<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 2, 1996, 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 33-66342
COLE NATIONAL GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 34-1744334
(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)
(216)449-4100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM IN THE REDUCED DISCLOSURE
FORMAT.
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
--- ---
ALL OF THE OUTSTANDING CAPITAL STOCK OF THE REGISTRANT IS HELD BY COLE NATIONAL
CORPORATION.
AS OF NOVEMBER 25, 1996, 1,100 SHARES OF THE REGISTRANT'S COMMON STOCK, $.01 PAR
VALUE, WERE OUTSTANDING.
================================================================================
<PAGE> 2
- --------------------------------------------------------------------------------
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED NOVEMBER 2, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
PART I. FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF NOVEMBER 2, 1996 AND
FEBRUARY 3, 1996 .......................................... 1
CONSOLIDATED STATEMENTS OF INCOME FOR THE 13 WEEKS
ENDED NOVEMBER 2, 1996 AND OCTOBER 28, 1995 AND FOR THE
39 WEEKS ENDED NOVEMBER 2, 1996 AND OCTOBER 28, 1995 ...... 2
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 39 WEEKS
ENDED NOVEMBER 2, 1996 AND OCTOBER 28, 1995 ............... 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................ 4 - 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ....................... 7 - 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .......................... 10
</TABLE>
- -------------------------------------------------------------------------------
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
November 2, February 3,
Assets 1996 1996
- ------ ----------- -----------
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 31,489 $ 29,260
Accounts receivable 20,075 18,544
Inventories 103,778 84,794
Prepaid expenses and other 5,795 5,869
Deferred income tax benefits 10,616 10,616
-------- --------
Total current assets 171,753 149,083
Property and equipment, at cost 162,713 154,589
Less - accumulated depreciation and
amortization (95,127) (90,883)
-------- --------
Total property and equipment, net 67,586 63,706
Other assets 8,294 5,038
Cost in excess of net assets of purchased
businesses, net 79,485 81,163
-------- --------
Total assets $327,118 $298,990
======== ========
Liabilities and Stockholder's Equity
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 300 $ 292
Accounts payable 39,896 29,082
Payable to affiliates 25,394 2,404
Accrued interest 1,886 7,044
Dividend payable - 12,351
Accrued liabilities 59,939 53,676
Accrued income taxes 4,819 5,970
-------- --------
Total current liabilities 132,234 110,819
Long-term debt, net of discount 180,033 180,218
Deferred income taxes and other 5,390 5,456
Stockholder's equity:
Common stock - -
Paid-in capital 118,065 118,065
Accumulated deficit (108,604) (115,568)
-------- --------
Total stockholder's equity 9,461 2,497
-------- --------
Total liabilities and stockholder's
equity $327,118 $298,990
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
-1-
<PAGE> 4
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
-------------------------- --------------------------
November 2, October 28, November 2, October 28,
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $146,702 $138,646 $443,057 $401,999
Costs and expenses:
Cost of goods sold 44,773 43,181 136,673 125,246
Operating expenses 91,124 85,916 266,385 242,269
Depreciation and amortization 4,330 3,880 12,780 11,552
-------- -------- -------- --------
Total costs and expenses 140,227 132,977 415,838 379,067
-------- -------- -------- --------
Income from operations 6,475 5,669 27,219 22,932
Interest expense, net 4,800 5,272 14,782 15,872
-------- -------- -------- --------
Income before income taxes 1,675 397 12,437 7,060
Income tax provision 738 175 5,473 3,107
-------- -------- -------- --------
Net income $ 937 $ 222 $ 6,964 $ 3,953
======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-2-
<PAGE> 5
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
39 Weeks Ended
-------------------------------
November 2, October 28,
1996 1995
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,964 $ 3,953
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 12,780 11,552
Non-cash interest expense 322 307
Change in assets and liabilities:
Increase in accounts receivable,
prepaid expenses and other assets (1,705) (5,485)
Increase in inventories (18,984) (12,801)
Increase in accounts payable and accrued
liabilities 16,722 14,147
Decrease in accrued interest (5,158) (5,317)
Decrease in accrued income taxes (1,151) (1,116)
-------- --------
Net cash provided by operating activities 9,790 5,240
-------- --------
Cash flows from financing activities:
Advances from Affiliates, net 10,639 -
Repayment of long-term debt (360) (181)
-------- --------
Net cash provided (used) by
financing activities 10,279 (181)
-------- --------
Cash flows from investing activities:
Purchases of property and equipment, net (15,553) (14,042)
Acquisition of business - (800)
Other, net (2,287) (959)
-------- --------
Net cash used by investing activities (17,840) (15,801)
-------- --------
Cash and temporary cash investments:
Net increase (decrease) during the period 2,229 (10,742)
Balance, beginning of the period 29,260 19,730
-------- --------
Balance, end of the period $ 31,489 $ 8,988
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-3-
<PAGE> 6
COLE NATIONAL GROUP, INC. 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 Group, Inc. (CNG) and its wholly owned subsidiaries (collectively, the
Company). CNG is a wholly owned subsidiary of Cole National Corporation (the
Parent). All significant intercompany transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared
without audit and certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although the Company
believes that the disclosures herein are adequate to make the information not
misleading. These statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the fiscal year ended February 3, 1996.
In the opinion of management, the accompanying financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the Company's financial position as of November 2, 1996 and
the results of operations for the 13 and 39 weeks ended November 2, 1996 and
October 28, 1995, and cash flows for the 39 weeks ended November 2, 1996 and
October 28, 1995.
Inventories
The accompanying interim consolidated financial statements have been
prepared without physical inventories. Inventories at November 2, 1996 and
February 3, 1996 were valued at the lower of first-in, first-out (FIFO) cost or
market.
Cash Flows
Net cash flows from operating activities reflect cash payments for income
taxes and interest of $6,670,000 and $20,779,000, respectively, for the 39 weeks
ended November 2, 1996, and $4,224,000 and $21,413,000, respectively, for the 39
weeks ended October 28, 1995.
(2) TRANSACTIONS WITH PARENT
During the second quarter of fiscal 1996, the Parent used a portion of the
net proceeds from its public stock offering to purchase approximately $15.1
million of the Company's outstanding 11.25% Senior Notes (the Senior Notes) in
the open market. The remaining proceeds of approximately $9.7 million were
advanced to the Company.
Of the $180.0 million of long-term debt outstanding at November 2, 1996,
approximately $15.1 million, plus accrued interest, is payable to the Parent. In
connection with the acquisition of Pearle, Inc. (see Note 5), the Company
purchased and retired the $15.1 million of Senior Notes held by the Parent at a
price equal to net book value.
(3) ASSET IMPAIRMENT
During the first quarter of fiscal 1996, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed Of". Adoption of SFAS
No. 121 had no material impact on the Company's results of operations, financial
position or cash flows.
-4-
<PAGE> 7
(4) SEASONALITY
The Company's business is seasonal with approximately 30% of its sales and
approximately 50% of its income from operations generated in the fourth fiscal
quarter, which contains the important Christmas retailing season. Therefore,
earnings or losses for a particular interim period are not necessarily
indicative of full year results.
(5) SUBSEQUENT EVENTS
Acquisition of AOCO Limited
On November 5, 1996, the Company acquired all of the issued and
outstanding common stock of AOCO Limited, which operates 73 Sears Optical
Departments and two freestanding Vision Club stores in Canada, for a purchase
price of $2.6 million. The acquisition will be accounted for as a purchase.
Acquisition of Pearle, Inc.
On November 15, 1996, the Parent purchased certain assets and all of the
issued and outstanding common stock of Pearle, Inc. (Pearle). Subsequent to the
acquisition of Pearle, the Parent sold Pearle Holdings B.V., Pearle's European
operations, to Pearle Trust B.V. for approximately $62 million. The Parent has a
20% equity interest in Pearle Trust B.V.
Immediately following the Parent's acquisition of Pearle, and pursuant to
a transfer agreement, CNG purchased from the Parent all of the issued and
outstanding common stock of Pearle and Pearle Service Corporation (PSC) for an
aggregate purchase price of approximately $154 million. The Company will account
for the Pearle acquisition as a purchase.
The Company financed the Pearle acquisition primarily through the proceeds
of a private placement (the Offering) of $150 million of 9-7/8% Senior
Subordinated Notes (the Notes) due in 2006. Interest on the Notes is payable
semi-annually in arrears on December 31 and June 30 commencing June 30, 1997.
The Notes are general unsecured obligations of the Company, subordinated in
right of payment to Senior Indebtedness of the Company, including the Senior
Notes, and senior in right of payment to any current or future subordinated
indebtedness of the Company.
The indenture pursuant to which the Notes were issued restricts dividend
payments to the Parent to 50% of the Company's net income after October 31,
1993, plus amounts due to the Parent under a tax sharing agreement and for
administrative expenses of the Parent not to exceed 0.25% of the Company's net
sales and contains other financial covenants. The Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after December 31,
2001. In addition, the Company would be required to make an offer to purchase
Notes following a Change of Control (as defined in the Indenture) and, under
certain circumstances, following a sale of assets.
Following the Pearle acquisition, Cole Vision Corporation, Things
Remembered, Inc., Cole Gift Centers, Inc., Pearle and PSC, the principal
operating subsidiaries of CNG, (collectively, the Borrowers), entered into a New
Credit Facility. The New Credit Facility replaced, contemporaneously with the
consummation of the Offering, the existing Revolving Credit Facility.
The New Credit Facility provides the Borrowers with a four-year revolving
line of credit of up to the lesser of a "borrowing base" and $75 million. A
portion of the New Credit Facility not in excess of $30 million is available for
the issuance of letters of credit. Borrowings under the New Credit Facility
initially bear interest at a rate equal to, at the option of the Borrowers,
either (a) the Eurodollar Rate plus 1.25% or (b) 0.25% plus the highest of (i)
the rate of interest publicly announced by Canadian Imperial Bank of Commerce as
its prime rate in effect at its principal office in New York City, (ii) the
three-week moving average of the secondary market rates for three-month
certificates of deposit (adjusted for statutory reserve requirements) plus 1%
-5-
<PAGE> 8
and (iii) the federal funds effective rate from time to time plus 0.5%. The
interest rates are subject to quarterly adjustment after the first anniversary
of the closing of the New Credit Facility based on the Company's achievement of
certain interest coverage ratio benchmarks. Additionally, the New Credit
Facility requires the Borrowers to comply with various operating covenants that
restrict corporate activities, including covenants restricting the Borrowers'
ability to incur additional indebtedness, pay dividends, prepay subordinated
indebtedness, dispose of certain assets, create liens, make capital expenditures
and make certain investments or acquisitions. The New Credit Facility also
requires the Borrowers to comply with certain financial covenants, including
covenants regarding minimum interest coverage, maximum leverage and consolidated
net worth.
The New Credit Facility permits the Company's subsidiaries to pay
dividends to the Company, to the extent necessary to permit it to pay all
interest and principal on the Senior Notes and the Notes, and to use up to $20
million to repurchase the Senior Notes and/or the Notes, so long as no default
or event of default under the New Credit Facility has occurred and is
continuing. The Company is a limited guarantor under the New Credit Facility,
with recourse against the Company limited to certain bank accounts.
-6-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain information required by this item has been omitted pursuant to
General Instruction H of Form 10-Q.
The following is a discussion of certain factors affecting the Company's
results of operations for the 13 week and 39 week periods ended November 2, 1996
and October 28, 1995 (the Company's third quarter and first nine months,
respectively). This discussion should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
filing and the Company's audited financial statements for the fiscal year ended
February 3, 1996.
On November 15, 1996, the Company completed the Pearle acquisition
acquiring the North American and Caribbean system of Pearle, Inc. Pearle's North
America and Caribbean system consists of 695 optical retailing locations,
including 353 company operated stores and 342 franchised locations in 43 states,
Canada, Puerto Rico and the Virgin Islands. A significant portion of the
purchase price was financed by the Company's issuance of $150.0 million of
9-7/8% Senior Subordinated Notes due 2006 (the Notes). In November, 1996, the
Company also purchased all the issued and outstanding common stock of AOCO
Limited which operates 73 Sears Optical Departments and two freestanding stores
under the name "Vision Club" in Canada. Except as otherwise indicated, the
following discussion relates to the Company on a historical basis without giving
effect to the Pearle acquisition, the Note issuance or the purchase of AOCO
Limited.
The Company's fiscal year ends on the Saturday closest to January 31.
Fiscal years are identified according to the calendar year in which they begin.
For example, the fiscal year ended February 3, 1996 is referred to as "fiscal
1995."
RESULTS OF OPERATIONS
Net sales for the third quarter of fiscal 1996 increased 5.8% to $146.7
million from $138.6 million for the same period last year. Net sales for the
first nine months of fiscal 1996 increased 10.2% to $443.1 million from $402.0
million for the same period a year ago. The increases in consolidated sales for
the third quarter and first nine months of fiscal 1996 were due to comparable
store sales increases of 3.3% and 6.3%, respectively, and to the opening of
additional Cole Gift and Cole Vision units, partially offset by the closing of
95 low-volume Cole Gift departments. Comparable store sales increased primarily
as a result of successful eyewear promotions and growth in the managed vision
care program at Cole Vision, along with the roll-out of monogrammed softgoods
and introduction of new merchandise at Cole Gift. At November 2, 1996, the
Company operated 2,357 specialty service retail units compared to 2,361 at
October 28, 1995.
Gross profit increased to $101.9 million in the third quarter of fiscal
1996 from $95.5 million for the same period last year. Third quarter gross
margins in fiscal 1996 and fiscal 1995 were 69.5% and 68.9%, respectively. For
the first nine months, gross profit increased to $306.4 million in fiscal 1996
from $276.8 million for the same period a year ago. Gross margins for the first
nine months in fiscal 1996 and fiscal 1995 were 69.2% and 68.8%, respectively.
The increases in gross margin percentages were the result of lower product
costs, improved optical lab productivity and a higher level of personalization
in the sales mix at Things Remembered.
Operating expenses increased 6.1% to $91.1 million in the third quarter of
fiscal 1996 from $85.9 million for the third quarter last year. For the first
nine months of fiscal 1996, operating expenses increased 10.0% to $266.4 million
from $242.3 million for the same period in fiscal 1995. Operating expense
increases for both periods compared to last year were primarily due to higher
-7-
<PAGE> 10
advertising expenditures, payroll costs and store occupancy expenses.
Advertising expenditures at Cole Vision were increased for optical promotions to
encourage continued sales growth above last year's successful promotions.
Payroll costs increased because of more higher-volume retail units open in 1996,
including an increased number of Things Remembered personalization superstores,
and additional payroll to support increased sales. Store occupancy expenses
increased primarily as a result of the increased number of Things Remembered
personalization superstores and higher percentage rents caused by increased
comparable store sales. Fiscal 1996 depreciation and amortization expense of
$4.3 million in the third quarter and $12.8 million in the first nine months was
$0.5 and $1.2 million more, respectively, than the same periods in fiscal 1995
reflecting an increase in capital expenditures beginning in the latter part of
fiscal 1993.
Income from operations increased 14.4% in the third quarter of fiscal 1996
to $6.5 million and increased 18.7% to $27.2 million in the first nine months
primarily because of increased sales at Cole Vision and Things Remembered.
Net interest expense decreased $0.5 million to $4.8 million in the third
quarter of fiscal 1996 and decreased $1.1 million to $14.8 million in the first
nine months. The decrease for both the quarter and the nine months was primarily
due to the retirement of $5.0 million of Senior Notes in November 1995, the
elimination of working capital borrowings and increased interest income from an
increase in temporary cash investments.
The issuance of the Notes in connection with the Pearle Acquisition will
result in an increase in annual interest expense of approximately $14.9 million
including amortization of discount on the Notes. The purchase and cancellation
of $15.1 million of Senior Notes held by Parent will reduce annual interest
expense by approximately $1.7 million. Amortization of deferred financing costs
related to the Notes and the New Credit Facility will increase noncash interest
expense by $0.8 million annually.
Income tax provisions were recorded in the third quarter and first nine
months of fiscal 1996 and fiscal 1995 using the Company's estimated annual
effective tax rate of 44%.
Net income for the third quarter increased to $0.9 million in 1996 from
$0.2 million for the third quarter of 1995. For the first nine months of fiscal
1996, net income increased to $7.0 million from $4.0 million for that same
period last year. For both the third quarter and first nine months of fiscal
1996, increases were due to the improvement in income from operations and the
decrease in net interest expense.
The Company's business historically has been seasonal with approximately
30% of its sales and approximately 50% of its income from operations occurring
in the fourth fiscal quarter because of the importance of gift sales during the
Christmas retailing season. Although the Pearle acquisition will moderate the
seasonality of the Company due to relatively lower levels of optical product
sales during the Christmas holiday season, the Company's business will remain
seasonal. Therefore, results of operations for interim periods are not
necessarily indicative of full year results.
CERTAIN EFFECTS OF THE PEARLE ACQUISITION
Following the Pearle Acquisition, the Company's consolidated gross margin
will likely decline from its historical levels. This will likely result because
even after conforming Pearle's accounting methods to those of the Company,
Pearle is expected to have a lower gross margin than the Company due to the
higher costs of in-store laboratories and lower margin wholesale sales to
franchised stores partially offset by franchise royalties, fees and interest
income on franchise notes receivable which have no corresponding cost of goods
sold.
-8-
<PAGE> 11
In addition, the Company is currently evaluating the various operations of
Pearle and Cole Vision for opportunities to effect operational efficiencies.
While this evaluation is in process and not near completion, the Company's
expectation is that a charge for business integration and consolidation costs is
likely to be taken in the fourth quarter of 1996.
FORWARD-LOOKING INFORMATION
Certain sections of this Form 10-Q contain statements that are "forward-
looking statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Forward-looking statements are made based upon
management's expectations and beliefs concerning future events impacting the
Company, and include, among other things, the discussions of the Company's
business strategy and expectations concerning the Company's future operations,
margins, profitability, liquidity and capital resources, as well as statements
concerning the integration of the Pearle acquisition and achievement of cost
savings and other efficiencies in connection therewith. Readers are cautioned
that reliance on any forward-looking statement involves risks and uncertainties,
and that although the Company believes that the assumptions on which the
forward-looking statements contained herein are based are reasonable, any of
those assumptions could prove to be inaccurate, and as a result, the forward-
looking statements based on those assumptions also could be materially
incorrect. Actual results may differ materially due to a variety of factors that
can adversely affect the Company, such as the integration of Pearle's
operations, the ability to select and stock merchandise attractive to customers,
general economic cycles affecting consumer spending, weather factors affecting
retail operations, its quality controls in optical manufacturing and engraving,
operating factors affecting customer satisfaction, the Company's relationships
with its host stores and franchisees, the mix of goods sold, pricing and other
competitive factors, and the seasonality of the Company's business. In light of
these and other uncertainties, the inclusion of a forward-looking statement
herein should not be regarded as a representation by the Company that the
Company's plans and objectives will be achieved.
-9-
<PAGE> 12
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:
10.01 Lease agreement (Salt Lake) dated as of November 1,
1996 by and between Gibbons Realty and Cole Vision
Corporation, incorporated by reference to Exhibit
10.01 to Cole National Corporation's Report on Form
10-Q for the period ended November 2, 1996 (File No.
1-12814).
27 Financial Data Schedule
(b) Reports on Form 8-K
On September 25, 1996, the Company filed a report on Form 8-K
announcing that the Parent had agreed to purchase the stock and certain
assets of Pearle, Inc. from The Pillsbury Company, a subsidiary of
Grand Metropolitan PLC.
-10-
<PAGE> 13
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 GROUP, INC.
By: /s/ Wayne L. Mosley
--------------------------------------
Wayne L. Mosley
Vice President and Controller
(Duly Authorized Officer and Principal
Accounting Officer)
Date: December 13, 1996
-11-
<PAGE> 14
COLE NATIONAL GROUP, INC.
FORM 10-Q
QUARTER ENDED NOVEMBER 2, 1996
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
10.01 Lease agreement (Salt Lake) dated as of
November 1, 1996 by and between Gibbons
Realty and Cole Vision Corporation, in-
corporated by reference to Exhibit 10.01
to Cole National Corporation's Report on
Form 10-Q for the period ended November 2,
1996 (File No. 1-12814).
27 Financial Data Schedule
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-1-1997
<PERIOD-START> FEB-4-1996
<PERIOD-END> NOV-2-1996
<CASH> 31,489
<SECURITIES> 0
<RECEIVABLES> 20,075
<ALLOWANCES> 0
<INVENTORY> 103,778
<CURRENT-ASSETS> 171,753
<PP&E> 162,713
<DEPRECIATION> 95,127
<TOTAL-ASSETS> 327,118
<CURRENT-LIABILITIES> 132,234
<BONDS> 180,033
<COMMON> 0
0
0
<OTHER-SE> 9,461
<TOTAL-LIABILITY-AND-EQUITY> 327,118
<SALES> 443,057
<TOTAL-REVENUES> 443,057
<CGS> 136,673
<TOTAL-COSTS> 415,838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,782
<INCOME-PRETAX> 12,437
<INCOME-TAX> 5,473
<INCOME-CONTINUING> 6,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,964
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
