<PAGE>


================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-Q/A
                                (Amendment No. 1)

(MARK ONE)

X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD -- ENDED AUGUST 3, 2002,

                                       OR

__   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________.


                         COMMISSION FILE NUMBER 33-66342


                            COLE NATIONAL GROUP, INC.
             (Exact Name of Registrant as Specified in Its Charter)


               DELAWARE                               34-1744334
  (STATE OR OTHER JURISDICTION OF        (I.R.S. EMPLOYER IDENTIFICATION NO.)
   INCORPORATION OR ORGANIZATION)


       5915 LANDERBROOK DRIVE                            44124
       MAYFIELD HEIGHTS, OHIO                          (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                 (440) 449-4100
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM IN THE REDUCED DISCLOSURE
FORMAT.

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.  YES X   NO __

ALL OF THE OUTSTANDING CAPITAL STOCK OF THE REGISTRANT IS HELD BY COLE NATIONAL
CORPORATION.

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT).  YES X    NO __

AS OF AUGUST 31, 2002, 1,100 SHARES OF THE REGISTRANT'S COMMON STOCK, $.01 PAR
VALUE WERE OUTSTANDING.

================================================================================


<PAGE>


                                EXPLANATORY NOTE

         This Amendment No. 1 to Form 10-Q is being filed by Cole National Group
(the Company) to give effect to the restatement described in Note 8 to the
accompanying Consolidated Financial Statements. See Note 8 for a summary of the
effects of the restatement.

         Except for the certifications herein and Item 4 of Part I, all
information contained herein is as of August 3, 2002, and does not reflect any
events or changes in information, other than the restatement, that may have
occurred subsequent to August 3, 2002. For a discussion of events and
developments relating to periods subsequent to August 3, 2002, see the Company's
reports filed with the Securities and Exchange Commission for such subsequent
periods, including the Company's Annual Report on Form 10-K for the fiscal year
ended February 1, 2003, which is being filed concurrently with this Form 10-Q.

                   COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
                                   FORM 10-Q/A
                          QUARTER ENDED AUGUST 3, 2002
                                      INDEX
<TABLE>
<CAPTION>
                                                                                    Page No.
<S>                                                                                 <C>

PART I. FINANCIAL INFORMATION

        Item 1. Financial Statements

                Consolidated Balance Sheets as of August 3, 2002 (as restated)
                and February 2, 2002 (as restated)..............................        1

                Consolidated Statements of Operations for the 13 and 26 week
                periods ended August 3, 2002 (as restated) and August 4,
                2001 (as restated)..............................................        2

                Consolidated Statements of Cash Flows for the 26 week periods
                ended August 3, 2002 (as restated) and August 4, 2001 (as
                restated).......................................................        3

                Notes to Restated Consolidated Financial Statements.............        4

        Item 2. Management's Discussion and Analysis of Financial Condition
                and Results of Operation........................................       17

        Item 3. Quantitative and Qualitative Disclosures about Market
                Risk............................................................       26

        Item 4. Controls and Procedures.........................................       26

PART II. OTHER INFORMATION

        Item 1. Legal Proceedings...............................................       28

        Item 6. Exhibits and Reports on Form 8-K................................       28

        Signatures..............................................................       30

        Certifications..........................................................       31

        Exhibit Index...........................................................       33
</TABLE>



<PAGE>



                         PART I. - FINANCIAL INFORMATION

ITEM 1. RESTATED FINANCIAL STATEMENTS

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


<TABLE>
<CAPTION>

                                                                             August 3,           February 2,
                                                                                2002                2002
                                                                           (As restated,        (As restated,
                                                                            see Note 8)          see Note 8)
                                                                          --------------        -------------
<S>                                                                           <C>                  <C>
Assets
Current assets:
     Cash and cash equivalents                                                $ 48,904             $ 63,418
     Accounts receivable, less allowances of
          $3,378 and $3,228, respectively                                       44,548               41,299
     Current portion of notes receivable                                         2,795                2,723
     Inventories                                                               125,970              119,203
     Prepaid expenses and other                                                 27,988               29,013
     Deferred income taxes                                                      27,236               27,161
                                                                          -------------        -------------
               Total current assets                                            277,441              282,817

Property and equipment, at cost                                                308,480              298,918
     Less - accumulated depreciation and amortization                         (189,736)            (180,536)
                                                                          -------------        -------------
               Total property and equipment, net                               118,744              118,382

Notes receivable, excluding current portion, less allowances of
     $4,217 and $5,209, respectively                                             4,272                4,709
Deferred income taxes                                                           23,155               22,156
Other assets                                                                    45,596               43,690
Other intangibles, net                                                          45,788               45,996
Goodwill, net                                                                   85,542               85,543
                                                                          -------------        -------------
               Total assets                                                  $ 600,538            $ 603,293
                                                                          =============        =============

Liabilities and Stockholder's Equity
Current liabilities:
     Current portion of long-term debt                                           $ 256                $ 229
     Accounts payable                                                           59,364               64,863
     Payable to affiliate, net                                                  84,009               85,477
     Accrued interest                                                            7,533                6,340
     Accrued liabilities                                                        95,251               92,324
     Accrued income taxes                                                        3,520                  373
     Deferred revenue                                                           36,895               35,401
                                                                          -------------        -------------
                Total current liabilities                                      286,828              285,007

Long-term debt, net of discount and current portion                            275,546              274,574

Other long-term liabilities                                                     19,214               17,919
Deferred revenue, long-term                                                     11,706               11,049

Stockholder's equity                                                             7,244               14,744
                                                                          -------------        -------------

          Total liabilities and stockholder's equity                         $ 600,538            $ 603,293
                                                                          =============        =============
</TABLE>

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



                                       1
<PAGE>


                   COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                                 (In thousands)




<TABLE>
<CAPTION>

                                                              Thirteen Week Periods Ended          Twenty-Six Week Periods Ended
                                                           ---------------------------------     ----------------------------------
                                                               August 3,          August 4,          August 3,           August 4,
                                                                 2002               2001                2002               2001
                                                             (As restated,      (As restated,       (As restated,     (As restated,
                                                              see Note 8)        see Note 8)         see Note 8)        see Note 8)
                                                           --------------     --------------     ---------------     --------------

<S>                                                            <C>                <C>                 <C>                <C>
Net revenue                                                    $ 292,390          $ 275,334           $ 577,831          $ 547,108

Costs and expenses:
     Cost of goods sold                                           95,227             90,029             186,749            175,206
     Operating expenses                                          186,971            173,859             371,929            351,536
     Goodwill and tradename amortization                               -              1,253                   -              2,506
                                                           --------------     --------------     ---------------     --------------
          Total costs and expenses                               282,198            265,141             558,678            529,248
                                                           --------------     --------------     ---------------     --------------

Operating income                                                  10,192             10,193              19,153             17,860

Interest and other (income) expense, net:
     Interest expense                                              6,832              6,868              13,823             13,947
     Interest and other (income), net                               (439)              (658)               (975)            (2,185)
                                                           --------------     --------------     ---------------     --------------
          Total interest and other (income) expense, net           6,393              6,210              12,848             11,762
                                                           --------------     --------------     ---------------     --------------

Income before income taxes                                         3,799              3,983               6,305              6,098

Income tax provision                                               3,915              4,400               6,500              6,739
                                                           --------------     --------------     ---------------     --------------

Income (loss) before extraordinary loss                             (116)              (417)               (195)              (641)

Extraordinary loss on early extinguishment of
    debt, net of $3.9 million tax benefit                          7,242                  -               7,242                  -
                                                           --------------     --------------     ---------------     --------------

Net income (loss)                                              $  (7,358)         $    (417)          $  (7,437)         $    (641)
                                                           ==============     ==============     ===============     ==============

</TABLE>

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



                                       2
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                       Twenty-Six Week Periods Ended
                                                                                     ---------------------------------
                                                                                        August 3,           August 4,
                                                                                          2002                2001
                                                                                     (As restated,       (As restated,
                                                                                      see Note 8)         see Note 8)
                                                                                     -------------       -------------

<S>                                                                                      <C>                   <C>
Cash flows from operating activities:
     Net income (loss)                                                                   $ (7,437)             $ (641)
     Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
            Depreciation and amortization                                                  17,790              18,983
            Extraordinary loss on early extinguishment of debt, net of tax                  7,242                   -
            Noncash interest and other, net                                                   435                 786
            Gain on sale of building                                                            -                (683)
            Increases (decreases) in cash resulting from changes in operating
               assets and liabilities:
                    Accounts and notes receivable, prepaid expenses and other assets       (2,120)              5,836
                    Inventories                                                            (6,774)             (7,729)
                    Accounts payable, accrued liabilities and other liabilities             7,179               4,468
                    Accrued interest                                                        1,193                  (8)
                    Accrued and deferred income taxes                                       5,972               6,002
                                                                                     -------------       -------------
                             Net cash provided by operating activities                     23,480              27,014
                                                                                     -------------       -------------


Cash flows from investing activities:
     Purchases of property and equipment, net                                             (13,944)            (19,222)
     Net proceeds from sale of fixed assets                                                     -               4,712
     Systems development costs                                                             (2,329)             (4,578)
     Other, net                                                                              (393)               (569)
                                                                                     -------------       -------------
                             Net cash used for investing activities                       (16,666)            (19,657)
                                                                                     -------------       -------------


Cash flows from financing activities:
     Repayment of long-term debt                                                         (158,146)                (65)
     Proceeds from issuance of long-term debt                                             150,000                   -
     Increase (decrease) overdraft balances                                                (5,882)             (3,393)
     Advances to parent, net                                                               (1,239)             (6,012)
     Payment of deferred financing fees                                                    (6,003)                  -
     Other, net                                                                               (58)                (94)
                                                                                     -------------       -------------
                             Net cash used for financing activities                       (21,328)             (9,564)
                                                                                     -------------       -------------


Cash and cash equivalents:
     Net decrease during the period                                                       (14,514)             (2,207)
     Balance, beginning of period                                                          63,418              37,218
                                                                                     -------------       -------------
     Balance, end of period                                                              $ 48,904            $ 35,011
                                                                                     =============       =============

</TABLE>

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




                                       3
<PAGE>



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


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

         Cole National Group, Inc. is a wholly owned subsidiary of Cole National
Corporation. The consolidated financial statements include the accounts of Cole
National Group and its wholly owned subsidiaries (collectively, the "Company").
All significant intercompany transactions have been eliminated in consolidation.

         The accompanying consolidated financial statements have been prepared
without audit and certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although management
believes that the disclosures herein are adequate to make the information not
misleading. Results for interim periods are not necessarily indicative of the
results to be expected for the full year.

Nature of Operations

         The Company is a specialty service retailer operating in both host and
nonhost environments, whose primary lines of business are optical products and
services and personalized gifts. The Company sells its products through 2,492
company-owned retail locations and 446 franchised locations in 50 states,
Canada, and the Caribbean. In connection with its optical business, the Company
is a managed vision care benefits provider and claims payment administrator
whose programs provide comprehensive eyecare benefits primarily marketed
directly to large employers, health maintenance organizations (HMO) and other
organizations. The Company has two reportable segments: Cole Vision and Things
Remembered (see Note 5).

Use of Estimates

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

         Significant estimates are required in determining the allowance for
uncollectible accounts, inventory valuation, depreciation, amortization and
recoverability of long-lived assets, deferred income taxes, remakes and returns
allowances, managed vision underwriting results, self-insurance reserves and
retirement and post-employment benefits.

Reclassifications

         Certain reclassifications have been made to prior year financial
statements and the notes to conform to the current year presentation.

Revenue Recognition and Deferred Revenue

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

         Revenues from merchandise sales and services, net of estimated returns
and allowances, are recognized at the time of customer receipt or when the
related goods are shipped direct to the customer and all significant obligations
of the Company have been satisfied. The reserve for returns and allowances is
calculated as a percentage of sales based on historical return percentages.
Capitation revenues are accrued when due under related contracts at the agreed
upon per member, per month rates. Administrative service revenue is recognized
when services are provided over the contract period and the Company's customers

                                       4
<PAGE>

are obligated to pay. Additionally, the Company sells discount programs which
have twelve-month terms. Revenues from discount programs are deferred and
amortized over the twelve-month term.

         Additionally, the Company sells separately priced extended warranty
contracts with terms of coverage of 12 and 24 months. Revenues from the sale of
these separately priced contracts are deferred and amortized over the lives of
the contracts while the costs to service the warranty claims are expensed as
incurred. Incremental costs directly related to the sale of such contracts, such
as sales commissions and percentage rent, are deferred and charged to expense in
proportion to the revenue recognized.

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

         Things Remembered sells memberships in its Rewards Club(TM) program,
which allows members to earn rebates based on their accumulated purchases. The
Company defers and amortizes the membership fee revenue over the life of the
membership. The rebates which can only be used to offset the price of future
customer purchases are recognized as a reduction of revenue based on the rebates
earned and the estimated future redemptions. The cumulative liability for
unredeemed rebates is adjusted over time based on actual experience and trends
with respect to redemption.

Valuation of Inventories

         Inventories are recorded at the lower of cost or market based on the
first-in, first-out (FIFO) method for the optical inventories and based on the
weighted average cost method for the gift inventories. The Company records a
valuation reserve for future inventory cost markdowns to be taken for inventory
not expected to be part of its ongoing merchandise offering. The reserve is
estimated based on historical information regarding sell through for similar
products. The Company records a reserve for estimated shrinkage based on various
factors including sales volume, historical shrink results and current trend.

Property and Equipment

         Property and equipment are stated at cost. Repairs and maintenance
costs that extend the life of the asset are capitalized. Depreciation is
provided principally by using the straight-line method over the estimated useful
life of the related assets, generally 2 to 10 years for furniture, fixtures and
equipment, 2 to 25 years for leasehold improvements and 5 to 40 years for
buildings and improvements.

Goodwill and Other Intangible Assets

         Goodwill, noncompete agreements and tradename assets were amortized
over their estimated useful economic life using the straight-line method and are
carried at cost less accumulated amortization. Beginning with fiscal year 2002,
all goodwill and tradename amortization ceased in accordance with Statement of
Financial Accounting Standard (SFAS) No. 142, "Goodwill and Other Intangible
Assets" (SFAS 142), and both goodwill and tradenames are tested at least
annually for impairment. The Company adopted the first day of the fourth fiscal
quarter for the annual impairment review. Other intangible assets with finite
lives are amortized over their estimated useful lives based on management's
estimates of the period that the assets will generate revenue.

Cash Flows

         Net cash flows from operating activities reflect net cash payments
(receipts) for income taxes and payments for interest of $459,000 and
$12,075,000, respectively, for the 26 week period ended August 3, 2002, and
$716,000 and $13,336,000, respectively, for the 26 week period ended August 4,
2001.




                                       5
<PAGE>


Total Other Comprehensive Income (Loss)

         Total other comprehensive income (loss) for the 13 and 26 week periods
ended August 3, 2002 and August 4, 2001 is as follows (000's omitted):


<TABLE>
<CAPTION>
                                                    Thirteen Week Periods                  Twenty-Six Week Periods
                                                 ----------------------------            -----------------------------
                                                    2002             2001                   2002             2001
                                                 ------------     -----------            ------------     ------------

<S>                                                 <C>               <C>                   <C>                <C>
Net income (loss)                                   $ (7,358)         $ (417)               $ (7,437)          $ (641)
Cumulative translation (loss), net                      (117)             (8)                    (10)            (170)
                                                 ------------     -----------            ------------     ------------
Total other comprehensive income (loss)             $ (7,475)         $ (425)               $ (7,447)          $ (811)
                                                 ============     ===========            ============     ============
</TABLE>



(2) GOODWILL AND OTHER INTANGIBLE ASSETS

         The Company adopted SFAS 142 in the first quarter of fiscal 2002. This
statement requires that goodwill and certain intangible assets deemed to have
indefinite lives will no longer be amortized, but instead, be subject to reviews
for impairment annually, or more frequently if certain indicators arise. With
the adoption of this statement, the Company ceased amortization of goodwill and
tradenames as of February 3, 2002.

         The Company completed the transitional impairment testing of goodwill
during the second quarter of fiscal 2002 as required by SFAS 142. Based on the
findings of its outside valuation advisor, the Company has concluded that there
was no impairment of its goodwill at the adoption date of the new accounting
standard, effective February 3, 2002.

         The following table provides the comparable effects of adopting SFAS
142 for the 13 and 26 week periods ended August 3, 2002 and August 4, 2001:

<TABLE>
<CAPTION>
                                                             Thirteen Week Periods            Twenty-Six Week Periods
                                                          -----------------------------     -----------------------------
                                                             2002             2001             2002             2001
                                                          ------------     ------------     ------------     ------------

<S>                                                            <C>              <C>              <C>              <C>
Net income (loss):
     Reported net income (loss)                              $ (7,358)          $ (417)        $ (7,437)          $ (641)
     Goodwill amortization - Cole Vision                            -              707                -            1,414
     Goodwill amortization - Things Remembered                      -              237                -              474
     Tradename amortization - Cole Vision                           -              309                -              618
     Related tax adjustment                                         -             (170)               -             (340)
                                                          ------------     ------------     ------------     ------------
     Adjusted net income (loss)                              $ (7,358)           $ 666         $ (7,437)         $ 1,525
                                                          ============     ============     ============     ============

</TABLE>


         Other intangible assets consist of (dollars in thousands):


<TABLE>
<CAPTION>
                                                                                 2002            2001
                                                                              -----------     ------------

<S>                                                                             <C>              <C>
Tradename                                                                       $ 49,460         $ 49,460
Noncompete agreements                                                                240              240
Contracts                                                                          3,460            3,460
                                                                              -----------     ------------
                                                                                  53,160           53,160
Accumulated amortization                                                          (7,372)          (7,164)
                                                                              -----------     ------------
Other intangibles, net                                                          $ 45,788         $ 45,996
                                                                              ===========     ============
</TABLE>


         The net carrying amount of goodwill at August 3, 2002, by business
segment, was $64.2 million at Cole Vision and $21.4 million at Things
Remembered. The change in the net carrying amount of goodwill of ($757) for the
26 week period ended August 3, 2002, was due to foreign currency translation of
goodwill at Cole Vision. The net carrying amount of other intangibles of $45.8
million at August 3, 2002, was attributable to the Cole Vision segment.
Amortization of other intangibles was $0.2 million for the twenty-six week
period ended August 3, 2002.

                                       6
<PAGE>

(3) LONG-TERM DEBT

         On May 22, 2002, Cole National Group issued $150.0 million of 8-7/8%
senior subordinated notes due 2012. These notes are unsecured and mature on May
15, 2012. Interest on the notes is payable semi-annually on each May 15 and
November 15, commencing November 15, 2002.

         The indenture pursuant to which the 8-7/8% notes were issued contains
certain optional and mandatory redemption features and other financial covenants
similar to those in the indentures for Cole National Group's 8-5/8% and
previously outstanding 9-7/8% notes.

         Net proceeds from the 8-7/8% note offering, together with cash on hand,
were used to retire $150.0 million of 9-7/8% senior subordinated notes due 2006
and pay premiums and other costs associated with retiring those notes. The
Company's results for the 13 and 26 weeks ended August 3, 2002 included an
extraordinary loss on early extinguishment of debt of approximately $7.2
million, net of an income tax benefit of approximately $3.9 million,
representing the payment of premiums and other costs of retiring the notes and
the write-offs of unamortized discount and deferred financing fees.

         Subsequent to August 3, 2002, the Company entered into interest rate
swap agreements to take advantage of favorable market interest rates. These
agreements require the Company to pay an average floating interest rate based on
six-month LIBOR plus 4.5375% to a counter party while receiving a fixed interest
rate on a portion of the Company's $125.0 million 8-5/8% senior subordinated
notes due 2007. The counter party is a major commercial bank. The agreements
mature August 15, 2007 and qualify as fair value hedges. The aggregate notional
amount of the interest rate swap agreements is $50.0 million.

(4) CREDIT FACILITY

         The operating subsidiaries of Cole National Group, Inc. have a working
capital commitment of $75.0 million that extends until May 31, 2006. Borrowings
under the credit facility presently bear interest based on leverage ratios of
Cole National Group at a rate equal to either (a) the Eurodollar Rate plus 2.25%
or (b) 1.25% plus the highest of (i) the prime rate, (ii) the three-week moving
average of the secondary market rates for three-month certificates of deposit
plus 1.0% and (iii) the federal funds rate plus 0.5%. Cole National Group pays a
commitment fee of between 0.50% and 0.75% per annum on the total unused portion
of the facility based on the percentage of revolving credit commitments used.
Cole National Corporation and the Company guarantees this credit facility. The
credit facility is secured by the assets of the operating subsidiaries of Cole
National Group, Inc.

         The credit facility requires the principal operating subsidiaries of
Cole National Group to comply with various operating covenants that restrict
corporate activities, including covenants restricting the ability of the
subsidiaries to incur additional indebtedness, pay dividends, prepay
subordinated indebtedness, dispose of certain investments or make acquisitions.
The credit facility also requires the subsidiaries to comply with certain
financial covenants, including covenants regarding interest coverage and maximum
leverage. The principal operating subsidiaries of Cole National Group were in
compliance with these covenants at August 3, 2002.

         The credit facility restricts dividend payments to Cole National Group
from its subsidiaries to amounts needed to pay interest on the 8-7/8% notes and
the 8-5/8% notes, and certain amounts related to taxes, along with up to 0.25%
of Cole National Group's consolidated net revenue annually for other direct
expenses of the Cole National Corporation or the Company. The credit facility
restricts dividend payments to Cole National Group in an aggregate amount not to
exceed $50.0 million to allow for the repurchase of Senior Subordinated Notes.

         No borrowings under the credit facility were outstanding as of August
3, 2002 and August 4, 2001. There were no borrowings during the second quarter
of fiscal 2002 and fiscal 2001.



                                       7
<PAGE>



(5) SEGMENT INFORMATION

         Information on the Company's reportable segments is as follows (000's
omitted):

<TABLE>
<CAPTION>
                                                 Thirteen Week Period               Twenty-Six Week Period
                                            -------------------------------      ------------------------------
                                                2002              2001               2002             2001
                                            -------------     -------------      -------------     ------------

<S>                                            <C>               <C>                <C>              <C>
Net revenue:
     Cole Vision                               $ 218,079         $ 201,431          $ 451,049        $ 420,260
     Things Remembered                            74,311            73,903            126,782          126,848
                                            -------------     -------------      -------------     ------------
          Total net revenue                    $ 292,390         $ 275,334          $ 577,831        $ 547,108
                                            =============     =============      =============     ============


Operating income:
     Cole Vision                                 $ 2,906           $ 1,696           $ 16,197         $ 12,997
     Things Remembered                             9,795            10,922              7,956            9,690
                                            -------------     -------------      -------------     ------------
          Total segment operating income        $ 12,701          $ 12,618           $ 24,153         $ 22,687
     Unallocated amounts:
          Corporate expenses                       2,509             2,425              5,000            4,827
                                            -------------     -------------      -------------     ------------
     Total operating income                       10,192            10,193             19,153           17,860
     Interest and other (income) expense, net      6,393             6,210             12,848           11,762
                                            -------------     -------------      -------------     ------------
     Income before income taxes                  $ 3,799           $ 3,983            $ 6,305          $ 6,098
                                            =============     =============      =============     ============
</TABLE>


(6) COMMITMENTS AND CONTINGENCIES

         The Company leases a substantial portion of its computers, equipment
and facilities including laboratories, office and warehouse space, and retail
store locations. These leases generally have initial terms of up to 10 years and
often contain renewal or purchase options. Operating and capital lease
obligations are based upon contractual minimum rates and, in most leases
covering retail store locations, additional rents are payable based on store
sales. In addition, Cole Vision operates departments in various host stores
paying occupancy costs solely as a percentage of sales under agreements
containing short-term cancellation clauses. Generally, the Company is required
to pay taxes and normal expenses of operating the premises for laboratory,
office, warehouse and retail store leases; the host stores pay these expenses
for departments operated on a percentage-of-sales basis.

         The Company guarantees future minimum lease payments for certain store
locations leased directly by franchisees. These guarantees totaled approximately
$13.7 million and $14.0 million as of February 2, 2002 and August 3, 2002.
Performance under a guarantee by the Company is triggered by default of a
franchisee in their lease commitment. Generally, these guarantees also extend to
payments of taxes and other normal expenses payable under these leases, the
amounts of which are not readily quantifiable. Many of the guarantees are
limited to periods that are less than the full term of the leases involved.

(7) LEGAL PROCEEDINGS

         The State of California has obtained a preliminary injunction in July
2002 in a case brought against the Company, Pearle Vision and other subsidiaries
regarding Pearle Vision Centers and Pearle Vision Care, Inc. The terms of the
injunction are not expected to have any material effect on the Company's
operations. Although we believe we are in compliance with California law and
intend to continue to defend the case vigorously, we may be required to further
modify our activities or might be required to pay damages and/or restitution in
currently undeterminable amounts if we are not successful, the cost of which, as
well as continuing defense costs, might have a material adverse effect on our
operating results in one or more periods.

         A class action complaint was filed in a case brought against the
Company's subsidiary, Things Remembered, Inc., alleging violation of
California's wage and hour laws. The case is in its early stages and the Company
intends to vigorously defend the suit. We may be required to modify our
activities and pay damages and/or restitution in currently undeterminable
amounts if the plaintiffs prevail, the cost of which, as well as continuing
defense costs, might have a material adverse impact on our operating results in
one or more periods.

                                       8
<PAGE>


(8) RESTATEMENT

         Subsequent to the issuance of the Company's consolidated financial
statements for the second quarter of fiscal 2002, the Company determined it
needed to restate its previously issued financial statements for numerous items,
each of which was an "error" within the meaning of Accounting Principles Board
(APB) Opinion No. 20, "Accounting Changes." In addition to the restatement of
its annual financial statements, the Company has also restated its previously
issued quarterly financial statements.

Recognition of Revenues Earned on the Sale of Extended Warranty Contracts.
Customers purchasing eyeglasses from the Company's retail stores are offered the
option of buying a warranty for up to two years, paying in full for the warranty
at the time of sale. The Company historically recognized the revenue at the time
of the sale. The Company has made restatement adjustments to record the warranty
payment received at the time of the sale as deferred revenue and recognizes the
revenue on a straight-line basis over the warranty period.

Other Revenue Recognition Adjustments. Previously, the Company recognized
certain sales transactions as revenue when the customer placed the order and a
deposit was taken. Restatement adjustments were made to defer such revenue until
customer receipt or when the related goods were shipped direct to the customer
and all significant obligations of the Company were satisfied. In addition,
revenue adjustments have been made to establish adequate allowances for returns
and remakes. Historically, the Company recorded returns and remakes based on
actual product returned during the period.

Valuation of Long-lived Assets. Historically, the Company did not consider
certain mature stores with negative cash flows in its asset impairment tests. In
addition, in testing for SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," (SFAS 121), the
Company did not allocate goodwill to the respective stores. As part of the
restatement, the Company applied a methodology which includes all mature stores
in its asset impairment tests and includes an allocation of goodwill for years
prior to fiscal 2002. The restated financial statements also reflect the
recognition of losses on the disposal of fixed assets in the appropriate
periods. Additional adjustments were made to record depreciation expense for
certain depreciable fixed assets which were not previously being depreciated.
Also included is an adjustment to record capital lease assets and the
corresponding lease obligation for leases that had been previously accounted for
as operating leases.

Inventories and Cost of Goods Sold. The Company's restated financial statements
reflect adjustments relating to inventories and cost of goods sold primarily to
(i) recognize obsolescence reserves in appropriate periods and amounts, correct
calculation errors and recognize certain inventory costs in appropriate periods
and (ii) reflect certain vendor allowances previously recorded in operations but
not yet earned as a reduction in the inventory balances.

Accruals for Operating Expenses. Historically, the Company did not always record
changes in estimates in the period of change, and established accruals for
certain expenses that had not yet been incurred. The restated financial
statements reflect adjustments to recognize certain operating expenses in the
period in which they were incurred and to record the corresponding liability for
those items not paid at the end of the period. Such operating expenses primarily
consist of advertising, self-insurance, IBNR claims, retirement and post
employment benefits, vacation, allowance for uncollectible accounts and
miscellaneous operating expenses.

1998 Settlement from Former Owner of Pearle. The Company's 1998 financial
statements included the recognition of $6.0 million of income from a $13.0
million cash settlement with the former owner of Pearle. The terms of the
related agreement included the settlement of certain claims and indemnifications
associated with the purchase agreement. In addition, as part of the settlement,
the Company agreed to assume certain contingent liabilities from the former
owner. The restated financial statements reflect the treatment of this $6.0
million from the settlement as an adjustment to the purchase price of Pearle,
thereby reducing the goodwill that was established in connection with the Pearle
acquisition and associated amortization expense.

Deferred Income Taxes and Income Tax Liabilities. The Company reviewed all of
its temporary differences and loss and tax credit carryforwards, and made
adjustments to its deferred tax assets and liabilities. Adjustments were made to
provide for state and local income tax deferred tax assets and liabilities,
which were previously not recorded. The Company evaluated the



                                       9
<PAGE>

adequacy of the tax liabilities established for the current and open tax years
and adjusted the amounts maintained in the tax liability accounts. Also included
is the tax effect of the restatement items.

Summary. This Form 10-Q for the quarterly period ended August 3, 2002 is being
filed at the completion of the restatement process, and at the same time as the
filing of the Company's Form 10-K for the fiscal year ended February 1, 2003.
The comparative financial information for the prior year set forth in the
financial statements of this Form 10-Q have been restated.



                                       10
<PAGE>
CONSOLIDATED BALANCE SHEET AS OF AUGUST 3, 2002


<TABLE>
<CAPTION>
                                                                As
                                                            Previously
                                                             Reported         Adjustments      As Restated
                                                            ----------        -----------      -----------
                                                                         (Dollars in thousands)
<S>                                                         <C>               <C>               <C>
ASSETS
Current assets:
    Cash                                                    $  48,931         $     (27)        $  48,904
    Accounts receivable, less allowances                       44,509                39            44,548
    Current portion of notes receivable                         2,795              --               2,795
    Inventories                                               118,318             7,652           125,970
    Refundable income taxes                                       458              (458)             --
    Prepaid expenses and other                                 21,798             6,190            27,988
    Deferred income tax benefits                                  500            26,736            27,236
                                                            ---------         ---------         ---------
        Total current assets                                  237,309            40,132           277,441

Property and equipment, at cost                               297,350            11,130           308,480
    Less - accumulated depreciation and amortization         (177,773)          (11,963)         (189,736)
                                                            ---------         ---------         ---------
        Total property and equipment, net                     119,577              (833)          118,744


Notes receivable, excluding current portion,
    less allowances                                             3,532               740             4,272
Deferred income taxes and other assets                         50,438            18,313            68,751
Other intangibles, net                                           --               2,796             2,796
Tradenames, net                                                42,992              --              42,992
Goodwill, net                                                 103,551           (18,009)           85,542
                                                            ---------         ---------         ---------
                                                            $ 557,399         $  43,139         $ 600,538
                                                            =========         =========         =========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
    Current portion of long-term debt                       $      40         $     216         $     256
    Accounts payable                                           53,413             5,951            59,364
    Payable to affiliates, net                                 70,240            13,769            84,009
    Accrued interest                                            7,813              (280)            7,533
    Accrued liabilities and deferred revenues                  81,937            50,209           132,146
    Accrued income taxes                                          484             3,036             3,520
                                                            ---------         ---------         ---------
        Total current liabilities                             213,927            72,901           286,828

Long term debt, net of discount and current portion           275,000               546           275,546
Other long term liabilities                                    12,352            18,568            30,920

Stockholder's equity                                           56,120           (48,876)            7,244

                                                            ---------         ---------         ---------
    Total liabilities and stockholder's equity              $ 557,399         $  43,139         $ 600,538
                                                            =========         =========         =========
</TABLE>


                                       11
<PAGE>

CONSOLIDATED BALANCE SHEET AS OF FEBRUARY 2, 2002


<TABLE>
<CAPTION>
                                                                As
                                                            Previously
                                                             Reported         Adjustments      As Restated
                                                            ----------        -----------      -----------
                                                                         (Dollars in thousands)
<S>                                                         <C>               <C>               <C>
ASSETS
Current assets:
    Cash                                                    $  63,656         $    (238)        $  63,418
    Accounts receivable, less allowances                       39,544             1,755            41,299
    Current portion of notes receivable                         2,825              (102)            2,723
    Inventories                                               111,098             8,105           119,203
    Refundable income taxes                                       502              (502)             --
    Prepaid expenses and other                                 22,613             6,400            29,013
    Deferred income tax benefits                                  430            26,731            27,161
                                                            ---------         ---------         ---------
        Total current assets                                  240,668            42,149           282,817

Property and equipment, at cost                               291,148             7,770           298,918
    Less - accumulated depreciation and amortization         (169,851)          (10,685)         (180,536)
                                                            ---------         ---------         ---------
        Total property and equipment, net                     121,297            (2,915)          118,382


Notes receivable, excluding current portion,
    less allowances                                             3,899               810             4,709
Deferred income taxes and other assets                         49,371            16,475            65,846
Other intangibles, net                                           --               3,004             3,004
Tradenames, net                                                42,992              --              42,992
Goodwill, net                                                 103,552           (18,009)           85,543
                                                            ---------         ---------         ---------
                                                            $ 561,779         $  41,514         $ 603,293
                                                            =========         =========         =========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
    Current portion of long-term debt                       $      54         $     175         $     229
    Accounts payable                                           57,242             7,621            64,863
    Payable to affiliates, net                                 73,548            11,929            85,477
    Accrued interest                                            6,130               210             6,340
    Accrued liabilities and deferred revenues                  78,725            49,000           127,725
    Accrued income taxes                                          546              (173)              373
                                                            ---------         ---------         ---------
        Total current liabilities                             216,245            68,762           285,007

Long term debt, net of discount and current portion           274,318               256           274,574
Other long term liabilities                                    12,040            16,928            28,968

Stockholder's equity                                           59,176           (44,432)           14,744

                                                            ---------         ---------         ---------
    Total liabilities and stockholder's equity              $ 561,779         $  41,514         $ 603,293
                                                            =========         =========         =========
</TABLE>



                                       12
<PAGE>


FOR THE QUARTER ENDED AUGUST 3, 2002

<TABLE>
<CAPTION>
                                                                  As Previously
                                                                    Reported         Adjustments    As Restated
                                                                  -------------      -----------    -----------
                                                                                   (In thousands)

<S>                                                                  <C>                <C>            <C>
Net revenue                                                          $ 288,857          $ 3,533        $ 292,390

Cost and expenses:
     Cost of goods sold                                                 94,520              707           95,227
     Operating expenses                                                184,893            2,078          186,971
     Goodwill and tradename amortization                                     -                -                -
                                                                  -------------    -------------    -------------
          Total costs and expenses                                     279,413            2,785          282,198
                                                                  -------------    -------------    -------------

Operating income                                                         9,444              748           10,192

Interest and other (income) expense:
     Interest expense                                                    6,814               18            6,832
     Interest and other (income) , net                                    (208)            (231)            (439)
                                                                  -------------    -------------    -------------
          Total interest and other (income) expense, net                 6,606             (213)           6,393
                                                                  -------------    -------------    -------------

Income before income taxes                                               2,838              961            3,799

Income tax provision                                                     1,135            2,780            3,915
                                                                  -------------    -------------    -------------

Income (loss) before extraordinary loss                                  1,703           (1,819)            (116)

Extraordinary loss on early extinguishment of debt                       7,634             (392)           7,242
                                                                  -------------    -------------    -------------

Net income (loss)                                                     $ (5,931)        $ (1,427)        $ (7,358)
                                                                  =============    =============    =============
</TABLE>


                                       13
<PAGE>


FOR THE QUARTER ENDED AUGUST 4, 2001

<TABLE>
<CAPTION>
                                                                  As Previously
                                                                    Reported         Adjustments     As Restated
                                                                  -------------    -------------    -------------
                                                                                   (In thousands)

<S>                                                                  <C>                <C>            <C>
Net revenue                                                          $ 273,348          $ 1,986        $ 275,334

Cost and expenses:
     Cost of goods sold                                                 91,307           (1,278)          90,029
     Operating expenses                                                170,818            3,041          173,859
     Goodwill and tradename amortization                                 1,436             (183)           1,253
                                                                  -------------    -------------    -------------
          Total costs and expenses                                     263,561            1,580          265,141
                                                                  -------------    -------------    -------------

Operating income                                                         9,787              406           10,193

Interest and other (income) expense:
     Interest expense                                                    6,863                5            6,868
     Interest and other (income) , net                                    (315)            (343)            (658)
                                                                  -------------    -------------    -------------
          Total interest and other (income) expense, net                 6,548             (338)           6,210
                                                                  -------------    -------------    -------------

Income before income taxes                                               3,239              744            3,983

Income tax provision                                                     2,268            2,132            4,400
                                                                  -------------    -------------    -------------

Net income (loss)                                                        $ 971         $ (1,388)          $ (417)
                                                                  =============    =============    =============

</TABLE>





                                       14
<PAGE>


FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 2002


<TABLE>
<CAPTION>
                                                                  As Previously
                                                                    Reported         Adjustments    As Restated
                                                                  -------------    ---------------  ------------
                                                                                   (In thousands)
<S>                                                                  <C>               <C>             <C>
Net revenue                                                          $ 578,966         $ (1,135)       $ 577,831

Cost and expenses:
     Cost of goods sold                                                190,168           (3,419)         186,749
     Operating expenses                                                367,842            4,087          371,929
     Goodwill and tradename amortization                                     -                -                -
                                                                  -------------    -------------    -------------
          Total costs and expenses                                     558,010              668          558,678
                                                                  -------------    -------------    -------------

Operating income (loss)                                                 20,956           (1,803)          19,153

Interest and other (income) expense:
     Interest expense                                                   13,807               16           13,823
     Interest and other (income) , net                                    (506)            (469)            (975)
                                                                  -------------    -------------    -------------
          Total interest and other (income) expense, net                13,301             (453)          12,848
                                                                  -------------    -------------    -------------

Income (loss) before income taxes                                        7,655           (1,350)           6,305

Income tax provision                                                     3,062            3,438            6,500
                                                                  -------------    -------------    -------------

Income (loss) before extraordinary income (loss)                         4,593           (4,788)            (195)

Extraordinary income (loss) on early extinguishment of debt              7,634             (392)           7,242
                                                                  -------------    -------------    -------------

Net income (loss)                                                     $ (3,041)        $ (4,396)        $ (7,437)
                                                                  =============    =============    =============
</TABLE>


                                       15
<PAGE>


FOR THE TWENTY-SIX WEEKS ENDED AUGUST 4, 2001


<TABLE>
<CAPTION>
                                                                  As Previously
                                                                    Reported         Adjustments     As Restated
                                                                  -------------    --------------    ------------
                                                                                  (In thousands)
<S>                                                                  <C>                <C>            <C>
Net revenue                                                          $ 543,639          $ 3,469        $ 547,108

Cost and expenses:
     Cost of goods sold                                                179,029           (3,823)         175,206
     Operating expenses                                                344,094            7,442          351,536
     Goodwill and tradename amortization                                 2,898             (392)           2,506
                                                                  -------------    -------------    -------------
          Total costs and expenses                                     526,021            3,227          529,248
                                                                  -------------    -------------    -------------

Operating income                                                        17,618              242           17,860

Interest and other (income) expense:
     Interest expense                                                   13,764              183           13,947
     Interest and other (income) , net                                  (1,251)            (934)          (2,185)
                                                                  -------------    -------------    -------------
          Total interest and other (income) expense, net                12,513             (751)          11,762
                                                                  -------------    -------------    -------------

Income before income taxes                                               5,105              993            6,098

Income tax provision                                                     3,574            3,165            6,739
                                                                  -------------    -------------    -------------

Net income (loss)                                                      $ 1,531         $ (2,172)          $ (641)
                                                                  =============    =============    =============

</TABLE>

                                       16
<PAGE>


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

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

         As discussed in Note 8 to the Consolidated Financial Statements, the
Company's financial statements have been restated. See Note 8 to the Notes to
Consolidated Financial Statements, for a summary of the significant effects of
the restatement. The following discussion of the Company's financial condition
and results of operations gives effect to the restatement and should be read in
conjunction with the Consolidated Financial Statements and related notes.

OVERVIEW

         Cole National, primarily through the subsidiaries owned by its direct
subsidiary, Cole National Group, Inc., is a leading provider of optical products
and services and personalized gifts. The Company sells its products and services
through 2,492 company-owned retail locations and 446 franchised locations in 50
states, Canada and the Caribbean.

         Fiscal years end on the Saturday closest to January 31 and are
identified according to the calendar year in which they begin. For example, the
fiscal year ended February 2, 2002 is referred to as "fiscal 2001." The current
fiscal year, which ends February 1, 2003, is referred to as "fiscal 2002."
Fiscal 2002 and fiscal 2001 each consisted of 52 weeks.

         The Company has two reportable segments, Cole Vision and Things
Remembered. Most of Cole Vision's revenue represents sales of prescription
eyewear, accessories and services through its Cole Licensed Brands and Pearle
Vision retail locations. Cole Vision revenue also includes sales of merchandise
to franchisees, royalties based on franchise sales, initial franchise fees for
Pearle Vision and capitation revenue, administrative service fee revenue and
discount program service fees from its Cole Managed Vision business.

         Things Remembered's revenue represents sales of engraveable gift
merchandise, personalization and other services primarily through retail in-line
stores and kiosks. Things Remembered revenue also includes direct sales through
its e-commerce site, http://www.ThingsRemembered.com, sales through Things
Remembered catalogs and through affiliate programs direct to businesses.


                                       17
<PAGE>



RESULTS OF OPERATIONS

         The following schedule sets forth certain operating information for the
second quarter and first six months fiscal 2002 and fiscal 2001. This schedule
and subsequent discussions should be read in conjunction with the consolidated
financial statements included in this Form 10-Q/A.


<TABLE>
<CAPTION>
                                                 Second Quarter                               First Six Months
                                            -------------------------                     -------------------------
                                               2002          2001         Change             2002          2001         Change
                                            -----------    ----------    ---------        -----------   -----------    ---------
                                              (Dollars in millions)                         (Dollars in millions)
<S>                                            <C>           <C>              <C>            <C>           <C>              <C>
Net revenue:
    Cole Vision                                $ 218.1       $ 201.4          8.3 %          $ 451.0       $ 420.2          7.3 %
    Things Remembered                             74.3          73.9          0.5              126.8         126.9         (0.1)
                                            -----------    ----------                     -----------   -----------
        Total net revenue                      $ 292.4       $ 275.3          6.2 %          $ 577.8       $ 547.1          5.6 %

Gross margin:
    Cole Vision                                $ 143.4       $ 132.7          8.1 %          $ 298.6       $ 280.9          6.3 %
    Things Remembered                             53.8          52.6          2.3               92.5          91.0          1.6
                                            -----------    ----------                     -----------   -----------
        Total gross margin                     $ 197.2       $ 185.3          6.4 %          $ 391.1       $ 371.9          5.2 %

Operating expenses:
    Cole Vision                                $ 140.5       $ 130.0          8.1 %          $ 282.4       $ 265.9          6.2 %
    Things Remembered                             44.0          41.5          6.0               84.5          80.8          4.6
    Unallocated corporate                          2.5           2.4          4.2                5.0           4.8          4.2
                                            -----------    ----------                     -----------   -----------
        Total operating expense                $ 187.0       $ 173.9          7.5 %          $ 371.9       $ 351.5          5.8 %

Goodwill and tradename amortization
    Cole Vision                                    $ -         $ 1.0       (100.0)%              $ -         $ 2.0       (100.0)%
    Things Remembered                                -           0.2       (100.0)                 -           0.5       (100.0)
                                            -----------    ----------                     -----------   -----------
        Total goodwill and tradename
          amortization                             $ -         $ 1.2       (100.0)%              $ -         $ 2.5       (100.0)%

Operating income (loss):
    Cole Vision                                  $ 2.9         $ 1.7         70.6 %           $ 16.2        $ 13.0         24.6 %
    Things Remembered                              9.8          10.9        (10.1)               8.0           9.7        (17.5)
    Unallocated corporate expenses                (2.5)         (2.4)         4.2               (5.0)         (4.8)         4.2
                                            -----------    ----------                     -----------   -----------
        Total operating income                  $ 10.2        $ 10.2            -             $ 19.2        $ 17.9          7.3 %
                                            ===========    ==========                     ===========   ===========

Percentage of net revenue:
    Gross margin                                  67.4 %        67.3 %        0.1               67.7 %        68.0 %       (0.3)
    Operating expenses                            64.0          63.2          0.8               64.4          64.2          0.1
    Goodwill and tradename amortization              -           0.4         (0.4)                 -           0.5         (0.5)
                                            -----------    ----------                     -----------   -----------
        Operating income                           3.5 %         3.7 %       (0.2)               3.3 %         3.3 %        0.1
                                            ===========    ==========                     ===========   ===========


Number of retail locations at the end
    of the period
        Cole Licensed Brands                     1,296         1,225
        Pearle company-owned                       420           435
        Pearle franchised                          446           416
                                            -----------    ----------
            Total Cole Vision                    2,162         2,076
        Things Remembered                          776           780
                                            -----------    ----------
            Total Cole National                  2,938         2,856
                                            ===========    ==========
</TABLE>

                                       18
<PAGE>


         As used in Item 2 of this Form 10-Q, same-store sales growth is a
non-GAAP financial measure, which includes deferred warranty sales on a cash
basis and does not reflect provisions for returns and remakes and certain other
items. The Company's current systems do not gather data on these items on
an individual store basis. Adjustments to the cash basis sales information
accumulated at the store level are made for these items on an aggregate basis.
As a retailer, the Company believes that a measure of same-store sales
performance is important for understanding its operations. The Company
calculates same-store sales for stores opened for at least twelve months. A
reconciliation of same-store sales to revenue is presented below in the section
"Reconciliation of Same-Store Sales Growth". Same store sales growth follows:

<TABLE>
<CAPTION>
                                                           2002
                                            -----------------------------------
                                            Second Quarter     First Six Months
                                            --------------     ----------------

<S>                                            <C>                   <C>
Cole Licensed Brands (U.S.)                    5.8%                  4.6%
Pearle Company-owned (U.S.)                    1.5%                  6.2%
     Total Cole Vision                         3.5%                  4.7%
Things Remembered                             (1.6%)                (2.2%)
     Total Cole National                       2.1%                  3.0%

Pearle franchise stores (U.S.)                 0.6%                  1.0%
</TABLE>




         Same-store sales for Pearle U.S. franchise stores is a non-GAAP
financial measure that is provided for comparative purposes only. The Company
believes that its franchisees' method of reporting sales is consistent on a
year-to-year basis.

SECOND QUARTER FISCAL 2002 COMPARED TO SECOND QUARTER FISCAL 2001

CONSOLIDATED OPERATIONS

         Total revenues were $292.4 million in the second quarter of fiscal
2002, compared with $275.3 million in the same period of fiscal 2001. Total
revenues increased 6.2% in the second quarter, primarily attributable to a 2.1%
increase in same-store sales and an increase in the number of Target Optical
stores open.

         Gross margin was $197.2 million in the second quarter of fiscal 2002,
compared with $185.3 million in the same period of fiscal 2001, an increase of
6.4%. The gross margin dollar increase was primarily attributable to
improvements in net revenue at Cole Vision. The gross margin rate for the second
quarter was 67.4%, compared to 67.3% for the second quarter 2001. The increase
in gross margin rate for the second quarter was attributable to improvements in
gross margin rate at Things Remembered, offset by a slight decline in Cole
Vision. At Things Remembered, the gross margin rate improved from 71.2% to
72.4%. The improvement was due primarily to increases in the average dollar
sale.

         Operating expenses were $187.0 million in the second quarter of fiscal
2002, compared with $173.9 million in the same period of fiscal 2001, an
increase of 7.5%. The increase in operating expenses was primarily due to costs
incurred to support the increases in net revenue and the number of Target
Optical stores opened in the past twelve months. As a percentage of net revenue,
operating expenses were 64.0% compared to 63.2% for the second quarter 2001. The
increase in operating expense percent was primarily a result of higher operating
costs at Things Remembered. Operating expenses at Things Remembered increased
6.0% on a 0.5% increase in sales. Higher costs of store rent and occupancy and
increases in marketing were the primary reasons for the increase in operating
expense percent.

         The Company adopted SFAS 142 "Goodwill and Other Intangible Assets",
(SFAS 142), in the first quarter of fiscal 2002. SFAS 142 requires that goodwill
and certain intangibles deemed to have indefinite lives no longer be amortized,
but instead, will be subject to annual reviews for impairment. With the adoption
of this statement, the Company ceased amortization of goodwill and tradenames as
of February 3, 2002. The Company recorded a $1.2 million goodwill and tradename
amortization charge in the second quarter of fiscal 2001.

         Operating income was $10.2 million in the second quarter of fiscal
2002, compared to $10.2 million in the same period of fiscal 2001. Improvements
at Cole Vision were offset by a decline in operating income at Things
Remembered.

                                       19
<PAGE>

         Interest and other (income) expense, net was $0.2 million higher in the
second quarter of fiscal 2002 than the comparable period of fiscal 2001. The
Company recorded lower interest income from franchise receivables and temporary
investments of excess cash compared to the prior year.

         The difference between the statutory tax rate and the higher effective
tax rates in each fiscal year is primarily due to the provision for state income
taxes, the provision for valuation allowances related to deferred tax assets for
charitable contribution carryforwards, foreign income, other nondeductible
items, and in 2001 goodwill amortization.

COLE VISION SEGMENT

         Cole Vision revenues were $218.1 million in the second quarter of
fiscal 2002, compared with $201.4 million in the comparable period of fiscal
2001, an increase of 8.3%. Same-store sales for the second quarter of fiscal
2002 increased 5.8% at Cole Licensed Brands and 1.5% at Pearle Vision
company-owned stores, despite the difficult retail environment and a slowdown in
business in July. Same-store sales reflected an increase in the average
spectacle selling price and an increase in transactions at Target Optical.
Same-store sales increased 41.1% at Target Optical in the second quarter.

         The gross margin rate decreased slightly, 0.1%, from the prior year.

         Operating expenses as a percent of sales were slightly lower than the
prior year. Higher costs of advertising and store payroll at Cole Licensed
Brands to support the increase in net revenue and the number of Target Optical
locations opened in the past twelve months were offset by improvements at Cole
Managed Vision and Pearle Vision. The processing cost per claim was reduced as
the Company converted MetLife claims to its internal systems. At Pearle,
operating expense as a percent of revenues was lower due to improvements in
store payroll, as both hours worked per store week and average wage rate grew at
a lower rate than sales. In addition, a demutualization insurance credit was
recorded in the second quarter totaling $0.4 million at Cole Vision. The
Prudential Insurance company demutualized, converting from a mutual insurance
company to a publicly traded company and issued a dividend to its shareholders.

         Operating income at Cole Vision improved to $2.9 million in the second
quarter of fiscal 2002, compared to $1.7 million in the comparable period of
fiscal 2001. The cessation of goodwill and tradename amortization, which totaled
$1.0 million at Cole Vision during the second quarter of fiscal 2001, was the
primary reason for the improvement in operating income.

THINGS REMEMBERED SEGMENT

         Things Remembered sales were $74.3 million in the second quarter of
fiscal 2002, compared with $73.9 million in the comparable period of fiscal
2001, a 0.5% increase. Same-store sales declined 1.6% as fewer transactions
offset the increase in average selling price resulting from sales of new
merchandise at higher average unit prices, higher revenue from merchandise
personalization, and less merchandise sold at clearance prices.

         Gross margin as a percent of sales increased 1.2% in the second quarter
of fiscal 2002 compared to the comparable period of fiscal 2001, due primarily
to an increase in the average dollar sale.

         At Things Remembered, operating expenses grew 6.0% on a 0.5% increase
in sales. Store rent and occupancy charges increased in the second quarter due
to increases in insurance, taxes and other common area charges. In addition,
marketing expenses increased by $0.8 million due primarily to increased direct
mail marketing efforts to increase sales in the difficult retail environment.

         Operating income for the second quarter of 2002 was $9.8 million
compared to an operating income of $10.9 million in the comparable period of
2001. Higher store rent and occupancy charges and increases in marketing offset
the sales increase.


                                       20
<PAGE>

FIRST SIX MONTHS FISCAL 2002 COMPARED TO FIRST SIX MONTHS FISCAL 2001

CONSOLIDATED OPERATIONS

         Total revenue was $577.8 million for the first six months of fiscal
2002, compared to $547.1 million for the comparable period of fiscal 2001. Total
revenue increased 5.6% during this period, primarily attributable to a 3.0%
increase in same-store sales, an increase in the number of Target Optical stores
open, and an increase in revenues from managed vision care programs.

         Gross margin increased $19.2 million, or 5.2% in the first six months
of fiscal year 2002 compared to the same period a year ago. The gross margin
dollar increase was primarily attributable to improvements in net revenue at
Cole Vision. The gross margin rate decreased to 67.7% for the first six months
of fiscal 2002 from 68.0% in fiscal 2001 due to a 0.6 percentage point decrease
at Cole Vision offset by a 1.2 percentage point margin improvement at Things
Remembered. The gross margin rate at Cole Vision decreased at both Vision retail
businesses (further discussion is included in the Cole Vision segment). The
increase in gross margin rate at Things Remembered was due to increases in the
average dollar sale.

         Operating expenses increased $20.4 million, or 5.8% for the first six
months of fiscal 2002 compared to the same period in fiscal 2001. The increase
in operating expenses was primarily due to costs incurred to support the
increases in net revenue and the number of Target Optical stores opened in the
past twelve months. For the first six months, operating expenses as a percentage
of net revenue increased to 64.4% from 64.2% for the comparable period of fiscal
2001. The increase in operating expense percent was primarily a result of Things
Remembered's negative same-store sales and higher occupancy and advertising
expenses.

         The Company adopted SFAS 142 in the first quarter of fiscal 2002. SFAS
142 requires that goodwill and certain intangibles deemed to have indefinite
lives no longer be amortized, but instead, will be subject to annual reviews for
impairment. With the adoption of this statement, the Company ceased amortization
of goodwill and tradenames as of February 3, 2002. The Company recorded a $2.5
million goodwill and tradename amortization charge for the first six months of
fiscal 2001.

         Operating income for the first six months of fiscal 2002 was $19.2
million, compared with $17.9 million for the comparable period of fiscal 2001, a
7.3% improvement. The improvement in operating income for the first six months
reflected the elimination of goodwill and tradename amortization from adopting
SFAS 142 and improved operating earnings at Cole Vision. These were offset by
lower operating earnings at Things Remembered.

         Interest and other (income) expense, net increased to $12.8 million for
the first six months of fiscal 2002 compared to $11.8 million for the same
period in fiscal 2001. The Company recorded a $0.7 million gain from the sale of
a Dallas, Texas office facility in the first quarter of fiscal 2001. In
addition, the Company recorded lower interest income from franchise receivables
and temporary investments of excess cash compared to the prior year. Interest
expense was slightly lower than last year, reflecting the refinancing of Cole
National Group's $150.0 million Senior Subordinated Notes. (See Note 3 of the
Notes to Consolidated Financial Statements for further information regarding
this transaction).

         The difference between the statutory tax rate and the higher effective
tax rates in each fiscal year is primarily due to the provision for state income
taxes, the provision for valuation allowances related to deferred tax assets for
charitable contributions carryforwards, foreign income, other nondeductible
items, and in 2001 goodwill amortization.

         The results for the first six months of fiscal 2002 include an
extraordinary loss on early extinguishment of debt of $7.2 million, net of an
income tax benefit of $3.9 million. The extraordinary charge represents payment
of premiums and other costs of retiring Cole National Group's 9-7/8% Senior
Subordinated Notes due 2006 and the write-offs of unamortized discount and
deferred financing fees. See the section below entitled "Liquidity and Capital
Resources" and Note 3 of the Notes To Consolidated Financial Statements for more
information regarding the early extinguishment of debt.


                                       21
<PAGE>
COLE VISION SEGMENT

         Cole Vision revenues were $451.0 million for the first six months of
fiscal 2002, compared with $420.2 million for the comparable period of fiscal
2001. Same-store sales for the first six months of fiscal 2002 increased in all
retail vision brands, despite the difficult retail environment and a slowdown in
business in July. Cole Licensed Brands and Pearle Vision company-owned locations
increased same-store sales by 4.6% and 6.2%, respectively. Same-store sales
reflected an increase in the average spectacle selling price and strong
transaction increases at Target Optical. Same-stores sales increased 35.0% at
Target Optical for the first six months of fiscal 2002. Same-store sales
increases also reflected strong first quarter transaction increases at Pearle
Vision.

         Gross margin percent declined 0.6% for the first six months of fiscal
2002, compared to the comparable period in fiscal 2001. The decrease in vision
gross margin percent was due to more competitive pricing on contact lenses and
an increase in product sold to Pearle franchisees. Sales to franchisees, which
carry a lower margin rate, offer other benefits, including helping franchise
comparable store sales and producing a more uniform merchandise assortment and
consistent brand look across all stores.

         Operating expenses as a percent of sales declined at Cole Vision by
0.6% for the first six months of fiscal 2002, compared to the comparable period
of fiscal 2001. The reduction in operating expense percent was due primarily to
a reduction in the processing cost per claim at Cole Managed Vision and to lower
operating costs at Pearle Vision, primarily due to advertising costs which were
lower in the first six months of fiscal 2002 compared to the comparable period
in fiscal 2001.

         Operating income at Cole Vision improved to $16.2 million for the first
six months of fiscal 2002, compared to $13.0 million for the comparable period
of fiscal 2001. Improved operating earnings at Pearle Vision resulting from
higher revenues and lower advertising and nonstore expenses, the lower cost of
claims processing at Cole Managed Vision and the cessation of goodwill and
tradename amortization were the primary reasons for the increase. Goodwill and
tradename amortization at Cole Vision totaled $2.0 million during the first six
months of fiscal 2001. These improvements were offset by higher costs of payroll
and advertising at Target Optical to support the increase in revenues.

THINGS REMEMBERED SEGMENT

         Things Remembered sales were $126.8 million for the first six months of
fiscal 2002, slightly lower than the comparable period of fiscal 2001.
Same-store sales declined 2.2% as fewer transactions offset the increase in
average selling price resulting from sales of new merchandise at higher average
unit prices, higher revenue from merchandise personalization, and less
merchandise sold at clearance prices.

         Gross margin percent increased 1.2% at Things Remembered for the first
six months of fiscal 2002 compared to the comparable period of fiscal 2001. The
increase in margin rate was primarily attributable to a change in sales mix to
higher end product.

         At Things Remembered, operating expenses grew 4.6% on a slight decline
in sales. Store rent and occupancy charges increased for the first six months
due to increases in insurance, taxes and other common area charges. In addition,
marketing expenses increased by $0.9 million due primarily to increased direct
mail marketing efforts to increase sales in a difficult retail environment.

         Operating income decreased to $8.0 million for the first six months of
fiscal 2002, compared to $9.7 million in the comparable period of fiscal 2001.
Costs of rent, occupancy and advertising increased despite a slight decrease in
sales, resulting in the lower operating income.

RECONCILIATION OF SAME-STORE GROWTH

         Same-store sales growth is a non-GAAP financial measure, which includes
deferred warranty sales on a cash basis and does not reflect provisions for
returns and remakes and certain other items. The Company's current systems do
not gather data on these items on an individual store basis. Adjustments to the
cash basis sales information accumulated at the store level are made for these
items on an aggregate basis.

                                       22
<PAGE>


As a retailer, the Company believes that a measure of same-store performance is
important for understanding its operations. The Company calculates same-store
sales for stores opened for at least twelve months. A reconciliation of
same-store sales to revenue reported on a GAAP basis follows:

<TABLE>
<CAPTION>
                                                  Thirteen                Twenty-Six
                                                 Week Period              Week Period
                                                 ------------            -------------
                                                            (In thousands)

<S>                                                  <C>                   <C>
Current year same-store sales                        $ 249,172             $ 498,966
Prior year same-store sales                            244,136               484,477
Percent Change                                            2.1%                  3.0%

Current year same-store sales                          249,172               498,966

Adjustment for:
   Sales at new and closed stores                        8,365                16,928
   Extended warranties                                      (9)               (2,150)
   Order vs. customer receipt                            2,605                  (362)
   Returns, remakes and refunds                            862                  (305)
   Other                                                   (48)                   (9)
                                                 --------------        --------------
        Store sales                                    260,947               513,068

Nonstore revenues                                       38,453                79,693

Intercompany eliminations                               (7,010)              (14,930)
                                                 --------------        --------------

GAAP Basis Net Revenue                               $ 292,390             $ 577,831
                                                 ==============        ==============
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary source of liquidity is funds provided from the
operations of its operating subsidiaries. In addition, as of August 3, 2002, the
Company and its operating subsidiaries had a working capital commitment of $75.0
million. Availability under this credit facility totaled $60.3 million, after
reduction for commitments under outstanding letters of credit. There were no
working capital borrowings outstanding at any time during the first six months
of fiscal 2002 or fiscal 2001. Cole National Group and its principal operating
subsidiaries are in compliance with all credit facility covenants as of August
3, 2002.

         The credit facility, which is guaranteed by Cole National Corporation
and Cole National Group, requires Cole National Group and its principal
operating subsidiaries to comply with various operating covenants that restrict
corporate activities, including covenants restricting the ability of the
subsidiaries to incur additional indebtedness, pay dividends, prepay
subordinated indebtedness, dispose of certain investments or make acquisitions.
The credit facility also requires Cole National Group to comply with certain
financial covenants, including covenants regarding minimum interest coverage
and maximum leverage.

         On May 22, 2002, the Company issued $150.0 million of 8-7/8% senior
subordinated notes due 2012. The notes are unsecured and mature on May 15, 2012.
Net proceeds from the notes offering, together with cash on hand, were used to
retire $150.0 million of 9-7/8% senior subordinated notes due 2006 and pay
premium and other costs associated with retiring those notes. An extraordinary
loss on early extinguishment of debt of $7.2 million, net of an income tax
benefit of $3.9 million, representing the payment of premiums and other costs of
retiring the notes and write-offs of unamortized discount and deferred financing
fees, was recorded in the second quarter of fiscal 2002.

         The indentures pursuant to which the 8-5/8% notes and the 8-7/8% notes
were issued contain certain optional and mandatory redemption features and other
financial covenants, including restrictions on the ability of Cole National
Group to pay dividends or make other restricted payments to Cole National
Corporation. The indentures permit dividend payments to Cole National
Corporation for certain tax obligations and for administrative expenses not
to exceed 0.25% of net sales. See Note 3 of the Notes to


                                       23
<PAGE>

Consolidated Financial Statements. The Company may from time to time purchase
its outstanding notes in the open market or refinance them depending on capital
market conditions.

         No significant principal payment obligations are due under Cole
National's outstanding indebtedness until 2007, when the $125.0 million Senior
Subordinated debt is due. The ability of Cole National Corporation and its
subsidiaries to satisfy their obligations will be primarily dependent upon the
future financial and operating performance of the subsidiaries and upon Cole
National Corporation's ability to renew or refinance borrowings or raise
additional capital through equity financing or sales of assets.

         Operations for the first six months provided $23.5 million of cash in
fiscal 2002 compared with $27.0 million in fiscal 2001. The primary reason for
the $3.5 million decrease in cash provided by operations was a change in working
capital. Changes in working capital resulted in a source of funds of $5.5
million in fiscal 2002, compared to a source of funds of $8.6 million in fiscal
2001. Changes in receivables and other assets resulted in a use of funds of $2.1
million compared to a source of funds of $5.8 million in fiscal 2001. The
increase in receivables was primarily due to increases in sales and
corresponding receivables at Cole Vision. Changes in accounts payable and other
liabilities resulted in a source of cash of $7.2 million in fiscal 2002 compared
to a source of cash of $4.5 million in fiscal 2001. The improvement was due to
the timing of purchases and payments.

         Net cash from investing activities resulted in a use of funds of $16.7
million for the first six months of fiscal 2002 compared to a use of funds
totaling $19.7 million in the comparable period of fiscal 2001. Capital
expenditures, which accounted for most of the cash used for investing, were
$14.0 million and $19.2 million in fiscal 2002 and fiscal 2001, respectively.
The majority of capital expenditures were for store fixtures, equipment and
leasehold improvements for new stores and remodeling of existing stores.
Expenditures for systems development costs totaled $2.3 million and $4.6 million
for the first six months of fiscal 2002 and fiscal 2001, respectively. In fiscal
2001, net proceeds of $4.7 million were received from the sale of a Dallas
office facility.

         Net cash used for financing activities totaled $21.3 million for the
first six months of fiscal 2002, compared to $9.6 million for the comparable
period of fiscal 2001. In May 2002, Cole National Group, Inc., issued $150.0
million of 8-7/8% Senior Subordinated Notes due May 2012. The net proceeds of
this issuance and cash on hand were used to retire all of Cole National Group's
$150.0 million 9-7/8% Senior Subordinated Notes due 2006. Finance fees and early
repayment of the 9-7/8% notes resulted in a net cash usage of $14.2 million. See
Note 3 for further information regarding this transaction. Advances to
affiliates totaled $1.2 million in fiscal 2002, compared to $6.0 million in
fiscal 2001.

         The Company believes that funds provided from operations, including
cash on hand, along with funds available under the credit facility will provide
adequate sources of liquidity to allow its operating subsidiaries to continue to
expand the number of stores and to fund capital expenditures and system
development costs.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL COMMITMENTS

         The Company leases a substantial portion of its equipment and
facilities including laboratories, office and warehouse space, and retail
locations. In addition, Cole Vision operates departments in various host stores
and pays occupancy costs solely as a percentage of sales. A more complete
discussion of the Company's lease and license commitments is included in Note 6
of the Notes to Consolidated Financial Statements.

         The Company guarantees future minimum lease payments for certain store
locations leased directly by Pearle franchisees. The term of these guarantees
range from one to ten years of which many are limited to periods that are less
than the full term of the leases involved. A more complete discussion of the
Company's guarantees is included in Note 6 of the Notes to Consolidated
Financial Statements.


                                       24
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

         The Company adopted SFAS 142, "Goodwill and Other Intangible Assets"
(SFAS 142) in the first quarter of fiscal 2002. This statement requires that
goodwill and certain intangible assets deemed to have indefinite useful lives no
longer be amortized, but instead be subject to at least an annual review for
impairment. With the adoption of this statement, the Company ceased amortization
of goodwill and tradenames as of February 3, 2002. Amortization of goodwill and
tradenames totaled $5.0 million in fiscal 2001.

         During the second quarter of fiscal 2002, the Company completed the
transitional impairment testing of goodwill as required by SFAS 142. Based on
the findings of its outside valuation advisor, the Company has concluded that
there was no impairment of its goodwill or tradenames at the adoption date of
the new accounting standard, effective February 3, 2002. The Company has elected
to perform its annual tests for potential impairment as of the first day of the
Company's fourth quarter. Based on its annual tests performed in the fourth
quarter of fiscal 2002, the Company has concluded that there was no impairment
of its goodwill or tradenames. As part of the restatement, the Company and its
outside valuation advisor reviewed the previously completed impairment testing
and confirmed that there was no impairment of either goodwill or tradenames.

         The Financial Accounting Standards Board (FASB) has issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of SFAS
Statement No. 13, and Technical Corrections" (SFAS 145). SFAS 145 states that
the rescission of SFAS No. 4 shall be applied in fiscal years beginning after
May 15, 2002. Any gain or loss on extinguishment of debt that was classified, as
an extraordinary item in prior periods presented that does not meet the criteria
in APB Opinion 30, "Reporting the Results of Operations - Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," for classification as an
extraordinary item shall be reclassified as an operating expense. The Company
will adopt SFAS 145 as of the beginning of fiscal 2003. As a result, the loss on
early extinguishment of debt reported as an extraordinary item for the year
ended February 1, 2003 will be reclassified at that time. The pretax loss from
the early extinguishment of debt will be presented as a separate line within
interest and other (income) expenses and the related income tax benefit will
reduce the reported income tax provision. Other portions of the statement are
not applicable to the Company.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS 146). This statement requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. The provisions of this statement were
effective for exit or disposal activities that are initiated after December 31,
2002. The Company will adopt SFAS 146 on January 1, 2003. The adoption will have
no effect on the Company's financial position or operations.

         The FASB has also issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143), and SFAS No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 143 provides guidance for legal
obligations arising from the retirement of long-lived assets. SFAS 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. SFAS 144 was adopted during fiscal 2002 and had no effect on the
Company's financial position or operations. SFAS 143 will be adopted during
fiscal 2003 and is not expected to have a material effect on the Company's
financial position or operations.

CONTINGENCIES

         A complaint was filed in the Superior Court of California, county of
San Diego against Cole National Corporation, its affiliates and certain of its
officers by the Attorney General of the State of California on February 14, 2002
and amended on February 22, 2002. The case, State of California v. Cole National
Corporation, et. al., alleges claims for various statutory violations related to
the operation of 24 Pearle Vision Centers in California. The claims include
untrue or misleading advertising, illegal dilation fees, unlawful advertising of
eye exams, maintaining an optometrist on or near the premises of a registered
dispensing optician, unlawful advertising of an optometrist, unlicensed practice
of optometry, and illegal relationships between dispensing opticians, optical
retailers and optometrists. The action seeks unspecified damages, restitution
and injunctive relief. Although the State of California obtained a preliminary
injunction to enjoin certain advertising practices and the charging of dilation
fees in July 2002, the terms of the injunction have not had and are not expected
to have a material effect on the Company operations. In addition, both the State
and the Company have appealed the preliminary injunction. Although we believe we
are in compliance with California law and intend to continue to defend the
issues raised in the case vigorously, the case is in its early stages and we
cannot predict with certainty its outcome or costs.

FORWARD LOOKING STATEMENTS

         The Company's expectations and beliefs concerning the future contained
in this document are forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those forecasted due to a variety of factors that can adversely
affect the Company's operating results, liquidity and financial condition such
as risks associated with potential adverse consequences of the restatement of
the Company's financial statements, including those resulting from litigation or
government investigations, restrictions or curtailment of the Company's credit
facility and other credit situations, the timing and achievement of improvements
in the operations of the optical business, the results of Things Remembered,
which is highly dependent on the fourth quarter holiday season, the nature and
extent of disruptions of the economy from terrorist activities or major health
concerns and from governmental and consumer responses to such situations, the
actual utilization of Cole Managed Vision funded eyewear programs, the success
of new store openings and the rate at


                                       25
<PAGE>

which new stores achieve profitability, the Company's ability to select, stock
and price merchandise attractive to customers, success of systems development
and integration, costs and other effects associated with litigation, competition
in the optical industry, integration of acquired businesses, economic and
weather factors affecting consumer spending, operating factors affecting
customer satisfaction, including manufacturing quality of optical and engraved
goods, the Company's relationships with host stores and franchisees, the mix of
goods sold, pricing and other competitive factors, and the seasonality of the
Company's business.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

(a)      Immediately following the Signature section of this Quarterly Report
are certifications of the Company's Chief Executive Officer and Chief Financial
 Officer required in accordance with Section 302 of the Sarbanes-Oxley Act of
2002 (the "Section 302 Certification"). This portion of our Quarterly Report on
Form 10-Q is our disclosure of the results of our control evaluation referred
to in paragraphs (4), (5) and (6) of the Section 302 Certification and
should be read in conjunction with the Section 302 Certification for a more
complete understanding of the topics presented.

         In November 2002, the Company determined it needed to restate its
previously issued financial statements for the timing of the recognition of
revenues earned on the sale of extended warranty contracts. The Company issued a
press release on November 26, 2002 announcing the restatement of its historical
consolidated financial statements beginning with its 1998 fiscal year. The
Company subsequently determined that it needed to make changes to previously
issued financial statements in addition to the timing of the recognition of
warranty revenues. The adjustments have a significant negative impact on the
Company's previously reported revenue, net income, and earnings per share. See
Note 8 to the Notes to Consolidated Financial Statements for further discussion
of the restatement.

         In March 2003, the Audit Committee engaged outside counsel to conduct
an inquiry into the issues surrounding the restatement. The results and
conclusions of that inquiry have been considered in the preparation of the
accompanying financial statements.

         Within 90 days prior to the filing date of this Form 10-Q, the Company
carried out an evaluation, under the supervision and with the participation of
its Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a-15
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), as
amended, of the effectiveness of the design and operation of its disclosure
controls and procedures. In making this evaluation, the Company has considered
matters relating to its restatement of previously issued financial statements,
including the substantial process that was undertaken to ensure that all
material adjustments necessary to restate the previously issued financial
statements were recorded. The Company believes that certain of the restatement
adjustments occurred because certain of the Company's control processes and
procedures related to the matters underlying such adjustments were not
effective.

         In connection with the audit of the Company's financial statements for
the 2002 fiscal year and the restated financial statements for the 2001 and 2000
fiscal years, Deloitte & Touche reported to management and the Board of
Directors on April 30, 2003 that certain deficiencies existed during the audit
period in the design or operation of the Company's internal accounting controls
which constituted material weaknesses pursuant to standards established by the
American Institute of Certified Public Accountants. Such deficiencies related to
the application or selection of accounting principles, the use of management
judgment and estimates, and the adequacy of account details and reconciliations.

         In order to improve the effectiveness of its control processes and
procedures, the Company has taken a number of actions within the past year. The
Company searched for and hired a new Chief Financial Officer from outside the
Company, and filled the position of Corporate Controller. The Audit Committee
approved a charter for the Internal Audit function; the Internal Audit staff was
strengthened and its role was expanded.

                                       26
<PAGE>


The Company established an internal representation requirement, whereby the
operating executive and financial officer of each business unit and major staff
area are required to certify on a quarterly basis the accuracy of the financial
statements and the adequacy of the control processes and procedures within that
business unit or staff area. With the approval of the Board of Directors, the
Company amended its Business Code of Conduct, and required that all management
employees certify in writing that they will comply with it. The Business Code of
Conduct includes procedures for the receipt, retention and treatment of
complaints received from employees regarding, among other things, accounting and
internal accounting control matters. The Company is currently revising its
Finance and Accounting Policies and Procedures Manual.

         Based in part upon these changes, the Company's Chief Executive Officer
and Chief Financial Officer concluded that as of the evaluation date, the
Company's disclosure controls and procedures were reasonably designed to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission.

(b)      Other than as described above, since the evaluation date by the
Company's management of its internal controls, there have not been any
significant changes in the internal controls or in other factors that could
significantly affect the internal controls.

                                       27
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

        A complaint was filed in the Superior Court of California, County of
San Diego against Cole National Corporation, its affiliates and certain of its
officers by the Attorney General of the State of California on February 14,
2002 and amended on February 22, 2002. The case, State of California v. Cole
National Corporation, et al., Case No. G1C783135, alleges claims for various
statutory violations related to the operation of 24 Pearle Vision Centers in
California. The claims include alleged untrue or misleading advertising,
illegal dilation fees, unlawful advertising of eye exams, maintaining an
optometrist on or near the premises by a registered dispensing optician,
unlawful advertising of an optometrist, unlicensed practice of optometry, and
illegal relationships among dispensing opticians, optical retailers and
optometrists. The action seeks unspecified damages, restitution and injunctive
relief.

        The case is in its early stages and we cannot predict with certainty
its outcome or costs. In May 2002, all of the individual officer defendants
were dismissed and their dismissal has been appealed by the State. The State of
California moved for a preliminary injunction to enjoin certain advertising
practices and from charging dilation fees. Though the State obtained a
preliminary injunction in July 2002, the terms of the injunction are not
expected to have any material effect on the Company's operations. In addition,
both the State and the Company have appealed the preliminary injunction. We
believe we are in compliance with California law and intend to continue to
defend the issues raised in the case vigorously.

        On August 14, 2002, two former store managers employed in the San
Francisco area by our subsidiary, Things Remembered, Inc., filed a class action
complaint in San Francisco Superior Court. The complaint alleges that the
plaintiffs and the other members of the putative class (alleged to include 250
members) were improperly denied overtime compensation for more than eight hours
of work per day and/or more than 40 hours of work per week in violation of
California law. The action seeks unspecified damages, interest, restitution, as
well as, declaratory and injunctive relief and attorneys' fees.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. The following Exhibits are filed herewith and made a part thereof:

      10.1* First Amendment to Credit Agreement, dated August 23, 2002, among
            Cole Vision Corporation, Things Remembered, Inc., and Pearle, Inc.
            and Canadian Imperial Bank of Commerce.

      10.2* Second Amendment to Credit Agreement, dated September 13, 2002,
            among Cole Vision Corporation, Things Remembered, Inc., and Pearle,
            Inc. and Canadian Imperial Bank of Commerce.

      10.3* Amendment No. 1 to the Cole National Group, Inc. Retirement Plan
            (Amended and Restated as of January 1, 2001), effective March 31,
            2002.

      99.1  Certification of Chief Executive Officer and Chief Financial Officer
            Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002.


                                       28
<PAGE>

(b) Reports on Form 8-K.

                  The Company filed a report on Form 8-K (Item 4 and 7) on June
         18, 2002, disclosing the Company was replacing Arthur Andersen LLP as
         its independent public accountants and appointing Deloitte & Touche LLP
         to serve as its independent public accountants for the fiscal year
         2002.

                  The Company filed a report on Form 8-K (Item 5) on August 8,
         2002, which attached a press release announcing that it had extended
         its offering to exchange up to $150.0 million aggregate principal
         amount of its existing 8-7/8% senior subordinated notes due 2012.

* Filed with the original Form 10-Q filed on September 17, 2002.

                                       29
<PAGE>

                                   SIGNATURES


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

                           COLE NATIONAL GROUP, INC.


                           By: /s/ Lawrence E. Hyatt
                               -------------------------------------------
                               Lawrence E. Hyatt
                               Executive Vice President and Chief
                               Financial Officer (Duly Authorized Officer)


                           By: /s/ Ann M. Holt
                               -------------------------------------------
                               Ann M. Holt
                               Senior Vice President and Corporate Controller
                               (Principal Accounting Officer)

Date: May 16, 2003

                                       30
<PAGE>


                                  CERTIFICATION



I, Jeffrey A. Cole, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Cole National Group,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:

    a)  Designed such disclosure controls and procedures to ensure that material
        information relating to the registrant, including its consolidated
        subsidiaries, is made known to us by others within those entities,
        particularly during the period in which this quarterly report is being
        prepared;

    b)  Evaluated the effectiveness of the registrant's disclosure controls and
        procedures as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  Presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

    a)  All significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weaknesses in internal
        controls; and

    b)  Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: May 16, 2003

                                 /s/ Jeffrey A. Cole
                                 -------------------------------------------
                                 Jeffrey A. Cole
                                 Chairman and CEO


                                       31
<PAGE>

                                  CERTIFICATION


I, Lawrence E. Hyatt, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Cole National Group,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:

    a)  Designed such disclosure controls and procedures to ensure that material
        information relating to the registrant, including its consolidated
        subsidiaries, is made known to us by others within those entities,
        particularly during the period in which this quarterly report is being
        prepared;

    b)  Evaluated the effectiveness of the registrant's disclosure controls and
        procedures as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  Presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

    a)  All significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weaknesses in internal
        controls; and

    b)  Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: May 16, 2003

                               /s/ Lawrence E. Hyatt
                               -------------------------------------------
                               Lawrence E. Hyatt
                               Executive Vice President and
                               Chief Financial Officer



                                       32
<PAGE>

                            COLE NATIONAL GROUP, INC.
                                   FORM 10-Q/A
                          QUARTER ENDED AUGUST 3, 2002

                                  EXHIBIT INDEX


Exhibit
Number                        Description
------                        -----------

10.1* First Amendment to Credit Agreement, dated August 23, 2002, among Cole
      Vision Corporation, Things Remembered, Inc., and Pearle, Inc. and Canadian
      Imperial Bank of Commerce.

10.2* Second Amendment to Credit Agreement, dated September 13, 2002, among Cole
      Vision Corporation, Things Remembered, Inc., and Pearle, Inc. and Canadian
      Imperial Bank of Commerce.

10.3* Amendment No. 1 to the Cole National Group, Inc. Retirement Plan (Amended
      and Restated as of January 1, 2001), effective March 31, 2002.

99.1+ Certification of Chief Executive Officer and Chief Financial Officer
      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002.


* Filed with the original Form 10-Q filed on September 17, 2002.
+ Filed herewith.


                                       33