Average
Exercise Prices  at 12/31/99 Contractual Life  Price   at 12/31/99  Exercise Price
---------------  ----------- ---------------- -------- ----------- ----------------
<S>              <C>         <C>              <C>      <C>         <C>
 $0.03              317,781        5.42        $ 0.03     317,781       $ 0.03
 $1.18              537,978        5.44        $ 1.18     537,978       $ 1.18
 $2.34              606,765        5.41        $ 2.34     606,765       $ 2.34
 $7.24              337,501        6.83        $ 7.24     337,501       $ 7.24
$15.00               40,000        7.17        $15.00      40,000       $15.00
$16.75              235,700        7.33        $16.75     109,650       $16.75
$28.25               20,000        7.75        $28.25      20,000       $28.25
$28.44                8,000        8.42        $28.44       2,668       $28.44
$20.50              279,100        8.83        $20.50      68,375       $20.50
$29.88               12,000        9.42        $29.88         --        $29.88
$28.88              347,350        9.83        $28.88         --        $28.88
                  ---------        ----        ------   ---------       ------
                  2,742,175        6.73        $ 9.47   2,040,718       $ 4.40
</TABLE>

 Stock Purchase Plan

   The Wesley Jessen VisionCare, Inc. Employee Stock Discount Purchase Plan and
International Employee Stock Discount Purchase Plan (the "Stock Purchase
Plans") were approved by the Board of Directors in 1997 and provide that,
subject to certain restrictions, each employee of the Company will be eligible
to participate in the Stock Purchase Plans. The Company has reserved 500,000
shares of Common Stock for issuance in connection with the Stock Purchase Plans
and each eligible employee is entitled to purchase a maximum of 125 shares per
quarter. Each participating employee contributes to the Stock Purchase Plans by
choosing a payroll deduction in any specified amount, with a minimum deduction
of $10.00 per payroll period. Each participating employee's contributions will
be used to purchase shares for the employee's share account, and the cost per
share will be 85% of the price of the Company's Common Stock on the Nasdaq
National Market on specified dates.

                                       44
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9. Income taxes

   Income (loss) before income tax benefit (expense) and extraordinary loss is
as follows (in thousands):

<TABLE>
<CAPTION>
                                                        Year ended December 31,
                                                        -----------------------
                                                         1999    1998    1997
                                                        ------- ------- -------
   <S>                                                  <C>     <C>     <C>
   Domestic (including Puerto Rico).................... $50,119 $34,498 $20,088
   International.......................................   1,368   9,349  (7,700)
                                                        ------- ------- -------
                                                        $51,487 $43,847 $12,388
                                                        ======= ======= =======
</TABLE>

   Income tax benefit (expense) is as follows (in thousands):

<TABLE>
<CAPTION>
                                                Year ended December 31,
                                               -----------------------------
                                                 1999       1998      1997
                                               --------   --------   -------
   <S>                                         <C>        <C>        <C>
   Current:
     Domestic federal......................... $ (9,109)  $ (3,853)  $(2,694)
     Domestic state and local (including
      Puerto Rico)............................   (2,755)    (1,293)   (1,359)
     International............................   (2,407)    (1,332)   (1,757)
                                               --------   --------   -------
                                                (14,271)    (6,478)   (5,810)
                                               --------   --------   -------

   Deferred:
     Domestic federal.........................   (2,488)    (2,017)      328
     Domestic state and local (including
      Puerto Rico)............................   (1,912)    (1,006)     (994)
     International............................    2,195     (4,749)    2,288
                                               --------   --------   -------
                                                 (2,205)    (7,772)    1,622
                                               --------   --------   -------
                                               $(16,476)  $(14,250)  $(4,188)
                                               ========   ========   =======

   Differences between the U.S. federal income tax statutory rates and the
income tax benefit (expense) recorded are attributable to the following:

<CAPTION>
                                                Year ended December 31,
                                               -----------------------------
                                                 1999       1998      1997
                                               --------   --------   -------
   <S>                                         <C>        <C>        <C>
   Income tax at statutory rate...............    (35.0)%    (35.0)%   (35.0)%
     State and local taxes (including Puerto
      Rico),
      net of federal tax benefit..............      1.3        5.9      20.5
     Effect of international operations.......     (1.4)     (11.2)    (17.5)
     Amortization of negative goodwill........      0.6        0.9       2.4
     Recognition of net operating loss
      benefits................................      0.4        8.7       --
     Revaluation of reserves..................      3.4        --        --
     Other....................................     (1.3)      (1.8)     (4.2)
                                               --------   --------   -------
                                                  (32.0)%    (32.5)%   (33.8)%
                                               ========   ========   =======
</TABLE>

                                       45
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Deferred tax assets and liabilities are comprised of the following (in
thousands):

<TABLE>
<CAPTION>
                            December 31,
                           ----------------
                            1999     1998
                           -------  -------
<S>                        <C>      <C>
Deferred tax assets:
  Accounts receivable
   valuation allowances... $ 3,913  $ 5,653
  Inventory reserves......   7,080    4,826
  Fixed assets............   5,841    8,242
  Accrued expenses........   7,308    8,122
  Domestic net operating
   losses and AMT credit..   1,027      689
  Other deductible
   temporary differences..     426      659
  International net
   operating losses.......   7,260    5,963
                           -------  -------
                            32,855   34,154
                           -------  -------

Deferred tax liabilities:
  Prepaid pension cost....    (759)  (2,485)
  Puerto Rico tollgate
   tax....................  (5,853)  (4,677)
                           -------  -------
  Total deferred tax
   liabilities............  (6,612)  (7,162)
                           -------  -------
  Valuation allowance for
   international net
   operating losses.......  (5,362)  (4,862)
                           -------  -------
                           $20,881  $22,130
                           =======  =======
</TABLE>

   The Company has certain foreign net operating losses ("NOLs") which expire
in one to seven years from December 31, 1999. All other foreign NOLs are
available to the Company indefinitely. The Company has domestic net operating
losses which expire through the year 2011. At December 31, 1999 and 1998, the
Company has not provided a valuation allowance against its deferred tax assets
except for certain assets relating to certain foreign NOLs because, based upon
its current operating plans, the Company believes that it is more likely than
not that the assets will be realized through future profitable operations.
During 1999, income tax expense was reduced by $205 due to the reversal of
valuation allowances and by $1,758 due to a revaluation of worldwide tax
liabilities.

   Estimated taxes have been provided for the Company's international
operations assuming repatriation of all available earnings. The Company's
manufacturing operations in Puerto Rico qualify for income tax credit available
under Section 936 of the Internal Revenue Code. Current legislation will phase
out the income tax credit allowed under Section 936 over a period ending in
2005. The phase out period will allow a tax credit under present law through
December 31, 2001. The credit will be subject to further limitation through
December 31, 2005, and thereafter the credit is eliminated.

10. Retirement benefits

 Defined benefit pension plans

   The Wesley Jessen Cash Balance Pension Plan (the "Cash Balance Plan") is a
defined benefit plan, effective as of January 1, 1996, covering substantially
all domestic employees (including Puerto Rico). Under the Cash Balance Plan,
the Company allocates a percentage of compensation for each participant (annual
pay credits) based upon years of service, beginning after December 31, 1995.
Additionally, the Cash Balance Plan provides for a specified return (interest
credits) on participants' account balances. Under the Cash Balance Plan, annual
pay credits and interest credits will be accumulated in participants' accounts
as the basis for their Cash

                                       46
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Balance Plan benefits. The Company will contribute actuarially determined
amounts to fund the Cash Balance Plan benefits within regulatory minimum
requirements and maximum tax deductible limits. Newly hired employees are
eligible to participate in the Cash Balance Plan within one year of employment
and are vested after five years of service.

   In connection with the Barnes-Hind Acquisition, the Company acquired a fully
funded portion of the Pilkington VisionCare Pension Plan, a non-contributory
defined benefit pension plan, which covered substantially all Barnes Hind
domestic employees. Effective December 31, 1997, the Board of Directors of the
Company voted to merge this plan with the Cash Balance Plan. In connection with
the merger of the plans, benefits previously earned by participants under the
Pilkington VisionCare Pension Plan were converted into nominal cash balance
accounts. These participants will receive benefit payments provided under the
same conditions afforded participants of the Cash Balance Plan.

   Additionally, the Company acquired an international fully-funded
contributory single-employer defined benefit pension plan covering certain
Barnes Hind employees in the United Kingdom. For participants under this plan,
benefits are based on length of service and on compensation during the last ten
years of service prior to retirement. Funding is on an actuarially determined
basis, to provide for the plan's current service costs and the plan's prior
service cost over its amortization period.

                                       47
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Information regarding the domestic pension plan is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                      Year ended December 31,
                                                      -------------------------
                                                       1999     1998     1997
                                                      -------  -------  -------
<S>                                                   <C>      <C>      <C>
Change in benefit obligation
  Benefit obligation at beginning of year............ $17,386  $15,942  $15,016
  Service cost.......................................   2,156    1,878    1,676
  Interest cost......................................   1,228    1,093    1,227
  Amendments.........................................     --       236      --
  Actuarial (gains) losses...........................    (730)     289   (1,909)
  Benefits paid......................................  (3,725)  (2,052)     (68)
                                                      -------  -------  -------
  Benefit obligation at end of year.................. $16,315  $17,386  $15,942
                                                      -------  -------  -------

Change in plan assets
  Fair value of plan assets at beginning of year..... $19,499  $20,611  $21,190
  Actual return on plan assets.......................   2,657    2,597      (36)
  Employer contributions.............................  (2,308)  (1,657)    (475)
  Benefits paid......................................  (3,725)  (2,052)     (68)
                                                      -------  -------  -------
  Fair value of plan assets at end of year........... $16,123  $19,499  $20,611
                                                      -------  -------  -------

Funded status........................................    (192)   2,113    4,669
  Unrecognized prior service cost....................     698      777      621
  Unrecognized net actuarial gain....................  (3,214)  (1,573)  (1,127)
                                                      -------  -------  -------
  (Accrued) prepaid benefit.......................... $(2,708) $ 1,317  $ 4,163
                                                      -------  -------  -------

Components of net periodic benefit cost
  Service cost.......................................   2,156    1,878    1,676
  Interest cost......................................   1,228    1,093    1,227
  Expected return on plan assets.....................  (1,746)  (1,863)  (1,793)
  Amortization of prior service cost.................      80       80       60
  Amortization of actuarial gains....................     --       --       (63)
                                                      -------  -------  -------
  Net periodic benefit cost.......................... $ 1,718  $ 1,188  $ 1,107
                                                      -------  -------  -------

Weighted average assumptions as of December 31
  Discount rate......................................    7.75%    6.50%    6.75%
  Rate of compensation increase......................    5.00%    5.00%    5.00%
  Expected return on plan assets.....................    9.00%    9.00%    9.00%
</TABLE>



                                       48
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   Information regarding the United Kingdom pension plan is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                      Year ended December 31,
                                                      -------------------------
                                                       1999     1998     1997
                                                      -------  -------  -------
<S>                                                   <C>      <C>      <C>
Change in benefit obligation
  Benefit obligation at beginning of year............ $17,557  $12,213  $ 8,410
  Service cost.......................................   1,249      844      704
  Interest cost......................................     979    1,042      685
  Actuarial (gains) losses...........................  (1,867)   2,344    2,950
  Benefits paid......................................    (487)    (186)    (256)
  Transfer from other pension plan...................     --     1,218      --
  Effect of exchange rates...........................    (390)      82     (280)
                                                      -------  -------  -------
  Benefit obligation at end of year.................. $17,041  $17,557  $12,213
                                                      -------  -------  -------

Change in plan assets
  Fair value of plan assets at beginning of year..... $16,078  $11,685  $ 8,646
  Actual return on plan assets.......................   1,164    1,901    2,445
  Employer contributions.............................     769      921      762
  Employee contributions.............................     350      461      381
  Administrative expenses............................     (28)     --       --
  Benefits paid......................................    (487)    (186)    (256)
  Transfer from other pension plan...................     --     1,218      --
  Effect of exchange rates...........................    (437)      78     (293)
                                                      -------  -------  -------
  Fair value of plan assets at end of year........... $17,409  $16,078  $11,685
                                                      -------  -------  -------

Funded status........................................     368   (1,479)    (528)
  Unrecognized net actuarial (gain) loss.............   1,320    2,445    1,038
                                                      -------  -------  -------
  Prepaid benefit cost............................... $ 1,688  $   966  $   510
                                                      -------  -------  -------

Components of net periodic benefit cost
  Service cost.......................................   1,249      844      704
  Interest cost......................................     979    1,042      685
  Expected return on plan assets.....................  (1,125)  (1,114)    (787)
  Amortization of actuarial (gains) losses...........     120      150      160
                                                      -------  -------  -------
  Net periodic benefit cost.......................... $ 1,223  $   922  $   762
                                                      -------  -------  -------

Weighted average assumptions as of December 31
  Discount rate......................................    5.75%    5.75%     8.5%
  Rate of compensation increase......................    4.25%    4.25%     6.5%
  Expected return on plan assets.....................    7.00%    7.00%     8.5%
</TABLE>

 Defined contribution plans

   The Company sponsors defined contribution plans covering substantially all
U.S. employees. The plans provide for specified Company matching of
participants' contributions. Contributions charged to operations for the years
ended December 31, 1999, 1998 and 1997 totaled $1.1 million, $1.5 million and
$1.5 million, respectively.

                                       49
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


11. Advertising costs

   The Company participates in several cooperative advertising programs with
customers. The costs incurred under these programs are accrued and expensed at
the inception of the contract. All of the Company's other production costs of
advertising are expensed the first time the advertising takes place.
Advertising expense for the years ended December 31, 1999, 1998, and 1997 was
$22.5 million, $23.2 million and $17.9 million, respectively.

12. Commitments and contingencies

 Leases

   The Company leases certain facilities and computer and other equipment under
operating leases. Total rent expense under these leases for the years ended
December 31, 1999, 1998, and 1997 was $ 3.8 million, $3.3 million and $3.3
million, respectively.

   Future minimum lease payments under non-cancelable operating leases at
December 31, 1999 were as follows (in thousands):

<TABLE>
<CAPTION>
       Year Ending
       -----------
       <S>                                                                 <C>
       December 31, 2000.................................................. 3,263
       December 31, 2001.................................................. 2,696
       December 31, 2002.................................................. 2,169
       December 31, 2003.................................................. 1,815
       December 31, 2004.................................................. 1,480
       Thereafter......................................................... 4,593
</TABLE>

 Litigation

   The Company has certain patent infringement, product liability, personal
injury and employment related litigation and claims pending in the normal
course of its business. Management believes that any uninsured losses resulting
from the resolution of such litigation and claims would not have a material
adverse impact on the Company's financial position or results of operations as
presented in the accompanying financial statements.

13. Related party transactions

 Management and advisory fees

   In connection with the Wesley Jessen Acquisition, the Company entered into
an agreement with Bain Capital, Inc. for the provision of management and
advisory services. Included in marketing and administrative expense for the
years ended December 31, 1999, 1998 and 1997 are $2.0 million $2.0 million and
$2.1 million, respectively, of management fees paid for the services provided
pursuant to this agreement. In addition, if the Company enters into any
acquisition transactions, it must pay specified fees to Bain Capital, Inc.
based upon the purchase price. The Company paid Bain Capital, Inc. fees of $3.0
million in connection with the structuring of the bank credit agreement used to
finance the Barnes-Hind Acquisition.

 Promissory Note

   On May 7, 1997, Wesley Jessen Corporation loaned the Company's Chief
Executive Officer ("CEO") $1.2 million in exchange for an unsecured promissory
note bearing interest at the rate of 8%, interest payable quarterly. The note
is due at the earlier of (i) May 9, 2002, (ii) the date the CEO ceases to be
employed by the Company, or (iii) the date the CEO disposes of any of his
common stock holdings in the company. The Company has previously waived the
requirement that the CEO repay such loan pursuant to clause (iii) above.

                                       50
<PAGE>

                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


14. Business segments and geographical information

   The Company operates in one product segment--the development, manufacture
and marketing of contact lenses. The aggregation criteria for sales are based
on point of production and shipment while the aggregation criteria for assets
are based on their physical location.

   Financial information by geographic area is as follows (in thousands):

<TABLE>
<CAPTION>
                                                           December 31,
                                                    ---------------------------
                                                      1999      1998     1997
                                                    --------- -------- --------
<S>                                                 <C>       <C>      <C>
Net sales:
  United States (including Puerto Rico)............ $ 199,303 $194,321 $190,329
  United Kingdom...................................    35,710   36,155   41,383
  Rest of the world................................    76,676   61,783   50,466
                                                    --------- -------- --------
                                                    $ 311,689 $292,259 $282,178
                                                    ========= ======== ========

Total assets:
  United States (including Puerto Rico)............ $ 139,666 $124,536 $112,210
  United Kingdom...................................    26,912   42,649   36,763
  Rest of the world................................    56,436   37,333   24,103
                                                    --------- -------- --------
                                                    $ 223,014 $204,518 $173,076
                                                    ========= ======== ========
</TABLE>

                                       51
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.

                        QUARTERLY INFORMATION--Unaudited
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                   For the Year Ended December 31, 1999
                         ---------------------------------------------------------
                         First Quarter Second Quarter Third Quarter Fourth Quarter
                         ------------- -------------- ------------- --------------
<S>                      <C>           <C>            <C>           <C>
Net sales...............    $76,311       $80,005        $80,744       $74,629
Operating income........     10,146        14,360         15,537        15,306
Net income..............      6,204         9,165          9,940         9,702
Basic earnings per
 share..................       0.36          0.53           0.57          0.57
Diluted earnings per
 share..................       0.34          0.49           0.53          0.52
Market price per share:
  High..................    $ 27.56       $ 34.88        $ 32.75       $ 39.94
  Low...................    $ 20.50       $ 26.75        $ 27.13       $ 25.31

<CAPTION>
                                   For the Year Ended December 31, 1998
                         ---------------------------------------------------------
                         First Quarter Second Quarter Third Quarter Fourth Quarter
                         ------------- -------------- ------------- --------------
<S>                      <C>           <C>            <C>           <C>
Net sales...............    $70,595       $73,417        $75,254       $72,992
Operating income........      8,981        12,840         13,535        13,300
Net income..............      5,270         7,727          8,051         8,547
Basic earnings per
 share..................       0.30          0.43           0.47          0.50
Diluted earnings per
 share..................       0.27          0.40           0.43          0.47
Market price per share:
  High..................    $ 40.25       $ 34.94        $ 25.75       $ 27.75
  Low...................    $ 32.13       $ 18.38        $ 17.00       $ 16.88
</TABLE>

                                       52
<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders
of Wesley Jessen VisionCare, Inc.

   Our audits of the consolidated financial statements referred to in our
report dated February 18, 2000, and included in this Form 10-K also included an
audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, the Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.

[Logo]

PricewaterhouseCoopers LLP

Chicago, Illinois
February 18, 2000

                                       53
<PAGE>

                         WESLEY JESSEN VISIONCARE, INC.

                          FINANCIAL STATEMENT SCHEDULE
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                 Additions
                                                 charged to
                                       Beginning costs and             Ending
                                        balance   expenses  Deductions balance
                                       --------- ---------- ---------- -------
<S>                                    <C>       <C>        <C>        <C>
Allowance for Doubtful Accounts
  Year ended December 31, 1997........  $ 6,989   $ 2,476    $(3,175)  $ 6,290
  Year ended December 31, 1998........  $ 6,290   $ 1,063    $(2,361)  $ 4,992
  Year ended December 31, 1999........  $ 4,992   $ 1,493    $(2,227)  $ 4,258
Allowance for Sales Returns and
 Adjustments
  Year ended December 31, 1997........  $10,622   $ 2,416    $(2,677)  $10,361
  Year ended December 31, 1998........  $10,361   $   464    $  (212)  $10,613
  Year ended December 31, 1999........  $10,613   $   696    $(5,487)  $ 5,822
Valuation Allowance for Deferred Tax
 Assets
  Year ended December 31, 1997........  $ 2,296   $ 4,001    $   --    $ 6,297
  Year ended December 31, 1998........  $ 6,297   $(1,435)   $   --    $ 4,862
  Year ended December 31, 1999........  $ 4,862   $   500    $   --    $ 5,362
Allowance for Inventory
  Year ended December 31, 1997........  $12,245   $ 4,353    $(3,830)  $12,768
  Year ended December 31, 1998........  $12,768   $ 6,082    $(4,337)  $14,513
  Year ended December 31, 1999........  $14,513   $ 3,298    $(2,109)  $15,702
</TABLE>

                                       54
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on this 30th day
of March, 2000.

                                          WESLEY JESSEN VISIONCARE, INC.

                                                     /s/ Kevin J. Ryan
                                          By___________________________________
                                                       Kevin J. Ryan
                                              President and Executive Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on this 24th day of March, 2000.

<TABLE>
<CAPTION>
              Signature                                 Capacity
              ---------                                 --------

<S>                                    <C>
        /s/ Kevin J. Ryan              President and Director (principal executive
______________________________________  officer)
            Kevin J. Ryan

       /s/ Edward J. Kelley            Chief Financial Officer, Treasurer and
______________________________________  Director (principal financial officer)
           Edward J. Kelley

       /s/ Ronald J. Artale            Vice President--Controller (principal
______________________________________  accounting officer)
           Ronald J. Artale

      /s/ Michael A. D'Amato           Director
______________________________________
          Michael A. D'Amato

        /s/ Adam W. Kirsh              Director
______________________________________
            Adam W. Kirsh

          /s/ Sol Levine               Director
______________________________________
              Sol Levine

         /s/ John W. Maki              Director
______________________________________
             John W. Maki

       /s/ John J. O'Malley            Director
______________________________________
           John J. O'Malley
</TABLE>

                                       55
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
No.                                      Exhibit Description
-------                                  -------------------
<S>       <C>
 2.1      Purchase and Sale Agreement, dated as of May 5, 1995, between Schering
           Corporation and WJ Acquisition Corp. +(1)
 2.2      Agreement for Purchase and Sale, dated as of July 5, 1996, between the Company
           and Pilkington plc. +(1)
 3.1(i)   Amended and Restated Certificate of Incorporation. (2)
 3.1(ii)  Amended and Restated By-laws. (2)
 4.1      Certificate representing shares of Common Stock, $0.01 par value per share. (1)
 4.2      Stockholders Agreement, dated October 22, 1996, among the Company and the
           stockholders named therein. (1)
 4.3      Amended and Restated Registration Agreement, dated as of October 22, 1996 between
           the Company and the stockholders named therein. (1)
 4.4      Credit Agreement, dated as of February 19, 1997 and as amended as of September
           10, 1997, among Wesley Jessen VisionCare, Inc., Wesley-Jessen Corporation,
           various lending institutions and Bankers Trust Company, as agent. +(3)
 4.5      Security Agreement, dated as of February 19, 1997, among Wesley Jessen
           VisionCare, Inc., Wesley-Jessen Corporation, certain other subsidiaries of
           Wesley Jessen VisionCare, Inc. and Bankers Trust Company, as Collateral Agent.
           +(2)
 4.6      Pledge Agreement, dated as of February 19, 1997, by Wesley Jessen VisionCare,
           Inc., Wesley-Jessen Corporation and certain other subsidiaries of Wesley Jessen
           VisionCare, Inc. in favor of Bankers Trust Company, as Collateral Trustee and
           Agent. +(2)
 4.7      Subsidiary Guaranty, dated as of February 19, 1997, made by each subsidiary of
           Wesley-Jessen Corporation named therein and Bankers Trust Company, as Agent. (2)
 4.8      Subordinated seller's note, dated as of October 2, 1996, by Wesley-Jessen
           Corporation in favor of Pilkington plc. (1)
 4.9      Second Amendment, dated August 18, 1999, to the Credit Agreement, dated as of
           February 19, 1997 and reinstated as of September 10, 1997 and further amended by
           a First Amendment and Consent dated as of June 9, 1998, among Wesley Jessen
           VisionCare, Inc., Wesley Jessen Corporation, various lending institutions, and
           Bankers Trust Company, as Agent. (6)
4.10      Rights Agreement dated as of November 16, 1999, between Wesley Jessen VisionCare,
           Inc. and American Stock Transfer and Trust Company, as Rights Agent. (7)
10.1      Wesley Jessen VisionCare, Inc. Stock Incentive Plan, as amended. (5)*
10.2      Wesley Jessen VisionCare, Inc. Non-Employee Director Stock Option Plan. (2)*
10.3      Amended and Restated Advisory Agreement, dated as of October 2, 1996, between
           Wesley-Jessen Corporation and Bain Capital, Inc. (1)
10.4      Stock Purchase Agreement, dated as of June 28, 1995, among Wesley-Jessen Holding,
           Inc. and the various purchasers named therein. (1)
10.5      Agreement, dated as of December 21, 1992, between Wesley-Jessen Corporation and
           Tech Medical Inc, regarding casting cups, as amended. (1)
10.6      Employment Agreement, dated June 28, 1995 between the Company and Kevin J. Ryan.
           (1)*
10.7      Employment Agreement, dated June 28, 1995 between the Company and Edward J.
           Kelley. (1)*
10.8      Wesley-Jessen Holding, Inc. 1995 Stock Purchase and Option Plan. (1)*
10.9      Wesley-Jessen Holding, Inc. 1996 Stock Option Plan. (1)*
</TABLE>


                                       56
<PAGE>

<TABLE>
<CAPTION>
Exhibit
No.                                     Exhibit Description
-------                                 -------------------
<S>      <C>
10.10    Management Agreement, effective as of June 28, 1995 and dated as of April 5,
          1996, by and between the Company and Kevin J. Ryan (with an attached schedule
          setting forth the terms of other Named Executives). (1)*
10.11    Indemnification Agreement, dated as of March 4, 1997 and effective as of February
          12, 1997, between Kevin J. Ryan and the Company with an attached schedule
          listing the other officers and directors who entered into such an agreement.
          (2)*
10.12    Lease agreements relating to the Company's Southampton, United Kingdom
          manufacturing facility. (1)
10.13    Lease agreements relating to the Company's San Diego, California manufacturing
          facility. (1)
10.14    Wesley-Jessen Corporation Professional Incentive Program (1996). (1)
10.15    Wesley Jessen VisionCare, Inc. Employee Stock Discount Purchase Plan. (2) *
10.16    Asset Purchase Agreement, dated as of January 24, 1997 by and among Wesley-Jessen
          Corporation, PBH, Inc. and The Cooper Companies, Inc. +(2)
10.17    Unsecured promissory note, dated as of May 7, 1997, by Kevin J. Ryan in favor of
          Wesley-Jessen Corporation. (4)
10.18    Unsecured promissory note, dated July 27, 1999, by Kevin J. Ryan in favor of
          Wesley Jessen Corporation (6)
10.19    Employment Agreement dated October 1, 1999 between the Company and Kevin J.
          Ryan.*
11.1     Earnings Per Share.
21.1     Subsidiaries of the Company.
23.1     Consent of PricewaterhouseCoopers LLP.
27.1     Financial Data Schedule.
</TABLE>
--------
(1)  Incorporated by reference to the applicable exhibit to the Registrant's
     Registration Statement on Form S-1, Registration No. 333-17353.
(2)  Incorporated by reference to the applicable exhibit to the Registrant's
     Quarterly Report on Form 10-Q for the quarterly period ended March 29,
     1997, File No. 0-22033.
(3)  Incorporated by reference to the applicable exhibit to the Registrant's
     Quarterly Report on Form 10-Q for the quarterly period ended September 27,
     1997, File No. 0-22033
(4)  Incorporated by reference to the applicable exhibit to the Registrant's
     Registration Statement on Form S-1, Registration No. 333-32493.
(5)  Incorporated by reference to the applicable exhibit to the Registrant's
     Quarterly Report on Form 10-Q for the quarterly period ended July 3, 1999,
     File No. 0-22033.
(6)  Incorporated by reference to the applicable exhibit to the Registrant's
     Quarterly Report on Form 10-Q for the quarterly period ended October 2,
     1999, File No. 0-22033.
(7)  Incorporated by reference to exhibit 1.1 to the Registrant's Registration
     Statement on Form 8-A12G filed with the Commission on November 22, 1999.
 +  The Company agrees to furnish supplementally to the Commission a copy of
    any omitted schedule or exhibit to such agreement upon request by the
    Commission.
 *  Management contract, compensatory plan or arrangement required to be filed
    as an exhibit pursuant to Item 14 (c) of this report.

                                       57