<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, 1998

  (  )     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)
                                        
<TABLE>
<S>                                 <C>                                   <C>
      Delaware                                                                         36-4023739
(State of Incorporation)            333 East Howard Avenue                (I.R.S Employer Identification No.)
                               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)
                                        
</TABLE> 

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, 1999 at a closing sale price of  $26.31 as reported
by the Nasdaq National Market was approximately $305,430,185.  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, 1999, the Registrant had 17,081,203 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 1999 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.
                                                                                  --------
    <S>                                                                           <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                              16
 
     PART II
     Item 5.       Market for the Registrant's Common Equity and
                   Related Stockholder Matters                                       17
     Item 6.       Selected Financial Data                                           19
     Item 7.       Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                               19
     Item 7A.      Quantitative and Qualitative Disclosure About Market Risk         28
     Item 8.       Financial Statements and Supplementary Data                       28
     Item 9.       Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure                               28
 
     PART III
     Item 10.      Directors and Executive Officers of the Registrant                28
     Item 11.      Executive Compensation                                            29
     Item 12.      Security Ownership of Certain Beneficial Owners and Management    29
     Item 13.      Certain Relationships and Related Transactions                    29
 
     PART IV
     Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K   29
</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 UV light. The Company offers a broad range of both
conventional contact lenses, which can typically be used for up to 24 months,
and disposable contact lenses, which are intended to be replaced at least every
two weeks. 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 40%
of U.S. soft lens wearers use disposable 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 and sells its products to
consumers through advertising campaigns and to eyecare practitioners through its
211 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, there are over 156
million people who require some form of corrective eyewear. 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 

                                       1
<PAGE>
 
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.

  The contact lens industry is large and rapidly growing. In 1998,
manufacturers' sales of soft contact lenses worldwide totaled  $2.3 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 6 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 80% of U.S. wearers, and the hard lens portion,
primarily rigid gas permeable ("RGP"), which represents approximately 20% 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 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 15% of the overall soft lens market.

  The two primary segments within the soft lens market are clear and specialty.
Clear lenses (lenses that 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)
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 eyecolor 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 

                                       2
<PAGE>
 
markets its products to a fitter, that fitter will carry that manufacturer's
brand of 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, 1998:

                           Net Sales by Product Line
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                 Year Ended
                                                                                           -----------------------
Product Line                                                                                  December 31, 1998
                                                                                           -----------------------
 
                                                                                             Amount       Percent
                                                                                           -----------   ---------
<S>                                                                                        <C>           <C>
      Specialty Lenses                                                                        $241,948         83%
 
      Clear Lenses                                                                              41,784         14%
 
      Hard/Other Lenses                                                                          8,527          3%
                                                                                              --------        ---
 
            Total Lenses                                                                      $292,259        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 1998. The Company's specialty soft contact lens
products include the following:

                                       3
<PAGE>
 
  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 and which the Company believes will become the
market standard due to its patented color printing process that allows the
pupil-covering zone of the lens to remain clear.  In September, 1998 the Company
launched FreshLook ColorBlends in North America.  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 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
contact lens, which is typically replaced every two weeks. With the broadest
product offering in the cosmetic lens segment, the Company has obtained over
60% share of the U.S. cosmetic lens market in 1998.

  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. In February 1997, the Company introduced a toric version
of its enhancer colored 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, Hydrocurve and CSI
toric lens sales represent 15% of the U.S. toric lens market in 1998.

  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, the first disposable lens available with UV
protection, which is gaining share from many clear disposable lenses. The
Company's market research suggests that some 90% of contact lens wearers are
interested in lenses offering UV protection. The Company's Gentle Touch product,
which is typically replaced every 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 Company held 90% of the U.S. premium
lens segment in 1998.

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

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

                                       4
<PAGE>
 
  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 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 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 donates all 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 50 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 $10.8 million,
or 3.7% of net revenues, for the year ended December 31, 1998.

  In the last twelve months, the Company has introduced four new products or
line extensions, including disposable toric lenses, a new line of specialty
color lenses, novelty cosmetic lenses and UV-absorbing disposable lenses.  The
UV protection lens allows the Company to further penetrate the emerging health-
conscious market and permits cross-promotion with the Company's current
specialty lens wearers.

  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)
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. The
Company's disposable lens manufacturing facilities are currently operating at
more than 80% of their capacity. The Company has plans to supplement production
in 1999.

                                       5
<PAGE>
 
  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 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 Atlanta,
Georgia and Farnham, United Kingdom facilities.  In connection with the Barnes
Hind Acquisition, management has announced plans for the closing of its
manufacturing operations in San Diego, California with a shift of conventional
lens production to its plant in Cidra, Puerto Rico.  In addition, the Company
has obtained alternate production sources for its RGP contact lenses.

  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 has implemented a two-pronged sales and marketing strategy that
reflects the Company's belief that both consumers and eyecare practitioners are
important to the success of the Company's products. To generate consumer
awareness and increase demand for its products, the Company has spent
approximately $15 million in 1998 on a national advertising campaign featuring
supermodel Elsa Benetiz. In total, the Company spent approximately $31.5 million
worldwide during 1998 for the advertisement and promotion of its disposable
cosmetic lenses.  The Company also developed a successful national consumer
mail-in rebate program which expanded its consumer franchises in 1998.  The
Company continued its "free gift with purchase" offer designed 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 211 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, Holland, Germany,  Mexico, Brazil, Argentina,
Japan  and Australia. Countries in Europe, Asia and Latin America not directly
served by the Company are serviced by a broad network of distributors. The
Barnes-Hind Acquisition strengthened the Company's global distribution
infrastructure by contributing direct salesforces in Germany, Spain, Belgium,
Netherlands, Luxembourg and Australia, in addition to strengthening existing
salesforces in the United States, France, Italy, Canada and the United Kingdom.

                                       6
<PAGE>
 
  The following table sets forth the Company's net sales to the geographic
regions indicated for the year ended December 31, 1998:

                        Net Sales to Geographic Regions
                             (dollars in thousands)

<TABLE>
<CAPTION>
                    Region                                Amount                    Percent
----------------------------------------------   ------------------------   -----------------------
<S>                                              <C>                        <C>
United States.................................                   $170,189                      58 %
Rest of World.................................                    122,070                      42 %
                                                                 --------                    -----
  Total.......................................                   $292,259                    100.0%
                                                                 ========                    =====
</TABLE>

For additional information about the Company's geographic sales, refer to
Footnote 15 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 5% of its revenues for the year ended December
31, 1998. Furthermore, the Company's top 10 customers accounted for less than
25% of its revenues for the year ended December 31, 1998.

  In the United States, the Company sells to three customer segments: private
practitioners, chain warehouses and wholesalers. There are approximately 17,100
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 10,000
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 1998:

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

<TABLE>
<CAPTION>
                                                                                 Percent of 1998
                                                                                 ---------------   
              Distribution Channel                                                  U.S. Sales
              --------------------                                                  ----------     
              <S>                                                              <C>
                    Private practitioners.........                                    54 %
                    Chain warehouses..............                                    14 %
                    Wholesalers...................                                    32 %
                                                                                      ---
                          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.

  The Barnes-Hind Acquisition provided Wesley Jessen with access to a new set of
accounts and the opportunity to cross-sell existing product lines between Wesley
Jessen's and Barnes-Hind's extensive customer bases.

                                       7
<PAGE>
 
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 8,500 orders are received daily,
primarily by telephone and facsimile in nine customer service centers in North
America, Europe, Japan, Argentina and Australia.

  In the U.S., approximately 68% of the Company's lenses are shipped primarily
by common carriers directly to eyecare practitioners from distribution centers
in Des Plaines, Illinois. The remaining 32% 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 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 relationships and reputation 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, 1998, 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.

                                       8
<PAGE>
 
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 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 lens and a proprietary compound for making
such 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 pending in Italy.
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), Gentle Touch,
Hydrocurve, Optifit(R), Polycon(R), Precision UV 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.

                                       9
<PAGE>
 
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 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 

                                       10
<PAGE>
 
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 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 

                                       11
<PAGE>
 
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 the
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. The Company's San Diego, California; Southampton, United
Kingdom; Cidra, Puerto Rico; and Des Plaines, Illinois facilities have been
inspected within the past two years. A form FDA 483 was issued. The Company
responded and no follow up inspection was required. 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. On April 19, 1998, the
FDA issued a warning letter challenging certain claims by the Company regarding
Precision UV contact lenses. The Company responded by suspending use of the
challenged materials. The Company later submitted to the FDA a PMA supplement
and a 510(k) submission substantiating the claims. The Company also took
additional steps to address the FDAs concerns. The PMA supplement and the 510(k)
submission were approved by the FDA and the Company has resumed use of the
claims. The Company does not expect any future action by the FDA regarding the
warning letters.

  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 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 by
June 14, 1998. "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 

                                       12
<PAGE>
 
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 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, 1998, the Company had approximately 2,690 full-time and
part-time employees, including 1,767 in the United States (including Puerto
Rico), 766 in Europe, and 157 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. 

                                       13
<PAGE>
 
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.
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.

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 are located in Des Plaines, Illinois (a
suburb of Chicago). In Europe, Barnes-Hind has consolidated warehouses and
customer service centers into one distribution center in the United Kingdom and
two customer service centers in the United Kingdom and France.

  The Company believes that substantially all of its property and production
equipment is in good condition and 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, 1998:

<TABLE>
<CAPTION>
                                                                                   Square
                                                                                  --------                 
Location                             Function                                     Footage      Owned/Leased   
--------                             --------                                     --------     ------------
<S>                                  <C>                                          <C>        <C>
Des Plaines, Illinois                Corporate Headquarters/Disposable
                                     Manufacturing/R&D/Distribution                340,000         Owned
Des Plaines, Illinois                Distribution Center                            62,883        Leased
Chicago, Illinois                    Distribution Center (1)                        48,000        Leased
San Diego, California                Conventional Manufacturing                     19,000         Owned
San Diego, California                Conventional Manufacturing/Distribution        69,700        Leased
Atlanta, Georgia                     RGP Manufacturing                               7,200        Leased
Cidra, Puerto Rico                   Conventional Lens 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                                   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
</TABLE> 
                                       14
<PAGE>
 

<TABLE> 
<S>                                  <C>                                           <C>           <C> 
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
produces the Company's 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.

  San Diego, California. This 88,700 square foot facility produces the Company's
CSI, Hydrocurve and Gentle Touch premium and toric lenses. Additionally, the
facility is used for customer service and management information systems.  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 or 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 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 1998.

                                       15
<PAGE>
 
Item 4A.  Executive Officers of the Registrant

<TABLE>
<CAPTION>
     Name                                  Age     Position
     ----                                  ---     --------
<S>                                      <C>       <C>
      Kevin J. Ryan...................        59   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.........        50   Vice President, Worldwide Manufacturing
      Ronald J. Artale................        48   Vice President and Controller
      Lawrence L. Chapoy..............        56   Vice President, Research & Development
      William M. Flynn................        40   Vice President, Pan Asia
      Joseph F. Foos..................        47   Vice President, Scientific Affairs
      George H. McCrary...............        56   Vice President, Americas
      Daniel M. Roussel...............        50   Vice President, Europe
      Thomas F. Steiner...............        53   Vice President, Marketing
</TABLE>

  Kevin J. Ryan has served as President, Chief Executive Officer and a Director
of the Company since June 1995 and was appointed Chairman of the Board in
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.

  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.

                                       16
<PAGE>
 
  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 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.

                                    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 Common Stock commenced trading on February 13, 1997. 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
                                                                                     ----                      ---           
      1997:                                                                     
       <S>                                                                          <C>                      <C>
       First Quarter (from February 13, 1997)...........................            $16.75                     $14.63
       Second Quarter...................................................             25.88                      13.00
       Third Quarter....................................................             31.00                      22.50
       Fourth Quarter...................................................             39.00                      26.25
                                                                                
      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
</TABLE>
                                        
Holders

  As of the close of business on March 18, 1999, there were approximately 3,099
holders of record of Common Stock. The Company believes that it has a
significantly larger number of beneficial holders 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.

                                       17
<PAGE>
 
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.

                                       18
<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, 1998 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>
                                                       Predecessor                                 Company
                                                 -------------------------   -----------------------------------------------------
                                                                                          
                                                 Twelve Months   January 1,     June 29,  
                                                     Ended        through       through         Twelve Months Ended December 31,
                                                  December 31,    June 28,    December 31,    ------------------------------------
                                                      1994           1995          1995          1996         1997        1998
                                                  --------------------------------------------------------------------------------
<S>                                               <C>              <C>          <C>         <C>            <C>          <C>
Statements of Income                                                          
Net sales.......................................... $109,640      $ 51,019       $ 54,315      $156,752     $282,178     $292,259
Income (loss) before income taxes                                                           
   and extraordinary loss..........................  (57,421)      (22,544)       (33,737)       (4,108)      12,388       43,847
Income (loss) before extraordinary loss............  (30,486)      (13,143)       (19,715)       (1,071)       8,200       29,597
Extraordinary loss, net of income tax benefit......        -             -              -        (1,671)      (4,902)           -
Net income (loss)..................................  (30,486)      (13,143)       (19,715)       (2,742)       3,298       29,597
                                                                                            
Income (loss) per common share:                                                             
  Basic                                                                                     
    Income (loss) before extraordinary loss........                              $ (1.37)      $ (0.07)     $   0.49     $   1.70
    Extraordinary loss, net of income tax benefit..                              $      -      $ (0.12)     $ (0.29)     $      -
    Net income (loss)..............................                              $ (1.37)      $ (0.19)     $   0.20     $   1.70
                                                                                            
  Diluted                                                                                   
    Income (loss) before extraordinary loss........                              $ (1.37)      $ (0.07)     $   0.45     $   1.57
    Extraordinary loss, net of income tax benefit..                              $      -      $ (0.12)     $ (0.27)     $      -
    Net income (loss)..............................                              $ (1.37)      $ (0.19)     $   0.18     $   1.57
                                                                                            
Balance Sheets:                                                                             
Working capital.................................... $ 30,940                     $ 30,262      $ 77,747     $ 65,835     $ 83,717
Total assets.......................................  191,429                       67,330       180,600      173,076      204,518
Total debt.........................................        -                       42,000       102,975       57,000       69,000
Stockholders' equity (deficit).....................  173,409                      (12,190)      (13,292)      36,846       49,952
</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 and scientists and Company-sponsored
research by third-party experts. The Company markets and sells its products to
consumers through the second largest advertising campaign in the industry and to
eyecare practitioners through its 211 person salesforce and network of
independent distributors, which together sell the Company's products in more
than 75 countries.

                                       19
<PAGE>
 
Wesley Jessen Acquisition

  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"). The cash purchase
price in the Wesley Jessen Acquisition of $47.0 million (plus fees and expenses
of $3.5 million) was funded with $7.5 million of equity and $43.0 million of
borrowings under a bank credit agreement. The aggregate purchase price in the
Wesley Jessen Acquisition, including assumed liabilities, was $76.6 million. The
Wesley Jessen Acquisition was accounted for under the purchase method of
accounting.  As a result of the Wesley Jessen Acquisition, the Company
recognized a significant non-cash increase in cost of goods sold of $6.6 million
in 1996 related to the amortization of Wesley Jessen 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."

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 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 which accrues
interest at a compound rate of 12% per annum, 8% of which is payable currently
and 4% of which is payable-in-kind. On July 31, 1997, the purchaser made a
voluntary prepayment of $3.0 million on the promissory note. On May 7, 1998, the
purchaser made an additional voluntary prepayment of $1.0 million.  As part of
the agreement, the Company entered into a supply agreement pursuant to which the
Company will supply the purchaser with Natural Touch lenses for sale in the
United States.
 
  In connection with the Barnes-Hind Acquisition, the Company identified
significant operating synergies and substantial cost saving opportunities. The
Company has completed the majority of its initial cost reduction measures which,
as expected, have improved the Company's operating results. The Company
announced the closing of its manufacturing operations in San Diego, California,
expected to be substantially completed by March, 2000, with a shift of
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 incurred significant
non-recurring charges as follows: (i) a non-cash increase in cost of goods sold
of $14.1 million in 1996 and $22.7 million in 1997 related to the amortization
of the Barnes-Hind purchased inventory step-up to fair value at the acquisition
date; and (ii) extraordinary debt extinguishment costs of $2.8 million ($1.7
million, net of income tax benefit) in 1996 related to the write-off of
capitalized financing fees incurred in connection with the refinancing of the
Company's then- existing credit agreement. Adjustments for these non-recurring
charges and expected cost savings related 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 have been reflected  in the pro forma columns
of the Company's Unaudited Statement of Operations Data. See "Results of
Operations."

                                       20
<PAGE>
 
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.

  In September, 1997, in connection with the Offering, the Company entered into
the Amended Bank Credit Agreement which increased the total borrowing
availability thereunder to $135.0 million, converted all remaining term loan
borrowings into revolving loans, and reduced the interest rate thereunder.  The
Company incurred an additional $0.6 million of fees and expenses associated with
the Amended Bank Credit Agreement. These costs have been capitalized and are
being amortized through September 2002.

  Interest expense reductions as if the IPO had occurred on January 1, 1996 are
reflected in the pro forma columns 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 Wesley Jessen and Barnes-Hind Acquisitions occurred on June 29, 1995 and
October 2, 1996, respectively.  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
Acquisitions, the financial statements of the Company for the years ended
December 31, 1998, 1997 and 1996 are not comparable.  In addition, the Company
completed its IPO in February, 1997, which had a significant impact on the
Company's on-going 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 operating results for the years
ended December 31, 1996 and 1997 giving effect to the cost-reduction and
operating improvements as if such transactions occurred on January 1, 1996.  The
pro forma adjustments are set forth in the notes to the table.  The pro forma
information included herein for the prior year periods 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 does it 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.

                                       21
<PAGE>
 
                     Unaudited Statement of Operations Data
                     (in thousands, except per share data)
<TABLE>
<CAPTION>
 
                                                             Twelve Months Ended December 31,
                                           -----------------------------------------------------------------
                                               Actual      Pro Forma      Actual      Pro Forma      Actual
                                                1998        1997(a)        1997        1996(b)        1996
                                           -----------------------------------------------------------------
 
<S>                                           <C>         <C>            <C>         <C>            <C>
Net sales..................................   $292,259     $282,178      $282,178     $249,999      $156,752
Operating costs and expenses:
    Cost of goods sold.....................     90,471       92,780       115,446       86,568        63,858
    Marketing and administrative...........    143,309      136,565       137,650      127,030        88,274
    Research and development...............     10,818       11,997        11,997       12,050         7,178
    Amortization of goodwill, net..........       (997)        (862)         (862)        (784)         (784)
                                           -----------------------------------------------------------------
    Income (loss) from operations..........     48,658       41,698        17,947       25,135        (1,774)
Other (income) expense:
    Interest expense, net..................      4,811        5,148         5,559        5,809         5,385
    Other income, net......................                       -             -       (3,051)       (3,051)
                                           -----------------------------------------------------------------
Income (loss) before income taxes                                                                            
 and extraordinary loss....................     43,847       36,550        12,388       22,377        (4,108)
Income tax (expense) benefit...............    (14,250)     (12,244)       (4,188)      (7,608)        3,037
                                           -----------------------------------------------------------------
Income (loss) before extraordinary loss....     29,597       24,306         8,200       14,769        (1,071)
Extraordinary loss, net of related                                                                            
 income tax benefit........................          -            -        (4,902)           -        (1,671) 
                                           -----------------------------------------------------------------
Net income (loss)..........................   $ 29,597     $ 24,306      $  3,298     $ 14,769      $ (2,742)
                                           =================================================================
 
Net income (loss) per common share:
   Basic...................................      $1.70        $1.40         $0.20        $0.85        $(0.19)
                                           =================================================================
   Diluted.................................      $1.57        $1.29         $0.18        $0.79        $(0.19)
                                           =================================================================
Weighted average common shares outstanding:
   Basic...................................     17,432       17,302        16,898       17,459        14,638
                                           =================================================================
   Diluted.................................     18,904       18,856        18,451       18,684        14,638
                                           =================================================================
</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%.

(b) The pro forma results comprise the Wesley Jessen operations and the Barnes-
    Hind operations and include adjustments for: (i) the divestiture of the U.S.
    Natural Touch product line of $1,039;  (ii) the elimination of inventory
    step-up amortization of $20,706; (iii) the net reduction in depreciation and
    amortization expense of $2,876 as a result of the Company's application of
    purchase accounting; (iv) the net cost savings of $20,712 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; (v) the net increase in interest expense associated with the
    financing of the Barnes-Hind Acquisition and the refinancing in connection
    with the IPO of $386; (vi) the elimination of the extraordinary write-off of
    capitalized financing fees of $1,671; and (vii) the adjusted income tax
    expense resulting from the preceding adjustments at an effective income tax
    rate of 34%.

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, 

                                       22
<PAGE>
 
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 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.

  Amortization of goodwill increased by $0.1 million, or 15.7%, to $1.0 million
in 1998 from $0.9 million in 1997  due to the impact on negative goodwill of the
purchase price reduction, pension valuation and integration  of cost estimate
changes related to the Barnes-Hind Acquisition.

  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.

Pro Forma Year Ended December 31, 1997 (Unaudited) Compared to Pro Forma Year
Ended December 31, 1996 (Unaudited)

  Net sales for the year ended December 31, 1997 increased $32.2 million, or
12.9%, to $282.2 million from $250.0 million for the year ended December 31,
1996. This increase resulted primarily from 38.1% growth in sales of the
Company's disposable and planned replacement contact lenses, from $71.0 million
to $98.0 million, along with a moderate increase in the conventional lens
product lines of 3.1%. Sales of disposable and planned replacement contact
lenses grew 51.4% in the U.S. and 27.6% internationally. Total sales in the
United States grew 17.4%, while sales in the rest of the world grew 7.8% for the
year. The sales returns and allowances reserve decreased slightly from $10.6
million at December 31, 1996 to $10.4 million at December 31, 1997.  This is a
result of lower actual sales returns and allowances trends which the Company
experienced throughout the year.

  Gross profit for the year ended December 31, 1997 increased $26.0 million, or
15.9%, to $189.4 million from $163.4 million in the comparable 1996 period.
Gross profit margin improved 1.7% to 67.1% in 1997, reflecting the higher
margins realized on the Company's disposable and planned replacement lenses due
to higher production volumes, as well as cost savings from improved plant
utilization and other operating efficiencies.

  Marketing and administrative expenses increased by $9.5 million, or 7.5%, to
$136.6 million in 1997 from $127.0 million in 1996, largely due to higher
promotional spending for all product lines, particularly the former 

                                       23
<PAGE>
 
Barnes-Hind conventional lens products, along with higher performance related
compensation expenses. As a percentage of net sales, though, marketing and
administrative expenses decreased to 48.4% in 1997 from 50.8% in 1996.

  Income from operations of $41.7 million for the year ended December 31, 1997
increased 65.9% from $25.1 million for the year ended December 31, 1996 due to
the overall increase in sales volume along with improvement in the Company's
gross margin offset slightly by the increase in marketing and administrative
expenses.

  Interest expense, net decreased 11.4% to $5.1 million in 1997 from $5.8
million in 1996 due to the paydown of debt with proceeds from the offerings as
well as interest income earned on the promissory note receivable related to the
sale of the Company's Natural Touch product line.

  Other income for the year ended December 31, 1996 includes $3.7 million of
non-recurring licensing fee income. There was no such income in the comparable
1997 period.

  Net income for the year ended December 31, 1997 increased $9.5 million to
$24.3 million from $14.8 million for the year ended December 31, 1996. Excluding
the 1996 licensing fee income, net income increased $12.0 million. This resulted
from higher sales volume and improvement in the Company's gross margins,
partially offset by increased spending in marketing and administrative expenses.

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, 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.  For the year ended December 31, 1996, the Company provided
approximately $19.2 million in cash from operating activities, primarily as a
result of increases in profitability (giving effect to the inventory step-up
amortization), a decrease in accounts receivable and increases in income taxes
payable and accrued liabilities offset by a decrease in accounts payable.
Since December 31, 1997, the Company has additional borrowings of $12.0 million,
which were used to fund capital expenditures, recent acquisitions and a portion
of the share repurchase program.

  For the years ended December 31, 1998, 1997 and 1996, the Company made capital
expenditures of approximately $17.2 million, $16.3 million and $6.6 million,
respectively. The majority of these capital expenditures were for facility and
equipment improvement, information technology enhancements and site
consolidations. The Company anticipates additional capital expenditures of
approximately $27.0 million to be made throughout 1999 to expand production
capacity, further consolidate locations, 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.

  As a result of the Barnes-Hind Acquisition, the Company expects to incur
integration costs of approximately $20.4 million, principally for severance
costs and lease expenses on vacated premises. Management expects that this
restructuring will be substantially completed by March, 2000. As of December 31,
1998, the Company has paid $12.5 million of these integration costs.

  Effective July 29, 1998, the Company entered into the First Amendment and
Consent of the Amended Bank Credit Agreement to increase the borrowing
availability under the revolving credit facility to $170.0 million and to 

                                       24
<PAGE>
 
permit the repurchase of a maximum of $35.0 million of the Company's common
stock. See "Share Repurchase Program".

  As of December 31, 1998, the Company had approximately $101.0 million in
borrowing availability under the revolving credit facility portion of the
Amended Bank Credit Agreement. The Amended Bank 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, sell its assets and engage in certain other
activities. In addition, the indebtedness of the Company under the Amended Bank
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.

  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 Amended Bank Credit
Agreement and cash on hand at December 31, 1998, 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 and its subsidiaries 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, 1996, 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,
1999. The cap is intended to provide partial protection from potential exposure
relating to the Company's variable rate debt instruments.

  Approximately 42% of the Company's net sales for the year ended December 31,
1998 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 and
the Company completed the program 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.

Recent Acquisitions

   On June 26, 1998, the Company acquired the operations of Plastic Contact Lens
Argentina SAIC (PCL) from its sole shareholder.  On July 31, 1998, the Company,
through its Australian subsidiary, executed a purchase agreement to acquire
certain assets and assume certain liabilities of Eycon Lens Laboratories, Pty,
Ltd. from its shareholders.  The total adjusted purchase price for both
acquisitions of approximately $2.7 million (plus additional fees and expenses of
$0.3 million) was funded with existing liquidity.  The Company has accounted for
the acquisitions under the purchase method of accounting.

                                       25
<PAGE>
 
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, 1998.

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.  This Statement is effective for fiscal
quarters of fiscal years beginning after June 15, 1999 and does not permit
retroactive application to prior period financial statements.  The Company
expects to adopt this Statement in its financial statements for the year ending
December 31, 2000.  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 may recognize a date identified as "00" as the year
"1900" rather than "2000", which could result in miscalculations or system
failures. This is commonly referred to as the "Year 2000" or "Y2K" issue.

    The Company has undertaken a global approach to addressing the Year 2000
issue.  Thus far, the Company has identified the areas of its operations in
which the Year 2000 issue may arise and conducted a global survey of all
personal computer, software and other essential equipment to identify components
that must be modified or replaced.  A formal plan has been established to
acquire new and repair existing Company personal computers and associated
software by June, 1999.  An assessment of manufacturing equipment and software
has been completed.   Mainframe system software modifications are progressing
according to plan and, in instances where critical, are being tested.  In
addition, the Company has 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 are vulnerable to those third parties' failures to remediate their
Year 2000 compliance problems.  The Company's global steering committee meets
bi-weekly to monitor the progress of testing all Company Information Technology
("IT") and relevant non-IT systems, to establish milestones for completion of
specific Year 2000-related tasks throughout the Company's facilities, and to
supervise generally the measures taken by the Company to address the Year 2000
issue.

    The Company presently believes that, as a result of its actions, the Year
2000 issue will not pose significant operational problems for its computer
systems.  If, however, the modifications, conversions and testing described
above are not accomplished in a timely manner, the Year 2000 issue could have a
material impact on the 

                                       26
<PAGE>
 
Company's operations. In addition, there can be no guarantee that the systems of
third parties will be made compliant in a timely manner and would not have an
adverse effect on the Company.

  The Company is using both internal and external resources to identify and test
systems for Year 2000 compliance and to modify or replace them where necessary.
To assure Year 2000 compliance, the Company has made commitments of $1.9 million
to date, of which $0.8 million has been spent in 1998, and has projected
commitments of $1.8 million in future periods.  The majority of these costs will
be expensed as incurred, with the remainder treated as capital expenditures.
Costs related to Year 2000 compliance were not significant in prior years.

    At this time, management is unable to estimate the effect of noncompliance
with the Year 2000 issue on the Company's results of operations, liquidity and
financial condition beyond the belief that noncompliance would be material in
nature.  To mitigate the potential risk related to unsuccessful remediation on
either the part of the Company or its significant suppliers or bankers, a
contingency plan is being developed and is scheduled for completion by June 30,
1999.
 
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 are addressing the issues involved, currently with
preliminary emphasis on order processing, banking and assessment of financial
systems.  Due to the uncertainties involved, the issue of one common currency's
effect on pricing and its impact on results of operations cannot be reasonably
estimated at this time.

    Based on our work to date, we believe the euro currency conversion will 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 strategic benefits of the Barnes-Hind Acquisition; (v) the
continued effectiveness of the Company's sales and marketing strategy; (vi) the
ability of the Company to continue to successfully develop and launch new
products;  (vii) the timely resolution of the Year 2000 issue by the Company and
its suppliers; and  (viii) the Euro conversion.   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.

                                       27
<PAGE>
 
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
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, 1998.

  Interest rate risk

  Virtually all of the Company's debt bears interest at floating rates,
approximately 6% at December 31, 1998.  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 interest expense
by approximately 10%, or $544,000.  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 33 through 55 of this
Form 10-K. The supplementary financial information required by Item 302 of
Regulation S-K is set forth on page 56 of this Form 10-K.

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

  None.

                                     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.

                                       28
<PAGE>
 
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 Trasnsactions," which information
is incorporated herein by reference.

                                    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 33
              through 55:

              Report of Independent Accountants

              Consolidated Statements of Operations of the Company for the years
                   ended December 31, 1998, 1997 and 1996
 
              Consolidated Balance Sheets of the Company at December 31, 1998
                   and 1997

              Consolidated Statements of Cash Flows of the Company for the years
                   ended December 31, 1998, 1997 and 1996
              
              Consolidated Statements of Changes in Stockholders' Equity of the
                   Company for the years ended December 31, 1996, 1997 and 1998

              Notes to Consolidated Financial Statements
 
         2.   Supplemental Unaudited Financial Data.  Quarterly Financial Data
 
         3.   Financial Statement Schedules. The following financial statement
              schedule of the Company for the years ended December 31, 1996,
              1997 and 1998 is included in the

                                       29
<PAGE>
 
        Form 10-K on page 58.

<TABLE>
<CAPTION>
Schedule No.       Description                                Page No.
------------       -----------                                --------
<S>                <C>                                        <C>
Schedule II        Valuation and Qualifying Accounts          58
</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.

Exhibit  No.          Exhibit
------------  --------------------------------------------------
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)

                                       30
<PAGE>
 
Exhibit No.           Exhibit
-----------   ------------------------------------------------------
4.8           Subordinated seller's note, dated as of October 2, 1996, by 
              Wesley-Jessen Corporation in favor of Pilkington plc. (1)

10.1          Wesley Jessen VisionCare, Inc. 1997 Stock Incentive Plan. (2)*

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)

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

                                       31
<PAGE>
 
Exhibit No.           Exhibit
-----------   ------------------------------------------------------
11.1          Earnings Per  Share.

21.1          Subsidiaries of the Company. (1)

23.1          Consent of  PricewaterhouseCoopers LLP.

27.1          Financial Data Schedule.
--------------

(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.
+   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.

    None

                                       32
<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 operations, 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, 1998 and 1997 and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles. 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
generally accepted auditing standards 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 23, 1999

                                       33
<PAGE>

                        WESLEY JESSEN VISIONCARE, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in thousands, except per share amounts)
 
<TABLE> 
<CAPTION> 
 
                                                                                              Twelve Months Ended
                                                                     -------------------------------------------------------
                                                                         December 31,        December 31,       December 31,
                                                                             1998                1997               1996
                                                                     -------------------    ---------------    -------------
 
<S>                                                                           <C>                <C>                <C>
Net sales............................................................         $292,259           $282,178           $156,752
                                                                     -------------------    ---------------    -------------
                                                                     
Operating costs and expenses:                                        
    Cost of goods sold...............................................           90,471             92,780             43,152
    Cost of goods sold - inventory step-up...........................                -             22,666             20,706
    Marketing and administrative.....................................          143,309            137,650             88,274
    Research and development.........................................           10,818             11,997              7,178
    Amortization of goodwill, net....................................             (997)              (862)              (784)
                                                                     -------------------    ---------------    -------------
Income (loss) from operations........................................           48,658             17,947             (1,774)
                                                                     
Other (income) expense:                                              
    Interest income..................................................             (633)              (522)                 -
    Interest expense.................................................            5,444              6,081              5,385
    Other income, net................................................                -                  -             (3,051)
                                                                     -------------------    ---------------    -------------
Income (loss) before income taxes and extraordinary loss.............           43,847             12,388             (4,108)
Income tax benefit (expense).........................................          (14,250)            (4,188)             3,037
                                                                     -------------------    ---------------    -------------
Income (loss) before extraordinary loss..............................           29,597              8,200             (1,071)
Extraordinary loss, net of related income tax benefit                
   of $2,526 in 1997 and $1,093 in 1996..............................                -             (4,902)            (1,671)
                                                                     -------------------    ---------------    -------------
Net income (loss)....................................................         $ 29,597           $  3,298           $ (2,742)
                                                                     ===================    ===============    =============
                                                                     
Income (loss) per common share:                                      
  Basic                                                              
    Income (loss) before extraordinary loss..........................         $   1.70           $   0.49           $  (0.07)
    Extraordinary loss, net of income tax benefit....................         $      -           $  (0.29)          $  (0.12)
    Net income (loss)................................................         $   1.70           $   0.20           $  (0.19)
                                                                     
  Diluted                                                            
    Income (loss) before extraordinary loss..........................         $   1.57           $   0.45           $  (0.07)
    Extraordinary loss, net of income tax benefit....................         $      -           $  (0.27)          $  (0.12)
    Net income (loss)................................................         $   1.57           $   0.18           $  (0.19)
                                                                     
                                                                     
Weighted average common shares outstanding                           
  Basic..............................................................           17,432             16,898             14,638
  Diluted............................................................           18,904             18,451             14,638
 
</TABLE> 

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

                                       34
<PAGE>
 
                        WESLEY JESSEN VISIONCARE, INC.
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share amounts)

<TABLE> 
<CAPTION> 
 
                                                                                               December 31,
                                                                                     -------------------------------
                                                                                           1998              1997
                                                                                     ---------------    ------------
<S>                                                                                     <C>                <C>
                                  ASSETS
                                  ------
Current assets:
    Cash and cash equivalents........................................................       $  8,859        $  4,759
    Accounts receivable - trade, net (Note 5)........................................         47,363          42,642
    Other receivables................................................................          6,840           4,773
    Inventories......................................................................         62,055          49,262
    Deferred income taxes............................................................         18,602          18,102
    Prepaid expenses.................................................................          6,977           7,675
    Assets held for sale.............................................................          1,222           1,222
                                                                                     ---------------    ------------
          Total current assets.......................................................        151,918         128,435
                                                                                     ---------------    ------------
Property, plant and equipment, net...................................................         36,338          21,480
Other assets.........................................................................          6,011           6,894
Deferred income taxes................................................................          3,528          10,838
Notes receivable.....................................................................          1,803           2,773
Goodwill, net........................................................................          2,569               -
Capitalized financing fees, net......................................................          2,351           2,656
                                                                                     ---------------    ------------
          Total assets...............................................................       $204,518        $173,076
                                                                                     ===============    ============
 
               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------
 
Current liabilities:
    Trade accounts payable...........................................................       $ 17,689        $ 14,229
    Accrued compensation and benefits................................................         25,565          19,806
    Accrued advertising..............................................................          4,060           4,113
    Other accrued liabilities........................................................          9,744          11,212
    Transition reserve...............................................................          7,886          11,225
    Income taxes payable.............................................................          3,257           2,015
                                                                                     ---------------    ------------
          Total current liabilities..................................................         68,201          62,600
                                                                                     ---------------    ------------
Negative goodwill, net...............................................................         12,587          13,681
Long term debt.......................................................................         69,000          57,000
Other liabilities....................................................................          4,778           2,949
                                                                                     ---------------    ------------
          Total liabilities..........................................................        154,566         136,230
                                                                                     ---------------    ------------
Commitments and contingencies (Note 13)                                                            -               -
Stockholders' equity
    Common stock, $.01 par value, 50,000,000 shares authorized, 16,994,884
        and 17,736,011  issued and outstanding at December 31, 1998 and
        December 31, 1997, respectively..............................................            180             177
    Additional paid in capital.......................................................         60,847          56,390
    Accumulated earnings  (deficit)..................................................         10,438         (19,159)
    Treasury stock, 1,000,000 shares at December 31, 1998, at cost...................        (21,306)              -
    Accumulated other comprehensive loss.............................................           (207)           (562)
                                                                                     ---------------    ------------
          Total stockholders' equity.................................................         49,952          36,846
                                                                                     ---------------    ------------
          Total liabilities and stockholders' equity.................................       $204,518        $173,076
                                                                                     ===============    ============
 
</TABLE> 
  The accompanying notes are an integral part of these financial statements.


                                      35
<PAGE>
 
                        WESLEY JESSEN VISIONCARE, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
<TABLE>
<CAPTION>
 
                                                                                                     Twelve Months Ended
                                                                                      ----------------------------------------------

                                                                                        December 31,    December 31,    December 31,

                                                                                           1998            1997             1996
                                                                                      --------------  --------------    ------------

<S>                                                                                      <C>          <C>                <C>
Operating activities:
    Net income (loss).................................................................  $ 29,597      $   3,298           $ (2,742)
    Adjustments to reconcile net income (loss) to net cash                                         
    provided by operating activities:                                                              
        Extraordinary loss on early extinguishment of debt............................         -          7,428              2,764
        Depreciation expense..........................................................     2,121            901                462
        Purchased inventory step-up...................................................         -         22,666             20,706
        Amortization of capitalized financing fees....................................       584            508                699
        Amortization of  goodwill.....................................................      (997)          (862)              (784)
        (Gain) loss on disposal of property, plant, and equipment.....................        17           (120)               187
        Deferred income tax...........................................................     7,772         (1,622)            (6,087)
        Stock compensation............................................................         -            257                  -
    Changes in balance sheet items:                                                                
        Accounts receivable - trade, net..............................................    (3,057)        (3,941)             5,625
        Other receivables.............................................................    (1,716)          (545)               799
        Inventories...................................................................   (11,198)        (3,723)               402
        Prepaid expenses..............................................................       750         (1,192)            (1,664)
        Other assets..................................................................       882           (491)                83
        Notes receivable..............................................................       (30)        (1,227)                 -
        Trade accounts payable........................................................     2,458          2,179             (4,690)
        Accrued liabilities...........................................................      (562)       (14,139)             1,883
        Other liabilities.............................................................     1,740          2,181                145
        Income taxes payable..........................................................     2,807         (4,679)             1,450
                                                                                      -------------   -------------     -----------
            Cash provided by operating activities.....................................    31,168          6,877             19,238
                                                                                      -------------   -------------     -----------
                                                                                                   
Investing activities:                                                                              
    Cash paid for assets acquired.....................................................    (2,994)             -            (61,816)
    Proceeds from Natural Touch sale..................................................     1,000          6,000                  -
    Capital expenditures..............................................................   (17,238)       (16,298)            (6,617)
    Proceeds from the sale of property, plant and equipment...........................       133            417                427
                                                                                      -------------   -------------     -----------
            Cash used in investing activities.........................................   (19,099)        (9,881)           (68,006)
                                                                                      -------------   -------------     -----------
                                                                                                   
Financing activities:                                                                              
    Issuance of stock.................................................................     2,150         48,513                272
    Repurchase of shares..............................................................   (21,306)             -                  -
    Proceeds from long term debt......................................................    43,000        150,000            122,255
    Payments of long term debt........................................................   (31,000)      (194,375)           (61,380)
    Payment of financing fees.........................................................      (279)        (3,076)            (7,778)
                                                                                      -------------   -------------     -----------
            Cash provided by (used in) financing activities...........................    (7,435)         1,062             53,369
                                                                                      -------------   -------------     -----------
                                                                                                   
    Effect of exchange rates on cash and cash equivalents.............................      (534)          (372)               (50)
                                                                                                   
    Net increase (decrease) in cash and cash equivalents..............................     4,100         (2,314)             4,551
Cash and cash equivalents:                                                                         
    Beginning of period...............................................................     4,759          7,073              2,522
                                                                                      -------------   -------------     -----------
    End of period.....................................................................  $  8,859      $   4,759           $  7,073
                                                                                      =============   =============     ===========
                                                                                                   
Supplemental disclosure of cash flow information                                                   
    Cash paid during the period for interest..........................................  $  4,074      $   6,287           $  4,359
                                                                                      =============   =============     ===========
    Cash paid during the period for taxes, net........................................  $  3,316      $   7,474           $    744
                                                                                      =============   =============     ===========
</TABLE> 
The accompanying notes are an integral part of these financial statements.


                                       36
<PAGE>
 
<TABLE>
<CAPTION>  
                                                  WESLEY JESSEN VISIONCARE, INC.
 
                                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                          (in thousands)

                                                                                                                               
                                                                                                                               
                                                                Class L                                      Common Stock      
                                                             Common Stock                 Common Stock       Repurchased       
                                                   --------------------------------------------------------------------------  
                                                         Shares         Amount          Shares   Amount   Shares     Amount    
                                                      ------------    -----------       ------   ------   ------   ----------  
<S>                                                   <C>             <C>               <C>      <C>      <C>      <C>         
Balance at December 31, 1995.......................            429            $ 4        3,862     $ 38        -    $       -
Issuance of stock..................................              1              -            7        -        -            -
Stock subscription receivable......................              -              -            -        1        -            -
Exchange of stock..................................           (109)            (1)         221        2        -            -
Retroactive effect of February 12, 1997
   Class L Common Stock Reclassification...........           (321)            (3)       1,461       15        -            -
Retroactive effect of February 12, 1997
   Class L Common Stock split......................              -              -        8,725       87        -            -
Comprehensive income
     Net income....................................              -              -            -        -        -            -
     Other comprehensive income
        Currency translation adjustment............              -              -            -        -        -            -
                                                   ----------------------------------------------------------------------------
Balance at December 31, 1996.......................              -            $ -       14,276     $143        -    $       -
Issuance of stock..................................              -              -        3,460       34        -            -
Stock compensation.................................              -              -            -        -        -            -
Stock option related tax benefit...................              -              -            -        -        -            -
Comprehensive income
     Net income....................................              -              -            -        -        -            -
     Other comprehensive income
        Currency translation adjustment............              -              -            -        -        -            -
                                                   ----------------------------------------------------------------------------
Balance at December 31, 1997.......................              -            $ -       17,736     $177        -    $       -
Issuance of stock..................................              -              -          259        3        -            -
Repurchase of common stock.........................              -              -            -        -    1,000      (21,306)
Stock option related tax benefit...................              -              -            -        -        -            -
Comprehensive income
     Net income....................................              -              -            -        -        -            -
     Other comprehensive income
        Currency translation adjustment............              -              -            -        -        -            -
                                                   ----------------------------------------------------------------------------
Balance at December 31, 1998.......................              -            $ -       17,995     $180    1,000    $(21,306)
                                                   ============================================================================
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                                                Other
                                                           Additional       Accumulated        Compre-        Compre-
                                                           Paid in          Earnings           hensive        hensive
                                                           Capital           Deficit            Loss        Income (Loss)
                                                          ----------       -----------       -----------    ------------
<S>                                                       <C>              <C>               <C>            <C>
Balance at December 31, 1995.......................          $ 7,483         $(19,715)           $     -        $      -
Issuance of stock..................................               15                 -                 -               -
Stock subscription receivable......................              256                 -                 -               -
Exchange of stock..................................                -                 -                 -               -
Retroactive effect of February 12, 1997
   Class L Common Stock Reclassification...........                -                 -                 -               -
Retroactive effect of February 12, 1997
   Class L Common Stock  split.....................             (100)                -                 -               -
Comprehensive income
     Net income....................................                -            (2,742)                -          (2,742)
     Other comprehensive income
        Currency translation adjustment............                -                 -             1,368           1,368
                                                     -------------------------------------------------------------------
Balance at December 31, 1996.......................          $ 7,654         $(22,457)           $ 1,368        $(1,374)
                                                                                                                ========
Issuance of stock..................................           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.......................          $56,390         $(19,159)           $  (562)       $  1,368
                                                                                                                ========
Issuance of stock..................................            2,147                 -                 -               -
Repurchase of common stock.........................                -                 -                 -               -
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.......................          $60,847         $  10,438           $ (207)        $ 29,952
                                                     =================================================================== 
</TABLE>
   The accompanying notes are an integral part of these financial statements.


                                       37
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Basis of presentation and description of business

Basis of presentation

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").

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.
 
The IPO

In February and March, 1997 the Company completed an initial public offering
("IPO") of 2,821,000 shares of common stock at $15.00 per share.  Concurrent
with the offering, the Board of Directors declared a 4.549-to-one conversion of
Class L Common Stock into Common Stock (the "Conversion") and a 3.133-to-one
split of the Common Stock (the "Split").  For balance sheet presentation
purposes the Conversion and the Split have been given effect as if they had
occurred on December 31, 1996.  All per share data have been presented as if the
Conversion and Split had occurred on June 29, 1995.  Additionally, concurrent
with the IPO, the Board of Directors amended the Company's Articles of
Incorporation, authorizing 5,000,000 and 50,000,000 shares of Serial Preferred
Stock and Common Stock, respectively.

The Offering

In August and September, 1997,  the Company completed a public offering of
4,300,000 shares of common stock at $23.50 per share (the "Offering").  Of the
4,300,000 shares, 500,000 were offered by the Company and the remaining
3,800,000 shares were offered by certain selling stockholders.

Net proceeds received by the Company, after deducting underwriting discounts,
commissions and offering expenses, were used to repay certain outstanding debt
from the Barnes-Hind Acquisition (Note 3) and to reduce the Company's
indebtedness under it's bank credit agreement.


2.   Summary of significant accounting policies

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.

         

                                       38
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Principles of consolidation

All significant intercompany accounts and transactions have been eliminated in
consolidation.

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.

Other income

Other income for the year ended December 31, 1996 includes income of $3.7
million relating to licensing of a patent by the Company.

Cash and cash equivalents

All highly liquid investments with an original maturity of three months or less
are considered to be cash equivalents. These amounts are stated at cost which
approximates fair value.

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.

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>
<CAPTION>
<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.

                                       39
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Goodwill

Goodwill resulting from the Argentina PCL Acquisition (Note 3) and the Eycon
Lens Laboratories  Acquisition (Note 3) is being amortized on a straight line
basis over a period of fifteen years.  Goodwill was $2.6 million, net of $0.1
million of accumulated amortization at December 31, 1998

Negative goodwill resulting from the Wesley Jessen Acquisition (Note 3) and the
Barnes-Hind Acquisition (Note 3) is being amortized on a straight-line basis as
a credit to income over a period of fifteen years.  Negative goodwill was $12.6
million, $13.7 million and $10.6 million, net of  $3.1 million, $2.0 million and
$1.2 million of accumulated amortization, at December 31, 1998, 1997 and 1996,
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.

Fair value of financial instruments

Cash, accounts receivable, accounts payable, and accrued liabilities 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.

Earnings per share

The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share."  The difference
between the weighted average shares used in the computations of basic and
diluted earnings per share for the years ended December 31, 1998 and 1997 is 

                                       40
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


the dilutive effect of outstanding stock options, using the treasury stock
method from the date of grant. Weighted average shares used in the computations
for the year ended December 31, 1996 does not include the effect of these stock
options, as the effect would be antidilutive.


3.   Acquisitions
 
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").  The Wesley
Jessen Acquisition was completed for a total purchase price of $76.6 million,
consisting of cash paid of $47.0 million and liabilities assumed of $29.6
million. As a result of the Wesley Jessen Acquisition, Wesley-Jessen Corporation
acquired certain assets from Schering-Plough, consisting of manufacturing
facilities in Des Plaines, Illinois and Cidra, Puerto Rico, a distribution
facility in Chicago, Illinois, and a number of non-U.S. sales and service
offices, assumed certain liabilities and paid certain acquisition costs directly
attributable to the Wesley Jessen Acquisition.   The Wesley Jessen Acquisition
was financed by $43.0 million of bank debt and $7.5 million of proceeds from the
issuance of the Company's common stock.

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.

The purchase method of accounting was used to record the acquisitions.  The
results of operations of the acquired companies have been included in the
results of operations of the Company since the acquisition date.  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 have been 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 and $20.7 million was charged to cost of goods sold during the years
ended December 31, 1997 and 1996, respectively.

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
promissory note accrues compounded interest at a rate of 12% per annum, 8% of
which is paid currently and 4% of which is payable-in-kind.  As part of the
sale, the Company entered into a supply agreement pursuant to which the Company
will supply the purchaser with Natural Touch lenses for sale in the United
States.  On July 31, 1997, the purchaser made a voluntary prepayment of  $3.0
million on the promissory note.  On May 7, 1998, the purchaser made an
additional voluntary prepayment of $1.0 million.

Also in connection with the Barnes Hind Acquisition, the Company undertook a
plan to integrate the acquired operations with those of the Company and to
restructure the Company's pre-existing operations (Note 4).

                                       41
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


On June 26, 1998, the Company acquired the operations of Plastic Contact Lens
Argentina SAIC (PCL) from its sole shareholder.   On July 31, 1998,  the
Company, through its Australian subsidiary, executed a purchase agreement to
acquire certain assets and assume certain liabilities of Eycon Lens
Laboratories, Pty, Ltd. from its shareholders.  The total adjusted purchase
price for both acquisitions of approximately $2.7 million (plus additional fees
and expenses of $0.3 million) was funded with existing liquidity.  The Company
has accounted for the acquisitions under the purchase method of accounting.


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 announced
the closing of its manufacturing operations in San Diego, California, expected
to be substantially complete by March, 2000, with a shift of conventional lens
production  to its plant in Cidra, Puerto Rico.  The plant closing will result
in the termination of 471 employees (of whom 199 had been terminated as of
December 31, 1998).  Payments related to the transition reserve are as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                   Lease                    Facility
                                            Employee               Termination             Restoration         
                                       Related 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
                                             =======                   =======                    ======           =======
</TABLE>
                                                                                
In addition to the transition plan, the Company committed to a plan to
restructure the Wesley Jessen operations following the Barnes-Hind Acquisition,
resulting in a $3.4 million charge in the fourth quarter of 1996 ("restructuring
reserve").   Pursuant to the restructuring plan, the Chicago distribution
facilities were consolidated with those at Des Plaines, Illinois in October,
1997.  The restructuring reserve, totaling $0.6 million at December 31, 1998,
consists of costs related to employee termination, 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):

                                       42
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


<TABLE>
<CAPTION>
                                                  Employee                   Lease
                                                   Related               Termination             Other        
                                                    Costs                    Costs               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
                                                    =====                    =====             =======            =======
</TABLE>
                                                                                

5.   Accounts receivable-trade, net

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

<TABLE>
<CAPTION>
                                                                  December 31,            December 31,
                                                                      1998                    1997
                                                                      ----                    ----
 
<S>                                                               <C>                     <C>
Trade receivables                                                 $ 62,968                $ 59,293
Less allowances:
   Doubtful accounts                                                (4,992)                 (6,290)
   Sales returns and adjustments                                   (10,613)                (10,361)
                                                                  --------                --------
                                                                  $ 47,363                $ 42,642
                                                                  ========                ========
</TABLE>


6.   Inventories

Inventories consist of the following  (in thousands):
 
<TABLE>
<CAPTION>
                                                                December 31,         December 31,
                                                                    1998                 1997
                                                                    ----                 ----
 
<S>                                                             <C>                  <C>
Raw materials                                                    $ 5,934              $ 3,558
Work-in-process                                                    6,463                7,613
Finished goods                                                    49,658               38,091
                                                                 -------              -------
                                                                 $62,055              $49,262
                                                                 =======              =======
</TABLE>
                                                                               

                                       43
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


7.   Property, plant and equipment

Property, plant and equipment consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                 December 31,          December 31,
                                                                     1998                  1997
                                                                     ----                  ----
 
<S>                                                            <C>                   <C>
Buildings and improvements                                        $ 9,449               $ 8,369
Machinery, equipment, furniture and fixtures                       19,638                10,246
Construction-in-progress                                           11,450                 4,159
                                                                  -------               -------
                                                                   40,537                22,774
Less accumulated depreciation                                      (4,199)               (1,294)
                                                                  -------               -------
                                                                  $36,338               $21,480
                                                                  =======               =======
</TABLE>
                                                                                

8.   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, 1998, 1997, and 1996 was $23.2 million,
$17.9 million and  $14.0 million, respectively.


9.   Long-term debt

At December 31, 1998 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 on July 29, 1998 when the then-existing bank credit
agreement was amended to increase the borrowing availability to permit the
repurchase of a maximum of $35 million of the Company's common stock. Relating
to the this agreement, the Company incurred $3.4 million of financing fees,
which are being amortized through September, 2002.

As part of the Barnes-Hind Acquisition (Note 3) refinancing, the Company
recognized an extraordinary loss of $2.8 million ($1.7 million net of tax
benefit) in 1996, relating to the write-off of capitalized financing fees
incurred in connection with the Wesley Jessen Acquisition (Note 3).

In connection with a refinancing of the Company's credit arrangements as part of
the IPO (Note 1), the Company recognized an extraordinary loss of $7.4 million
($4.9 million, net of income tax benefit) in 1997, relating to the write off of
capitalized financing fees incurred in connection with the Barnes-Hind
Acquisition.

At December 31, 1998, the weighted average borrowing rate was 6.008 %.
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
unutilized portion of the credit facilities at December 31, 1998 was $101.0
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 

                                       44
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


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 Amended Bank Credit Agreement contains a number of covenants restricting the
Company and its subsidiaries with respect to the incurrence of 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, 1999.  The cap is
intended to provide partial protection to the Company from potential exposure
relating to its variable rate debt instruments.


10.   Stockholders' equity

Pre-IPO capital structure

The Company's authorized capital stock consisted of 600,000 shares of Class L
Common Stock, par value $.01 per share ("Class L Common"), and 5,400,000 shares
of Common Stock, par value $.01 per share ("Common Stock").  Concurrent with the
Wesley Jessen Acquisition, the Company issued 415,000 shares of Class L Common
(issued at $17.41 per share) and 3,735,000 shares of Common Stock (issued at
$0.081 per share).

Holders of Class L Common and Common Stock were entitled to one vote per share
on all matters to be voted on by the Company's stockholders, and the holders of
both classes of stock vote together as a single class.  The outstanding shares
of one class of stock could not be the subject of a stock split or a stock
dividend unless the outstanding shares of the other class were similarly
affected.

Holders of Class L Common were entitled to a preferential payment ("Yield") in
the amount of 12.5% per year on the original cost paid for the shares ($17.41
per share) plus any accumulated and unpaid Yield thereon.  The Yield accumulated
until such time as distributions were made by the Company.  No distributions
were made by the Company during the periods ended December 31, 1995 and 1996 and
the accumulated and unpaid Yield at December 31, 1995 and 1996, amounted to $0.5
million and $1.5 million, respectively.  As part of the Conversion this unpaid
Yield was converted to Common Stock.

Post-IPO capital structure

Since  February, 1997, the Company's authorized capital stock has consisted  of
50,000,000 shares of Common Stock and 5,000,000 shares of Serial Preferred
Stock.

                                       45
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Holders of the Common Stock shares, subject to the prior rights of the Serial
Preferred Stock, 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 and subject to the prior rights of any holders of Serial Preferred
Stock then outstanding.

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.

Stock options

The Company applies Accounting Principles Board Opinion 25 and related
Interpretations in accounting for its stock-based compensation plans, and
recognized expense of $0.3 million for the year ended December 31, 1996.  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 method of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," the pro forma effect on the Company's net income (loss) and
income (loss)  per share for the periods presented would have been as follows
(in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                   Year ended       Year ended        Year ended
                                                                  December 31,     December 31,      December 31,
                                                                      1998             1997              1996
                                                                  -------------   ---------------   ---------------
Pro forma income (loss)
<S>             <C>                                               <C>             <C>               <C>
                Income (loss) before extraordinary loss                 $29,253          $ 7,785           $(1,447)
                Extraordinary loss, net of income tax benefit                 -           (4,902)           (1,671)
                Net income (loss)                                        29,253            2,883            (3,118)
 
Pro forma basic income (loss) per share
                Income (loss) before extraordinary loss                 $  1.68          $  0.46           $ (0.10)
                Extraordinary loss, net of income tax benefit                 -            (0.29)            (0.12)
                Net income (loss)                                          1.68             0.17             (0.22)
 
Pro forma diluted income (loss) per share
                Income (loss) before extraordinary loss                 $  1.55          $  0.42           $ (0.10)
                Extraordinary loss, net of income tax benefit                 -            (0.27)            (0.12)
                Net income (loss)                                          1.55             0.15             (0.22)
</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 1998, 1997 and 1996, respectively: expected volatility of
26.37 %, 31.29 % and 22.69 %; risk-free interest rate of 4.69 %, 6.38 % and 6.36
%; and expected lives of  3 years, 3 years and 7 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 

                                       46
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


time option grants, 469,940 vest in four equal annual installments beginning on
June 28, 1996 and 313,293 vest in five equal annual installments beginning on
April 5, 1996. 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 and include certain repurchase and participation rights which cease upon
(1) a sale of the Company or (2) sale of its Common Stock by the Company
pursuant to a Registration Statement under the Securities Act of 1933 in
connection with which Bain Capital, Inc. and affiliated investors cease to own
at least 20% of the Company.

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 267,872 shares were immediately exercisable,
and options to purchase 156,647 shares vest in five equal annual installments
beginning October 22, 1997.

1997 Stock Incentive Plan

The Wesley Jessen VisionCare, Inc. 1997 Stock Incentive Plan (the "1997 Stock
Plan") was approved by the Board of Directors in February, 1997.  The 1997 Stock
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 800,000 shares of Common Stock of the
Company have been reserved for issuance under the 1997 Stock Plan, subject to
certain adjustments reflecting changes in the Company's capitalization.  The
1997 Stock 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 1997 Stock 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
1997 Stock 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 

                                       47
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


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.
 
A summary of the Company's stock option plans as of December 31, 1998, 1997 and
1996, and changes during the periods then ended is presented below:

<TABLE>
<CAPTION>
                                                   1998                            1997                                   1996
                                       ---------------------------      --------------------------       --------------------------
                                                      Weighted-                       Weighted-                        Weighted-
                                                       Average                         Average                          Average
                                         Shares     Exercise Price       Shares     Exercise Price       Shares      Exercise Price
                                         ------     --------------       ------    ---------------       ------    ----------------
                                      
<S>                                    <C>            <C>               <C>            <C>             <C>             <C>
Outstanding at beginning of period      2,816,658      $ 3.97           2,617,570      $ 2.13          2,038,658              $1.14
Granted                                   294,100       20.72             326,700       17.24            578,912               5.63
Exercised                                (203,786)       2.13            (127,612)       0.27                  -                  -
Forfeited                                 (11,615)      11.60                   -           -                  -                  -
                                       ----------                      ----------                     ----------
Outstanding at end of year              2,895,357      $ 5.76           2,816,658      $ 3.97          2,617,570              $2.13
                                       ==========                      ==========                     ==========
                                                                                                  
Options exercisable at year-end         2,075,143      $ 3.22           2,001,695      $ 2.89          1,857,841              $2.38
                                       ==========                      ==========                     ==========
Weighted-average fair value of                                                                    
options granted during the year             $5.02                           $5.23                     $     2.36
                                       ==========                      ==========                     ==========
</TABLE>


The following table summarizes information about stock options outstanding at
December 31, 1998:

<TABLE>
<CAPTION>
                                          Options Outstanding                                   Options Exercisable
                     ----------------------------------------------------------------   ----------------------------------------
                            Number          Weighted-Average         Weighted                Number              Weighted-
                          Outstanding           Remaining             Average              Exercisable            Average  
 Exercise  Prices         at 12/31/98        Contractual Life       Exercise Price          at 12/31/98         Exercise Price   
 ----------------       ---------------   ---------------------   ----------------      ------------------   ------------------- 

<S>                         <C>                         <C>              <C>                    <C>                    <C>
$0.03                        584,384                    6.49             $ 0.03                 345,157                $ 0.03
$1.18                        614,797                    6.46               1.18                 614,797                  1.18
$2.34                        703,905                    6.47               2.34                 703,905                  2.34
$7.24                        382,471                    7.83               7.24                 288,484                  7.24
$15.00                        40,000                    8.17              15.00                  40,000                 15.00
$16.75                       255,700                    8.33              16.75                  62,800                 16.75
$28.25                        20,000                    8.75              28.25                  20,000                 28.25
$28.44                         8,000                    9.42              28.44                       -                 28.44
$20.50                       286,100                    9.83              20.50                       -                 20.50
                           ---------                    ----             ------               ---------                ------
                           2,895,357                    7.20             $ 5.76               2,075,143                $ 3.22
                           =========                    ====             ======               =========                ======
</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 

                                       48
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


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.


11.      Income taxes

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

<TABLE>
<CAPTION>
 
                                                          Year ended            Year ended             Year ended
                                                         December 31,          December 31,           December 31, 
                                                            1998                  1997                   1996 
                                                  -----------------------------------------------------------------
<S>                                                          <C>                    <C>               <C>     
Domestic (including Puerto Rico)                             $34,498                $20,088           $(7,721)
International                                                  9,349                 (7,700)            3,613 
                                                             -------                -------           ------- 
                                                             $43,847                $12,388           $(4,108)
                                                             =======                =======           ======== 
</TABLE>
                                                                               
Income tax benefit (expense) is as follows (in thousands):

<TABLE>
<CAPTION>
 
                                                          Year ended            Year ended             Year ended
                                                         December 31,          December 31,           December 31, 
                                                            1998                  1997                   1996 
                                                  -----------------------------------------------------------------
Current income tax benefit (expense):
<S>                                                         <C>                    <C>                   <C>
Domestic federal                                            $ (3,853)              $(2,694)              $(2,126)
Domestic state and local (including Puerto Rico)              (1,293)               (1,359)                 (922)
International                                                 (1,332)               (1,757)                 (116)
                                                            --------               -------               -------
                                                              (6,478)               (5,810)               (3,164)
                                                            --------               -------               -------
Deferred income tax benefit (expense):                
Domestic federal                                              (2,017)                  328                 4,307
Domestic state and local (including Puerto Rico)              (1,006)                 (994)               (1,237)
International                                                 (4,749)                2,288                 3,131
                                                            --------               -------               -------
                                                              (7,772)                1,622                 6,201
                                                            --------               -------               -------
                                                      
                                                            $(14,250)              $(4,188)              $ 3,037
                                                            =========              ========              ======= 
</TABLE>
                                                                                
Differences between the U.S. federal income tax statutory rates and the income
tax benefit (expense) recorded are attributable to the following:
 
<TABLE>
<CAPTION>
 
                                                             Year ended             Year ended           Year ended
                                                            December 31,           December 31,         December 31,
                                                               1998                   1997                  1996
                                                               ----                   ----                  ---- 
<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                                     5.9                   20.5                 39.4
 Effect of international operations                           (11.2)                 (17.5)                (4.5)
 Amortization of negative goodwill                              0.9                    2.4                  6.8
 Recognition of net operating loss benefits                     8.7                      -                    -
 Other                                                         (1.8)                  (4.2)                (2.8)
                                                              ------                  -----                 ----
                                                              (32.5)%                 (33.8)%               73.9%
                                                              =======                 =======               ====
</TABLE>

                                       49
<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,               December 31,
                                                                          1998                       1997
                                                                          ----                       ----
Deferred tax assets: 
<S>                                                                      <C>                         <C>
Accounts receivable valuation allowances                                 $ 5,653                     $ 6,179
Inventory reserves                                                         4,826                       4,746
Fixed assets                                                               8,242                      10,143
Accrued expenses                                                           8,122                       7,177
Domestic net operating losses and AMT credit                                 689                       4,716
Other deductible temporary differences                                       659                         934
International net operating losses                                         5,963                       6,297
                                                                         -------                     -------
                                                                          34,154                      40,192
                                                                         =======                     ======= 
Deferred tax liabilities:
Prepaid pension cost                                                      (2,485)                     (2,485)
Puerto Rico tollgate tax                                                  (4,677)                     (2,470)
                                                                         -------                     -------
Total deferred tax liabilities                                            (7,162)                     (4,955)
                                                                         -------                     -------
Valuation allowance for international net operating losses                (4,862)                     (6,297)
                                                                         -------                     -------
                                                                         $22,130                     $28,940
                                                                         =======                     =======
</TABLE>
                                                                                


The Company has certain foreign net operating losses ("NOLs")  which expire in
one to seven years from December 31, 1998.  All other foreign NOLs are available
to the Company indefinitely.  The Company has domestic net operating losses
which expire through the year 2012.  At December 31, 1998 and 1997, the Company
has not provided a valuation allowance against its deferred tax assets except
for certain assets relating to 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 1998,
income tax expense was reduced by $3,823 due to the reversal of valuation
allowances.

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.


12.  Retirement benefits

Defined benefit pension plans

The Wesley Jessen Plan is a defined benefit plan, effective as of January 1,
1996, covering substantially all domestic employees (including Puerto Rico).
Under the Wesley Jessen Plan, the Company allocates a 

                                       50
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


percentage of compensation for each participant (annual pay credits) based upon
years of service, beginning after December 31, 1995. Additionally, the Wesley
Jessen Plan provides for a specified return (interest credits) on participants'
account balances. Under the Wesley Jessen Plan, annual pay credits and interest
credits will be accumulated in participants' accounts as the basis for their
Wesley Jessen Plan benefits. The Company will contribute actuarially determined
amounts to fund Wesley Jessen Plan benefits within regulatory minimum
requirements and maximum tax deductible limits. Vesting occurs after five years
of service and includes service during the period June 29, 1995 to December 31,
1995.

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 covers substantially all Barnes Hind
domestic employees. Additionally,  the Company acquired an international fully-
funded contributory single-employer defined benefit pension plan covering
certain Barnes Hind employees in the United Kingdom.

Under the plans acquired in the Barnes-Hind Acquisition, benefit payments for
domestic employees are based principally on earnings during the last five-year
period prior to retirement and length of service.  Employees are eligible to
participate in domestic plans within one year of employment and are vested after
five years of service.  For the international employees, 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 plans' current service costs and the plans' prior service cost over their
amortization periods.

                                       51
<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             Year ended          Year ended
                                                             December 31,            December 31,        December 31,
                                                                1998                    1997                1996
                                                                ----                    ----                ----
<S>                                                            <C>                     <C>                 <C>
Change in benefit obligation
Benefit obligation at beginning of year                        $15,942                  $15,016             $ 4,986
Service cost                                                     1,878                    1,676                 659
Interest cost                                                    1,093                    1,227                 585
Amendments                                                         236                        -                   -
Actuarial (gains) losses                                           289                   (1,909)               (346)
Acquisitions                                                         -                        -               9,148
Benefits paid                                                   (2,052)                     (68)                (16)
                                                               -------                  -------             -------
Benefit obligation at end of year                              $17,386                  $15,942             $15,016
                                                               -------                  -------             -------
                                                                             
Change in plan assets                                                        
Fair value of plan assets at beginning of year                 $20,611                  $21,190             $ 4,500
Actual return on plan assets                                     2,597                      (36)              1,173
Acquisitions                                                         -                        -              15,533
Employer contributions                                          (1,657)                    (475)                  -
Benefits paid                                                   (2,052)                     (68)                (16)
                                                               -------                  -------             -------
Fair value of plan assets at end of year                       $19,499                  $20,611             $21,190
                                                               -------                  -------             -------
                                                                             
Funded status                                                    2,113                    4,669               6,174
Unrecognized prior service cost                                    777                      621                 681
Unrecognized net actuarial (gain) loss                          (1,573)                  (1,127)             (1,110)
                                                               -------                  -------             -------
Prepaid benefit cost                                           $ 1,317                  $ 4,163             $ 5,745
                                                               -------                  -------             -------
                                                                             
Components of net periodic benefit cost                                      
Service cost                                                     1,878                    1,676                 659
Interest cost                                                    1,093                    1,227                 585
Expected return on plan assets                                  (1,863)                  (1,793)               (664)
Amortization of prior service cost                                  80                       60                  60
Amortization of actuarial (gains) losses                             -                      (63)                  -
                                                               -------                  -------             -------
Net periodic benefit cost                                      $ 1,188                  $ 1,107             $   640
                                                               -------                  -------             -------
                                                                             
Weighted average assumptions as of December 31                               
Discount rate                                                     6.50%                    6.75%               7.50%
Rate of compensation increase                                     5.00%                    5.00%               5.00%
Expected return on plan assets                                    9.00%                    9.00%               7.00%
</TABLE>

                                       52
<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             Year ended          Year ended
                                                             December 31,            December 31,        December 31,
                                                                1998                    1997                1996
                                                                ----                    ----                ----
<S>                                                                <C>                  <C>                  <C>
Change in benefit obligation
Benefit obligation at beginning of year                        $12,213                  $ 8,410              $7,324
Service cost                                                       844                      704                 136
Interest cost                                                    1,042                      685                 153
Actuarial (gains) losses                                         2,344                    2,950                  83
Benefits paid                                                     (186)                    (256)                (67)
Transfer from other pension plan                                 1,218                        -                   -
Effect of exchange rates                                            82                     (280)                781
                                                               -------                  -------              ------
Benefit obligation at end of year                              $17,557                  $12,213              $8,410
                                                               -------                  -------              ------
                                                                             
Change in plan assets                                                        
Fair value of plan assets at beginning of year                 $11,685                  $ 8,646              $7,442
Actual return on plan assets                                     1,901                    2,445                 239
Employer contributions                                             921                      762                 153
Employee contributions                                             461                      381                  77
Benefits paid                                                     (186)                    (256)                (67)
Transfer from other pension plan                                 1,218                        -                   -
Effect of exchange rates                                            78                     (293)                802
                                                               -------                  -------              ------
Fair value of plan assets at end of year                       $16,078                  $11,685              $8,646
                                                               -------                  -------              ------
                                                                             
Funded status                                                   (1,479)                    (528)                236
Unrecognized net actuarial (gain) loss                           2,445                    1,038                 (94)
                                                               -------                  -------              ------
Prepaid benefit cost                                           $   966                  $   510              $  142
                                                               -------                  -------              ------
                                                                             
Components of net periodic benefit cost                                      
Service cost                                                       844                      704                 136
Interest cost                                                    1,042                      685                 153
Expected return on plan assets                                  (1,114)                    (787)               (239)
Amortization of actuarial (gains) losses                           150                      160                  83
                                                               -------                  -------              ------
Net periodic benefit cost                                      $   922                  $   762              $  133
                                                               -------                  -------              ------
                                                                             
Weighted average assumptions as of December 31                               
Discount rate                                                     5.75%                     8.5%                8.5%
Rate of compensation increase                                     4.25%                     6.5%                6.5%
Expected return on plan assets                                    7.00%                     8.5%                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, 1998, 1997 and 1996 totaled $1.5 million, $1.5 million and $0.7 million,
respectively.

                                       53
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


13.   Commitments and contingencies

Leases

The Company leases certain facilities and computer and other equipment under
operating leases. Total rent expense under these leases was  as follows (in
thousands):

<TABLE>
<S>                                                                             <C>
Year ended December 31, 1998                                                    $3,322
Year ended December 31, 1997                                                     3,269
Year ended December 31, 1996                                                     2,554
</TABLE>

Future minimum lease payments under non-cancelable operating leases at December
31, 1998 were as follows (in thousands):

<TABLE>
<CAPTION>
                 Year Ending
                 -----------
                 <S>                                                          <C>
                 December 31, 1999                                            $2,968
                 December 31, 2000                                             2,505
                 December 31, 2001                                             2,250
                 December 31, 2002                                             1,996
                 December 31, 2003                                             1,784
                 Thereafter                                                    6,225
</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.

14.   Related party transactions

Management and advisory fees

In connection with the Wesley Jessen Acquisition, the Company entered into an
agreement with Bain Capital, Inc., an affiliate of the Company's major
stockholder, for the provision of management and advisory services. Included in
marketing and administrative expense for the years ended December 31, 1998, 1997
and 1996 are $2.0 million, $2.1 million and  $1.3 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, a wholly owned subsidiary of the
Company, loaned the Company's Chief Executive Officer ("CEO") $1.2 million in
exchange for an unsecured promissory note 

                                       54
<PAGE>
 
                        WESLEY JESSEN VISION CARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


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 waived the requirement that the CEO repay such loan pursuant to clause
(iii) above.


15. 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,       December 31,        December 31, 
                                                  1998               1997                1996
                                                  ----               ----                ----
<S>                                              <C>                <C>                 <C>
Net sales:
United States (including Puerto Rico)            $194,321            $190,329            $121,687
United Kingdom                                     36,155              41,383              11,697
Rest of the world                                  61,783              50,466              23,368
                                                 --------            --------            --------
                                                 $292,259            $282,178            $156,752
                                                 ========            ========            ========
 
Total assets:
United States (including Puerto Rico)            $124,536            $112,210            $104,220
United Kingdom                                     42,649              36,763              49,968
Rest of the world                                  37,333              24,103              26,412
                                                 --------            --------            --------
                                                 $204,518            $173,076            $180,600
                                                 ========            ========            ========
</TABLE>
                                                                                

16.   Treasury stock purchase plan

The Board of Directors approved a share repurchase plan on June 10, 1998 and the
Company completed  the program 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.

                                       55
<PAGE>
 
<TABLE>
<CAPTION>
                                                              WESLEY JESSEN VISIONCARE, INC.
 
                                                            QUARTERLY INFORMATION - Unaudited
                                                         (in thousands, except per share amounts)
 
 
                                                                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
                                 
                                                               For the Year Ended December 31, 1997                 
                                 ---------------------------------------------------------------------------------------------------

                                     First Quarter            Second Quarter            Third Quarter              Fourth Quarter
                                 ----------------------    ----------------------    ---------------------      --------------------

                                                                                   
Net Sales                                 $ 64,071                   $72,083                  $75,235                     $70,789
Operating income (loss)                     (6,972)                      710                   11,989                      12,220
Net income (loss)                          (10,731)                     (371)                   7,095                       7,305
Basic earnings (loss) per share              (0.70)                    (0.02)                    0.41                        0.42
Diluted earnings (loss) per share            (0.70)                    (0.02)                    0.37                        0.38
Market price per share:                                                            
High                                      $  16.75                   $ 25.88                  $ 31.00                     $ 39.00
Low                                       $  14.63                   $ 13.00                  $ 22.50                     $ 26.75
</TABLE>

                                       56
<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 23, 1999, and included in this Form 10-K also included an audit
of  the Financial  Statement Schedule listed in Item 14(a) 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.



PricewaterhouseCoopers LLP

Chicago, Illinois
February 23, 1999

                                       57
<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, 1996..................      $ 4,655       $ 5,509 (a)   $ (3,175)    $ 6,989
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
 
Allowance for Sales Returns and Adjustments
Year ended December 31, 1996..................      $ 7,225       $14,999 (b)   $(11,602)    $10,622
Year ended December 31, 1997..................      $10,622       $ 2,416       $ (2,677)    $10,361
Year ended December 31, 1998..................      $10,361       $   464       $   (212)    $10,613
 
Transition Reserve
Year ended December 31, 1996..................      $     -       $20,400       $ (1,506)    $18,894     
Year ended December 31, 1997..................      $18,894       $     -       $ (7,669)    $11,225
Year ended December 31, 1998..................      $11,225       $     -       $ (3,339)    $ 7,886
 
Restructuring Reserve
Year ended December 31, 1996..................      $     _       $ 3,400       $      -     $ 3,400     
Year ended December 31, 1997..................      $ 3,400       $     -       $ (2,152)    $ 1,248
Year ended December 31, 1998..................      $ 1,248       $     -       $   (659)    $   589
 
Valuation Allowance for Deferred Tax Assets
Year ended December 31, 1996..................      $   752       $ 1,544       $      -     $ 2,296
Year ended December 31, 1997..................      $ 2,296       $ 4,001       $      -     $ 6,297
Year ended December 31, 1998..................      $ 6,297       $(1,435)      $      -     $ 4,862
</TABLE>
(a) Includes October 2, 1996 Barnes-Hind opening balance sheet account balance
    of $3,476.
(b) Includes October 2, 1996 Barnes-Hind opening balance sheet account balance
    of $2,622.

                                       58
<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, 1999.

                         WESLEY JESSEN VISIONCARE, INC.

                         By /s/ Kevin J. Ryan
                            ------------------------------------
                                 Kevin J. Ryan
                                 President and Executive Officer

  Pursuant to the requirements of the Securities Exchange Act of 1994, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on this 30th day of March, 1999.

            Signature                          Capacity
            ---------                          --------

 

            /s/ Kevin J. Ryan           President and Director (principal
------------------------------------                       
            Kevin J. Ryan               executive officer) 


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

            /s/Ronald J. Artale         Vice President--Controller (principal
------------------------------------                                           
            Ronald J. Artale            accounting officer)
 
 
            /s/ Michael A. D'Amato      Director
------------------------------------              
            Michael A. D'Amato


            /s/ Adam W. Kirsch          Director
------------------------------------              
            Adam W. Kirsch


            /s/ Sol Levine              Director
------------------------------------                
            Sol Levine


            /s/John W. Maki             Director
------------------------------------                
            John W. Maki


            /s/ John J. O'Malley        Director
------------------------------------              
            John J. O'Malley

                                       59
<PAGE>
 
<TABLE>
<CAPTION> 
                               INDEX TO EXHIBITS

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)
 
   10.1          Wesley Jessen VisionCare, Inc. 1997 Stock Incentive Plan. (2)*
 
   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)
</TABLE> 

                                       60
<PAGE>
 
<TABLE> 
<CAPTION> 

Exhibit No.   Exhibit Description
-----------   ---------------------------------------------------------------
<S>           <C>  
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)
 
10.17         Unsecured promissory note, dated as of May 7, 1997, by Kevin J.
              Ryan in favor of Wesley-Jessen Corporation. (4)*
 
11.1          Earnings Per Share.
 
21.1          Subsidiaries of the Company. (1)
 
23.1          Consent of  PricewaterhouseCoopers LLP.
 
27.1          Financial Data Schedule.
</TABLE> 

                                       61
<PAGE>
 
     (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.
      +    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.

                                       62