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 1, 2000
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: (845) 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
At August 14, 2000, the Registrant had issued 4,122,950 shares of common stock,
$.01 par value per share, and had outstanding 4,112,650 shares.
<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 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 1, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I
Item 1. Financial Statements .............................................................. 2 - 8
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition ...................................................... 9 - 12
PART II
Item 1. Legal Proceedings...................................................................... 13
Item 6. Exhibits and Reports on Form 8-K....................................................... 13
Signature .................................................................................. 14
</TABLE>
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 1, Jan. 1,
2000 2000
----------------- ------------------
ASSETS (Unaudited)
<S> <C> <C>
Current:
Cash and cash equivalents $ 368 $ 2,272
Accounts receivable - trade, less allowance for doubtful
accounts of $138 and $137 7,518 6,205
Inventories 20,857 18,896
Prepaid expenses and other current assets 840 836
Advances to affiliates 1,653 1,040
Advances to parent 864 588
Deferred tax asset 238 587
----------------- -----------------
Total current assets 32,338 30,424
Fixed assets, net 2,768 2,811
Investment in affiliates 2,813 2,388
Advances to affiliates 2,450 442
Other assets 352 262
----------------- -----------------
Total Assets $ 40,721 $ 36,327
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable:
Trade 2,815 1,056
Affiliate -- 133
Accrued expenses and other current liabilities 1,280 1,184
Current maturities of long-term debt 166 63
----------------- -----------------
Total current liabilities 4,261 2,436
----------------- -----------------
Long-term debt, less current maturities:
Bank 11,032 11,406
Other 724 440
Affiliate 1,017 996
----------------- -----------------
Total long-term liabilities 12,773 12,842
----------------- -----------------
Deferred taxes 248 205
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, outstanding 3,922,650 and
3,924,950 shares. 39 39
Treasury stock at cost, 10,300 shares (51) --
Additional paid-in capital 28,847 28,804
Deficit (5,396) (7,999)
----------------- -----------------
Total stockholders' equity 23,439 20,844
----------------- -----------------
Total liabilities and stockholder's equity $ 40,721 $ 36,327
================= =================
</TABLE>
See accompanying notes to condensed consolidated financial statements
2
<PAGE>
FINANCIAL STATEMENTS OF
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands - Except for Shares and Per Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
Twenty-six weeks ended Thirteen weeks ended
-------------------------- --------------------------
Jul. 1, Jul. 3, Jul. 1, Jul. 3,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 28,436 $ 28,159 $ 13,804 $ 14,437
Cost of sales 19,056 19,462 9,256 10,079
----------- ----------- ----------- -----------
Gross profit 9,380 8,697 4,548 4,358
Selling, general and administrative expenses 5,353 5,082 2,743 2,551
----------- ----------- ----------- -----------
Operating income 4,027 3,615 1,805 1,807
Interest, net, including $33, $13, $16 and
$6, from parent 362 410 157 205
Income of affiliates (325) (16) (122) (16)
----------- ----------- ----------- -----------
Income before income tax 3,990 3,221 1,770 1,618
Income tax 1,387 1,207 631 605
----------- ----------- ----------- -----------
Net income $ 2,603 $ 2,014 $ 1,139 $ 1,013
=========== =========== =========== ===========
Net income per common share:
Basic $ 0.66 $ 0.51 $ 0.29 $ 0.26
----------- ----------- ----------- -----------
Diluted $ 0.66 $ 0.51 $ 0.29 $ 0.26
----------- ----------- ----------- -----------
Weighted average number of common shares:
Basic 3,922,799 3,920,318 3,923,759 3,921,686
----------- ----------- ----------- -----------
Diluted 3,922,799 3,927,220 3,923,759 3,934,720
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
FINANCIAL STATEMENTS OF
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Twenty-six weeks ended
------------------
Jul. 1, Jul. 3,
2000 1999
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,603 $ 2,014
Add (deduct) noncash items charged (credited) to income:
Deferred income taxes 393 1,067
Depreciation and amortization 281 240
Equity in income of affiliates (325) (16)
Loss / (gain) on disposal of fixed assets 5 4
Other non-cash items charged to income 43 --
Add (deduct) changes in operating assets and liabilities:
Accounts receivable (1,314) (332)
Inventories (1,961) (1,825)
Prepaid expenses and other assets (129) (245)
Due to (from) affiliates (26) (454)
Accounts payable and accrued expenses 1,855 165
------- -------
Net cash provided by operating activities 1,425 618
------- -------
Cash flows from investing activities:
Investment in affiliate (100) --
Advances to affiliates (2,707) --
Fixed asset purchases (208) (306)
------- -------
Net cash used in investing activities: (3,015) (306)
------- -------
Cash flows from financing activities:
Proceeds from sale of common shares, net -- 21
Purchase of treasury stock (51) --
Repayment of long-term debt - bank -- (780)
Increase in note payable - bank -- 497
Proceeds from equipment financing 950 --
Repayment of long-term debt - other (374) --
Net proceeds from revolving credit facility (563) --
Change in due from parent (276) (65)
------- -------
Net cash used in financing activities (314) (327)
------- -------
Net decrease in cash and cash equivalents (1,904) (15)
Cash and cash equivalents, beginning of period 2,272 29
------- -------
Cash and cash equivalents, end of period $ 368 $ 14
======= =======
Cash paid during the period for:
Interest $ 565 $ 411
======= =======
Income taxes $ 983 $ 141
======= =======
</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
Presentation financial 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 1, 2000 are not
necessarily indicative of the results that may be
expected for the year ending December 30, 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 1, 2000.
2. Inventories Inventories consist of the following: (In Thousands)
<TABLE>
<CAPTION>
January 1, 2000 July 1, 2000
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished Goods $ 6,738 $ 6,985
Raw materials, purchased parts and work-
in-process 12,128 13,872
----------------------------------------------------------------------------------------------------------
$ 18,896 $ 20,857
----------------------------------------------------------------------------------------------------------
</TABLE>
3. Earnings Basic earnings per share includes no dilution and is
per Share computed by dividing net income by the weighted average
number of common shares outstanding for the period.
Diluted earnings per share reflect, in periods in which
they have a dilutive effect, the dilution which would
occur upon the exercise of stock options. A
reconciliation of the shares used in calculating basic
and diluted earnings per share follows:
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------------------------
July 3, 1999 July 1, 2000
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Diluted earnings per share computation:
Basic weighted average common shares
outstanding 3,920,318 3,922,799
Incremental shares from assumed exercise
of dilutive options 6,902 0
----------------------------------------------------------------------------------------------------------
3,927,220 3,922,799
----------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------
July 3, 1999 July 1, 2000
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Diluted earnings per share computation:
Basic weighted average common shares
outstanding 3,921,686 3,923,759
Incremental shares from assumed exercise
of dilutive options 13,034 0
----------------------------------------------------------------------------------------------------------
3,934,720 3,923,759
----------------------------------------------------------------------------------------------------------
</TABLE>
For both the six months and the quarters ended July 3,
1999 and July 1, 2000, 145,000 and 342,800 options and
warrants outstanding, respectively, were anti-dilutive.
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 1, 2000. 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 1, 2000. The Company evaluates
segment performance based on operating income.
The following table presents information about the
Company's business segments.
6
<PAGE>
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
<TABLE>
<CAPTION>
Year to Date July 1, 2000
OEM DISTRIBUTOR OTHER TOTAL
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales from External Customers $21,545 $6,891 $ -- $28,436
Gross Profit 5,595 3,785 -- 9,380
Operating Income 2,780 1,247 -- 4,027
Depreciation / Amortization 230 51 -- 281
Capital Expenditures 163 0 45 208
Total Assets 24,384 6,097 10,240 40,721
<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
<CAPTION>
Quarter Ended July 1, 2000
OEM DISTRIBUTOR OTHER TOTAL
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales from External Customers $10,546 $3,258 $ -- $13,804
Gross Profit 2,715 1,833 -- 4,548
Operating Income 1,236 569 -- 1,805
Depreciation / Amortization 122 25 -- 147
Capital Expenditures 112 0 35 147
Total Assets 24,384 6,097 10,240 40,721
<CAPTION>
Quarter Ended July 3, 1999
OEM DISTRIBUTOR OTHER TOTAL
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
Depreciation expense was allocated based on material, labor, and overhead.
7
<PAGE>
GENERAL BEARING CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Subsequent In July 2000, the Company acquired 100% of World
Events Machinery Company, which, prior to the acquisition,
owned 74.8% of the outstanding common stock of General
Bearing. World Machinery was principally owned by
members of General Bearing's Board of Directors and
senior management. This transaction will be accounted
for in a manner similar to a pooling of interest.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Sales. Sales of $13,804,000 for the second fiscal quarter of 2000 were
$633,000 or 4% lower than the same period in 1999. Sales in the OEM Division
decreased 3% from 1999 to $10,546,000 primarily due to a large order for
railroad bearings shipped during the second fiscal quarter of 1999. Partially
offsetting this were increases in sales to the Company's other market segments.
The largest contributor was a net increase in sales of ball bearings and drive
line components to the automotive industry. There were also increased sales of
industrial ball bearings for various applications and tapered roller bearings to
the heavy duty truck trailer market. Distribution Division sales decreased 9%
from the second fiscal quarter of 1999 to $3,258,000. Increased sales at the
Company's largest distributors were offset by decreases at some of the smaller
distributors. On a year-to-date basis, Company sales of $28,436,000 were
$277,000 or 1% higher than the same period in 1999. Sales in the OEM Division
increased 3% over 1999 to $21,545,000 due to increased sales of tapered roller
bearings, industrial ball bearings and automotive products, partially offset by
lower sales of railroad bearings. Distribution Division sales of $6,891,000 were
4% lower than 1999 due primarily to a decrease in orders for railroad bearings.
Gross Profit. Gross profit for the quarter of $4,548,000 represents a 4%
increase over the second fiscal quarter of 1999. As a percentage of sales, gross
profit (GP%) was 33.0% compared to 30.2% in the second fiscal quarter of 1999.
The Company has lowered its cost of goods sold by increasing plant efficiency as
a result of last year's capital expenditures and also by reducing its material
cost. GP% for the OEM Division was 25.7% in the second fiscal quarter of 2000
compared to 21.9% in 1999 primarily as a result of material cost reductions,
increased plant efficiency and product mix. GP% for the Distribution Division
was 56.3% in the second quarter of 2000 compared to 55.5% in 1999 due mainly to
product mix. On a year-to-date basis, gross profit was $9,380,000, or 33.0% of
sales, in 2000 compared to $8,697,000, or 30.9% of sales in 1999. GP% for the
OEM Division was 26.0% in 2000 compared to 23.0% for the 1999 year-to-date
period. Distribution Division GP% increased to 54.9% from 53.8%. The increases
for both divisions are due to the same factors that affected the quarterly
results.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (S,G&A) as a percentage of sales were 19.9% for the
second fiscal quarter of 2000 compared to 17.7% in the second fiscal quarter of
1999. S,G&A increased by $192,000. Year-to-date, S,G&A as a percentage of sales
was 18.8% compared to 18.0% in 1999. This represents an increase of $271,000 due
primarily to increases in salaries ($140,000), professional fees ($80,000),
sales rebates ($45,000), amortization ($34,000) and use tax ($30,000), offset by
decreases in commissions ($142,000), travel and entertainment ($57,000) and bank
charges ($51,000).
Operating Income. Operating income was $1,805,000 for the second fiscal
quarter of 2000 compared to $1,807,000 for the same period in 1999. OEM Division
increased 21% over 1999 to $1,236,000 due primarily to the gross profit
increases partially offset by increased S,G&A as detailed above. Operating
income in the Distribution Division decreased 28% compared to 1999 to $569,000
due mainly to the lower sales volume and higher S,G&A. On a year-to-date basis,
operating income of $4,027,000 in 2000 represents an 11% increase compared to
1999. The OEM Division year-to-date increase of 30% over 1999 to $2,780,000 is
mainly due to higher sales volume, lower material cost and increased plant
efficiency, partially offset by higher S,G&A. The Distribution Division's
operating income in 2000 of $1,247,000 is 16% lower than in 1999 primarily due
to lower sales and higher S,G&A.
9
<PAGE>
Interest Expense, Net. Net interest expense was $157,000 for the second
fiscal quarter of 2000 compared to $205,000 during the same period in 1999
mainly due to higher interest income resulting from loans to an affiliate
partially offset by higher average debt. On a year-to-date basis, net interest
expense was $362,000 in 2000 compared to $410,000 in 1999 as lower interest
rates and higher interest income were partially offset by higher average debt.
The interest rate reduction resulted from a new credit facility that became
effective during the fourth quarter of 1999.
Income of Affiliate. Affiliate income of $122,000 in the second fiscal
quarter of 2000 includes the Company's share of earnings in Jiangsu General Ball
and Roller Co., Ltd. ("JGBR") which began operations during the first quarter of
2000. Year-to date affiliate income of $325,000 includes $287,000 from JGBR.
Income Tax. The Company's effective income tax rate was 35.6% in the
second fiscal quarter of 2000 compared to 37.4% for the same period in 1999. On
a year-to-date basis, the Company's effective tax rate was 34.8% compared to
37.5% in 1999. Both amounts reflect a normal rate of taxation.
Net Income. As a result of the factors discussed above, net income for the
second fiscal quarter of 2000 increased 12% to $1,139,000 or $.29 per basic and
diluted share from $1,013,000 or $.26 per basic and diluted share for the same
period in 1999. On a year-to-date basis, net income increased 29% to $2,603,000,
or $.66 per basic and diluted share from $2,014,000 or $.51 per basic and
diluted share in 1999.
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 1, 2000 and July 1, 2000, the Company had working
capital of $27,988,000 and $28,077,000, respectively.
Cash provided by operating activities during the first six months of 2000
was $1,425,000. Cash provided from net income and increased accounts payable and
accrued expenses was partially offset by increased accounts receivable and
inventory. The accounts receivable increase is directly related to higher
periodic sales volume as days sales outstanding are comparable with historic
results. The primary reasons for the inventory increase are to support current
and future demand for tapered roller bearings and automotive components. Also,
due to a change in certain terms, in-transit inventory and accounts payable have
increased.
Cash used in investing activities during the first six months of 2000 was
$3,015,000. Included in this amount is $2,080,000 for the Company's 50% interest
in a new joint venture, NN General, LLC ("NNG"), which purchased 60% of JGBR.
This was structured as a $100,000 investment and loans of $1,980,000. Cash used
in investing activities also includes a $727,000 advance to an affiliate against
future purchases and $208,000 for capital expenditures.
Cash used in financing activities during the first six months of 2000 was
$314,000. The Company refinanced certain of its previously purchased machinery
and equipment in the amount of $950,000 under
10
<PAGE>
a lease finance facility. Part of these proceeds was used to repay its existing
$504,000 capital lease. At January 1, 2000, the Company had cash collateralized
$1,818,000 in letters of credit outstanding with its former lender. At July 1,
2000, all such cash has either been used to fund inventory purchases or been
returned to the Company. During the first six months of 2000, the Company repaid
$374,000 of debt under its Revolving Credit Facility and $59,000 under its new
capital lease.
At July 1, 2000, the Company had outstanding debt of $11,032,000 under its
Revolving Credit Facility and had further availability of approximately $5.5
million.
In July 2000, the Company acquired 100% of World Machinery Company in
exchange for common shares. The Company believes that this acquisition will have
no material effect on its liquidity.
The Company believes that funds generated from continuing operations,
capital lease financing and borrowing under the revolving credit facility will
be sufficient to finance the Company's stock buyback program, its commitment to
provide up to $420,000 of additional funding to NNG, if necessary, as well as
its anticipated working capital and capital expenditure requirements for at
least the next 24 months.
Year 2000 Compliance
There have been no material year 2000 developments beyond those set forth
in the Company's 10K dated March 31, 2000. The Company has experienced no year
2000 problems and, to the Company's knowledge, none of its significant vendors
or customers have suffered material problems related to year 2000 compliance.
However, there can be no assurances that the Company will not experience any
negative effects or disruptions of business in the future as a result of year
2000 issues.
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.
11
<PAGE>
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.
12
<PAGE>
PART II
Item 1. Legal Proceedings
There have been no material developments in any legal proceedings
subsequent to the events reported in the Company's 10-K filed March 31, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27. Financial Data Schedule
(b) The Registrant has not filed a report on Form 8-K during the quarter
just ended.
13
<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 15, 2000.
GENERAL BEARING CORPORATION
---------------------------
(Registrant)
/s/ David L. Gussack
-----------------------------------------------------
David L. Gussack
President
/s/ Barry A. Morris
-----------------------------------------------------
Barry A. Morris
Chief Financial Officer
-14-
