-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EyjzOWln2qd8S5vrDw2+zmyFO5DCeRiYIrPIJVn5bPjAiMdtcgwYboO+UXuj9ZLH ifoMBhMfZxaM7AqTNLjcEQ== 0000950152-99-007560.txt : 19990915 0000950152-99-007560.hdr.sgml : 19990915 ACCESSION NUMBER: 0000950152-99-007560 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLE NATIONAL CORP /DE/ CENTRAL INDEX KEY: 0000769644 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 341453189 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12814 FILM NUMBER: 99711380 BUSINESS ADDRESS: STREET 1: 5915 LANDERBROOK DR CITY: MAYFIELD HEIGHTS STATE: OH ZIP: 44124 BUSINESS PHONE: 2164494100 MAIL ADDRESS: STREET 1: 5915 LANDERBROOK DRIVE STREET 2: SUITE 300 CITY: CLEVELAND STATE: OH ZIP: 44124 FORMER COMPANY: FORMER CONFORMED NAME: CNC HOLDING CORP/DE DATE OF NAME CHANGE: 19920703 10-Q 1 COLE NATIONAL CORPORATION 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999, OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM___________ TO____________. COMMISSION FILE NUMBER 1-12814 COLE NATIONAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 34-1453189 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 5915 LANDERBROOK DRIVE MAYFIELD HEIGHTS, OHIO 44124 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (440) 449-4100 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. X YES NO --- --- AS OF AUGUST 23, 1999, 14,855,843 SHARES OF THE REGISTRANT'S COMMON STOCK WERE OUTSTANDING. ================================================================================ 2 - -------------------------------------------------------------------------------- COLE NATIONAL CORPORATION AND SUBSIDIARIES FORM 10-Q QUARTER ENDED JULY 31, 1999 INDEX
PAGE NO. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS AS OF JULY 31, 1999 AND JANUARY 30, 1999...................................................................... 1 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE 13 AND 26 WEEKS ENDED JULY 31, 1999 AND AUGUST 1, 1998.......................................... 2 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 26 WEEKS ENDED JULY 31, 1999 AND AUGUST 1, 1998................................................... 3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................ 4 - 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................................... 7 - 10 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................ 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................... 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................................... 13
- -------------------------------------------------------------------------------- 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS COLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS) July 31, January 30, 1999 1999 --------- --------- Assets - ------ Current assets: Cash and temporary cash investments $ 25,254 $ 51,057 Accounts receivable, less allowance for doubtful accounts of $8,935 in 1999 and $7,189 in 1998 46,573 45,561 Current portion of notes receivable 3,452 2,707 Refundable income taxes 9,556 9,556 Inventories 126,852 119,881 Prepaid expenses and other 8,529 8,582 Deferred income tax benefits 13,739 14,048 --------- --------- Total current assets 233,955 251,392 Property and equipment, at cost 268,710 261,605 Less-accumulated depreciation and amortization (142,721) (135,731) --------- --------- Total property and equipment, net 125,989 125,874 Other assets: Notes receivable, excluding current portion 30,892 32,039 Deferred income taxes and other assets 62,742 59,021 Intangible assets, net 157,160 159,698 --------- --------- Total assets $ 610,738 $ 628,024 ========= ========= Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Current portion of long-term debt $ 1,623 $ 1,497 Accounts payable 56,873 73,065 Accrued interest 6,280 6,216 Accrued liabilities 89,986 101,791 Accrued income taxes 4,482 128 --------- --------- Total current liabilities 159,244 182,697 Long-term debt, net of discount and current portion 285,222 276,013 Other long-term liabilities 14,490 23,954 Stockholders' equity 151,782 145,360 --------- --------- Total liabilities and stockholders' equity $ 610,738 $ 628,024 ========= ========= The accompanying notes to consolidated financial statements are an integral part of these consolidated balance sheets. -1- 4 COLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 13 Weeks Ended 26 Weeks Ended -------------------- -------------------- July 31, August 1, July 31, August 1, 1999 1998 1999 1998 -------- -------- -------- -------- Net revenue $267,502 $267,611 $534,134 $539,439 Costs and expenses: Cost of goods sold 90,205 89,132 177,503 179,421 Operating expenses 155,828 147,721 314,788 304,039 Depreciation and amortization 8,797 8,091 17,931 16,489 -------- -------- -------- -------- Total costs and expenses 254,830 244,944 510,222 499,949 -------- -------- -------- -------- Operating income 12,672 22,667 23,912 39,490 Interest and other (income) expense, net 5,895 6,233 11,984 12,520 -------- -------- -------- -------- Income before income taxes 6,777 16,434 11,928 26,970 Income tax provision 2,779 6,634 4,891 11,058 -------- -------- -------- -------- Net income $ 3,998 $ 9,800 $ 7,037 $ 15,912 ======== ======== ======== ======== Earnings per common share: Basic- $ .27 $ .66 $ .47 $ 1.07 Diluted- $ .27 $ .64 $ .47 $ 1.04 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. -2- 5 COLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
26 Weeks Ended -------------------- July 31, August 1, 1999 1998 -------- -------- Cash flows from operating activities: Net income $ 7,037 $ 15,912 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 17,931 16,489 Amortization of restricted stock awards 271 -- Non-cash interest, net (854) (473) Change in assets and liabilities: Decrease (increase) in accounts and notes receivable, prepaid expenses and other assets 319 (5,580) Increase in inventories (6,971) (5,950) Decrease in accounts payable, accrued liabilities and other liabilities (25,697) (23,220) Increase in accrued interest 64 207 Increase in accrued, refundable and deferred income taxes 4,354 10,090 -------- -------- Net cash provided (used) by operating activities (3,546) 7,475 -------- -------- Cash flows from investing activities: Purchases of property and equipment, net (12,901) (22,563) Systems development costs (6,500) (10,150) Investment in Pearle Europe, net (1,360) (7,152) Acquisitions of businesses, net -- (2,923) Other, net (582) 402 -------- -------- Net cash used by investing activities (21,343) (42,386) -------- -------- Cash flows from financing activities: Repayment of long-term debt (710) (682) Net proceeds from exercise of stock options and warrants 153 1,857 Common stock repurchased (564) -- Other, net 207 (165) -------- -------- Net cash provided (used) by financing activities (914) 1,010 -------- -------- Cash and temporary cash investments: Net decrease during the period (25,803) (33,901) Balance, beginning of the period 51,057 68,053 -------- -------- Balance, end of the period $ 25,254 $ 34,152 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. -3- 6 COLE NATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION AND ACCOUNTING POLICIES The consolidated financial statements include the accounts of Cole National Corporation and its wholly owned subsidiaries, including Cole National Group, Inc. and its wholly owned subsidiaries (collectively, the "Company"). All significant intercompany transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared without audit and certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although management believes that the disclosures herein are adequate to make the information not misleading. Results for interim periods are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with Cole National Corporation's consolidated financial statements for the fiscal year ended January 30, 1999. In the opinion of management, the accompanying financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly its financial position as of July 31, 1999 and the results of operations and cash flows for the 26 weeks ended July 31, 1999 and August 1, 1998. Inventories The accompanying interim consolidated financial statements have been prepared without physical inventories. Cash Flows Net cash flows from operating activities reflect cash payments for income taxes and interest of $283,000 and $13,331,000, respectively, for the 26 weeks ended July 31, 1999, and $912,000 and $13,471,000, respectively, for the 26 weeks ended August 1, 1998. Earnings Per Share Earnings per share for the 13 and 26 weeks ended July 31, 1999 and August 1, 1998 have been calculated based on the following weighted average number of common shares and equivalents outstanding: 13 Weeks 26 Weeks -------------------------- ------------------------- July 31, August 1, July 31, August 1, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Basic 14,855,657 14,881,801 14,862,827 14,818,344 Diluted 14,874,604 15,344,539 14,971,526 15,310,805 -4- 7 (2) RESTRUCTURING CHARGE In the fourth quarter of fiscal 1998, the Company recorded a restructuring charge related to Pearle's operations. The Company's restructuring plan, which included the closing of certain unprofitable stores during fiscal 1999 and removing surfacing equipment from certain in-store full service labs through the second quarter of 2000, is proceeding. The estimated costs of the restructuring are expected to approximate original estimates. During the first half of fiscal 1999, the Company closed a total of 17 Pearle stores and no in-store labs. The restructuring reserves remaining at January 30, 1999 were $7.1 million, of which approximately $4.9 million were paid in the first six months of fiscal 1999. The remaining reserve at July 31, 1999 of $2.2 million is expected to be paid through the fourth quarter of fiscal 1999. (3) LONG TERM DEBT In the fourth quarter of fiscal 1998, the Company entered into an irrevocable commitment to contribute $10,000,000 to a leading medical institution, supporting the development of a premier eye care research and surgical facility. On April 23, 1999, the Company issued a $10,000,000 promissory note bearing interest at 5% per annum in recognition of the commitment. Prior to this, the obligation was classified with other long-term liabilities in the consolidated balance sheet. The note requires a $5,000,000 principal payment to be made on April 23, 2004, and principal payments in the amount of $1,000,000 to be made on the anniversary date of the note each successive year through 2009. Interest will be paid at the end of each year for the first 5 years, and thereafter with each payment of principal. (4) CREDIT FACILITY In August 1999, the Company's credit facility was amended and extended until January 31, 2003. Borrowings under the credit facility initially bear interest based on leverage ratios at a rate equal to, at the option of the principal operating subsidiaries of Cole National Group, either (a) the Eurodollar Rate plus 2% or (b) 1% plus the highest of (i) the prime rate, (ii) the three-week moving average of the secondary market rates for three-month certificates of deposit plus 1% and (iii) the federal funds rate plus .5%. Cole National Group pays a commitment fee of between .375% and .75% per annum on the total unused portion of the facility based on the percentage of revolving credit commitments used. -5- 8 (5) SEGMENT INFORMATION Information on the Company's reportable segments is as follows (000's omitted):
13 Weeks Ended 26 Weeks Ended ---------------------- ---------------------- July 31, August 1, July 31, August 1, 1999 1998 1999 1998 --------- --------- --------- --------- Net revenue: Cole Vision $ 198,634 $ 203,368 $ 416,865 $ 429,468 Things Remembered 68,868 64,243 117,269 109,971 --------- --------- --------- --------- Consolidated net revenue $ 267,502 $ 267,611 $ 534,134 $ 539,439 ========= ========= ========= ========= Income or loss: Cole Vision $ 4,077 $ 15,102 $ 18,404 $ 35,958 Things Remembered 10,479 8,969 9,138 6,342 --------- --------- --------- --------- Total segment profit 14,556 24,071 27,542 42,300 Unallocated amounts: Corporate expenses (1,884) (1,404) (3,630) (2,810) --------- --------- --------- --------- Consolidated operating income 12,672 22,667 23,912 39,490 Interest and other expense, net (5,895) (6,233) (11,984) (12,520) --------- --------- --------- --------- Income before income taxes $ 6,777 $ 16,434 $ 11,928 $ 26,970 ========= ========= ========= =========
(6) RECLASSIFICATIONS Certain 1998 amounts have been reclassified to conform with the 1999 presentation. -6- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion of certain factors affecting Cole National Corporation's results of operations for the 13 and 26 week periods ended July 31, 1999 and August 1, 1998 (the Company's second quarter and first six months) and its liquidity and capital resources. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this filing and the audited financial statements for the fiscal year ended January 30, 1999 included in the annual report on Form 10-K. Fiscal years end on the Saturday closest to January 31 and are identified according to the calendar year in which they begin. For example, the fiscal year ended January 30, 1999 is referred to as "fiscal 1998." The current fiscal year, which will end January 29, 2000, is referred to as "fiscal 1999." RESULTS OF OPERATIONS The following table sets forth certain operating information for the second quarter and first six months of fiscal 1999 and fiscal 1998 (dollars in millions):
Second Quarter First Six Months --------------------------- --------------------------- Fiscal Fiscal Fiscal Fiscal 1999 1998 Change 1999 1998 Change ---- ---- ------ ---- ---- ------ Net Revenue- Cole Vision $ 198.6 $ 203.4 (2.3%) $ 416.8 $ 429.4 (2.9%) Things Remembered 68.9 64.2 7.2% 117.3 110.0 6.6% -------- -------- -------- -------- Total net revenue $ 267.5 $ 267.6 0.0% $ 534.1 $ 539.4 (1.0%) Gross profit $ 177.3 $ 178.5 (0.7%) $ 356.6 $ 360.0 (0.9%) Operating expenses 155.8 147.7 5.5% 314.8 304.0 3.5% Depreciation & amortization 8.8 8.1 8.7% 17.9 16.5 8.7% -------- -------- -------- -------- Operating income $ 12.7 $ 22.7 (44.1%) $ 23.9 $ 39.5 (39.4%) ======== ======== ======== ======== Percentage of Net Revenue- Gross margin 66.3% 66.7% (0.4) 66.8% 66.7% 0.1 Operating expenses 58.3 55.2 3.1 58.9 56.4 2.5 Depreciation & amortization 3.3 3.0 0.3 3.4 3.0 0.4 -------- -------- -------- -------- Operating income 4.7% 8.5% (3.8) 4.5% 7.3% (2.8) ======== ======== ======== ======== Number of Retail Locations at the End of the Period- Cole Licensed Brands 1,176 1,161 Pearle company-owned 462 461 Pearle franchised 418 403 -------- -------- Total Cole Vision 2,056 2,025 Things Remembered 810 823 -------- -------- Total Cole National 2,866 2,848 ======== ========
-7- 10 The softness in net revenue for the second quarter and first six months of fiscal 1999 was primarily attributable to decreases in consolidated comparable store sales, partially offset by growth in the number of locations since last year. Changes in comparable store sales by business were: Second Quarter First Six Months -------------- ---------------- Cole Licensed Brands (U.S.) (4.5%) (4.7%) Pearle company-owned (U.S.) (4.0%) (5.9%) Total Cole Vision (4.0%) (4.8%) Things Remembered 6.9% 7.0% Total Cole National (1.0%) (2.0%) Sales at Cole Licensed Brands were negatively impacted by a competitive promotional environment to which Cole began responding at the end of the second quarter. This response produced an improvement in the sales trend during the last two weeks of the quarter. Sales at Pearle were impacted by the competitive promotional environment and Pearle's focus on long-term, brand-building in its advertising campaign, as well as operating issues the company is actively addressing. During the second quarter, Pearle refocused its marketing efforts to become more promotional, resulting in an improved trend in comparable store sales as compared to the first quarter. The second quarter sales decrease at Cole Vision reflected a decline in the number of spectacles sold as well as a lower average selling price for contact lenses at Cole Licensed Brands and a reduction in the average transaction amount at Pearle due to a change in promotions between years. At Things Remembered, the comparable store sales increase reflected increased sales of additional personalization and new merchandise at higher average unit retails, along with the benefits from marketing directly to its existing customer base. The number of transactions at Things Remembered in the second quarter was essentially flat compared to a year ago. During the first six months of fiscal 1999, Cole National Corporation opened 52 new locations and closed 70 locations. The gross profit decreases for the second quarter and first six months of fiscal 1999 compared to those same periods in fiscal 1998 were primarily attributable to the lower revenue at Cole Vision, partially offset by the revenue increase at Things Remembered. Gross margin at Cole Vision declined 0.9 and 0.4 percentage points in the second quarter and first six months of fiscal 1999, respectively, compared to the same periods last year. The lower gross margin at Cole Vision was due in part to the impact of lower contact lens margins in the second quarter. Gross margin at Things Remembered improved 0.7 and 1.3 percentage points in the second quarter and first six months of fiscal 1999, respectively, reflecting increased sales of additional personalization and higher margins from new products. The unfavorable leverage in operating expenses in the second quarter was primarily attributable to a 1.2 percentage point increase in payroll costs, a 1.4 percentage point increase in net advertising expenditures and a 0.7 percentage point increase in managed vision care expenses. The unfavorable leverage for the first six months was primarily attributable to a 1.2 percentage point increase in payroll costs, a 0.4 percentage point increase in net advertising expenditures and a 0.6 percentage point increase in managed vision care expenses. The unfavorable payroll leverages were due to the comparable store sales decreases at Cole Vision and to staffing increases in managed vision care and information systems, partly offset by payroll leverage gains on the sales increases at Things Remembered. The -8- 11 unfavorable advertising leverage was largely due to increased advertising at Cole Vision in the second quarter of fiscal 1999 in response to the competitive pricing environment. The increases in managed vision care expenses were primarily attributable to growth in call and claims volumes associated with increases in sponsor-funded programs. The depreciation and amortization expense increases were primarily attributable to the increases in amortization of systems development and software costs. See the notes to consolidated financial statements for information on the status of the Company's restructuring charge recorded in the fourth quarter of fiscal 1998. The decreases in income from operations were primarily the result of the decreases in net revenue and gross profit, and the increases in operating expenses and depreciation and amortization. Net interest and other expense in fiscal 1999 decreased slightly from the second quarter and first six months of fiscal 1998. An income tax provision was recorded in the first six months of fiscal 1999 and fiscal 1998 using the Company's estimated annual effective tax rate of 41% in both years. LIQUIDITY AND CAPITAL RESOURCES The Company's primary source of liquidity is funds provided from operations of its operating subsidiaries. In addition, its wholly-owned subsidiary, Cole National Group, Inc., and its operating subsidiaries have available to them working capital commitments of $75.0 million, reduced by commitments under letters of credit, under a credit facility that was recently extended through January 2003. There were no working capital borrowings outstanding at any time during the first six months of fiscal 1999 and 1998. As of July 31, 1999, availability under the credit facility totaled $59.8 million, after reduction for commitments under outstanding letters of credit. Operations for the first six months used $3.5 million of cash in fiscal 1999 compared to cash provided of $7.5 million in fiscal 1998. The primary reason for the additional $11.0 million in cash used by operations was the decrease in operating income in fiscal 1999, partially offset by not having the increase in accounts and notes receivable, prepaid expenses and other assets that was experienced in fiscal 1998. Cash used by investing activities included capital additions of $12.9 million and $22.6 million for the first six months of fiscal 1999 and fiscal 1998, respectively. The majority of capital expenditures were for store fixtures, equipment and leasehold improvements for new stores and the remodeling of existing stores. Capital expenditures in fiscal 1998 also included $9.5 million to purchase the office building now occupied by Cole Vision. Investments in systems development costs totaled $6.5 million and $10.2 million in the first six months of fiscal 1999 and fiscal 1998, respectively. In July 1999, the Company invested an additional $1.2 million in the form of 9% shareholder loans to Pearle Europe B.V. (Pearle Europe) and $0.2 million in additional equity in connection with Pearle Europe's acquisition of a retail optical chain in Italy. In February 1998, the Company repaid a $3.2 million note payable to a subsidiary of Pearle Europe and invested an additional $7.2 million in the form of 8% shareholder loans to Pearle Europe in connection with Pearle Europe's acquisition of optical operations in Germany and Austria. -9- 12 The Company believes that funds provided from operations, along with funds available under the credit facility, will provide adequate sources of liquidity to allow its operating subsidiaries to continue to expand the number of stores and to fund capital expenditures and systems development costs. YEAR 2000 The Company is proceeding with the implementation of its Year 2000 Readiness Program, including ascertaining Year 2000 readiness of critical third parties. Management continues to believe that all critical programs and hardware will be Year 2000 ready, including testing, by the end of the third quarter of fiscal 1999 and expects that any necessary contingency plans will be completed at that time. Management estimates the total cost of the Year 2000 Readiness Program will be approximately $3.6 million, including $0.3 million of new hardware and software that has been capitalized. The remaining $3.3 million is being expensed as incurred (approximately $2.4 million in fiscal 1998 and $0.9 million in fiscal 1999, including $0.5 million during the first six months). These costs include only external costs as internal costs, which consist primarily of payroll-related costs of employees, are not tracked separately for the Year 2000 Readiness Program. The estimate of external costs does not include costs associated with addressing and resolving issues as a result of the failure of third parties to become Year 2000 ready. See the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 1999 for further discussion of Year 2000. RECENT DEVELOPMENTS AND FORWARD-LOOKING INFORMATION In the second half of fiscal 1999, the Company will continue to respond to the competitive pricing environment that exists in the retail optical market with the development and implementation of promotional messages in order to attract customers and improve comparable store sales. These actions may cause a negative impact on gross margin and may not significantly improve the recent trend in sales for the remainder of the year. Operating income for the second half of fiscal 1999 is expected to be below the same period of the prior year. Certain sections of this Form 10-Q, including this Management's Discussion and Analysis, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forecast due to a variety of factors that can adversely affect operating results, liquidity and financial condition such as risks associated with the timing and achievement of the continuing restructuring and improvements in the operations of the optical business, the ability of Cole National Corporation and its suppliers, host stores, and managed vision care organization partners to achieve Year 2000 readiness, the integration of acquired operations, the ability to select, stock and price merchandise attractive to customers, the implementation of its store acquisition program, economic and weather factors affecting consumer spending, operating factors affecting customer satisfaction, including manufacturing quality of optical and engraved goods, the relationships with host stores and franchisees, the mix of goods sold, pricing and other competitive factors, and the seasonality of the business. Forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting Cole National Corporation. All forward-looking statements involve risk and uncertainty. -10- 13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in foreign currency exchange rates, which could impact its results of operations and financial condition. Foreign exchange risk arises from the Company's exposure in fluctuations in foreign currency exchange rates because The Company's reporting currency is the United States dollar. Management seeks to minimize the exposure to foreign currency fluctuations through natural internal offsets to the fullest extent possible. -11- 14 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 10, 1999, the Company held its annual meeting of stockholders. At that meeting, the stockholders elected seven directors to serve until the next annual meeting of stockholders, approved the 1999 Employee Stock Purchase Plan, approved the amended 1998 Equity and Performance Incentive Plan ("Omnibus Plan"), and confirmed the appointment of Arthur Andersen LLP as independent auditors of the Company for the fiscal year ending January 29, 2000. Of the total eligible votes of 14,879,243, stockholders cast votes of 13,813,321 or 92.84% of the total eligible votes. The votes cast for the aforementioned matters were as follows: 1) Election of Directors
Abstentions and/or Broker For Withheld non-votes ---------- -------- --------- Jeffrey A. Cole 13,243,549 569,772 0 Timothy F. Finley 13,248,647 564,674 0 Irwin W. Gold 13,250,382 562,939 0 Peter V. Handal 13,248,832 564,489 0 Charles A. Ratner 13,249,972 563,349 0 Walter J. Salmon 13,249,882 563,439 0 Brian B. Smith 13,244,559 568,762 0 2) 1999 Employee Stock Purchase Plan Abstentions and/or Broker For Withheld non-votes ---------- -------- --------- Approval of Plan 13,449,128 359,054 5,139 3) Amendments to the 1998 Equity and Performance Incentive Plan ("Omnibus Plan") Abstentions and/or Broker For Withheld non-votes ---------- -------- --------- Approval of Plan 12,176,185 1,632,283 4,853 4) Confirmation of Independent Auditors Abstentions and/or Broker For Withheld non-votes ---------- -------- --------- Arthur Andersen LLP 13,560,912 250,310 2,099
-12- 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The following Exhibits are filed herewith and made a part hereof: 27 Financial Data Schedule 10.1 Fifth Amendment to the Credit Agreement, dated as of August 20, 1999, among Cole Vision Corporation, Things Remembered, Inc., and Pearle Inc. and Canadian Imperial Bank of Commerce. (b) Report on Form 8-K The Company has not filed any reports on Form 8-K for the quarterly period ended July 31, 1999. -13- 16 SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COLE NATIONAL CORPORATION By: /s/ Wayne L. Mosley ---------------------------------------- Wayne L. Mosley Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer) Date: September 14, 1999 -14- 17 COLE NATIONAL CORPORATION FORM 10-Q QUARTER ENDED JULY 31, 1999 EXHIBIT INDEX Exhibit Number Description ------ ----------- 27 Financial Data Schedule 10.1 Fifth Amendment to the Credit Agreement, dated as of August 20, 1999, among Cole Vision Corporation, Things Remembered, Inc., and Pearle Inc. and Canadian Imperial Bank of Commerce. -15- EX-10.1 2 EXHIBIT 10.1 1 Exhibit 10.1 FIFTH AMENDMENT FIFTH AMENDMENT, dated as of August 20, 1999 (this "AMENDMENT"), to the Credit Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among COLE VISION CORPORATION, a Delaware corporation ("COLE VISION"), THINGS REMEMBERED, INC., a Delaware corporation ("THINGS REMEMBERED") and PEARLE, INC., a Delaware corporation ("PEARLE"; Cole Vision, Things Remembered and Pearle each being referred to as a "BORROWER" and collectively as the "BORROWERS"), the several banks and other financial institutions from time to time parties thereto (collectively, the "LENDERS") and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian-chartered bank acting through its New York Agency, as administrative agent for the Lenders thereunder (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H: WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to the Credit Agreement; WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders amend the Credit Agreement as set forth herein; and WHEREAS, the Administrative Agent and the Lenders are willing to effect such amendment, but only upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Borrowers, the Lenders and the Administrative Agent hereby agree as follows: 1 DEFINED TERMS. Unless otherwise defined herein, terms defined in the Credit Agreement shall have such meanings when used herein. 2 AMENDMENT TO SUBSECTION 1.1. Subsection 1.1 of the Credit Agreement is hereby amended by: (a) changing the definitions of "Majority Lenders" and "Revolving Credit Commitment Termination Date" to read in their entireties as follow: "MAJORITY LENDERS": (i) at such periods in which each Lender's Revolving Credit Commitment Percentage is less than 30%, Non-Defaulting Lenders the Revolving Credit Commitment Percentages of which aggregate more than 50% of the aggregate Revolving Credit Commitment Percentages of all Non-Defaulting Lenders and (ii) at all such other periods, Non-Defaulting Lenders the Revolving Credit Commitment Percentages of which aggregate more than 66-2/3% of the aggregate Revolving Credit Commitment Percentages of all Non-Defaulting Lenders. 2 2 `REVOLVING CREDIT COMMITMENT TERMINATION DATE': the earlier of (a) January 31, 2003 or, if such date is not a Business Day, the Business Day next preceding such date and (b) the date upon which the Revolving Credit Commitments shall have terminated pursuant hereto."; and (b) deleting the words "Adjusted Interest Coverage Ratio" appearing in the definition of "Applicable Margin" and substituting in lieu thereof the words "Leverage Ratio". 3 AMENDMENT TO SUBSECTION 2.4. Subsection 2.4 of the Credit Agreement is hereby amended by changing such subsection to read in its entirety as follows: "2.4 COMMITMENT FEES; OTHER FEES. (a) The Borrowers agree, jointly and severally, to pay to the Administrative Agent for the account of each Lender, a commitment fee for the period from and including the first day of the Revolving Credit Commitment Period to the Revolving Credit Commitment Termination Date, computed at the rate per annum set forth under the heading "Commitment Fees" on Schedule II opposite the percentage which is the average daily amount of the Aggregate Outstanding Revolving Credit of all Lenders during the period for which payment is made constitutes of the average daily amount of the Available Revolving Credit Commitment of such Lender during such payment period, payable quarterly in arrears on the last day of each fiscal quarter of CNG and on the Revolving Credit Commitment Termination Date, commencing on the first of such days to occur after the Closing Date." 4 AMENDMENT TO SECTION 7. Section 7 of the Credit Agreement is hereby amended by adding to such Section the following new subsection 7.12: "7.12 YEAR 2000. Ensure that any reprogramming and testing required of all the material software, hardware, database and other similar or related items of automated or computerized systems (collectively, "Systems") relied on in its operations to permit such Systems to be Year 2000 compliant shall be completed by November 2, 1999. For purposes of this Agreement, an item is "Year 2000 compliant" if it will not malfunction, will not cease to function, will not generate incorrect data, and will not produce incorrect results when processing, providing or receiving (i) date-related data into and between the twentieth and twenty-first centuries and (ii) date-related data in connection with any valid data in the twentieth and twenty-first centuries.". 3 3 5 AMENDMENT TO SUBSECTIONS 8.1(a), 8.1(b) AND 8.1(c). Subsections 8.1(a), 8.1(b) and 8.1(c) of the Credit Agreement are hereby amended by deleting such subsections in their entireties and substituting in lieu thereof the following: "(a) LEVERAGE RATIO. Permit the Leverage Ratio as of the end of each fiscal quarter of CNG ending on or about any of the dates set forth below to be greater than the ratio set forth opposite such date below:
Fiscal Quarter Ending Leverage Ratio --------------------- -------------- January 31, 1997 3.85 to 1.00 April 30, 1997 3.75 to 1.00 July 31, 1997 3.60 to 1.00 October 31, 1997 3.45 to 1.00 January 31, 1998 3.25 to 1.00 April 30, 1998 3.10 to 1.00 July 31, 1998 2.95 to 1.00 October 31, 1998 2.80 to 1.00 January 31, 1999 2.80 to 1.00 April 30, 1999 2.80 to 1.00 July 31, 1999 3.50 to 1.00 October 31, 1999 3.75 to 1.00 January 31, 2000 3.75 to 1.00 April 30, 2000 3.75 to 1.00 July 31, 2000 3.75 to 1.00 October 31, 2000 3.50 to 1.00 January 31, 2001 3.50 to 1.00 April 30, 2001 3.50 to 1.00 July 31, 2001 3.50 to 1.00 October 31, 2001 3.25 to 1.00 January 31, 2002 3.25 to 1.00 Thereafter 3.00 to 1.00
4 4 (b) ADJUSTED INTEREST COVERAGE RATIO. Permit the Adjusted Interest Coverage Ratio as of the end of each fiscal quarter of CNG ending on or about any of the dates set forth below to be less than the ratio set forth opposite such date below:
Adjusted Fiscal Quarter Ending Interest Coverage Ratio --------------------- ----------------------- January 31, 1997 1.40 to 1.00 April 30, 1997 1.50 to 1.00 July 31, 1997 1.55 to 1.00 October 31, 1997 1.60 to 1.00 January 31, 1998 1.65 to 1.00 April 30, 1998 1.70 to 1.00 July 31, 1998 1.75 to 1.00 October 31, 1998 1.80 to 1.00 January 31, 1999 1.75 to 1.00 April 30, 1999 1.75 to 1.00 July 31, 1999 1.50 to 1.00 October 31, 1999 1.50 to 1.00 January 31, 2000 1.50 to 1.00 April 30, 2000 1.50 to 1.00 July 31, 2000 1.50 to 1.00 October 31, 2000 1.50 to 1.00 January 31, 2001 1.50 to 1.00 April 30, 2001 1.50 to 1.00 July 31, 2001 1.50 to 1.00 October 31, 2001 1.50 to 1.00 January 31, 2002 1.50 to 1.00 Thereafter 1.60 to 1.00
5 5 (c) MINIMUM CONSOLIDATED NET WORTH. Permit the Consolidated Net Worth of CNG as of the end of each fiscal quarter of CNG ending on or about any of the dates set forth below to be less than the amount set forth opposite such date below:
Fiscal Quarter Ending Consolidated Net Worth --------------------- ---------------------- January 31, 1997 $9,000,000 April 30, 1997 $9,000,000 July 31, 1997 $15,000,000 October 31, 1997 $18,000,000 January 31, 1998 $28,000,000 April 30, 1998 $30,000,000 July 31, 1998 $40,000,000 October 31, 1998 $50,000,000 January 31, 1999 $60,000,000 April 30, 1999 $67,000,000 July 31, 1999 $80,000,000 October 31, 1999 $80,000,000 January 31, 2000 $85,000,000 April 30, 2000 $90,000,000 July 31, 2000 $90,000,000 October 31, 2000 $90,000,000 January 31, 2001 $95,000,000 April 30, 2001 $100,000,000 July 31, 2001 $100,000,000 October 31, 2001 $100,000,000 January 31, 2002 $105,000,000 April 30, 2002 $110,000,000 July 31, 2002 $115,000,000 October 31, 2002 $115,000,000 January 31, 2003 $120,000,000".
6 AMENDMENT TO SUBSECTION 8.8. Subsection 8.8 of the Credit Agreement is hereby amended by deleting the words appearing in the last line of the table appearing therein and substituting in lieu thereof the following: "January 30, 2000 - January 29, 2001 $45,000,000 January 30, 2001 - January 29, 2002 $50,000,000 January 30, 2002 - Revolving Credit Termination Date $55,000,000".
6 6 7 AMENDMENT TO SUBSECTION 9(M). Subsection 9(m) of the Credit Agreement is hereby amended by deleting the amount "$20,000,000" appearing therein and substituting in lieu thereof the amount "$30,000,000". 8 AMENDMENT TO SCHEDULES I AND II TO CREDIT AGREEMENT. Schedules I and II to the Credit Agreement are hereby amended by deleting such Schedules in their entireties and inserting in lieu thereof the revised Schedules I and II attached hereto as Exhibits A and B, respectively. 9 AMENDMENT FEE. In consideration of the agreement of the Lenders to consent to the amendments contained herein, the Borrowers agree to pay to each Lender which so consents on or prior to August 13, 1999 (by executing and delivering to the Administrative Agent or its counsel this Amendment on or prior to such date), an amendment fee in an amount equal to .375% of the amount of such Lender's Commitment, payable on the effective date of this Amendment in immediately available funds to the Administrative Agent on behalf of such Lender. 10 REPRESENTATIONS AND WARRANTIES. Each Borrower hereby confirms, reaffirms and restates the representations and warranties made by it in Section 5 of the Credit Agreement, PROVIDED that each reference to the Credit Agreement therein shall be deemed to be a reference to the Credit Agreement after giving effect to this Amendment. Each Borrower represents and warrants that, after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing. 11 CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on the date (the "AMENDMENT EFFECTIVE DATE") on which all of the following conditions precedent have been satisfied or waived: (a) the Borrowers, the Lenders, and the Administrative Agent shall have executed and delivered to the Administrative Agent this Amendment, and the Guarantors shall have executed and delivered to the Administrative Agent the Acknowledgment and Consent attached hereto; (b) each of the lenders listed on the Consent of Withdrawing Lenders attached hereto (each, a "WITHDRAWING LENDER") shall have executed and delivered to the Administrative Agent a counterpart of such Consent; and (c) the Borrowers shall have paid (i) the fees referred to in Section 9 above and (ii) all commitment fees and letter of credit commissions accrued for the account of the Withdrawing Lenders under subsections 2.4 and 3.3, respectively, of the Credit Agreement that are unpaid as of the Amendment Effective Date (the "PAYOFF AMOUNT") (the Administrative Agent shall promptly remit to each Withdrawing Lender its respective Payoff Amount so received by the Administrative Agent). 7 7 12. WITHDRAWING LENDERS. Upon the occurrence of the Amendment Effective Date and the payment to the Withdrawing Lenders of any interest, fees or principal due to such parties as of the Amendment Effective Date (a) the Withdrawing Lenders shall no longer be the Lenders under the Credit Agreement and the terms "Lenders" and "Lender" shall not include the Withdrawing Lenders, (b) the Lenders which are listed on Exhibit A hereto shall be the "Lenders" under the Credit Agreement for all purposes thereof, the Revolving Credit Notes and the other Loan Documents and, in the case of each Lender which was not a party to the Credit Agreement prior to the Amendment Effective Date, shall thereafter be entitled to all benefits of a Lender and subject to all obligations of a Lender thereunder and (c)(i) each Withdrawing Lender shall be released from all of its obligations under the Credit Agreement and the other Loan Documents and shall cease to be a party thereto (except for obligations set forth in subsection 11.15 of the Credit Agreement) and (ii) each Borrower shall be released from its obligations to the Withdrawing Lenders under the Credit Agreement and the other Loan Documents (except for obligations set forth in subsections 4.10, 4.11 and 11.5 of the Credit Agreement). Each of the parties to this Amendment agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Amendment. 13. CONTINUING EFFECT OF CREDIT AGREEMENT. This Amendment shall not constitute a waiver, amendment or modification of any other provision of the Credit Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Borrowers that would require a waiver or consent of the Lenders or the Administrative Agent. Except as expressly amended or modified herein, the provisions of the Credit Agreement are and shall remain in full force and effect. 14. COUNTERPARTS. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 15. PAYMENT OF EXPENSES. The Borrowers agree, jointly and severally, to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of this Amendment and any other documents prepared in connection herewith, and the consummation and administration of the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. 16. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 8 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. COLE VISION CORPORATION By: ------------------------------ Name: Joseph Gaglioti Title: Treasurer THINGS REMEMBERED, INC. By: ------------------------------ Name: Joseph Gaglioti Title: Treasurer PEARLE, INC. By: ------------------------------ Name: Joseph Gaglioti Title: Treasurer 9 CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Administrative Agent By: ------------------------------ Name: Katherine Bass Title: Authorized Signatory CIBC INC. By: ------------------------------ Name: Katherine Bass Title: Executive Director, CIBC World Markets Corp., As Agent CREDIT SUISSE FIRST BOSTON By: ------------------------------ Name: Robert Hetu Title: Vice President By: ------------------------------ Name: Bill O'Daly Title: Vice President 10 FIRST UNION NATIONAL BANK By: ------------------------------ Name: Randall R. Meck Title: Asst. Vice President NATIONAL CITY BANK By: ------------------------------ Name: Chris D. Thoraton Title: Vice President KEYBANK NATIONAL ASSOCIATION By: ------------------------------ Name: Mark A. LoSchiavo Title: Assistant Vice President 11 FIFTH THIRD BANK, NORTHEASTERN OHIO By: ------------------------------ Name: James P. Byrnes Title: Vice President 12 CONSENT OF WITHDRAWING LENDERS The undersigned Withdrawing Lenders hereby agree to the terms of Section 12 of this Amendment and the revised Schedule I attached hereto as Exhibit A. BANK OF AMERICA By: ----------------------------------- Name: Bridget Garavalia Title: Managing Director THE SANWA BANK, LIMITED, CHICAGO BRANCH By: ----------------------------------- Name: Kenneth C. Eichwald Title: First Vice President Assistant General Manager YASUDA TRUST & BANK CO. By: ----------------------------------- Name: Yoshihiko Shibata Title: Vice President THE FUJI BANK, LIMITED By: ----------------------------------- Name: Peter L. Chinnici Title: Senior Vice President and Group Head 13 EXHIBIT A TO FIFTH AMENDMENT Schedule I ---------- to Credit Agreement ------------------- Revolving Credit Commitments and Addresses ------------------------------------------
Revolving Credit Commitment --------------------------- CIBC INC. 425 Lexington Avenue, 7th Floor New York, NY 10017 Attention: Melissa Roedel Telecopy: 212-856-3763 $30,000,000.00 CREDIT SUISSE FIRST BOSTON Tower 49 12 East 49th Street New York, NY 10017 Attention: Joel Gladowski/Ed Barr Telecopy: 212-238-5441 $15,000,000.00 FIRST UNION NATIONAL BANK PA4821 1345 Chestnut Street, 3 Widener Philadelphia, PA 19101 $15,000,000.00 NATIONAL CITY BANK 1900 East 9th Street Loc. #2083 Cleveland, OH 44114 $5,000,000.00 KEY BANK, N.A. 127 Publc Square Mail Code: OH-01-27-0606 Cleveland, OH 44114 $5,000,000.00 FIFTH THIRD BANK, NORTHEASTERN OHIO 1404 East 9th Street Cleveland, OH 4414 $5,000,000.00
14 EXHIBIT B TO FIFTH AMENDMENT Schedule II ----------- to Credit Agreement ------------------- Applicable Margin Calculation for Revolving Credit Loans --------------------------------------------------------
ABR Loans Eurodollar Loans Leverage Ratio Applicable Margin Applicable Margin - -------------- ----------------- ----------------- Greater than 3.25 to 1.00 1.25% 2.25% Greater than 3.00 to 1.00, but less than or equal to 3.25 to 1.00 1.00% 2.00% Greater than 2.50 to 1.00, but less than or equal to 3.00 to 1.00 .75% 1.75% Less than or equal to 2.50 to 1.00 .50% 1.50%
Notwithstanding the foregoing table, the Applicable Margin will be adjusted on each Adjustment Date to the applicable rate per annum set forth above under the heading "ABR Loans Applicable Margin" or "Eurodollar Loans Applicable Margin" MINUS .25% per annum in the event that, immediately preceding such Adjustment Date, (i) the senior unsecured long-term debt of CNG shall be rated at least "BBB-" by Standard & Poor's, a division of McGraw-Hill, Inc., and (ii) the Administrative Agent shall have received written notice of such rating from a Borrower. Commitment Fees ---------------
Percentage of Revolving Credit Commitments Used Commitment Fees - ---------------- --------------- Greater than 66.6% .375% Greater than 33.3%, but less than or equal to 66.6% .50% Less than or equal to 33.3% .75%
15 ACKNOWLEDGMENT AND CONSENT Each of the undersigned corporations as Guarantors under the Guarantee and Collateral Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "GUARANTEE AND COLLATERAL AGREEMENT"), made by the undersigned corporations in favor of the Administrative Agent, for the benefit of the Lenders, hereby (a) consents to the transactions contemplated by this Amendment, and (b) acknowledges and agrees that the guarantees (and grants of collateral security therefor) contained in such Guarantee and Collateral Agreement are, and shall remain, in full force and effect after giving effect to this Amendment, and all prior modifications to the Credit Agreement. BAY CITIES OPTICAL COMPANY By: ------------------------------- Name: Joseph Gaglioti Title: Treasurer WESTERN STATES OPTICAL, INC. By: ------------------------------- Name: Joseph Gaglioti Title: Treasurer COLE VISION SERVICES, INC. By: ------------------------------- Name: Joseph Gaglioti Title: Treasurer COLE MANAGEMENT SERVICES, INC. By: ------------------------------- Name: Joseph Gaglioti Title: Treasurer 16 PEARLE VISIONCARE, INC. By: ------------------------------- Name: Joseph Gaglioti Title: Treasurer PEARLE VISION MANAGED CARE - HMO OF TEXAS, INC. By: ------------------------------- Name: Joseph Gaglioti Title: Treasurer EX-27 3 EXHIBIT 27
5 This Schedule contains summary financial information extracted from the Consolidated Balance Sheet and the Consolidated Statement of Income filed as part of the Quarterly Report on Form 10-Q and is qualified in its entirety by reference to such quarterly report on Form 10-Q. 1,000 6-MOS JAN-29-2000 JAN-31-1999 JUL-31-1999 25,254 0 58,960 8,935 126,852 233,955 268,710 142,721 610,738 159,244 285,222 0 0 15 151,767 610,738 534,134 534,134 177,503 510,222 0 0 11,984 11,928 4,891 7,037 0 0 0 7,037 0.47 0.47
-----END PRIVACY-ENHANCED MESSAGE-----