<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                 AMENDMENT NO. 1
                                       TO
                                    FORM 10-K

    (Mark One)

         X        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        ---       SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2001

                                       OR

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

                          COMMISSION FILE NO. 0-23397

                               U. S. VISION, INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                                        22-3032948
(State or other jurisdiction of             (I.R.S. employer identification no.)
 incorporation or organization)

                                 1 HARMON DRIVE
                            GLEN OAKS INDUSTRIAL PARK
                           GLENDORA, NEW JERSEY 08029
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (856) 228-1000
        Securities registered pursuant to Section 12(b) of the Act: NONE
           Securities Registered Pursuant to Section 12(g) of the Act:

<TABLE>
<S>                                                     <C>
COMMON STOCK, PAR VALUE $.01 PER SHARE                                       7,802,942
          (Title of class)                              (Number of Shares Outstanding as of April 20, 2001)
</TABLE>

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES  X    NO
    ---      ---

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

   The aggregate market value of voting stock held by nonaffiliates of the
registrant is approximately $3,846,745. This amount was calculated by reducing
the total number of shares of the registrant's common stock outstanding by the
total number of shares of common stock held by officers, directors, and
stockholders owning in excess of 10% of the registrant's common stock, and
multiplying the remainder by the average of the bid and asked price for the
registrant's common stock on April 20, 2001, as reported on the National
Association of Securities Dealers, Inc. Automated Quotation System. The
information provided shall in no way be construed as an admission that any
officer, director, or more than 10% stockholder of the registrant may be deemed
an affiliate of the registrant or that such person is the beneficial owner of
the shares reported as being held by such person, and any such inference is
hereby disclaimed.



<PAGE>   2




                                     PART I

ITEM 1.  BUSINESS.

OVERVIEW

         U.S. Vision, Inc. ("we," "us," "our," or the "company") is a retailer
of optical products and services through retail optical departments licensed to
operate within national and regional department stores and through a limited
number of freestanding retail locations. As of January 31, 2001, we operated 629
locations in 47 states and Canada, consisting of 596 licensed departments and 33
freestanding stores. We currently operate 420 retail optical departments in J.C.
Penney's and are their primary optical licensee. In addition, we operate 66
Sears retail optical departments and 110 retail optical departments in regional
department stores. Our freestanding stores are located in malls and shopping
centers.

         Our retail optical departments are full-service retail vision care
stores that offer an extensive selection of designer brands and private label
prescription eyewear, contact lenses, sunglasses, ready made readers and
accessories. Also, an on-premises, independent doctor of optometry performs
complete eye examinations and prescribes eyeglasses and contact lenses. Our
extensive selection of designer and private label branded eyewear allows us to
tailor our merchandise selection to meet the needs of our host store customers.
See "Business -- Products and Services -- Merchandise Selection" and "Store
Operations."

         We operate a single, modern optical laboratory, distribution and lens
grinding facility at which we fill customer orders for prescription eyewear and
maintain a central inventory of frames. Customer orders are placed at the retail
stores and are transmitted into the central optical laboratory daily, where the
lenses are ground, cut, finished and custom fitted to optical frames in the size
and style selected by the customer. The finished eyewear is then shipped to the
retail store for delivery to the customer within a few working days and can be
completed overnight if requested by the customer. See "Business -- Optical
Laboratory."

         Since 1991, we have been a national provider of managed vision care
benefits through our participation in programs which offer comprehensive eyewear
benefits to plan participants. In fiscal 2000, approximately 33% of our revenues
were attributable to purchases by participants in managed vision care programs.
See "Business -- Managed Vision Care."

         Our corporate headquarters are located at 1 Harmon Drive, Glen Oaks
Industrial Park, Glendora, New Jersey 08029 and our telephone number is (856)
228-1000.

PRODUCTS AND SERVICES

         Merchandise Selection. We carry a full selection of men's, women's and
children's eyeglass frames, a complete line of contact lenses, sunglasses, ready
made readers, and ancillary products for eyeglasses and contact lenses.
Prescription eyewear and accessories accounted for 89% of our sales during
fiscal 2000. We offer an extensive selection of designer and private label
branded eyewear. Designer eyeglass frames offered include Guess, Halston and
Eddie Bauer, among others and, at certain stores, Giorgio Armani, Calvin Klein
and Polo by Ralph Lauren. We also offer private label branded eyeglass frames
such as Kenneth Cole, Arizona, Ashley Stewart, Oliver Winston, City Slickers and
Rascals, among others. U.S. Vision also offers a wide variety of value-added
eyewear features and





                                       2
<PAGE>   3

services on which we realize a higher gross margin. These eyewear features and
services include lightweight, virtually unbreakable polycarbonate lenses,
including progressive lenses and photochromic lenses, as well as scratch
resistant and anti-reflective coatings. In addition, we carry a complete line of
contact lenses by major contact lens manufacturers such as Bausch & Lomb, Wesley
Jessen, and Johnson & Johnson, including daily wear and extended wear soft
contact lenses and cosmetic tinted lenses. During fiscal 2000, contact lenses
accounted for approximately 11% of the company's sales.

         Pricing. U.S. Vision maintains a promotional pricing strategy which
stresses a quality product delivered at a competitive price. Our frames and
lenses are generally competitively priced, with prices varying based on market
locations. While we earn a higher gross margin on our private-label lines,
designer frames generally command premium prices, resulting in higher gross
profit dollars per transaction.

         Full Customer Service. We strive to provide our customers with
exceptional care and value by combining the personal service typically
associated with a private optometrist with the broad product selection and
competitive prices of a large optical retailer. Management believes that
providing superior customer service from knowledgeable and courteous employees
complements the customer-oriented policies of our department store hosts.

MANAGED VISION CARE

         Since 1991, we have been a participating provider of managed vision
care benefits primarily through Vision One, a national vision care program which
offers comprehensive eyewear benefits to over 90 million covered lives through a
network of over 2,000 optical locations. Managed care programs are marketed
directly to employers, employee benefit plan sponsors and insurance companies
such as General Motors, Metropolitan Life, Aetna, Cigna, AARP, Prudential and
Blue Cross/Blue Shield. Managed care programs give employers the opportunity to
offer their employees a group discount at retail optical locations of
participating providers with minimal direct cost to the employer. The discounts
vary under the plans from fixed percentage discounts to fixed dollar amounts
with the balance paid by the subscriber. As a result of these benefits,
management believes that many managed care participants have vision examinations
on a regular basis and may become more frequent customers of the company. In
addition, managed care participants frequently apply their discounts and
allowances toward the purchase of premium eyeglass products and related
accessories. Under the terms of our contract with Cole National, a competitor of
the company and the owner of the Vision One program, we pay an administrative
fee for each Vision One member transaction. Our contract with Cole National
expires in 2002. We retain the right, though we have not exercised it in the
past, to refuse to participate in particular Vision One programs under which we
cannot profitably provide goods and services, and to participate in other
managed care vision plans under certain conditions. Approximately 33% of our
revenues are generated from our participation in various managed vision care
programs.

STORE OPERATIONS

         Location and Layout. We operate most of our stores on the premises of
national and regional department stores in the United States and Canada. These
stores generally operate under names such as "J.C. Penney Optical Center" and
"Sears Optical," which associate the departments with the host store. Our retail
optical departments generally operate under a lease or license arrangement
through which the host store collects the sales receipts, retains rent computed
as an agreed upon percentage of sales and remits the remainder to us on a
regular basis. Our leased retail optical departments typically average in size
from 500 to 800 square feet. Our retail optical departments are often located
within the host





                                       3
<PAGE>   4

department store near the host store's other licensed departments such as the
beauty salon and photography studio. Management believes that the location of
our retail optical departments within a host store influences our ability to
take full advantage of the host store's customer traffic.

         Each of our stores follows a standard merchandise layout plan which is
designed to emphasize fashion, invite customer browsing and enhance the
customer's shopping experience. All of our stores are similar in appearance and
are operated under certain uniform standards and procedures. We have developed a
new store prototype design and all of our new and remodeled retail optical
departments are designed in accordance with this prototype.

         Our freestanding stores operate under various trade names such as Royal
Optical, Service Optical and Wall & Ochs and are located in malls and shopping
centers. Our freestanding stores generally range in size from 900 to 1,400
square feet.

         Store Management. Our store management structure consists of field
managers and store managers. The store managers, along with two to three
associates known as Optechs, are responsible for the day-to-day operations of
each of our retail optical departments. Optechs undertake a comprehensive
training program that familiarizes them with the company's product lines,
customer services, store procedures and automated systems. Our field managers
are each assigned responsibility for the sales, customer relations and daily
operation for a number of stores in their geographic area. Management believes
that providing knowledgeable and responsive customer service is an important
element of our success and, accordingly, has developed and implemented a variety
of employee training and incentive programs.

         On-Site Independent Optometrist. We have made arrangements with
licensed optometrists to provide eye examination services at or adjacent to our
retail locations in those states where it is permitted. See "Government
Regulations." The independent optometrists sublease space and equipment from us
or from the host store. We and the optometrists do not share in each other's
revenues. We believe the presence of the optometrists at the stores helps to
generate eyeglass sales, leads to repeat customers and reinforces the quality
and professionalism of each store.

RELATIONSHIP WITH HOST STORES

         Most of our stores operate as licensed optical departments within a
host department store such as J.C. Penney, Sears, Hudson's Bay, May
(Strawbridge's, Famous Barr and L.S. Ayres), Marshall Field's, Dayton's,
Hudson's and Carson Pirie Scott, among others. Management believes that our
relationships with our host stores provide several competitive advantages such
as:

         o        lower operating expenses;

         o        lower initial capital investment;

         o        loyal host store customer base;

         o        established host store advertising and marketing programs;

         o        one-stop shopping convenience; and

         o        access to the host store's private label credit card.




                                       4
<PAGE>   5

Management believes its hosts' reputation of quality, trust and value further
enhances our customer relations.

         Management believes the company has developed excellent relationships
with the host stores in which it operates. We routinely consult with the host
stores about the size and placement of our optical departments within newly
opened or remodeled host stores. Although management strives to continue to
enhance these relationships, the loss of one of our major host stores, such as
J.C. Penney or Sears, could cause a significant decrease in our sales and have a
materially adverse effect on our results of operations.

         Our retail optical departments within J.C. Penney stores are subject to
a master lease that expires in December 2003. On January 31, 2001, we had 420
locations within J.C. Penney. Our master lease with J.C. Penney provides that
only a limited number of our J.C. Penney optical centers may be closed by J.C.
Penney in any calendar year without cause. This limitation, however, does not
apply if J.C. Penney closes an entire J.C. Penney department store, either
temporarily or permanently. The lease also provides that J.C. Penney will
reimburse us for certain costs relating to the closed department. Our optical
departments within Sears stores are each subject to a lease which provides for a
year-to-year term, subject to early termination by either party, without cause,
on thirty-days prior written notice. Our retail optical departments located
within other department stores are subject to lease arrangements which contain
short notice lease termination provisions. These leases provide for monthly
lease payments based upon a percentage of our sales at each location.

         In January 1999, as part of our objective to diversify our host store
base, we signed a lease agreement with Hudson's Bay Company, the operator of
over 450 retail locations in Canada. In March 1999, we opened 15 retail optical
departments within The Bay, a traditional department store division of Hudson's
Bay. At January 31, 2001, we were operating in 46 Hudson's Bay vision centers
under the names The Bay and Zellers.

MARKETING AND ADVERTISING

         We engage in a variety of marketing and promotional efforts to maintain
and strengthen our customer base. Our advertising program is targeted at the
department store consumer and is designed to convey a message of value, fashion,
convenience and trust to our customer base. We work with each of our host stores
to design advertising programs that convey this message in a manner consistent
with that of the host store, targeted at their specific customer base. For
example, we work with J.C. Penney to develop targeted catalog inserts which
advertise our J.C. Penney optical departments. These advertising promotions
generally mention the availability of on-site professional eye examinations and
our acceptance, as a participating provider of managed vision care benefits, of
the discounts and allowances offered by managed vision care plans. These
targeted inserts are mailed to selected customers based on previous spending
patterns at the host store. We augment these programs by providing local
advertising in individual geographic markets. We have an in-house advertising
department which permits us to respond quickly to fashion trends, competitor
advertising and promotional initiatives.







                                       5
<PAGE>   6


OPTICAL LABORATORY

         We operate a 60,000 square foot modern optical laboratory and lens
grinding facility adjacent to our headquarters in Glendora, New Jersey. Customer
orders for prescription eyewear, sunglasses and contact lenses are transmitted
daily from each of our store locations to our central laboratory. Customer
orders generally are processed and shipped to stores within a few working days
and can be completed overnight if requested by the customer. Most prescription
lenses are completed from semi-finished polycarbonate or plastic lenses obtained
from third-party suppliers. These lenses are finished in a highly technical
process that grinds the surface of the lens to fit the prescription utilizing
modern grinding equipment, much of it computer-guided. The lenses are then
custom fitted to optical frames in the size and style selected by the customer.
Other prescriptions, including many standard prescriptions, can be manufactured
by cutting and edging a prefinished lens, also purchased from a third-party
supplier, to fit the frames selected. Contact lenses, accessories and
non-prescription sunglass orders are filled from available stock and shipped to
our retail optical departments.

         Our laboratory is furnished with machinery capable of custom grinding,
polishing, cutting, edging, tinting and coating prescription lenses. Management
believes it has the manufacturing capacity in our laboratory to accommodate all
of our projected growth for the foreseeable future.

PURCHASING

         Our relationship with our vendors has enabled us to gain access to a
wide array of brand name product offerings. As a leading retailer of eyewear in
the United States, we purchase significant quantities of frames, lenses and
contact lenses from our suppliers. In fiscal 2000, Bausch & Lomb, Signet
Armorlite and Vistakon, our largest suppliers, accounted for approximately 8%,
14% and 9%, respectively, of our total merchandise purchases. All raw materials
for products we manufacture are available from numerous suppliers.

         Historically, we manufactured, imported and distributed optical frames
and sunglasses principally for sale in our retail optical stores and, to a
lesser extent, for sale to other optical distributors and retailers through our
Styl-Rite Optical subsidiary. During fiscal 1999, we decided it was more cost
effective to import optical frames and sunglasses rather than manufacture these
products. Accordingly in July 2000, management closed our manufacturing
operations at Styl-Rite and consolidated our importing and distribution
functions with our other centralized operations at our corporate headquarters in
Glendora, New Jersey. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation."

MANAGEMENT INFORMATION SYSTEMS

         Currently, customer prescription orders for our optical products are
prepared by the stores on order forms and the details of each order are
transmitted daily to our centralized laboratory. These orders are then entered
into the laboratory's computerized order entry system which, for lenses, also
makes the necessary optical calculations to grind and finish the lenses to the
correct prescription and shape them to the dimensions of the frame selected by
the customer. The present laboratory order entry system also tracks each order
through every step of the manufacturing process until the finished product is
shipped to the retail optical department.

         In fiscal 2000, we completed the design of an integrated management
information system, which includes an automated order entry system at each of
our optical stores, and new manufacturing and financial systems at our corporate
headquarters. This new integrated system is designed to facilitate the
transmission of the order to the laboratory and provide our stores with improved
order pricing and





                                       6
<PAGE>   7

costing capability. This new system is also designed to provide our stores with
the capability to capture sales and customer information, including prescription
data, enhancing our ability to monitor sales and merchandise trends and to
improve customer service after the sale. In addition, the automated order entry
system is designed to enable the stores to validate, at the time of sale,
whether a particular frame selected by the customer is in stock and whether the
combination of the customer's prescription, selected lenses and frame is within
manufacturing tolerances. The integrated information system is expected to
enhance our operating efficiencies by permitting all orders to be electronically
transmitted from the stores to the laboratory. In December 2000, we initiated a
beta test of the system in 8 stores. The beta test was successfully completed in
February 2001 and the rollout to the first fifty stores commenced in March 2001.

COMPETITION

         We compete with other national, regional, and local retail optical
chains and independent optical retailers. Most optical retailers generally serve
individual or local markets, and, as a result, competition is fragmented and
varies substantially among locations and geographic areas. Although the retail
optical industry is highly competitive, management believes none of our
competitors has more than an 8% market share based on revenue. The principal
competitive factors affecting our retail operations are merchandise selection,
quality and consistency of products and services, price, location within the
host store, convenience, availability of on-site professional eye examinations
and access to a host store's private label credit card. The retail optical
industry engages in price-related promotions as a standard marketing practice.
Several of our competitors have greater financial and other resources than us,
which may enable competitors to pursue more aggressive pricing and promotional
strategies at the expense of profits for longer periods of time than we can.

         Our ability to achieve our growth strategy by opening new retail
optical departments in existing and new host stores is dependent on our ability
to obtain suitable optical locations within existing and new host stores.
Management does not believe our growth strategy will be adversely affected by
the fact that some competitors operate more retail optical departments in host
stores than we do.

         Additionally, we face competition from advances in vision correction
technologies, including laser surgery and other surgical vision correction
procedures. This could result in decreased demand for eyeglasses and contact
lenses.

         To the extent our customers may not be covered by our eye care benefit
plans, we may compete with other vision care benefit plans and retailers who
provide alternative vision care plans. As the number of national and regional
managed vision care programs increase, competition for customers will intensify
among the various vision care programs.

EMPLOYEES

         As of January 31, 2001, we had approximately 2,350 full-time and
part-time employees, of which approximately 1,900 were employed in our retail
outlets, 350 were employed in manufacturing and distribution in our laboratory
in Glendora, New Jersey, and 100 were employed in administrative, marketing and
managerial positions at the company's headquarters in Glendora.




                                       7
<PAGE>   8

GOVERNMENT REGULATIONS

         We are subject to a variety of federal, state and local laws, rules and
regulations affecting the health care industry and the delivery of health care
services. State and local legal requirements vary widely among jurisdictions and
are subject to frequent change. Federal legal requirements are also subject to
change.

         Relationships between the company and independent optometrists and
ophthalmologists are subject to federal, state and local laws and regulations.
State laws generally prohibit the practice of medicine and optometry by
unlicensed practitioners. In addition, many states prohibit medical
practitioners and optometrists from splitting fees with business corporations
such as the company and prohibit the practice of medicine and optometry by
corporate entities. Some states have enacted laws governing the ability of
ophthalmologists and optometrists to enter into contracts to provide
professional services with business corporations or lay persons. Some states
prohibit the company from computing our fee for rent, equipment leases and
management services provided by us based on a percentage of the gross revenue of
the ophthalmologists and the optometrists. Such requirements are particularly
comprehensive in California and Texas, where we operate a significant number of
stores. Further, some states restrict the location of optometric offices in
relation to optical stores, such as ours, and regulate advertising and the
solicitation of prospective patients.

         Relationships between us and independent ophthalmologists and
optometrists are also subject to the fraud and abuse provisions of the federal
Social Security Act which include the "anti-kickback" laws. The anti-kickback
laws prohibit the offering, payment, solicitation or receipt of any direct or
indirect remuneration for the referral of Medicare or Medicaid patients or for
the ordering or providing of Medicare or Medicaid covered services, items or
equipment. Violations of these laws may result in substantial civil or criminal
penalties for individuals or entities and exclusion from participation in the
Medicare and Medicaid programs. Several states, including states in which we
operate, have adopted similar laws that cover patients with private health
insurance coverage as well as those covered by government programs. Although
management believes it is not in violation of the anti-kickback laws, the
applicability of these provisions has been subject to only limited judicial and
regulatory interpretation. In addition, certain of our products must comply with
standards set by the United States Food and Drug Administration.

         We, as well as the independent optometrists providing services in or
adjacent to our stores, from time to time receive inquiries from regulatory
bodies regarding our compliance with applicable state and local regulations. If
our relationships with ophthalmologists and optometrists are challenged, we may
be required to alter the manner in which we conduct our business. There can be
no assurance that a review of our business by courts or regulatory authorities
will not result in determinations that could adversely affect operations or that
new laws, regulations or interpretations of current laws and regulations will
not have a material adverse effect on our business, financial condition or
results of operations.

ITEM 2.  PROPERTIES

         We own a 20,000 square foot facility in Glendora, New Jersey, which
serves as our corporate headquarters, a neighboring 24,000 square foot
distribution facility, and a neighboring 60,000 square foot optical laboratory.
The real property on which these facilities are located, as well as the
buildings and certain equipment located therein, other than the distribution
facility, secure the company's obligations under the DRPA Term Loans. See Note 5
to Notes to Consolidated Financial Statements. The real property on which the
distribution facility is located secures the company's obligations under a
mortgage




                                       8
<PAGE>   9

loan agreement. Styl-Rite owns a 40,000 square foot facility in Miami, Florida,
which was formerly utilized to manufacture frames and an adjacent 20,000 square
foot building that is currently rented. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations--Liquidity and
Capital Resources."

         Our freestanding store locations are subject to lease arrangements
which contain varying terms and are not subject to short notice lease
termination provisions. The leases provide for monthly base lease payments plus,
under certain circumstances, include an additional rent provision based on a
percentage of the company's sales at each location.

ITEM 3. LEGAL PROCEEDINGS.

         We are subject to various pending and threatened litigation from time
to time in the ordinary course of our business. Although all litigation involves
some degree of uncertainty, in the opinion of management, liabilities, if any,
arising from such litigation or threat thereof are not expected to have a
material adverse effect on the company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.







                                       9
<PAGE>   10


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Our stock is traded on Nasdaq under the symbol "USVI."

         For the period indicated below, the following table sets forth the high
and low bid information of our stock as reported on Nasdaq, rounded to the
nearest eighth of a dollar.

<TABLE>
<CAPTION>
                              2000 CLOSING PRICES     1999 CLOSING PRICES
                              -------------------     -------------------
   CALENDAR PERIOD             LOW         HIGH        LOW         HIGH
-----------------------       ------      -------     ------      -------
<S>                           <C>         <C>         <C>         <C>
February 1 - April 30         $ 2.00      $ 3.25      $ 3.50      $ 6.68
May 1 - July 31                 1.50        3.13        4.93        5.63
August 1 - October 31           2.75        4.25        3.43        5.25
November 1 - January 31         1.94        4.25        2.38        3.75
</TABLE>

        As of April 20, 2001, there were approximately 55 record holders of our
stock. We have not declared or paid any cash dividends on our stock since our
organization. Under the terms of our revolving bank line of credit, our ability
to pay cash dividends to our shareholders is restricted.





                                       10
<PAGE>   11


ITEM 6. SELECTED FINANCIAL DATA.

         The selected consolidated financial information regarding the company's
financial position and operating results set forth below for the fiscal years
ended January 31, 2001, 2000, 1999, 1998 and 1997 have been derived from our
audited consolidated financial statements. The selected consolidated financial
data set forth below should be read in conjunction with our consolidated
financial statements and related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this report.



<TABLE>
<CAPTION>
                                                                               YEAR ENDED JANUARY 31,
                                                  ------------------------------------------------------------------------------
                                                     2001              2000             1999            1998             1997
                                                  -----------      -----------      -----------     -----------      -----------
                                                                  (In thousands except share and per share data)

<S>                                               <C>              <C>              <C>             <C>              <C>
STATEMENTS OF OPERATIONS DATA:
Net sales ...................................     $   147,617      $   143,419      $   131,491     $   122,763      $   111,544
Cost of sales ...............................          44,645           45,516           40,648          38,584           34,273
                                                  -----------      -----------      -----------     -----------      -----------
Gross profit ................................         102,972           97,903           90,843          84,179           77,271
Operating expenses:
  Selling, general and administrative .......          92,070           91,726           79,119          73,367           68,366
Depreciation and amortization ...............           4,708            4,670            3,879           3,390            3,271
Special non-recurring
  charges  (1) ..............................             752            2,835               --              --               --

Store closings and disposals (2) ............              --               --               --            (389)              --
                                                  -----------      -----------      -----------     -----------      -----------

        Total operating expenses ............          97,530           99,231           82,998          76,368           71,637
                                                  -----------      -----------      -----------     -----------      -----------
Operating income (loss) .....................           5,442           (1,328)           7,845           7,811            5,634
Interest expense, net .......................             456              469               21           2,486            3,499
                                                  -----------      -----------      -----------     -----------      -----------
Income (loss) before income tax .............           4,986           (1,797)           7,824           5,325            2,135
Income tax provision ........................             191               22              355              --               --
                                                  -----------      -----------      -----------     -----------      -----------
Net income (loss) ...........................     $     4,795      $    (1,819)     $     7,469     $     5,325      $     2,135
                                                  ===========      ===========      ===========     ===========      ===========
Net income (loss) per share -- basic (3)
                                                  $      0.61      $     (0.23)     $      0.96     $      0.90      $      0.41
                                                  ===========      ===========      ===========     ===========      ===========

Shares used in computing net
  income (loss) per share -- basic (3) ......       7,802,942        7,802,942        7,789,299       5,661,089        5,270,678
Net income (loss) per share --
  assuming dilution (4) .....................     $      0.61      $     (0.23)     $      0.94     $      0.89      $      0.40
                                                  ===========      ===========      ===========     ===========      ===========

Shares used in computing net
  income (loss) per share --
  assuming dilution (4) .....................       7,835,554        7,802,942        7,964,409       5,767,546        5,377,835
Net income per share --
  pro forma (5) .............................                                                       $      0.96
                                                                                                    ===========
Shares used in computing net
  income per share -- pro forma (5) .........                                                         7,877,835
</TABLE>

                          Footnotes on following page.





                                       11
<PAGE>   12



<TABLE>
<CAPTION>
                                                        YEAR ENDED JANUARY 31,
                                             --------------------------------------------
                                             2001      2000      1999      1998      1997
                                             ----      ----      ----      ----      ----

<S>                                          <C>       <C>       <C>       <C>       <C>
SELECTED OPERATING DATA:
Stores open at end of period:
  Licensed departments .................      596       640       557       507       488
  Freestanding stores ..................       33        46        57        63        66
                                             ----      ----      ----      ----      ----
Total  stores ..........................      629       686       614       570       554
Comparable store sales
  increase (6) .........................      3.3%      1.9%      4.2%      9.2%      8.3%
</TABLE>





<TABLE>
<CAPTION>
                                                                 JANUARY 31,
                                        ------------------------------------------------------------
                                          2001         2000         1999         1998        1997
                                        --------     --------     --------     --------     --------
                                                               (In thousands)
<S>                                     <C>          <C>          <C>          <C>          <C>
BALANCE SHEET DATA:
Cash ..............................     $    240     $    454     $    693     $    365     $    374
Working capital ...................       20,460       19,127       23,152       17,967       11,321
Total assets ......................       81,078       83,033       75,594       60,129       54,403
Long-term debt ....................       18,384       20,369       14,069        8,296       22,623
Shareholders' equity ..............       49,446       44,651       46,470       38,818       13,810
</TABLE>

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

(1)      See Note 11 to Notes to Consolidated Financial Statements.

(2)      As a result of favorable settlements on terminated leases, the company
         realized a gain in fiscal 1997 related to the closing and disposal of
         stores during fiscal 1992 through 1995.

(3)      Net income per share has been computed using the weighted average
         number of shares outstanding after giving effect for all periods
         presented to the 64-for-1 stock dividend and the conversion of all
         outstanding Series A Preferred Stock and Series C Preferred Stock into
         common stock upon the closing of the company's initial public offering
         in December 1997. Cash dividends on preferred stock of $217,000 were
         deducted from net income in computing net income per share for the
         fiscal year ended January 31, 1998.

(4)      Net income per share -- assuming dilution has been computed using the
         weighted average number of shares outstanding after giving effect to
         the 64-for-1 stock dividend and the conversion of all outstanding
         Series A Preferred Stock and Series C Preferred Stock into common stock
         upon the closing of the company's initial public offering in December
         1997. In addition, common share equivalents such as warrants and
         options are included in the computation for the years ended January 31,
         2001, 1999, 1998 and 1997, respectively. Cash dividends on preferred
         stock of $217,000 were deducted from net income in computing net income
         per share - assuming dilution for the fiscal year ended January 31,
         1998.

(5)      Net income per share -- pro forma is calculated by dividing net income
         after adjustment for applicable interest expense, net of tax
         ($2,208,000) by the adjusted number of weighted average shares
         outstanding after giving effect to the 2,500,000 shares that were sold
         at the initial public offering price to repay $20,375,000 of debt.

(6)      Comparable-store sales reflect existing stores that have been open over
         twelve months.








                                       12
<PAGE>   13

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

GENERAL OVERVIEW

         Our net sales consist primarily of retail sales of prescription eyewear
and contact lenses, net of refunds and allowances for customer returns. The
company's sales are influenced by customer traffic in our host department
stores, the successful implementation of our promotional programs and our
participation in various managed vision care plans. The principal components of
our cost of sales include the cost of materials, including eyeglass frames and
lenses, as well as manufacturing, assembly, labor and overhead costs associated
with operating our centralized optical laboratory. Prices of frames vary widely,
from inexpensive to high-end designer brands.

         Our selling, general and administrative expenses include primarily
labor-related expenses at the store level, rent and occupancy costs, managed
vision care costs, advertising and administrative expenses. The rent we pay to
our host stores is calculated as a percentage of net sales within each retail
optical department. Freestanding store rent is generally a fixed monthly payment
plus, in many cases, a percentage of net sales above certain revenue levels.
Flat fees per transaction are paid by us to vision care plans in which we
participate.

         Our fiscal year ends on January 31. Accordingly, references herein to
"fiscal 2000," "fiscal 1999," and "fiscal 1998" refer to the company's fiscal
years ended January 31, 2001, January 31, 2000, and January 31, 1999,
respectively.

RESULTS OF OPERATIONS

         The following table sets forth selected statements of operations items
expressed as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                     YEAR ENDED JANUARY 31,
                                               2001           2000           1999

<S>                                         <C>            <C>            <C>
Net sales ...............................      100.0%         100.0%         100.0%
Cost of sales ...........................       30.2           31.7           30.9
                                            --------       --------       --------
  Gross profit ..........................       69.8           68.3           69.1

Operating expenses:
  Selling, general and administrative....       62.4           63.9           60.2
  Depreciation and amortization .........        3.2            3.3            2.9
                                            --------       --------       --------

Operating income, excluding
  unusual items .........................        4.2            1.1            6.0
Special non-recurring charges ...........       (0.5)          (2.0)           0.0
                                            --------       --------       --------

Operating income (loss) .................        3.7           (0.9)           6.0
Interest expense, net ...................        0.3            0.3            0.0
                                            --------       --------       --------
Income(loss) before income tax ..........        3.4           (1.2)           6.0
Income tax provision ....................        0.2            0.0            0.3
                                            --------       --------       --------
Net income (loss) .......................        3.2%          (1.2)%          5.7%
                                            ========       ========       ========
</TABLE>



FISCAL 2000 COMPARED TO FISCAL 1999

         Net sales increased $4.2 million, or 2.9%, from $143.4 million for
fiscal 1999 to $147.6 million for fiscal 2000. A 3.3% increase in
comparable-store sales accounted for nearly all of the increase in net sales.
The increase in comparable store sales was mostly the result of an increase in
the number of eyeglasses sold.



                                       13
<PAGE>   14


         Cost of sales decreased by $0.9 million, or 1.9%, from $45.5 million in
fiscal 1999 to $44.6 million in fiscal 2000. The decrease was due principally to
a reduction in labor costs including the closing of the frame manufacturing
plant in Miami, Florida in July 2000. As a percentage of net sales, cost of
sales decreased from 31.7% in fiscal 1999 to 30.2% in fiscal 2000. The decrease
was due to a reduction in material costs and labor costs.

         Selling, general and administrative expenses increased by $0.3 million,
or 0.4%, from $91.7 million in fiscal 1999 to $92.1 million in fiscal 2000. As a
percentage of net sales, selling, general and administrative expenses decreased
from 63.9% in fiscal 1999 to 62.4% in fiscal 2000. The decrease was principally
due to cost savings implemented by management, a reduction in advertising
expenditures, closing of unprofitable locations and leverage created by the
comparable store sales increase.

         Unusual charges for fiscal 2000 included the one time write-off of
approximately $0.8 million related to the closing of 82 unprofitable stores.

FISCAL 1999 COMPARED TO FISCAL 1998

         Net sales increased $11.9 million, or 9.1%, from $131.5 million for
fiscal 1998 to $143.4 million for fiscal 1999. A 1.9% increase in
comparable-store sales accounted for $2.4 million of the increase in net sales.
New store openings, net of store closings, accounted for the remaining $9.5
million of the increase. The increase in comparable store sales was the result
of an increase in the number of eyeglasses sold.

         Cost of sales increased by $4.9 million, or 12.0%, from $40.6 million
in fiscal 1998 to $45.5 million in fiscal 1999. The increase was due principally
to the $11.9 million increase in net sales. As a percentage of net sales, cost
of sales increased from 30.9% in fiscal 1998 to 31.7% in fiscal 1999. The
increase was due to additional discounts offered by the company in response to
increased promotional pressure from our competition, as well as an increase in
labor rates in the manufacturing facilities and retail in response to low
unemployment rates.

         Selling, general and administrative expenses increased by $12.6
million, or 15.9%, from $79.1 million in fiscal 1998 to $91.7 million in fiscal
1999. As a percentage of net sales, selling, general and administrative expenses
increased from 60.2% in fiscal 1998 to 63.9% in fiscal 1999. The increase was
principally due to an increase in expenses associated with 106 new store
openings, as these stores open with relatively low sales volume, an overall
increase in base salary rates as a result of the competitive labor market, and
greater department store rents which are tied directly to sales volume.
Duplicate administrative fees and claims associated with changing healthcare
administrators during fiscal 1999 also contributed to the increase.

         Unusual charges for fiscal 1999 included the one time write-off of
approximately $2.8 million related to the strategic decision to close our
Styl-Rite frame manufacturing facility in Miami, Florida. We are relocating
Styl-Rite's importing and distribution functions to our corporate headquarters.
In connection with this plan, the company recorded a charge of $2,835,000, which
was comprised of $2,224,000 in write-offs of inventory used solely in the
manufacturing process, $161,000 in machinery and equipment, $250,000 in
buildings and $200,000 for uncollectible receivables. The write-offs associated
with the buildings and machinery and equipment were intended to reduce their
carrying costs to their estimated net realizable value. The company also will
incur approximately $250,000 in additional payroll costs between February 1 and
June 30, 2000, which will be expensed when paid.

         Depreciation and amortization increased by $0.8 million, or 20.4%, from
$3.9 million in fiscal 1998 to $4.7 million in fiscal 1999. This was due to
increased amortization of goodwill as a result of the acquisitions of businesses
during fiscal 1998 and 1999. In addition, depreciation expense increased due




                                       14
<PAGE>   15

to capital expenditures associated with new store openings and the purchase of
additional machinery for the manufacturing facility.

         Interest expense, net increased by $448,000 from $21,000 in fiscal 1998
to $469,000 in fiscal 1999. The increase was principally due to increased
borrowings on our line of credit. See "Liquidity and Capital Resources."

QUARTERLY FLUCTUATIONS

         Our financial position and results of operations are slightly affected
by seasonal fluctuations in sales and operating profits. Our sales and operating
profits are generally lower in the fourth quarter, due to the Christmas season,
which has historically been a period of reduced sales of prescription optical
products. This trend has been mitigated somewhat by the increase in vision care
sales under plans which are on a calendar year basis and require participants to
use or lose their benefits annually. Quarterly sales can also be affected by the
timing and amount of sales contributed by new stores. Accordingly, the results
of operations for interim periods are not necessarily indicative of results for
the entire fiscal year.

The following tables set forth certain unaudited financial data for the quarters
indicated:

<TABLE>
<CAPTION>
                                            FISCAL 2000 QUARTER ENDED                       FISCAL 1999 QUARTER ENDED
                                   --------------------------------------------    --------------------------------------------
                                   APRIL 30,   JULY 31,    OCT. 31,    JAN. 31,    APRIL 30,   JULY 31,    OCT. 31,    JAN. 31,
                                     2000        2000        2000        2001        1999        1999        1999        2000
                                   --------    --------    --------    --------    --------    --------    --------    --------
                                                       (In thousands, except percentages and per share data)

<S>                                <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Net sales ......................   $ 41,894    $ 36,771    $ 37,395    $ 31,557    $ 37,841    $ 35,601    $ 36,223    $ 33,754
Gross profit ...................     29,040      25,610      26,252      22,070      26,180      24,781      25,004      21,938
% of net sales .................       69.3%       69.6%       70.2%       69.9%       69.2%       69.6%       69.0%       65.0%

Operating income (loss) ........   $  2,619    $  1,149    $  1,484    $    190    $  2,931    $  1,435    $    170    $ (5,864)
% of net sales .................        6.3%        3.1%        4.0%        0.6%        7.7%        4.0%        0.5%      (17.4)%
Net income (loss) ..............   $  2,345    $    994    $  1,358    $     98    $  2,270    $  1,180    $    488    $ (5,757)
% of net sales .................        5.6%        2.7%        3.6%        0.3%        6.0%        3.3%        1.3%      (17.1)%
Net income (loss)
   per share -- basic ..........   $   0.30    $   0.13    $   0.17    $   0.01    $   0.29    $   0.15    $   0.06    $  (0.74)
Net income (loss) per share -
   assuming dilution ...........   $   0.30    $   0.13    $   0.17    $   0.01    $   0.29    $   0.15    $   0.06    $  (0.74)
</TABLE>

          The decrease in operating income in the fourth quarter of fiscal 2000
was due to seasonally lower net sales and a $752,000 write-off due to store
closings.

         The decrease in operating income in the fourth quarter of fiscal 1999
was due to seasonally lower net sales, a $2.8 million write-off due to the
closure of the Styl-Rite manufacturing facility, duplicate administrative fees
and claims associated with changing healthcare administrators during the year
and the negative leverage on expenses of opening 106 locations during the year
with an extremely low sales base.

INCOME TAXES

         As of January 31, 2001, we had net operating loss carry forwards of
approximately $14,100,000 which will begin to expire in the year 2006.
Approximately $5,900,000 of these carry forwards are available to offset future
taxable income without limitation and approximately $8,200,000 of these carry
forwards (the "Restricted NOLs") are significantly limited due to ownership
changes. Approximately $780,000 of the Restricted NOLs will become available for
use each year through the year 2008. Approximately $3,400,000 of the Restricted
NOLs are expected to expire unutilized. A valuation allowance has been
established to fully reserve the future benefit of all the net operating loss
carry forwards.


                                       15
<PAGE>   16

LIQUIDITY AND CAPITAL RESOURCES

         Our primary cash sources for fiscal 2000 were from operations. Our
working capital requirements are seasonal and traditionally peak at the end of
the fourth quarter and the beginning of the first quarter. Cash and working
capital at January 31, 2001 were $240,000 and $20.5 million, respectively,
compared to $454,000 and $19.1 million, respectively, at January 31, 2000.

         For the year ended January 31, 2001, cash provided by operating
activities was $9.5 million compared to cash provided by operating activities of
$5.3 million for the year ended January 31, 2000. The $4.2 million increase
resulted from an increase in net income and a reduction of inventory caused by a
reduction in store count and controlling inventory levels offset by a decrease
in accounts payable.

         Cash used in investing activities in fiscal 2000 was a planned
reduction to $6.3 million compared to $10.4 million in fiscal 1999 and $10.8
million in fiscal 1998. Capital expenditures in fiscal 2000 of $6.3 million were
primarily for new store openings and development work on the company's
integrated management information system. In fiscal 2001, we expect to spend
approximately $4.0 million on capital expenditures for new store openings, the
integrated management information system and other capital expenditures.
Historically, we have funded capital expenditures through a revolving line of
credit, debt financing activities, including capital leases and operating cash
flow.

         Our principal external source of liquidity is our $20.0 million
revolving line of credit with Commerce Bank, N.A. The revolving line of credit
facility bears interest at the lower of the prime rate as published in the Wall
Street Journal or the thirty (30) day rate for United States Treasury Bills plus
250 basis points and matures in December 2002. As of January 31, 2001, we had
$12,033,000 outstanding under our revolving line of credit and $7,967,000 of
availability. The loan agreement prohibits the payment of dividends to
shareholders and contains customary covenants. We must also maintain certain
financial ratios including a specified net worth level, current ratio, and a
fixed charge ratio. As of January 31, 2001, we were in compliance with all of
the financial covenants. We do not believe that the financial covenants set
forth in our revolving line of credit will have an adverse impact on our
operations or future plans.

         We have commitments from Commerce BankLease, a unit of Commerce Bank,
N.A., for a $2,000,000 five-year equipment lease financing facility. During
fiscal 2000 and 1999, the Company executed the agreement and leased
approximately $382,000 and $922,000, respectively of laboratory equipment and
furniture and fixtures, which will be paid for over a period of 60 months. The
leased laboratory equipment has been recorded as a capital lease on the
consolidated balance sheet.

         Based upon our current operating and new store opening plans, we
believe we can fund our working capital and capital expenditure needs for the
foreseeable future through borrowings under the revolving line of credit and
cash generated from operations.

EFFECTS OF INFLATION

         We believe that the effects of inflation on our operations have not
been material during the past three years.







                                       16
<PAGE>   17


CAUTION REGARDING FORWARD-LOOKING STATEMENTS

         We occasionally make forward-looking statements concerning our plans,
goals, product and service offerings, store openings and closings and
anticipated financial performance. These forward-looking statements may
generally be identified by introductions such as "outlook" for an upcoming
period of time, or words and phrases such as "should", "expect", "hope",
"plans", "projected", "believes", "forward-looking" (or variants of those words
and phrases) or similar language indicating the expression of an opinion or view
concerning the future.

         These forward-looking statements are subject to risks and uncertainties
based on a number of factors and actual results or events may differ materially
from those anticipated by such forward-looking statements. These factors
include, but are not limited to: our ability to maintain our relationship with
our host stores such as J.C. Penney and Sears, as well as with Cole National
Corporation, a competitor of the company and the owner of the Vision One managed
vision care plan in which the company participates; the growth rate of our
revenue and market share; our ability to effectively manage our business
functions while growing the company's business in a rapidly changing
environment; and the quality of our plans and strategies, as well as our ability
to execute such plans and strategies.

          In addition, forward-looking statements concerning our expected
revenue or earnings levels are subject to many additional uncertainties
applicable to competitors generally and to general economic conditions over
which we have no control, such as the performance of our host stores. We do plan
to generally publicly update prior forward-looking statements for unanticipated
events or otherwise and, accordingly, prior forward-looking statements should
not be considered to be "fresh" simply because we have not made additional
comments on those forward-looking statements.















                                       17
<PAGE>   18



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Our earnings are affected by changes in interest rates due to the
impact those changes have on the interest expense payable by us under our
variable rate debt revolving line of credit, for which the outstanding balance
was $12,033,000 as of January 31, 2001. A 1.0% change in the underlying prime
rate or the thirty (30) day rate for United States Treasury Bills would result
in a $120,000 change in the annual amount of interest on such debt. This amount
is determined by considering the impact of the hypothetical interest rates on
our revolving line of credit outstanding as of January 31, 2001.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The Financial Statements together with the report thereon of Ernst &
Young LLP, independent auditors, are included in this report commencing at Page
F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         None.






                                       18
<PAGE>   19


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Set forth below is biographical and other information about the persons who make
up the Board of Directors and who have been nominated for election at the
company's 2001 annual meeting:

<TABLE>
<S>                                          <C>
RICHARD K. MCDONALD                          Since 1989, Mr. McDonald has served as the
Age:  54                                     President and Director of Constitution
Director since 1994                          Capital Corporation, a general partner
Executive, Audit and Compensation            of M&M General Partnership and a general
Committees                                   partner of RKM Investment Company, the
                                             general partner of Constitution Partners
                                             I, L.P.



G. KENNETH MACRAE                            He is a consultant to Keystone Venture Capital
Age:  72                                     Management Co., a venture capital firm
Director since 1990                          in Philadelphia, Pennsylvania. Prior to
Compensation, Executive                      serving as a consultant, Mr. Macrae was
and Stock Option Committees                  from 1983 to 1997 the President of
                                             Keystone Venture Capital Management Co.
                                             and the President and Director of KVM IV
                                             MCGP, Inc., the general partner of
                                             Keystone Venture IV Management Company,
                                             L.P. and Keystone IV, L.P.



WILLIAM A. SCHWARTZ, JR.                     Mr. Schwartz serves as the company's President,
Age:  59                                     Chief Executive Officer and Chairman of
Director since 1967                          the Board and has served in that capacity
Executive Committee                          for the company and its predecessors since
                                             1967. Mr. Schwartz also serves on the board
                                             of directors of Commerce Bancorp Inc. (NASDAQ:
                                             CBH). Mr. Schwartz is married to Gayle E. Schmidt.


DENNIS J. SHAUGHNESSY                        Since 1989, Mr. Shaughnessy has served
Age:  54                                     as the Managing Director, Treasurer and
Director since 1994                          Director of Grotech Capital Group, Inc.,
Audit, Compensation and Stock Option         the general partner of Grotech Partners
Committees                                   III, L.P., Grotech III Companion Fund,
                                             L.P. and Grotech III Pennsylvania Fund,
                                             L.P. and Managing Director, Treasurer
                                             and Director of Grotech Capital Group
                                             IV, Inc., the general partner of Grotech
                                             Partners IV, L.P. Mr. Shaughnessy also
                                             serves on the board of directors of Polk
                                             Audio Inc. (NASDAQ: PKAU) and FTI
                                             Consulting, Inc. (AMEX: FCN).



J. ROGER SULLIVAN, JR.                       Since March 1994, Mr. Sullivan has served as
Age:  58                                     a vice president of Grotech Capital Group,
Director since 1994                          Inc., the general partner of Grotech
Audit Committee                              Partners III, L.P. and Grotech Capital
                                             IV, Inc., the general partner of Grotech
                                             Partners IV, L.P.
</TABLE>




                                       19
<PAGE>   20


<TABLE>
<S>                                          <C>
PETER M. TROUP                               Since 1996, Mr. Troup has served as a
Age:  57                                     management consultant to the retail
Director since 1997                          industry.

</TABLE>



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

INFORMATION CONCERNING EXECUTIVE OFFICERS

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

Background information about the company's executive officers is set forth
below.



<TABLE>
<S>                                          <C>
GAYLE E. SCHMIDT                             Ms. Schmidt has served as the company's
Age:  48                                     Executive Vice President and Chief
                                             Operating Officer since April 2000. From
                                             1990 to March 2000, she served as the
                                             company's Executive Vice President,
                                             Manufacturing.


GEORGE T. GORMAN                             Mr. Gorman has served as the company's
Age:  49                                     President, Retail since February 1998.
                                             From September 1996 to January 1998, he
                                             served as the Executive Vice President,
                                             Retail of the company.


GEORGE E. MCHENRY, JR.                       Mr. McHenry has served as the company's
Age:  48                                     Executive Vice President, Chief
                                             Financial Officer and Secretary since
                                             July 2000. From February 1998 to July
                                             2000, he served as the company's Chief
                                             Administrative Officer, Secretary and
                                             Treasurer. From 1990 to February 1998,
                                             he served as the company's Chief
                                             Financial Officer, Treasurer and
                                             Secretary.
</TABLE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act of 1934, as amended, requires the company's
executive officers and directors and persons who own more than ten percent of a
registered class of the company's equity securities (collectively, the
"Reporting Persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and to furnish the Company with copies of
these reports. The company believes that all filings required to be made by the
Reporting Persons during the fiscal year ended January 31, 2001 were made on a
timely basis.



                                       20
<PAGE>   21

ITEM 11. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

The following table presents information concerning total compensation earned by
the Named Executive Officers--the Chief Executive Officer and the three other
most highly compensated executive officers of the company who served in such
capacities as of January 31, 2001 for services rendered to the company during
each of the last three fiscal years. The information presented below represents
all compensation earned by the Named Executive Officers for all services
performed for the company or any of its subsidiaries.

<TABLE>
<CAPTION>
                                                            ANNUAL COMPENSATION       LONG-TERM COMPENSATION AWARDS
                                                        ---------------------------   -----------------------------
                                                                                        SHARES
                                         FISCAL                                       UNDERLYING      ALL OTHER
NAME AND PRINCIPAL POSITIONS              YEAR             SALARY          BONUS        OPTIONS     COMPENSATION(1)
-----------------------------------   ------------      ------------   ------------   ------------  ---------------

<S>                                   <C>               <C>            <C>            <C>           <C>
William A. Schwartz, Jr. ..........           2000      $    297,000   $         --        228,735   $         35
   President and Chief                        1999           275,000             --             --             --
   Executive Officer                          1998           222,000         50,000             --             --

George T. Gorman ..................           2000           185,000             --         80,665          1,256
   President, Retail                          1999           176,000             --             --          1,297
                                              1998           161,300         25,000         65,000          1,068

Gayle E. Schmidt ..................           2000           185,000             --         76,050             --
   Executive Vice President                   1999           176,000             --             --             --
   and Chief Operating                        1998           161,200         25,000             --             --
   Officer

George E. McHenry, Jr. ............           2000           175,000             --         76,050          1,167
   Executive Vice President,                  1999           163,900             --             --            860
   Chief Financial Officer                    1998           152,200         25,000             --            725
   and Secretary

Kathy G. Cullen ...................           2000(2)         75,833             --             --             --
   Senior Vice President                      1999           131,000             --             --             --
   and Chief Financial Officer                1998           116,200         20,000             --             --
</TABLE>

----------

(1)      Includes the value of the company's contributions to the
         company-sponsored 401(k) plan and the amount paid by the company for
         term life insurance coverage under health and welfare plans.

(2)      Ms. Cullen resigned from her position with the company in July 2000.



                                       21
<PAGE>   22


STOCK OPTIONS

The following table sets forth certain information about the stock option awards
that were made to the Named Executive Officers during fiscal 2000. All of these
options are transferable to family members under specified conditions.



                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                           PERCENTAGE                                     POTENTIAL REALIZABLE VALUE
                            NUMBER OF       OF TOTAL                                      AT ASSUMED ANNUAL RATES OF
                             SHARES         OPTIONS                                        STOCK PRICE APPRECIATION
                           UNDERLYING      GRANTED TO       EXERCISE                          FOR OPTION TERM(1)
                             OPTIONS      EMPLOYEES IN       PRICE       EXPIRATION    --------------------------------
          NAME               GRANTED      FISCAL YEAR      PER SHARE        DATE             5%($)           10%($)
-------------------------- ------------ ----------------- ------------- -------------  ---------------   --------------

<S>                        <C>          <C>               <C>           <C>            <C>               <C>
William A. Schwartz, Jr.     228,735          29.5%           $3.00       6/01/10             0                0
George T. Gorman              80,665          10.4             3.00       6/01/10             0                0
Gayle E. Schmidt              76,050           9.8             3.00       6/01/10             0                0
George E. McHenry, Jr.        76,050           9.8             3.00       6/01/10             0                0
Kathy G. Cullen(2)            76,050           9.8             3.00       6/01/10             0                0
-------------------------- ------------ ----------------- ------------- -------------  ---------------   --------------
</TABLE>

(1)      Potential value is reported net of the option exercise price, but
         before taxes associated with exercise. These amounts represent assumed
         rates of appreciation only. Actual gains, if any, on stock option
         exercises are dependent on the future performance of the company's
         common stock, as well as on the option holders' continued employment
         through the vesting period. The potential realizable values are zero
         because the market price of the company's common stock was less than
         the exercise price of the options on the date granted.

(2)      Ms. Cullen resigned from her position with the company in July 2000.
         All of her options expired unexercised.


                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>

                                                        NUMBER OF SHARES             VALUE OF UNEXERCISED
                                                     UNDERLYING UNEXERCISED         IN-THE MONEY OPTIONS(1)
                                                   OPTIONS AT FISCAL YEAR-END         AT FISCAL YEAR-END
                                                 ------------------------------ --------------------------------
                     NAME                        EXERCISABLE    UNEXERCISABLE   EXERCISABLE     UNEXERCISABLE
------------------------------------------------ ------------- ---------------- ------------- ------------------
<S>                                              <C>           <C>              <C>           <C>
William A. Schwartz, Jr.                           228,735        228,735             $0            $285,919
George T. Gorman                                    80,665         80,665              0             100,831
Gayle E. Schmidt                                    76,050         76,050              0              95,063
George E. McHenry, Jr.                              76,050         76,050              0              95,063
------------------------------------------------ ------------- ---------------- ------------- ------------------
</TABLE>

(1)      Amounts were calculated using the closing price of the common stock on
         the last trading day of the fiscal year ($4.25).


EMPLOYMENT AGREEMENTS


We entered into an employment agreement in 1998 with William A. Schwartz, Jr.,
President and Chief Executive Officer. The employment agreement provides for a
guaranteed base salary and the right to be considered for such bonus programs as
are adopted by the board. The initial term of Mr. Schwartz's employment
agreement was for three years and automatically renews annually for successive
three-year terms if not terminated by either party. Under the terms of Mr.
Schwartz's agreement, he is entitled to salary continuation of the balance of
the term of his employment agreement, but not less than one year, if his
employment is terminated by us other than for cause or if he resigns for good
reason under the terms of the agreement. The severance payable to Mr. Schwartz
will depend on his monthly salary at that time. His current monthly salary is
$22,917. If all or substantially all of the assets of the company are sold, or a






                                       22
<PAGE>   23

merger or sale of all or substantially all of the stock of the company occurs
while Mr. Schwartz is employed by the company, he will receive a bonus payment
of $750,000.

We also entered into salary continuation agreements in 1998 with George T.
Gorman, President-Retail, Gayle E. Schmidt, Executive Vice President and Chief
Operating Officer and George E. McHenry, Jr., Executive Vice President and Chief
Financial Officer and Secretary. Under the terms of each of these agreements,
the executive is entitled to salary continuation for one year if the executive's
employment is terminated by us other than for cause, or if the executive resigns
with good reason under the terms of the agreement. The severance due to each
executive depends on the executive's monthly salary at that time. The current
monthly salary for each executive is as follows: Mr. Gorman -- $16,133; Ms.
Schmidt -- $16,133; and Mr. McHenry -- $15,026. Each executive has also agreed
not to compete with the company for a period of six months following the
termination of the executive's employment with the company.

OTHER BENEFITS

401(k) Retirement Plan. The company maintains a 401(k) retirement savings plan
that is available to substantially all employees. Under the terms of the plan,
the company matches 25% of each participant's voluntary contributions up to 3%
of the participant's compensation. A participant vests ratably in the matching
contributions over the first five years of employment (20% per year).

DIRECTOR COMPENSATION

Mr. Schwartz, who is the only director that is also employee, does not receive
any additional compensation for serving on the Board of Directors.

Annual Retainer Fee. Historically, each director of the company who is not an
employee of the company or any of its subsidiaries receives an annual retainer
payable in either cash or shares of the company's stock. The form and amount of
the annual retainer to be paid by the company to eligible directors in fiscal
2001 has not yet been determined. In fiscal 2000, each eligible director
received warrants to purchase 13,000 shares of the company's common stock at a
per share exercise price of $2.875.

Other Benefits. We reimburse directors for the reasonable expenses associated
with attending Board meetings and provides them with liability insurance
coverage for their activities as directors of the company.

MEETINGS AND COMMITTEES OF THE BOARD

The Board met five times during fiscal 2000. During fiscal 2000, all then
incumbent directors attended at least 75% of the meetings of the Board and the
Board committees on which they served.

The Board has four standing committees: the Audit Committee, the Compensation
Committee, the Executive Committee and the Stock Option Committee. The Board
does not have a nominating committee. The functions customarily attributable to
a nominating committee are performed by the Board as a whole.

Audit Committee. The Audit Committee of the Board of Directors, currently
consisting of Messrs. McDonald, Shaughnessy and Sullivan, is authorized to
recommend to the Board of Directors independent certified public accounting
firms for selection as auditors of the company, make recommendations to the
Board of Directors on auditing matters, examine and make recommendations to the
Board of Directors concerning the scope of audits, and review and approve the
terms of transactions between or among the company and related parties. None of
the members of the Audit Committee is an employee of the company. Mr. McDonald
is the Chairman of the Audit Committee. The Audit Committee met four times
during fiscal 2000.




                                       23
<PAGE>   24

Compensation Committee. The Compensation Committee of the Board of Directors,
currently consisting of Messrs. Shaughnessy, Macrae and McDonald, is authorized
to exercise all of the powers of the Board of Directors with respect to matters
pertaining to compensation and benefits, including, but not limited to, salary
matters, incentive/bonus plans, investment programs and insurance plans. The
Compensation Committee is also authorized to exercise all of the powers of the
Board of Directors in matters pertaining to employee promotions and the
designation or revision of employee positions and job titles. None of the
members of the Compensation Committee is an employee of the company. Mr.
Shaughnessy is Chairman of the Compensation Committee. The Compensation
Committee met once during 2000.

Executive Committee. The Executive Committee of the Board of Directors,
currently consisting of Messrs. Macrae, McDonald and Schwartz, is authorized to
exercise substantially all of the powers of the board in the management and
business affairs of the company, except it does not have the authority to
declare dividends, authorize the issuance of shares of our common stock, modify
the company's certificate of incorporation or bylaws, adopt any agreement of
merger or consolidation or recommend to the shareholders the sale, lease or
exchange of all or substantially all of the company's assets or the dissolution
of the company. Regularly scheduled meetings of the board are held periodically
each year and special meetings are held from time to time. As a consequence, the
occasions on which this committee is required to take action are limited. The
committee did not meet during fiscal 2000.

Stock Option Committee. The Stock Option Committee of the Board of Directors,
currently consisting of Messrs. Shaughnessy and Macrae, is authorized to
administer the company's existing stock option plan. The committee did not meet
separately from the board during fiscal 2000.

AUDIT COMMITTEE REPORT

The audit functions of the Audit Committee are focused on three areas:

         o        the adequacy of the company's internal controls and financial
                  reporting process and the reliability of the company's
                  financial statements;

         o        the independence and performance of the company's independent
                  auditors; and

         o        the company's compliance with legal and regulatory
                  requirements.

We meet with management periodically to consider the adequacy of the company's
internal controls and the objectivity of its financial reporting. We discuss
these matters with the company's independent auditors and with appropriate
company financial personnel. We regularly meet privately with the independent
auditors who have unrestricted access to the Audit Committee. We also recommend
to the Board the appointment of the independent auditors and review periodically
their performance and independence from management. In addition, the Audit
Committee reviews the company's financing plans and reports recommendations to
the full Board for approval and to authorize action.

The Directors who serve on the committee are all "Independent" for purposes of
the Nasdaq listing standards. That is, the Board of Directors has determined
that none of us has a relationship with USV that may interfere with our
independence from USV and its management. The Board has adopted a written
charter setting out the audit related functions the committee is to perform.

Management has primary responsibility for the company's financial statements and
the overall reporting process, including the company's system of internal
controls. The independent auditors audit the annual




                                       24
<PAGE>   25
financial statements prepared by management, express an opinion as to whether
those financial statements fairly present the financial position, results of
operations and cash flows of the company in conformity with accounting
principles generally accepted in the United States and discuss with us any
issues they believe should be raised with us. We reviewed the company's audited
financial statements for the fiscal year ended January 31, 2001, with both
management and Ernst & Young, the company's independent auditors, to discuss
those financial statements. Management represented to us that the financial
statements were prepared in accordance with generally accepted accounting
principles.

We received from and discussed with Ernst & Young the written disclosure and the
letter required by Independence Standards Board Standard No. 1, (Independence
Discussions with Audit Committees). These items relate to that firm's
independence from the company. We also discussed with Ernst & Young any matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).

Based on these reviews and discussions, we recommended to the Board that the
company's audited financial statements for the fiscal year ended January 31,
2001, be included in its Annual Report on Form 10-K for filing with the
Securities and Exchange Commission. The Committee also recommended the
reappointment, subject to shareholder approval, of the independent auditors, and
the Board of Directors concurred in such recommendation.

Submitted by the Audit Committee of the company's Board of Directors.

Richard K. McDonald (Chairman)
Dennis J. Shaughnessy
J. Roger Sullivan, Jr.

COMPENSATION COMMITTEE REPORT

The company's executive compensation program is philosophically designed to
reward exceptional performance and to align the financial interests of the
company's senior executives with those of the equity owners of the company. To
achieve this end, the Committee has developed and implemented a compensation
program designed to attract and retain highly skilled executives with the
business experience and acumen necessary for achievement of the company's
long-term business objectives. The Compensation Committee uses compensation
surveys to provide information and data to assist it in developing compensation
programs that are competitive with other similarly-situated companies.

The company's executive compensation consists of three components: base salary;
an annual performance-based bonus; and stock-based compensation. The general
guidelines used by the company to determine these components are described
below. Subject to these guidelines, bonus awards and option grants are awarded
on a discretionary rather than a formulaic basis.







                                       25
<PAGE>   26


BASE SALARY

The base salaries paid to the company's executive officers are based upon
recommendations of senior management, and require approval of the Compensation
Committee. Management takes into account a variety of factors in determining
base salary, including:

         o        competitive salaries for comparable officers at comparable
                  companies;

         o        individual performance and an assessment of the value of the
                  individual's services to USV;

         o        the fairness of individual executive officers' salaries
                  relative to their responsibilities;

         o        the salaries of other executive officers; and

         o        the company's financial performance.

At different times, depending upon prevailing circumstances, the Compensation
Committee gives these criteria varying degrees of weight.

ANNUAL BONUS

The company uses annual incentive bonuses to recognize individual performance
and reward exceptional contributions to the company's business. Bonuses are
determined as follows. At the end of each fiscal year, a bonus pool is proposed
by senior management and reviewed with the Compensation Committee. The bonus
pool, which includes amounts to be paid to the Chief Executive Officer and the
three other most highly compensated officers in the company, is allocable based
on:

         o        the company's EBITDA growth rate for the year (taking into
                  account long-term investment);

         o        each individual's contribution to the whole; and

         o        the prior year's bonus pool.

Although these factors are considered, bonus pools are allocated on a
discretionary, rather than a formulaic basis.

Once the bonus pool is established, senior USV management are responsible for
making recommendations to the Compensation Committee regarding allocation to
executives other than the three most highly compensated officers of the company
based on a subjective assessment of individual performance. The Compensation
Committee is responsible for determining the CEO's bonus and the CEO makes
recommendations to the Compensation Committee regarding allocation of the bonus
pool to the four other most highly compensated executive officers of the
company, which the Compensation Committee then approves or disapproves. Subject
to certain guidelines based on salary levels, bonuses are entirely
discretionary, with exceptional efforts and results rewarded disproportionately.







                                       26
<PAGE>   27


STOCK OPTIONS

The Committee believes that its stock option program appropriately links
executive interest to stockholder value. The company makes annual option grants
to eligible employees based on performance and issues options to certain
employees upon initial employment and (promotion) and in connection with
entering into certain new employment arrangements.

The number of options available for grant each year and the allocation of
options is determined as described below. At the end of the year, an aggregate
option pool available for grant to company executives is proposed by senior
management and reviewed with and approved by the Compensation Committee and the
Stock Option Committee. As is the case with bonuses, once the option pool is
established, senior USV management are responsible for making recommendations to
the Compensation Committee regarding allocation to executives other than the
five most highly compensated executive officers. As is the case with bonuses,
the CEO makes recommendations to the Compensation Committee regarding option
grants to the four most highly compensated executive officers other than the CEO
and the Compensation Committee determines the number of options to be granted to
the CEO. Subject to certain guidelines based on salary levels, option grants
from the established pool are discretionary. In addition, a certain number of
options are set aside each year for extraordinary grants to new hires, renewals
or other grants that fall outside the annual grant program. All grants are
reviewed and approved by the Compensation Committee and the Stock Option
Committee, and the vast majority of the options granted vest over a three-year
period.

SUMMARY

The Compensation Committee believes that the company's executive compensation
program must continually provide executives with a strong incentive to focus on
and achieve the company's business objectives and link a significant portion of
long-term remuneration directly to stock price appreciation realized by all of
the company's shareholders. By assuring that executives are appropriately
compensated and therefore motivated, the long-term interests of shareholders
will be best served. The actions taken by the Compensation Committee in 2000
were consistent with this focus and the principles outlined above.

Submitted by the Compensation Committee of the company's Board of Directors

Dennis J. Shaughnessy (Chairman)
G. Kenneth Macrae
Richard K. McDonald

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Neither Messrs. Shaughnessy, Macrae or McDonald is an officer or employee, or
former officer or employee, of the company or any of its subsidiaries. No
interlocking relationship exists between the members of the company's Board or
Compensation Committee and the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past.




                                       27
<PAGE>   28


PERFORMANCE GRAPH

The following Performance Graph compares, for the period that our Peer Group
common stock has been publicly traded (since December 2, 1997), the cumulative
total stockholder return for the company, The Nasdaq Stock Market (U.S.
Compares) Index (the "Nasdaq Market Index"), and The Peer Group Index (the "Peer
Group Index"). The Peer Group Index consists of the company and the following
companies which are engaged primarily in the retail optical business: Cole
National Corporation; Luxottica; Vista Eyecare, Inc.; and Emerging Vision, Inc.
The Performance Graph assumes that $100 was invested beginning on the date of
our initial public offering in each of USV and the indexes. Total return
performance for the Nasdaq Market Index and the Peer Group Index is weighted
based on the market capitalization of the companies included in each index and
assumes that dividends are reinvested. In fiscal 2000, we did not declare or pay
any dividends on our common stock. Immediately following the Performance Graph
is a chart of the numerical plot-points that support the graph. We caution that
the stock price performance shown in the graph below should not be considered
indicative of potential future stock price performance.


                          TOTAL RETURN TO STOCKHOLDERS
                      (Assumes $100 Investment on 12/2/97)


<TABLE>
<CAPTION>
                           12/02/1997        01/30/1998        1/29/1999        01/31/2000        01/31/2001
                           ----------        ----------        ---------        ----------        ----------

<S>                        <C>               <C>               <C>               <C>              <C>
U.S. Vision, Inc           $100.00           $106.94            $ 79.17           $ 31.60          $ 47.23
Nasdaq Market Index        $100.00           $112.42            $ 88.43           $131.41          $220.18
Peer Group Index           $100.00           $100.89            $156.72           $247.15          $173.91
</TABLE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

STOCK OWNERSHIP

The following table sets forth, as of January 31, 2001, certain information
regarding the beneficial ownership of our common stock by:

         o        Each person or entity who is known by us to own beneficially
                  5% or more of our outstanding common stock;

         o        each director of the company;

         o        each of our Named Executive Officers; and

         o        all of our directors and executive officers as a group.




                                       28
<PAGE>   29
<TABLE>
<CAPTION>
                                                                                       OPTIONS OR
                                                                                        WARRANTS
                                                                                       EXERCISABLE
              NAME AND ADDRESS                           NUMBER OF SHARES               WITHIN 60           PERCENTAGE OF SHARES
            OF BENEFICIAL OWNER                        BENEFICIALLY OWNED(1)               DAYS            BENEFICIALLY OWNED(1)
            -------------------                        ---------------------       ----------------------  ---------------------
<S>                                                    <C>                         <C>                     <C>
Norcross Roberts Group ...........................         1,848,675                       --                     23.7%
     c/o George E. Norcross III
     1701 Route 70 East
     Cherry Hill, NJ 08034
Grotech Partners IV, L.P. ........................         1,583,951                       --                     20.3%
     9690 Deereco Road
     Timinium, MD 21093
Stolberg Partners, L.P. ..........................         1,525,159                       --                     19.5%
     767 Third Avenue
     New York, NY 10017
Constitution Partners I, L.P. ....................           487,228                       --                      6.2%
     600 Grant Street, 57th Floor, USX Tower
     Pittsburgh, PA 15219
William A. Schwartz(2) ...........................            60,190                  228,735                      3.6%
Dennis J. Shaughnessy(3) .........................         1,953,795                   39,000                     25.4%
J. Roger Sullivan, Jr.(3) ........................         1,953,795                   39,000                     25.4%
Richard K. McDonald(4) ...........................           737,254                   19,500                      9.6%
George T. Gorman(2) ..............................                --                   80,665                      1.0%
Gayle E. Schmidt(2) ..............................             1,040                   76,050                        *
George E. McHenry, Jr.(2) ........................                --                   76,050                        *
Peter M. Troup ...................................             8,228                   63,944                        *
G. Kenneth Macrae ................................             2,471                   27,618                        *
Directors and executive
  officers as a group
  (9) persons ....................................         2,762,978                  650,562                     40.4%
</TABLE>

----------

 *       Represents less than 1%

(1)      Beneficial ownership is determined in accordance with the rules of the
         Commission and generally includes voting or investment power with
         respect to securities. Except as otherwise indicated by footnote, and
         subject to community property laws where applicable, the persons named
         in the table above have sole voting and investment power with respect
         to all shares of Class A common stock shown as beneficially owned by
         them.

(2)      The address of Messrs. Schwartz, Gorman and McHenry, and Ms. Schmidt is
         c/o U.S. Vision, Inc., One Harmon Drive, Glendora, NJ 08029.

(3)      The shares of stock listed in Mr. Shaughnessy's and Mr. Sullivan's name
         are owned by Grotech Partners IV, L.P., Grotech Partners III, L.P.,
         Grotech III Companion Fund, L.P. and Grotech III Pennsylvania Fund,
         L.P., each a limited partnership in which Mr. Shaughnessy and Mr.
         Sullivan serve as directors or officers of the respective general
         partners. Grotech Capital Group, Inc., the general partner of Grotech
         Partners III, L.P., Grotech III Companion Fund, L.P. and Grotech III
         Pennsylvania Fund, L.P., is the holder of 1,295 of these shares.
         Grotech Capital Group IV, LLC, the general partner of Grotech Partners
         IV, L.P., is the holder of 3,166 of these shares. Messrs. Shaughnessy
         and Sullivan disclaim beneficial ownership of these shares for all
         purposes. (1)



                                       29
<PAGE>   30


(4)      A portion of these shares of stock held in Mr. McDonald's name are
         owned by M&M General Partnership and Constitution Partners I, L.P.,
         each a limited partnership in which Mr. McDonald serves as a director
         or officer of the respective general partners. Mr. McDonald disclaims
         beneficial ownership of these shares, except to the extent of his
         pecuniary interest therein.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Since 1990, we have leased a retail store, office and administrative space
located in a 7,000 square foot building in Philadelphia, Pennsylvania, from a
limited partnership in which William A. Schwartz, Jr., Gayle E. Schmidt and
George E. McHenry, Jr., each of whom is an executive officer of the company and
a 10% limited partner of the partnership. Mr. Schwartz is also the general
partner of the partnership. We made payments to the partnership of $136,600,
$148,600 and $153,000 in fiscal 1998, 1999 and 2000, respectively. Management
believes that the lease terms are comparable to those that could have been
obtained pursuant to an arm's length transaction with unaffiliated partners.




                                       30
<PAGE>   31


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

FINANCIAL STATEMENTS

         The following financial statements of the company are filed as a part
of this report:

<TABLE>
<CAPTION>
                                                                                                               PAGE

<S>                                                                                                           <C>
Report of Independent Auditors..................................................................................F-1
Consolidated Balance Sheets as of January 31, 2001 and 2000.....................................................F-2
Consolidated Statements of Operations -- For the Fiscal Years Ended
  January 31, 2001, 2000 and 1999...............................................................................F-3
Consolidated Statements of Shareholders' Equity -- For the Fiscal Years Ended
  January 31, 2001, 2000 and 1999 ..............................................................................F-4
Consolidated Statements of Cash Flows --For the Fiscal Years Ended
  January 31, 2001, 2000 and 1999...............................................................................F-5
Notes to Consolidated Financial Statements......................................................................F-6
</TABLE>

         All financial statement schedules have been omitted because they are
not applicable or the required information is shown in the consolidated
financial statements and notes thereto.

REPORTS ON FORM 8-K

         The company filed a Form 8-K dated January 5, 2001, to report the
proposed acquisition of the company by the Norcross Roberts Group.



                                       31
<PAGE>   32


                                    EXHIBITS

The following exhibits are filed as a part of this report:

EXHIBIT
NUMBER            EXHIBIT

3.1*     Restated Certificate of Incorporation of the Company

3.2*     Bylaws of the Company

10.1*    Loan and Security Agreement between the Company and Commerce Bank, as
         amended

10.2*    Stock Option Plan, including form of Stock Option Agreement

10.3+    Amendment to Stock Option Plan

10.4*    Subordinated Note Purchase Agreement

10.5**   Amendment to Subordinated Note Purchase Agreement

10.6**   J.C. Penney License Agreement

10.7**   Vision Care Agreement

10.8***  Employment Agreement for William A. Schwartz, Jr.

10.9***  Form of Employment Severance Agreement

10.10**  Form of Non-Statutory Option Agreement

10.11**  Form of Indemnification Agreement

10.12**  Shareholders' Agreement

10.13**  Form of Sears Lease

10.14**  Commerce Bank Mortgages and Schedules

10.15**  DRPA Loan Documentation

10.16*** Form of Warrant

21+      Subsidiaries of the Company

23+      Consent of Independent Auditors

----------
*        Previously filed as an exhibit to the Form S-1 (Reg. No. 333-35819)
         filed with the Commission on September 17, 1997.

**       Previously filed as an exhibit to Amendment No. 1 to the Form S-1 (Reg.
         No. 333-35819) filed with the Commission on October 29, 1997.

***      Previously filed as an exhibit to the company's Form 10-K for the
         fiscal year ended January 31, 1998, which was filed with the Securities
         and Exchange Commission on April 30, 1999.

****     Previously filed as an exhibit to the company's Form 10-Q for the
         quarter ended July 31, 2000, which was filed with the Securities and
         Exchange Commission on September 13, 2000.

+        Filed herewith.



                                       32
<PAGE>   33



                                   SIGNATURES

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

                                U. S. VISION, INC.


May 31, 2001                    By:   /s/ William A. Schwartz, Jr.
                                   -------------------------------
                                      William A. Schwartz, Jr., President and
                                      Chief Executive Officer

     Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities indicated on May 31, 2001.

<TABLE>
<CAPTION>
         Signature                                            Capacity



<S>                                                           <C>
    /s/ William A. Schwartz, Jr.                              President, Chief Executive Officer and Director
--------------------------------------------                  (Principal Executive Officer)
   William A. Schwartz, Jr.


    /s/ George E. McHenry, Jr.                                Executive Vice President and Chief Financial Officer
--------------------------------------------                  (Principal Financial and Accounting Officer)
   George E. McHenry, Jr.


    /s/ Dennis J. Shaughnessy                                 Director
--------------------------------------------
   Dennis J. Shaughnessy


    /s/ J. Roger Sullivan, Jr.                                Director
--------------------------------------------
   J. Roger Sullivan, Jr.


    /s/ Richard K. McDonald                                   Director
--------------------------------------------
   Richard K. McDonald


    /s/ G. Kenneth Macrae                                     Director
--------------------------------------------
   G. Kenneth Macrae


     /s/ Peter M. Troup                                       Director
 -------------------------------------------
   Peter M. Troup
</TABLE>



<PAGE>   34




                         REPORT OF INDEPENDENT AUDITORS


Board of Directors and Shareholders
U.S. Vision, Inc.

We have audited the accompanying consolidated balance sheets of U.S. Vision,
Inc. as of January 31, 2001 and 2000, and the related consolidated statements of
operations, changes in shareholders' equity, and cash flows for each of the
three years in the period ended January 31, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of U.S. Vision, Inc.
at January 31, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended January 31, 2001,
in conformity with accounting principles generally accepted in the United
States.


                                                           /s/ Ernst & Young LLP


Philadelphia, Pennsylvania
March 16, 2001






                                       F-1


<PAGE>   35



                                U.S. Vision, Inc.

                           Consolidated Balance Sheets

           (Dollars in thousands, except share and per share amounts)


<TABLE>
<CAPTION>
                                                                                              JANUARY 31,
                                                                                     -------------------------------
                                                                                        2001                 2000
                                                                                     ----------           ----------


<S>                                                                                  <C>                  <C>
ASSETS



Current assets:
     Cash .................................................................          $      240           $      454
     Accounts receivable ..................................................              10,879               12,006
     Inventory ............................................................              20,954               23,785
     Prepaid expenses and other ...........................................               1,130                  542
                                                                                     ----------           ----------
Total current assets ......................................................              33,203               36,787
Property, plant, and equipment, net .......................................              40,524               37,890
Goodwill, net of accumulated amortization of $1,217 and $868,
     respectively
                                                                                          6,356                6,705
OTHER .....................................................................                 995                1,651
                                                                                     ----------           ----------
TOTAL ASSETS ..............................................................          $   81,078           $   83,033
                                                                                     ==========           ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable--trade ..............................................          $    4,865           $   10,094
     Accrued expenses .....................................................               6,483                5,859
     Current portion of obligations under capital lease ...................                 945                  646
     Current portion of long-term debt ....................................                 450                1,061
                                                                                     ----------           ----------
Total current liabilities .................................................              12,743               17,660
Obligations under capital lease ...........................................               2,272                1,759
Long-term debt, less current portion ......................................              16,112               18,610
Other long-term liabilities ...............................................                 505                  353
Shareholders' equity:
     Common stock, $0.01 par value:
          Authorized shares--15,000,000, issued and outstanding
               shares--7,802,942
                                                                                             78                   78
     Additional paid-in capital ...........................................             115,766              115,766
     Accumulated deficit ..................................................             (66,398)             (71,193)
                                                                                     ----------           ----------
Total shareholders' equity ................................................              49,446               44,651
                                                                                     ----------           ----------
Total liabilities and shareholders' equity ................................          $   81,078           $   83,033
                                                                                     ==========           ==========
</TABLE>



          See accompanying notes to consolidated financial statements.










                                       F-2



<PAGE>   36



                                U.S. Vision, Inc.

                      Consolidated Statements of Operations

                (Dollars in thousands, except per share amounts)







<TABLE>
<CAPTION>
                                                                                YEAR ENDED JANUARY 31,
                                                                 ---------------------------------------------------
                                                                    2001                2000                 1999
                                                                 ----------          ----------           ----------



<S>                                                              <C>                 <C>                  <C>
Net sales .............................................          $  147,617          $  143,419           $  131,491
Cost of sales .........................................              44,645              45,516               40,648
                                                                 ----------          ----------           ----------
Gross profit ..........................................             102,972              97,903               90,843
Operating expenses:
    Selling, general, and administrative
       expenses .......................................              92,070              91,726               79,119
    Special non-recurring charges .....................                 752               2,835                   --
    Depreciation and amortization .....................               4,708               4,670                3,879
                                                                 ----------          ----------           ----------
                                                                     97,530              99,231               82,998
                                                                 ----------          ----------           ----------

Operating income (loss) ...............................               5,442              (1,328)               7,845

Interest expense, net .................................                 456                 469                   21
                                                                 ----------          ----------           ----------

Income (loss) before income tax provision .............               4,986              (1,797)               7,824
Income tax provision ..................................                 191                  22                  355

                                                                 ----------          ----------           ----------
Net income (loss) .....................................          $    4,795          $   (1,819)          $    7,469
                                                                 ==========          ==========           ==========
Net income (loss) per share - basic ...................          $     0.61          $    (0.23)          $     0.96
                                                                 ==========          ==========           ==========
Net income (loss) per share - assuming dilution .......          $     0.61          $    (0.23)          $     0.94
                                                                 ==========          ==========           ==========
</TABLE>



          See accompanying notes to consolidated financial statements.











                                       F-3


<PAGE>   37

                                U.S. Vision, Inc.

           Consolidated Statements of Changes in Shareholders' Equity

                        (In thousands, except share data)






<TABLE>
<CAPTION>
                                            COMMON STOCK
                                        ($0.01 PAR VALUE PER
                                               SHARE)                     ADDITIONAL                              TOTAL
                                    -----------------------------          PAID-IN         ACCUMULATED        SHAREHOLDERS'
                                      SHARES             AMOUNT            CAPITAL           DEFICIT             EQUITY
                                    ----------         ----------         ----------        ----------         ----------


<S>                                 <C>                <C>                <C>               <C>                <C>
Balance at January 31, 1998          7,770,679         $       78         $  115,583        $  (76,843)        $   38,818
Net income                                                                                       7,469              7,469
Additional initial public
     offering costs                                                             (174)                               (174)
Stock issuance in connection
      with acquisition                  16,700                 --                200                                  200
Stock issuance in connection
     with director stock
     compensation plan                  15,563                 --                157                                  157
                                    ----------         ----------         ----------        ----------         ----------
Balance at January 31, 1999          7,802,942                 78            115,766           (69,374)            46,470
Net  loss                                                                                       (1,819)            (1,819)
                                    ----------         ----------         ----------        ----------         ----------
Balance at January 31, 2000          7,802,942                 78            115,766           (71,193)            44,651
Net income                                                                                       4,795              4,795
                                    ----------         ----------         ----------        ----------         ----------
Balance at January 31, 2001          7,802,942         $       78         $  115,766        $  (66,398)        $   49,446
                                    ==========         ==========         ==========        ==========         ==========
</TABLE>





          See accompanying notes to consolidated financial statements.









                                       F-4



<PAGE>   38
                                U.S. Vision, Inc.

                      Consolidated Statements of Cash Flows

                                 (In thousands)




<TABLE>
<CAPTION>
                                                                                   YEAR ENDED JANUARY 31,
                                                                       ------------------------------------------
                                                                         2001             2000             1999
                                                                       --------         --------         --------


<S>                                                                    <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                      $  4,795         $ (1,819)        $  7,469
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
     Depreciation and amortization                                        4,708            4,670            3,879
     Special non-recurring charges                                          396            2,835               --
     Changes in operating assets and liabilities, net of
     effect of acquisitions:
       Accounts receivable                                                1,127            1,104           (1,547)
       Inventory                                                          2,831           (2,918)          (4,275)
       Other                                                                 49             (953)            (415)
       Accounts payable - trade                                          (5,229)           2,200            1,718
       Accrued expenses                                                     777              203             (396)
                                                                       --------         --------         --------
Net cash provided by operating activities                                 9,454            5,322            6,433

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to property, plant, and equipment, net                    (6,313)          (9,601)          (8,894)
     Acquisitions                                                            --             (795)          (1,892)
                                                                       --------         --------         --------
Net cash used in investing activities                                    (6,313)         (10,396)         (10,786)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings:
   Revolving line of credit                                              72,560           75,570           29,265
   Other                                                                    682              870              424
Repayments of borrowings:
   Revolving line of credit                                             (74,741)         (69,680)         (23,090)
   Term loans                                                              (381)            (355)            (524)
   Other                                                                 (1,475)          (1,570)          (1,220)
1997 initial public offering costs                                           --               --             (174)
                                                                       --------         --------         --------
   Net cash provided by (used in) financing activities                   (3,355)           4,835            4,681
                                                                       --------         --------         --------
Net increase (decrease) in cash                                            (214)            (239)             328
Cash at beginning of period                                                 454              693              365
                                                                       --------         --------         --------
Cash at end of period                                                  $    240         $    454         $    693
                                                                       ========         ========         ========

Supplemental disclosure of cash flow information:
Interest paid                                                          $  1,434         $  1,065         $    554
                                                                       ========         ========         ========
Income taxes paid                                                      $    188         $    863         $    235
                                                                       ========         ========         ========
Supplemental schedule of non-cash investing and
   financing activities:
Capital lease obligations incurred                                     $  1,575         $     45         $     --
                                                                       ========         ========         ========
Note payable incurred in connection with acquisitions                  $     --         $    758         $  1,206
                                                                       ========         ========         ========
</TABLE>






          See accompanying notes to consolidated financial statements.







                                       F-5

<PAGE>   39




                                U.S. Vision, Inc.


                   Notes to Consolidated Financial Statements





1. ORGANIZATION

U.S. Vision, Inc. (the "Company") was formed in March 1990 and incorporated in
the Commonwealth of Pennsylvania. In March 1997, the Company reincorporated in
the State of Delaware. The Company's principal business activity is the retail
sale and manufacturing of prescription eyewear through approximately 629 stores
located throughout the United States.


2. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
all of its wholly owned subsidiaries. All significant intercompany transactions
and balances have been eliminated.


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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.


INVENTORY

Inventory, consisting principally of frames and lenses, is valued at the lower
of cost or market, determined by the first-in, first-out method.


PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment are stated at cost. Depreciation, which includes
assets under capital leases, is computed using the straight-line method. The
general range of useful lives is 10 to 30 years for buildings and improvements,
and 3 to 10 years for automobiles, machinery and equipment, computer equipment,
and furniture and fixtures. Depreciation expense totaled $4,342,000, $4,349,000,
and $3,703,000 in fiscal 2000, 1999, and 1998, respectively.

LONG-LIVED ASSETS

Long-lived assets, which principally includes property, plant, and equipment,
and goodwill arising from business acquisitions, are amortized on a
straight-line basis over the expected period to be benefitted from 15 to 40
years. In accordance with FASB Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company
periodically evaluates the realizability of long-lived assets as events or
circumstances indicate a possible inability to recover their carrying amounts.
Long-lived assets are grouped and evaluated on a per store basis by applying
various analyses, including undiscounted cash flows and profitability
projections.




                                       F-6



<PAGE>   40




                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)





2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ADVERTISING

The Company expenses advertising costs as incurred. Advertising expense was
$8,950,000, $9,764,000, and $8,035,000 in fiscal 2000, 1999, and 1998,
respectively.


STORE OPENINGS AND CLOSINGS

The noncapital expenditures incurred in opening new stores or remodeling
existing stores are expensed as incurred. When a store is closed, the remaining
investment in leasehold improvements and the amount estimated to terminate the
lease are expensed.

REVENUE RECOGNITION

Revenue is recognized when merchandise is delivered or shipped to the customer.

RECLASSIFICATION

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

ACCOUNTING FOR INTERNAL USE SOFTWARE

The Company capitalizes certain costs incurred with developing or obtaining
internal-use software in accordance with the provisions of AICPA Statement of
Position 98-1. Total costs capitalized for the years ended January 31, 2001,
2000 and 1999 included capitalization of interest expense of $999,000, $739,000,
and $554,000 respectively.

3. INVENTORY

Inventory is as follows (In thousands):



<TABLE>
<CAPTION>
                              JANUARY 31,
                         2001            2000
                       --------        --------

<S>                    <C>             <C>
Finished goods         $ 20,954        $ 22,810
Work-in-process              --             870
Raw materials                --             105
                       --------        --------
                       $ 20,954        $ 23,785
                       ========        ========
</TABLE>









                                       F-7



<PAGE>   41







                                U.S. Vision, Inc.

             Notes to Consolidated Financial Statements (continued)



4.     PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment is as follows (In thousands):



<TABLE>
<CAPTION>
                                               JANUARY 31,
                                          2001            2000
                                        --------        --------


<S>                                     <C>             <C>
Land and buildings                      $  8,018        $  7,303
Leasehold improvements                    10,641          10,242
Machinery and equipment                   22,639          21,460
Data processing equipment and
   related capitalized costs              17,744          15,310
Furniture and fixtures                    16,653          14,684
                                        --------        --------
                                          75,695          68,999
   Less accumulated depreciation          35,171          31,109
                                        --------        --------
                                        $ 40,524        $ 37,890
                                        ========        ========
</TABLE>






5.     LONG-TERM DEBT

Long-term debt is as follows (In thousands):


<TABLE>
<CAPTION>
                                                                                              JANUARY 31,
                                                                                          2001            2000
                                                                                        --------        --------


<S>                                                                                     <C>             <C>
$20,000,000 Revolving Line of Credit which expires on December 31, 2002
Interest is payable monthly at the lower of prime, as defined, or the thirty day
rate for U.S. Treasury Bills plus 250 basis points (8.08% at January 31, 2001)
The revolving line of credit is secured by substantially all the assets of the
Company                                                                                 $ 12,033        $ 14,214


DRPA Term Loan due February 1, 2010. Requires quarterly payments of $13,322,
which includes principal and interest at 2%. Final payment of $702,434 is due on
January 31, 2010. The term loan is secured by the land and building of the
Corporate headquarters                                                                     1,022           1,054

DRPA Term Loan due February 1, 2010. Requires quarterly payments of $25,313,
which includes principal and interest at 2%. Final payment of $1,334,625 is due
on January 31, 2010. The term loan is secured by the land and building of the
New Jersey manufacturing facility                                                          1,942           2,004
</TABLE>








                                       F-8



<PAGE>   42




                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)





5.     LONG-TERM DEBT (CONTINUED)




<TABLE>
<S>                                                                                     <C>            <C>
DRPA Term Loan due on June 7, 2005. Requires quarterly payments of $33,175,
which includes principal and interest at 2%. The term loan is secured by certain
equipment located in the New Jersey manufacturing facility                                  539            660

Mortgage loan payable due October 2004. Requires monthly payments of $5,121,
which includes principal and interest at 8.5%. Final payment of $413,000 is due
on October 2004. The loan is secured by the land and building of the New Jersey
distribution facility                                                                       497            516

Note payable to stockholder due July 7, 2001. Requires quarterly payments of
$41,666 plus simple interest based on the prime rate at the
first day of each calendar quarter (9.0% at January 31, 2001)                                83            249

Other                                                                                       446            974
                                                                                        -------        -------

                                                                                         16,562         19,671

Less current portion                                                                        450          1,061
                                                                                        -------        -------

                                                                                        $16,112        $18,610
                                                                                        =======        =======
</TABLE>

The revolving credit agreement contains various financial covenants including
maintaining a specified net worth level, current ratio, and a fixed charge
ratio. The revolving credit agreement also prohibits the payment of dividends to
common shareholders. As of January 31, 2001, the Company was in compliance with
the all financial covenants.


The carrying amounts of the Company's debt approximate their fair values.


Maturities of long-term debt for each of the next five years and thereafter are
as follows (In thousands):



<TABLE>
<CAPTION>
       YEAR ENDED JANUARY 31,
       ----------------------


<S>                            <C>
2002                           $   450
2003                            12,405
2004                               371
2005                               727
2006                               145
Thereafter                       2,464
                               -------
                               $16,562
                               =======
</TABLE>














                                       F-9



<PAGE>   43




                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)


6.     LEASE COMMITMENTS


Capital lease obligations are machinery and equipment leases which expire on
various dates through 2005. Assets under capital leases at January 31, 2001 and
2000, were $3,389,000 and $3,232,000, net of accumulated amortization of
$1,211,000 and $795,000, respectively, and are included as a component of
property, plant, and equipment in the consolidated balance sheets.


Future minimum payments required under capital leases and noncancellable
operating leases with lease terms in excess of one year as of January 31, 2001,
are as follows (In thousands):



<TABLE>
<CAPTION>
                                                             CAPITAL                 OPERATING
           YEAR ENDED JANUARY 31,                            LEASES                    LEASES
           ----------------------                          ----------                ---------

<S>                                                        <C>                       <C>
           2002                                            $    1,226                $    935
           2003                                                 1,048                     569
           2004                                                   688                     294
           2005                                                   408                     167
           2006                                                   187                      45
           Thereafter                                              -                       10
                                                           ----------                --------
           Total lease payments                                 3,557                $  2,020
                                                                                     ========
           Less amount representing interest                      340
                                                           ----------
           Present value of minimum capitalized
               lease payments                                   3,217
           Less current portion                                   945
                                                           ----------
           Long-term portion                               $    2,272
                                                           ==========
</TABLE>


At January 31, 2001, the Company operated 33 of its retail stores under
operating leases with varying terms. The leases expire at various dates from
fiscal 2001 to fiscal 2006, and many have renewal options for up to five
additional years. The leases provide for minimum lease payments and, in many
cases, require payment of additional rents if sales exceed stipulated levels.
These additional rents are not significant. The leases also require, in most
cases, payment of taxes and common area expenses such as maintenance, security,
and other expenses.


The Company also operated 596 licensed optical departments under leases with
expiration dates ranging from 60-days to 5-years. These leases provide for
monthly lease payments calculated as a percentage of sales. Rent expense under
these leases was $18,215,000, $17,378,000, and $15,537,000 in fiscal 2000, 1999,
and 1998, respectively. Approximately 70% of these leases are with one large
national retailer. The Company's master lease provides that only a limited
number of the Company's optical centers with this retailer may be closed in any
calendar year without cause.


The Company also operates other facilities under operating leases. Rent expense
for all operating leases, including those on its retail stores and licensed
optical departments described above, was $20,323,000, $19,867,000, and
$18,270,000 in fiscal 2000, 1999, and 1998, respectively.











                                      F-10



<PAGE>   44
                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)

6.     LEASE COMMITMENTS (CONTINUED)

The Company has commitments from Commerce BankLease, a unit of Commerce Bank,
N.A., for a $2,000,000 five-year equipment lease financing facility. During
fiscal 2000 and 1999, the Company executed the agreement and leased
approximately $382,000 and $922,000 of laboratory equipment, which will be paid
for over a period of 60 months. The leased laboratory equipment has been
recorded as a capital lease on the consolidated balance sheet.

7.     INCOME TAXES

The components of the income tax provision are as follows (In thousands):

<TABLE>
<CAPTION>
                                    YEAR ENDED JANUARY 31,
                            ------------------------------------
                             2001           2000           1999
                            ------         ------         ------
<S>                         <C>            <C>            <C>
Current provision           $  217         $   48         $  476
Deferred benefit               (26)           (26)          (121)
                            ------         ------         ------
Income tax provision        $  191         $   22         $  355
                            ======         ======         ======
</TABLE>


Deferred income tax liabilities and assets result from differences in the tax
basis of assets and liabilities and their reported amounts in the consolidated
financial statements. Significant components of the Company's deferred income
taxes are as follows (In thousands):

<TABLE>
<CAPTION>
                                                      YEAR ENDED JANUARY 31,
                                            ------------------------------------------
                                              2001             2000             1999
                                            --------         --------         --------
<S>                                         <C>              <C>              <C>
Deferred tax assets:
      Net operating loss carryover          $  5,347         $  5,856         $  5,730
      Inventory costs                            466            1,262              414
      Alternative Minimum Tax Credit             258              232              206
      Other                                      196              124              170
      Store closing reserves                       8              171              199
                                            --------         --------         --------
Total deferred tax assets                      6,275            7,645            6,719
Valuation allowance                           (3,970)          (5,451)          (4,965)
                                            --------         --------         --------
Net deferred tax assets                        2,305            2,194            1,754
                                            --------         --------         --------
Deferred tax liability:
      Depreciation                            (2,047)          (1,962)          (1,548)
                                            --------         --------         --------
Total deferred tax liability                  (2,047)          (1,962)          (1,548)
                                            --------         --------         --------

Net deferred tax asset                      $    258         $    232         $    206
                                            ========         ========         ========
</TABLE>


The deferred tax valuation reserve decreased by $1,481,000 and increased by
$486,000 for fiscal 2000 and 1999, respectively. The valuation reserve has been
established to eliminate the benefit of all net deferred tax assets except for
the credit on the Alternative Minimum Tax.


                                      F-11



<PAGE>   45




                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)





7.    INCOME TAXES (CONTINUED)


A reconciliation of the income tax provision with amounts determined by applying
the U.S. Statutory rate to income before income tax is as follows (in
thousands):


<TABLE>
<CAPTION>
                                                             YEAR ENDED JANUARY 31,
                                                    2001             2000             1999
                                                  --------         --------         --------


<S>                                               <C>              <C>              <C>
Income tax provision at the statutory rate        $  1,738         $   (611)        $  2,660

Amortization of goodwill                                99               83               54
Nondeductible expenses                                  61              121               47
Increase (decrease) in deferred tax
       asset valuation reserve                      (1,481)             486           (2,691)
State income tax provision                             111               76              136
Other taxes                                           (337)            (133)             149
                                                  --------         --------         --------
Income tax provision                              $    191         $     22         $    355
                                                  ========         ========         ========
</TABLE>


As of January 31, 2001, the Company had net operating loss carry forwards of
approximately $14,100,000 which will begin to expire in the year 2006.
Approximately $5,900,000 of these carry forwards are available to offset future
taxable income without limitation and approximately $8,200,000 of these carry
forwards (the "Restricted NOLs") are significantly limited due to ownership
changes. Approximately $780,000 of the Restricted NOLs will become available for
use each year through the year 2008. Approximately $3,400,000 of the Restricted
NOLs are expected to expire unutilized.


8.     NET INCOME PER SHARE


The following table (In thousands except per share data) presents the
calculation of earnings per share for the periods indicated.

<TABLE>
<CAPTION>
                                                            YEAR ENDED JANUARY 31,
                                                     2001            2000             1999
                                                   --------        --------         --------


<S>                                                <C>             <C>              <C>
Net income available to common shareholders        $  4,795        $ (1,819)        $  7,469
                                                   --------        --------         --------
Basic average common shares outstanding               7,803           7,803            7,789
Effect of dilutive securities:
      Options and warrants                               33              --              175
                                                   --------        --------         --------


Diluted average common shares outstanding             7,836           7,803            7,964
                                                   --------        --------         --------
Net income per share - basic applicable to
         common shareholders                       $   0.61        $  (0.23)        $   0.96
                                                   ========        ========         ========
Net income per share - assuming dilution
         applicable to common shareholders         $   0.61        $  (0.23)        $   0.94
                                                   ========        ========         ========
</TABLE>



Options to purchase shares of common stock have no impact on earnings per share
for the year ended January 31, 2000, as their effect was antidilutive.





                                      F-12



<PAGE>   46



                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)





9.     COMMITMENTS AND CONTINGENCIES

The Company is subject to various pending and threatened litigation from time to
time in the ordinary course of our business. Although all litigation involves
some degree of uncertainty, in the opinion of management, liabilities, if any,
arising from such litigation or threat thereof are not expected to have a
material adverse effect on the company.

10.    ACQUISITIONS

On July 31, 1999, the Company acquired ten licensed optical retail stores
located within The Bay and Zeller's full line stores in the Quebec province. On
September 20, 1999, the Company acquired all of the assets and inventory of
twenty-four licensed optical departments from a regional department store
retailer. Both acquisitions were accounted for under the purchase method of
accounting. The operating results of these acquisitions are included in the
consolidated financial statements since the date of the acquisitions. The total
cost of these acquisitions was $1.5 million, and the excess of the purchase
price over the fair market value of the acquired assets and liabilities assumed
has been recorded as goodwill. The total goodwill recorded on these acquisitions
was $1.2 million, which is being amortized on a straight line basis from the
respective date of each acquisition. Pro forma results of operations have not
been included for these acquisitions as the effect is not material.


On July 7, 1998, the Company acquired nine licensed optical retail stores
located within Sears full line stores and two medical center locations. On
October 4, 1998, the Company acquired all of the assets and inventory of sixteen
licensed optical departments from a department store division of a national
retailer. Both acquisitions were accounted for under the purchase method of
accounting. The operating results of these acquisitions are included in the
consolidated financial statements since the date of the acquisitions. The total
cost of these acquisitions was $3.2 million, and the excess of the purchase
price over the fair market value of the acquired assets and liabilities assumed
has been recorded as goodwill. The total goodwill recorded on these acquisitions
was $2.8 million which is being amortized on a straight line basis from the
respective date of each acquisition. Pro forma results of operations have not
been included for these acquisitions as the effect is not material.

11.    SPECIAL NON-RECURRING CHARGES

In fiscal 1999 the Company's board of directors approved a plan to close its
plastic frame manufacturing facility located in Florida. The Company relocated
the importing and distribution of frames, previously manufactured or imported in
Florida, to its Glendora, NJ distribution facility. In connection with this
plan, the company recorded a charge of $2,835,000, which was comprised of
$2,224,000 in write-offs of inventory used solely in the manufacturing process,
$161,000 in machinery and equipment, $250,000 in buildings and $200,000 for
uncollectible receivables. The write-offs associated with the buildings and
machinery and equipment were intended to reduce their carrying costs to their
estimated net realizable value.

In fiscal 2000 the company closed approximately 80 under-performing stores and
recorded a charge of $752,000 for lease termination charges and the write-off of
furniture and fixtures and leasehold improvements.





                                      F-13




<PAGE>   47
                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)


12.    SEGMENT INFORMATION

The Company operates exclusively in the business of marketing, distribution, and
production of optical products through retail optical stores. On January 31,
2001, the Company operated in 47 states and in Canada. Approximately 66% of the
Company's sales were in licensed departments of one retailer for fiscal 2000,
1999 and 1998. Sales in licensed departments of another retailer were
approximately 12% for fiscal 2000, 1999 and 1998. A termination of either of
these licenses could cause a loss of sales, which would affect operating results
adversely.

The Company's sales to customers, operating income and net property, plant and
equipment are summarized by geographical areas below. Sales to customers are
attributed to the geographical areas based on the point of sale.


<TABLE>
<CAPTION>
                                          UNITED STATES           CANADA            CONSOLIDATED
                                          -------------        ------------         ------------
                                                              (In thousands)

<S>                                       <C>                  <C>                  <C>
YEAR ENDED JANUARY 31, 2001
Sales to customers                        $    141,616         $      6,001         $    147,617
Operating income (loss)                          6,615               (1,173)               5,442
Property, plant and equipment, net              38,535                1,989               40,524

YEAR ENDED JANUARY 31, 2000
Sales to customers                        $    140,463         $      2,956         $    143,419
Operating income (loss)                           (333)                (995)              (1,328)
Property, plant and equipment, net              37,010                  880               37,890

YEAR ENDED JANUARY 31, 1999
Sales to customers                        $    131,491         $         --         $    131,491
Operating income (loss)                          7,845                   --                7,845
</TABLE>

13.    STOCK BASED COMPENSATION PLANS

In February 1996, the Board of Directors authorized the formation of an
incentive stock option plan. The number of shares of Common Stock for which
options could be granted under this plan cannot exceed in the aggregate
1,300,000 shares. The price at which shares may be purchased pursuant to options
granted under the plan may not be less than the fair market value of the shares
of Common Stock on the date the option is granted. In June 2000, the Board of
Directors amended the incentive stock option plan to increase the aggregate
number of shares subject to issuance by 700,000 shares from 1,300,000 shares to
2,000,000 shares.








                                      F-14



<PAGE>   48
                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)



13.    STOCK BASED COMPENSATION PLANS (CONTINUED)



The following table summarizes the Company's stock option activity:



<TABLE>
<CAPTION>
                                                                   YEAR ENDED JANUARY 31,
                                -------------------------------------------------------------------------------------------
                                           2001                              2000                           1999
                                ---------------------------     ---------------------------     ---------------------------
                                                 Weighted                        Weighted                        Weighted
                                                  Average                        Average                         Average
                                  Number         Exercise         Number         Exercise          Number        Exercise
                                 of shares         Price         of shares        Price          of shares         Price
                                -----------     -----------     -----------     -----------     -----------     -----------

<S>                             <C>             <C>             <C>             <C>             <C>             <C>
Options outstanding at
      beginning of year           1,010,473     $      9.09       1,086,523     $      8.99         769,523     $      7.75
Granted                             797,467            3.00              --              --         317,000           12.00
Forfeited                           107,420            7.34          76,050            7.69              --              --
                                -----------     -----------     -----------     -----------     -----------     -----------

Options outstanding
      at end of year              1,700,520     $      6.31       1,010,473     $      9.09       1,086,523     $      8.99
                                ===========     ===========     ===========     ===========     ===========     ===========

Exercisable at end of year          906,665     $      8.52         851,973     $      8.54         832,440     $      8.14

Available for future grants         451,595                         419,385                         343,335
</TABLE>



In June 2000, 105,500 warrants were issued to various directors with an exercise
price of $2.88 per share (fair market value on date of grant). These warrants
vested immediately upon grant and expire in June 2005.

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its employee stock options because the alternative fair value
accounting provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation," requires use of option valuation models that were not
developed for use in valuing employee stock options. If the Company had
recognized compensation costs based upon the fair value of the stock options at
the date of the grant, as prescribed by FAS 123, the Company's pro forma results
would have been:


<TABLE>
<CAPTION>
                     Pro Forma        Pro Forma - Diluted
Fiscal Year Ended    Net Income        Net Income (Loss)
   January 31,         (Loss)              Per Share
-----------------   -----------       -------------------

<S>                 <C>               <C>
       2001         $ 3,970,000          $      0.51
       2000         $(2,300,000)         $     (0.29)
       1999         $ 6,700,000          $      0.85
</TABLE>








                                      F-15



<PAGE>   49




                                U.S. Vision, Inc.


             Notes to Consolidated Financial Statements (continued)





13.           STOCK BASED COMPENSATION PLANS (CONTINUED)


The fair value of options granted in fiscal 2000 and fiscal 1998 was $1.07 and
$5.54 per share, respectively. The fair value of the options was estimated at
the date of the grant using a Black-Scholes option pricing model with the
following assumptions: risk-free interest rate of 5.75%, dividend yield of 0%,
expected volatility of the market price of the common stock of 63.8% in fiscal
2000 and 43.5% in fiscal 1998, and weighted average expected life of the options
of 2 years for fiscal 2000 and 5 years for fiscal 1998. The estimated fair value
of the options was amortized to expense over the vesting period of the options
for the purposes of determining pro forma net income and pro forma net income
per share. The effects of applying FAS 123 for purposes of providing pro forma
disclosures are not likely to be representative of the effects on reported net
income in future years.

During 1998, the Company issued 15,563 shares of common stock to directors.
Compensation expense, based on the fair market value of the stock at the date of
grant, of $158,000 has been included in the statement of income for fiscal 1998.

14.           EMPLOYEE BENEFIT PLAN

The Company implemented an employee savings plan (the "plan") during fiscal 1995
pursuant to Section 401(k) of the Internal Revenue Code. All employees who have
been credited with at least 250 hours of service within three consecutive months
are eligible to participate in the plan. Employees may elect to contribute to
the plan through payroll deductions in an amount not to exceed the amount
permitted under the Internal Revenue Code. The Company has the discretion to
make matching contributions on behalf of the participants. Employees are fully
vested in their contributions. Company contributions vest at a rate of 20% on
each participant's anniversary date in the plan provided that the participant
has completed 1,000 hours of service with the Company as of such date. During
fiscal 2000, 1999 and 1998, the Company contributed $140,000, $135,000, and
$104,000, respectively to the plan.













                                      F-16



<PAGE>   50
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
         EXHIBIT
         NUMBER             DESCRIPTION
         -------            -----------
<S>               <C>
         3.1*     Restated Certificate of Incorporation of the Company

         3.2*     Bylaws of the Company

         10.1*    Loan and Security Agreement between the Company and Commerce
                  Bank, as amended

         10.2*    Stock Option Plan, including form of Stock Option Agreement

         10.3+    Amendment to Stock Option Plan

         10.4*    Subordinated Note Purchase Agreement

         10.5**   Amendment to Subordinated Note Purchase Agreement

         10.6**   J.C. Penney License Agreement

         10.7**   Vision Care Agreement

         10.8***  Employment Agreement for William A. Schwartz, Jr.

         10.9***  Form of Employment Severance Agreement

         10.10**  Form of Non-Statutory Option Agreement

         10.11**  Form of Indemnification Agreement

         10.12**  Shareholders' Agreement

         10.13**  Form of Sears Lease

         10.14**  Commerce Bank Mortgages and Schedules

         10.15**  DRPA Loan Documentation

         10.16*** Form of Warrant

         21+      Subsidiaries of the Company

         23+      Consent of Independent Auditors
</TABLE>


----------
*        Previously filed as an exhibit to the Form S-1 (Reg. No. 333-35819)
         filed with the Commission on September 17, 1997.

**       Previously filed as an exhibit to Amendment No. 1 to the Form S-1 (Reg.
         No. 333-35819) filed with the Commission on October 29, 1997.

***      Previously filed as an exhibit to the company's Form 10-K for the
         fiscal year ended January 31, 1998, which was filed with the Securities
         and Exchange Commission on April 30, 1999.

****     Previously filed as an exhibit to the company's Form 10-Q for the
         quarter ended July 31, 2000, which was filed with the Securities and
         Exchange Commission on September 13, 2000.

+        Filed herewith.