##### Table of Contents



---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q/A

(Amendment No. 1)


(Mark One)

|  |  |                                                                                                                                                
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|þ |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934For the quarterly period ended May 4, 2002              
| 
| 
| 
| 
| 
| 
| 
| 
|  |  | OR                                                                                                                                             
| 
| 
| 
| 
| 
| 
| 
| 
|o |  | Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934For 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.þ YES   
o  NO

As of May 31, 2002, 16,072,181 shares of the registrants common stock were
outstanding.



---

---





---

TABLE OF CONTENTS



|                                |                                                                                                   |                                            |  |  |  |  |  | 
|------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I.  FINANCIAL INFORMATION
|                                | Item 1.     Financial Statements                                                                 
|                                |                                                                                                   | CONSOLIDATED BALANCE SHEETS               
|                                |                                                                                                   | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                |                                                                                                   | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                |                                                                                                   | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                | Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                | Item 3.     Quantitative and Qualitative Disclosures about Market Risks                          
|PART II  OTHER INFORMATION    
|                                | Item 6.     Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                     
|EXHIBIT INDEX                  
|Exhibit 99.1  - Certification  



---



##### Table of Contents



EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A amends and restates Items 1 and 2 of
Part I contained in the Companys report on Form 10-Q for the quarterly period
ended May 4, 2002 to give effect to the restatement of the Companys
consolidated financial statements for the quarterly period ended May 4, 2002,
as discussed in Note 6 to the financial statements. Except as set forth in
Items 1 and 2 of Part I and Item 6 of Part II below, the Company has not made any changes to, nor updated any
disclosures contained in, its Form 10-Q filed June 13, 2002.

COLE NATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-Q/A
QUARTER ENDED MAY 4, 2002
INDEX

|         |  |                       |  |                                                                                               |                                                                                                        |  |          |   | 
|-------- |  | --------------------- |  | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ |  | -------- | - | 
|         |  |                       |  |                                                                                               |                                                                                                        |  | Page No.
|         |  |                       |  |                                                                                               |                                                                                                        |  |         
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                               |                                                                                                        | 
|        
|        
|        
|        
|         |  |                       |  | Item 1. Financial Statements                                                                  |                                                                                                        |  |          |  
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  |                                                                                               | Consolidated Balance Sheets as of May 4, 2002 (as restated) and February 2, 2002                       |  |          | 1 | 
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  |                                                                                               | Consolidated Statements of Operations for the 13 weeks ended May 4, 2002 (as restated)
and May 5, 2001 |  |          | 2 | 
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  |                                                                                               | Consolidated Statements of Cash Flows for the 13 weeks ended May 4, 2002 (as restated)
and May 5, 2001 |  |          | 3 | 
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  |                                                                                               | Notes to Consolidated Financial Statements                                                             |  |          | 4 | 
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                        |  | 9        |  
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                        |  | 12       |  
|        
|PART II. |  | OTHER INFORMATION     |  |                                                                                               |                                                                                                        | 
|        
|        
|        
|        
|        
|        
|        
|        
|         |  |                       |  | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                        |  | 13       |  





---



##### Table of Contents






PART I.  FINANCIAL INFORMATION




Item 1.    Financial Statements




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

|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |             |         |         |  | 
|----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------------ | --------------------------------- | -------- | ------- | ------------ | ------- | ----------- | ------- | ------- |  | 
|                                                                                                |                                                                         |                                            |                                   |          |         | May 4,       |         |             |         |        
|                                                                                                |                                                                         |                                            |                                   |          |         | 2002         |         |             |         |        
|                                                                                                |                                                                         |                                            |                                   |          |         | (As restated |         | February 2,
|                                                                                                |                                                                         |                                            |                                   |          |         | See Note 6)  |         | 2002       
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|Assets                                                                                          |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current
assets:                                                                                 |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Cash and cash equivalents                                               |                                            | $                                 | 62,560   |         |              | $       | 63,656      |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accounts receivable, less allowances of
$5,494 and $4,008, respectively |                                            |                                   | 46,245   |         |              |         | 39,609      |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Current portion of notes receivable                                     |                                            |                                   | 2,897    |         |              |         | 2,926       |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Inventories                                                             |                                            |                                   | 118,832  |         |              |         | 111,098     |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Refundable income taxes                                                 |                                            |                                   | 472      |         |              |         | 502         |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Prepaid expenses and other                                              |                                            |                                   | 21,859   |         |              |         | 22,757      |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Deferred income tax benefits                                            |                                            |                                   | 547      |         |              |         | 477         |        
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                                |                                                                         |                                            | Total current assets              |          |         | 253,412      |         |             |         | 241,025 | 
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Property and equipment, at cost                                                                 |                                                                         |                                            | 300,104                           |          |         |              | 297,649 |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Less  accumulated depreciation and amortization                        |                                            |                                   | (177,531 | )       |              |         | (174,300    | )      
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                                |                                                                         |                                            | Total property and equipment, net |          |         | 122,573      |         |             |         | 123,349 | 
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Notes receivable, excluding current portion, less allowances of
$4,218 and $5,209, respectively |                                                                         |                                            | 19,381                            |          |         |              | 19,056  |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Deferred income taxes and other assets                                                          |                                                                         |                                            | 73,750                            |          |         |              | 74,220  |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Tradenames, net                                                                                 |                                                                         |                                            | 42,992                            |          |         |              | 42,992  |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Goodwill, net                                                                                   |                                                                         |                                            | 103,557                           |          |         |              | 103,552 |            
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                                |                                                                         |                                            | Total assets                      |          | $       | 615,665      |         |             | $       | 604,194 | 
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|Liabilities
and Stockholders Equity                                                            |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current liabilities:                                                                            |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Current portion of long-term debt                                       |                                            | $                                 | 64       |         |              | $       | 85          |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accounts payable                                                        |                                            |                                   | 61,044   |         |              |         | 57,647      |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accrued interest                                                        |                                            |                                   | 7,466    |         |              |         | 6,539       |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accrued liabilities                                                     |                                            |                                   | 82,812   |         |              |         | 79,722      |        
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accrued income taxes                                                    |                                            |                                   | 2,148    |         |              |         | 3,501       |        
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                                |                                                                         |                                            | Total current liabilities         |          |         | 153,534      |         |             |         | 147,494 | 
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Long-term debt, net of discount and current portion                                             |                                                                         |                                            | 284,346                           |          |         |              | 284,318 |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Other long-term liabilities                                                                     |                                                                         |                                            | 16,759                            |          |         |              | 16,775  |            
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Stockholders equity                                                                            |                                                                         |                                            | 161,026                           |          |         |              | 155,607 |            
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            
|                                                                                                |                                                                         | Total liabilities and stockholders equity |                                   | $        | 615,665 |              |         | $           | 604,194 |        
|                                                                                                |                                                                         |                                            |                                   |          |         |              |         |            

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

1



---



##### Table of Contents






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

|                                             |                                     |                                                |         |                      |         |        |         |         |         | 
|-------------------------------------------- | ----------------------------------- | ---------------------------------------------- | ------- | -------------------- | ------- | ------ | ------- | ------- | ------- | 
|                                             |                                     |                                                |         | Thirteen Weeks Ended
|                                             |                                     |                                                |         |                     
|                                             |                                     |                                                |         | May 4,               |         |        |         |        
|                                             |                                     |                                                |         | 2002                 |         |        |         |        
|                                             |                                     |                                                |         | (As restated         |         | May 5,
|                                             |                                     |                                                |         | See Note 6)          |         | 2001  
|                                             |                                     |                                                |         |                      |         |       
|Net revenue                                  |                                     | $                                              | 290,109 |                      |         | $      | 270,291 |        
|                                            
|                                            
|                                            
|                                            
|Costs and expenses:                          |                                     |                                                |         |                      |         |        |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Cost of goods sold                  |                                                |         | 95,648               |         |        |         | 87,722  |        
|                                            
|                                            
|                                            
|                                            
|                                             | Operating expenses                  |                                                |         | 183,387              |         |        |         | 173,903 |        
|                                            
|                                            
|                                            
|                                            
|                                             | Goodwill and tradename amortization |                                                |         |                     |         |        |         | 1,462   |        
|                                             |                                     |                                                |         |                      |         |        |         |        
|                                             |                                     | Total costs and expenses                       |         |                      | 279,035 |        |         |         | 263,087 | 
|                                             |                                     |                                                |         |                      |         |        |         |        
|Operating income                             |                                     |                                                | 11,074  |                      |         |        | 7,204   |        
|                                            
|                                            
|                                            
|                                            
|Interest and other (income) expense, net:    |                                     |                                                |         |                      |         |        |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Interest expense                    |                                                |         | 7,129                |         |        |         | 7,058   |        
|                                            
|                                            
|                                            
|                                            
|                                             | Interest and other (income), net    |                                                |         | (633                 | )       |        |         | (1,339  | )      
|                                             |                                     |                                                |         |                      |         |        |         |        
|                                             |                                     | Total interest and other (income) expense, net |         |                      | 6,496   |        |         |         | 5,719   | 
|                                             |                                     |                                                |         |                      |         |        |         |        
|Income before income taxes                   |                                     |                                                | 4,578   |                      |         |        | 1,485   |        
|                                            
|                                            
|                                            
|                                            
|Income tax provision                         |                                     |                                                | 1,831   |                      |         |        | 788     |        
|                                             |                                     |                                                |         |                      |         |        |         |        
|Income after taxes                           |                                     |                                                | 2,747   |                      |         |        | 697     |        
|                                            
|                                            
|                                            
|                                            
|Equity in net income (loss) of Pearle Europe |                                     |                                                | 796     |                      |         |        | (52     | )      
|                                             |                                     |                                                |         |                      |         |        |         |        
|Net income                                   |                                     |                                                | 3,543   |                      |         |        | 645     |        
|                                             |                                     |                                                |         |                      |         |        |         |        
|Earnings per share:                          |                                     |                                                |         |                      |         |        |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Basic                               |                                                | $       | 0.22                 |         |        | $       | 0.04    |        
|                                            
|                                            
|                                            
|                                            
|                                             | Diluted                             |                                                | $       | 0.22                 |         |        | $       | 0.04    |        
|                                             |                                     |                                                |         |                      |         |        |         |        

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

2



---



##### Table of Contents






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

|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |        |       |   |        |  
|------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | - | ---------------------------------------------------------------- | ----- | -------------------- | ------ | ------ | ----- | - | ------ | -
|                                      |                                                                                   |                                                                                           |   |                                                                  |       | Thirteen Weeks Ended
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                     
|                                      |                                                                                   |                                                                                           |   |                                                                  |       | May 4,               |        |        |       |  
|                                      |                                                                                   |                                                                                           |   |                                                                  |       | 2002                 |        |        |       |  
|                                      |                                                                                   |                                                                                           |   |                                                                  |       | (As restated         |        | May 5,
|                                      |                                                                                   |                                                                                           |   |                                                                  |       | See Note 6)          |        | 2001  
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|Cash flows from operating activities: |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Net income                                                                        |                                                                                           | $ | 3,543                                                            |       |                      | $      | 645    |      
|                                     
|                                     
|                                     
|                                     
|                                      | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                                           |   |                                                                  |       |                      |        |        |      
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Depreciation and amortization                                                             |   |                                                                  | 9,421 |                      |        |        | 9,873 |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Equity in net (income) loss of Pearle Europe                                              |   |                                                                  | (796  | )                    |        |        | 52    |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Noncash interest, net                                                                     |   |                                                                  | 5     |                      |        |        | 120   |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | 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 |       |                      | (5,625 | )      |       |   | 4,199  |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                           |   | Inventories                                                      |       |                      | (7,682 | )      |       |   | (7,546 | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                           |   | Accounts payable, accrued liabilities and other liabilities      |       |                      | 6,506  |        |       |   | (5,451 | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                           |   | Accrued interest                                                 |       |                      | 678    |        |       |   | 597    |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   |                                                                                           |   | Accrued, refundable and deferred income taxes                    |       |                      | 168    |        |       |   | 1,042  |  
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                      |                                                                                   |                                                                                           |   | Net cash provided by operating activities                        |       |                      | 6,218  |        |       |   | 2,848  |  
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|Cash flows from investing activities: |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Purchases of property and equipment, net                                          |                                                                                           |   | (6,348                                                           | )     |                      |        | (5,933 | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Net proceeds from sale of fixed assets                                            |                                                                                           |   |                                                                 |       |                      |        | 4,712  |      
|                                     
|                                     
|                                     
|                                     
|                                      | Systems development costs                                                         |                                                                                           |   | (1,228                                                           | )     |                      |        | (2,107 | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                        |                                                                                           |   | (145                                                             | )     |                      |        | (105   | )    
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                      |                                                                                   |                                                                                           |   | Net cash used for investing activities                           |       |                      | (7,721 | )      |       |   | (3,433 | )
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|Cash flows from financing activities: |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Repayment of long-term debt                                                       |                                                                                           |   | (21                                                              | )     |                      |        | (154   | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Net proceeds from exercise of stock options                                       |                                                                                           |   | 389                                                              |       |                      |        | 43     |      
|                                     
|                                     
|                                     
|                                     
|                                      | Issuance of notes receivable  stock options and awards, net                      |                                                                                           |   |                                                                 |       |                      |        | (345   | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Other, net                                                                        |                                                                                           |   | 39                                                               |       |                      |        | (200   | )    
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                      |                                                                                   |                                                                                           |   | Net cash provided by (used for) financing activities             |       |                      | 407    |        |       |   | (656   | )
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|Cash and cash equivalents:            |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Net decrease during the period                                                    |                                                                                           |   | (1,096                                                           | )     |                      |        | (1,241 | )    
|                                     
|                                     
|                                     
|                                     
|                                      | Balance, beginning of period                                                      |                                                                                           |   | 63,656                                                           |       |                      |        | 36,725 |      
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       
|                                      | Balance, end of period                                                            |                                                                                           | $ | 62,560                                                           |       |                      | $      | 35,484 |      
|                                      |                                                                                   |                                                                                           |   |                                                                  |       |                      |        |       

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

3



---



##### Table of Contents






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

(1)     Summary of Significant Accounting Policies

Basis of Presentation

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

The accompanying consolidated financial statements have been prepared
without audit and certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted, although management believes that the disclosures herein are adequate
to make the information not misleading. Results for interim periods are not
necessarily indicative of the results to be expected for the full year. These
unaudited consolidated financial statements should be read in conjunction with
the Companys consolidated financial statements for the fiscal year ended
February 2, 2002.

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 May 4, 2002 and the
results of operations and cash flows for the 13 weeks ended May 4, 2002 and May
5, 2001.

Inventories

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

Property and Depreciation

The Companys policy is to provide depreciation using the straight-line
method over a period, which is sufficient to amortize the cost of the asset
over its useful life or lease term. Leasehold improvements of optical
departments operated in a host store under licenses, which are terminable under
relatively short notice, are amortized over their estimated useful life.

Cash Flows

Net cash flows from operating activities reflect net cash payments
(receipts) for income taxes and payments for interest of $1,542,000 and
$6,142,000, respectively, for the 13 weeks ended May 4, 2002, and ($285,000)
and $6,156,000, respectively, for the 13 weeks ended May 5, 2001

Earnings Per Share

Earnings per share for the 13 weeks ended May 4, 2002 and May 5, 2001 have
been calculated based on the following weighted average number of common shares
and equivalents outstanding:

|        |  |      |            |      |  |  |            | 
|------- |  | ---- | ---------- | ---- |  |  | ---------- | 
|        |  | 2002 |            | 2001
|        |  |      |            |     
|Basic   |  |      | 15,978,068 |      |  |  | 15,694,224 | 
|       
|       
|       
|       
|Diluted |  |      | 16,469,429 |      |  |  | 15,796,732 | 

4



---



##### Table of Contents



Total Other Comprehensive Income (Loss)

Total other comprehensive income (loss) for the 13 weeks ended May 4, 2002
and May 5, 2001 is as follows (000s omitted):

|                                        |  |                |       |        |  |   |      |  
|--------------------------------------- |  | -------------- | ----- | ------ |  | - | ---- | -
|                                        |  | 13 Weeks Ended
|                                        |  |               
|                                        |  | May 4,         |       | May 5,
|                                        |  | 2002           |       | 2001  
|                                        |  |                |       |       
|Net income                              |  | $              | 3,543 |        |  | $ | 645  |  
|                                       
|                                       
|                                       
|                                       
|Cumulative translation gain (loss), net |  |                | 1,115 |        |  |   | (877 | )
|                                        |  |                |       |        |  |   |      |  
|Total other comprehensive income (loss) |  | $              | 4,658 |        |  | $ | (232 | )
|                                        |  |                |       |        |  |   |      |  

Use of Estimates

The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Reclassifications

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

(2)     Goodwill and Other Intangible Assets

The Company adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS 142) in the first quarter of fiscal 2002. This statement requires that
goodwill and certain intangible assets deemed to have indefinite lives will no
longer be amortized, but instead, will be subject to reviews for impairment
annually, or more frequently if certain indicators arise. With the adoption of
this statement, the Company ceased amortization of goodwill and tradenames as
of February 3, 2002. The Company is in the process of completing the required
transitional impairment testing of goodwill.

5



---



##### Table of Contents



The following table presents the first quarter results of the Company on a
comparable basis with fiscal 2001 adjusted for the pro forma impacts of SFAS
142 and fiscal 2002s estimated annual effective tax rate of 40% (000s
omitted, except per share amounts):

|                            |                                                 |  |   |                |  |        |   |       |   | 
|--------------------------- | ----------------------------------------------- |  | - | -------------- |  | ------ | - | ----- | - | 
|                            |                                                 |  |   | 13 Weeks Ended
|                            |                                                 |  |   |               
|                            |                                                 |  |   | May 4,         |  | May 5,
|                            |                                                 |  |   | 2002           |  | 2001  
|                            |                                                 |  |   |                |  |       
|Net income:                 |                                                 |  |   |                |  |        |   |      
|                           
|                           
|                           
|                           
|                            | Reported net income                             |  | $ | 3,543          |  |        | $ | 645   |  
|                           
|                           
|                           
|                           
|                            | Goodwill amortization                           |  |   |               |  |        |   | 1,153 |  
|                           
|                           
|                           
|                           
|                            | Tradename amortization                          |  |   |               |  |        |   | 309   |  
|                           
|                           
|                           
|                           
|                            | Related tax adjustment                          |  |   |               |  |        |   | (390  | )
|                            |                                                 |  |   |                |  |        |   |       |  
|                            | Adjusted net income                             |  | $ | 3,543          |  |        | $ | 1,717 |  
|                            |                                                 |  |   |                |  |        |   |       |  
|Basic earnings per share:   |                                                 |  |   |                |  |        |   |      
|                           
|                           
|                           
|                           
|                            | Reported net income                             |  | $ | 0.22           |  |        | $ | 0.04  |  
|                           
|                           
|                           
|                           
|                            | Goodwill and tradename amortization,
net of tax |  |   |               |  |        |   | 0.07  |  
|                            |                                                 |  |   |                |  |        |   |       |  
|                            | Adjusted net income                             |  | $ | 0.22           |  |        | $ | 0.11  |  
|                            |                                                 |  |   |                |  |        |   |       |  
|Diluted earnings per share: |                                                 |  |   |                |  |        |   |      
|                           
|                           
|                           
|                           
|                            | Reported net income                             |  | $ | 0.22           |  |        | $ | 0.04  |  
|                           
|                           
|                           
|                           
|                            | Goodwill and tradename amortization,
net of tax |  |   |               |  |        |   | 0.07  |  
|                            |                                                 |  |   |                |  |        |   |       |  
|                            | Adjusted net income                             |  | $ | 0.22           |  |        | $ | 0.11  |  
|                            |                                                 |  |   |                |  |        |   |       |  

The net carrying amount of goodwill at May 4, 2002, by business segment,
was $81,220,000 at Cole Vision and $22,331,000 at Things Remembered. The change
in the net carrying amount of goodwill for the 13 weeks ended May 4, 2002, was
due to foreign currency translation of goodwill at Cole Vision. The net
carrying amount of tradenames at May 4, 2002 was attributable to the Cole
Vision segment.

6



---



##### Table of Contents



(3)     Segment Information

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

|                         |                                          |                                |   |                |         |        |   |         |         |  
|------------------------ | ---------------------------------------- | ------------------------------ | - | -------------- | ------- | ------ | - | ------- | ------- | -
|                         |                                          |                                |   | 13 Weeks Ended
|                         |                                          |                                |   |               
|                         |                                          |                                |   | May 4,         |         | May 5,
|                         |                                          |                                |   | 2002           |         | 2001  
|                         |                                          |                                |   |                |         |       
|Net revenue:             |                                          |                                |   |                |         |        |   |        
|                        
|                        
|                        
|                        
|                         | Cole Vision                              |                                | $ | 236,656        |         |        | $ | 216,381 |        
|                        
|                        
|                        
|                        
|                         | Things Remembered                        |                                |   | 53,453         |         |        |   | 53,910  |        
|                         |                                          |                                |   |                |         |        |   |         |        
|                         |                                          | Total net revenue              |   | $              | 290,109 |        |   | $       | 270,291 |  
|                         |                                          |                                |   |                |         |        |   |         |        
|Operating income (loss): |                                          |                                |   |                |         |        |   |        
|                        
|                        
|                        
|                        
|                         | Cole Vision                              |                                | $ | 15,136         |         |        | $ | 11,379  |        
|                        
|                        
|                        
|                        
|                         | Things Remembered                        |                                |   | (1,364         | )       |        |   | (1,068  | )      
|                         |                                          |                                |   |                |         |        |   |         |        
|                         |                                          | Total segment operating income |   |                | 13,772  |        |   |         | 10,311  |  
|                        
|                        
|                        
|                        
|                         | Unallocated amounts:                     |                                |   |                |         |        |   |         |        
|                        
|                        
|                        
|                        
|                         |                                          | Corporate expenses             |   |                | (2,698  | )      |   |         | (3,107  | )
|                         |                                          |                                |   |                |         |        |   |         |        
|                         | Total operating income                   |                                |   | 11,074         |         |        |   | 7,204   |        
|                        
|                        
|                        
|                        
|                         | Interest and other income (expense), net |                                |   | (6,496         | )       |        |   | (5,719  | )      
|                         |                                          |                                |   |                |         |        |   |         |        
|                         | Income before income taxes               |                                | $ | 4,578          |         |        | $ | 1,485   |        
|                         |                                          |                                |   |                |         |        |   |         |        

(4)     Subsequent Events

On May 22, 2002, Cole National Group issued $150.0 million of 8-7/8%
senior subordinated notes due 2012. These notes are unsecured and mature on May
15, 2012. Interest on the notes is payable semi-annually on each May 15 and
November 15, commencing November 15, 2002.

The indenture pursuant to which the 8-7/8% notes were issued contains
certain optional and mandatory redemption features and other financial
covenants similar to those in the indentures for Cole National Groups 8-5/8%
and previously outstanding 9-7/8% notes.

Net proceeds from the 8-7/8% note offering, together with cash on hand,
were used to retire $150.0 million of 9-7/8% senior subordinated notes due 2006
and pay premiums and other costs associated with retiring those notes. The
Company anticipates that its second quarter results will include an
extraordinary loss on early extinguishment of debt of approximately $7.6
million, net of an income tax benefit of approximately $4.1 million,
representing the payment of premiums and other costs of retiring the notes and
the write-offs of unamortized discount and deferred financing fees.

In connection with the 8-7/8% note offering, Cole National Group and its
operating subsidiaries amended their existing credit facility to, among other
things, extend its term to May 31, 2006, provide a working capital commitment
of $75.0 million and reduce borrowing rates. Borrowings under the amended
credit facility presently bear interest at a rate equal to, at the option of
the principal operating subsidiaries of Cole National Group, either (a) the
Eurodollar Rate plus 2.25% or (b) 1.25% 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 1.0% or (iii) the federal funds rate
plus 0.5%. Cole National Group pays a commitment fee of between 0.50% and 0.75%
per annum on the unused portion of the facility based on the percentage of
revolving credit commitments used.

The amended credit facility, which is secured by liens against various
assets of the operating subsidiaries and guaranteed by Cole National
Corporation and Cole National Group, has customary operating and financial
covenants similar to those in the Companys previous credit agreement, as
described in Cole Nationals annual report on Form 10-K.

7



---



##### Table of Contents



(5)     Commitments and Contingencies

The Company leases a substantial portion of its equipment and facilities
including laboratories, office and warehouse space, and retail store locations.
These leases generally have initial terms of up to 10 years and often contain
renewal options. Certain of the store locations have been sublet to
franchisees. In most leases covering retail store locations, additional rents
are payable based on store sales. In addition, Cole Vision operates departments
in various host stores paying occupancy costs solely as a percentage of sales
under agreements containing short-term cancellation clauses. Generally, the
Company is required to pay taxes and normal expenses of operating the premises
for laboratory, office, warehouse and retail store leases; the host stores pay
these expenses for departments operated on a percentage-of-sales basis.

The Company guarantees future minimum lease payments for certain store
locations leased directly by franchisees. These guarantees totaled
approximately $13.7 million and $14.2 million as of February 2, 2002 and May 4,
2002, respectively. Generally, these guarantees also extend to payments of
taxes and other normal expenses payable under these leases, the amounts of
which are not readily quantifiable. Many of the guarantees are limited to
periods that are less than the full term of the leases involved.

(6)     Restatement

Subsequent to the issuance of the Companys consolidated financial
statements for the quarterly period ended May 4, 2002, management of the
Company determined that the amount of equity in net income of Pearle Europe
previously recorded for the 13 weeks ended May 4, 2002 did not reflect all of
the Companys 21% interest in Pearle Europes net income for such period. As a
result, the accompanying consolidated financial statements for the quarterly
period ended May 4, 2002 have been restated from the amounts previously
reported to appropriately account for this amount. In addition, the Company has
separately reported its equity in net income of Pearle Europe on the
consolidated statements of operations. Previously, this amount was reported
within interest and other income, net on the consolidated statements of
operations. The following is a summary of the significant effects of the
restatement:

|                                                                       |                                            |  |               |         |             |  |  |         |  
|---------------------------------------------------------------------- | ------------------------------------------ |  | ------------- | ------- | ----------- |  |  | ------- | -
|                                                                       |                                            |  | May 4, 2002  
|                                                                       |                                            |  |              
|                                                                       |                                            |  | As Previously |         |             |  | 
|                                                                       |                                            |  | Reported      |         | As Restated
|                                                                       |                                            |  |               |         |            
|CONSOLIDATED
STATEMENT OF OPERATIONSFOR THE 13 WEEKS ENDED MAY 4, 2002 |                                            |  |               |         |             |  |  |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Interest and other (income), net           |  |               | (883    | )           |  |  | (633    | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Income before income taxes                 |  |               | 4,828   |             |  |  | 4,578   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Income tax provision                       |  |               | 1,931   |             |  |  | 1,831   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Income after taxes                         |  |               | 2,897   |             |  |  | 2,747   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Equity in net income of Pearle Europe      |  |               |        |             |  |  | 796     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net income                                 |  |               | 2,897   |             |  |  | 3,543   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Basic earnings per share                   |  |               | 0.18    |             |  |  | 0.22    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Diluted earnings per share                 |  |               | 0.18    |             |  |  | 0.22    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|CONSOLIDATED BALANCE SHEET AS OF MAY 4, 2002                           |                                            |  |               |         |             |  |  |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Deferred income taxes and other assets     |  |               | 73,104  |             |  |  | 73,750  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Total assets                               |  |               | 615,019 |             |  |  | 615,665 |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Stockholders equity                       |  |               | 160,380 |             |  |  | 161,026 |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Total liabilities and stockholders equity |  |               | 615,019 |             |  |  | 615,665 |  

8



---



##### Table of Contents






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

Subsequent to the issuance of the Companys consolidated financial
statements for the quarterly period ended May 4, 2002, management of the
Company determined that the amount of equity in net income of Pearle Europe
previously recorded for the 13 weeks ended May 4, 2002 did not reflect all of
the Companys 21% interest in Pearle Europes net income for such period. As a
result, the accompanying consolidated financial statements for the quarterly
period ended May 4, 2002 have been restated from the amounts previously
reported to account for this amount. See Note 6 for a summary of the
significant effects of the restatement. The following discussion and analysis
gives effect to the restatement.

The following is a discussion of certain factors affecting the Companys
results of operations for the 13-week periods ended May 4, 2002 and May 5, 2001
(the Companys first quarter) and its liquidity and capital resources. This
discussion should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this filing and the audited
financial statements for the fiscal year ended February 2, 2002 included in the
Companys 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 2, 2002 is referred to as fiscal 2001. The current fiscal
year, which will end February 1, 2003, is referred to as fiscal 2002.

Results of Operations

The following table sets forth certain operating information for the first
quarter fiscal 2002 and fiscal 2001 (dollars in millions):

|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |      |      | 
|--------------------------------------------------- | ----------------------------------- | ------------------- | ----- | ------------- | ----- | ---- | ----- | ------ | ----- | - | ------ | ---- | ---- | 
|                                                    |                                     |                     |       | First Quarter |       |      |       |       
|                                                    |                                     |                     |       |               |       |      |       |       
|                                                    |                                     |                     |       | 2002          |       | 2001 |       | Change
|                                                    |                                     |                     |       |               |       |      |       |       
|Net
revenue                                        
|                                                    | Cole Vision                         | $                   | 236.6 |               |       | $    | 216.4 |        |       |   | 9.4    | %   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Things Remembered                   |                     |       | 53.5          |       |      |       | 53.9   |       |   |        | (0.8 | )   
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|                                                    |                                     | Total net revenue   |       | $             | 290.1 |      |       | $      | 270.3 |   |        |      | 7.3  | 
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|Gross margin                                        |                                     | $                   | 194.5 |               |       | $    | 182.6 |        |       |   | 6.5    | %   
|                                                   
|                                                   
|                                                   
|                                                   
|Operating expenses                                  |                                     |                     | 183.4 |               |       |      | 173.9 |        |       |   | 5.5    |     
|                                                   
|                                                   
|                                                   
|                                                   
|Goodwill and tradename amortization                 |                                     |                     |      |               |       |      | 1.5   |        |       |   | (100.0 | )   
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|                                                    |                                     | Operating income    |       | $             | 11.1  |      |       | $      | 7.2   |   |        |      | 53.7 | 
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|Percentage
of net revenue                          
|                                                    | Gross margin                        |                     | 67.0  | %             |       |      | 67.5  | %      |       |   | (0.5   | )   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Operating expenses                  |                     |       | 63.2          |       |      |       | 64.3   |       |   |        | (1.1 | )   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Goodwill and tradename amortization |                     |       |              |       |      |       | 0.5    |       |   |        | (0.5 | )   
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|                                                    |                                     | Operating income    |       |               | 3.8   | %    |       |        | 2.7   | % |        |      | 1.1  | 
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|Number of retail locations at the end
of the period
|                                                    | Cole Licensed Brands                |                     | 1,286 |               |       |      | 1,186 |        |       |   |        |     
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Pearle company-owned                |                     |       | 422           |       |      |       | 438    |       |   |        |      |     
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Pearle franchised                   |                     |       | 442           |       |      |       | 421    |       |   |        |      |     
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|                                                    |                                     | Total Cole Vision   |       |               | 2,150 |      |       |        | 2,045 |   |        |      |      | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Things Remembered                   |                     |       | 776           |       |      |       | 781    |       |   |        |      |     
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     
|                                                    |                                     | Total Cole National |       |               | 2,926 |      |       |        | 2,826 |   |        |      |      | 
|                                                    |                                     |                     |       |               |       |      |       |        |       |   |        |     

9



---



##### Table of Contents



The increase in consolidated net revenue for the first quarter was
primarily attributable to increases in comparable store sales at Cole Vision,
growth in managed vision care revenue and an increase in the number of Target
Optical stores now open. Changes in comparable store sales by business for the
first quarter of fiscal 2002 compared to the same period a year ago were as
follows:

|                             |                     |  |               |     |  
|---------------------------- | ------------------- |  | ------------- | --- | -
|                             |                     |  | First Quarter
|                             |                     |  |              
|Cole Licensed Brands (U.S.)  |                     |  | 3.5           | %  
|                            
|                            
|                            
|                            
|Pearle company-owned (U.S.)  |                     |  | 10.6          | %  
|                            
|                            
|                            
|                            
|                             | Total Cole Vision   |  |               | 5.9 | %
|                            
|                            
|                            
|                            
|Things Remembered            |                     |  | (3.0          | %) 
|                            
|                            
|                            
|                            
|                             | Total Cole National |  |               | 3.9 | %
|                            
|                            
|                            
|                            
|Pearle U.S. franchise stores |                     |  | 5.9           | %  
|                            
|                            
|                            
|                            
|Pearle U.S. chain-wide       |                     |  | 8.1           | %  

At Cole Licensed Brands, comparable store sales increased primarily from
an increase in the average spectacle selling price, as unit sales decreased
slightly. At Pearle, the increase in company-owned comparable store sales was
driven primarily by an increase in the number of transactions with a modest
increase in average spectacle selling price. At Things Remembered, comparable
store sales declined as fewer transactions more than offset the increase in
average selling price resulting from sales of new merchandise at higher average
unit retails, more personalization and less clearance merchandise.

The first quarter gross margin dollar increase was attributable to
improvements in net revenue at Cole Vision. Overall, the gross margin rate
decreased to 67.0% from 67.5% in fiscal 2001 due to a number of factors,
including more aggressive pricing of contact lenses, the mix of frames selected
by Sears Optical customers and an increase in products sold to Pearle
franchisees. Although sales to franchisees generate lower margins, they add
gross margin dollars and provide other benefits to the Company including a more
uniform merchandise assortment and a consistent brand look across all stores.
As a result, the gross margin rate at Cole Vision declined by 0.7 percentage
points compared to first quarter 2001. However, the gross margin rate at Things
Remembered increased 0.8 percentage points compared to first quarter 2001
benefiting primarily from the improvement in average selling price discussed
above.

The dollar increase in operating expenses for first quarter 2002 was
primarily due to costs incurred to support the increase in net revenue and the
number of Target Optical stores opened in the past twelve months, partially
offset by reduced advertising expenditures at Pearle. As a percentage of net
revenue, operating expenses improved to 63.2% from 64.3% in fiscal 2001,
gaining operating leverage of 1.1 percentage points. The leverage gain was
primarily due to the increase in comparable store sales at Cole Vision and
reduced advertising expenditures. Amortization of goodwill and tradenames was
stopped in fiscal 2002 as a result of adopting SFAS 142.

The $3.9 million improvement in first quarter 2002 operating income
compared to first quarter 2001 was primarily attributable to the increase in
net revenues and operating leverage at Cole Vision and the adoption of SFAS 142
as discussed above.

The increase in interest and other (income) expense, net, was primarily
the result of a $0.7 million gain from the sale of a Dallas office facility in
fiscal 2001. An income tax provision was recorded in the first quarter of
fiscal 2002 and fiscal 2001 using the Companys estimated annual effective tax
rates of 40.0% and 53.0%, respectively. The reduction in the estimated
effective tax rate compared to fiscal 2001 was primarily a result of adopting
SFAS 142 which stopped nondeductible goodwill amortization.

Equity in the net income of Pearle Europe was $0.8 million for the first
quarter this year compared to a net loss of $0.1 million for the first quarter
of fiscal 2001. Fiscal 2001 results were impacted by the costs and expenses
associated with the terminations of a developmental venture.

10



---



##### Table of Contents



Liquidity and Capital Resources

The Companys primary source of liquidity is funds provided from the
operations of its operating subsidiaries. In addition, as of May 4, 2002, Cole
National Group, Inc., and its operating subsidiaries had 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 Companys amended
credit facility. As of May 4, 2002, the total commitment was $75.0 million and
availability under this credit facility totaled $62.7 million, after reduction
for commitments under outstanding letters of credit. There were no working
capital borrowings outstanding at any time during the first quarter of fiscal
2002 or the first quarter of fiscal 2001. Cole National Group and its principal
operating subsidiaries were in compliance with all credit facility covenants at
May 4, 2002.

On May 22, 2002, Cole National Group issued $150.0 million of 8-7/8%
senior subordinated notes due 2012. These notes are unsecured and mature on May
15, 2012. Interest on the notes is payable semi-annually on each May 15 and
November 15, commencing November 15, 2002.

The indenture pursuant to which the 8-7/8% notes were issued contains
certain optional and mandatory redemption features and other financial
covenants including restrictions on the ability of Cole National Group to pay
dividends or make other restricted payments to Cole National Corporation. The
indenture permits dividend payments to Cole National Corporation equal to 50%
of Cole National Groups consolidated net income, provided that no default or
event of default has occurred under the indenture and that Cole National Group
has met a specified fixed charge coverage ratio test. The indenture also
permits payments to Cole National Corporation for certain tax obligations and
for administrative expenses not to exceed 0.25% of net revenue.

Net proceeds from the 8-7/8% note offering, together with cash on hand,
were used to retire $150.0 million of 9-7/8% senior subordinated notes due 2006
and pay premiums and other costs associated with retiring those notes. The
Company anticipates that its second quarter results will include an
extraordinary loss on early extinguishment of debt of approximately $7.6
million, net of an income tax benefit of approximately $4.1 million,
representing the payment of premiums and other costs of retiring those notes
and the write-offs of unamortized discount and deferred financing fees. In
addition to extending the Companys debt maturity schedule, the offering and
retirement will reduce annual cash interest expense by $1.5 million.

In connection with the 8-7/8% note offering, Cole National Group and its
operating subsidiaries amended their existing credit facility to, among other
things, extend its term to May 31, 2006, provide a working capital commitment
of $75.0 million and reduce borrowing rates. The credit facility, which is
guaranteed by Cole National Corporation and Cole National Group, requires Cole
National Group and its principal operating subsidiaries to comply with
customary operating covenants that restrict corporate activities, including
covenants restricting the ability of the subsidiaries to incur additional
indebtedness, pay dividends, prepay subordinated indebtedness, dispose of
certain investments or make acquisitions. The credit facility also requires
Cole National Group to comply with certain financial covenants, including
covenants regarding minimum interest coverage and maximum leverage.

Operations for the first quarter provided $6.2 million of cash in fiscal
2002 compared to $2.8 million in fiscal 2001. The primary reasons for the $3.4
million increase in cash provided by operations were the increase in net income
and changes in certain operating assets and liabilities during the first
quarter of fiscal 2002 as compared to the same period in fiscal 2001. In fiscal
2002, funds provided by temporary increases in accounts payable and accrued
liabilities due primarily to the timing of purchases and payments were
partially offset by an increase in accounts receivable from strong April
comparable store sales at Cole Vision.

Capital expenditures were $6.3 million and $5.9 million for the first
quarter of fiscal 2002 and fiscal 2001, 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. In fiscal 2001, net proceeds of $4.7 million were received
from the sale of a facility in Dallas, Texas that was no longer needed. The
Company paid approximately $1.2 million and $2.1 million for systems
development costs in the first quarter of fiscal 2002 and fiscal 2001,
respectively.

11



---



##### Table of Contents



The Company believes that funds provided from operations including cash on
hand 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.

New Accounting Pronouncements

The Company adopted SFAS 142 in the first quarter of fiscal 2002. This
statement requires that goodwill and certain intangible assets deemed to have
indefinite lives will no longer be amortized, but instead, will be subject to
reviews for impairment annually, or more frequently if certain indicators
arise. With the adoption of this statement, the Company ceased amortization of
goodwill and tradenames as of February 3, 2002. Amortization of goodwill and
tradenames totaled $5.8 million in fiscal 2001. The Company is in the process
of completing the required transitional impairment testing of goodwill.

Forward-Looking Information

Based on the momentum generated in first quarter 2002, management expects
second quarter earnings per share before the extraordinary loss on early
extinguishment of debt to be flat or slightly above earnings per share for the
same period last year after last year is adjusted for the pro forma impacts of
SFAS 142 and the use of fiscal 2002s estimated annual effective tax rate of
40%. Management continues to estimate that full year net income could increase
approximately 15% to 20% in fiscal 2002 from fiscal 2001 with fiscal 2001
adjusted for the pro forma impacts previously described. Achieving both the
second quarter and the full year earnings expectations assumes, among other
things, that the current economic environment does not worsen.

Certain sections of this Quarterly Report on Form 10-Q/A, 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 the 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 nature and extent
of disruptions of the economy from terrorist activities and from governmental
and consumer responses to such acts, the success of new store openings and the
rate at which new stores achieve profitability, the Companys relationships
with host stores and franchisees, the Companys ability to select, stock and
price merchandise attractive to customers, success of systems development and
integration, competition and regulation in the optical industry, integration of
acquired businesses, economic, political and weather factors affecting consumer
spending, operating factors affecting customer satisfaction, including
manufacturing quality of optical and engraved goods, the mix of goods sold,
pricing and other competitive factors, the seasonality of the Companys
business and the actual effect of implementation of new accounting standards.
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.




Item 3.     Quantitative and Qualitative Disclosures about Market Risks

The Companys major market risk exposure is to 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 to
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



---



##### Table of Contents






PART II  OTHER INFORMATION




Item 6.    Exhibits and Reports on Form 8-K



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

|      |  |                                                                                                                                                                                                  
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1* |  | Amended and Restated Credit agreement dated May 23, 2002, among
Cole Vision Corporation,
Things Remembered, Inc., and Pearle, Inc. and Canadian Imperial Bank
of Commerce.                       
|     
|     
|     
|     
|10.2* |  | Indenture dated May 22, 2002, by and among Cole National Group, Inc.
and Wells Fargo Bank Minnesota, National Association, as trustee, relating to the 8-7/8% Senior
Subordinated Notes Due 2012.
|     
|     
|     
|     
|99.1  |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                   



|(b) |  | Reports on Form 8-K                                                                                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company filed a report on Form 8-K on May 7, 2002, which disclosed
domestic comparable store sales for the first quarter of 2002.



|* |  | Filed with the original Form 10-Q filing on June 13, 2002.
|- |  | ----------------------------------------------------------

13



---



##### Table of Contents






SIGNATURES

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/ Lawrence E. Hyatt

Lawrence E. Hyatt
Executive Vice President and Chief
Financial Officer (Duly Authorized Officer)
|                        
|                        
|                        
|                        
|                         |  |                           |  |                                                                                                                        
|                        
|                        
|                        
|                        
|                         |  | By:                       |  | /s/ Tracy L. Burmeister

Tracy L. Burmeister
Vice President Accounting and Reporting
(Principal Accounting Officer)    
|                        
|                        
|                        
|                        
|                         |  |                           |  |                                                                                                                        
|                        
|                        
|                        
|                        
|Date: September 17, 2002 |  |                           |  |                                                                                                                        

14



---



##### Table of Contents



COLE NATIONAL CORPORATION
FORM 10-Q/A
QUARTER ENDED MAY 4, 2002




EXHIBIT INDEX

|        |  |                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                  
|Number  |  | Description                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                  
|10.1*   |  | Amended and Restated Credit Agreement dated May 23, 2002, among Cole
Vision Corporation,
Things Remembered, Inc., and Pearle, Inc. and Canadian Imperial Bank of
Commerce.                       
|       
|       
|       
|       
|10.2*   |  | Indenture dated May 22, 2002, by and among Cole National Group, Inc. and Wells Fargo Bank
Minnesota, National Association, as trustee, relating to the 8-7/8% Senior Subordinated Notes
Due 2012.
|       
|       
|       
|       
|99.1   |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                   



|* |  | Filed with the original Form 10-Q filing on June 13, 2002.
|- |  | ----------------------------------------------------------
| 
| 
| 
| 
| |  | Filed herewith.                                           

15