SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |X| Definitive Proxy Statement
|_| Definitive Additional Materials |_| Soliciting Materials Pursuant to
|_| Confidential, for use of the ss.240.14a-11(c) or ss.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
General Bearing Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
____________________________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
4) Proposed maximum aggregate value of transaction:____________________
5) Total fee paid:_____________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_____________________________________________
2) Form, Schedule or Registration Statement No:________________________
3) Filing Party:_______________________________________________________
4) Date Filed:_________________________________________________________
<PAGE>
GENERAL BEARING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 1999
To the Stockholders of General Bearing Corporation:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders
(the "Meeting") of GENERAL BEARING CORPORATION, a Delaware corporation (the
"Company"), will be held on Monday, July 26, 1999 at 10:00 a.m., local time, at
the Company's principal executive offices at 44 High Street, West Nyack, New
York to consider and act upon the following:
1. The election of six directors to serve until the 2000 Annual
Meeting of Stockholders or until their successors have been duly elected and
qualified;
2. The ratification of the appointment of BDO Seidman, LLP as
independent auditors of the Company and its subsidiaries for the fiscal year
ending January 1, 2000; and
3. The transaction of such other business as may properly come
before the Meeting and at any adjournments thereof.
Only holders of record of the Company's common stock, par value $.01
per share, at the close of business on May 31, 1999, which has been fixed as the
record date for the Meeting, shall be entitled to notice of, and to vote at, the
Meeting and any adjournment or adjournments thereof.
Stockholders are cordially invited to attend the Meeting in person.
Whether or not you plan to attend the Meeting, please sign and date the enclosed
proxy card and mail it promptly in the enclosed envelope to ensure that your
shares are represented at the Meeting. Stockholders who attend the Meeting may
vote their shares personally, even though they have sent in their proxies.
By Order of the Board of Directors
/s/ David L. Gussack
David L. Gussack
President
June 18, 1999
IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE
UNITED STATES.
<PAGE>
GENERAL BEARING CORPORATION
PROXY STATEMENT
1999 Annual Meeting of Stockholders
July 26, 1999
GENERAL
This Proxy Statement (the "Proxy Statement") is furnished in
connection with the solicitation of proxies by the Board of Directors of GENERAL
BEARING CORPORATION, a Delaware corporation (the "Company"), to be voted at the
1999 Annual Meeting of Stockholders of the Company (the "Meeting") which will be
held at the Company's principal executive offices at 44 High Street, West Nyack,
New York, on July 26, 1999, at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and in this Proxy Statement.
The principal executive offices of the Company are located at 44
High Street, West Nyack, New York 10994. The approximate date on which this
Proxy Statement and accompanying Proxy will first be sent or given to
stockholders is June 21, 1999.
VOTING SECURITIES AND VOTE REQUIRED
Stockholders of record as of the close of business on May 31, 1999
(the "Record Date") will be entitled to notice of, and to vote at, the Meeting
and at any adjournments thereof. On the Record Date, there were 3,921,950 shares
of the Company's common stock, par value $.01 per share (the "Common Stock"),
outstanding. There was no other class of voting securities of the Company
outstanding on such date. Each holder of Common Stock is entitled to one vote
for each share held by such holder. The presence, in person or by proxy, of the
holders of the majority of the shares of Common Stock of the Corporation issued
and outstanding and entitled to vote is necessary to constitute a quorum at the
Meeting. The election of directors of the Company and for the ratification of
the appointment of the Company's auditors require the affirmative vote of a
majority of the outstanding shares of Common Stock voting at the Meeting or at
any adjournment or adjournments thereof.
Under the rules promulgated by the Securities and Exchange
Commission, boxes and a designated blank space are provided on the proxy card
for stockholders to mark if they wish to withhold authority to vote for any one
or more of the six nominees for directors. Votes withheld in connection with the
election of any one or more of the six of the nominees for directors will be
counted as votes cast against such individuals and will be counted toward the
presence of a quorum for the transaction of business at the Meeting. If no
direction is indicated, the proxy will be voted for the election of the nominees
for directors. Under the rules of the National Association of Securities
Dealers, Inc., a broker "non-vote" has no effect on the outcome of the election
of directors or the establishment of a quorum for such election. The form of
proxy does not provide for abstentions with respect to the election of
directors; however, a stockholder present at the Meeting may abstain with
respect to such election. The treatment of abstentions and broker "non-votes"
with respect to the election of directors is consistent with applicable Delaware
law and the Company's By-Laws. Abstentions are counted in tabulations of the
votes cast on proposals presented to the stockholders and have the same legal
effect as a vote against a particular proposal (other than the election of
directors). Broker "non-votes" are not taken into account for purposes of
determining whether a proposal has been approved by the requisite stockholder
vote.
VOTING OF PROXIES
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
the shares represented thereby will be voted (i) FOR the election of the six
nominees as directors, (ii) FOR ratification of the appointment of the Company's
auditors and (iii) in accordance with the judgment of the person or persons
voting the proxies on any other matter that may be properly brought before the
Meeting. Each such Proxy granted may be revoked at any time thereafter by
execution and delivery of a subsequent Proxy or by attendance and voting in
person at the Meeting, except as to any matter or matters upon which, prior to
such revocation, a vote shall have been cast pursuant to the authority conferred
by such Proxy.
-1-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of April 2, 1999, the number of shares
of Common Stock owned by all executive officers, directors and nominees of the
Company individually and all directors and executive officers as a group, and
each person who owned of record, or was known to own beneficially, more than 5%
of the outstanding shares of Common Stock. The persons named in the table below
have sole voting and investment power with respect to all of the shares of
Common Stock owned by them, unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENTAGE OF SHARES
BENEFICIAL OWNER OWNED (1) BENEFICIALLY OWNED(1)
- ---------------- --------- ---------------------
<S> <C> <C>
World Machinery Company ....... 3,000,000 (2)(5) 76.6%
44 High Street, West Nyack, New York 10994
Seymour I. Gussack ............ 3,016,200 (3)(4) 77.0%
David L. Gussack .............. 3,015,300 (3)(4) 76.9%
Nina M. Gussack ............... 6,000 (4) *
Robert E. Baruc ............... 500 *
William Kurtz ................. 200 *
Barry A. Morris ............... 1,000 *
All Directors and Executive
Officers as a Group .......... 3,029,200
</TABLE>
* Less than 1%
(1) Pursuant to Rule 13d-3 under the U.S. Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition) with
respect to a security whether through a contract, arrangement, understanding,
relationship or otherwise.
(2) Seymour I. Gussack, the Company's Chairman of the Board, David L. Gussack,
the Company's President and Nina M. Gussack, a Director of the Company own or
control approximately 19.6% and 17.6% and 17.6%, respectively, of the Common
Stock of World. The remaining children of Seymour I. Gussack and his spouse own
or control an additional approximately 23.5% of the stock of World. The estate
of Harold S. Geneen, a former Director of the Company, and Joseph J. Hoo, Vice
President -- Advanced Technology and China Affairs of the Company, own
approximately 19.6% and 2.0% of the Common Stock of World, respectively.
(3) Includes for each of Seymour I. Gussack and David L. Gussack, 3,000,000
shares beneficially owned by World. Seymour I. Gussack and David L. Gussack are
the two directors of World and each may be deemed to share with the other the
power to vote and dispose of the shares owned by that corporation. Seymour I.
Gussack and David L. Gussack disclaim beneficial ownership of the shares of
Common Stock owned by World.
June 18, 1999
-2-
<PAGE>
(4) Includes 5,000 shares of Common Stock owned by Realty over which Seymour I.
Gussack, David L. Gussack, and Nina M. Gussack as general partners of Realty,
may be deemed to share the power to vote and dispose of. Each of Seymour I.
Gussack, David L. Gussack and Nina M. Gussack disclaim beneficial ownership of
the shares of Common Stock owned by Realty.
(5) Includes 1,000,000 shares of Common Stock currently pledged to BNY Financial
Corporation ("BNY") to secure payment of a term note in the principal amount of
$3,500,000. Pursuant to the pledge agreement dated April 7, 1998 (the "Pledge
Agreement"), World is required to cause the percentage obtained by dividing (x)
the outstanding principal amount of the term note by (y) the market value of the
shares pledged to (i) at all times be less than 50%, (ii) as of the date of the
Pledge Agreement to be approximately 40% and (iii) be promptly reduced to
approximately 40% (by pledging additional shares of Common Stock of the Company)
if at any time such percentage exceeds 48%. The Pledge Agreement, among other
things, provides that (i) World may not exercise or refrain from exercising any
voting rights or powers if in the reasonable judgment of BNY such action would
have a material adverse effect on the value of the pledged shares or any part
thereof and (ii) World give at least five days' written notice of the manner in
which World intends to exercise, or the reasons for refraining from exercising,
any voting rights or other powers other than with respect to any election of
directors and voting with respect to any incidental matters. In case of an Event
of Default, as defined, BNY, among other things, at its option, would be
entitled to vote the pledged shares, and would have the right to sell the
shares, in which event, World has agreed to use its best efforts to cause the
Company to register the sale of the pledged shares under the Securities Act of
1933, as amended. The principal of the term note is payable on April 6, 2000.
Interest is payable monthly.
June 18, 1999
-3-
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
A total of six directors are to be elected at the Meeting by the
holders of the Common Stock to serve until the 2000 Annual Meeting of
Stockholders or until their successors have been elected and qualified.
Presently, the Directors are Seymour I. Gussack, David L. Gussack, Barbara M.
Henagan, Robert E. Baruc, Peter Barotz and Nina M. Gussack and their terms
expire at the Meeting. The Board of Directors recommends the re-election of all
of the six current Directors as new Directors to serve until the 2000 Annual
Meeting of Stockholders or until their successors have been elected and
qualified. Should any of the nominees not remain a candidate for election at the
date of the Meeting (which contingency is not now contemplated or foreseen by
the Board of Directors), proxies solicited thereunder will be voted in favor of
those nominees who do remain candidates and may be voted for substitute nominees
selected by the Board of Directors. Assuming a quorum is present, a vote of a
majority of the shares present, in person or by proxy, at the Meeting is
required to elect each of the nominees as a director in accordance with the
Company's By-Laws.
In 1998 there were three meetings of the Board of Directors of the
Company. The Compensation/Stock Option Committee met once and acted four times
by consent. The Audit Committee of the Board of Directors did not meet
separately from the Board or act by consent during the fiscal year ended January
2, 1999. All directors attended 75% or more of the meetings of the Board of
Directors.
Set forth below are the names, ages and positions of the current
directors, all of whom are nominees for directors to serve until the 2000 Annual
Meeting of Stockholders or until their successors have been elected and
qualified, and executive officers of the Company:
Name Age Position
---- --- --------
Seymour I. Gussack........... 74 Chairman of the Board of Directors
David L. Gussack............. 40 President and Director
Barbara M. Henagan........... 40 Director
Robert E. Baruc.............. 46 Director
Peter Barotz................. 70 Director
Nina M. Gussack.............. 42 Director
William F. Kurtz............. 39 Vice President--Director of Operations
Joseph J. Hoo................ 63 Vice President--Advanced Technology and
China Affairs
Barry A. Morris.............. 44 Chief Financial Officer
Set forth below is certain additional information with respect to the
Directors, and executive officers.
SEYMOUR I. GUSSACK founded the Company in 1958 and has served as Chairman
of the Board of Directors and a Director of the Company since its formation.
Seymour I. Gussack is also the Chairman of the Board of Directors and a Director
of World and a partner of Realty. See "Certain Relationships and Related
Transactions" and "Security Ownership of Certain Beneficial Owners and
Management." Seymour I. Gussack's son is David L. Gussack, President of the
Company and a Director.
DAVID L. GUSSACK became President of the Company in 1993 and has been a
Director of the Company since 1987. David L. Gussack has held various positions
with the Company since 1983, including Executive Vice President from 1991 to
1992, General Manager of the OEM Division from 1988 to 1990, Supervisor and
Coordinator, Hyatt Absorption Project from 1987 to 1988, Plant Manager from 1986
to 1987, Office Facilities Manager from 1985 to 1986, and Manager of Special
Projects from 1983 to 1985. David L. Gussack is a Director of SGBC. He also is a
partner of Realty. See "Certain Relationships and Related Transactions." David
L. Gussack is a graduate of the University of Pennsylvania. David L. Gussack's
father is Seymour I. Gussack, Chairman of the Board of Directors of the Company.
June 18, 1999
-4-
<PAGE>
WILLIAM F. KURTZ has served as Vice President--Director of Operations
since February 1998. He served as Vice President--Technical Services of the
Company from 1993 to January 1998. Mr. Kurtz was also a Chief Engineer of the
Company from 1989 to 1993 and Senior Project Engineer of the Company from 1988
to 1989. He is a graduate of Manhattan College (B.E. and M.E. in Mechanical
Engineering) and a licensed professional engineer.
JOSEPH I. HOO has served as Vice President--Advanced Technology and China
Affairs of the Company since August 1995. Mr. Hoo served as General Manager,
Industrial Products Division, from 1991 to 1995 and as Chief Metallurgist from
1987 to 1991. Mr. Hoo is a graduate of the National University of Japan (B.S. in
Engineering) and University of Michigan (M.S.E. in Metallurgy and Engineering).
BARBARA M. HENAGAN was elected a Director of the Company on March 30,
1999. Mrs. Henagan has been Senior Managing Director of Bradford Ventures Ltd,
since 1992. Mrs. Henagan is Chairman of the Board of Travis International. She
is also a Director of Central Sprinkler Corporation, Hampton Industries,
Paramount Cards Inc., V-Span, Inc. and Batteries Batteries, Inc. Mrs. Henagan is
a graduate of Princeton University and Columbia University's MBA program.
ROBERT E. BARUC has been a Director of the Company since February 1997.
Since January 1999, Mr. Baruc has been Co-President of Unapix Entertainment,
Inc., an independent distributor of film and television programming. Since
August 1993, he has been the President and Chief Executive Officer of A-PIX
Entertainment, Inc. From December 1992 to August 1993, Mr. Baruc was President
of Triboro Entertainment Group, a company engaged principally in home video
distribution. From January 1991 to December 1992, Mr. Baruc primarily acted as
an independent consultant to the entertainment industry. He is the son-in- law
of Seymour I. Gussack and the brother-in-law of David L. Gussack and Nina M.
Gussack.
PETER BAROTZ has been a director of the Company since December 30, 1997,
when he was elected by the Board of Directors to fill the vacancy resulting from
the death of Harold Geneen. For the past 25 years, Mr. Barotz has been the
President of Panda Capital Corporation. Mr. Barotz is a director of Firecom,
Inc., a manufacturer of life support systems for high-rise buildings.
NINA M. GUSSACK has been a Director of the Company since February 1997.
Ms. Gussack has been a litigation partner at the law firm of Pepper, Hamilton, &
Scheetz in Philadelphia, Pennsylvania since 1986. She is a graduate of the
University of Pennsylvania (B.S. in History and M.S. in Secondary Education) and
Villanova University School of Law (J.D.). She is a member of the Pennsylvania
bar. She is the daughter of Seymour I. Gussack and the sister of David L.
Gussack.
BARRY A. MORRIS was appointed Chief Financial Officer of the Company in
July, 1998. Prior to joining the Company, Mr. Morris served as Director of
Financial Services at the U.S. headquarters of BTR, plc, United Kingdom. He
holds a Master of Business Administration from the University of Connecticut and
a B.S. in Accounting from American International College.
Seymour I. Gussack and David L. Gussack were each officers of the Company
at the time the Company filed for protection from creditors under Chapter 11 of
the U.S. Bankruptcy Code in 1991.
Directors hold office until the next annual meeting of stockholders
following their election, or until their successors are elected and qualified.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board of Directors.
The standing committees of the Board of Directors are the Audit Committee
and the Compensation/Stock Option Committee.
The Audit Committee of the Board of Directors consists of three directors,
David L. Gussack, Robert E. Baruc and Barbara M. Henagan. The Audit Committee's
function is to review and report to the Board of Directors with respect to the
selection and the terms of engagement of the Company's independent public
accountants, and to maintain communications among the Board of Directors, such
independent public accountants, and the Company's internal accounting staff with
respect to accounting and audit procedures, the implementation of
recommendations by such independent public accountants, the adequacy of the
Company's internal controls and related matters. The Audit Committee also
reviews certain related party transactions and any potential conflict of
interest situations involving officers, directors or stockholders beneficially
owning more than 10% of an equity security of the Company.
The Compensation/Stock Option Committee consists of Messrs. Peter Barotz
and Robert E. Baruc, each of whom is an independent Director. The
Compensation/Stock Option Committee's function is to review and approve annual
salaries and bonuses for all employees with salaries in excess of $100,000 and
review, approve and recommend to the Board of Directors the terms and conditions
of all employee benefit plans or changes thereto, including the granting of
stock options pursuant to the Company's 1996 Option Plan.
June 18, 1999
-5-
<PAGE>
COMPENSATION AND OTHER BENEFITS
The following table sets forth the aggregate compensation paid for
services rendered in all capacities to the Company's executive officer who
received compensation of $100,000 or more during the fiscal year ended January
2, 1999:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
Restricted
Fiscal Stock Stock All Other
Name and Principal Position Year Salary Bonus Awards Options# Compensation
<S> <C> <C> <C> <C> <C> <C>
David L. Gussack, President 1998 181,981 10,379 - 20,000 -
Option Grants in Last Fiscal Year
- ----------------------------------------------------------------------------------------------------
Potential Realized Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option
Individual Grants Term
- ----------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Expiration
Name Granted Fiscal Year Base Price Date 5% 10%
- ----------------------------------------------------------------------------------------------------
David L. Gussack 20,000 24.4 12.875 3/31/2008 $161,900 $410,300
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
- ----------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised In-the-
Unexercised Options Money Options at
at January 2, 1999 January 2, 1999
------------------------------------------
Shares Acquired on
Exercise Value Realized Exercisable/ Exercisable/
Name # $ Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------
David L. Gussack 0 0 11,250 / 53,750 N/A
</TABLE>
(1) Perquisites and other personal benefits are not included because they do not
exceed the lesser of $50,000 or 10% of the total base salary and annual bonus
for the named executive officer.
June 18, 1999
-6-
<PAGE>
REPORT OF COMPENSATION/STOCK OPTION COMMITTEE OF BOARD OF DIRECTORS(1)
The Compensation/Stock Option Committee of the Board of Directors (the
"Committee") is responsible for review and approval of (i) annual salaries and
bonuses for all employees with salaries in excess of $100,000 and (ii) all
grants of stock options under the Company's 1996 Stock Option and Performance
Award Plan.
In 1998 the Committee consisted of two members: Peter Barotz and Robert E.
Baruc. The Committee reviewed and approved salaries for 1998 for executive
officers and employees with base salaries in excess of $100,000 and considered
the recommendations of management and made final decisions on the stock option
grants issued in 1998.
The only executive officer who received a base salary in excess of
$100,000 in 1998 was David L. Gussack, the Company's President, whose
compensation consisted of a salary of $181,981 plus bonus of $10,380. The
bonuses were comprised of (a) $6,875 in company wide holiday bonuses equal to
two weeks' salary and (b) an award of $3,505 pursuant to a management wide bonus
plan under which bonuses equal to one week's salary were awarded based on the
Company's performance in the 1st quarter of 1998. In addition, Mr. Gussack
received other benefits. See "Summary Compensation Table" for the type and
amount of these payments. The Committee believes the compensation paid to Mr.
Gussack during 1998 was suitable based upon Mr. Gussack's experience in the
bearing industry, the Company's performance and consideration of compensation
paid to executives at other companies of comparable or smaller size.
The Committee embraces the policy that compensation should be designed to
encourage and reward management and employee efforts to further strengthen the
Company's business and financial objectives and to create added value for
stockholders. Such a policy helps to achieve the Company's business and
financial objectives and also provides incentive needed to attract and retain
well-qualified personnel. The Committee regards the grant of stock options as a
key element of this policy.
In 1998 the Committee approved the grant of a total of 94,000
non-qualified stock options to Directors, Officers and key employees, vesting
over a period from 4-7 years. All such options are exercisable for a period of
ten years from the date of grant. The 1998 grants were based upon management's
recommendations which took into account each recipient's service to and length
of time with the Company. The Committee views the grant of stock options as both
a reward for past performance and an incentive for future performance.
The Compensation Committee
Robert E. Baruc
Peter Barotz
- ----------
1. This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates
this report by reference, and shall not otherwise be deemed filed under
such acts.
June 18, 1999
-7-
<PAGE>
COMPARISON OF TOTAL STOCKHOLDER RETURN
The Company is required to include in this Proxy Statement a line-graph
presentation comparing cumulative shareholder returns with the Nasdaq Composite
Index and an index of companies selected by the Company. The graph below sets
forth information on shareholder return for the period from February 10, 1997,
the date of the Company's initial public offering to January 2, 1999. The
Company has changed the peer group from that used in last year's Proxy
Statement. The graph includes lines showing returns for the peer group used last
year ("SIC Code Index") and for this year ("Peer Group Index"), as required by
SEC rules.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG GENERAL BEARING CORP.,
NASDAQ MARKET INDEX, SIC CODE INDEX AND PEER
GROUP INDEX
[Graph Omitted]
[The following table was depicted as a graph in the printed document.]
<TABLE>
<CAPTION>
2/10/97 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 1/02/99
------- ------- ------- ------- -------- ------- ------- ------- -------
Dollars
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GENERAL BEARING CORP $ 100.00 $ 77.19 $ 98.25 $ 203.51 $ 219.30 $ 180.70 $ 124.56 $ 87.72 $ 100.00
SIC CODE INDEX $ 100.00 $ 97.52 $ 133.61 $ 146.05 $ 128.99 $ 148.07 $ 131.96 $ 100.73 $ 123.03
NASDAQ MARKET INDEX $ 100.00 $ 88.47 $ 104.67 $ 122.03 $ 114.34 $ 134.01 $ 137.47 $ 123.90 $ 161.06
PEER GROUP INDEX $ 100.00 $ 100.22 $ 115.87 $ 132.13 $ 108.24 $ 119.69 $ 102.13 $ 64.02 $ 74.73
</TABLE>
* Assumes $100 Invested on Feb. 10, 1997
Assumes Dividend Reinvested
Fiscal Year Ending Jan. 02, 1999
The Company selected a different peer group for comparison for 1998 from that
used for 1997. For 1997, the Company used a peer group comprised of companies
with the SIC Code 3562. Those companies were General Bearing Corporation,
Ingersoll-Rand Co. ("IR"), Kaydon Corp., NN Ball & Roller, Inc., SKF AB ADR and
The Timken Company. Based on a review of IR's segment reporting with the SEC,
the Company believes that bearings were not a predominant business line for IR
in 1998. Therefore, the Company determined that IR was not sufficiently
comparable to the Company and eliminated it from the peer group for 1998.
Accordingly, the peer group selected for 1998 consists of the same companies
used for 1997 except for IR. As all of the companies used for the 1998
comparison are primarily in the bearing or bearing component business, the
Company believes that they represent a more accurate peer group than the group
used for 1997.
June 18, 1999
-8-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bankruptcy and Resulting Obligations to World
In connection with the Plan of Reorganization, the Company issued to
World, which prior to this Offering owned all of the Company's Common Stock, a
Secured Note for $2.5 million, an Installment Note for $750,000, and 1,000
shares of Common Stock (3,000,000 shares after giving effect to the 3000-for-one
stock split effective October 10, 1996) in exchange for the discharge of an
obligation World acquired for approximately $2.0 million from Wells Fargo, which
provided financing for the purchase by the Company in March 1987 of Hyatt and
for working capital. Interest on the Secured Note accrues annually but is only
payable with respect to any fiscal year to the extent the Company's net income
exceeds $400,000. The Company made a payment of $1.5 million in 1997 against the
$2.5 million Secured Note. The $1 million balance was settled in 1998 ($150,000
cash payment and $850,000 offset against accounts receivable from World). The
balance of $250,000 on the $750,000 Installment Note was paid in 1998.
Leases with Realty
The Company leases a facility located at West Nyack, New York comprising
189,833 square feet owned by Realty, whose partners include Seymour I. Gussack,
David L. Gussack and Nina M. Gussack, each a member of the Board of Directors of
the Company. The Company and Realty entered into the Lease effective as of
November 1, 1996, which provides for an initial term expiring on October 31,
2003, renewable at the option of the Company for an additional six year term.
The Company pays rent of $4.81 per square foot (or $913,000) annually, payable
in monthly rent payments of $76,000. Although the Company has not obtained a
formal appraisal, based upon an informal survey conducted by a real estate
broker, the Company believes that the rent charged it by Realty approximates
fair market rents in the area. The Lease provides for an increase every other
year, commencing in 1998, to the greater of: (i) 106% of the next preceding
year's rent; or (ii) the preceding year's rent multiplied by a fraction the
numerator of which is the CPI for the area including Rockland County or if no
such index is published, for Northern New Jersey in effect 90 days prior to
November 1 of the new rent year and the denominator of which is the CPI in
effect 90 days prior to November 1 of the preceding year. The November 1998
increase amounted to 106% of the next preceding year, resulting in rent of
$5.0986 per square foot (or $968,000) annually effective through October 31,
2000.
The Company is the guarantor with respect to a mortgage loan currently in
the principal amount of $513,000 from the Job Development Authority of Rockland
County and a mortgage loan currently in the principal amount of $375,000 from
the Industrial Development Authority of Rockland County on the property in
Blauvelt, New York. These mortgage loans were created for the purpose of
building a facility in 1983 which the Company subsequently occupied for 12 years
until 1996.
Subleases to WMW Machinery Co. and World
The Company currently subleases 30,949 square feet and 5,500 square feet
at the West Nyack facility to WMW Machinery Co., a subsidiary of World, and
World, respectively, pursuant to subleases in each case effective November 1,
1996. The subleases are coterminous with the Lease. The sublease with WMW
Machinery Co. provides for rent of $5.50 per square foot or $170,000 per year
until November 1998, payable to the Company in equal monthly installments. The
sublease with World provides for rent of $33,000 per year until November 1998,
payable to the Company in equal monthly installments. Each sublease provides for
an increase in rent every other year, commencing in 1998, to the greater of: (i)
106% of the next preceding year's rent; or (ii) the preceding year's rent
multiplied by a fraction the numerator of which is the
June 18, 1999
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Continued
Subleases to WMW Machinery Co. and World - Continued
CPI in effect 90 days prior to November 1 of the next rent year and the
denominator of which is the CPI in effect 90 days prior to November 1 of the
preceding year. The November 1998 rent, increase amounted to 106% of the next
preceding year rent, or $180,000 and $35,000 annually to WMW Machinery Co., Inc.
and World, respectively through October 2000. The subleases with WMW Machinery
Co., Inc and World expire on October 31, 2003; however, the Company anticipates
WMW Machinery Co., Inc. vacating the 31,000 square feet by the end of 1999, as
the Company requires the use of the space for its own needs.
Other Transactions with World and World Affiliates
The Company made payments for and advances to World, World subsidiaries
and joint ventures and certain affiliates for payroll, benefits and other
expenses. Such payments aggregated approximately $1,227,000 for 1998. The
advances bear interest at the rate of 8% per annum which is accrued monthly. In
certain cases, the obligation to repay advances made by the Company were
satisfied by offsetting the price of bearings or bearing products purchased from
joint ventures obligated to the Company. The Company's purchases from World
affiliates aggregated $5.2 million for 1998. The Company anticipates that it
will continue to purchase bearings from joint ventures in which World has an
interest and to make advances to or for the benefit of World and such joint
ventures for the payment of their expenses related to the supply of products to
the Company. These advances either have or will be repaid by World or the joint
venture or will be offset against the price of bearings purchased by the
Company.
World has also granted to the Company options, exercisable prior to
December 31, 1999, to purchase from World its interest in two joint ventures,
Rockland and WGBC, for $400,000 and $846,000 (subject to adjustment based on
change in accounts payable by WGBC to World), respectively, representing the
estimated capital contributions, advances for administrative expenses and other
costs paid by World with respect to such ventures prior to January 2, 1999; plus
any additional capital contributions made and administrative expenses incurred
on behalf of the joint venture by World after such date.
Tax Sharing Agreement
The Company has been, and will be, included in the consolidated federal
income tax returns filed by World during all periods in which it has been, or
will be, a wholly-owned subsidiary of World ("Affiliation Years"). Upon the
completion of the IPO, the Company ceased to be included in the consolidated
federal income tax returns filed by World, and will file on a separate basis. As
a result, the Company and World have entered into an agreement ("Tax Sharing
Agreement") providing for the manner of determining payments with respect to
federal income tax liabilities and benefits arising during the Affiliation
Years. Under the Tax Sharing Agreement, the Company has paid, or will pay, to
World an amount equal to the Company's share of World's consolidated federal
income tax liability, generally determined on a separate return basis, for the
tax years which have ended and the portion of the tax year preceding
consummation of the IPO, and World will pay the Company for the use of the
Company's losses, and credits arising in such periods, in each case net of any
amounts theretofore paid or credited by World or the Company to the other with
respect thereto. In the event that World's consolidated federal income tax
liability for any Affiliation Year is adjusted upon audit or otherwise, the
Company will bear any additional liability or receive any refund which is
attributable to adjustments of items of income, deduction, gain, loss or credit
of the Company. World shall permit the Company to participate in any audits or
litigation with respect to Affiliation Years, at the Company's expense, to the
extent that such audit or litigation could result in an indemnification payment
from the Company to World.
June 18, 1999
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<PAGE>
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS - Continued
Registration Rights Agreement
World has certain rights with respect to the registration under the
Securities Act of 1933, as amended ("the Act") of shares of Common Stock owned
by it ("Registrable Shares"). Such rights will be exercisable by any person or
entity (together with World, "Holders") acquiring Registrable Shares from World,
including any options, warrant to purchase, or other security exchangeable for
or convertible into Registrable Shares other than pursuant to an effective
registration statement under the Act. If the Company proposes to register any
securities under the Act (other than a registration on Form S-4 or Form S-8),
whether or not for its own account, the Holders are entitled to include
Registrable Shares, subject to the right of the managing underwriter of any such
offering to exclude, due to market conditions, some or all of such Registrable
Shares from such registration. In addition, commencing February 7, 1998, the
Holders will have the right to require the Company to prepare and file
registration statements under the Act with respect to the Registrable Shares.
The right may be requested by any Holder holding Registrable Shares aggregating
at least 50,000 shares of the Company's Common Stock outstanding at the date of
the Company's Initial Public Offering. The Company generally is required to bear
the expenses (except underwriting discounts and commissions and fees and
expenses of separate counsel) of all such registrations, whether or not
initiated by any Holder.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Fiscal Year 1998
Barry A. Morris, John E. Stein and Barbara M. Henagan each filed one late
Report on Form 3 which disclosed no beneficial ownership in the Company's stock.
June 18, 1999
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<PAGE>
PROPOSAL II
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, on the recommendation of the Audit
Committee, has appointed the firm of BDO Seidman, LLP as independent auditors of
the Company to audit and report on its consolidated financial statements for the
fiscal year ended January 1, 2000 and has determined that it would be desirable
to request that the stockholders of the Company ratify such appointment.
Representatives of BDO Seidman, LLP are expected to attend the Meeting and
will be available to respond to appropriate questions. Such representatives will
also be given an opportunity to make a statement at the Meeting if they so
desire.
The Board of Directors recommends a vote "FOR" Proposal II.
ANNUAL REPORT
All stockholders of record as of May 31, 1999 have or are currently being
sent a copy of the Company's Annual Report for the fiscal year ended January 2,
1999 (the "Annual Report"), which contains audited financial statements of the
Company. The Annual Report is deemed to be a part of the material for the
solicitation of proxies.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL HOLDER OF ITS
COMMON STOCK ON MAY 31, 1999 WHO DID NOT RECEIVE A COPY OF THE COMPANY'S ANNUAL
REPORT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 2, 1999 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE MADE IN
WRITING TO THE SECRETARY, GENERAL BEARING COMPANY, 44 HIGH STREET, WEST NYACK,
NEW YORK 10994.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 2000
Annual Meeting of Stockholders must be received by the Company at the Company's
principal executive offices not later than June 26, 2000. All such proposals
should be in compliance with applicable Securities and Exchange Commission
regulations.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matter to be brought before the Meeting.
However, if any other matters not mentioned in the Proxy Statement are properly
brought before the Meeting or any adjournments thereof, the persons named in the
enclosed Proxy or their substitutes will have discretionary authority to vote
proxies given in said form, or otherwise act, in respect of such matters in
accordance with their best judgment.
All of the costs and expenses in connection with the solicitation of
proxies with respect to the matters described herein will be borne by the
Company. In addition to solicitation of proxies by use of mails, directors,
officers and employees (who will receive no compensation therefor in addition to
their regular remuneration) of the Company may solicit the return of proxies by
telephone, telegram or personal interview. The Company will request banks,
brokerage houses and other custodians, nominees and fiduciaries to forward
copies of the proxy material to their principals and to request instructions for
voting the proxies. The Company may reimburse such banks, brokerage houses and
other custodians, nominees and fiduciaries for their expenses in connection
therewith.
It is important that proxies be returned promptly. Stockholders are,
therefore, urged to fill in, date, sign and return the Proxy immediately. No
postage need be affixed if mailed in the enclosed envelope in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David L. Gussack
DAVID L. GUSSACK
President
June 18, 1999
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