UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549
                               FORM 10-K
 (Mark One)
         [ X ]   Annual Report Pursuant to Section 13 or 15(d) of the 
                      Securities Exchange Act of 1934  

For the fiscal year ended December 28, 1996

                                                                        
                                                 OR
 [  ]  Transition Report Pursuant to Section 13 or 15(d) of the         
                                   
                   Securities Exchange Act of 1934   
For the transition period from  .................. to..................

                    Commission file Number 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.
[ ] Yes   [  ] No

 Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not 
contained herein, and will not be contained, to the best of registrant's 
knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                           [ X]

 At March 24, 1997 the aggregate market value of the Registrant's
outstanding common stock, $.01 par value per share, held by non-
affiliates, was $5,775,250, based on the closing sale price as reported
March 24, 1997 on The NASDAQ Small Cap Market.

At  March 24, 1997, the Registrant had issued and outstanding 3,900,000
shares of common stock, $.01 par value per share.

                  DOCUMENTS INCORPORATED BY REFERENCE

     None of the documents indicated on Form 10-K have been
incorporated herein by reference.

<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 Annual Report such statements may relate 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

                      ANNUAL REPORT ON FORM 10-K
              FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996


                           TABLE OF CONTENTS

                                                                        
                                                               Page No.
                                                               --------
PART I
   Item 1.   Business. . . . . . . . . . . . . . . . . . . . . .   1
   Item 2.   Properties. . . . . . . . . . . . . . . . . . . . .   9
   Item 3.   Legal Proceedings . . . . . . . . . . . . . . . . .  10
   Item 4.   Submission of Matters to a Vote of Security Holders  11

PART II
   Item 5.   Market for Registrant's Common Equity and Related
                Stockholder Matters . . . . . . . . . . . . . .   12
   Item 6.   Selected Financial Data . . . . . . . . . . . . . .  12
   Item 7.   Management's Discussion and Analysis of Financial 
                Condition and Result of Operations . . . . . . .  13
   Item 8.   Financial Statements and Supplementary Data . . . .  17
   Item 9.   Change in and Disagreements with Accountants on 
                Accounting and Financial Disclosure. . . . . . .  43

PART III
   Item 10.  Directors and Executive Officers of the Registrant.  44
   Item 11.  Executive Compensation. . . . . . . . . . . . . . .  46
   Item 12.  Security Ownership of Certain Beneficial Owners and
                Management . . . . . . . . . . . . . . . . . . .  47 
   Item 13.  Certain Relationships and Related Transactions. . .  48

PART IV
   Item 14.  Exhibits, Financial Statement Schedules, and 
                Reports on Form 8-K  . . . . . . . . . . . . . .  52

<PAGE>
                                PART I

Item 1. Business.

  General Bearing Corporation ("Company") manufactures, sources,
assembles and distributes a variety of bearing components and bearing
products, including ball bearings, tapered roller bearings, spherical
roller bearings and cylindrical roller bearings under the Hyatt(R) and
The General(R) trademarks. The Company supplies  original  equipment 
manufacturers  ("OEMs") and the industrial aftermarket principally in
the United States ("U.S.") and Canada. The Company's products are used
in a broad range of applications, including automobiles, railroad cars,
locomotives, trucks, office equipment, machinery and appliances. 

  The Company operates in two divisions: the OEM Division, which
supplies OEMs, and the Distribution Division, which serves distributors
that supply the repair and maintenance aftermarket and small OEMs.
Current OEM Division customers include automotive and locomotive 
divisions of General Motors Corporation  ("GM"),  Gunite  Corporation 
("Gunite"),  Strick Corporation ("Strick"), Trinity Industries, Inc.
("Trinity"), Burlington Northern Railroad Co. ("Burlington Northern")
and Xerox Corporation ("Xerox"). The Distribution Division has
customers ranging in size from Motion Industries Inc. ("Motion
Industries") and Applied Industrial Technology, each of which has more
than 400 outlets, to independent single outlet operations. The
Distribution Division's individual shipments are typically smaller in
volume but have higher gross margins. 

  Through flexibility in manufacturing and sourcing, as well as
attentive customer service, the Company strives to be a reliable,
innovative and cost effective provider of bearing components and
products to the approximately $5 billion per year U.S. bearing market.
The Company's strategy to accomplish this objective includes the
following: 

   * PROVIDE HIGH QUALITY PRODUCTS AND SUPERIOR CUSTOMER SERVICE.  The
   Company maintains a detailed and extensive Quality Assurance Program
   and  has been certified to the M 1003 standard by the Association of
   American Railroads ("AAR") and the MIL-I-45208 standard by General
   Dynamics, a military contractor. The Company currently is taking
   steps to obtain ISO 9001 and QS 9000 registrations from the
   International Standards Organization ("ISO").  The Company also
   requires that both its  affiliated and unaffiliated suppliers
   conform to Company and customer quality and engineering standards.
   Certain of the Company's products also have been  specifically
   certified by the AAR for use in and railroad cars. In addition, the
   Company has been qualified as an authorized supplier by leading
   automobile and truck trailer manufacturers (including GM, Fruehauf,
   Gunite, Stoughton Trailers, Inc. ("Stoughton"), and Strick),
   railroads (including Burlington Northern, the Atchison, Topeka and
   Santa Fe Railway ("Santa Fe"), Missouri Pacific Railroad Company
   ("Missouri Pacific"), Southern Pacific Rail Corporation ("Southern
   Pacific") and Norfolk Southern Corp. ("Norfolk Southern")) and
   national distributors of bearings,  including  Motion  Industries 
   and Bearings,  Inc. These certifications and qualifications, which
   often take significant time to obtain because of testing and other
   requirements, enable the Company to supply large markets currently
   served by a limited number of competitors and to which the Company's
   access had been limited previously.

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<PAGE>

   * PRESENCE IN CHINA. In 1987, the Company formed a joint venture,
   Shanghai General Bearing Co. Ltd. ("SGBC"), in the People's Republic
   of China ("PRC") to establish a low cost, quality controlled source
   for bearings and bearing components. The Company has formed other
   joint ventures in the PRC, and it continues to investigate joint
   venture opportunities. The Company  believes that potential 
   customers in the U.S. intending to establish or expand manufacturing
   and other facilities in the PRC have, and will continue to have, an
   incentive to purchase bearings from the Company in order to satisfy
   Chinese counterpurchasing and local content requirements. In
   addition, on February 3, 1997, the U.S. Department of Commerce
   ("Commerce") granted the Company's joint venture, SGBC, partial
   revocation of the antidumping order affecting tapered roller
   bearings from the PRC.  As a result of SGBC receiving zero or de
   minimis antidumping margins for the periods from 1990 to 1993,
   ("4th, 5th and 6th Reviews" ), Commerce revoked the antidumping
   order as to SGBC in the 1993-1994 period ("7th Review"). As a result
   of the revocation, SGBC  and the Company will no longer be required
   to participate in the annual reviews of the antidumping order
   conducted by Commerce.  Timken has filed actions against the United
   States in the Court of International Trade challenging Commerce's
   final antidumping determinations of the 4th, 5th, 6th and 7th
   reviews.  The Company knows of no such revocations pending for other
   companies and believes its own revocation provides it with a
   competitive advantage.

   * MANUFACTURING AND SOURCING FLEXIBILITY. The Company operates  on
   the principle that a flexible method of combining product and
   component purchasing with its own manufacturing and assembly
   capabilities can provide customers with high quality products and
   cost advantages. The Company uses its manufacturing, engineering and
   purchasing expertise to determine the highest quality and most cost
   effective  methods of production. The Company currently sources
   bearing components and products from over 20 factories outside the
   U.S. In order to maintain the Company's flexibility to change with
   the market, the Company typically limits the term of its supply
   contracts to one year.

   * NICHE MARKET PRODUCTS. Since 1992, the Company increasingly has
   emphasized the sale of special and niche market bearings. Special
   bearings are manufactured according to the design specifications of
   a particular customer, often in cooperation with the Company's
   engineering staff. Niche market bearings are used in specific
   industries served by a limited number of manufacturers and are often
   sold at higher profit margins than standard bearings. Sales of
   special and niche market bearings by the Company have increased by
   approximately 40% from fiscal 1993 to fiscal 1996. 

   * IMPROVED FINANCIAL POSITION AND CUSTOMER CONFIDENCE. In September
   1991, the Company filed for bankruptcy protection as a result of its
   inability to meet its obligations under a loan it incurred to
   acquire the assets of Hyatt Clark Industries ("Hyatt"), formerly a
   division of GM. In connection with the Company's reorganization, the
   Company took significant steps to improve its operations and
   financial  position and reestablish the well-known Hyatt(R) brand.
   As a result of these efforts, the Company increased its sales from
   approximately $27.3 million in fiscal 1993, the last year in which
   the Company operated in bankruptcy, to approximately $38.3 million
   in fiscal 1996, and reported operating income of $3,201,000 for

                                  2
<PAGE>

   fiscal 1996 compared to an operating loss of $387,000 for fiscal
   1993.  Although there cannot be any assurance that it will be the
   case, and while the Company has no formal basis for determining the
   effect of the product recall on customer confidence, the Company
   believes that as a result of its recent initial public offering
   ("Offering") it may be redesignated as an approved vendor by certain
   of such distributors, enabling the Company to increase its
   distribution sales, and the Offering may enhance customer confidence
   in the Company's ability to undertake projects requiring greater
   capital commitments by the Company.

     As a result of the Company's improved financial condition,
   certifications and qualifications, a favorable operating environment
   for its Chinese joint ventures, its manufacturing and sourcing
   expertise and focus on niche markets, the Company believes it is
   well positioned to increase sales and profitability.

INDUSTRY OVERVIEW

  Based upon statistics published by Commerce, shipments of
antifriction bearings and components in the U.S. exceeded $5.2 billion
for 1995, an increase of 11% over 1994. There has been an approximately
5% annual rate of growth for antifriction bearings and components in
the U.S. for the past 10 years. The industry's 1995 shipments included
approximately $1.9 billion of ball bearings, $1.3 billion of tapered
roller bearings, $900 million of other types of roller bearings, $450
million of mounted units and $589 million of bearing components. Timken
dominates the tapered roller bearing market with estimated sales in
excess of $1 billion. The Company competes in segments of each of these
bearing classifications. The antifriction bearing industry historically
has been cyclical in nature.  However, long-term growth prospects are
expected to continue as the demand for application products requiring
antifriction bearings increases. Antifriction bearings are used in
practically every industrial and consumer product requiring reliable,
continuous circular motion.

PRODUCTS

  The Company and its joint ventures manufacture and market high
quality, precision ball and roller bearings used in a broad range of
applications including automotive and trucking (e.g., steering columns,
wheels and axles), railcar and locomotive (e.g., wheel and axle
assemblies), appliances (e.g., washing machines, fans and vacuum
cleaners), lawn and garden implements (e.g., lawn mowers), office
equipment (e.g., copiers), consumer products (e.g., bicycles), medical
equipment (e.g., wheelchairs), material handling (e.g., conveyor
assemblies and hand trucks), power tools (e.g., drills and lathes),
chemical processing and the oil industry (e.g., drilling rigs).

  The Company sells approximately 2,000 products. The Company's product
line includes standard and metric precision ball bearings, double row
ball bearings, unground bearings, and special ball bearings. The
Company offers its products in standard, modified, and custom designs
where appropriate. The Company produces both special and niche market
bearings. Special bearings are specifically manufactured to the
requirements of a customer, as determined in cooperation with the

                                  3
<PAGE>

Company's engineering staff. Examples of these products include
bearings for copier machines, automotive steering columns, postal
equipment and wheelchairs. Niche bearings are bearings used in specific
industries, and are produced by a limited number of manufacturers. The
Company produces, under the Hyatt(R) brand, selected tapered roller
bearings, spherical roller bearings and cylindrical roller bearings
which are used in railroad, truck trailer, automotive and other
industrial applications.

MANUFACTURING AND SOURCING

  The Company primarily manufactures and assembles bearings at its
facilities in New York and New Jersey, and, since 1987, at the
Company's joint venture facility, SGBC, in Shanghai, PRC. Although
certain imports from various locations have been subject to antidumping
duties since 1987, requiring importing companies to post cash deposits,
SGBC, the Company's Chinese joint venture and principal source of
imported product, has not been required to pay cash deposits for
antidumping duties on tapered roller bearings imported from the PRC
since 1991, based upon Commerce's final determination as to the
fairness of SGBC's pricing that year.  On February 3, 1997, Commerce
granted the Company's joint venture, SGBC, partial revocation of the
antidumping order affecting tapered roller bearings from the PRC.  As a
result of SGBC receiving zero or de minimis antidumping margins for the
4th, 5th and 6th Reviews, Commerce revoked the antidumping order as to
SGBC in the 7th Review. As a result of the revocation, SGBC  and the
Company will no longer be required to participate in the annual reviews
of the antidumping order conducted by Commerce.  Timken has filed
actions against the United States in the Court of International Trade
challenging Commerce's final antidumping determinations of the 4th,
5th, 6th and 7th reviews.

  The Company produces approximately 37% of the bearings that it sells
and obtains an additional 24% from joint ventures in which it
participates. The Company currently relies on approximately 82
unaffiliated manufacturers to produce the remaining 39% of the bearings
and components that it distributes. The Company has no long-term
contracts with its unaffiliated manufacturing sources. The Company
attempts to maintain sourcing flexibility by not engaging in any
purchasing contracts that exceed one year. 

CHINESE JOINT VENTURES

  The Company has entered into joint ventures with factories in the PRC
to enable it to secure a reliable source of high quality low cost
bearings and bearing components. By entering into joint ventures,
rather than long term manufacturing contracts, the Company is better
able to monitor and control production and quality assurance by having
access to the factories at both management and production levels.
Furthermore, by sourcing from joint ventures, the Company is not
required to incur inventory carrying costs, since the joint ventures
typically hold all inventory until needed by the Company. The joint
ventures also provide a far less capital intensive alternative to
building Company-owned facilities.

  SGBC was established by the Company and Shanghai Roller Bearing
Factory ("SRBF") in June 1987 as a joint venture limited liability
company in accordance with PRC law for an initial term of ten years,
which was recently extended to June 2008. SGBC produces tapered roller

                                  4
<PAGE>

and ball bearings, which the Company imports into the U.S. for further
assembly, inspection, testing and distribution. The Company contributed
25% of the initial capital of SGBC in the form of capital equipment
valued by the parties at $750,000 and the Company's joint venture
partner, SRBF, contributed 75% of the initial capital of SGBC in the
form of facilities and equipment, valued by the parties at $1,500,000
and $750,000, respectively. Subsequently, SGBC's capital was increased
by $2,500,000, with the Company contributing 25% of such amount in the
form of capital equipment and SRBF contributing 75% of such amount in
the form of additional facilities, equipment and cash. The Company is
not required, however, to contribute additional capital.

  The Company has the exclusive right to sell the products of SGBC in
the U.S. In 1994, 1995 and 1996, the Company imported $4,900,000,
$5,500,000 and $5,800,000, respectively, in bearings from SGBC.
Purchases are made upon terms and conditions established periodically
by negotiation between the Company and SGBC and are subject to
adjustment based upon certain events, including increases in the prices
of raw materials. The Company is responsible for selecting and
purchasing equipment and materials outside of the PRC. Governance,
operations, distributions and the dissolution of SGBC are governed by
PRC law and by SGBC's joint venture contract and articles of
association. SGBC's eight-member Board of Directors, which consists of
five directors chosen by SRBF and three directors chosen by the
Company, exercises authority over the joint venture by majority vote.
Certain decisions involving annual strategy, budgeting and production
plans require the vote of at least one Director chosen by the Company.
Unanimous consent of the Board of Directors is required for all
fundamental corporate changes.

  Subject to PRC law and regulations providing for the payment of
taxes, allocations to cover losses of prior years, and contributions to
special funds for enterprise expansion, employee welfare and bonuses
and general reserves, the profits of SGBC may be distributed, at the
discretion of its Board of Directors, to the Company and SRBF in
proportion to their registered capital contributions.  A distribution
of 450,000 Renminbi (the legal currency of the PRC)
("RMB")(approximately $51,967 at then current exchange rates) from 1993
operating profits was made by SGBC to the Company in February 1994. A
distribution of another 740,000 RMB (approximately $89,156 at then
current exchange rates) from 1994 operating profits, was declared in
December 1995. The Company has agreed that this distribution will be
invested in the Kong Qiao General Bearing Company ("SKGBC"), a proposed
new joint venture between the Company and Shanghai Xinhua Industrial
Corp.  A distribution of 650,000 RMB ($78,313 at current exchange
rates) from 1995 operating profits has been proposed by SGBC management
and approved by the Board of Directors of SGBC.  The joint venture
contract and articles of association of SGBC provide that after the
Company receives $1,375,000 in profits, its right to receive any
additional dividends will terminate and all profits after that time
will be distributed exclusively to SRBF. Furthermore, after termination
of the joint venture, all equipment and machinery contributed by the
Company will be turned over to SRBF without compensation to the
Company.

  Wafangdian-Hyatt Bearing Manufacturing Co. Ltd. and Hyatt-ZWZ Bearing
Corporation ("Wafangdian-Hyatt" and "Hyatt-ZWZ," respectively) were
established pursuant to a Joint Venture Contract dated as of October 9,
1990, by and between the Company and Wafangdian Bearing Factory
("WBF"), a corporation organized under the laws of the PRC. 

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<PAGE>

Wafangdian-Hyatt is a joint venture limited liability company formed in
accordance with PRC law by the Company and WBF for an initial term of
ten years. Wafangdian-Hyatt is situated in Wafangdian, PRC and
manufacturers journal boxes, traction motor bearings and components for
exclusive shipment to Hyatt- ZWZ, which prepares them for distribution
by the Company. The Company contributed 25% of the initial registered
capital of Wafangdian-Hyatt in the form of capital equipment valued by
the parties at $250,000 and WBF contributed 75% of the initial
registered capital of Wafangdian-Hyatt in the form of facilities and
capital equipment valued by the parties at $750,000. Provisions with
respect to pricing, governance, administration and distributions are
substantially similar in all material aspects to those of SGBC.

  Wafangdian-Hyatt was terminated by the end of 1996 and all of its
operations were assumed by Wafangdian General Bearing Co., Ltd.
("WGBC"), a new joint venture between World and Wafangdian Bearing
Company. In its initial stage, it is proposed that WGBC will produce
rear wheel automotive bearings in the PRC with machinery purchased from
GM's Delphi plant in Bristol, Connecticut. The Company will sell the
WGBC bearings in the U.S. In its second stage, it is proposed that WGBC
will produce railroad bearings for sale in the U.S. 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 Manufacturing Company ("Rockland") and WGBC, for
$400,000 and $912,896 (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; provided,
however, that if any such option is exercised after December 31, 1997,
the applicable purchase price will be adjusted,  to include any
additional capital  contributions made and administrative expenses
incurred on behalf of the joint venture by World after such date. 

QUALITY AND CUSTOMER SERVICE PROGRAMS

  In order to meet the need for quality products, the Company has
focused on the development and implementation of appropriate systems
and controls to ensure that proper levels of quality are established
and consistently maintained. These systems are documented in the
Company's Quality Assurance Manual, which is also used as part of the
operating standard of the Company's joint ventures and certain other
suppliers. The systems were designed with special requirements to meet
customers' specifications. Over the years, the Quality Assurance Manual
has been revised to keep abreast with new and revised customer and
industry requirements. The systems control not only the activities of
the Quality Assurance Department, but also receiving inspection,
in-process inspection, final audit procedures, and certain activities
of other departments of the Company.  These include procedures for
design  engineering,  procurement, manufacturing, assembly and
distribution. The system has been audited by certain of the Company's
customers and the Company has been certified to the M1003 standard by
the AAR and the MIL-I-45208-A standard by General Dynamics, a military
contractor.

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<PAGE>

  The Company is seeking to obtain ISO 9001 and QS 9000 registrations
by December 1997. Both of these are comprehensive industry-wide quality
control systems. ISO 9001 is similar to ISO 9002, a quality standard
applicable to manufacturing companies promulgated by the ISO, but
contains specifications regarding engineering and design as well as
manufacturing. QS 9000, a standard jointly developed by GM, Ford and
Chrysler, has all the basic systems of ISO 9001 with certain additional
requirements specific to the automotive industry.  GM has requested
that the Company meet the QS 9000 certification by December 1997. The
Company believes that it will meet such registrations by such date and
that, if it cannot, GM will extend the date for obtaining
registrations, although there can be no assurances that the Company's
expectations will be satisfied.

  In order to obtain QS 9000 registration (which includes the
requirements for ISO 9001) the Company has retained a full time
consultant who has developed a 28 step program, which the Company
believes should result in registration by November 1997, although there
can be no assurances that the Company's expectations will be satisfied.
The benchmarking of the Company's current Quality Assurance system
disclosed the need for re-writing of certain procedures, including the
Management Responsibility section which has already been completed. In
addition, the benchmarking revealed the need to supplement the Quality
Assurance and Design Control documentation and this has also been
instituted. The next step in the registration process is the
implementation of systems which will be accomplished when and as each
respective system is developed, although delays in implementing the
program could have an adverse impact on the registration process.

SALES, MARKETING AND CUSTOMERS

  The Company markets its products in the U.S. and abroad through ten
salaried sales employees as well as 28 commissioned  independent  sales
representative organizations, aggregating 95 sales persons. In
addition, the Company has seven customer service representatives
responsible for handling orders and providing sales support. Products
sold through the OEM Division bear The General(R) label for ball
bearings and the Hyatt(R) brand for all types of roller bearings.

  The Company participates in trade shows sponsored by the Truck
Maintenance Council, Society of Automotive Engineers and the Railway
Supply Association. The Company spent $105,000 on advertising for
fiscal 1996 and it anticipates that its advertising budget for fiscal
1997 will be between $100,000 and $150,000. 

  Current OEM customers include automotive and locomotive divisions of
GM, Gunite (manufacturer of wheels and hubs for trucks and trailers),
Strick (truck trailer manufacturer), Trinity (freight car
manufacturer), Burlington Northern (railroad) and Xerox (office
equipment manufacturer). The OEM Division has over 150 customers. The
Distribution Division markets the same broad line of bearing products
as the OEM division. The Distribution Division has over 1,200
customers, ranging in size from Motion Industries and Applied
Industrial Technology, each of which has approximately 400 stores in
the U.S., to independent single outlet operations. Since 1992, the
Company increasingly has emphasized the sale of special and niche
market bearings including certain tapered roller bearings. The OEM
Division focuses on the transportation industry, specialty truck

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<PAGE>
  
trailer manufacturers (to which the Company was the leading supplier in
1995), railroad locomotive and freight car manufacturers and automotive
manufacturers. No customer accounted for more than 10% of the Company's
consolidated revenues for fiscal 1996.

  The Distribution Division generally ships product within 24 hours of
the time an order is placed. The OEM Division ships products within one
to 365 days from the date an order is placed. Actual shipments are
dependent upon production schedules of the Company's customers. The
Company's arrangements with its North American customers typically
provide that payments are due within 30 days following the date of
shipment of goods. Foreign customers are generally required to pay by
letter of credit. At December 28, 1996, in excess of 90% of  accounts
receivable were current or less than 30 days past due. Approximately    
2.8% of accounts receivable were over 90 days old as of December 28,
1996.  

EMPLOYEES

  As of December 31, 1996, the Company had 172 full-time employees, of
whom 122 were engaged in production, shipping and receiving and
maintenance, and 18 of whom were engaged in sales and marketing. 110 of
the Company's employees engaged in production,  shipping and receiving,
and maintenance, are subject to collective  bargaining and are
represented by the United Brotherhood of Carpenters and Joiners of
America, AFL-CIO, Local 3127 ("Union"). The current collective
bargaining agreement with the Union expires on April 30, 1997. The
Company believes that relations with its employees, including those
subject to collective bargaining, are good. The Company has a 20 year
relationship with the Union and has never experienced a Union work
stoppage.

COMPETITION

  The ball and roller bearing industry is highly competitive. The
Company believes that competition within the precision ball and roller
bearing market is based principally on quality, price and the ability
to meet customer delivery requirements. The Company's primary domestic
and foreign competitors are Timken, SKF USA Inc., NSK Corporation, NTN
Bearing Corporation of America, The Torrington Company and FAG Holding 
Corporation.  Many of the Company's competitors have substantially
greater financial resources than the Company. Management believes that
the Company's manufacturing and sourcing capabilities and its
reputation for consistent quality and reliability have positioned the
Company for continued growth in both market share and sales.  

PATENTS, TRADEMARKS AND LICENSES

  Except for The General(R) trademark and the license from GM with
respect to the Hyatt(R) trademark ("Hyatt License"), the Company does
not own any U.S. or foreign patents, trademarks or licenses that are
material to its business. The Company does rely on certain data,
including costing and customer lists, and the success of its business
depends, to some extent, on such information remaining confidential.
Each employee who may have access to confidential information is
subject to a confidentiality agreement. 

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<PAGE>

  Under the Hyatt License, the Company has exclusive use of the terms
"Hyatt," "Hyatt Railway," "Hyatt Railway Products," "Hyatt 
Manufacturing," "Hyatt General" and most derivatives of "Hyatt" in
connection with locomotive journal boxes, traction motor bearings and
component parts thereof, and non-exclusive rights to such trademarks
with respect to other products. The term of the Hyatt License  extends
until January 1, 2000, and may be renewed at the option of the Company
for an additional ten year term. The Company paid GM an initial fee of
$30,000 upon  execution of the Hyatt License and has paid or will pay
an annual licensing fee to GM in an amount increasing from $20,000 in
1990 to $35,000 in 1999. The fee payable by the Company upon the
exercise of its option to renew the Hyatt License is based upon a
benchmark of $27,500 indexed for inflation as of 1999.

ENVIRONMENTAL COMPLIANCE

  The Company's operations and products are subject to extensive
federal, state and local regulatory requirements relating to pollution
control and protection of the environment. Based on information
compiled to date, management believes that the Company's current
operations are in material compliance with applicable environmental
laws and regulations, the violation of which would have a material
adverse effect on the Company. There can be no assurance, however, that
currently unknown matters,  new laws and regulations,  or stricter
interpretations of existing laws and regulations will not materially
affect the Company's business or operations in the future.  In
February, 1997, the Company and Realty preliminarily settled their
previously disclosed action against Xerox on terms which, among other
things, require the defendant to indemnify the Company for any third
party claims resulting from the defendant's conduct in violation of 
applicable environmental regulations.  See "Item 7.  Management's 
Discussion and Analysis of Results of Operations and Financial 
Condition - Recent Developments". 

Item 2.  Properties.

  The Company leases facilities located in Union, New Jersey and West
Nyack, New York, which have approximately 72,000 and 190,000 square
feet of space, respectively. Management believes that the plants are
adequate for the Company's present needs and anticipated expansion. The
West Nyack facility, which is used principally for administrative,
assembly, and distribution purposes, is owned by Realty and from
January 1 to November 1, 1996 the Company held a month-to-month tenancy
for the premises at a monthly rent of $61,885. Effective November 1,
1996, the Company and Realty entered into a lease for the West Nyack
facility ("Lease"), which provides for an initial term expiring on
October 31, 2003, and is renewable at the option of the Company for an
additional six year term. The Company pays rent of $4.81 per square
foot (or $912,840) annually, payable in monthly rent payments of
$76,070. The Lease provides for an increase in the rent every other
year, commencing in 1998, to the greater of (i) 106% of the next
preceding year's rent or (ii) the preceding years rent multiplied by a
fraction the numerator of which is the Consumer Price Index for the
area including Rockland County or, if no such index is published, for
Northern Jersey ("CPI") 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.  Simultaneously, the Company
entered into a sublease with WMW Machinery Co. and World for
approximately 31,000 and 5,500 square feet of the West Nyack facility,
respectively. See "Item 13 - Certain Relationships and Related

                                  9
<PAGE>

Transactions." The lease for the Union facility, which is used
principally for assembly, manufacturing and distribution purposes,
expires on April 1, 1998, renewable at the option of the Company for an
additional five year term. Rent expense for the Union location was
approximately $204,000, $204,000 and $216,000 in 1994, 1995 and 1996,
respectively.  

Item 3.  Legal Proceedings.

  On August 25, 1986, Timken, a U.S. producer of tapered roller
bearings, filed a petition on behalf of the U.S. tapered roller bearing
industry with both the ITC and Commerce seeking the imposition of
antidumping duties on imports of tapered roller bearings from Japan,
Italy, the former Yugoslavia, Romania, Hungary and the PRC. In May
1987, Commerce found that tapered roller bearings from each of the
aforementioned countries were being sold in the U.S. at less than fair
value, as determined by Commerce based upon an estimate of the foreign
market value of tapered roller bearings (i.e. the price at which the
same or similar merchandise is sold or offered for sale in the
principal markets of the home market country).   Commerce subsequently
issued an antidumping order imposing duties on the unfairly traded
tapered roller bearings equal to the percentage difference between the
selling prices in the U.S. and the foreign market value of the imported
tapered roller bearings during specified review periods.   Among
others, the order named SGBC, the Company's joint venture in the PRC.  
Importers subject to the antidumping order are required to post a cash
deposit with the U.S. Customs Service equal to the antidumping margin
percentage multiplied by the export price of any imported product
covered by the dumping petition.  On February 3, 1997, Commerce granted
the Company's joint venture, SGBC, partial revocation of the
antidumping order affecting tapered roller bearings from the PRC.  As a
result of SGBC receiving zero or de minimis antidumping margins for the
4th, 5th and 6th Reviews, Commerce revoked the antidumping order as to
SGBC in the 7th Review. As a result of the revocation, SGBC  and the
Company will no longer be required to participate in the annual reviews
of the antidumping order conducted by Commerce.  Timken has filed
actions against the United States in the Court of International Trade
challenging Commerce's final antidumping determinations of the 4th,
5th, 6th and 7th reviews.  See "Item 7. Managements Discussion and
Analysis of Results of Operations and Financial Conditions - Recent
Developments".

  In 1986 the Company entered into a joint venture with a former East
German trade agency pursuant to which the parties jointly owned,
through a holding company called Alurop, WMW. Pursuant to the joint
venture agreement, WMW was, by separate agency contract, granted the
exclusive right to distribute certain East German machine tools in the
United States. After the reunification of Germany in 1990, the
Company's joint venture partner and its successors, including WEMEX,
breached the joint venture agreement and the exclusive agency contract,
causing damage to WMW by frustrating WMW's ability to sell machine
tools and causing the rapid devaluation of its inventory. WMW could not
ensure its customers that service and parts could be supplied, or that
terms of the warranties could be met, causing its business to decline
dramatically. The Company attempted unsuccessfully for a period of
several years to amicably resolve the WMW dispute.

                                  10
<PAGE>

  In February 1995, however, WMW and the Company commenced an action in
the U.S. District Court for the Southern District of New York against
WEMEX, Werner P. Muender,  Treuhandanstalt  and Bundesanstalt fuer
Vereinigungsbedingte Sonderaufgaben alleging, among other things, that:
(i) WEMEX breached a joint venture agreement with the Company and a
commercial sales agency agreement with WMW and violated its duties to
the Company and WMW arising under such agreements; (ii) the Company
relied to its detriment upon promises made by WEMEX to support WMW's
marketing efforts; and (iii) Werner P. Muender, the liquidator of
WEMEX, wrongfully converted property of WMW to his benefit. WMW also is
seeking a declaratory judgment that any indebtedness it may owe to
WEMEX be extinguished or diminished to the extent of existing value of
machine tools purchased by WMW from or through WEMEX. Defendants
answered the complaint, denying the allegations therein, and WEMEX
asserted counterclaims against: (i) WMW for goods sold and delivered in
the amount of $9,507,337; (ii) Seymour I. Gussack and WMW Machinery Co.
in the amount of $9,507,337, alleging that Seymour I. Gussack
improperly caused the sale of WMW's assets to WMW Machinery Co.; and
(iii) the Company in the amount of $9,507,337, alleging that the
Company breached its fiduciary duty to WEMEX by failing to provide the
working capital requirements of WMW. WMW, the Company, WMW Machinery
Co. and Seymour I. Gussack have denied any liability to WEMEX and
believe its counterclaims to be without merit. However, there can be no
assurance the case will be resolved in a timely manner or settled to
the satisfaction of the Company. Furthermore, the enforcement of an
award favorable to the Company may be subject to further review by
German courts. Defendants have also moved to dismiss the action based
on various grounds including, among others, the Foreign Sovereign
Immunities Act of 1976, the Act of State Doctrine, forum non
conveniens, legal insufficiency of certain claims and improper venue.
WMW, the Company, WMW Machinery Co. and Seymour I. Gussack have opposed
Defendants' motion for dismissal, and argued that, if the Court
dismisses the Company's claims, it should also dismiss the Defendants'
counterclaims. There can be no assurance, however, that if the court
dismisses the action in its entirety, the Defendants will not institute
an action in Germany, which may be a less favorable forum for the
Company. In addition, if the Defendants prevail in their counterclaim
against the Company for the amount claimed and the Company is
unsuccessful in its claims against the Defendants, there would be a
material adverse effect on the Company's financial condition.

Item 4.  Submission of Matters to a Vote of Security Holders.
INAPPLICABLE

                                  11
<PAGE>

                                PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder
Matters.

   The Company's Common Stock has been quoted on the NASDAQ Small Cap
market under the symbol "GNRL" since the Company's initial public
offering effective February 7, 1997.

   The Company has never declared or paid any cash dividends on its
capital stock.  The Company currently intends to retain any earnings
for future growth and, therefore, does not anticipate declaring or
paying any cash dividends in the foreseeable future.

   At March 24, 1997, the Company believes it had in excess of 300
holders of Common Stock.

Item 6.  Selected Financial Data

   The selected financial data set forth below is derived from the
Company's consolidated financial statements and should be read in
conjunction with the consolidated financial statements and related
notes included elsewhere in this Annual report.  See Management
Discussion and Analysis of Financial Condition and Results of
Operations.



General Bearing Corporation
Selected Financial Data

(In Thousands Except for Share and Per Share Data)



                                     Years Ended
--------------------------------------------------------------------------- 
         
                    December   December    December    December    December
                       26,        25,         31,         30,         28,
                      1992       1993        1994        1995        1996

---------------------------------------------------------------------------

STATEMENT OF 
OPERATIONS DATA:

Sales               $27,155    $27,254    $37,032    $42,070    $38,362

Operating
income (loss)         $(345)     $(387)      $874       $354     $3,201

Income (loss)
before
extraordinary 
item and
income tax
(benefit)           $(1,754)     $(365)      $255    $(2,229)    $1,998

Net income
(loss)              $(9,469)    $4,019       $363    $(1,729)    $2,198

Net income
(loss) per
share (before
extraordinary
item)(1)           $  (.39)    $  (.02)    $  .08    $  (.58)    $  .73

Net income
(loss) per
share(1)           $  (.39)    $   .17     $  .12    $  (.58)    $  .73
-----------------------------------------------------------------------



                                     Years Ended
------------------------------------------------------------------------
                    December   December   December   December   December
                       26,        25,        31,        30,        28,
                      1992       1993       1994       1995       1996
------------------------------------------------------------------------  

BALANCE SHEET DATA:

Total Assets        $15,913    $17,618    $24,143    $27,086    $24,399

Long-term
debt (excluding
current portion)    $14,920     $4,512     $5,218     $4,817     $4,493 

[FN]
(1)   Adjusted to reflect the 3,000 for one stock split in October 1996.



Item 7.  Management's Discussion and Analysis of Results of Operations
and Financial Condition

RESULTS OF OPERATIONS

Fiscal 1996 compared to Fiscal 1995

      Sales.    The Company's sales decreased 8.8% from approximately 42.0
million in fiscal 1995 to approximately 38.4 million in fiscal 1996. 
Sales of the OEM Division and the Distribution Division represented 62%
and 38% of total sales in fiscal 1996, respectively, as compared to 66%
and 34% of total sales in fiscal 1995.  The decrease in sales between
the two periods reflected a significant decline in the production of
truck trailers, which resulted in a reduction of truck trailer bearing
sales of approximately $4 million, despite an increase in the Company's
market share for such bearings.  In addition, a $300,000 reduction in
sales of OEM ball bearings for various commodity applications was
attributable to the Company's strategy to de-emphasize sales of certain
low margin commodity bearings.  These decreases in sales were partially
offset by an increase in fiscal 1996 of approximately $1 million in
sales of tapered journal bearings used in railroad freight cars.

      Cost of Sales.    The Company's cost of sales as a percentage of
sales decreased from 76.2% in fiscal 1995 to 72.8% in fiscal 1996. 
The decrease was partially the result of the commencement of a program
to increase efficiency in plant operations.  This program entails the
consolidation of operations between the Company's Union, New Jersey
and West Nyack, New York facilities, which will simplify tooling,
personnel and quality control functions.  The consolidation of
operations began in the first quarter of 1996.  To date, the cost of
consolidation has not been material and has been expensed as a

                                  13
<PAGE>

component of cost of sales as incurred.  The decrease of cost of sales
as a percentage of sales also reflects the Company's strategy to de-
emphasize sales of low margin commodity bearings.  The Company
operates on the principle that a flexible method of combining product
and component purchasing with its own manufacturing and assembly
capabilities can provide high-quality products and cost advantages. 
In the last several years, the Company has increased its sourcing from
joint venture partners and unaffiliated suppliers, and the Company
believes that improvements in cost of sales and gross margins reflect
in part cost savings associated with increased sourcing.  The
improvement in cost of sales as a percentage of sales also reflected
the settlement with one of the Company's suppliers related to the
tapered journal bearings recall which resulted in the cancellation of
a Company payable to such supplier of approximately $220,000.

      Selling, General and Administrative Expenses.   Selling, general
and administrative expenses increased from $7.5 million in fiscal 1995
to $7.6 million in fiscal 1996, and as a percentage of sales, such
expenses increased from 17.8% to 19.9%, respectively, due to a
decrease in sales.

      Provision for Customer Damage Claims.    In April 1995, three
railroads reported to the AAR problems with eight of the Company's
bearings that were attributed to misplaced seals.  The Company agreed
to recall approximately 10,000 tapered journal bearings.  As a result,
the Company recorded a special provision of approximately $2.2 million
during fiscal 1995 representing an estimated liability for rework
costs and customer damage claims.  In comparison, during fiscal 1996,
the Company recorded a credit of approximately $401,000, representing
recovery for customer damage claims.  Since the recall and the
conditional reapproval in September 1995 of the Company's sale of
tapered journal bearings, the Company's sales of the product have not
attained previous levels, however, the recall is not expected to
affect the future operations and financial position of the Company.

      Operating Income.    Operating income increased to approximately
$3.2 million in fiscal 1996 from approximately $354,000 in fiscal
1995.  Operating income for fiscal 1995 reflects a customer damage
claim of approximately $2.2 million recorded in that year.  For fiscal
1996 the Company had recovery of approximately $621,000 relating to
the recall.

      Other Income (Expense).    Other expenses decreased by 53.5% from
approximately $2.6 million in fiscal 1995 to $1.2 million in fiscal
1996.  Fiscal 1995 included write-offs of the balance of the Company's
(i) equity investment in a subsidiary ($960,000) and (ii) goodwill
($93,333) due to uncertainty surrounding the future recovery of cash
flows against these assets.

      Income Tax (Benefit).    For fiscal 1996, the Company accrued an
additional $200,000 benefit as compared to the benefit recorded in
fiscal 1995, of $500,000, relating to the anticipated use of net
operating loss carry-forwards.  As of December 28, 1996, the Company
has a deferred tax asset valuation reserve of $3.3 million which could
be further reduced in the future.

      Net Income (Loss).    As a result of the factors discussed above,
net income increased to $2.2 million in fiscal 1996 from a net loss of
approximately $1.7 million in fiscal 1995.

                                  14
<PAGE>

  FISCAL 1995 COMPARED TO FISCAL 1994

      Sales.    The Company's sales increased 13.6% to approximately
$42.1 million in fiscal 1995 from approximately $37.0 million in
fiscal 1994.  This increase in sales was attributable to increased
penetration into the truck trailer bearing market, as well as the
market for special bearings, locomotive journal boxes and ball
bearings.  Sales of the OEM Division increased 16.5% from
approximately $23.8 million in fiscal 1994 to approximately $27.7
million in fiscal 1995 and represented 66% of total sales in fiscal
1995 as compared to 64% of total sales in fiscal 1994.  Sales of the
Distribution Division increased 8.5% to approximately $14.4 million in
fiscal 1995 from approximately $13.3 million in fiscal 1994 and
represented 34% of sales in fiscal 1995 as compared to 36% of sales in
fiscal 1994.

      Cost of Sales.    Cost of sales increased by 12.6% to approximately
$32.1 million in fiscal 1995 from approximately $28.5 million in
fiscal 1994, reflecting increased sales.  However, cost of sales as a
percentage of net sales declined from 76.9% in fiscal 1994 to 76.2% in
fiscal 1995.

      Selling, General and Administrative Expenses.    Selling, general
and administrative expenses remained stable at approximately $7.5
million in fiscal 1995 compared to approximately $7.7 million in
fiscal 1994.  However, such expenses decreased as a percentage of
sales to 17.8% in fiscal 1995 from 20.7% in fiscal 1994, reflecting
the increase in sales and measures to control selling, general and
administrative expenses.

      Provision for Customer Damage Claims.    In April 1995, three
railroads reported to the AAR problems with eight of the Company's
bearings that were attributed to misplaced seals.  The Company agreed
to recall approximately 10,000 tapered journal bearings.  As a result,
the Company recorded a special provision of approximately $2.2 million
in fiscal 1995 representing estimated liability for rework costs and
customer damage claims.

      Operating Income.    As a result of the factors described above,
operating income decreased 59.5% to approximately $354,000 in fiscal
1995 from approximately $874,000 in fiscal 1994.

      Other Income (Expense).    Other expenses increased 317% to
approximately $2.6 million in fiscal 1995 from approximately $0.6
million in fiscal 1994.  This increase reflected a 44.2% increase in
interest expense to $1.4 million in fiscal 1995 from $1.0 million in
fiscal 1994, primarily as a result of an increase in average
borrowings under the Revolving Credit Facility to fund working capital
requirements related to the increase in sales.  Interest expense
during fiscal 1995 also included $180,000 of interest accrued with
respect to a Secured Note and 6% loans due December 1995 in the
aggregate principal amount of $1,000,000 owed to World.  In fiscal
1995, the Company had equity in income of an affiliate of
approximately $79,000 compared to equity in the income of affiliates
of approximately $403,000 during fiscal 1994.  During fiscal 1995 the
Company had other expenses of approximately $1.2 million compared to
other expenses of approximately $32,000 in fiscal 1994 due to the
write down of an investment in its Alurop subsidiary.

      Income Tax (Benefit).    For fiscal 1995, the Company accrued a
$500,000 benefit for anticipated use of net-operating loss carry-
forwards, compared to no provision for income tax in fiscal 1994.

                                  15
<PAGE>

      Net Income (Loss).    Due to the provision for customer damage
claims and the write down of an investment in a subsidiary, the
Company had a net loss in fiscal 1995 of approximately $1.7 million. 
For fiscal 1994, the Company had net income of $363,237.

  LIQUIDITY AND CAPITAL RESOURCES

      During the three years ended December 28, 1996, the Company's
primary sources of capital have been net cash provided by operating
activities, bank borrowings and financing from affiliates.  Working
capital requirements also have been financed through revolving credit
borrowings.  The primary demands on the Company's capital resources
have been the need to fund inventory and receivables growth created in
normal business expansion.  In 1996 there was an additional
requirement for capital to fund expenses associated with the tapered
journal bearing recall, as well as the absorption of the carrying
costs of the build-up of inventory as the result of temporarily being
prohibited from shipping tapered journal bearings during the recall
until the conditional reapproval by the AAR in September 1995.  These
demands have been met through cash from operations and borrowings
under the Revolving Credit Facility.

      On February 7, 1997, the Company successfully sold 900,000 shares
of common stock to the public at $7 per share.  The Company recognized
net proceeds of approximately $5.1 million after expenses from the
offering.  The Company has used a portion of these proceeds as working
capital and to pay down debts.

      At December 30, 1995, and December 28, 1996, the Company had
working capital of approximately $2.8 million and $ 3.9 million
respectively.  Cash flow from operations for 1996 was $2.9 million  as
compared to $194,000 during 1995.  The improvement in the Company's
cash flow from operations primarily reflects an increase in results of
operations in 1996.

      Historically, the Company has used cash provided by operations to
fund a portion of its operating requirements and capital expenditures. 
The Company also has relied on borrowings under its $15.0 million
Revolving Credit Facility with Bank of New York Commercial Corporation
("BNYCC")to fund operations.  As of March 26, 1997, $2.5 million  was
available under the Revolving Credit Facility, which sums are secured
by the Company's accounts receivable, inventory and various other
assets.  Upon receipt of the proceeds of the Company's recent initial
public offering, the Company paid down $5.1 million of the Revolving
Credit Facility.  The Revolving Credit Facility currently terminates
in June 1998 and will remain available through that date.  The
Revolving Credit Facility allows for borrowings, from time to time,
not to exceed the lesser of $15.0 million or an amount equal to the
sum of (i) 85% of eligible receivables, as defined, (ii) 50% of
eligible inventory, as defined, consisting of raw materials, (iii) 50%
of eligible inventory, as defined, consisting of finished goods, and
(iv) 50% of eligible inventory, as defined, in transit under letters
of credit less the sum of the (x) the aggregate amount of outstanding
letters of credit and (y) such reserves as the lender may reasonably
deem proper and necessary from time to time.  Based upon the Company's
performance and 20 year relationship with BNYCC, the Company has
requested and believes it may be able to obtain more favorable terms
on the Revolving Credit Facility, although there can be no assurances
it will be able to do so.  The Revolving Credit Facility contains
covenants that, among other things, limit the Company's ability to
incur additional indebtedness and requires the Company to maintain
certain levels of working capital and satisfy other financial tests. 

                                  16
<PAGE>

As of December 28, 1996, the Company was in compliance with all other
covenants under the Revolving Credit Facility.

      The Company anticipates that capital expenditures for the current
fiscal year and the foreseeable future will be approximately $750,000
to $1.0 million per year.  However, the Company, from time to time,
may consider the implementation of programs to expand its operations,
which could increase capital expenditures above such level.

      In June 1995, the Company obtained $1.56 million interim financing
from BNYCC, bearing interest at the bank's base rate from time to time
(8.25% at December 11, 1996) plus 2%.  The term loan provides for 35
consecutive monthly payments of principal of $18,570, with the final
payment due on July 1, 1998.  Proceeds of the term loan were primarily
used to reduce debt owed to World.

      The Company believes that funds generated from continuing
operations, the net proceeds of the recently completed Offering and
borrowings under the Revolving Credit Facility will be sufficient to
finance the Company's anticipated working capital needs and capital
expenditure requirements for at least the next 24 months.

INFLATION

      The effect of inflation on the Company has not been significant during
the last two fiscal years.

                                  17
<PAGE>

Item 8. Financial Statements and Supplementary Data

                Index to Consolidated Financial Statements

                                  18
<PAGE>



                      GENERAL BEARING CORPORATION
                           AND SUBSIDIARIES

                  THREE YEARS ENDED DECEMBER 28, 1996

  
                            TABLE OF CONTENTS

                                                                  Page
                                                                  ----

      Report of Independent Certified Public Accountants . . . .  20 - 21

      Consolidated Balance Sheets, December 30, 1995 
         and December 28, 1996 . . . . . . . . . . . . . . . . .  22

      Consolidated Statements of Operations for the Years 
        Ended December 30, 1995 and December 28, 1996. . . . . .  23

      Consolidated Statements of Stockholders' Equity for
        the Years Ended December 30, 1995 and
        December 28, 1996. . . . . . . . . . . . . . . . . . . .  24

      Consolidated Statements of Cash Flows for the Years
         Ended December 30, 1995 and December 28, 1996 . . . . .  25

      Notes to Consolidated Financial Statements . . . . . . . .  29 - 39

                         
                                  19

<PAGE>
                            
         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                  
                                  
     General Bearing Corporation
     West Nyack, New York
     
     We have audited the accompanying consolidated balance sheets of 
     General Bearing Corporation and subsidiaries as of December 30, 
     1995 and December 28, 1996, and the related consolidated statements
     of operations, changes in stockholder's equity and cash flows for 
     the years then ended. These financial statements are the responsibility
     of the Company's management. Our responsibility is to express an 
     opinion on these financial statements based on our audits.
     
     We conducted our audits in accordance with generally accepted auditing
     standards. Those standards require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are
     free of material misstatement. An audit includes examining, on a test 
     basis, evidence supporting the amounts and disclosures in the financial
     statements.  An audit also includes assessing the accounting principles
     used and significant estimates made by management, as well as evaluating
     the overall financial statement presentation. We believe that our audits
     provide a reasonable basis for our opinion.
     
     In our opinion, the consolidated financial statements referred to above
     present fairly, in all material respects, the financial position of 
     General Bearing Corporation and subsidiaries as of December 30, 1995 
     and December 28, 1996, and the results of their operations and their 
     cash flows for the years then ended, in conformity with generally 
     accepted accounting principles.   
     
     /s/ BDO Seidman, LLP
     
     BDO Seidman, LLP     
     
     
     New York, New York
     March 21, 1997

                                  20
<PAGE>                            
                                  
         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                   
     
     General Bearing Corporation
     West Nyack, New York
     
     We have audited the  consolidated statements of operations, changes in
     stockholder's equity and cash flows of General Bearing Corporation and
     subsidiaries for the year then ended December 31, 1994. These financial
     statements are the responsibility of the Company's management. Our
     responsibility is to express an opinion on these financial statements 
     based on our audits.
     
     We conducted our audit in accordance with generally accepted auditing
     standards. Those standards require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are 
     free of material misstatement. An audit includes examining, on a test 
     basis, evidence supporting the amounts and disclosures in the financial
     statements.  An audit also includes assessing the accounting principles
     used and significant estimates made by management, as well as evaluating
     the overall financial statement presentation. We believe that our audit
     provides a reasonable basis for our opinion.
     
     In our opinion, the consolidated financial statements referred to above
     present fairly, in all material respects, the results of  operations and
     cash flows of General Bearing Corporation and subsidiaries for the year
     ended December 31, 1994, in conformity with generally accepted accounting
     principles.   
     
     /s/ Ferro, Berdon & Company, LLP
     
     Ferro, Berdon & Company, LLP    
     
     
     New York, New York
     March 24, 1995
 
                                  21
<PAGE>

                         GENERAL BEARING CORPORATION
                         ---------------------------
                              AND SUBSIDIARIES
                              ----------------

                         CONSOLIDATED BALANCE SHEETS
                         ---------------------------

                                         December 30,        December 28,
                                             1995               1996     
                                         ------------        ------------
            ASSETS

Current:
 Cash                                    $    50,735         $    12,969
 Accounts receivable - trade, less
   allowance for doubtful accounts of
   $255,000 and $235,000                   6,044,042           4,575,493
 Inventories                              16,626,234          13,898,595
 Prepaid expenses and other current 
  assets                                     184,139             467,081
 Advances to parent and affiliates           215,350             710,397
                                             -------             -------

     Total current assets                 23,120,500          19,664,535
                                          ----------          ----------

Fixed assets, net                          2,480,170           2,604,670
                                           ---------           ---------
Investments and advances:                  
 Investments in affiliates                   687,454             687,454
 Advances to affiliate                       255,824             255,824
                                             -------             -------
                                             943,278             943,278
                                             -------             -------

Deferred tax asset, net                      500,000             700,000
                                             -------             -------

Other assets                                  42,460             486,182
                                              ------             -------

Total Assets                            $ 27,086,408        $ 24,398,665
                                        ============        ============

   LIABILITIES AND STOCKHOLDERS' EQUITY       

Current:                                      
 Note payable - bank                   $ 10,862,894         $  9,526,484
 Accounts payable:                                            
   Trade                                  4,811,677            1,998,361
   Affiliates                             1,398,525            1,774,013
 Accrued expenses and other current
   liabilities                            1,467,563            2,245,386
 Accrued customer damage claims           1,564,742                    -
 Current maturities of long-term debt       222,840              222,840
                                            -------              -------

     Total current liabilities           20,328,241           15,767,084
                                         ----------           ----------

Long-term debt, less current maturities:
 Bank                                     1,225,740           1,002,900
 Parent                                   2,875,142           2,750,142
 Affiliate                                  716,422             739,588
                                            -------             -------

     Total long-term liabilities          4,817,304           4,492,630
                                          ---------           ---------

Commitments and contingencies                 

Stockholder's 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 3,000,000                30,000              30,000
 Additional paid-in capital              23,654,524          23,654,524
 Deficit                                (21,743,661)        (19,545,573)
                                        -----------         -----------

     Total stockholder's equity           1,940,863           4,138,951
                                          ---------           ---------

Total liabilities and stockholder's 
  equity                               $ 27,086,408        $ 24,398,665
                                       ============        ============

     SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                  22
<PAGE>

                      GENERAL BEARING CORPORATION
                      --------------------------- 
                           AND SUBSIDIARIES
                           ----------------

                CONSOLIDATED STATEMENTS OF OPERATIONS
                -------------------------------------

                                                Years Ended             
                                 -----------------------------------------
                                 December 31,   December 30,   December 28,
                                     1994           1995          1996   
                                 -----------    -----------    -----------

Sales                            $37,031,669    $42,070,000    $38,362,128
Cost of sales                     28,483,348     32,068,789     27,926,232
                                  ----------     ----------     ----------

  Gross profit                     8,548,321     10,001,211     10,435,896

Selling, general and
  administrative expenses          7,674,250      7,495,208      7,635,824
Provision (recovery) - customer
  damage claims                            -      2,152,000       (400,959)
                                         ---      ---------       -------- 

  Operating income                   874,071        354,003      3,201,031
                                     -------        -------      ---------

Other (income) expense:               
  Interest, net, including $210,000,
    $180,000, $54,261 to parent      989,912      1,428,451      1,223,143
  Equity in income of affiliate     (403,071)       (78,587)             -
  Other                               32,268      1,233,039        (20,200)
                                      ------      ---------         ------

                                     619,109      2,582,903      1,202,943
                                     -------      ---------      ---------
  Income (loss) before income 
    tax benefit and extraordinary 
    income                           254,962     (2,228,900)     1,998,088

Income tax benefit                         -       (500,000)      (200,000)
                                         ---       --------       --------

  Income(loss) before extraordinary
    income                           254,962     (1,728,900)     2,198,088

Extraordinary income - settlement of
    debts at a discount              108,275              -              -
                                     -------            ---            ---

         Net income (loss)        $  363,237    $(1,728,900)    $2,198,088
                                  ==========    ===========     ==========

Income (loss) per common share:           
      Income(loss) before 
        extraordinary income           $ .08       $   (.58)        $  .73
      Extraordinary income               .04              -              -
                                         ---            ---            ---

         Net income (loss)             $ .12       $   (.58)        $  .73
                                       =====       ========         ======

Weighted average number of 
  common shares                    3,000,000      3,000,000      3,000,000

        SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
              AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                  23
<PAGE>

                        GENERAL BEARING CORPORATION
                        ---------------------------
                             AND SUBSIDIARIES 
                             ----------------

                     CONSOLIDATED STATEMENTS OF CHANGES
                     ----------------------------------
                           IN STOCKHOLDERS' EQUITY
                           -----------------------


                          Preferred Stock            Common Stock      
                        --------------------     ----------------------
                          Shares     Amount       Shares        Amount    
                          ------     ------       ------        ------    

Balance, 
 December 25,  1993                 $            3,000,000    $ 30,000
Net income                    -           -              -           -
                            ---         ---            ---         ---  
Balance, 
 December 31, 1994                               3,000,000      30,000
Net loss                      -           -              -           -
                            ---         ---            ---         ---
Balance, 
 December 30, 1995                               3,000,000      30,000
Net income                    -           -              -           -
                            ---         ---            ---         ---
Balance, 
 December 28, 1996            -     $     -      3,000,000    $ 30,000
                            ===     =======      =========    ========


                                     Additional
                                     paid-in
                                     capital            Deficit
                                    ------------     ------------

Balance,
 December 25, 1993                  $ 23,654,524     $(20,377,998)
Net income                                     -          363,237
                                             ---          -------
Balance,
 December 31, 1994                    23,654,524      (20,014,761)
Net income                                     -       (1,728,900)
                                             ---       ----------  
Balance,
 December 30, 1995                    23,654,524      (21,743,661)
New income                                     -        2,198,088
                                             ---        ---------
Balance,
 December 28, 1996                  $ 23,654,524     $(19,545,573) 
                                    ============     ============



     SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
           AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                  24
<PAGE>

                          GENERAL BEARING CORPORATION
                          ---------------------------
                                AND SUBSIDIARIES
                                ----------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

                                                   Year ended            
                                   ------------------------------------------
                                   December 31,    December 30,   December 28, 
                                       1994            1995          1996   
                                   ------------    ------------   -----------
Cash flows from operating 
  activities:                                               
  Net income (loss)               $    363,237   $ (1,728,900)   $ 2,198,088
Add (deduct) noncash items 
  charged (credited) to income:
  Extraordinary income                (108,275)             -              -
  Deferred income taxes                      -       (500,000)      (200,000)
  Depreciation and amortization        505,447        520,082        557,208
  Equity in (income) loss of 
    affiliate                         (403,071)       (78,587)             -
  Revaluation of equity 
    investment                               -        960,000              -
  Revaluation of goodwill                    -         93,333              -
  (Gain) loss on disposal of 
    equipment and improvements         (24,073)       144,967        (17,838)
Other                                   (9,787)        64,928              -
  Add (deduct) changes in operating 
   assets and liabilities:               
    Accounts receivable             (1,345,403)      (457,381)     1,468,549
    Inventories                     (4,757,159)    (2,963,603)     2,727,639
    Prepaid expenses and other 
      assets                          (183,484)       169,234       (730,093)
    Due to (from) affiliates          (399,601)       617,296        497,782
    Accounts payable and accrued 
      expenses                       1,665,002      1,788,263     (2,035,493)
Accrued customer damage claims               -      1,564,742     (1,564,742)
                                           ---      ---------     ---------- 

        Net cash provided by 
        (used in) operating 
        activities                  (4,697,167)       194,374      2,901,100 
                                    ----------        -------      ---------
Cash flows from investing activities:
  Equipment purchases                 (253,892)    (1,111,653)      (681,641)
  Sale of machinery                     86,000              -         21,200

        Net cash used in 
        investing activities          (167,892)    (1,111,653)      (660,441)
                                      --------     ----------       -------- 

Cash flows from financing activities:    
  Proceeds from long-term debt - bank        -      1,560,000              -
  Repayment of long-term debt - bank         -       (111,420)      (222,840)
  Increase (decrease) in note 
    payable-bank                     4,158,002        892,785     (1,336,410)
  Proceeds from long-term debt and 
    other balances - parent            500,000              -              -

  Repayment of long-term debt and
     other balances - parent           (50,918)    (1,440,304)      (719,175)
                                       -------     ----------       --------

        Net cash provided by 
        (used in) financing 
        activities                   4,607,084        901,061     (2,278,425)
                                     ---------        -------     ----------

Net decrease in cash                  (257,975)       (16,218)       (37,766)

Cash, beginning of year                324,928         66,953         50,735

Cash, end of year                 $     66,953   $     50,735    $    12,969
                                  =     ======   =     ======    =    ======

      SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                  25
<PAGE>


                     GENERAL BEARING CORPORATION
                     ---------------------------
                          AND SUBSIDIARIES
                         ----------------

             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
             ------------------------------------------


THE COMPANY            General Bearing Corporation ("General") and
                       subsidiaries (collectively, the "Company")
                       manufactures, sources, assembles and distributes
                       ball bearings, including standard radial, electric
                       motor quality, tapered roller and traction motor
                       ball bearings, used in a broad range of industrial
                       applications. The Company supplies bearings to
                       original equipment manufacturers and to
                       manufacturing industries, railroad companies and the
                       industrial aftermarket primarily in the United
                       States and Canada. The Company also markets bearings
                       for freight cars and locomotives worldwide. The
                       Company is a wholly-owned subsidiary of World
                       Machinery Company ("World" or "Parent").

PRINCIPLES OF          The accompanying consolidated financial statements
 CONSOLIDATION         include the accounts of General and its majority-
                       owned subsidiaries. Investments in 20%- to 50%-owned
                       companies are accounted for on the equity method.

                       All significant intercompany accounts and
                       transactions have been eliminated.
     
INVENTORIES            Inventories are stated at the lower of cost
                       (first-in, first-out method) or market.
     
FIXED ASSETS           The cost of depreciable plant and equipment is
                       depreciated for financial reporting purposes over
                       the estimated useful lives using the straight-line
                       or declining balance methods. The estimated lives
                       for each property classification are as follows:

                       ---------------------------------------------------
  
                       Machinery and equipment               3 to 10 years

                       Furniture and fixtures                     10 years

                       Transportation equipment               3 to 5 years

                       Leasehold                   Lesser of life of lease
                        improvements                        or useful life
                       ---------------------------------------------------

                       Expenditures for maintenance, repairs and minor
                       renewals or betterments are charged against income.
                       Major renewals and replacements are capitalized

                                         26
<PAGE>

                             GENERAL BEARING CORPORATION
                             ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                     ------------------------------------------

REVENUE                The Company recognizes revenue when products are
  RECOGNITION          shipped.
     
REPORTING PERIOD       The reporting period for the Company is a 52-53 week
                       period ending on the last Saturday in December.
                       There were 52 weeks in the period ended December 30,
                       1995 and December 28, 1996 and 53 weeks in the
                       period ended December 31, 1994.
     
INCOME TAXES           The Company files a consolidated Federal income tax
                       return with its Parent and separate state and local
                       tax returns. Federal income taxes are calculated as
                       if the Company filed its tax return on a separate
                       return basis.

                       Deferred income taxes reflect the net tax effect of
                       temporary differences between the carrying amounts
                       of assets and liabilities for financial reporting
                       purposes and the amounts used for income tax
                       purposes.

USE OF ESTIMATES       The preparation of financial statements in
                       conformity with generally accepted accounting
                       principles requires management to make estimates and
                       assumptions that affect the reported amounts of
                       assets and liabilities and disclosure of contingent
                       assets and liabilities at the date of the financial
                       statements and the reported amounts of revenues and
                       expenses during the reporting period. Actual results
                       could differ from those estimates.
     
ESTIMATED FAIR         Statement of  Financial accounting Standards
  VALUE OF             ("SFAS") No. 107, "Disclosure About Fair Value of 
  FINANCIAL            Financial Instruments", requires disclosures of fair
  INSTRUMENTS          value information about financial instruments, for
                       which it is practicable to estimate the value,
                       whether or not recognized on the balance sheet. 

                       The fair value of  financial instruments, including
                       cash, accounts receivable and accounts payable,
                       approximate their carrying value because of the
                       current nature of these instruments. The carrying
                       amounts of the Company's note payable - bank and
                       long-term debt - bank approximate fair value because
                       the interest rates on these instruments are subject
                       to changes with market interest rates. It is not
                       practical to determine the fair value of receivables
                       from, payables to and long-term debt payable to the
                       parent and affiliates because of the nature of their
                       terms.  The repayment terms are subject to
                       managements' discretion.

                                         27
<PAGE>

                             GENERAL BEARING CORPORATION
                             ---------------------------
                                  AND SUBSIDIARIES
                                  ----------------

                     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                     ------------------------------------------
  

CONCENTRATIONS         The Company extends credit based on an evaluation of
  OF CREDIT RISK       the customer's financial condition, generally
                       without requiring collateral. Exposure to losses on
                       receivables is principally dependent on each
                       customer's financial condition. The Company monitors
                       its exposure for credit losses and maintains
                       allowances for anticipated losses.


LONG-LIVED ASSETS      Long-lived assets, such as goodwill and property and
                       equipment, are evaluated for impairment when events
                       or changes in circumstances indicate that the
                       carrying amount of the assets may not be recoverable
                       through the estimated undiscounted future cash flows
                       from the use of these assets. When any such
                       impairment exists, the related assets will be
                       written down to fair value. This policy is in
                       accordance with Statement of Financial Accounting
                       Standards No. 121 ("SFAS No. 121"), "Accounting for
                       the Impairment of Long-Lived Assets and for
                       Long-Lived Assets to Be Disposed Of," which is
                       effective for fiscal years beginning after
                       December 15, 1995. The Company elected early
                       adoption of this standard and has, accordingly,
                       written down its goodwill as of December 30, 1995
                       (Note 11).

STOCK-BASED            In October 1995, the Financial Accounting Standards
  COMPENSATION         Board issued Statement of Financial Accounting
                       Standards No. 123, "Accounting for Stock-Based
                       Compensation" ("SFAS No. 123"). SFAS No. 123
                       requires entities which have arrangements under
                       which employees receive shares of stock or other
                       equity instruments of the employer or the employer
                       incurs liabilities to employees in amounts based on
                       the price of its stock to either record the fair
                       value of the arrangements or disclose the proforma
                       effects of the fair value of the arrangements.  The
                       Company has adopted the disclosure method of SFAS
                       No. 123.  The adoption of this method did not effect
                       the Company's financial position, operating results
                       or cash flows.

EARNINGS PER           Earnings per common share are computed on the basis
  COMMON SHARE         of the weighted average number of common shares
                       outstanding during the year.

DEFERRED               Costs incurred in connection with the public offering
  REGISTRATION         have been deferred and are included in other assets. 
  COSTS                These costs will be offset against the proceeds of
                       the offering in fiscal 1997.

RECENT ACCOUNTING      In February 1997, the Financial Accounting Standards
  STANDARDS            Board issued Statement of Financial Accounting
                       Standards No. 128, "Earnings Per Share"  ("SFAS No.
                       128").  SFAS No. 128 specifies the computation,
                       presentation, and disclosure requirements for
                       earnings per share.  SFAS No. 128 is effective for
                       periods ending after December 15, 1997.  The
                       adoption of this statement is not expected to have
                       a material effect on the consolidated financial
                       statements.

                                         28
<PAGE>

                             GENERAL BEARING CORPORATION
                             ---------------------------
                                  AND SUBSIDIARIES
                                  ----------------

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     ------------------------------------------


1.   INITIAL           In February, 1997, the Company completed an
       PUBLIC          initial public offering ("IPO") in which 900,000
       OFFERING        shares of  common stock were sold for $ 7 per share
                       for a total consideration of $ 6.3 million.  Net
                       proceeds received by the Company amounted to $ 5.1
                       million.  The Company has used a portion of these
                       proceeds as working capital and to pay down debt. 


2.   INVENTORIES       Inventories consist of the following:


                                            December 30,     December 28,
                                               1995             1996
                       --------------------------------------------------
        
                       Finished goods       $11,134,414       $6,958,972

                       Raw materials, 
                         purchased parts
                         and work-in-
                         process              5,491,820        6,939,623
                       --------------------------------------------------
                                            $16,626,234      $13,898,595 
                       ==================================================


3.   FIXED ASSETS      Fixed assets consist of the following:


                                            December 30,     December 28,
                                                1995            1996
                       --------------------------------------------------

                       Machinery and 
                         equipment           $6,071,074       $4,802,427

                       Furniture and 
                         fixtures               608,468          393,298

                       Leasehold 
                         improvements           389,729          469,587

                       Transportation 
                         equipment               88,893           36,136
                       ----------------------------------------------------

                                              7,158,164        5,701,448

                       Less:  Accumulated 
                               depreciation 
                               and 
                               amortization   4,677,994        3,096,778
                       ---------------------------------------------------

                                             $2,480,170       $2,604,670
                       ===================================================

                                         29
<PAGE>


                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------


                        Depreciation and amortization expense was $505,447,
                        $518,368 and $ 553,779 for the years 1994, 1995 and
                        1996, respectively.

                        The Company purchased, through an affiliate,
                        $750,000 of machinery and equipment in 1995 which,
                        as of December 28, 1996, has not been placed into
                        service.
                                                    
4.  OTHER ASSETS        Other assets consist of the following:

                                             December 30,       December 28,
                                                1995               1996
                        ------------------------------------------------------

                        Security deposits 
                          and other           $20,174             $17,325

                        Deferred loan 
                          costs                22,286               8,857

                        Deferred registration 
                          costs                     -             450,000
                        -----------------------------------------------------
                                              $42,460            $486,182
                        =====================================================

5.  INVESTMENTS AND 
    ADVANCES                                  

                                              December 30,       December 28,
                                                 1995                1996
                        ----------------------------------------------------

                        Investments in 
                          affiliates:
                          Less than 50%-
                          owned - at equity:
                            Shanghai General 
                            Bearing Company 
                            Ltd. (25%-owned) 
                            and Wafangdian 
                            Hyatt Bearing 
                            Manufacturing
                            Co. Ltd. 
                           (25%-owned) 
                           (a)                 687,454            687,454
                        ---------------------------------------------------
                                              $687,454           $687,454
                        ===================================================
                        Advances to Parent 
                          and affiliates:                           

                          Current:
                            Parent (b)        $116,222           $710,397
                            Shar General 
                             Corp.              57,094                  -
                            All others          42,034                  -
                        ---------------------------------------------------
                                              $215,350           $710,397
                        ===================================================
                        ---------------------------------------------------
                          Long-term:
                            General 
                            IKL Corp. 
                            (see Note 
                             12(e))           $255,824           $255,824
                        
                        ===================================================

                                          30
<PAGE>                                              

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

                        (a)   At December 28, 1996, the Company's investment
                              in Shanghai General Bearing Company Ltd.,
                              ("SGBC") was $687,454.  SGBC was formed in
                              June 1987 for an initial term of ten years. 
                              During 1996, the Company extended the term to
                              June 2008 and can further extend the term for
                              an additional ten year interval upon six
                              months notice and unanimous consent of SGBC's
                              board of directors.  The Company is not
                              required to contribute additional capital.
                              Upon receipt of $1,375,000 in dividends, the
                              Company will cease to receive any further
                              dividends.  Furthermore, after termination of
                              the joint venture, all equipment and machinery
                              contributed by the Company will be turned over
                              to the joint venture partner without
                              compensation to the Company.  Condensed
                              financial data of SGBC are as follows:
                              
                        BALANCE SHEETS              

                                              December 30,     December 28,
                                                 1995             1996
                        --------------------------------------------------

                        Current assets        $2,585,000       $2,414,000

                        Total assets           6,293,000        5,794,000

                        Current 
                          liabilities          3,319,000        3,196,000

                        Total liabilities      3,336,000        3,212,000

                        Stockholder's 
                          equity               2,957,000        2,582,000
                         
                       ====================================================

                        STATEMENTS OF OPERATIONS                    

                                                      Year ended
                                       --------------------------------------
                                       December      December      December
                                          31,           30,           28,
                                         1994          1995          1996
                        -----------------------------------------------------
                        Net sales      $5,875,000    $7,321,000    $5,136,000

                        Gross 
                          profit        1,352,000     1,586,000       834,000

                        Operating 
                          income          521,000       438,000        68,000

                        Net income        456,000       384,000         2,000
                        =====================================================

                        At December 28, 1996, the Company's investment in
                        Wafangdian-Hyatt Bearing Manufacturing Co., Ltd.
                        ("Wafangdian-Hyatt") had no value.  Wafangdian-
                        Hyatt was formed in October 1990 for an initial
                        term of ten years; however, this joint venture was
                        terminated by the end of 1996.  Provisions with
                        respect to distributions and termination are
                        substantially similar in all respects to those of
                        SGBC.

                                          31
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------
                                       
                        (b)   Includes accrued interest payable to the
                              Parent of $300,000 and $450,000 as of 1995 and
                              1996, respectively, relating to the
                              subordinated note (Note 8).  Effective
                              December 31, 1995, the outstanding amounts
                              will bear interest at 8% and have no set
                              repayment terms.  As of December 28, 1996,
                              this amount includes $95,739 of interest
                              receivable.

6.  NOTE PAYABLE -      The Company is obligated to a bank under a
     BANK               revolving line of credit which expires on July 1,
                        1998 and a term loan (see Note 8). The loan and
                        security agreement provides the Company with a
                        secured line of credit of up to $15 million for
                        working capital, acceptances and letters of credit.

                        Borrowings under the credit line are based upon
                        percentage formulas relating to accounts receivable
                        and inventories. The maximum amount available is
                        reduced by the term loan balance outstanding.
                        Interest on the outstanding obligation is payable
                        at the bank's prime rate plus 2%, 10.25% at
                        December 28, 1996. The loan is secured by all of
                        the Company's inventories, accounts receivable,
                        general intangibles, and certain machinery and
                        equipment. The loan and security agreement also
                        contains certain restrictive covenants which
                        include, among others, the maintenance of financial
                        ratios relating to working capital and net worth,
                        limitations on capital expenditures and payment of
                        dividends, and prepayment penalties.

                        As of December 28, 1996, borrowings under the
                        credit line amounted to $9,526,484.

                        Commitments under letters of credit amounted to
                        $524,792 at December 28, 1996.
                                       
7.  TAXES ON            The benefits for Federal, state and local income
     INCOME             taxes consist of  the following:

                                                     Years Ended              
                                       --------------------------------------
                                       December      December      December
                                          31,           30,           28,
                                         1994          1995          1996
                        -----------------------------------------------------
                        Deferred :                                 
                          Federal      $     -       $(473,000)    $(189,200)

                        State and 
                          local              -         (27,000)      (10,800)
                        -----------------------------------------------------
                                       $     -       $(500,000)    $(200,000)
                        =====================================================

                                          32
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------


                        The major elements contributing to the difference
                        between the Federal statutory rate and the
                        Company's effective tax rate are as follows:
                        
                                                     Year ended
                                       -------------------------------------
                                       December      December      December
                                          31,           30,           28,
                                         1994          1995          1996
                        --------------------------------------------------
                        Statutory 
                          rate          34.0%        (34.0%)        34.0%

                        Increase 
                          (decrease) 
                          in valuation 
                          allowance 
                          (due primarily 
                          to non-
                          utilization
                          of net 
                          operating 
                          loss)        (41.8)         12.5         (42.1)

                        Permanent and 
                          other 
                          differences    7.8            .9           8.1
                        ---------------------------------------------------
                                           0 %       (22.4%)       (10.0%)
                        ===================================================

                        Temporary differences which give rise to a
                        significant portion of deferred tax assets and
                        liabilities are as follows:
                                       
                                                     December      December
                                                        30,           28,
                                                       1995          1996
                        ---------------------------------------------------
                        Gross deferred tax assets:                        
                          Accounts 
                          receivable 
                          allowances               $   90,000    $   88,000

                          Net operating 
                           loss carry forwards      4,693,000     4,030,000

                          Other                       336,000       100,000
                        ---------------------------------------------------
                                                    5,119,000     4,218,000

                        Gross deferred tax 
                          liabilities:                                    

                          Plant and equipment, 
                           depreciation 
                           differences               (351,000)     (265,000)
                        ---------------------------------------------------
                                                    4,768,000     3,953,000

                        Valuation allowance        (4,268,000)    3,253,000
                        ---------------------------------------------------
                                                   $  500,000    $  700,000
                        ===================================================


                        Management believes that the remaining portion of
                        the deferred tax asset will more likely than not be
                        fully realized based on the Company's historical
                        earnings and future expectations of adjusted
                        taxable income.

                        As of December 28, 1996, the Company has Federal
                        tax loss carryovers of approximately $11.5 million
                        expiring at various dates through the year 2010.

                                          33
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

8.  LONG-TERM DEBT


                                                     December      December
                                                        30,           28,
                                                       1995          1996
                        ---------------------------------------------------
                        Bank:
                           $1,560,000 three year 
                              loan from the same 
                              bank referred to in 
                              Note 6. Interest is 
                              calculated at the bank's 
                              prime rate plus 2%; 
                              10.25% at December 28, 
                              1996; principal of 
                              $18,570 plus interest 
                              is payable monthly, 
                              through June 1, 1998 
                              with final payment of  
                              $910,050 due July 1, 
                              1998.                  $1,448,580   $1,225,740

                        Less:
                             Current 
                               maturities               222,840     222,840
                        ---------------------------------------------------
                                                      1,225,740   1,002,900


                        Parent:
                            6% subordinated 
                              promissory notes 
                              due December 1998. 
                              Interest is accruable 
                              but is to be paid 
                              annually only out 
                              of net income in 
                              excess of $400,000. 
                              The notes are 
                              subordinated to the
                              rights of all creditors 
                              and are secured by 
                              machinery and equipment 
                              having a net book value 
                              of approximately 
                              $810,000 At December
                              28, 1996               $2,500,000  $2,500,000

                            Noninterest-bearing 
                              promissory note, 
                              payable in annual 
                              installments of 
                              $125,000 commencing 
                              December 1993. The 
                              1993 and 1994 
                              installments were 
                              deferred until, 
                              and paid in, 1995. 
                              Repayment is subject 
                              to management 
                              discretion.               375,142     250,142
                        ---------------------------------------------------
                                                      2,875,142   2,750,142
                        ---------------------------------------------------

                        Affiliates:                                

                            General-IKL 
                              Corp.(see 
                              Note 12(e))            $  716,422  $  739,588
                        ---------------------------------------------------
                                                     $4,817,304  $4,492,630
                        ===================================================

                                          34
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

                        At December 28, 1996, aggregate principal payments
                        for the long-term bank debt agreements are $222,840
                        in 1997 and $1,002,900 in 1998. The repayment terms
                        of the long-term debt - parent and affiliates are
                        stated above or are at the discretion of
                        management.

9.  DISCRETIONARY       The Company and certain of its affiliates maintain
      PROFIT            profit sharing plans covering eligible salaried and
      SHARING           nonunion employees. Contributions are made to the
      PLAN              plans at the discretion of the management of the
                        Company. The Company made contributions of $60,000
                        in 1994 and $120,000 in 1996. There were no
                        contributions recorded in 1995.
                                       
10.  PROVISION FOR      In 1995, the Company was notified that certain
       CUSTOMER         wheel bearings supplied to the railroad industry
       DAMAGE           did not meet specifications. As a result,
       CLAIMS           substantially all these bearings previously sold,
                        were recalled to be reworked. In connection with
                        this recall, the Company made a special provision
                        against earnings of $2,152,000, in the year ended
                        December 30, 1995, representing the estimated
                        liability for rework costs and customer damage
                        claims.
                                       
                        During the later part of 1996, the Company received
                        notice from various vendors that it will be
                        reimbursed for approximately $921,000 of costs
                        relating to this recall.  The Company has included
                        $220,000 in cost of sales, $401,000 in operating
                        income and reduced interest expense by $81,000.  As
                        of December 28, 1996, the Company has received
                        $421,000 and has a receivable of $281,000, net of
                        allowance for doubtful accounts of $219,000 which
                        is included in prepaid expenses and other current
                        assets.
                                       
11.  OTHER              Other (income) expense consists of:
     (INCOME) EXPENSE

                                       December      December      December 
                                          31,           30,           28,
                                         1994          1995          1996
                        ---------------------------------------------------
                        Revaluation 
                          of equity 
                          investment
                             (a)       $     -       $  960,000    $      -
                              -
                        Revaluation 
                          of goodwill        -           93,333           -

                        Other           (19,699)        179,706     (20,200)
                        ---------------------------------------------------
                                       $(19,699)     $1,233,039    $(20,200)
                        ===================================================

                        The Company incurred interest expense of $989,912,
                        $1,428,451 and $1,399,402 in 1994, 1995 and 1996
                        respectively.

                                          35
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------


                        (a)   During 1995 the Company revalued its equity
                              investment in Alurop Trading Corp. to properly
                              reflect share of equity to be realized from
                              the investment.  In February  1995, the
                              Company brought an action against the other
                              50% shareholder in Alurop, since it was unable
                              to amicably resolve its dispute with this
                              party, who also had been a principal supplier
                              to WMW.  Accordingly, the Company has written
                              off its investment in Alurop due to the
                              uncertainties relating to this litigation 
                              (Note 13d)), the limited operations of WMW
                              (Alurop's only asset) and the uncertain value
                              of WMW's investment in preferred stock

12.  TRANSACTIONS       (a)   The Company made purchases of approximately
       WITH                   $6.9 million, $9.1 million and $6.6 million
       AFFILIATES             from affiliates in 1994, 1995 and 1996,
                              respectively. Accounts payable - affiliates
                              relate primarily to these purchases.

                        (b)   General shares office facilities and provides
                              services for several affiliates. General
                              charged these affiliates $115,000, $120,000
                              and $120,000 in 1994, 1995 and 1996,
                              respectively.

                        (c)   General leases property, including its
                              corporate headquarters, from Gussack Realty
                              Company ("Realty"), which is owned by the
                              shareholders of World. Rent and real estate
                              taxes paid to the affiliate were approximately
                              $923,000, $861,000 and $ 939,000  in 1994,
                              1995 and 1996, respectively (see Note 13).

                        (d)   The Company made payments for and advances to
                              certain affiliates for payroll, benefits, and
                              other expenses. Such payments aggregated
                              $1,708,000 $1,742,000 and $1,691,000 for the
                              fiscal years ended 1994, 1995 and 1996,
                              respectively.

                        (e)   The amounts receivable from and payable to
                              General-IKL Corp., a corporate joint venture
                              with a manufacturer located in the former
                              Republic of Yugoslavia, are restricted due to
                              the suspension of economic activity with that
                              country.
                                       
13.  COMMITMENTS        (a)   Effective January 1996, the Company completed
       AND                    a move to new facilities owned by Realty.
      CONTINGENCIES           Existing obligations under a long-term lease
                              for the previous facilities, also owned by
                              Realty, were waived. Prior to November 1,
                              1996, the facilities were leased on a
                              month-to-month basis.

                              The Company entered into a lease agreement
                              with Realty for its new premises effective
                              November 1, 1996 for an initial term of seven
                              years.  Concurrently, the Company entered into
                              sublease agreements with World and WMW
                              Machinery Co., Inc., an affiliate.

                              Rent expense consists of the following:

                                          36
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------


                                                     Year ended
                                       -------------------------------------
                                       December      December      December
                                          31,           30,           28,
                                         1994          1995          1996
                        --------------------------------------------------
                        Gross rent 
                          paid 
                          (excluding 
                          taxes)       $756,555      $748,320      $770,990

                        Less: 
                         Reimbursed
                          from 
                          related 
                          companies    (123,791)     (224,820)     (54,792)
                        --------------------------------------------------
                                       $632,764      $523,500     $716,198
                        ==================================================
                        Minimum annual rentals and rental income under
                        these agreements  are as follows:

                                       Minimum

                                       Annual        Rental

                        Year           Rentals       Income          Net
                        ---------------------------------------------------
                        1997           $  912,840    ($203,200)   $ 709,640

                        1998              921,968     (205,232)     716,736

                        1999              967,608     (215,392)     752,216

                        2000              977,284     (217,545)     759,739

                        2001            1,025,664     (228,315)     797,349

                        Thereafter
                        (cumulative)    1,982,944     (432,277)   1,550,667
                        ---------------------------------------------------
                                       $6,788,308  ($1,501,961)  $5,286,347
                        ===================================================

                        (b)   The Company is obligated under an operating
                              lease for manufacturing  facilities in New
                              Jersey through May 1999.  The lease requires 
                              payment of real estate taxes, insurance and
                              maintenance.  Rent  expense was $204,000,
                              $204,000 and $216,000 in 1994, 1995 and 1996
                              respectively. 

                              Minimum annual rentals as of December 28,
                              1996, under this lease, are as follows:
                        
                              Year                           Amount
                              ------------------------------------------
                              1997                           $219,500

                              1998                            239,500

                              1999                            105,000
                              ------------------------------------------
                                                             $564,000
                              ==========================================

                                          37
<PAGE>

                              GENERAL BEARING CORPORATION
                              --------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

                        (c)   The Company has a management consulting and
                              noncompetition agreement with a former officer
                              and stockholder. The agreement, which
                              commenced as of July 1, 1980, provides for
                              quarterly payments aggregating $35,000 per
                              annum for twenty years. As of December 28,
                              1996, future payments required under the
                              agreement total $131,250.

                        (d)   In 1995, General and WMW Machinery of New
                              Jersey, Inc. (formerly WMW Machinery, Inc.)
                              commenced an action for damages in the United
                              States District Court for the Southern
                              District of New York against the successor to
                              a former East German Foreign Trade
                              Organization and certain other German parties.

                              The defendants filed an answer and
                              counterclaim which included a claim against
                              General and certain affiliates in the amount
                              of $9,507,337 for allegedly failing to provide
                              the working capital requirements of WMW
                              Machinery of New Jersey, Inc.

                              Management believes the claim against the
                              Company to be entirely without merit and
                              anticipates that the claim will have no
                              material impact on the Company.

                              Additionally, US Customs has a claim against
                              the Company, which the Company believes to be
                              without merit. The Company intends to
                              vigorously defend this claim and believes that
                              the claim will not have a material impact on
                              the Company.

                        (e)   General is party to a trademark license
                              agreement which provides for increasing annual
                              fees of between $25,000 and $35,000 through
                              1999, and $35,000 per year plus an inflation
                              factor thereafter until 2009. The agreement
                              contains an acceleration clause which provides
                              for immediate payment of all remaining fees in
                              the event of breach of contract.

                        (f)   The Company has guaranteed certain of Realty's
                              outstanding obligations of approximately
                              $1.2 million to a bank and other parties.

                                          38
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------
                                       
14.  STOCKHOLDER'S      In connection with the IPO of its common stock, the
       EQUITY           Company, on October 10, 1996, filed an amendment to
                        its Certificate of Incorporation, increasing the
                        authorized common shares from 10,600 to 19,000,000
                        and changing its $.10 par value per common share to
                        $.01 par value, and effecting a 3,000-for-one stock
                        split. All share and per share data in the
                        consolidated financial statements have been
                        adjusted to give retroactive effect to the stock
                        split.

15.  STOCK OPTIONS      In September 1996, the Company adopted the 1996
                        Stock Option and Performance Award Plan ("1996
                        Plan"), which authorizes the granting to directors,
                        officers and key employees of the Company of
                        incentive or nonqualified stock options,
                        performance shares, restricted shares and
                        performance units. The 1996 Plan covers up to
                        500,000 shares of common stock.

                        The exercise price of any incentive stock option
                        granted to an eligible employee may not be less
                        than 100% of the fair market value of the shares
                        underlying such option on the date of grant, unless
                        such employee owns more than 10% of the outstanding
                        common stock or stock of any subsidiary or parent
                        of the Company, in which case the exercise price of
                        any incentive stock option may not be less than
                        110% of such fair market value. No option may be
                        exercisable more than ten years after the date of
                        grant and, in the case of an incentive stock option
                        granted to an eligible employee owning more than
                        10% of the common stock or stock of any subsidiary
                        or parent of the Company, no more than five years
                        from its date of grant. Options are not
                        transferable, except upon the death of the
                        optionee. In general, upon termination of
                        employment of an optionee, all options granted to
                        such person which are not exercisable on the date
                        of such termination immediately expire, and any
                        options that are exercisable expire three months
                        following termination of employment, if such
                        termination is not the result of death or
                        retirement, two years following such termination if
                        such termination was because of death and one year
                        following such termination if such termination was
                        because of disability or retirement under the
                        provisions of any retirement plan that may be
                        established by the Company, or with the consent of
                        the Company.

                        As of December 28, 1996, no awards have been
                        granted.

16.  SUPPLEMENTAL       For the periods ended December 31, 1994, December
       CASH FLOW        30, 1995 and December 28, 1996, the Company paid
       INFORMATION      interest of approximately $745,000,  $1,257,000,
                        and  $1,316,363, respectively.

                                          39
<PAGE>


                             SUPPLEMENTARY FINANCIAL DATA
                               FURNISHED PURSUANT TO THE
                              REQUIREMENTS OF   FORM 10-K

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


General Bearing Corporation
West Nyack, New York

     The audits referred to in our report dated March 21, 1997 relating
to the consolidated financial statements of General Bearing Corporation
and subsidiaries, which is referred to in Item 8 of this Form 10-K,
includes the audits of the accompanying financial statement schedule
for the years ended December 28, 1996 and December 30, 1995.  This
financial statement schedule is the responsibility of the Company's
management.  Our responsibility is to express an opinion on this
financial statement schedule based upon our audits.

     In our opinion, such financial statement schedule presents fairly,
in all material respects, the information set forth therein for the
years ended December 28, 1996 and December 30, 1995.


                                              /s/ BDO Seidman, LLP

                                              BDO Seidman, LLP


New York, New York
March 21, 1997

                                          40
<PAGE>

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


General Bearing Corporation
West Nyack, New York

    The audit referred to in our report date March 24, 1995 relating to
the consolidated financial statements of General Bearing Corporation
and subsidiaries, which is referred to in Item 8 of this Form 10-K,
includes the audit of the financial statement schedule for the year
ended December 31, 1994.  This financial statement schedule is the
responsibility of management.  Our responsibility is to express an
opinion on this financial statement schedule based upon our audits.

     In our opinion, such financial statement schedule presents fairly,
in all material respects, the information set forth therein for the
year ended December 31, 1994.



                                 /s/ Ferro, Berdon & Company, L.L.P.


                                 FERRO, BERDON & COMPANY, L.L.P.


New York, New York
March 24, 1995

                                          41
<PAGE>

                              GENERAL BEARING CORPORATION
                              ---------------------------
                                   AND SUBSIDIARIES
                                   ----------------


SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS


       Column A            Column B     Column C   Column D       Column E
       --------            --------     --------   --------       --------
                                          Add  
                                       ----------
                          Balance at   Charged to
                         Beginning of  Costs and  Deductions     Balance at
     Description            Period      Expenses      (1)      End of Period
     -----------         -----------   ---------- ----------   -------------

Year Ended December 31, 1994
   Allowance for 
     doubtful Accounts..    $255,000       -          -          $255,000
                            --------    -------   -------        --------

                            $255,000       -          -          $255,000
                            ========    =======   =======        ========

Year Ended December 30, 1995
   Allowance for
      doubtful Accounts...  $255,000    $17,050   $17,050        $255,000
                            --------    -------   -------        --------  
                            $255,000    $17,050   $17,050        $255,000
                            ========    =======   =======        ========

Year Ended December 28, 1996
   Allowance for 
     doubtful Accounts...   $255,000    $55,762    $75,762       $235,000
                            --------    -------    -------       --------
                            $255,000    $55,762    $75,762       $235,000
                            ========    =======    =======       ========
--------------------

(1) Uncollectible accounts written off net of recoveries.

                                  42
<PAGE>  

Item 9. Changes in and disagreements with Accountants on Accounting
and Financial Disclosures

       Since the Company's inception, there has not been any Form 8-K
filed under the Securities and Exchange Act of 1934 reporting a change
in accountants in which there was a reported disagreement on any matter
of accounting principles or practices or financial statement
disclosure.



                                  43
<PAGE>

                               PART III

Item 10.  Directors and Executive Officers

    The directors and executive officers of the Company are as
follows:

  NAME                 AGE       POSITION
  ----                 ---       -------- 
  
  Seymour I. Gussack . 73     Chairman of the Board of Directors
  David L. Gussack . . 39     President and Director
  Jerome Johnson . . . 85     Director
  Robert E. Baruc. . . 45     Director 
  Harold S. Geneen . . 86     Director 
  Nina M. Gussack. . . 41     Director 
  Lester M. White  . . 37     Vice President -- Administration/MIS
  Eugene Passariello . 65     Vice President -- Manufacturing
  William F. Kurtz . . 38     Vice President -- Technical Services
  Christopher Moore. . 40     Vice President -- Finance, Secretary
                                                     and Treasurer
  Joseph J. Hoo. . . . 62     Vice President -- Advanced Technology    
                                                     and China Affairs

    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 "Principal 
Stockholder." 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 Secretary  and a
Director of SGBC and Hyatt-ZWZ,  respectively.  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. 

    LESTER M. WHITE has served as Vice  President  -- 
Administration/Management Information  Systems of the  Company  since 
1989.  Mr.  White is a graduate  of University of Massachusetts, Boston
(B.S. in Management and Economics). 

                                  44
<PAGE>

    EUGENE  PASSARIELLO  has served as Vice  President -- 
Manufacturing  of the Company since 1989. Mr. Passariello was a Plant
Manager of the Company from 1989 to 1991. He is a graduate of Fairleigh
Dickenson  University (B.S. in Industrial Engineering) and has
undertaken  graduate studies at Brooklyn  Technical College
(Metallurgy) and Rockland College (Business Administration).

    WILLIAM F. KURTZ has served as Vice  President -- Technical 
Services of the Company since 1993. Mr. Kurtz was also a Chief Engineer
of the Company from 1989 to 1993 and  Senior  Project  Engineer  of the 
Company  from  1988-89.  He is a graduate of Manhattan  College (B.E.
and M.E. in Mechanical  Engineering)  and a licensed professional
engineer.

    CHRISTOPHER  MOORE has served as Vice  President  -- Finance of
the  Company since 1995 and as Secretary and Treasurer  since 1993. 
Prior to that time,  Mr. Moore held various positions in the Company, 
including  Controller from 1986 to 1995 and  Assistant  Controller 
from 1984 to 1986.  Mr.  Moore is a graduate of Seton Hall  University 
(B.S.  in  Accounting)  and has been a certified  public accountant
since 1982.

    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).  

    JEROME JOHNSON has been a director of the Company since  September
1987. Mr. Johnson has been an attorney in private practice for more
than 50 years. He also serves on the Board of Directors of 
Presidential  Life Insurance  Company.  Mr. Johnson is a graduate of
DePaul  University  (J.D. and L.L.B) and is a member of the Illinois
and New York bars.

    ROBERT E. BARUC has been a Director  of the  Company since
February 1997.  Since April 1994, Mr. Baruc has been an Executive Vice
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.

    HAROLD S. GENEEN has been a Director  of the  Company since
February 1997.  Mr. Geneen served as Chief Executive Officer of ITT
Corporation  ("ITT")  from 1959  until  1977,  and as  Chairman  of the
Board of Directors  of ITT from 1965 until  1979.  He has been 
Chairman  Emeritus of ITT since 1983. Mr. Geneen is also a Director of
IVAX Corporation,  a pharmaceutical company and Gunther International,
Ltd., a document assembly company. 

    NINA M.  GUSSACK has been a Director of the Company since February
1997.  Ms. Gussack has been litigation partner at the law firm of
Pepper,  Hamilton,  & Scheetz in Philadelphia,  Pennsylvania since

                                  45
<PAGE>

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.

    Seymour  I.  Gussack,  David L.  Gussack  and Eugene  Passariello 
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 Jerome 
Johnson.  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. 
Harold S. Geneen  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. 

Item 11.  Executive Compensation

    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 December 28, 1996:

                                  46
<PAGE>

                   ANNUAL COMPENSATION(1)         LONG-TERM COMPENSATION 
                  ------------------------   --------------------------------
    
Name and                                     Restricted  
Principal          Fiscal                      Stock     Stock     All Other
Position            Year    Salary   Bonus     Awards   Options#  Compensation
--------           ------   ------   -----   ---------- --------  ------------
David L. Gussack, 
  President         1996    165,675  1,624                           10,147


(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.

(2) Represents deferred compensation.

Item 12.  Security Ownership of Certain Beneficial Owners and
Management.

    The following  table sets forth, as of the date of this Report
certain information concerning the beneficial ownership of Common Stock
as to each  director and current executive officer of the  Company, 
and each person who, to the Company's knowledge, beneficially owns more
than 5% of the outstanding Common Stock.

                                 NUMBER OF
                                 SHARES                                
NAME AND ADDRESS OF              BENEFICIALLY   PERCENTAGE OF SHARES 
BENEFICIAL OWNER                 OWNED (1)      BENEFICIALLY OWNED(1)
-------------------              ---------      ---------------------

World Machinery Company ......   3,000,000(2)           76.9%
44 High Street
West Nyack, New York 10994

Seymour Gussack...............   3,009,000(3)(4)        77%

David Gussack.................   3,007,000(3)(4)        77%

Nina M. Gussack...............       5,000(4)            *

Robert E. Baruc...............         500               *

All Directors and Executive
 Officers as a Group..........   3,011,500(4)           77%

* Less than 1%

                                  47
<PAGE>

(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 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. Harold S. Geneen, a 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.

(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.

Item 13.  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 $750,142, 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 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.  The  Secured  Note is secured by a  subordinated 
lien in certain  machinery and equipment having a net book value of 
approximately  $810,000 at December 28, 1996.  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 has never made any payments of principal or interest  with 
respect to the  Secured  Note,  and it has  accrued  $450,000 in
interest  thereon. The Installment  Note  does not bear interest.  

                                  48
<PAGE>

LEASES WITH REALTY

    From  January 1 to  November  1, 1996,  the  Company  held a 
month-to-month tenancy for the  premises  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  $912,840)
annually,  payable in monthly rent payments of $76,070. 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.

    During  1994 and 1995,  the Company leased  facilities  from
Realty in Blauvelt, New York at which the Company located its
headquarters and operations. The Company is the guarantor  with respect
to a mortgage  loan  currently in the principal  amount of $650,470 
from the Job  Development  Authority  of Rockland County and a mortgage
loan  currently in the  principal  amount of $506,250 from the 
Industrial  Development  Authority  of Rockland  County on the 
property in Blauvelt,  New York. The Company did not receive any 
consideration  from Realty for its guarantee of such  mortgage  loans. 
The Company  incurred rent and real estate taxes with respect to the
facilities leased from Realty in Blauvelt,  New York for 1994 and 1995
of approximately  $923,000 and $861,000, respectively. 

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 square feet or $170,220 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 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. 

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 
$1,708,000,  $1,742,000  and $1,691,000 for 1994,  1995 and 1996

                                  49
<PAGE>

respectively.  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 has  purchased  bearings  from
four joint  ventures and  machinery  from another joint venture in
which World has interests.  Such  purchases  aggregated $600,000, 
$2,650,000 and $675,000 for 1994, 1995 and 1996 respectively.  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 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 $912,896  (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;  provided,  however,  that if any such
option is exercised after December 31, 1997, the applicable purchase
price shall be  adjusted,   to  include  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 Initial
Public Offering, 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 Offering, 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.

                                  50
<PAGE>

REGISTRATION RIGHTS AGREEMENT

    World has certain rights with respect to the  registration  under
the Security Act 1933, as amended (the "Act")of shares of Common Stock
owned by it as of the date hereof ("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.


                                  51
<PAGE>

                                PART IV

ITEM 14. FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES, EXHIBITS
AND REPORTS ON FORM 8-K

(a) 1.  Financial Statements (included in Part II of this report):

            Reports of Independent Certified Public Accountants dated
            March 21, 1997 and March 24, 1997

            Consolidated Balance Sheets for years ended December 30, 1995
            and December 28, 1996

            Consolidated Statements of Operations for years ended
            December 31, 1994, December 30, 1995 and December 28, 1996.
         
            Consolidated Statement of Changes in Stockholder's Equity at
            December 25, 1993, December 31, 1994, December 30, 1995 and
            December 28, 1996.

            Consolidated Statement of Cash Flows for year ended December
            31, 1994, December 30, 1995 and December 28, 1996.

            Summary of Significant Accounting Policies and Notes to
            Consolidated Financial Statements.

(a) 2.  Financial Statement Schedules (included pursuant to Item 14(d) 
         at page 42 of this report):

            Schedule II - Valuation and Qualifying Accounts

(a) 3.  Exhibits:

            Reference is made to the Exhibit Index commencing on page 54,
            filed pursuant to Item 14(c).  The Exhibits include the
            following management contract or compensatory plan or
            arrangement required to be filed as an exhibit to this
            report:  1996 Stock Option and Performance Award Plan.

(b) Reports on Form 8-K:

             NONE

                                  52

<PAGE>


                             SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized, on March 26, 1997.

                GENERAL BEARING CORPORATION
                By:   /s/ David L. Gussack       
                   ------------------------------
                   David L. Gussack, President
                   (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following
persons on behalf of the registrant and in the capacities indicated, on
March 26, 1997.

      Signatures             Title                       Date
      ----------             -----                       ---- 


  /s/ Seymour I. Gussack     Chairman of the Board of    March 26, 1997 
 -------------------------   Directors
    Seymour I. Gussack 


  /s/ David L. Gussack       President and Director      March 26, 1997
 -------------------------   (Principal Executive Officer)
     David L. Gussack        


  /s/ Christopher Moore      Vice President Finance      March 26, 1997 
 -------------------------   (Principal Financial and
  Christopher Moore          Accounting Officer)


    /s/ Jerome Johnson       Director                    March 26, 1997 
 ------------------------- 
   Jerome Johnson                 

                    
  /s/ Nina Gussack           Director                    March 26, 1997 
 ------------------------- 
    Nina Gussack          
                                   

  /s/ Harold S. Geneen       Director                    March 26, 1997  
 -------------------------
   Harold S. Geneen       
   
                    
  /s/ Robert E. Baruc        Director                    March 26, 1997 
 -------------------------
   Robert E. Baruc        

                                  53
<PAGE>

                             EXHIBIT INDEX

NOTE:  Except as to those items marked with an "*", which are filed
herewith, all Exhibits have been previously filed with the Company's
Registration Statement on Form S-1 effective February 7, 1997
(Registration No. 333-15477).


Exhibit No.                 Description of Exhibit
-----------                 ----------------------

   3.1          Second Restated Certificate of Incorporation

   3.2          By-Laws of the Company

   4.1          Specimen Stock Certificate
   
   10.1         Loan and Security Agreement dated December 20, 1993 by
                and among the Bank of New York Commercial Corporation,
                the Company and Hyatt Railway Products Corp.,
                including amendments 1 through 8 thereto

   10.2         Contract dated June 1988 by and between Shanghai
                Rolling Bearing Factory and the Company, including
                Agreement for the Revision and Amendment to the
                Contract

   10.3         Lease Agreement dated November 1, 1996 by and between
                Gussack Realty Company and the Company relating to
                West Nyack, New York premises

   10.4         Lease dated March 15, 1988 by and between Lamington
                Associates II and the Company relating to the Union,
                New Jersey premise

   10.5         Sublease Agreement dated November 1, 1996 between the
                Company and World Machinery Company

   10.6         Sublease Agreement dated November 1, 1996 between the
                Company and WMW Machinery Co.

   10.9         1996 Stock Option and Performance Award Plan

   10.10        Form of Representative's Warrant

   10.11        Form of Registration Rights Agreement between the
                Company and World (previously filed exhibit as 4.2)
   10.12        Form of Tax Sharing and Indemnification Agreement
                between the Company and World Machinery Company

   10.13        Amendment Letter dated March 7, 1997 between the
                Company and Bank of New York Commercial Corporation*

   21           List of Subsidiaries of the Company

   27           Financial Data Schedule*

                                  54