<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31,
1998, OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
________ TO ________.
COMMISSION FILE NUMBER 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)
(440) 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 20, 1998, 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 OCTOBER 31, 1998
INDEX
<TABLE>
<CAPTION>
PAGE NO.
PART I. FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 31, 1998 AND JANUARY 31,
1998 ..................................................................... 1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
13 AND 39 WEEKS ENDED OCTOBER 31, 1998 AND
NOVEMBER 1, 1997.......................................................... 2
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
39 WEEKS ENDED OCTOBER 31, 1998 AND
NOVEMBER 1, 1997.......................................................... 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................ 4 - 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..................................................... 6 - 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................................... 11
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
October 31, January 31,
Assets 1998 1998
- ------ -------- --------
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 19,293 $ 67,989
Accounts receivable, less allowance for doubtful
accounts of $6,898 in 1998 and $5,377 in 1997 53,479 51,491
Current portion of notes receivable 3,365 4,177
Inventories 151,802 119,970
Prepaid expenses and other 8,669 9,099
Deferred income tax benefits 21,751 20,950
--------- ---------
Total current assets 258,359 273,676
Property and equipment, at cost 251,565 237,611
Less - accumulated depreciation and amortization (125,245) (113,954)
--------- ---------
Total property and equipment, net 126,320 123,657
Other assets:
Notes receivable, excluding current portion 19,727 19,552
Deferred income taxes and other 66,227 52,373
Intangible assets, net 160,403 159,077
--------- ---------
Total assets $ 631,036 $ 628,335
========= =========
Liabilities and Stockholder's Equity
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 422 $ 15,078
Accounts payable 74,187 71,672
Payable to affiliates 80,071 88,776
Accrued interest 1,838 6,615
Accrued liabilities 106,425 112,020
Accrued income taxes 11,395 965
--------- ---------
Total current liabilities 274,338 295,126
Long-term debt, net of discount and current portion 274,788 274,992
Other long-term liabilities 30,664 30,664
Stockholder's equity 51,246 27,553
--------- ---------
Total liabilities and stockholder's equity $ 631,036 $ 628,335
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these consolidated balance sheets.
1
<PAGE> 4
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
--------------------------- ---------------------------
Oct. 31, Nov. 1, Oct. 31, Nov. 1,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net revenue $ 255,615 $ 251,816 $ 792,929 $ 731,764
Costs and expenses:
Cost of goods sold 84,910 86,621 264,331 250,195
Operating expenses 150,983 144,004 453,350 412,101
Depreciation and amortization 8,421 7,561 24,441 21,612
Business integration charge - 1,100 - 1,100
--------- --------- --------- ---------
Total costs and expenses 244,314 239,286 742,122 685,008
--------- --------- --------- ---------
Operating income 11,301 12,530 50,807 46,756
Other expense (income):
Interest expense 6,814 6,880 20,374 23,675
Interest and other income (6,000) (430) (6,000) (1,318)
--------- --------- --------- ---------
Total other expense (income) 814 6,450 14,374 22,357
--------- --------- --------- ---------
Income from continuing operations before
income taxes and extraordinary item 10,487 6,080 36,433 24,399
Income tax provision 1,840 2,614 12,478 10,491
--------- --------- --------- ---------
Income from continuing operations before
extraordinary item 8,647 3,466 23,955 13,908
Operating loss from discontinued operations,
net of income taxes - (841) - (1,617)
--------- --------- --------- ---------
Income before extraordinary item 8,647 2,625 23,955 12,291
Extraordinary loss on early
extinguishment of debt - (12,183) - (12,183)
--------- --------- --------- ---------
Net income (loss) $ 8,647 $ (9,558) $ 23,955 $ 108
========= ========= ========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these consolidated statements.
2
<PAGE> 5
COLE NATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
39 Weeks Ended
-----------------------------
October 31, November 1,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 23,955 $ 108
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Extraordinary loss - 12,183
Depreciation and amortization 24,441 21,612
Non-cash interest 788 705
Change in assets and liabilities:
Increase in accounts and notes receivable,
prepaid expenses and other assets (301) (14,113)
Increase in inventories (30,947) (33,655)
Decrease in accounts payable, accrued
liabilities and other liabilities (7,768) (17,724)
Decrease in accrued interest (4,777) (2,199)
Increase in refundable, deferred and
accrued income taxes 9,629 4,925
-------- ---------
Net cash provided (used) by operating
activities 15,020 (28,158)
-------- ---------
Cash flows from investing activities:
Purchases of property and equipment, net (20,644) (25,339)
Systems development costs (12,417) (11,590)
Acquisitions of businesses, net of cash acquired (6,848) -
Other, net 284 (443)
-------- ---------
Net cash used by investing activities (39,625) (37,372)
-------- ---------
Cash flows from financing activities:
Repayment of long-term debt (14,973) (169,717)
Proceeds from long-term debt - 125,000
Payment of deferred financing fees - (2,896)
Advances from (to) affiliates, net (8,851) 74,308
Other, net (267) (229)
-------- ---------
Net cash provided (used) by financing
activities (24,091) 26,466
-------- ---------
Cash and temporary cash investments:
Net decrease during the period (48,696) (39,064)
Balance, beginning of the period 67,989 73,141
-------- ---------
Balance, end of the period $ 19,293 $ 34,077
======== =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these consolidated 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. All
significant intercompany transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared
without audit and certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although the Company
believes that the disclosures herein are adequate to make the information not
misleading. Prior year financial statements have been restated to reflect the
discontinued operations of Cole Gift Centers, Inc. (CGC) chain of personalized
gift and greeting card departments located in host stores.
Results for interim periods are not necessarily indicative of the results
to be expected for the full year. These statements should be read in conjunction
with the Company's consolidated financial statements and notes thereto included
in the Company's annual report on Form 10-K for the fiscal year ended January
31, 1998.
In the opinion of management, the accompanying financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the Company's financial position as of October 31, 1998 and
the results of operations for the 13 and 39 weeks ended October 31, 1998 and
November 1, 1997, and cash flows for the 39 weeks ended October 31, 1998 and
November 1, 1997.
Inventories
The accompanying interim consolidated financial statements have been
prepared without physical inventories.
Cash Flows
Net cash flows from operating activities reflect cash payments for income
taxes and interest of $1,618,000 and $24,462,000, respectively, for the 39 weeks
ended October 31, 1998, and $4,412,000 and $26,957,000, respectively, for the 39
weeks ended November 1, 1997.
(2) NEW ACCOUNTING PRONOUNCEMENT
Effective February 1, 1998, the Company adopted statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income." This
statement requires that the Company report the change in its equity during a
period from non-owner sources. For the 39 weeks ended October 31, 1998 and
November 1, 1997, components of
4
<PAGE> 7
other comprehensive income (loss) relate to foreign currency translation
adjustments related to the Company's Canadian operations. Total comprehensive
income is as follows (000's omitted):
<TABLE>
<CAPTION>
Thirteen Weeks Thirty-Nine Weeks
----------------------- ------------------------
1998 1997 1998 1997
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss) $ 8,647 $(9,558) $ 23,955 $ 108
Other comprehensive income (loss) (83) (28) (261) (236)
------- ------- -------- -----
Total comprehensive income (loss) $ 8,564 $(9,586) $ 23,964 $(128)
======= ======= ======== =====
</TABLE>
(3) OTHER INCOME
The 1998 third quarter results include the recognition of $6.0 million of
income from cash received in a nontaxable settlement of certain contingencies
related to several claims against and indemnifications from the former owner of
Pearle (the "Pearle Settlement"). In connection with the Pearle Settlement
agreement, the Company assumed secondary liability for approximately $10.0
million of loans to certain franchisees held by a third party. The Company is
contingently liable should any of the franchisees default, and also for
prepayment penalties of up to $1.1 million. The Company has established reserves
for potential losses on the loans, which mature through 2001. The Pearle
Settlement also included a release of the former owner of Pearle from certain
future non-tax claims related to Pearle.
(4) BUSINESS INTEGRATION CHARGE
During the third quarter of fiscal 1997, the Company recorded a $1.1
million pre-tax ($0.6 million net of tax) business integration charge associated
with the American Vision Centers, Inc. (AVC) acquisition. Such charge included
costs incurred related to the integration and consolidation of AVC into the
Company's operations.
(5) RECLASSIFICATIONS
Certain 1997 amounts have been reclassified to conform with the 1998
presentation.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 continuing operations for the 13 and 39 week periods ended October
31, 1998 and November 1, 1997 (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
January 31, 1998 included in its annual report on Form 10-K.
The Company's fiscal year ends on the Saturday closest to January 31.
Fiscal years are identified according to the calendar year in which they begin.
For example, the fiscal year ended January 31, 1998 is referred to as "fiscal
1997."
RESULTS OF OPERATIONS
Net revenue for the third quarter of fiscal 1998 increased 1.5% to $255.6
million from $251.8 million for the same period in fiscal 1997. Net revenue for
the first nine months of fiscal 1998 increased 8.4% to $792.9 million from
$731.8 million for the same period in fiscal 1997. The increases in revenue were
primarily attributable to the inclusion in fiscal 1998 of additional Cole
Optical units, including the American Vision Centers, Inc. ("AVC") stores
acquired in August 1997, consolidated comparable store sales increases of 1.2%
for the third quarter and 2.8% for the first nine months of fiscal 1998, and the
growth of managed vision care fees. At Cole Optical, third quarter comparable
store sales increased 1.1% at Cole Vision and decreased 3.1% at Pearle. For the
first nine months, comparable store sales increased 3.2% at Cole Vision and
decreased 0.7% at Pearle. The Pearle comparable store sales have been impacted
by a weaker than expected reception to new marketing and merchandising programs
as well as the increased competitive pressures in the optical business and what
the Company perceives may be a general softening in the retail optical market.
At Things Remembered, the comparable store sales increases of 7.1% and 6.7% for
the third quarter and first nine months, respectively, reflected increased sales
of additional personalization and new products. At October 31, 1998, the Company
had 2,882 specialty service retail locations, including 406 franchised
locations, compared to 2,860 at November 1, 1997.
Gross profit increased 3.3% to $170.7 million in the third quarter of
fiscal 1998 from $165.2 million in the same period last year. For the first nine
months of fiscal 1998, gross profit increased 9.8% to $528.6 million from $481.6
million in the same period a year ago. The gross profit increases were primarily
attributable to the increased revenue at both Cole Optical and Things
Remembered. Gross margins for the third quarter of fiscal 1998 and fiscal 1997
were 66.8% and 65.6%, respectively. For the first nine months of fiscal 1998 and
fiscal 1997, gross margins were 66.7% and 65.8%, respectively. Gross margins
6
<PAGE> 9
were favorably impacted by production efficiencies and lower contact lens costs
at Cole Optical and increased personalization sales at Things Remembered.
Operating expenses increased 4.8% to $151.0 million in the third quarter
of fiscal 1998 from $144.0 million in fiscal 1997, and as a percentage of
revenue, operating expenses increased to 59.1% in fiscal 1998 from 57.2% in
fiscal 1997. For the first nine months of fiscal 1998, operating expenses
increased 10.0% to $453.4 million from $412.1 million in fiscal 1997, and as a
percentage of revenue, operating expenses increased to 57.2% in fiscal 1998 from
56.3% in fiscal 1997. The leverage loss for the third quarter and nine months
was primarily attributable to the sales performance at Pearle and increased
expenses related to managed vision care fee growth. In addition, for the first
nine months, the leverage loss was also impaired by increased advertising
expenditures at Pearle, partially offset by a leverage gain on store occupancy
costs. Fiscal 1998 depreciation and amortization expense of $8.4 million in the
third quarter and $24.4 million in the first nine months was $0.9 million and
$2.8 million more, respectively, than the same periods in fiscal 1997 reflecting
the acquisition of AVC and an increase in capital expenditures.
Operating income decreased 9.8% to $11.3 million for the third quarter of
fiscal 1998 from $12.5 million for the same period a year ago reflecting a
shortfall at Pearle, which more than offset improved results at Cole Vision and
Things Remembered and the $1.1 million business integration charge associated
with the acquisition of AVC last year. For the first nine months of fiscal 1998,
operating income increased 8.7% to $50.8 million from $46.8 million for the same
period last year. This increase was primarily the result of the increase in net
revenue and the $1.1 million business integration charge last year.
Interest expense decreased $0.1 million from the third quarter of fiscal
1997 to $6.8 million and decreased $3.3 million in the nine months of fiscal
1998 to $20.4 million. The decreases were attributable to the purchase and
retirement of $150.9 million of 11-1/4% Senior Notes in connection with a tender
offer in September 1997, partially offset by additional interest on $125.0
million of 8-5/8% Senior Subordinated Notes issued in August 1997. Interest and
other income includes the recognition of $6.0 million of income from cash
received in a nontaxable settlement of certain contingencies related to several
claims against and indemnifications from the former owner of Pearle (the "Pearle
Settlement"). Interest income decreased $0.4 million and $1.3 million,
respectively, for the third quarter and nine months of fiscal 1998, due
primarily to a reduction in available cash.
An income tax provision was recorded in the first nine months of fiscal
1998 and fiscal 1997 using the Company's estimated annual effective tax rates of
41% and 43%, respectively, excluding the nontaxable income from the Pearle
Settlement. The reduction in the rate primarily reflects the estimated impact of
non-deductible amortization of goodwill in both years.
Net income increased to $8.6 million for the third quarter of fiscal 1998
from a loss of $9.6 million for the same period in fiscal 1997. For the first
nine months of fiscal 1998, net income increased to $24.0 million from $0.1
7
<PAGE> 10
million for the same period last year. The third quarter increase was primarily
due to the Pearle Settlement this year, a $0.8 million loss from discontinued
operations last year and an extraordinary loss of $12.2 million on early
extinguishment of debt last year, partially offset by the $1.2 million decrease
in operating income. The nine month increase was due to the Pearle
Settlement, improvement in income from operations, the reduction of net interest
expense, the lower effective tax rate, a $1.6 million loss from discontinued
operations in the first nine months of fiscal 1997 and the extraordinary loss on
early extinguishment of debt last year.
RESTRUCTURING AND OTHER CHARGES; FOURTH QUARTER RESULTS
The Company recently announced that, to address the weakness in Pearle's
operating results, it has begun work to change the operating structure of its
optical business to more clearly align the merchandising and marketing of its
two principal brands, Pearle Vision and Sears Optical, with the needs of the
different consumers that each brand serves. The decision to create separate
organizational structures at Pearle and Sears Optical reflects the belief that
the Company can improve each unit's performance through additional management
focus.
The Company expects to report restructuring and other charges of
approximately $25.0 million reflecting expenses for revising the Pearle
operating model, including the write down of inventory and other assets, the
cost of consultants retained to assist management with certain aspects of the
restructuring, human resource expenses associated with personnel changes, the
costs of retention and recruitment of senior management, the costs of relocating
and consolidating facilities and other charges. All or a majority of the charges
are expected to be taken in the fourth quarter of fiscal 1998.
Given the recent trend of sales at Pearle, the ongoing competitive
pressures in the optical business and the importance of the upcoming holiday
season, management believes income from continuing operations before
restructuring and other unusual charges for the fourth quarter will be
approximately half of last year's level.
YEAR 2000
The Company has been working with a consultant to assess and resolve the
potential impact of the Year 2000 on the ability of the Company's computerized
information systems to accurately process information that may be date-sensitive
(the "Year 2000 Readiness Program"). Any of the Company's programs that
recognize a date using "00" as the year 1900 rather than the Year 2000 could
result in errors or system failures.
During the third quarter of fiscal 1998, the Company completed the
assessment of its internal critical and non-critical hardware and software.
Included in the Company's assessment was the identification of all critical and
non-critical computer programs and hardware, including non-information
technology systems such as HVAC, telephone and others containing embedded
microcontrollers, and an evaluation of their Year 2000 readiness. The Company
utilizes over 500 separate computer information systems across its operations,
8
<PAGE> 11
many of which were recently installed and are Year 2000 ready. In addition,
modification to many of the Company's other critical programs has been completed
and testing of these programs is in process. The Company currently believes that
all critical programs and hardware will be Year 2000 ready, including testing,
by the end of the second quarter of 1999.
Concurrent with this internal assessment, the Company identified and
contacted critical vendors, host stores and managed health care partners with
whom the Company does business regarding their Year 2000 readiness. Although not
all responses from third parties have been received, the Company is not
currently aware of any critical third party whose Year 2000 issues is likely to
have a material effect on the Company.
The Company has not yet developed contingency plans and such plans will
depend primarily on the responses from critical third parties in the event the
Company or critical third parties should fail to become Year 2000 ready. The
Company expects its contingency plans to be completed by the end of the first
quarter of fiscal 1999.
Notwithstanding that the Company is proceeding diligently with the
implementation of its own Year 2000 Readiness Program, including ascertaining
Year 2000 readiness of critical third parties, the inability of the Company or
critical third parties to effectuate timely and cost effective solutions to Year
2000 issues could have a material adverse effect on the Company.
The Company estimates the total cost of the Year 2000 Readiness Program
will be approximately $3.3 million, including approximately $0.3 million of new
hardware and software that will be capitalized. The remaining $3.0 million will
be expensed as incurred (approximately $1.7 million in fiscal 1998 and $1.3
million in fiscal 1999). These costs include only external costs as the Company
does not separately track internal costs, which consist primarily of payroll
related costs of employees, 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.
For the 13 and 39 weeks ended October 31, 1998, in addition to internal
costs, the Company has incurred approximately $0.7 million and $1.0 million,
respectively, of external Year 2000 costs, all of which have been expensed.
FORWARD-LOOKING INFORMATION
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. Forward-looking
statements are made based upon management's expectations and beliefs concerning
future events impacting the Company. All forward-looking statements involve risk
and uncertainty.
The Company operates in a highly competitive environment, and its future
liquidity, financial condition and operating results may be materially affected
by a variety of factors, some of which may be beyond the control of the Company,
9
<PAGE> 12
including risks associated with the integration of acquired operations, the
timing and achievement of the restructuring of the optical business, the ability
of the Company and its suppliers, host stores, and managed care organization
partners to achieve Year 2000 readiness, the Company's ability to select and
stock merchandise attractive to customers, the implementation of its store
acquisition program, economic and weather factors affecting consumer spending,
operating factors, including manufacturing quality of optical and engraved
goods, affecting customer satisfaction, the Company's relationships with host
stores and franchisees, the mix of goods sold, pricing and other competitive
factors, and the seasonality of the Company's business.
10
<PAGE> 13
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:
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K for the quarterly
period ended October 31, 1998.
11
<PAGE> 14
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COLE NATIONAL GROUP, INC.
By: /s/ Wayne L. Mosley
------------------------------------
Wayne L. Mosley
Vice President and Controller
(Duly Authorized Officer and Principal
Accounting Officer)
Date: December 3, 1998
12
<PAGE> 15
COLE NATIONAL GROUP, INC.
FORM 10-Q
QUARTER ENDED OCTOBER 31, 1998
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
13
<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> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 19,293
<SECURITIES> 0
<RECEIVABLES> 63,742
<ALLOWANCES> 6,898
<INVENTORY> 151,802
<CURRENT-ASSETS> 258,359
<PP&E> 251,565
<DEPRECIATION> 125,245
<TOTAL-ASSETS> 631,036
<CURRENT-LIABILITIES> 274,338
<BONDS> 274,788
0
0
<COMMON> 0
<OTHER-SE> 51,246
<TOTAL-LIABILITY-AND-EQUITY> 631,036
<SALES> 792,929
<TOTAL-REVENUES> 792,929
<CGS> 264,331
<TOTAL-COSTS> 736,122
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,374
<INCOME-PRETAX> 36,433
<INCOME-TAX> 12,478
<INCOME-CONTINUING> 23,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,955
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
