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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(Mark One)

 X   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
---  Act of 1934 For the quarterly period ended August 1, 1998, 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 August 26, 1998, 14,838,428 shares of the registrant's common stock
were outstanding.

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<PAGE>   2
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                   COLE NATIONAL CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                          QUARTER ENDED AUGUST 1, 1998
                                      INDEX
<TABLE>
<CAPTION>
                                                                                                            Page No.
<S>                                                                                                           <C>
PART I.       FINANCIAL INFORMATION

              Item 1.      Financial Statements

                           Consolidated Balance Sheets as of August 1, 1998 and January 31,
                           1998......................................................................           1

                           Consolidated Statements of Operations for the 13 and 26 weeks ended August
                           1, 1998 and August 2, 1997................................................           2

                           Consolidated Statements of Cash Flows for the 26 weeks ended August
                           1, 1998 and August 2, 1997................................................           3

                           Notes to Consolidated Financial Statements................................         4 - 5

              Item 2.      Management's Discussion and Analysis of Financial Condition and
                           Results of Operations.....................................................         6 - 9

PART II.      OTHER INFORMATION

              Item 4.      Submission of Matters to a Vote of Security Holders.......................          10

              Item 6.      Exhibits and Reports on Form 8-K..........................................          11
</TABLE>

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<PAGE>   3

                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                   COLE NATIONAL CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                    August 1,      January 31,
                                                                       1998           1998
                                                                  -------------  --------------
Assets
------
<S>                                                                <C>             <C>         
Current assets:
    Cash and temporary cash investments                            $     34,152    $     68,053
    Accounts receivable, less allowance for 
      doubtful accounts of $6,357 in 1998 and 
      $4,334 in 1997                                                     56,833          52,030
    Current portion of notes receivable                                   3,402           4,177
    Refundable income taxes                                               8,911           9,520
    Inventories                                                         126,485         119,970
    Prepaid expenses and other                                           11,459           9,195
    Deferred income tax benefits                                         21,534          21,534
                                                                   ------------    ------------
          Total current assets                                          262,776         284,479


Property and equipment, at cost                                         263,289         242,966
    Less-accumulated depreciation and amortization                     (125,279)       (115,162)
                                                                   ------------    ------------
          Total property and equipment, net                             138,010         127,804


Other assets:
    Notes receivable, excluding current portion                          33,689          25,783
    Deferred income taxes and other                                      65,036          54,241
    Intangible assets, net                                              158,612         159,077
                                                                   ------------    ------------
          Total assets                                             $    658,123    $    651,384
                                                                   ============    ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
    Current portion of long-term debt                              $     16,071    $     16,027
    Accounts payable                                                     53,905          71,867
    Accrued interest                                                      6,822           6,615
    Accrued liabilities                                                 113,391         115,838
    Accrued income taxes                                                 10,438             957
                                                                   ------------    ------------
          Total current liabilities                                     200,627         211,304

Long-term debt, net of discount and current portion                     276,773         277,401

Other long-term liabilities                                              30,664          30,664

Stockholders' equity                                                    150,059         132,015
                                                                   ------------    ------------
          Total liabilities and stockholders' equity               $    658,123    $    651,384
                                                                   ============    ============
</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             26 Weeks Ended
                                                        ------------------------    ------------------------
                                                         August 1,     August 2,     August 1,     August 2,
                                                           1998          1997          1998          1997
                                                        ----------    ----------    ----------    ----------
<S>                                                     <C>           <C>           <C>           <C> 
Net revenue                                             $  267,611    $  242,163    $  539,439    $  481,849

Costs and expenses:
    Cost of goods sold                                      89,132        81,162       179,421       163,574
    Operating expenses                                     147,721       133,505       304,039       269,546
    Depreciation and amortization                            8,091         7,026        16,489        14,486
                                                        ----------    ----------    ----------    ----------
       Total costs and expenses                            244,944       221,693       499,949       447,606

Operating income                                            22,667        20,470        39,490        34,243

Other (income) expense:
    Interest expense                                         6,868         8,528        13,785        16,924
    Interest income and other                                 (635)         (634)       (1,265)       (1,247)
                                                        ----------    ----------    ----------    ----------
       Total other (income) expense                          6,233         7,894        12,520        15,677

Income from continuing operations before income taxes       16,434        12,576        26,970        18,566

Income tax provision                                         6,634         5,348        11,058         7,984
                                                        ----------    ----------    ----------    ----------

Income from continuing operations                            9,800         7,228        15,912        10,582

Operating income (loss) from
 discontinued operations, net of
 income taxes                                                 --             130          --            (776)
                                                        ----------    ----------    ----------    ----------

Net income                                              $    9,800    $    7,358    $   15,912    $    9,806
                                                        ==========    ==========    ==========    ==========

Earnings (loss) per common share:
    Basic-
       Income from continuing operations                $     0.66    $     0.58    $     1.07    $     0.87
       Income (loss) from discontinued
          operations                                          --            0.01          --           (0.07)
                                                        ----------    ----------    ----------    ----------
       Net income                                       $     0.66    $     0.59    $     1.07    $     0.80
                                                        ==========    ==========    ==========    ==========

    Diluted-
       Income from continuing operations                $     0.64    $     0.56    $     1.04    $     0.83
       Income (loss) from discontinued
          operations                                          --            0.01          --           (0.06)
                                                        ----------    ----------    ----------    ----------
       Net income                                       $     0.64    $     0.57    $     1.04    $     0.77
                                                        ==========    ==========    ==========    ==========
</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>
                                                                            26 Weeks Ended
                                                                    ----------------------------
                                                                       August 1,      August 2,
                                                                          1998           1997
                                                                    ------------    ------------
<S>                                                                 <C>             <C>         
Cash flows from operating activities:
    Net income                                                      $     15,912    $      9,806
    Adjustments to reconcile net income to net cash provided
       (used) by operating activities:
          Depreciation and amortization                                   16,489          14,486
          Non-cash interest                                                 (473)            113
          Change in assets and liabilities:
              Increase in accounts and notes receivable,
                 prepaid expenses and other assets                        (5,580)        (18,044)
              Increase in inventories                                     (5,950)        (10,806)
              Decrease in accounts payable, accrued liabilities
                 and other liabilities                                   (23,220)        (14,068)
              Increase (decrease) in accrued interest                        207          (1,826)
              Increase (decrease) in accrued income taxes                 10,090         (11,268)
                                                                    ------------    ------------
                 Net cash provided (used) by operating activities          7,475         (31,607)
                                                                    ------------    ------------

Cash flows from investing activities:
    Purchases of property and equipment, net                             (22,563)        (19,818)
    Systems development costs                                            (10,150)         (6,020)
    Investment in Pearle Europe, net                                      (7,152)           --
    Acquisitions of businesses, net                                       (2,923)           --
    Other, net                                                               402            (460)
                                                                    ------------    ------------
                 Net cash used by investing activities                   (42,386)        (26,298)
                                                                    ------------    ------------

Cash flows from financing activities:
    Repayment of long-term debt                                             (682)           (564)
    Proceeds from public offering, net                                      --           115,909
    Proceeds from exercise of stock options and warrants                   1,857           2,668
    Other, net                                                              (165)           (107)
                                                                    ------------    ------------
                 Net cash provided by financing activities                 1,010         117,906
                                                                    ------------    ------------

Cash and temporary cash investments:
  Net increase (decrease) during the period                              (33,901)         60,001
  Balance, beginning of the period                                        68,053          73,141
                                                                    ------------    ------------
  Balance, end of the period                                        $     34,152    $    133,142
                                                                    ============    ============
</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 (CNC), its wholly owned subsidiaries, including Cole
    National Group, Inc. (CNG), and CNG's 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 the
    Company believes that the disclosures herein are adequate to make the
    information not misleading. Prior year financial statements have been
    restated to reflect the discontinued operations of Cole Gift Centers, Inc.
    (CGC) chain of personalized gift and greeting card departments located in
    host stores. At March 15, 1998, all CGC locations have been closed. 

           Results for interim periods are not necessarily indicative of the
    results to be expected for the full year. These statements should be read in
    conjunction with the Company's consolidated financial statements for the
    fiscal year ended January 31, 1998.

           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 1,
    1998 and the results of operations for the 13 and 26 weeks ended August 1,
    1998 and August 2, 1997, and cashflows for the 26 weeks ended August 1, 1998
    and August 2, 1997.

           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 $912,000 and $13,471,000, respectively, for the
    26 weeks ended August 1, 1998, and $18,661,000 and $19,044,000, 
    respectively, for the 26 weeks ended August 2, 1997.

           Earnings Per Share

           Earnings per share for the 13 and 26 weeks ended August 1, 1998 and
    August 2, 1997 have been calculated based on the following weighted average
    number of common shares and equivalents outstanding:
<TABLE>
<CAPTION>

                      13 Weeks                         26 Weeks
           -----------------------------    -------------------------------
             August 1,         August 2,         August 1,        August 2,
               1998              1997              1998             1997
          --------------   --------------   --------------   --------------
<S>         <C>              <C>              <C>              <C>           
Basic       14,881,801       12,436,850       14,818,344       12,228,169
Diluted     15,344,539       12,963,978       15,310,805       12,722,546
</TABLE>

                                     - 4 -
<PAGE>   7



    (2)    INVESTMENT IN PEARLE EUROPE B.V.

           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.

           In June 1998, Pearle Europe repaid to the Company a shareholder loan,
    including interest thereon, in the amount of $3.7 million.

    (3)    NEW ACCOUNTING PRONOUNCEMENT

           Effective February 1, 1998, the Company adopted Statement of
    Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
    Income." This statement requires that the Company report the change in its
    equity during a period from non-owner sources. For the 13 and 26 weeks
    ended August 1, 1998 and August 2, 1997, components of other comprehensive
    income (loss) relate to foreign currency translation adjustments related
    to the Company's Canadian operations and investment in Pearle Europe.
    Total comprehensive income is as follows (000's omitted):
<TABLE>
<CAPTION>

                                            13 Weeks Ended                   26 Weeks Ended
                                    ----------------------------    ----------------------------
                                      August 1,        August 2,       August 1,       August 2,
                                         1998            1997            1998            1997
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>  
Net income                          $      9,800    $      7,358    $     15,912    $      9,806
Other comprehensive income (loss)           (268)           (449)             (3)           (909)
                                    ------------    ------------    ------------    ------------
Total comprehensive income          $      9,532    $      6,909    $     15,909    $      8,897
                                    ============    ============    ============    ============
</TABLE>


    (4)    RECLASSIFICATIONS

           Certain 1997 amounts have been reclassified to conform with the 1998
    presentation.

                                     - 5 -
<PAGE>   8


    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 continuing operations for the 13 and 26 week periods 
    ended August 1, 1998 and August 2, 1997 (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 Company's audited financial statements for the fiscal year ended 
    January 31, 1998 included in its annual report on Form 10-K.

           The Company's fiscal year ends on the Saturday closest to January 31.
    Fiscal years are identified according to the calendar year in which they
    begin. For example, the fiscal year ended January 31, 1998 is referred to as
    "fiscal 1997."

    RESULTS OF OPERATIONS

           Net revenue for the second quarter of fiscal 1998 increased 10.5% to
    $267.6 million from $242.2 million for the same period in fiscal 1997. Net
    revenue for the first six months of fiscal 1998 increased 12.0% to $539.4
    million from $481.8 million for the same period in fiscal 1997. The
    increases in revenue were primarily attributable to the inclusion in fiscal
    1998 of additional Cole Optical units, including the American Vision
    Centers, Inc. ("AVC") stores acquired in August 1997, consolidated
    comparable store sales increases of 3.6% for both the second quarter and the
    first six months of fiscal 1998, and the growth of managed vision care fees.
    At Cole Optical, second quarter comparable store sales increased 3.8% at
    Cole Vision and decreased 0.9% at Pearle. For the first six months,
    comparable store sales increased 4.2% and 0.4% at Cole Vision and Pearle,
    respectively. The Pearle comparable store sales were impacted by weaker
    than expected reception to both a new promotional offer in the first 
    quarter and subsequent marketing efforts. At Things Remembered, the 
    comparable store sales increases of 7.8% and 6.5% for the second quarter 
    and first six months, respectively, reflected increased sales of additional
    personalization and clearance merchandise. At August 1, 1998, the Company
    had 2,848 specialty service retail locations, including 403 franchised
    locations, compared to 2,675 at August 2, 1997.

           Gross profit increased 10.9% to $178.5 million in the second quarter
    of fiscal 1998 from $161.0 million in the same period last year. For the
    first six months of fiscal 1998, gross profit increased 13.1% to $360.0
    million from $318.3 million in the same period a year ago. The gross profit
    increases were primarily attributable to the increased revenue at Cole
    Optical and Things Remembered. Gross margins for the second quarter of
    fiscal 1998 and fiscal 1997 were 66.7% and 66.5%, respectively. For the
    first six months of fiscal 1998 and fiscal 1997, gross margins were 66.7%
    and 66.1%, respectively. Gross margins were favorably impacted by the growth
    in managed vision care fees and the sales mix of higher margin products at
    Cole Optical.

           Operating expenses increased 10.6% to $147.7 million in the second
    quarter of fiscal 1998 from $133.5 million in fiscal 1997, and as a
    percentage of revenue, operating expenses were nearly flat at 55.2% in
    fiscal 1998 versus 55.1% in fiscal 1997. For the first six months of fiscal
    1998, operating

                                     - 6 -
<PAGE>   9


    expenses increased 12.8% to $304.0 million from $269.5 million in fiscal
    1997, and as a percentage of revenue, operating expenses increased to 56.4%
    in fiscal 1998 from 55.9% in fiscal 1997. The leverage loss for the first
    six months was primarily a result of increased advertising expenditures at
    Pearle during the first quarter and increased expenses related to managed
    vision care fee growth, partially offset by leverage gains on payroll and
    store occupancy costs. Fiscal 1998 depreciation and amortization expense of
    $8.1 million in the second quarter and $16.5 million in the first six
    months was $1.1 million and $2.0 million more, respectively, than the same 
    periods in fiscal 1997 reflecting the acquisition of AVC and an increase in
    capital expenditures.

           Operating income increased 10.7% to $22.7 million for the second
    quarter of fiscal 1998 from $20.5 million for the same period a year ago,
    and for the first six months of fiscal 1998, operating income increased 
    15.3% to $39.5 million from $34.2 million for the same period last year,
    primarily the result of the increase in net revenue. 

           Interest expense decreased $1.7 million from the second quarter of
    fiscal 1997 to $6.9 million and decreased $3.1 million in the six months of
    fiscal 1998 to $13.8 million. The decreases were primarily attributable to
    the purchase and retirement of $150.9 million of 11-1/4% Senior Notes in
    connection with a tender offer in September 1997, partially offset by
    additional interest on $125.0 million of 8-5/8% Senior Subordinated Notes
    issued in August 1997.

           An income tax provision was recorded in the first six months of
    fiscal 1998 and fiscal 1997 using the Company's estimated annual effective
    tax rates of 41% and 43%, respectively. The reduction in the rate primarily
    reflects the estimated impact of non-deductible amortization of goodwill in
    both years.

           Net income increased to $9.8 million for the second quarter of fiscal
    1998 from $7.4 million for the same period in fiscal 1997. For the first six
    months of fiscal 1998, net income increased to $15.9 million from $9.8
    million for the same period last year. The increases were due to
    improvements in income from operations, the reduction of net interest
    expense, the lower effective tax rate and a $0.8 million loss from
    discontinued operations in the first six months of fiscal 1997.

    LIQUIDITY AND CAPITAL RESOURCES

           The Company's primary source of liquidity is funds provided from
    operations of its operating subsidiaries. In addition, the Company's
    operating subsidiaries have available to them working capital commitments of
    $75.0 million under their Credit Facility, reduced by commitments under
    letters of credit.

           There were no working capital borrowings outstanding during the first
    six months of fiscal 1998 and fiscal 1997.

           Operations for the first six months provided $7.5 million of cash in
    fiscal 1998 and used $31.6 million of cash in fiscal 1997. The increase in
    cash provided by operations was primarily attributable to the payment in
    fiscal 1997 of

                                     - 7 -
<PAGE>   10

    $15.0 million of taxes due on the sale of Pearle's European operation in
    fiscal 1996, less cash used in the first six months of fiscal 1998 for
    increases in accounts receivable, prepaid expenses and inventories and the
    increase in net income.

           Cash used by investing activities included capital additions of $22.6
    million and $19.8 million for the first six months of fiscal 1998 and fiscal
    1997, respectively. The majority of capital expenditures were for store
    fixtures, equipment and leasehold improvements for new stores and the
    remodeling of existing stores. In fiscal 1997, capital expenditures of $6.9
    million were incurred in connection with the construction of Things
    Remembered's new warehouse and distribution facility. In May 1998, the
    Company purchased an office building in Twinsburg, Ohio for $9.5 million. It
    is anticipated that a portion of Cole Optical's business will move there
    during 1998. The Company is currently evaluating financing alternatives for
    both facilities. In addition, $2.9 million of cash was used to acquire
    optical retail locations. During the first six months of fiscal 1998, the 
    Company repaid a $3.2 million note payable to a subsidiary of Pearle Europe
    B.V. (Pearle Europe), invested an additional $7.2 million in the form of 8%
    shareholder loans to Pearle Europe in connection with Pearle Europe's
    acquisition of two optical operations in Germany and Austria, and was repaid
    $3.7 million by Pearle Europe representing a shareholder loan and accrued
    interest. Investments in systems development costs totaled $10.2 million 
    and $6.0 million in the first six months of fiscal 1998 and fiscal 1997,
    respectively.

           During the current fiscal year through August 31, 1998, the Company 
    has repurchased 65,000 shares of common stock for an aggregate purchase 
    price of approximately $1.8 million and has remaining authority to purchase
    up to 415,000 shares of common stock in the open market and block purchases.

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

    YEAR 2000

           The Company currently is working with a consultant to assess and
    resolve the potential impact of the Year 2000 on the ability of the
    Company's computerized information systems to accurately process information
    that may be date-sensitive. Any of the Company's programs that recognize a
    date using "00" as the year 1900 rather than the Year 2000 could result in
    errors or system failures.

           Included in the Company's assessment is the identification of all
    critical and non-critical computer programs and hardware, including
    non-information technology systems such as HVAC, telephone and others
    containing embedded microcontrollers, and an evaluation of their Year 2000
    readiness. Concurrent with this internal assessment, the Company is
    identifying critical third parties, with whom the Company does business,
    regarding their Year 2000 readiness.

           Approximately 90% of the Company's hardware devices and software
    applications have been identified and evaluated, and critical vendors, host
    stores and managed health care partners have been contacted with respect to
    the Year 2000. The Company expects to complete this assessment during the
    third quarter of fiscal 1998. At that time a comprehensive plan will be 
    completed which will include (a) an estimate of the total Year 2000 costs, 
    (b) a timeline for modifying or replacing critical programs and hardware, 
    and (c) a contingency plan to address the risks of failure to be Year 2000
    ready and identify actions to mitigate those risks. The Company utilizes
    over 500 separate computer

                                     - 8 -
<PAGE>   11


    information systems across its operations, many of which were recently
    installed and were Year 2000 ready. In addition, modification to many of the
    Company's other critical programs has been started. The Company currently 
    believes that all critical programs and hardware will be Year 2000 ready,
    including testing, by the end of the second quarter of fiscal 1999.

           The Company cannot currently estimate the costs of assessing and
    resolving its Year 2000 issues, which include both internal staff costs as
    well as outside consulting and other expenditures related to this effort.
    Notwithstanding that the Company is proceeding diligently with the
    implementation of its own readiness program, including ascertaining Year
    2000 readiness of critical third parties, the inability of the Company or
    critical third parties to effectuate timely and cost effective solutions to
    Year 2000 issues could have a material adverse effect on the Company.

           For the 26 weeks ended August 1, 1998, in addition to internal costs,
    the Company has incurred approximately $300,000 of external Year 2000
    costs, all of which have been expensed.

    FORWARD-LOOKING INFORMATION

           Certain sections of this Form 10-Q contain forward-looking
    statements. Forward-looking statements are made based upon management's
    expectations and beliefs concerning future events impacting the Company. All
    forward-looking statements involve risk and uncertainty.

           The Company operates in a highly competitive environment, and its
    future liquidity, financial condition and operating results may be
    materially affected by a variety of factors, some of which may be beyond the
    control of the Company, including risks associated with the integration of
    acquired operations, the Company's ability to select and stock merchandise
    attractive to customers, the implementation of its store acquisition
    program, economic and weather factors affecting consumer spending, 
    operating factors, including manufacturing quality of optical and engraved 
    goods, affecting customer satisfaction, the Company's relationships with 
    host stores and franchisees, the mix of goods sold, pricing and other 
    competitive factors, the ability of the Company and its suppliers, host
    stores, and managed care organization partners to achieve Year 2000 
    readiness, and the seasonality of the Company's business.

                                     - 9 -

<PAGE>   12
                         PART II -- OTHER INFORMATION

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

           On June 11, 1998, 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, approved the 1998
    Equity and Performance Incentive Plan ("Omnibus Plan"), and confirmed the
    appointment of Arthur Andersen LLP as independent auditors of the Company
    for the fiscal year ending January 30, 1999.

           Of the total eligible votes of 14,812,467, stockholders cast votes of
    13,023,347 or 87.92% of the total eligible votes. The votes cast for the
    aforementioned matters were as follows:

           1)   Election of Directors
<TABLE>
<CAPTION>
                                                                                                        Abstentions
                                                                                                       and/or Broker
                                                           For                       Withheld            non-votes
                                                        ----------                   --------            ---------

<S>                                                     <C>                            <C>                   <C>
                Jeffrey A. Cole                         12,969,815                     53,532                0
                Timothy F. Finley                       12,983,863                     39,484                0
                Irwin W. Gold                           12,983,608                     39,739                0
                Peter V. Handel                         12,983,763                     39,584                0
                Charles A. Ratner                       12,969,863                     53,484                0
                Walter J. Salmon                        12,969,189                     54,158                0
                Brian B. Smith                          12,969,819                     53,528                0
</TABLE>

           2)   1998 Equity and Performance Incentive Plan ("Omnibus Plan")
<TABLE>
<CAPTION>
                                                                                                         Abstentions
                                                                                                        and/or Broker
                                                            For                      Withheld             non-votes
                                                        ----------                   --------            ---------

<S>                                                     <C>                           <C>                 <C>   
                Approval of Plan                        11,273,512                    518,219              1,231,616
</TABLE>

           3)   Confirmation of Independent Auditors
<TABLE>
<CAPTION>
                                                                                                       Abstentions
                                                                                                      and/or Broker
                                                           For                       Withheld           non-votes
                                                        ----------                   --------            ---------

<S>                                                     <C>                             <C>              <C>  
                Arthur Andersen LLP                     13,012,449                      7,100             3,798
</TABLE>

                                     - 10 -
<PAGE>   13


    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     Form of Cole National Corporation's 1998 Equity and
                  Performance Incentive Plan, incorporated by reference to
                  Exhibit A to Cole National Corporation's definitive Proxy
                  Statement dated May 1, 1998 (File No. 1-12814).

    (b)  Reports on Form 8-K

         The Company has not filed any reports on Form 8-K for the quarterly
         period ended August 1, 1998.


                                     - 11 -
<PAGE>   14




                                    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:  September 1, 1998


                                     - 12 -
<PAGE>   15


                            COLE NATIONAL CORPORATION
                                    FORM 10-Q
                          QUARTER ENDED AUGUST 1, 1998

                                  EXHIBIT INDEX


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

    27            Financial Data Schedule

    10.1          Form of Cole National Corporation's 1998 Equity and
                  Performance Incentive Plan, incorporated by reference to
                  Exhibit A to Cole National Corporation's definitive Proxy
                  Statement dated May 1, 1998 (File No. 1-12814).

                                     - 13 -