TABLE OF CONTENTS




|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II  OTHER INFORMATION   
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     



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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
      For the quarterly period ended April 29, 2000, or


Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
      For the transition period from  to .


Commission file number 1-12814

COLE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)


|                                                     |  |  |                                      | 
|---------------------------------------------------- |  |  | ------------------------------------ | 
|Delaware                                             |  |  | 34-1453189                           | 
|(State or other jurisdiction of                      |  |  | (I.R.S. employer identification no.) | 
|incorporation or organization)                      
|                                                    
|5915 Landerbrook Drive                               |  |  | 44124                                | 
|Mayfield Heights, Ohio                               |  |  | (Zip Code)                           | 
|                                                    
|                                                    
|                                                    
|                                                    
|(Address of principal executive offices)            
|                                                    
|(440) 449-4100                                      
|                                                    
|                                                    
|                                                    
|                                                    
|(Registrants telephone number, including area code)

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

As of May 31, 2000, 15,518,812 shares of the registrants common
stock were outstanding.

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##### Table of Contents



COLE NATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED APRIL 29, 2000
INDEX

|                              |  |  |  |         |  |  |                                                                             |                                                                                       |  |  |          |    | 
|----------------------------- |  |  |  | ------- |  |  | --------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- |  |  | -------- | -- | 
|                              |  |  |  |         |  |  |                                                                             |                                                                                       |  |  | Page No.
|PART I. FINANCIAL INFORMATION
|                             
|                             
|                             
|                             
|                              |  |  |  | Item 1. |  |  |                                                                             | Financial Statements                                                                  | 
|                             
|                             
|                             
|                             
|                              |  |  |  |         |  |  | Consolidated Balance Sheets as of April 29, 2000 and January 29, 2000       |                                                                                       |  |  | 1        |   
|                             
|                             
|                             
|                             
|                              |  |  |  |         |  |  | Consolidated Statements of Operations for the 13 weeks ended April 29, 2000 |                                                                                      
|                             
|                             
|                             
|                             
|                              |  |  |  |         |  |  | and May 1, 1999                                                             |                                                                                       |  |  | 2        |   
|                             
|                             
|                             
|                             
|                              |  |  |  |         |  |  | Consolidated Statements of Cash Flows for the 13 weeks ended April 29, 2000 |                                                                                      
|                             
|                             
|                             
|                             
|                              |  |  |  |         |  |  | and May 1, 1999                                                             |                                                                                       |  |  | 3        |   
|                             
|                             
|                             
|                             
|                              |  |  |  |         |  |  | Notes to Consolidated Financial Statements                                  |                                                                                       |  |  | 4        |   
|                             
|                             
|                             
|                             
|                              |  |  |  | Item 2. |  |  |                                                                             | Management's Discussion and Analysis of Financial Condition and Results of Operations |  |  |          | 6  | 
|                             
|                             
|                             
|                             
|                              |  |  |  | Item 3. |  |  |                                                                             | Quantitative and Qualitative Disclosures about Market Risk                            |  |  |          | 9  | 
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION   
|                             
|                             
|                             
|                             
|                              |  |  |  | Item 6. |  |  |                                                                             | Exhibits and Reports on Form 8-K                                                      |  |  |          | 10 | 





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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)

|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |          |         |         | 
|---------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | --------------------------------- | ------------------------------------------ | -------- | --------- | ------- | ----------- | -------- | ------- | ------- | 
|                                                                                                                             |                                                                                                |                                   |                                            |          | April 29, |         | January 29,
|                                                                                                                             |                                                                                                |                                   |                                            |          | 2000      |         | 2000       
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |            
|Assets                                                                                                                      
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Current assets:                                                                                                             
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Cash and temporary cash investments                                                            |                                   | $                                          | 20,507   |           |         | $           | 28,953   |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Accounts receivable, less allowance for doubtful accounts of
$7,518 in 2000 and $7,557 in 1999 |                                   |                                            | 42,781   |           |         |             | 41,682   |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Current portion of notes receivable                                                            |                                   |                                            | 4,863    |           |         |             | 4,917    |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Refundable income taxes                                                                        |                                   |                                            | 1,546    |           |         |             | 1,546    |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Inventories                                                                                    |                                   |                                            | 120,129  |           |         |             | 116,514  |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Prepaid expenses and other                                                                     |                                   |                                            | 6,086    |           |         |             | 6,947    |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Deferred income tax benefits                                                                   |                                   |                                            | 5,338    |           |         |             | 3,901    |        
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|                                                                                                                             |                                                                                                | Total current assets              |                                            |          | 201,250   |         |             |          | 204,460 |        
|                                                                                                                            
|Property and equipment, at cost                                                                                              |                                                                                                |                                   | 273,111                                    |          |           |         | 267,633     |         
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Less  accumulated depreciation and amortization                                               |                                   |                                            | (146,911 | )         |         |             | (144,249 | )      
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|                                                                                                                             |                                                                                                | Total property and equipment, net |                                            |          | 126,200   |         |             |          | 123,384 |        
|                                                                                                                            
|Notes receivable, excluding current portion and less reserves for
uncollectible amounts of $4,081 in 2000 and $4,196 in 1999 |                                                                                                |                                   | 23,509                                     |          |           |         | 25,948      |         
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Deferred income taxes and other assets                                                                                       |                                                                                                |                                   | 76,216                                     |          |           |         | 77,080      |         
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Intangible assets, net                                                                                                       |                                                                                                |                                   | 155,949                                    |          |           |         | 157,399     |         
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|                                                                                                                             |                                                                                                |                                   | Total assets                               |          | $         | 583,124 |             |          | $       | 588,271 | 
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|Liabilities and Stockholders Equity                                                                                        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Current liabilities:                                                                                                        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Current portion of long-term debt                                                              |                                   | $                                          | 1,248    |           |         | $           | 1,515    |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Accounts payable                                                                               |                                   |                                            | 54,140   |           |         |             | 60,388   |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Accrued interest                                                                               |                                   |                                            | 7,053    |           |         |             | 6,482    |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Accrued liabilities                                                                            |                                   |                                            | 77,135   |           |         |             | 72,176   |        
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|                                                                                                                             |                                                                                                |                                   | Total current liabilities                  |          |           | 139,576 |             |          |         | 140,561 | 
|                                                                                                                            
|Long-term debt, net of discount and current portion                                                                          |                                                                                                |                                   | 284,452                                    |          |           |         | 284,584     |         
|                                                                                                                            
|Other long-term liabilities                                                                                                  |                                                                                                |                                   | 16,437                                     |          |           |         | 16,610      |         
|                                                                                                                            
|Stockholders equity:                                                                                                       
|                                                                                                                             | Preferred stock                                                                                |                                   |                                            |         |           |         |             |         |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Common stock                                                                                   |                                   |                                            | 16       |           |         |             | 16       |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Paid-in capital                                                                                |                                   |                                            | 261,966  |           |         |             | 261,835  |        
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Accumulated deficit                                                                            |                                   |                                            | (101,340 | )         |         |             | (99,984  | )      
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Accumulated other comprehensive loss                                                           |                                   |                                            | (5,171   | )         |         |             | (3,358   | )      
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Treasury stock at cost                                                                         |                                   |                                            | (6,219   | )         |         |             | (6,218   | )      
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Unamortized restricted stock awards                                                            |                                   |                                            | (4,754   | )         |         |             | (5,064   | )      
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                             | Notes receivable-stock option exercise                                                         |                                   |                                            | (1,839   | )         |         |             | (711     | )      
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|                                                                                                                             |                                                                                                |                                   | Total stockholders equity                 |          |           | 142,659 |             |          |         | 146,516 | 
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         
|                                                                                                                             |                                                                                                |                                   | Total liabilities and stockholders equity |          | $         | 583,124 |             |          | $       | 588,271 | 
|                                                                                                                             |                                                                                                |                                   |                                            |          |           |         |             |         

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

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##### Table of Contents



COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
(Dollars in thousands, except per share amounts)

|                                     |                           |                                           |         |                |         |        |         |       |         | 
|------------------------------------ | ------------------------- | ----------------------------------------- | ------- | -------------- | ------- | ------ | ------- | ----- | ------- | 
|                                     |                           |                                           |         | 13 Weeks Ended
|                                     |                           |                                           |         |               
|                                     |                           |                                           |         | April 29,      |         | May 1,
|                                     |                           |                                           |         | 2000           |         | 1999  
|                                     |                           |                                           |         |                |         |       
|Net revenue                          |                           | $                                         | 257,771 |                |         | $      | 260,483 |      
|                                    
|Cost of goods sold                   |                           |                                           | 86,328  |                |         |        | 88,118  |      
|                                    
|                                    
|                                    
|                                    
|Operating expenses                   |                           |                                           | 158,343 |                |         |        | 151,859 |      
|                                    
|                                    
|                                    
|                                    
|Depreciation and amortization        |                           |                                           | 10,002  |                |         |        | 9,266   |      
|                                     |                           |                                           |         |                |         |        |         |      
|                                     |                           | Total costs and expenses                  |         |                | 254,673 |        |         |       | 249,243 | 
|                                     |                           |                                           |         |                |         |        |         |      
|                                    
|Operating income                     |                           |                                           | 3,098   |                |         |        | 11,240  |      
|                                    
|Interest and other (income) expense:
|                                    
|                                    
|                                    
|                                    
|                                     | Interest expense          |                                           |         | 7,060          |         |        |         | 6,828 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Interest and other income |                                           |         | (950           | )       |        |         | (739  | )      
|                                     |                           |                                           |         |                |         |        |         |      
|                                     |                           | Total interest and other (income) expense |         |                | 6,110   |        |         |       | 6,089   | 
|                                     |                           |                                           |         |                |         |        |         |      
|Income (loss) before income taxes    |                           |                                           | (3,012  | )              |         |        | 5,151   |      
|                                    
|Income tax provision (benefit)       |                           |                                           | (1,656  | )              |         |        | 2,112   |      
|                                     |                           |                                           |         |                |         |        |         |      
|Net income (loss)                    |                           | $                                         | (1,356  | )              |         | $      | 3,039   |      
|                                     |                           |                                           |         |                |         |        |         |      
|Earnings (loss) per common share:   
|                                    
|                                    
|                                    
|                                    
|                                     | Basic -                   |                                           | $       | (0.09          | )       |        | $       | 0.20  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Diluted -                 |                                           | $       | (0.09          | )       |        | $       | 0.20  |        

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

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##### Table of Contents



COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
(Dollars in thousands)

|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |         |       |         |  
|------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------ | -------------- | ------- | ------ | ------- | ----- | ------- | -
|                                      |                                                                                                 |                                                                                 |                                                                  |        | 13 Weeks Ended
|                                      |                                                                                                 |                                                                                 |                                                                  |        |               
|                                      |                                                                                                 |                                                                                 |                                                                  |        | April 29,      |         | May 1,
|                                      |                                                                                                 |                                                                                 |                                                                  |        | 2000           |         | 1999  
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |       
|Cash flows from operating activities:
|                                     
|                                     
|                                     
|                                     
|                                      | Net income (loss)                                                                               |                                                                                 | $                                                                | (1,356 | )              |         | $      | 3,039   |      
|                                     
|                                     
|                                     
|                                     
|                                      | Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 | Depreciation and amortization                                                   |                                                                  |        | 10,002         |         |        |         | 9,266 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 | Non-cash interest, net                                                          |                                                                  |        | (18            | )       |        |         | (260  | )      
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 | Increases (decreases) in cash resulting from changes in
assets and liabilities:
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 |                                                                                 | Accounts and notes receivable, prepaid expenses
and other assets |        |                | 861     |        |         |       | (1,285  | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 |                                                                                 | Inventories                                                      |        |                | (3,615  | )      |         |       | (8,158  | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 |                                                                                 | Accounts payable, accrued liabilities and other liabilities      |        |                | (610    | )      |         |       | (20,481 | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 |                                                                                 | Accrued interest                                                 |        |                | 571     |        |         |       | 937     |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                 |                                                                                 | Accrued, refundable and deferred income taxes                    |        |                | (1,615  | )      |         |       | 1,677   |  
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|                                      |                                                                                                 |                                                                                 | Net cash provided (used) by operating activities                 |        |                | 4,220   |        |         |       | (15,265 | )
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|Cash flows from investing activities:
|                                     
|                                     
|                                     
|                                     
|                                      | Purchase of property and equipment, net                                                         |                                                                                 |                                                                  | (9,099 | )              |         |        | (7,221  | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Systems development costs                                                                       |                                                                                 |                                                                  | (1,823 | )              |         |        | (3,328  | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                                      |                                                                                 |                                                                  | 56     |                |         |        | (148    | )    
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|                                      |                                                                                                 |                                                                                 | Net cash used by investing activities                            |        |                | (10,866 | )      |         |       | (10,697 | )
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|Cash flows from financing activities:
|                                     
|                                     
|                                     
|                                     
|                                      | Repayment of long-term debt                                                                     |                                                                                 |                                                                  | (419   | )              |         |        | (346    | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Payment of deferred financing fees                                                              |                                                                                 |                                                                  | (188   | )              |         |        |        |      
|                                     
|                                     
|                                     
|                                     
|                                      | Common stock repurchased                                                                        |                                                                                 |                                                                  |       |                |         |        | (327    | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Net proceeds from exercise of stock options and warrants                                        |                                                                                 |                                                                  |       |                |         |        | 153     |      
|                                     
|                                     
|                                     
|                                     
|                                      | Issuance of stock option notes receivable                                                       |                                                                                 |                                                                  | (998   | )              |         |        |        |      
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                                      |                                                                                 |                                                                  | (195   | )              |         |        | 434     |      
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|                                      |                                                                                                 |                                                                                 | Net cash used by financing activities                            |        |                | (1,800  | )      |         |       | (86     | )
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|Cash and temporary cash investments: 
|                                     
|                                     
|                                     
|                                     
|                                      | Net decrease during the period                                                                  |                                                                                 |                                                                  | (8,446 | )              |         |        | (26,048 | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Balance, beginning of the period                                                                |                                                                                 |                                                                  | 28,953 |                |         |        | 51,057  |      
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        
|                                      | Balance, end of the period                                                                      |                                                                                 | $                                                                | 20,507 |                |         | $      | 25,009  |      
|                                      |                                                                                                 |                                                                                 |                                                                  |        |                |         |        |        

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

-3-



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##### Table of Contents



COLE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) Summary of Significant Accounting Policies

Basis of Presentation

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

The accompanying consolidated financial statements have been
prepared without audit and certain information and footnote disclosures
normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States have been
condensed or omitted, although management believes that the disclosures
herein are adequate to make the information not misleading. Results for
interim periods are not necessarily indicative of the results to be
expected for the full year. These statements should be read in
conjunction with the Companys consolidated financial statements for the
fiscal year ended January 29, 2000.

In the opinion of management, the accompanying financial statements
contain all adjustments (consisting only of normal recurring accruals)
necessary to present fairly its financial position as of April 29, 2000
and the results of operations and cash flows for the 13 weeks ended April
29, 2000 and May 1, 1999.

Inventories

The accompanying interim consolidated financial statements have been
prepared without physical inventories.

Cash Flows

Net cash flows from operating activities reflect cash (receipts)
payments for income taxes and interest of ($61,000) and $6,224,000,
respectively, for the 13 weeks ended April 29, 2000, and $234,000 and
$5,620,000, respectively, for the 13 weeks ended May 1, 1999.

Earnings Per Share

Earnings per share for the 13 weeks ended April 29, 2000 and May 1,
1999 have been calculated based on the following weighted average number
of common shares and equivalents outstanding:

|        |  |      |            |      |  |  |            | 
|------- |  | ---- | ---------- | ---- |  |  | ---------- | 
|        |  | 2000 |            | 1999
|        |  |      |            |     
|Basic   |  |      | 15,518,812 |      |  |  | 14,869,996 | 
|       
|       
|       
|       
|Diluted |  |      | 15,518,812 |      |  |  | 15,068,447 | 

-4-



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##### Table of Contents



Total Other Comprehensive Income (Loss)

Total other comprehensive income (loss) for the 13 weeks ended April
29, 2000 and May 1, 1999 is as follows (000s omitted):

|                                  |  |                |        |        |  |   |       |  
|--------------------------------- |  | -------------- | ------ | ------ |  | - | ----- | -
|                                  |  | 13 Weeks Ended
|                                  |  |               
|                                  |  | April 29,      |        | May 1,
|                                  |  | 2000           |        | 1999  
|                                  |  |                |        |       
|Net income (loss)                 |  | $              | (1,356 | )      |  | $ | 3,039 |  
|                                 
|                                 
|                                 
|                                 
|Cumulative translation loss       |  |                | (1,813 | )      |  |   | (854  | )
|                                  |  |                |        |        |  |   |       |  
|Total comprehensive income (loss) |  | $              | (3,169 | )      |  | $ | 2,185 |  
|                                  |  |                |        |        |  |   |       |  

(2) Segment Information

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

|                                  |                      |                                |        |                |         |        |        |         |         |  
|--------------------------------- | -------------------- | ------------------------------ | ------ | -------------- | ------- | ------ | ------ | ------- | ------- | -
|                                  |                      |                                |        | 13 Weeks Ended
|                                  |                      |                                |        |               
|                                  |                      |                                |        | April 29,      |         | May 1,
|                                  |                      |                                |        | 2000           |         | 1999  
|                                  |                      |                                |        |                |         |       
|Net revenue:                     
|                                 
|                                 
|                                 
|                                 
|                                  | Cole Vision          |                                | $      | 207,115        |         |        | $      | 212,082 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Things Remembered    |                                |        | 50,656         |         |        |        | 48,401  |        
|                                  |                      |                                |        |                |         |        |        |        
|                                  |                      | Consolidated net revenue       |        | $              | 257,771 |        |        | $       | 260,483 |  
|                                  |                      |                                |        |                |         |        |        |        
|Operating income (loss):         
|                                 
|                                 
|                                 
|                                 
|                                  | Cole Vision          |                                | $      | 9,443          |         |        | $      | 14,327  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Things Remembered    |                                |        | (2,378         | )       |        |        | (1,341  | )      
|                                  |                      |                                |        |                |         |        |        |        
|                                  |                      | Total segment operating income |        |                | 7,065   |        |        |         | 12,986  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Unallocated amounts:
|                                 
|                                 
|                                 
|                                 
|                                  |                      | Corporate expenses             |        |                | (3,967  | )      |        |         | (1,746  | )
|                                  |                      |                                |        |                |         |        |        |        
|Consolidated operating income     |                      |                                | 3,098  |                |         |        | 11,240 |        
|                                 
|                                 
|                                 
|                                 
|Interest and other expense, net   |                      |                                | (6,110 | )              |         |        | (6,089 | )      
|                                  |                      |                                |        |                |         |        |        |        
|Income (loss) before income taxes |                      | $                              | (3,012 | )              |         | $      | 5,151  |        
|                                  |                      |                                |        |                |         |        |        |        

(3) Reclassifications

Certain 1999 amounts have been reclassified to conform to the 2000
presentation.

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##### Table of Contents









Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of certain factors affecting the
Companys results of operations for the 13 week periods ended April 29,
2000 and May 1, 1999 (the Companys first quarter) and its liquidity and
capital resources. This discussion should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in
this filing and the audited financial statements for the fiscal year
ended January 29, 2000 included in the annual report on Form 10-K.

Fiscal years end on the Saturday closest to January 31 and are
identified according to the calendar year in which they begin. For
example, the fiscal year ended January 29, 2000 is referred to as fiscal
1999. The current fiscal year, which will end February 3, 2001, is
referred to as fiscal 2000.

Results of Operations

The following table sets forth certain operating information for the
first quarter fiscal 2000 and fiscal 1999 (dollars in millions):

| |                                                      |                             |                      |                     |       |               |       |        |       |        |       |      |      |       |    | 
| | ---------------------------------------------------- | --------------------------- | -------------------- | ------------------- | ----- | ------------- | ----- | ------ | ----- | ------ | ----- | ---- | ---- | ----- | -- | 
| |                                                      |                             |                      |                     |       | First Quarter
| |                                                      |                             |                      |                     |       |              
| |                                                      |                             |                      |                     |       | Fiscal        |       | Fiscal
| |                                                      |                             |                      |                     |       | 2000          |       | 1999   |       | Change
| |                                                      |                             |                      |                     |       |               |       |        |       |       
| | Net Revenue-                                        
|
|
|
|
| |                                                      | Cole Vision                 |                      | $                   | 207.1 |               |       | $      | 212.1 |        |       |      | (2.3 | %)   
|
|
|
|
| |                                                      | Things Remembered           |                      |                     | 50.7  |               |       |        | 48.4  |        |       |      | 4.7  | %    
| |                                                      |                             |                      |                     |       |               |       |        |       |        |       |      |      |      
| |                                                      |                             | Total net revenue    |                     | $     | 257.8         |       |        | $     | 260.5  |       |      |      | (1.0  | %)
|
|
|
|
| | Gross profit                                         |                             | $                    | 171.4               |       |               | $     | 172.4  |       |        |       | (0.5 | %)  
|
|
|
|
| | Operating expenses                                   |                             |                      | 158.3               |       |               |       | 151.9  |       |        |       | 4.3  | %   
|
|
|
|
| | Depreciation & amortization                          |                             |                      | 10.0                |       |               |       | 9.3    |       |        |       | 7.9  | %   
| |                                                      |                             |                      |                     |       |               |       |        |       |        |       |      |      |      
| |                                                      |                             | Operating income     |                     | $     | 3.1           |       |        | $     | 11.2   |       |      |      | (72.4 | %)
| |                                                      |                             |                      |                     |       |               |       |       
| | Percentage of Net Revenue-                          
|
|
|
|
| |                                                      | Gross margin                |                      |                     | 66.5  | %             |       |        | 66.2  | %      |       |      | 0.3  |      
|
|
|
|
| |                                                      | Operating expenses          |                      |                     | 61.4  |               |       |        | 58.3  |        |       |      | 3.1  |      
|
|
|
|
| |                                                      | Depreciation & amortization |                      |                     | 3.9   |               |       |        | 3.6   |        |       |      | 0.3  |      
| |                                                      |                             |                      |                     |       |               |       |        |       |        |       |      |      |      
| |                                                      |                             | Operating income     |                     |       | 1.2           | %     |        |       | 4.3    | %     |      |      | (3.1  | ) 
| |                                                      |                             |                      |                     |       |               |       |       
| | Number of Retail Locations
at the End of the Period-
|
|
|
|
| |                                                      |                             | Cole Licensed Brands |                     |       | 1,078         |       |        |       | 1,185  |      
|
|
|
|
| |                                                      |                             | Pearle company-owned |                     |       | 447           |       |        |       | 469    |      
|
|
|
|
| |                                                      |                             | Pearle franchised    |                     |       | 421           |       |        |       | 412    |      
| |                                                      |                             |                      |                     |       |               |       |        |       |       
| |                                                      |                             |                      | Total Cole Vision   |       |               | 1,946 |        |       |        | 2,066 |     
|
|
|
|
| |                                                      |                             | Things Remembered    |                     |       | 791           |       |        |       | 817    |      
| |                                                      |                             |                      |                     |       |               |       |        |       |       
| |                                                      |                             |                      | Total Cole National |       |               | 2,737 |        |       |        | 2,883 |     
| |                                                      |                             |                      |                     |       |               |       |       

The decrease in net revenue for the first quarter of fiscal 2000 was
primarily attributable to a reduction in the number of locations, including
the closing of all optical departments at Montgomery Ward in December 1999,
partially

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##### Table of Contents



offset by a consolidated comparable store sales increase of 3.1%. Changes in
comparable store sales by business compared to the same period a year ago
were:

|                            |                     |  |               |     |  
|--------------------------- | ------------------- |  | ------------- | --- | -
|                            |                     |  | First Quarter
|                            |                     |  |              
|Cole Licensed Brands (U.S.) |                     |  | 4.9           | %  
|                           
|                           
|                           
|                           
|Pearle company-owned (U.S.) |                     |  | (1.3          | %) 
|                           
|                           
|                           
|                           
|                            | Total Cole Vision   |  |               | 2.4 | %
|                           
|                           
|                           
|                           
|Things Remembered           |                     |  | 5.8           | %  
|                           
|                           
|                           
|                           
|                            | Total Cole National |  |               | 3.1 | %

At Cole Licensed Brands, total first quarter sales increased despite
the closing of the Montgomery Ward departments. The average selling price
was nearly even between years, reflecting a small decrease in the average
contact lens price, while the number of transactions was up slightly even
though there were fewer locations. First quarter sales results for Pearle
reflected a decrease in the number of transactions due, in part, to fewer
locations. The average selling price was essentially flat between years.
The comparable store sales performance at Pearle company-owned stores,
although negative, was the best quarters comparable store sales
performance since the second quarter of fiscal 1998. At Things
Remembered, the comparable store sales increase reflected an increase in
sales of new merchandise at higher average unit retails and an increase
in the number of transactions compared to a year ago.

The gross profit decrease was primarily attributable to the lower
revenue at Cole Vision, partially offset by the revenue increase at
Things Remembered. Gross margin at Cole Vision improved 0.9 percentage
points in fiscal 2000 compared to the first quarter last year. The
primary cause for the improvement was the additional revenue associated
with the MetLife vision care business acquired in October 1999. Gross
margin at Things Remembered decreased 2.2 percentage points compared to
the first quarter last year reflecting the impact of an aggressive
merchandise clearance promotion this year.

The unfavorable leverage in operating expenses was primarily
attributable to a 1.6 percentage point increase in payroll costs, a 0.7
percentage point increase from severance costs, a 0.3 percentage point
increase in net advertising expenditures and a 0.2 percentage point
increase in store occupancy costs. The leverage loss resulted primarily
from the decline in comparable store sales at Pearle company-owned
stores, a $1.8 million charge for severance costs recorded in connection
with a personnel reduction at Cole Vision, and increased expenses
associated with the Target Optical expansion. The increase in
depreciation and amortization was primarily attributable to amortization
of systems development costs related to the Pearle manufacturing and
merchandise/inventory management system implemented in the third quarter
last year and amortization of restricted stock awarded in January 2000.

The decrease in income from operations was primarily the result of
the decrease in net revenue and the increase in operating expenses and
depreciation and amortization.

Net interest and other expense was virtually flat between years at
$6.1 million. An income tax provision was recorded in the first quarter
of fiscal 2000 and fiscal 1999 using the Companys estimated annual
effective tax rates of 55% and 41%, respectively. The increase in the
rate approximates the full year effective rate realized in fiscal 1999.

Net income decreased to a loss of $1.4 million for the first quarter
of fiscal 2000 from a profit of $3.0 million for the first quarter of
fiscal 1999. The decrease was due to the decrease in income from
operations, offset in part by the higher effective tax rate on the fiscal
2000 first quarter loss.

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##### Table of Contents



Liquidity and Capital Resources

The Companys primary source of liquidity is funds provided from
operations of its operating subsidiaries. In addition, its wholly-owned
subsidiary, Cole National Group, Inc., and its operating subsidiaries
have a working capital line of credit of $75.0 million. By amendment, the
working capital commitment has been reduced to $50.0 million for the
period January 30, 2000 to June 29, 2000 and certain covenants were
modified. There were no working capital borrowings outstanding at any
time during the first quarter of fiscal 2000 and fiscal 1999. As of April
29, 2000, availability under the credit facility totaled $40.4 million,
after reduction for commitments under outstanding letters of credit.

Operations for the first quarter provided $4.2 million of cash in
fiscal 2000 compared to using $15.3 million in fiscal 1999. The primary
reason for the additional $19.5 million in cash provided by operations
was a significantly smaller decrease in accounts payable, accrued
liabilities and other liabilities in the first quarter of fiscal 2000 as
compared to fiscal 1999.

Cash used for investing activities included capital additions of
$9.1 million and $7.2 million for the first quarter of fiscal 2000 and
fiscal 1999, respectively. The majority of capital expenditures were for
store fixtures, equipment and leasehold improvements for new stores and
the remodeling of existing stores. Investments in systems development
costs totaled $1.8 and $3.3 million in the first quarter of fiscal 2000
and fiscal 1999, respectively.

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

Recent Developments and Forward-Looking Information

In March 2000, the Company launched the reorganization of the
operating structure of its optical business. It is believed that the
essential ingredient to improved sales and profitability of the Companys
vision segment is the creation of distinct organizations that are
dedicated to serving the needs of their respective customers. Pearle and
Cole Licensed Brands are being managed as independent business units,
each of which has been strengthened by the addition of merchandising,
manufacturing, distribution and finance responsibilities.

While first quarter of fiscal 2000 produced comparable store sales
increases, the Company expects improvement in its profitability to lag
behind any sustained improvement in sales. The Company expects that
expenses associated with improving the Pearle business, as well as the
rapid Target Optical expansion, will cause results to be below last year
for the second quarter.

Certain sections of this Form 10-Q, including this Managements
Discussion and Analysis, contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those forecast due to a variety of
factors that can adversely affect operating results, liquidity and
financial condition such as risks associated with the timing and
achievement of the continuing restructuring and improvements in the
operations of the optical business, the Companys ability to select,
stock and price merchandise attractive to customers, success of systems
integration, competition in the optical industry, integration of acquired
businesses, economic and weather factors affecting consumer spending,
operating factors affecting customer satisfaction, including
manufacturing quality of optical and engraved goods, the Companys
relationship with host stores and franchisees, the mix of goods sold,
pricing and other competitive factors, and the seasonality of the
business. Forward-looking statements are made based upon managements
expectations and beliefs concerning future events impacting Cole National
Corporation. All forward-looking statements involve risk and uncertainty.

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##### Table of Contents









Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

-9-



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##### Table of Contents









PART II  OTHER INFORMATION







Item 6. Exhibits and Reports on Form 8-K

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

27       Financial Data Schedule

(b) Reports on Form 8-K

None.

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##### Table of Contents



SIGNATURE

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

|                          |                                                                                                                
|------------------------- | ---------------------------------------------------------------------------------------------------------------
|COLE NATIONAL CORPORATION
|                         
|By:                       | /s/ William P. Lahiff, Jr.                                                                                     
|                          |                                                                                                                
|                          | William P. Lahiff, Jr.
Vice President and Controller
(Duly Authorized Officer and Principal Accounting Officer)
|                         
|                          | Date:  June 12, 2000                                                                                           

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##### Table of Contents



COLE NATIONAL CORPORATION
FORM 10-Q
QUARTER ENDED APRIL 29, 2000

EXHIBIT INDEX

| |         |  |                         | 
| | ------- |  | ----------------------- | 
| | Exhibit
| | Number  |  | Description            
| | 27      |  | Financial Data Schedule | 

-12-