UNITED STATES
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 quarter ended July 3, 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 0-22053
GENERAL BEARING CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2796245
- -------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
44 High Street, West Nyack, New York 10994
- ------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 358-6000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 par value per share
-------------------------------------
(Title of class)
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
<PAGE>
At August 2, 1999, the Registrant had issued and outstanding 3,924,950 shares of
common stock, $.01 par value per share.
<PAGE>
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements, which are statements other than those of
historical fact, including, without limitation, ones identified by the use of
the words "anticipates,""estimates," "expects," "intends," "plans," "predicts,"
and similar expressions. In this Quarterly Report such statements may relate,
among other things, to the recoverability of deferred taxes, likely industry
trends, the continued availability of credit lines, the suitability of
facilities, access to suppliers and implementation of joint ventures and
marketing programs. Such forward looking statements involve important risks and
uncertainties that could cause actual results to differ materially from those
expected by the Company, and such statements should be read along with the
cautionary statements accompanying them and mindful of the following additional
risks and uncertainties possibly affecting the Company: the possibility of a
general economic downturn, which is likely to have an important impact on
historically cyclical industries such as manufacturing; significant price,
quality, quantity or marketing efforts from domestic or overseas competitors;
the loss of, or substantial reduction in orders from, a major customer; the loss
of, or failure to attain additional quality certifications; changes in U.S. or
foreign government regulations and policies, including the imposition of
antidumping orders on the Company or any of its suppliers; a significant
judgment or order against the Company in a legal or administrative proceeding;
and potential delays in implementing planned sales and marketing expansion
efforts and the failure of their effectiveness upon implementation.
<PAGE>
GENERAL BEARING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JULY 3, 1999
TABLE OF CONTENTS
Page No.
--------
PART I
Item 1. Financial Statements .........................................2 - 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.........................7 - 10
PART II
Item 1. Legal Proceedings................................................11
Item 5. Other Information................................................12
Item 6. Exhibits and Reports on Form 8-K.................................12
Signature ..................................................................13
1
<PAGE>
FINANCIAL STATEMENTS OF
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
Item 1. CONSOLIDATED BALANCE SHEETS
(In Thousands - Except for Shares and Per Share Data)
<TABLE>
<CAPTION>
July 3, Jan. 2,
1999 1999
-------- --------
ASSETS (Unaudited)
<S> <C> <C>
Current:
Cash $ 14 $ 29
Accounts receivable - trade, less allowance for doubtful
accounts of $201K and $200K 6,104 5,772
Inventories 18,249 16,423
Prepaid expenses and other current assets 593 358
Advances to parent and affiliates 1,403 940
Deferred tax asset 326 437
-------- --------
Total current assets 26,689 23,959
-------- --------
Fixed assets, net 3,339 3,277
Investments in affiliates 1,711 1,695
Advances to affiliate 432 423
Deferred tax asset, net -- 956
Other assets 37 28
-------- --------
Total Assets $ 32,208 $ 30,338
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Note payable - bank $ 8,622 $ 8,126
Accounts payable:
Trade 1,460 1,271
Affiliate -- 3
Parent 29 94
Accrued expenses and other current liabilities 1,104 1,128
Current maturities of long-term debt 63 286
-------- --------
Total current liabilities 11,278 10,908
-------- --------
Long-term debt, less current maturities:
Bank -- 557
Other 440 440
Affiliate 975 954
-------- --------
Total long-term liabilities 1,415 1,951
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock par value $.01 per share - shares
authorized 1,000,000 none issued and outstanding -- --
Common stock par value $.01 per share - shares
authorized 19,000,000, issued and outstanding 3,921,950
and 3,918,950 shares 39 39
Additional paid-in capital 28,779 28,758
Deficit (9,303) (11,318)
-------- --------
Total stockholders' equity 19,515 17,479
-------- --------
Total liabilities and stockholder's equity $ 32,208 $ 30,338
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
2
<PAGE>
FINANCIAL STATEMENTS OF
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In Thousands - Except for Shares and Per Share Data)
<TABLE>
<CAPTION>
Twenty-six weeks ended Thirteen weeks ended
-------------------------- --------------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 28,159 $ 21,348 $ 14,437 $ 11,011
Cost of sales 19,462 14,490 10,079 7,183
----------- ----------- ----------- -----------
Gross profit 8,697 6,858 4,358 3,828
Selling, general and administrative expenses 5,082 4,651 2,551 2,494
----------- ----------- ----------- -----------
Operating income 3,615 2,207 1,807 1,334
Interest, net, including ($13K), $7K, ($6K),
and $6K to parent 410 354 205 196
Equity in income of affiliates (16) -- (16) --
Gain on sale of equipment -- (295) -- --
----------- ----------- ----------- -----------
Income before income taxes 3,221 2,148 1,618 1,138
Income tax 1,207 852 605 468
----------- ----------- ----------- -----------
Net income $ 2,014 $ 1,296 $ 1,013 $ 670
=========== =========== =========== ===========
Net income per common share
Basic $ 0.51 $ 0.33 $ 0.26 $ 0.17
----------- ----------- ----------- -----------
Diluted $ 0.51 $ 0.32 $ 0.26 $ 0.17
----------- ----------- ----------- -----------
Weighted average number of common shares
Basic 3,920,318 3,910,589 3,921,686 3,917,521
----------- ----------- ----------- -----------
Diluted 3,927,220 4,029,731 3,934,720 3,988,050
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
FINANCIAL STATEMENTS OF
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Twenty-six weeks ended
----------------------
July 3, June 27,
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,014 $ 1,296
Add (deduct) noncash items charged (credited) to income:
Deferred income taxes 1,067 816
Depreciation and amortization 240 260
Equity in income of affiliates (16) --
Loss / (gain) on disposal of fixed assets 4 (295)
Add (deduct) changes in operating assets and liabilities:
Accounts receivable 332 (298)
Inventories (1,825) (2,482)
Prepaid expenses and other assets (245) 146
Due to (from) affiliates (454) 381
Accounts payable and accrued expenses 165 66
------- -------
Net cash provided by (used in) operating activities 618 (110)
------- -------
Cash flows from investing activities:
Investment in affiliates, net -- (1,000)
Fixed asset purchases (306) (864)
Proceeds from sale of fixed assets -- 604
------- -------
Net cash used in investing activities: (306) (1,260)
------- -------
Cash flows from financing activities:
Proceeds from sale of common shares, net 21 133
Repayment of current maturity - bank (223) --
Repayment of long-term debt - bank (557) (111)
Increase in note payable - bank 497 1,989
Repayment of long-term debt and other balances - parent (65) (644)
------- -------
Net cash provided by (used in) financing activities (327) 1,367
------- -------
Net decrease in cash (15) (3)
Cash, beginning of period 29 118
------- -------
Cash, end of period $ 14 $ 115
======= =======
Cash paid during the period for:
Interest $ 411 $ 374
======= =======
Income taxes $ 141 $ 36
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of The accompanying unaudited condensed consolidated financial
Presentation statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting solely
of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
twenty-six weeks ended July 3, 1999 are not necessarily
indicative of the results that may be expected for the year
ending January 1, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the
year ended January 2, 1999.
2. Earnings The calculation of diluted earnings per share includes the
per Share effect of outstanding options and warrants to the extent they
are dilutive.
3. Long Term Due to favorable interest rates, the Company consolidated the
Debt remaining term loan balance ($669,000) into the existing
revolving credit facility during June 1999.
4. Litigation Except as explained in Part II of this report, there has been
no material change in litigation since the events reported in
the Company's 10-K for the fiscal year ended January 2, 1999.
See Part II of this report for further disclosure.
5. Segment During 1998, the Company adopted Statement of Financial
Information Accounting Standards No. 131 ("SFAS 131"), Disclosures about
Segments of an Enterprise and Related Information. SFAS 131
supersedes SFAS 14, Financial Reporting for Segments of a
Business Enterprise, replacing the "industry segment" approach
with the "management" approach. The management approach
designates the internal reporting that is used by management
for making operating decisions and assessing performance as
the source of the Company's reportable segments.
The Company operates in two divisions: the OEM Division, which
supplies Original Equipment Manufacturers (OEM's), and the
Distribution Division, which serves distributors that supply
the repair and maintenance aftermarket and small OEM's. The
two divisions supply principally in the United States.
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies
outlined in the Company's 10-K for the fiscal year ended
January 2, 1999. The Company evaluates segment performance
based on operating income.
The following table presents information about the Company's business segments.
5
<PAGE>
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
<TABLE>
<CAPTION>
Year to Date July 3, 1999
OEM DISTRIBUTOR OTHER TOTAL
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales from External Customers $20,974 $7,185 $ -- $28,159
Gross Profit 4,833 3,864 -- 8,697
Operating Income 2,136 1,479 -- 3,615
Depreciation / Amortization 193 47 -- 240
Capital Expenditures 193 11 102 306
Total Assets 19,335 7,369 5,504 32,208
Year to Date June 27, 1998
OEM DISTRIBUTOR OTHER TOTAL
--------------------------------------------------------
Net Sales from External Customers $13,895 $7,453 $ -- $21,348
Gross Profit 3,037 3,821 -- 6,858
Operating Income 719 1,488 -- 2,207
Depreciation / Amortization 166 94 -- 260
Capital Expenditures 734 14 116 864
Total Assets 14,003 8,131 7,252 29,386
Quarter Ended July 3, 1999
OEM DISTRIBUTOR OTHER TOTAL
--------------------------------------------------------
Net Sales from External Customers $10,872 $3,565 $ -- $14,437
Gross Profit 2,379 1,979 -- 4,358
Operating Income 1,018 789 -- 1,807
Depreciation / Amortization 112 9 -- 121
Capital Expenditures 146 1 65 212
Total Assets 19,335 7,369 5,504 32,208
Quarter Ended June 27, 1998
OEM DISTRIBUTOR OTHER TOTAL
--------------------------------------------------------
Net Sales from External Customers $7,433 $3,578 $ -- $11,011
Gross Profit 1,793 2,035 -- 3,828
Operating Income 465 869 -- 1,334
Depreciation / Amortization 89 38 -- 127
Capital Expenditures 337 10 75 422
Total Assets 14,003 8,131 7,252 29,386
</TABLE>
Depreciation expense was allocated based on material, labor, and overhead.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Sales. Sales for the second fiscal quarter of 1999 were $14,437,000, an
increase of $3,426,000 or 31% compared to the same period in 1998. OEM sales
represented 75% of total sales for the second quarter of 1999 compared to 68% of
total sales for 1998. Second quarter sales in the OEM Division increased 46%
over 1998 while Distribution Division sales were virtually the same. On a
year-to-date basis, sales were $28,159,000, an increase of $6,811,000 or 32%
compared to the same period in 1998. OEM sales represented 74% and 65% of total
year-to-date sales for 1999 and 1998, respectively. OEM sales are ahead of the
prior period by 51% primarily as a result of new business won during 1998 and
1999. The largest dollar increase was in tapered roller bearings, where the
Company is a primary supplier to the heavy duty truck trailer market. Also
significant are increases in sales of ball bearings and new sales of a drive
line component to the automotive industry. Sales in the Distribution Division
are 4% lower in 1999 as softness in the industrial aftermarket offset higher
pricing.
Gross Profit. Gross profit was $4,358,000 or 30.2% of sales in the second
fiscal quarter of 1999 compared to $3,828,000 or 34.8% of sales in the second
fiscal quarter in 1998. Gross profit percentage of sales (GP%) was adversely
impacted by product mix as a result of the growth in sales to original equipment
manufacturers combined with relatively constant higher margin sales to the
industrial aftermarket. GP% for the OEM Division was 21.9% in the second fiscal
quarter of 1999 compared to 24.1% in 1998. This is primarily due to product mix,
introductory pricing necessary to increase market share and costs associated
with the rectification of certain nonconforming components. GP% for the
Distribution Division was 55.5% in the second fiscal quarter of 1999 compared to
56.9% in 1998 due to product mix. On a year-to-date basis, gross profit was
$8,697,000 or 30.9% of sales in 1999 compared to $6,858,000 or 32.1% of sales in
1998. GP% for the OEM Division was 23.0% compared to 21.9% for 1998. The
increase is primarily due to the higher sales volume, partially offset by the
factors discussed above. GP% for the Distribution Division was 53.8% compared to
51.3% for 1998 mainly due to higher pricing.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses as a percentage of sales were 17.7% in the second fiscal
quarter of 1999 compared to 22.7% in the second fiscal quarter in 1998. This
reduction reflects the effect of the Company's increased sales volume. S,G&A
increased by $57,000. This is primarily attributable to increases in salaries
($151,000) to help support the Company's growth, partially offset by reduced
professional fees ($106,000). On a year-to-date basis, selling, general and
administrative expenses were 18.0% in 1999 compared to 21.8% in 1998, also
reflecting the effect of the Company's increased sales volume. Year-to-date
S,G&A increased $431,000 compared to 1998. The increase is mainly due to the
aforementioned increase in salaries ($287,000) as well as an increase in various
variable costs such as commissions ($68,000), freight to customers ($56,000),
and outside warehouse costs ($84,000), partially offset by lower professional
fees ($140,000).
7
<PAGE>
Operating Income. Operating income of $1,807,000 for the second fiscal
quarter of 1999 represents a 35% increase over the same period in 1998. An
increase in the OEM Division of 119% over 1998 to $1,018,000 was due primarily
to the sales and associated gross profit increases partially offset by increased
S,G&A needed to support its growth. Operating income in the Distribution
Division decreased 9% from 1998 to $789,000 mainly due to product mix. On a
year-to-date basis, operating income of $3,615,000 in 1999 represents a 64%
increase compared to 1998. The OEM Division year-to-date increase of 197% over
1998 to $2,136,000 is due to the factors mentioned above. The Distribution
Division year-to-date operating income is virtually the same as in 1998 where
higher pricing offset lower sales volume.
Interest Expense, net. Net interest expense was $205,000 for the second
fiscal quarter of 1999 compared to $196,000 during the same period in 1998. As a
percentage of sales, net interest expense was 1.4% and 1.8% for the second
quarter of 1999 and 1998, respectively. This improvement reflects the higher
sales in 1999. On a year-to-date basis, net interest expense was $410,000 in
1999 compared to $354,000 in 1998. This increase is primarily due to higher bank
debt needed to fund inventory and receivables growth created by normal business
expansion.
Income Tax. For the second fiscal quarter of 1999, the Company had an
effective tax rate of 37.4% compared to 41.1% for 1998. On a year-to-date basis,
the company had an effective tax rate of 37.5% compared to 39.7% in 1998.
Effective tax rates are based on estimated year end effective rates.
Net Income. As a result of the factors discussed above, net income for the
second fiscal quarter of 1999 increased by 51% to $1,013,000 or $.26 per basic
and diluted share from $670,000 or $.17 per basic and diluted share in 1998. On
a year-to-date basis, net income increased by 55% to $2,014,000 or $.51 per
basic and diluted share from $1,296,000 or $.33 and $.32 per basic and diluted
share, respectively in 1998.
Financial Condition, Liquidity and Capital Resources
The Company's primary sources of capital have been net cash provided by
operating activities, a term loan, sale of common stock and financing from
affiliates. Working capital requirements also have been financed by a Revolving
Credit Facility. The primary demands on the Company's capital resources have
been the need to fund inventory and receivables growth created in normal
business expansion. At January 2, 1999 and July 3, 1999, the Company had working
capital of $13,051,000 and $15,411,000, respectively.
Cash provided by operating activities during the first six months of 1999
was $618,000. Cash provided from net income and deferred income taxes was
partially offset by increased inventory. The primary reasons for the inventory
increase are to support current and future increased sales volume in tapered
journal bearings, automotive ball bearings and truck size tapered roller
bearings.
8
<PAGE>
Cash used in investing activities during the first six months of 1999 was
$306,000 for capital expenditures.
Cash used in financing activities during the first six months of 1999 was
$327,000. Net cash available from operating and investing activities was used to
pay down the note payable to the bank. Additionally, during June 1999, the
Company repaid its term loan via a transfer to the revolving credit facility due
to favorable interest rates and borrowing availability.
At July 3, 1999, the Company had outstanding debt of $8,622,000 under its
Revolving Credit Facility and had further availability of approximately $4.0
million.
The Company believes that funds generated from continuing operations,
capital lease financing and borrowing under the existing and any future
Revolving Credit Facilities will be sufficient to finance the Company's
anticipated working capital and capital expenditure requirements for at least
the next 24 months.
Year 2000 Compliance
The "Year 2000" problem refers to and arises from deficient computer
programs and related products, such as embedded chips, which do not properly
recognize or process a year that begins with "20" instead of "19". If not
corrected, many computer applications could fail or create erroneous results.
The extent of the potential impact of the Year 2000 problem is not yet known,
and if not timely corrected, it could affect the global economy.
A. The Company's Readiness:
1. (i) Information Technology (IT) systems: The Company has conducted a
comprehensive review of its computer systems to identify those that could be
affected by the Year 2000 issue. The Company's operating system and database
system are Year 2000 compliant. The Company presently believes that with minor
modifications (conversion and testing in progress) to existing software, the
Year 2000 problem will not pose significant operational problems for the
Company's computer systems. (ii) Non IT systems: Non IT systems are those which
typically include "embedded" technology such as microcontrollers and chips. The
Company currently is in the process of evaluating the effect of the Year 2000
problem on non IT systems and estimates compliance by August 31, 1999.
2. Third Parties: Due to the pervasive use of computers by the Company in
its dealings with suppliers, customers, financial institutions, and other third
parties, the Year 2000 problem could have a material impact on the Company if
not timely addressed by such third parties. To assess third party readiness, the
Company has surveyed its principal suppliers and financial institutions and
received responses which indicate that all such parties have adequately
addressed the problem. While the company has not surveyed its customers, it has
received surveys from its principal customers which indicate that they are also
addressing the problem.
9
<PAGE>
B. Cost: The Company has not allocated anticipated year 2000 remediation costs
among the various systems which may be affected but believes that total
remediation costs will be immaterial.
C. Risks: The Company believes that the greatest risk presented by the year 2000
problem is from third parties, such as suppliers, financial institutions,
utility providers, etc. who may not have adequately addressed the problem. A
failure of any such third party's computer or other applicable systems in
sufficient magnitude could materially and adversely affect the Company. The
Company is not presently able to quantify this risk but believes that it is
minimal based upon the surveys and letters it has received.
D. Contingency Plans: The Company had previously decided to devise a Year 2000
contingency plan. It is in the process of documenting the plan and estimates
completion by August 31, 1999. This plan will include detailed manual procedures
for every department should the Year 2000 problem cause an interruption in
computer services. Also, the Company will issue a comprehensive set of year-end
reports prior to January 1, 2000 to ensure that the necessary information is
available to conduct business in an uninterrupted fashion until any problems are
resolved. The procedures will include paper back up of the transactions executed
during downtime, if any, to enable the Company to transfer these transactions to
the computer system when it becomes available.
Inflation
The effect of inflation on the Company has not been significant during the
last two fiscal years.
Quantitative and Qualitative Disclosure about Market Risk
Interest Rate Risk
The Company's primary market risks are fluctuations in interest rates and
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
on its bank debt. The Company does not use derivative financial instruments.
The Company's management believes that fluctuations in interest rates in
the near term would not materially affect the Company's consolidated operating
results, financial position or cash flows as the Company has limited risks
related to interest rate fluctuations.
Foreign Currency Risk
The Company does not use foreign currency forward exchange contracts or
purchased currency options to hedge local currency cash flows or for trading
purposes. All sales arrangements with international customers are denominated in
U.S. dollars. Only a small fraction of the Company's purchases are denominated
in foreign currency. Due to this limited activity, the Company does not expect
any material loss with respect to foreign currency risk.
10
<PAGE>
PART II
Item 1. Legal Proceedings
The Timken Company vs. United States
There have been no material developments in this matter subsequent to the
events reported in the Company's 10-K filed April 2, 1999.
Gussack Realty Company and General Bearing Corporation vs. Xerox
In 1995 Gussack Realty Company ("Realty") and the Company filed an action
against Xerox in the Untied States District Court for the Southern District of
New York related to the discharge by Xerox of contaminants into the subsurface
at a property in the vicinity of property formerly leased by the Company and
owned by Realty in Blauvelt, New York ("Blauvelt Property"). Realty and the
Company, among other things, alleged that the subsurface discharge has adversely
affected the Blauvelt Property. In July, 1997, Xerox filed a counterclaim
against the Company and Realty, seeking contribution for Xerox's remediation
costs based upon Xerox's allegation of a discharge of contaminants into the
subsurface at the Blauvelt facility.
On April 22, 1999, the jury in the above matter found in favor of Realty
and the Company and against Xerox on both the complaint and the counterclaim. On
May 28, 1999, the Court entered judgement in favor of Realty and the Company for
compensatory damages of $1,083,000 and sanctions of $27,897.70.
On June 14, 1999, Xerox filed a motion for entry of a judgment in favor of
Xerox notwithstanding the verdict, pursuant to Rule 50(b) of the Federal Rules
of Civil Procedure, which the Court denied.
On June 24, 1999, Realty and the Company filed an appeal with the United
States Court of Appeals for the Second Circuit (the "Appellate Court"),
challenging several rulings of the trial judge, including among other things,
his denial of prejudgment interest and refusal to allow the jury to consider
punitive damages.
On July 23, 1999, Xerox filed a cross appeal.
The Appellate Court has issued a scheduling order fixing deadlines for
submission of briefs and scheduling oral argument for "no earlier" than the week
of November 15, 1999.
Since the events reported in the Company's 10Q filed May 18, 1999, there
have been no material developments in the previously disclosed proceeding in the
United States Bankruptcy Court for the Southern District of New York, seeking to
hold Xerox in Contempt and for sanctions on the ground that the above
counterclaim was discharged upon confirmation of the Company's Chapter 11
Reorganization Plan in 1993.
11
<PAGE>
Item 5. Other Information
Rule 14a-4 of the Securities and Exchange Commission's proxy rules allows
the Company to use discretionary voting authority to vote on matters coming
before an annual meeting of stockholders, if the Company does not have notice of
the matter at least 45 days before the date on which the Company first mailed
its proxy materials for the prior year's annual meeting of stockholders or the
date specified by an advance notice provision in the Company's By-laws. The
Company's By-laws contain such an advance notice provision. For the Company's
2000 Annual Meeting of Stockholders, stockholders must submit such written
notice to the Secretary of the Company no earlier than April 14, 2000 nor later
than May 19, 2000.
This requirement is separate and apart from the Securities and Exchange
Commission's requirements that a stockholder must meet in order to have a
stockholder proposal included in the Company's proxy statement under Rule 14a-8.
For the Company's 2000 Annual Meeting of Stockholders, any stockholder who
wishes to submit a proposal for inclusion in the Company's proxy materials
pursuant to Rule 14a-8 must submit such proposal to the Secretary of the Company
no later than February 18, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27. Financial Data Schedule
(b) The Registrant has not filed any reports on Form 8-K during the
quarter ended July 3, 1999.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: August 17, 1999.
GENERAL BEARING CORPORATION
(Registrant)
/s/ David L. Gussack
- -----------------------
David L. Gussack
President
/s/ Barry A. Morris
- -----------------------
Barry A. Morris
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 6,305
<ALLOWANCES> 201
<INVENTORY> 18,249
<CURRENT-ASSETS> 26,689
<PP&E> 6,462
<DEPRECIATION> 3,123
<TOTAL-ASSETS> 32,208
<CURRENT-LIABILITIES> 11,278
<BONDS> 0
0
0
<COMMON> 39
<OTHER-SE> 19,476
<TOTAL-LIABILITY-AND-EQUITY> 32,208
<SALES> 28,159
<TOTAL-REVENUES> 28,159
<CGS> 19,462
<TOTAL-COSTS> 19,462
<OTHER-EXPENSES> 5,082
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 410
<INCOME-PRETAX> 3,221
<INCOME-TAX> 1,207
<INCOME-CONTINUING> 2,014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,014
<EPS-BASIC> .51
<EPS-DILUTED> .51
</TABLE>
