<PAGE>   1

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

                       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 OCTOBER 30, 1999, OR

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


                         COMMISSION FILE NUMBER 1-12814

                            COLE NATIONAL CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           DELAWARE                                             34-1453189
(STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                              IDENTIFICATION NO.)


         5915 LANDERBROOK DRIVE
         MAYFIELD HEIGHTS, OHIO                                   44124
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                        (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 NOVEMBER 15, 1999, 14,858,993 SHARES OF THE REGISTRANT'S COMMON
STOCK WERE OUTSTANDING.


===============================================================================
<PAGE>   2


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

                   COLE NATIONAL CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                         QUARTER ENDED OCTOBER 30, 1999
                                      INDEX

                                                                        PAGE NO.

PART I.  FINANCIAL INFORMATION

         ITEM 1. FINANCIAL STATEMENTS

                 CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 30, 1999
                 AND JANUARY 30, 1999...................................   1

                 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE 13
                 AND 39 WEEKS ENDED OCTOBER 30, 1999 AND
                 OCTOBER 31, 1998.......................................   2

                 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 39
                 WEEKS ENDED OCTOBER 30, 1999 AND OCTOBER 31, 1998......   3

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............. 4 - 6

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......... 7 - 11

         ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                 MARKET RISK............................................  12


PART II. OTHER INFORMATION


         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................  13


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






<PAGE>   3


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   COLE NATIONAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                         October 30,    January 30,
                                                            1999           1999
                                                         -----------    -----------
<S>                                                     <C>           <C>
ASSETS
Current assets:
    Cash and temporary cash investments                  $  22,793      $  51,057
    Accounts receivable, less allowance for
       doubtful accounts of $8,421 in 1999 and
       $7,189 in 1998                                       47,404         45,561
    Current portion of notes receivable                      4,386          2,707
    Refundable income taxes                                    665          9,556
    Inventories                                            133,849        119,881
    Prepaid expenses and other                               5,145          8,582
    Deferred income tax benefits                            16,179         14,048
                                                         ---------      ---------
          Total current assets                             230,421        251,392

Property and equipment, at cost                            273,400        261,605
    Less-accumulated depreciation and amortization        (146,409)      (135,731)
                                                         ---------      ---------
          Total property and equipment, net                126,991        125,874
Other assets:
    Notes receivable, excluding current portion             31,093         32,039
    Deferred income taxes and other assets                  65,349         59,021
    Intangible assets, net                                 158,144        159,698
                                                         ---------      ---------
          Total assets                                   $ 611,998      $ 628,024
                                                         =========      =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt                    $   1,739      $   1,497
    Accounts payable                                        65,299         73,065
    Accrued interest                                         7,356          6,216
    Accrued liabilities                                     86,502        101,791
    Accrued income taxes                                     2,466            128
                                                         ---------      ---------
          Total current liabilities                        163,362        182,697

Long-term debt, net of discount and current portion        284,735        276,013

Other long-term liabilities                                 14,491         23,954

Stockholders' equity                                       149,410        145,360
                                                         ---------      ---------
          Total liabilities and stockholders' equity     $ 611,998      $ 628,024
                                                         =========      =========
</TABLE>


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

                                      -1-
<PAGE>   4




                   COLE NATIONAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                          13 Weeks Ended                39 Weeks Ended
                                     --------------------------   --------------------------
                                     October 30,    October 31,   October 30,    October 31,
                                         1999          1998          1999           1998
                                     -----------    -----------   -----------    -----------

<S>                                  <C>            <C>           <C>           <C>
Net revenue                           $ 257,618      $ 256,654     $ 791,752     $ 796,093

Costs and expenses:
    Cost of goods sold                   86,354         84,910       263,857       264,331
    Operating expenses                  159,315        151,790       474,103       455,829
    Depreciation and amortization        10,785          8,655        28,716        25,144
                                      ---------      ---------     ---------     ---------
       Total costs and expenses         256,454        245,355       766,676       745,304
                                      ---------      ---------     ---------     ---------

Operating income                          1,164         11,299        25,076        50,789

Interest and other expense, net           5,921            109        17,905        12,629
                                      ---------      ---------     ---------     ---------

Income (loss) before income
    taxes                                (4,757)        11,190         7,171        38,160

Income tax provision (benefit)           (1,951)         2,128         2,940        13,186
                                      ---------      ---------     ---------     ---------

Net income (loss)                     $  (2,806)     $   9,062     $   4,231     $  24,974
                                      =========      =========     =========     =========


Earnings per common share:
    Basic-                            $   (0.19)     $    0.61     $    0.28     $    1.69
    Diluted-                          $   (0.19)     $    0.60     $    0.28     $    1.64

</TABLE>


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

                                      -2-

<PAGE>   5

                   COLE NATIONAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                        39 Weeks Ended
                                                                   -------------------------
                                                                   October 30,   October 31,
                                                                       1999          1998
                                                                   -----------   -----------
<S>                                                                 <C>          <C>
Cash flows from operating activities:
    Net income                                                       $  4,231      $ 24,974
    Adjustments to reconcile net income to net cash provided
       by operating activities:
          Depreciation and amortization                                28,716        25,144
          Non-cash interest, net                                       (1,563)         (953)
          Change in assets and liabilities:
              Decrease in accounts and notes receivable, prepaid
                 expenses and other assets                              1,542           316
              Increase in inventories                                 (13,968)      (30,947)
              Decrease in accounts payable, accrued liabilities
                 and other liabilities                                (19,968)      (11,169)
              Increase in accrued interest                              1,140           608
              Increase in net income tax liabilities                    8,789        18,232
                                                                     --------      --------
                 Net cash provided by operating activities              8,919        26,205
                                                                     --------      --------

Cash flows from investing activities:
    Purchases of property and equipment, net                          (20,425)      (30,171)
    Systems development costs                                         (10,930)      (12,417)
    Investment in Pearle Europe, net                                   (1,360)      (10,296)
    Repayment of Pearle Europe loan                                         -         3,144
    Acquisitions of businesses, net                                    (2,281)       (6,848)
    Other, net                                                           (549)          195
                                                                     --------      --------
                 Net cash used by investing activities                (35,545)      (56,393)
                                                                     --------      --------

Cash flows from financing activities:
    Repayment of long-term debt                                        (1,104)      (15,676)
    Net proceeds from exercise of stock options and warrants              163         1,945
    Common stock repurchased                                             (564)       (4,595)
    Other, net                                                           (133)         (246)
                                                                     --------      --------
                 Net cash used by financing activities                 (1,638)      (18,572)
                                                                     --------      --------

Cash and temporary cash investments:
  Net decrease during the period                                      (28,264)      (48,760)
  Balance, beginning of the period                                     51,057        68,053
                                                                     --------      --------
  Balance, end of the period                                         $ 22,793      $ 19,293
                                                                     ========      ========

</TABLE>




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

                                      -3-

<PAGE>   6


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

    (1)    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 Cole National Corporation's consolidated
    financial statements for the fiscal year ended January 30, 1999.

           In the opinion of management, the accompanying financial statements
    contain all adjustments (consisting only of normal recurring accruals)
    necessary to present fairly its financial position as of October 30, 1999
    and the results of operations and cash flows for the 39 weeks ended October
    30, 1999 and October 31, 1998.

           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 $299,000 and $18,902,000, respectively, for the
    39 weeks ended October 30, 1999, and $1,643,000 and $19,255,000,
    respectively, for the 39 weeks ended October 31, 1998.

           Earnings Per Share

           Earnings per share for the 13 and 39 weeks ended October 30, 1999 and
    October 31, 1998 have been calculated based on the following weighted
    average number of common shares and equivalents outstanding:

                               13 Weeks                     39 Weeks
                     ---------------------------    --------------------------
                     October 30,     October 31,    October 30,    October 31,
                        1999            1998           1999           1998
                     -----------     -----------    -----------    -----------

           Basic      14,857,634      14,788,958    14,861,096     14,808,549
           Diluted    14,857,634      15,100,447    14,933,562     15,240,685

                                      -4-


<PAGE>   7


    (2) RESTRUCTURING CHARGE

           In the fourth quarter of fiscal 1998, the Company recorded a
    restructuring charge primarily related to Pearle's operations. The Company's
    restructuring plan included the closing of certain unprofitable stores
    during fiscal 1999, and removing surfacing equipment from certain in-store
    full service labs through the second quarter of 2000. The estimated costs of
    the restructuring are expected to approximate original estimates. During the
    first 39 weeks of fiscal 1999, the Company closed a total of 25 Pearle
    stores. The restructuring reserves remaining at January 30, 1999 were $7.1
    million, of which approximately $6.0 million was paid in the first 39 weeks
    of fiscal 1999. The remaining reserve at October 30, 1999 of $1.1 million is
    expected to be paid through the first quarter of fiscal 2000. The Company is
    currently reevaluating its plan to remove labs from certain stores and, as a
    result, has closed no in-store labs in fiscal 1999. Since there were no
    costs accrued at January 30, 1999 related to closing of any in-store labs,
    any revisions to this portion of the original plan will have no effect on
    the restructuring reserves remaining.

    (3) LONG TERM DEBT

           In the fourth quarter of fiscal 1998, the Company entered into an
    irrevocable commitment to contribute $10,000,000 to a leading medical
    institution, supporting the development of a premier eye care research and
    surgical facility.

           On April 23, 1999, the Company issued a $10,000,000 promissory note
    bearing interest at 5% per annum in recognition of the commitment. Prior to
    this, the obligation was classified with other long-term liabilities in the
    consolidated balance sheet. The note requires a $5,000,000 principal payment
    to be made on April 23, 2004, and principal payments in the amount of
    $1,000,000 to be made on the anniversary date of the note each successive
    year through 2009. Interest will be paid annually for the first 5 years, and
    thereafter with each payment of principal.

    (4) CREDIT FACILITY

           In August 1999, the Company's credit facility was amended and
    extended until January 31, 2003. Borrowings under the credit facility
    initially bear interest based on leverage ratios at a rate equal to, at the
    option of the principal operating subsidiaries of Cole National Group,
    either (a) the Eurodollar Rate plus 2% or (b) 1% plus the highest of (i) the
    prime rate, (ii) the three-week moving average of the secondary market rates
    for three-month certificates of deposit plus 1% and (iii) the federal funds
    rate plus .5%. Cole National Group pays a commitment fee of between .375%
    and .75% per annum on the total unused portion of the facility based on the
    percentage of revolving credit commitments used.

                                      -5-

<PAGE>   8


(5) SEGMENT INFORMATION

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

<TABLE>
<CAPTION>
                                                         13 Weeks Ended                39 Weeks Ended
                                                   ------------------------      ------------------------
                                                    Oct. 30,       Oct. 31,       Oct. 30,       Oct. 31,
                                                      1999          1998            1999           1998
                                                   ---------      ---------      ---------      ---------
         <S>                                       <C>           <C>            <C>           <C>
           Net revenue:
               Cole Vision                         $ 204,429      $ 207,147      $ 621,294      $ 636,615
               Things Remembered                      53,189         49,507        170,458        159,478
                                                   ---------      ---------      ---------      ---------
                 Consolidated net revenue          $ 257,618      $ 256,654      $ 791,752      $ 796,093
                                                   =========      =========      =========      =========

           Income or (loss):
               Cole Vision                         $   6,528      $  15,228      $  24,932      $  51,186
               Things Remembered                         270         (2,440)         9,408          3,902
                                                   ---------      ---------      ---------      ---------
                 Total segment profit                  6,798         12,788         34,340         55,088
           Unallocated amounts:
               Corporate expenses                     (5,634)        (1,489)        (9,264)        (4,299)
                                                   ---------      ---------      ---------      ---------
                 Consolidated operating income         1,164         11,299         25,076         50,789
               Interest and other expense, net        (5,921)          (109)       (17,905)       (12,629)
                                                   ---------      ---------      ---------      ---------
                 Income (loss) before
                   income taxes                    $  (4,757)     $  11,190      $   7,171      $  38,160
                                                   =========      =========      =========      =========

</TABLE>

(6) RECLASSIFICATIONS

      Certain 1998 amounts have been reclassified to conform with the 1999
presentation.

(7) ACQUISITIONS AND DISPOSITIONS

      During the third quarter of fiscal 1999, the Company acquired MetLife's
managed vision care benefits business . The business consists of vision care
contracts with over 250 institutional customers and generates approximately
$15.0 million of revenue annually. The initial purchase price totaled $2.0
million, with additional amounts contingently due upon certain conditions being
met over the next four years. The acquisition is being accounted for under the
purchase method of accounting, including any contingent payments that may be
made in the future.

      On November 23,1999 the Company announced that, by the end of the fourth
quarter, it plans to exit the 150 Wards Optical departments that it operates.
The Company expects to incur a pretax loss associated with these closings of
approximately $2.0 - $2.5 million in the fourth quarter, primarily consisting of
inventory and fixed asset write-offs. The after-tax cash cost of the closings is
expected to be minimal.

(8) STOCKHOLDERS' RIGHTS PLAN

      On November 22, 1999 the Board of Directors authorized redemption of the
Company's existing stockholders' rights plan and replaced it with a new plan.
The new plan eliminates the so-called "dead hand" provision of the former plan,
permits HAL Holdings N.V. to acquire up to 25% of the Company's stock, and
reduces the price at which registered holders of the rights may purchase, under
specified conditions, Series A Junior Participating Preferred Stock to $40 per
one one-hundredth of a share. The new rights expire in 2009. As a result of the
redemption of the rights issued under the original plan, shareholders will
receive payment of $.01 per share of common stock in the fourth quarter of
fiscal 1999.

                                      -6-

<PAGE>   9


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

      The following is a discussion of certain factors affecting Cole National
Corporation's results of operations for the 13 and 39 week periods ended October
30, 1999 and October 31, 1998 (the Company's third quarter and first nine
months) and its liquidity and capital resources. This discussion should be read
in conjunction with the consolidated financial statements and notes thereto
included elsewhere in this filing and the audited financial statements for the
fiscal year ended January 30, 1999 included in the annual report on Form 10-K.

      Fiscal years end on the Saturday closest to January 31 and are identified
according to the calendar year in which they begin. For example, the fiscal year
ended January 30, 1999 is referred to as "fiscal 1998." The current fiscal year,
which will end January 29, 2000, is referred to as "fiscal 1999."

RESULTS OF OPERATIONS

      The following table sets forth certain operating information for the third
quarter and first nine months of fiscal 1999 and fiscal 1998 (dollars in
millions):

<TABLE>
<CAPTION>

                                                  Third Quarter                        First Nine Months
                                       ----------------------------------    -----------------------------------
                                        Fiscal      Fiscal                     Fiscal       Fiscal
                                         1999        1998         Change        1999         1998         Change
                                         ----        ----         ------        ----         ----         ------

<S>                                  <C>          <C>          <C>          <C>          <C>            <C>
    Net Revenue-
      Cole Vision                     $  204.4     $  207.2       (1.3%)     $   621.3    $   636.6       (2.4%)
      Things Remembered                   53.2         49.5        7.4%          170.5        159.5        6.9%
                                      --------     --------                  ---------    ---------
        Total net revenue             $  257.6     $  256.7        0.4%      $   791.8    $   796.1       (0.5%)

    Gross profit                      $  171.3     $  171.7       (0.3%)     $   527.9    $   531.8       (0.7%)
    Operating expenses                   159.3        151.8        5.0%          474.1        455.8        4.0%
    Depreciation & amortization           10.8          8.6       24.6%           28.7         25.2       14.2%
                                      --------     --------                  ---------    ---------
        Operating income              $    1.2     $   11.3      (89.7%)     $    25.1    $    50.8      (50.6%)
                                      ========     ========                  =========    =========


    Percentage of Net Revenue-
      Gross margin                        66.5%        66.9%      (0.4)           66.7%        66.8%      (0.1)
      Operating expenses                  61.8         59.1        2.7            59.9         57.3        2.6
      Depreciation & amortization          4.2          3.4        0.8             3.6          3.1        0.5
                                      --------     --------                  ---------    ---------
        Operating income                   0.5%         4.4%      (3.9)            3.2%         6.4%      (3.2)
                                      ========     ========                  =========    =========


    Number of Retail Locations
      at the End of the Period-
        Cole Licensed Brands             1,199        1,180
        Pearle company-owned               455          469
        Pearle franchised                  412          406
                                      --------     --------
          Total Cole Vision              2,066        2,055
        Things Remembered                  811          827
                                      --------     --------
          Total Cole National            2,877        2,882
                                      ========     ========

</TABLE>

                                      -7-

<PAGE>   10



      The softness in net revenue for the third quarter and first nine months of
fiscal 1999 was primarily attributable to decreases in consolidated comparable
store sales, partially offset by $1.4 million of revenue from the sale of rights
under various franchise and other agreements for 13 franchised stores. Changes
in comparable store sales by business compared to the same period a year ago
were:

                                         Third Quarter    First Nine Months
                                         -------------    -----------------

           Cole Licensed Brands (U.S.)        0.3%             (3.0%)
           Pearle company-owned (U.S.)       (6.9%)            (6.2%)
              Total Cole Vision              (1.7%)            (3.8%)
           Things Remembered                  7.8%              7.3%
              Total Cole National             0.4%             (1.3%)

      Sales at Cole Licensed Brands have been negatively impacted by a
competitive promotional environment. Licensed Brands' response, which began at
the end of the second quarter, produced an improvement in third quarter sales.
Sales this year at Pearle have also been impacted by the competitive promotional
environment and Pearle's focus, earlier in the year, on long-term,
brand-building in its advertising campaign, as well as operating and systems
issues that the Company is addressing. Pearle refocused its marketing efforts to
become more promotional during the second and third quarters, but to date has
not achieved any sustained improvement in comparable store sales trends. The
third quarter sales decrease at Cole Vision reflected a lower average selling
price for spectacles and contact lenses due primarily to more promotional
pricing, partially offset by increased unit sales at Cole Licensed Brands. At
Things Remembered, the comparable store sales increase reflected increased sales
of additional personalization and new merchandise at higher average unit
retails, along with the benefits from marketing directly to its existing
customer base. The number of transactions at Things Remembered in the third
quarter was slightly behind a year ago. During the first nine months of fiscal
1999, the Company opened 95 new locations and closed 102 locations.

      The gross profit decreases for the third quarter and first nine months of
fiscal 1999 compared to those same periods in fiscal 1998 were primarily
attributable to the lower revenue at Cole Vision, partially offset by higher
revenue at Things Remembered. Gross margin at Cole Vision declined 0.9 and 0.6
percentage points in the third quarter and first nine months of fiscal 1999,
respectively, compared to the same periods last year. The lower gross margin at
Cole Vision was due in part to the impact of more promotional pricing, lower
margins on contact lenses and costs resulting from problems that arose during
the integration of Pearle's new manufacturing and merchandise/inventory
management systems. The integration of these systems with Pearle's existing
warehouse management system resulted in manufacturing and distribution
inefficiencies that led to increased costs and lost sales in the quarter.
Progress has been made to date in bringing the system up to pre-installation
expectations; however, some continuing inefficiencies are expected to have a
negative impact on fourth quarter earnings. Gross margin at Things Remembered
improved 1.1 and 1.2 percentage points in the third quarter and first nine
months of fiscal 1999, respectively, benefiting from increased sales of
additional personalization and higher margins from new products.

                                      -8-

<PAGE>   11


      The unfavorable leverage in operating expenses for the third quarter was
primarily attributable to a 1.5 percentage point increase from executive
severance costs, a 0.6 percentage point increase in managed vision care costs
and a 0.5 percentage point increase in payroll costs. The unfavorable leverage
for the first nine months was primarily attributable to a 1.0 percentage point
increase in payroll costs, a 0.6 percentage point increase in managed vision
care costs, a 0.5 percentage point increase from the third quarter severance
costs and a 0.3 percentage point increase in net advertising expenditures. Third
quarter severance costs for the Company's former president and several other
executives totaled $4.7 million of which $0.7 million was charged to
depreciation and amortization. The unfavorable payroll leverages were primarily
due to the comparable store sales decreases at Cole Vision and staffing
increases in managed vision care, partly offset by payroll leverage gains on the
sales increases at Things Remembered. The increases in managed vision care
expenses were primarily attributable to growth in call and claims volumes
associated with increases in sponsor-funded programs. The unfavorable
advertising leverage was due to increased advertising at Cole Licensed Brands in
response to the competitive pricing environment, partly offset by reduced
spending at Pearle. The depreciation and amortization expense increases were
attributable to increases in amortization of systems development and software
costs and amortization of restricted stock awards, due in part to the executive
severance.

      See the notes to consolidated financial statements for information on the
status of the Company's restructuring charge recorded in the fourth quarter of
fiscal 1998.

      The decreases in income from operations were primarily the result of the
decreases in net revenue and gross profit, and the increases in operating
expenses and depreciation and amortization. Interest and other income includes
the recognition of $6.0 million of income in the third quarter of fiscal 1998
from a nontaxable cash settlement with the former owner of Pearle. Excluding the
Pearle settlement, net interest and other expense in fiscal 1999 decreased
slightly from the third quarter and first nine months of fiscal 1998. An income
tax provision was recorded in the first nine months of fiscal 1999 and fiscal
1998 using the Company's estimated annual effective tax rate of 41% in both
years.

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
available to them working capital commitments of $75.0 million, reduced by
commitments under letters of credit, under a credit facility that runs through
January 2003. There were no working capital borrowings outstanding at any time
during the first nine months of fiscal 1999 and 1998. As of October 30, 1999,
availability under the credit facility totaled $59.8 million, after reduction
for commitments under outstanding letters of credit.

      Operations for the first nine months provided $8.9 million of cash in
fiscal 1999 compared to $26.2 million in fiscal 1998. The primary reasons for
the decrease of $17.3 million in cash provided by operations were the decrease
in operating income and the larger decrease in accounts payable, accrued
liabilities and other liabilities in fiscal 1999 compared to fiscal 1998.
Partially offsetting these was the lower increase in inventories in fiscal 1999
compared to fiscal 1998.

                                      -9-

<PAGE>   12


      Cash used by investing activities included capital additions of $20.4
million and $30.2 million for the first nine months of fiscal 1999 and fiscal
1998, respectively. The majority of capital expenditures were for store
fixtures, equipment and leasehold improvements for new stores and the remodeling
of existing stores. Capital expenditures in fiscal 1998 also included $9.5
million to purchase the office building now occupied by Cole Vision. Investments
in systems development costs totaled $10.9 million and $12.4 million in the
first nine months of fiscal 1999 and fiscal 1998, respectively. In September
1999, the Company acquired the managed vision care business of MetLife. See the
notes to consolidated financial statements for more information on this
acquisition. In July 1999, the Company invested an additional $1.2 million in
the form of 9% shareholder loans to Pearle Europe B.V. (Pearle Europe) and $0.2
million in additional equity in connection with Pearle Europe's acquisition of a
retail optical chain in Italy. In February 1998, the Company repaid a $3.2
million note payable to a subsidiary of Pearle Europe and invested an additional
$7.2 million in the form of 8% shareholder loans to Pearle Europe in connection
with Pearle Europe's acquisition of optical operations in Germany and Austria.

      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.

YEAR 2000

      The Company is proceeding with the implementation of its Year 2000
Readiness Program, including ascertaining Year 2000 readiness of critical third
parties. Management believes that all critical programs and hardware are Year
2000 ready, including Y2K testing. As a precautionary measure, end-to-end Y2K
testing is being performed throughout the month of December. The Company has
communicated with its critical third party business partners and has received a
positive response of 90% overall. Contingency business relationships have been
set up for those who did not respond to the Company's inquiries. Detailed backup
and contingency plans for the year-end crossover are currently being developed
and management believes that they will be completed by mid-December.

      Management estimates the total cost of the Year 2000 Readiness Program
will be approximately $4.2 million, including $1.0 million of new hardware and
software that has been capitalized. The remaining $3.2 million is being expensed
as incurred (approximately $2.4 million in fiscal 1998 and $0.8 million in
fiscal 1999, including $0.6 million during the first nine months). These costs
include only external costs as internal costs, which consist primarily of
payroll-related costs of employees, are not tracked separately for the Year 2000
Readiness Program. The estimate of external costs does not include costs
associated with addressing and resolving issues as a result of the failure of
third parties to become Year 2000 ready. See the Company's Annual Report on Form
10-K for the fiscal year ended January 30, 1999 for further discussion of Year
2000.

RECENT DEVELOPMENTS AND FORWARD-LOOKING INFORMATION

      In the fourth quarter of fiscal 1999, the Company will continue to respond
to the competitive pricing environment that exists in the retail optical
industry. In addition, costs and expenses will be incurred to begin addressing
merchandise, field/store and franchise support, systems integration and other
initiatives with a primary focus of increasing comparable store sales growth in
the upcoming fiscal year. These actions may cause a negative impact on gross
margin and operating

                                      -10-


<PAGE>   13

expenses before any significant sales improvements are realized. As a result, it
is unlikely there will be an improvement in the sales and earnings trends of the
Company's vision segment for the balance of fiscal 1999.

      Further, on November 23, 1999 the Company announced that it has decided to
exit the 150 Wards Optical departments it operates by the end of the fourth
quarter of fiscal 1999 to focus its resources on enhancing the performance of
its remaining vision businesses. As a result, a pretax charge in the range of
$2.0 - $2.5 million is expected to be included in fourth quarter operating
results for the costs to close these stores. The net after tax cash cost of the
closing is expected to be minimal.

      Certain sections of this Form 10-Q, including this Management's Discussion
and Analysis, contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those forecast due to a variety of factors that can adversely
affect operating results, liquidity and financial condition such as risks
associated with the timing and achievement of the continuing restructuring and
improvements in the operations of the optical business, the ability of Cole
National Corporation and its suppliers, host stores, and managed vision care
organization partners to achieve Year 2000 readiness, the integration of
acquired operations, the ability to select, stock and price merchandise
attractive to customers, success of systems integration, competition in the
optical industry, economic and weather factors affecting consumer spending,
operating factors affecting customer satisfaction, including manufacturing
quality of optical and engraved goods, relationships with host stores and
franchisees, the mix of goods sold, pricing and other competitive factors, and
the seasonality of the business. Forward-looking statements are made based upon
management's expectations and beliefs concerning future events impacting Cole
National Corporation. All forward-looking statements involve risk and
uncertainty.

                                      -11-
<PAGE>   14


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.


                                      -12-

<PAGE>   15





ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

    27       Financial Data Schedule

    10.1     Resignation and Non-Competition Agreement


(b) Report on Form 8-K

    The Company has not filed any reports on Form 8-K for the quarterly period
    ended October 30, 1999.

                                      -13-

<PAGE>   16




                                    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/ Wayne L. Mosley
                                  -----------------------------------------
                                  Wayne L. Mosley
                                  Vice President and Controller
                                  (Duly Authorized Officer and Principal
                                  Accounting Officer)

                            Date: December 3, 1999

                                      -14-

<PAGE>   17


                            COLE NATIONAL CORPORATION
                                    FORM 10-Q
                         QUARTER ENDED OCTOBER 30, 1999

                                  EXHIBIT INDEX



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

27       Financial Data Schedule

10.1     Resignation and Non-Competition Agreement

                                      -15-