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 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                     
|Exhibit 10.1                  



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##### Table of Contents



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 August 4, 2001, 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
(State or other jurisdiction of
incorporation or organization)                |  | 34-1453189
(I.R.S. employer
identification no.)
|                                                                                      
|5915 Landerbrook Drive
Mayfield Heights, Ohio
(Address of principal executive offices) |  | 44124
(Zip code)                               

(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 August 31, 2001, 15,885,649 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 AUGUST 4, 2001
INDEX

|         |                                                                                                      |  |          |    | 
|-------- | ---------------------------------------------------------------------------------------------------- |  | -------- | -- | 
|         |                                                                                                      |  | Page No.
|PART I.  | FINANCIAL INFORMATION                                                                                |  |          |    | 
|        
|        
|        
|        
|Item 1.  | Financial Statements                                                                                 |  |          |    | 
|        
|        
|        
|        
|         | Consolidated Balance Sheets as of August 4, 2001 and February 3, 2001                                |  |          | 1  | 
|        
|        
|        
|        
|         | Consolidated Statements of Operations for the 13 and 26 weeks
ended August 4, 2001 and July 29, 2000 |  |          | 2  | 
|        
|        
|        
|        
|         | Consolidated Statements of Cash Flows for the 26 weeks ended
August 4, 2001 and July 29, 2000        |  |          | 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                                           |  |          | 10 | 
|        
|        
|        
|        
|PART II. | OTHER INFORMATION                                                                                    |  |          |    | 
|        
|        
|        
|        
|Item 4.  | Submission of Matters to a Vote of Security Holders                                                  |  |          | 11 | 
|        
|        
|        
|        
|Item 6.  | Exhibits and Reports on Form 8-K                                                                     |  |          | 12 | 





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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

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

|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|----------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | --------- | ------- | ----------- | ------- | -------- | ------- | 
|                                                                                                                        |                                                                                              |                                            |         | August 4, |         | February 3,
|                                                                                                                        |                                                                                              |                                            |         | 2001      |         | 2001       
|                                                                                                                        |                                                                                              |                                            |         |           |         |            
|Assets                                                                                                                  |                                                                                              |                                            |         |           |         |             |         |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Current assets:                                                                                                         |                                                                                              |                                            |         |           |         |             |         |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Cash and cash equivalents                                                                    |                                            | $       | 34,523    |         |             | $       | 36,725   |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Accounts receivable, less allowance for doubtful accounts
of $6,534 and $7,348, respectively |                                            |         | 38,720    |         |             |         | 40,505   |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Current portion of notes receivable                                                          |                                            |         | 4,366     |         |             |         | 5,097    |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Inventories                                                                                  |                                            |         | 130,346   |         |             |         | 122,238  |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Refundable income taxes                                                                      |                                            |         | 547       |         |             |         | 1,237    |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Prepaid expenses and other                                                                   |                                            |         | 15,553    |         |             |         | 15,188   |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Deferred income tax benefits                                                                 |                                            |         | 2,207     |         |             |         | 2,177    |        
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        
|                                                                                                                        |                                                                                              | Total current assets                       |         |           | 226,262 |             |         |          | 223,167 | 
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Property and equipment, at cost                                                                                         |                                                                                              |                                            | 284,164 |           |         |             | 275,241 |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Less  accumulated depreciation and amortization                                             |                                            |         | (154,796  | )       |             |         | (149,543 | )      
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|                                                                                                                        |                                                                                              | Total property and equipment, net          |         |           | 129,368 |             |         |          | 125,698 | 
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Notes receivable, excluding current portion, less reserves for
uncollectible amounts of $3,945 and $4,537, respectively |                                                                                              |                                            | 19,422  |           |         |             | 18,000  |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Deferred income taxes and other assets                                                                                  |                                                                                              |                                            | 78,748  |           |         |             | 75,460  |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Intangible assets, net                                                                                                  |                                                                                              |                                            | 148,680 |           |         |             | 151,588 |         
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        
|                                                                                                                        |                                                                                              | Total assets                               |         | $         | 602,480 |             |         | $        | 593,913 | 
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        
|Liabilities and Stockholders Equity                                                                                    |                                                                                              |                                            |         |           |         |             |         |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Current liabilities:                                                                                                    |                                                                                              |                                            |         |           |         |             |         |         
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Current portion of long-term debt                                                            |                                            | $       | 207       |         |             | $       | 452      |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Accounts payable                                                                             |                                            |         | 56,801    |         |             |         | 56,505   |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Accrued interest                                                                             |                                            |         | 6,418     |         |             |         | 6,736    |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Accrued liabilities                                                                          |                                            |         | 81,827    |         |             |         | 76,646   |        
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                        | Accrued income taxes                                                                         |                                            |         | 5,301     |         |             |         | 3,458    |        
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        
|                                                                                                                        |                                                                                              | Total current liabilities                  |         |           | 150,554 |             |         |          | 143,797 | 
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Long-term debt, net of discount and current portion                                                                     |                                                                                              |                                            | 284,269 |           |         |             | 284,286 |         
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Other long-term liabilities                                                                                             |                                                                                              |                                            | 15,923  |           |         |             | 16,280  |         
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |         | 
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|                                                                                                                       
|Stockholders equity                                                                                                    |                                                                                              |                                            | 151,734 |           |         |             | 149,550 |         
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        
|                                                                                                                        |                                                                                              | Total liabilities and stockholders equity |         | $         | 602,480 |             |         | $        | 593,913 | 
|                                                                                                                        |                                                                                              |                                            |         |           |         |             |         |          |        

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

1



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

|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |         |  
|------------------------------------ | ---------------------------------------------- | - | -------------------- | ------- | ---------------------- | - | --------- | ------- | -------- | - | ------- | ------- | - | - | ------- | ------- | -
|                                     |                                                |   | Thirteen Weeks Ended |         | Twenty-Six Weeks Ended
|                                     |                                                |   |                      |         |                       
|                                     |                                                |   | August 4,            |         | July 29,               |   | August 4, |         | July 29,
|                                     |                                                |   | 2001                 |         | 2000                   |   | 2001      |         | 2000    
|                                     |                                                |   |                      |         |                        |   |           |         |         
|Net revenue                          |                                                | $ | 273,348              |         |                        | $ | 264,663   |         |          | $ | 543,639 |         |   | $ | 522,434 |        
|                                     |                                                |   |                      |         |                        |   |           |         |         
|                                    
|                                    
|                                    
|                                    
|Costs and expenses:                  |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Cost of goods sold                             |   |                      | 90,684  |                        |   |           | 87,981  |          |   |         | 177,800 |   |   |         | 174,309 |  
|                                    
|                                    
|                                    
|                                    
|                                     | Operating expenses                             |   |                      | 163,354 |                        |   |           | 159,624 |          |   |         | 329,452 |   |   |         | 317,967 |  
|                                    
|                                    
|                                    
|                                    
|                                     | Depreciation and amortization                  |   |                      | 10,079  |                        |   |           | 9,960   |          |   |         | 19,952  |   |   |         | 19,962  |  
|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|                                     | Total costs and expenses                       |   |                      | 264,117 |                        |   |           | 257,565 |          |   |         | 527,204 |   |   |         | 512,238 |  
|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|Operating income                     |                                                |   | 9,231                |         |                        |   | 7,098     |         |          |   | 16,435  |         |   |   | 10,196  |        
|                                     |                                                |   |                      |         |                        |   |           |         |         
|                                    
|                                    
|                                    
|                                    
|Interest and other (income) expense: |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Interest expense                               |   |                      | 7,010   |                        |   |           | 7,028   |          |   |         | 14,068  |   |   |         | 14,088  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Interest and other income                      |   |                      | (1,024  | )                      |   |           | (934    | )        |   |         | (2,311  | ) |   |         | (1,884  | )
|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|                                     | Total interest and other (income) expense, net |   |                      | 5,986   |                        |   |           | 6,094   |          |   |         | 11,757  |   |   |         | 12,204  |  
|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|Income (loss) before income taxes    |                                                |   | 3,245                |         |                        |   | 1,004     |         |          |   | 4,678   |         |   |   | (2,008  | )      
|                                     |                                                |   |                      |         |                        |   |           |         |         
|                                    
|                                    
|                                    
|                                    
|Income tax provision (benefit)       |                                                |   | 1,786                |         |                        |   | 552       |         |          |   | 2,574   |         |   |   | (1,104  | )      
|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|Net income (loss)                    |                                                | $ | 1,459                |         |                        | $ | 452       |         |          | $ | 2,104   |         |   | $ | (904    | )      
|                                     |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|Earnings (loss) per share:           |                                                |   |                      |         |                        |   |           |         |          |   |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Basic                                          |   | $                    | 0.09    |                        |   | $         | 0.03    |          |   | $       | 0.13    |   |   | $       | (0.06   | )
|                                    
|                                    
|                                    
|                                    
|                                     | Diluted                                        |   | $                    | 0.09    |                        |   | $         | 0.03    |          |   | $       | 0.13    |   |   | $       | (0.06   | )

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

2



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##### Table of Contents



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

|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |        |         |  
|------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------- | ---------------------- | ------- | -------- | ------- | ------ | ------- | -
|                                      |                                                                                          |                                                                                           |                                                                  |         | Twenty-Six Weeks Ended
|                                      |                                                                                          |                                                                                           |                                                                  |         |                       
|                                      |                                                                                          |                                                                                           |                                                                  |         | August 4,              |         | July 29,
|                                      |                                                                                          |                                                                                           |                                                                  |         | 2001                   |         | 2000    
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |         
|Cash flows from operating activities: |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |        
|                                     
|                                     
|                                     
|                                     
|                                      | Net income (loss)                                                                        |                                                                                           | $                                                                | 2,104   |                        |         | $        | (904    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                                                           |                                                                  |         |                        |         |          |         |       
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          | Depreciation and amortization                                                             |                                                                  |         | 19,952                 |         |          |         | 19,962 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          | Non-cash interest, net                                                                    |                                                                  |         | (234                   | )       |          |         | (711   | )      
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          | Gain on sale of fixed assets                                                              |                                                                  |         | (683                   | )       |          |         |       |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          | Increases (decreases) in cash resulting from changes in operating
assets and liabilities: |                                                                  |         |                        |         |          |         |        |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          |                                                                                           | Accounts and notes receivable, prepaid expenses and other assets |         |                        | 3,261   |          |         |        | 2,981   |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          |                                                                                           | Inventories                                                      |         |                        | (8,108  | )        |         |        | (16,354 | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          |                                                                                           | Accounts payable, accrued liabilities and other liabilities      |         |                        | 5,247   |          |         |        | 9,274   |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          |                                                                                           | Accrued interest                                                 |         |                        | (318    | )        |         |        | (369    | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                          |                                                                                           | Accrued, refundable and deferred income taxes                    |         |                        | 2,648   |          |         |        | (549    | )
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|                                      |                                                                                          |                                                                                           | Net cash provided by operating activities                        |         |                        | 23,869  |          |         |        | 13,330  |  
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|Cash flows from investing activities: |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |        
|                                     
|                                     
|                                     
|                                     
|                                      | Purchases of property and equipment, net                                                 |                                                                                           |                                                                  | (19,907 | )                      |         |          | (17,598 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Proceeds from sale of fixed assets, net                                                  |                                                                                           |                                                                  | 4,712   |                        |         |          |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Systems development costs                                                                |                                                                                           |                                                                  | (4,578  | )                      |         |          | (3,851  | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Investment in Pearle Europe, net                                                         |                                                                                           |                                                                  | (6,446  | )                      |         |          | (553    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                               |                                                                                           |                                                                  | (176    | )                      |         |          | (10     | )     
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|                                      |                                                                                          |                                                                                           | Net cash used for investing activities                           |         |                        | (26,395 | )        |         |        | (22,012 | )
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|Cash flows from financing activities: |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |        
|                                     
|                                     
|                                     
|                                     
|                                      | Repayment of long-term debt                                                              |                                                                                           |                                                                  | (312    | )                      |         |          | (770    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Net proceeds from exercise of stock options                                              |                                                                                           |                                                                  | 1,372   |                        |         |          | 472     |       
|                                     
|                                     
|                                     
|                                     
|                                      | Net issuance of notes receivable  stock options and awards                              |                                                                                           |                                                                  | (340    | )                      |         |          | (1,128  | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Payment of deferred financing fees                                                       |                                                                                           |                                                                  |        |                        |         |          | (375    | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                               |                                                                                           |                                                                  | (396    | )                      |         |          | (175    | )     
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|                                      |                                                                                          |                                                                                           | Net cash provided by (used for) financing activities             |         |                        | 324     |          |         |        | (1,976  | )
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|Cash and cash equivalents:            |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |        
|                                     
|                                     
|                                     
|                                     
|                                      | Net decrease during the period                                                           |                                                                                           |                                                                  | (2,202  | )                      |         |          | (10,658 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Balance, beginning of the period                                                         |                                                                                           |                                                                  | 36,725  |                        |         |          | 28,953  |       
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       
|                                      | Balance, end of the period                                                               |                                                                                           | $                                                                | 34,523  |                        |         | $        | 18,295  |       
|                                      |                                                                                          |                                                                                           |                                                                  |         |                        |         |          |         |       

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 and Accounting Policies

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 generally
accepted accounting principles have been condensed or omitted, although
management believes that the disclosures herein are adequate to make the
information not misleading. Results for interim periods are not necessarily
indicative of the results to be expected for the full year. These statements
should be read in conjunction with the Companys consolidated financial
statements for the fiscal year ended February 3, 2001.

In the opinion of management, the accompanying financial statements
contain all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the Companys financial position as of August 4,
2001 and the results of operations and cash flows for the 26 weeks ended
August 4, 2001 and July 29, 2000.

Inventories

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

Cash Flows

Net cash flows from operating activities reflect cash payments for income
taxes and interest of $51,000 and $13,785,000 respectively, for the 26 weeks
ended August 4, 2001, and $176,000 and $13,915,000, respectively, for the 26
weeks ended July 29, 2000.

Earnings Per Share

Earnings per share for the 13 and 26 weeks ended August 4, 2001 and July
29, 2000 have been calculated based on the following weighted average number
of common shares and equivalents outstanding:

|        |  |                |            |                  |  |      |            |      |  |  |            |  |  |  |            | 
|------- |  | -------------- | ---------- | ---------------- |  | ---- | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|        |  | Thirteen Weeks |            | Twenty-six Weeks
|        |  |                |            |                 
|        |  | 2001           |            | 2000             |  | 2001 |            | 2000
|        |  |                |            |                  |  |      |            |     
|Basic   |  |                | 15,802,850 |                  |  |      | 15,552,558 |      |  |  | 15,748,537 |  |  |  | 15,535,685 | 
|       
|       
|       
|       
|Diluted |  |                | 16,243,001 |                  |  |      | 15,594,899 |      |  |  | 16,019,867 |  |  |  | 15,535,685 | 

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##### Table of Contents



COLE NATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

(1) Summary of Significant Accounting Policies (continued)

Total Other Comprehensive Income (Loss)

Total other comprehensive income (loss) for the 13 and 26 weeks ended
August 4, 2001 and July 29, 2000 is as follows (000s omitted):

|                                     |  |                |       |                  |  |      |       |      |  |   |       |   |  |   |        |  
|------------------------------------ |  | -------------- | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                                     |  | Thirteen Weeks |       | Twenty-Six Weeks
|                                     |  |                |       |                 
|                                     |  | 2001           |       | 2000             |  | 2001 |       | 2000
|                                     |  |                |       |                  |  |      |       |     
|Net income (loss)                    |  | $              | 1,459 |                  |  | $    | 452   |      |  | $ | 2,104 |   |  | $ | (904   | )
|                                    
|                                    
|                                    
|                                    
|Cumulative translation income (loss) |  |                | (82   | )                |  |      | 1,141 |      |  |   | (959  | ) |  |   | (672   | )
|                                     |  |                |       |                  |  |      |       |      |  |   |       |   |  |   |        |  
|Total comprehensive income (loss)    |  | $              | 1,377 |                  |  | $    | 1,593 |      |  | $ | 1,145 |   |  | $ | (1,576 | )
|                                     |  |                |       |                  |  |      |       |      |  |   |       |   |  |   |        |  

(2) Segment Information

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

|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |         |         |         |        |  
|------------------------ | --------------------------------- | ----------------- | ------------------------ | ------------------------------ | ------ | -------------- | ------ | ---------------- | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | -
|                         |                                   |                   |                          |                                |        | Thirteen Weeks |        | Twenty-Six Weeks
|                         |                                   |                   |                          |                                |        |                |        |                 
|                         |                                   |                   |                          |                                |        | 2001           |        | 2000             |        | 2001    |        | 2000   
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |        
|Net revenue:             |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|                        
|                        
|                        
|                        
|                         | Cole Vision                       |                   | $                        | 200,714                        |        |                | $      | 190,548          |        |         | $      | 417,095 |         |         | $      | 397,663 |        
|                        
|                        
|                        
|                        
|                         |                                   | Things Remembered |                          |                                | 72,634 |                |        |                  | 74,115 |         |        |         | 126,544 |         |        |         | 124,771 |        
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|                         |                                   |                   | Consolidated net revenue |                                | $      | 273,348        |        |                  | $      | 264,663 |        |         | $       | 543,639 |        |         | $       | 522,434 |       
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|Operating income (loss): |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|                        
|                        
|                        
|                        
|                         | Cole Vision                       |                   | $                        | 1,403                          |        |                | $      | (969             | )      |         | $      | 12,782  |         |         | $      | 8,474   |        
|                        
|                        
|                        
|                        
|                         |                                   | Things Remembered |                          |                                | 10,434 |                |        |                  | 11,887 |         |        |         | 9,366   |         |        |         | 9,509   |        
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|                         |                                   |                   |                          | Total segment operating income |        |                | 11,837 |                  |        |         | 10,918 |         |         |         | 22,148 |         |         |         | 17,983 |  
|                        
|                        
|                        
|                        
|                         | Unallocated amounts:              |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |         |        
|                        
|                        
|                        
|                        
|                         |                                   |                   |                          | Corporate expenses             |        |                | (2,606 | )                |        |         | (3,820 | )       |         |         | (5,713 | )       |         |         | (7,787 | )
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|                         | Consolidated operating income     |                   |                          | 9,231                          |        |                |        | 7,098            |        |         |        | 16,435  |         |         |        | 10,196  |        
|                        
|                        
|                        
|                        
|                         | Interest and other income, net    |                   |                          | (5,986                         | )      |                |        | (6,094           | )      |         |        | (11,757 | )       |         |        | (12,204 | )      
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        
|                         | Income (loss) before income taxes |                   | $                        | 3,245                          |        |                | $      | 1,004            |        |         | $      | 4,678   |         |         | $      | (2,008  | )      
|                         |                                   |                   |                          |                                |        |                |        |                  |        |         |        |         |         |         |        |        

5



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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 and 26 week periods ended August 4, 2001 and
July 29, 2000 (the Companys second quarter and first six months,
respectively) 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 February 3, 2001 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 February 3, 2001 is referred to as fiscal 2000. The
current fiscal year, which will end February 2, 2002, is referred to as
fiscal 2001.

Results of Operations

The following table sets forth certain operating information for the
second quarter and first six months of fiscal 2001 and fiscal 2000 (dollars
in millions):

|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |      |   |  |      |  
|---------------------------------------------------- | ----------------------------- | - | ----- | ------------------- | - | -------------- | ----- | ---------------- | - | ------ | ----- | ---- | - | ---- | ----- | ------ | - | - | ----- | ----- | - | - | ----- | ---- | - |  | ---- | -
|                                                     |                               |   |       |                     |   | Second Quarter |       | First Six Months
|                                                     |                               |   |       |                     |   |                |       |                 
|                                                     |                               |   |       |                     |   | 2001           |       | 2000             |   | Change |       | 2001 |   | 2000 |       | Change
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |       
|Net revenue:                                         |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cole Vision                   |   | $     | 200.7               |   |                | $     | 190.6            |   |        |       | 5.3  | % |      | $     | 417.1  |   |   | $     | 397.6 |   |   |       | 4.9  | %
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Things Remembered             |   |       | 72.6                |   |                |       | 74.1             |   |        |       | (2.0 | ) |      |       | 126.5  |   |   |       | 124.8 |   |   |       | 1.4  |  
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                     |                               |   |       | Total net revenue   |   | $              | 273.3 |                  |   | $      | 264.7 |      |   |      | 3.3   | %      |   | $ | 543.6 |       |   | $ | 522.4 |      |   |  | 4.1  | %
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                    
|                                                    
|                                                    
|                                                    
|Gross margin                                         |                               | $ | 182.7 |                     |   | $              | 176.7 |                  |   |        | 3.4   | %    |   | $    | 365.8 |        |   | $ | 348.1 |       |   |   | 5.1   | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Operating expenses                                   |                               |   | 163.4 |                     |   |                | 159.6 |                  |   |        | 2.3   |      |   |      | 329.4 |        |   |   | 317.9 |       |   |   | 3.6   |     
|                                                    
|                                                    
|                                                    
|                                                    
|Depreciation and amortization                        |                               |   | 10.1  |                     |   |                | 10.0  |                  |   |        | 1.2   |      |   |      | 20.0  |        |   |   | 20.0  |       |   |   | (0.1  | )   
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                     |                               |   |       | Operating income    |   | $              | 9.2   |                  |   | $      | 7.1   |      |   |      | 30.1  | %      |   | $ | 16.4  |       |   | $ | 10.2  |      |   |  | 61.2 | %
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|Percentage of net revenue:                           |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Gross margin                  |   |       | 66.8                | % |                |       | 66.8             | % |        |       |     |   |      |       | 67.3   | % |   |       | 66.6  | % |   |       | 0.7  |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Operating expenses            |   |       | 59.7                |   |                |       | 60.3             |   |        |       | (0.6 | ) |      |       | 60.6   |   |   |       | 60.8  |   |   |       | (0.2 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Depreciation and amortization |   |       | 3.7                 |   |                |       | 3.8              |   |        |       | (0.1 | ) |      |       | 3.7    |   |   |       | 3.8   |   |   |       | (0.1 | )
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                     |                               |   |       | Operating income    |   |                | 3.4   | %                |   |        | 2.7   | %    |   |      | 0.7   |        |   |   | 3.0   | %     |   |   | 2.0   | %    |   |  | 1.0  |  
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|Number of retail locations
at the end of the period: |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cole Licensed Brands          |   |       | 1,224               |   |                |       | 1,106            |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |      |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Pearle company-owned          |   |       | 435                 |   |                |       | 446              |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |      |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Pearle franchised             |   |       | 416                 |   |                |       | 425              |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |      |  
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                     |                               |   |       | Total Cole Vision   |   |                | 2,075 |                  |   |        | 1,977 |      |   |      |       |        |   |   |       |       |   |   |       |      |   |  |      |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Things
Remembered             |   |       | 780                 |   |                |       | 788              |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |      |  
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     
|                                                     |                               |   |       | Total Cole National |   |                | 2,855 |                  |   |        | 2,765 |      |   |      |       |        |   |   |       |       |   |   |       |      |   |  |      |  
|                                                     |                               |   |       |                     |   |                |       |                  |   |        |       |      |   |      |       |        |   |   |       |       |   |   |       |     

6



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The increases in consolidated net revenue for the second quarter and
first six months were primarily attributable to increases in comparable store
sales at Cole Vision, an increase in the number of Target Optical locations
and additional managed vision care revenue. The second quarter revenue
increase at Cole Vision was partially offset by a sales decrease at Things
Remembered caused by the general slowdown in mall traffic and the calendar
shift that benefited first quarter of fiscal 2001 as it ended one week closer
to Mothers Day, an important gift giving occasion. Changes in comparable
store sales by business compared to the same periods a year ago were:

|                             |                     |  |                |     |                  |  |      |     |  
|---------------------------- | ------------------- |  | -------------- | --- | ---------------- |  | ---- | --- | -
|                             |                     |  | Second Quarter |     | First Six Months
|                             |                     |  |                |     |                 
|Cole Licensed Brands (U.S.)  |                     |  | 1.6            | %   |                  |  | 3.3  | %  
|                            
|                            
|                            
|                            
|Pearle U.S. company-owned    |                     |  | 3.5            | %   |                  |  | 2.3  | %  
|                            
|                            
|                            
|                            
|                             | Total Cole Vision   |  |                | 1.8 | %                |  |      | 2.2 | %
|                            
|                            
|                            
|                            
|Things Remembered            |                     |  | (1.6           | %)  |                  |  | (0.8 | %) 
|                            
|                            
|                            
|                            
|                             | Total Cole National |  |                | 0.8 | %                |  |      | 1.4 | %
|                            
|                            
|                            
|                            
|                             |                     |  |                |     |                  |  |      |    
|                            
|                            
|                            
|                            
|Pearle U.S. franchise stores |                     |  | (0.2           | %)  |                  |  | (1.1 | %) 
|                            
|                            
|                            
|                            
|Pearle U.S. chain-wide       |                     |  | 1.5            | %   |                  |  | 0.5  | %  

At Cole Licensed Brands, the second quarter and first six months
comparable store sales increases primarily reflect an increase in the average
spectacle selling price. Comparable store sales for the second quarter
increased despite the fact that this years National Eye Exam Month promotion
at Sears Optical will run exclusively in the third quarter rather than
beginning in the second quarter as it did last year. At Pearle company-owned
stores, the second quarter comparable store sales increase was driven by the
average spectacle selling price and an increase in the number of
transactions. For the first six months, company-owned comparable store sales
were primarily driven by an increase in average spectacle selling price that
was due, in part, to not repeating a 50% off frame promotion that ran
during the entire first quarter of fiscal 2000. At Things Remembered,
comparable store sales for the first six months decreased, in part, from not
repeating February 2000s aggressive merchandise clearance promotion and from
the general slowdown in mall traffic. However, average selling price
increased as a result of sales of new merchandise at higher average unit
retails, more personalization and not repeating last years February
promotion.

The gross margin dollar increase for the second quarter resulted from
increased net revenue and gross margin rate at Cole Vision partially offset
by decreased net revenue and gross margin rate at Things Remembered. The
gross margin dollar increase for the first six months resulted from
improvements in net revenue and gross margin rate at both Cole Vision and
Things Remembered. The gross margin rate at Cole Vision improved 0.4 and 0.8
percentage points for the second quarter and first six months of fiscal 2001
compared to the same periods last year. The primary causes for the
improvement were the increased average spectacle selling price and the
additional revenue from managed vision care. The gross margin rate at Things
Remembered decreased 0.5 percentage points in the second quarter of fiscal
2001 compared to the same period last year as a result of various promotional
activities undertaken to stimulate sales. The gross margin rate for the first
six months improved 0.4 percentage points reflecting the improvement in
average selling price due in part to not repeating last years first quarter
aggressive clearance promotion.

The increases in operating expenses for the second quarter and first six
months were primarily due to costs incurred to support the increases in net
revenue and the Target Optical expansion. Operating expenses as a percentage
of net revenue decreased by 0.6 and 0.2 percentage points in the second
quarter and first six months compared to the same periods last year. The
second quarter improvement was a result of leveraging non-store overhead and
Cole Visions advertising expense, as well as improved efficiencies in the
cost per managed vision care claim processed. Partially offsetting these
gains were a 1.2 percentage point increase in payroll costs and a 0.2
percentage point increase in store occupancy costs due to the Target Optical
expansion and additional payroll costs incurred for training, improving
customer satisfaction and selling. Excluding a

7



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##### Table of Contents



$1.8 million first quarter
severance charge in fiscal 2000, operating expenses as a percentage of net
revenue for the first six months were essentially flat to last year.

The increase in operating income for the second quarter was primarily
attributable to the increases in net revenues and gross margin rates at Cole
Vision and the improvement in operating expense leverage. For the first six
months, the increase in operating income resulted from increases in net
revenue and gross margin rates at both Cole Vision and Things Remembered and
the severance charge included in fiscal 2000 results. During the first six
months of fiscal 2001, 60 Target Optical locations were opened, bringing the
total number to 177. The Companys profit improvement for the second quarter
and first six months was achieved after absorbing the increased losses from
the continued expansion of Target Optical.

The decrease in six month interest and other (income) expense, net, was
primarily the result of a $0.7 million first quarter gain from the sale of a
Dallas facility no longer needed for Pearles operations. An income tax
provision (benefit) was recorded in the first six months of fiscal 2001 and
fiscal 2000 using the Companys estimated annual effective tax rate of 55%.

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 commitment ranging from $50.0 million to $75.0 million based
on Cole National Groups current debt leverage ratio as described in the
credit facility. As of August 4, 2001, the total commitment was $75.0 million
and availability under the credit facility totaled $64.5 million, after
reduction for commitments under outstanding letters of credit. There were no
working capital borrowings outstanding at any time during the first six
months of fiscal 2001 or the first six months of fiscal 2000. Cole National
Group and its principal operating subsidiaries were in compliance with all
credit facility covenants at August 4, 2001.

Operations for the first six months provided $23.9 million of cash in
fiscal 2001 compared to $13.3 million in fiscal 2000. The primary reasons for
the $10.6 million increase in cash provided by operations were the changes in
operating assets and liabilities during the first six months of fiscal 2001
as compared to fiscal 2000. A decreased use of funds for inventories, an
increase in funds provided from improved earnings and additional funds
provided by the change in accrued, refundable and deferred income taxes
versus a year ago were partially offset by less funds provided by accounts
payable and accrued liabilities in fiscal 2001 versus last year.

Cash used for investing activities included capital additions of $19.9
million and $17.6 million for the first six months of fiscal 2001 and fiscal
2000, respectively. The majority of capital expenditures were for store
fixtures, equipment and leasehold improvements for new stores including the
Target Optical expansion and the remodeling of existing stores. Net proceeds
from the sale of the Dallas facility in the first quarter provided $4.7
million of cash flow in fiscal 2001. Investments in systems development costs
totaled $4.6 million and $3.9 million in the first six months of fiscal 2001
and fiscal 2000, respectively. The Companys net investment in Pearle Europe
used $6.4 million and $0.6 million in the first six months of fiscal 2001 and
fiscal 2000, respectively. The investment in fiscal 2001 was made in
connection with Pearle Europes acquisition of a leading optical retail chain
in Portugal during the second quarter of fiscal 2001.

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.

8



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##### Table of Contents



Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). This standard requires that companies stop
amortizing goodwill and certain intangible assets with an indefinite useful
life created by business combinations accounted for using the purchase method
of accounting. Instead, goodwill and intangible assets deemed to have an
indefinite useful life will be subject to an annual review for impairment.
The new standard generally will be effective for the Company in the first
quarter of fiscal 2002. The Company is in the process of quantifying the
impact of adopting each of the provisions of SFAS 142.

Upon adoption of SFAS 142, the Company expects to stop amortizing
goodwill and tradenames. Based upon the current level of these assets, this
would reduce annual amortization expense by approximately $5.7 million.
Because a substantial portion of the goodwill amortization is nondeductible
for tax purposes, the impacts of stopping goodwill and tradename amortization
would be to reduce the Companys annual effective tax rate and to increase
its annual net income.

The FASB has also issued Statement of Financial Accounting Standards No.
141, Business Combinations (SFAS 141) and No. 143 Accounting for Asset
Retirement Obligations (SFAS 143). SFAS 141 changes the accounting for
business combinations by, among other things, prohibiting the use of the
pooling of interests method. SFAS 143 provides guidance for legal obligations
arising from the retirement of long-lived assets. Neither of these standards
is expected to have a material affect on the Companys financial position or
operations.

9



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##### Table of Contents



Forward-Looking Information

Certain sections of this Form 10-Q Report, 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 forecasted due to a variety of
factors that can adversely affect the Companys operating results, liquidity
and financial condition such as risks associated with the timing and
achievement of improvements in the operations of the optical business, the
success of new store openings and the rate at which new stores achieve
profitability, the Companys ability to select, stock and price merchandise
attractive to customers, success of systems development and 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 Companys 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.




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.

10



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##### Table of Contents






PART II  OTHER INFORMATION




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

On June 14, 2001 the Company held its annual meeting of stockholders. At
that meeting, the stockholders elected seven directors to serve until the next
annual meeting of stockholders, confirmed the appointment of Arthur Andersen
LLP as independent auditors of the Company for the fiscal year ending February
2, 2002, and approved amendments to the Companys Management Incentive Bonus
Plan and its Employee Stock Purchase Plan.

Of the total eligible votes of 15,695,229, stockholders cast votes of
14,664,119 or 93.43% of the total eligible votes. The votes cast for the
aforementioned matters were as follows:

1) Election of Directors

|                  |  |     |            |          |  |           |        |  |  |               |   | 
|----------------- |  | --- | ---------- | -------- |  | --------- | ------ |  |  | ------------- | - | 
|                  |  |     |            |          |  |           |        |  |  | Abstentions  
|                  |  |     |            |          |  |           |        |  |  | and/or Broker
|                  |  | For |            | Withheld |  | Non-votes
|                  |  |     |            |          |  |          
|Jeffrey A. Cole   |  |     | 14,577,410 |          |  |           | 86,709 |  |  |               | 0 | 
|                 
|                 
|                 
|                 
|Timothy F. Finley |  |     | 14,580,489 |          |  |           | 83,630 |  |  |               | 0 | 
|                 
|                 
|                 
|                 
|Irwin W. Gold     |  |     | 14,582,339 |          |  |           | 81,780 |  |  |               | 0 | 
|                 
|                 
|                 
|                 
|Peter V. Handal   |  |     | 14,578,977 |          |  |           | 85,142 |  |  |               | 0 | 
|                 
|                 
|                 
|                 
|Larry Pollock     |  |     | 14,578,707 |          |  |           | 85,412 |  |  |               | 0 | 
|                 
|                 
|                 
|                 
|Charles A. Ratner |  |     | 14,578,144 |          |  |           | 85,975 |  |  |               | 0 | 
|                 
|                 
|                 
|                 
|Walter J. Salmon  |  |     | 14,582,224 |          |  |           | 81,895 |  |  |               | 0 | 

2) Confirmation of Independent Auditors

|                    |  |     |            |          |  |           |        |  |  |               |       | 
|------------------- |  | --- | ---------- | -------- |  | --------- | ------ |  |  | ------------- | ----- | 
|                    |  |     |            |          |  |           |        |  |  | Abstentions  
|                    |  |     |            |          |  |           |        |  |  | and/or Broker
|                    |  | For |            | Withheld |  | Non-votes
|                    |  |     |            |          |  |          
|Arthur Andersen LLP |  |     | 14,639,349 |          |  |           | 15,211 |  |  |               | 9,559 | 

3) Approval of amendments to, and reauthorization of, the Management Incentive Bonus Program.

| |  |     |            |          |  |           |           |  |  |               |        | 
| |  | --- | ---------- | -------- |  | --------- | --------- |  |  | ------------- | ------ | 
| |  |     |            |          |  |           |           |  |  | Abstentions  
| |  |     |            |          |  |           |           |  |  | and/or Broker
| |  | For |            | Withheld |  | Non-votes
| |  |     |            |          |  |          
| |  |     | 11,459,438 |          |  |           | 1,268,566 |  |  |               | 13,374 | 

11



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Item 4. Submission of Matters to a Vote of Security Holders (continued)

4) Approval of amendments to the Employee Stock Purchase Plan.

| |  |     |            |          |  |           |        |  |  |               |        | 
| |  | --- | ---------- | -------- |  | --------- | ------ |  |  | ------------- | ------ | 
| |  |     |            |          |  |           |        |  |  | Abstentions  
| |  |     |            |          |  |           |        |  |  | and/or Broker
| |  | For |            | Withheld |  | Non-votes
| |  |     |            |          |  |          
| |  |     | 14,552,965 |          |  |           | 93,057 |  |  |               | 18,097 | 




Item 6. Exhibits and Reports on Form 8-K

|     |  |                                                                                                                                                                  
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)  |  | Exhibits. The following Exhibits are filed herewith and made a part hereof:                                                                                      
|    
|    
|    
|    
|10.1 |  | Management Incentive Bonus Program (Amended and Restated as of March 29, 2001)                                                                                   
|    
|    
|    
|    
|10.2 |  | 1999 Employee Stock Purchase Plan (Amended and Restated effective June 14, 2001)                                                                                 
|    
|    
|    
|    
|(b)  |  | Reports on Form 8-K                                                                                                                                              
|    
|    
|    
|    
|     |  | The Company filed a report on Form 8-K on June 22, 2001, which
attached a press release regarding the election of Melchert Frans
Groot to the Board of Directors.

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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.
Senior Vice President and Controller
(Duly Authorized Officer and Principal
Accounting Officer)

Date: September 18, 2001

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##### Table of Contents



COLE NATIONAL CORPORATION
FORM 10-Q
QUARTER ENDED AUGUST 4, 2001

EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                          |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Exhibit |  |                                                                                                                                                                                                                          |  |  |  | 
|Number  |  | Description                                                                                                                                                                                                              |  |  |  | 
|        |  |                                                                                                                                                                                                                          |  |  |  | 
|10.1*   |  | Management Incentive Bonus Program (Amended and Restated as of March 29, 2001)                                                                                                                                          
|       
|       
|       
|       
|10.2    |  | 1999 Employee Stock Purchase Plan (Amended and Restated effective
June 14, 2001), incorporated by reference to Exhibit C of Cole National
Corporations definitive Proxy Statement filed May 10, 2001 (File No. 1-12814)

* Filed herewith.

14