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, 2002

                                       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 Identification No.)
    incorporation or organization)

44 High Street, West Nyack, New York                       10994
------------------------------------                       -----
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code: (845) 358-6000

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock $.01 par value per share
                      -------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes |_| No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.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|

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). |_| Yes |X| No

The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $5,197,000 at June 29, 2002.

At March 26, 2003, the Registrant had issued 7,102,200 shares of common stock,
$.01 par value per share, and had outstanding 3,867,380 shares.

                       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," "believes", "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, 2002

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
    No.                                                                                                        Page
    ---                                                                                                        ----
<S>                     <C>                                                                                     <C>
PART I
      Items 1 & 2.     Business and Properties.............................................................      1
      Item 3.          Legal Proceedings...................................................................      6
      Item 4.          Submission of Matters to a Vote of Security Holders.................................      6

PART II
      Item 5.          Market for Registrant's Common Equity and Related Stockholder
                       Matters.............................................................................      7
      Item 6.          Selected Financial Data.............................................................      8
      Item 7.          Management's Discussion and Analysis of Results of Operations and
                       Financial Condition.................................................................      9
      Item 7a.         Quantitative and Qualitative Disclosure about Market Risk...........................     16
      Item 8.          Financial Statements and Supplementary Data.........................................     18
      Item 9.          Changes in and Disagreements with Accountants on Accounting and
                       Financial Disclosures...............................................................     49

PART III
      Item 10.         Directors and Executive Officers of the Registrant..................................     50
      Item 11.         Executive Compensation..............................................................     52
      Item 12.         Security Ownership of Certain Beneficial Owners and Management and
                       Related Stockholder Matters.........................................................     54
      Item 13.         Certain Relationships and Related Transactions......................................     56
      Item 14.         Controls and Procedures.............................................................     58

PART IV
      Item 15.         Exhibits, Financial Statement Schedules, and Reports on Form 8-K....................     58
</TABLE>

<PAGE>

                                     PART I

Items 1 and 2. Business and Properties.

      The Company operates in two business segments: bearings ("Continuing
Operations") and machine tools ("Discontinued Operations"). In December of 2002,
the Company's Board of Directors and management resolved to discontinue the
operations of the machine tool segment by disposing of the net assets by sale.
Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long Lived Assets", prior period
financial statements of the Company have been reclassified to segregate
discontinued operations from continuing operations.

CONTINUING OPERATIONS:

      General Bearing Corporation ("General"), a Delaware Corporation formed in
1958, and subsidiaries (collectively, "the Company") manufactures, sources,
assembles and distributes a variety of bearings and bearing components,
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, primarily in the United States ("U.S.") and Asia. The
Company's products are used in a broad range of applications, including
automobiles, railroad cars, locomotives, trucks, heavy duty truck trailers,
office equipment, machinery and appliances.

      The Company strives to be a reliable and cost effective provider of
bearings and bearing components. The Company's strategy includes the following:

      * PROVIDE HIGH QUALITY PRODUCTS AND SUPERIOR CUSTOMER SERVICE. General
maintains a detailed and extensive Quality Assurance Program. It has been
certified to the M1003 standard by the Association of American Railroads
("AAR"); has been granted "Unconditional Approval" from the AAR for its tapered
journal bearings; maintains ISO 9001 registration from the International
Standards Organization ("ISO"); and maintains QS-9000 registration from the
Automotive Industry Quality System. General also requires that its suppliers
conform to Company and customer quality and engineering standards. Certain of
the Company's joint ventures have also achieved QS-9000 and/or ISO
certifications.

      * PRESENCE IN CHINA. In 1987, General formed Shanghai General Bearing Co.,
Ltd. ("SGBC"), a joint venture in the People's Republic of China ("PRC") to
establish a low cost, quality controlled source for bearings and bearing
components. The Company has established other manufacturing joint ventures in
the PRC, and it continues to investigate further expansion opportunities. On
February 3, 1997, the U.S. Department of Commerce ("Commerce") granted SGBC
partial revocation of the antidumping order affecting tapered roller bearings
from the PRC. As a result, SGBC and the Company are no longer required to
participate in the annual reviews of the antidumping order conducted by
Commerce. The Company believes SGBC's revocation provides it with a competitive
advantage. Any disruption in the supply of bearings and bearing components from
the PRC could have a material adverse effect on the Company's business.

PRODUCTS

      The Company sells approximately 2,500 stock keeping units ("SKU's"). The
Company's product line includes ball and roller bearings and their components.
The Company offers its products in standard, modified, and custom designs where
appropriate. Under The General(R) trademark, the Company produces ball bearings
for a wide variety of products including copying machines, automotive steering
columns, postal equipment, wheelchairs and other applications. Under the
Hyatt(R) brand, the Company produces select tapered roller bearings (TRB's),
tapered journal bearings, spherical roller bearings and cylindrical roller
bearings which are used in railroad, truck/trailer, automotive and other
industrial applications.


                                       1
<PAGE>

      The following are the product classes which represented 10% or more of
consolidated revenue for the past three years:

                                                 2002         2001         2000

Automotive Driveline Components                 14.27%       13.34%          --

Tapered Roller Bearings                         20.27%       26.31%       31.55%

Balls                                           19.95%          --           --

MANUFACTURING

      The Company primarily manufactures and assembles bearings at its
facilities in New York and the PRC as set forth below.

      The Company obtains the majority of its bearing and component requirements
from its manufacturing plants in the PRC, discussed in greater detail below. The
Company maintains relationships with unaffiliated manufacturers to produce the
remainder of its requirements. The Company has no long-term contracts with its
unaffiliated manufacturing sources.

CHINESE MANUFACTURING

      General has entered into six joint ventures (five with manufacturers in
the PRC) to enable it to manufacture high quality, low cost bearings and bearing
components. By entering into joint ventures, rather than long-term manufacturing
contracts, General is better able to monitor and control production and quality
assurance by having access to the factories at both management and production
levels. Further, by manufacturing at joint ventures, General may not be required
to incur inventory carrying costs, since the joint ventures may hold inventory
until needed by General.

      SGBC, a joint venture formed with Shanghai Roller Bearing Factory ("SRBF")
was established in June 1987. SGBC produces various bearing products for the
U.S. and foreign markets. General contributed 25% of the initial capital of
SGBC, and General's joint venture partner, SRBF, contributed 75% of the initial
capital of SGBC. In November 2001, General and SRBF agreed to a new joint
venture contract whereby ownership would be shared equally, with General
assuming control of operations upon General meeting its revised requirement to
contribute an additional $3 million during the period 2002-2004. At March 24,
2003, General has satisfied $2 million of this requirement. The official
business license for the revised joint venture company was granted in February
2002.

      General has the exclusive right to sell the products of SGBC in the U.S.
In 2002, General purchased $6.6 million in bearings and bearing components from
SGBC. Purchases are made upon terms and conditions established periodically by
negotiation between General and SGBC.

      Ningbo General Bearing Company, Ltd. ("NGBC"), a joint venture with China
Ningbo Genda Bearing Company, Ltd., was established in 1998. Located in Yuyao
City, China, this venture manufactures ball and roller bearings and their
components. Initially, General contributed 33.3% of the registered capital.
Subsequently, General increased its ownership to 42% in 2000, and increased its
ownership to 50% and assumed control over operations in July 2001. In 2002,
General purchased $14.2 million from NGBC which has been eliminated in
consolidation.

      Shanghai Pudong General Bearing Company ("SPGBC"), a joint venture with
Shanghai Xiua Industrial Corporation was established in 1996. Located in the
Pudong Industrial Zone of Shanghai, this venture produces various bearing
products for sale in the U.S. by General. General contributed 25% of the
registered capital of SPGBC, in 1998. In 2002, General purchased $300,000 from
SPGBC.

      Jiangsu General Ball & Roller Company, Ltd. ("JGBR"), a joint venture with
Jiangsu Lixing Steel Ball Factory (Group) ("JSBF"), was established in 1999.
Located in Rugao City, China, this venture is comprised of the operations of
JSBF, a manufacturer of rolling elements for bearings. This venture produces
chrome, carbon and stainless steel balls. In March 2000, General formed NN
General, LLC ("NNG"), a joint venture with NN Ball & Roller, Inc. ("NN").
General and NN each held a 50% interest in NNG, which held a 60% interest in
JGBR. In December 2001, General purchased NN's 50% interest in NNG for cash and
notes valued at approximately $3.9 million (book value). On June 30, 2002, NNG's
ownership in JGBR was reduced to 51% by agreement of the partners, and in
conjunction with commitments by the partners to contribute additional capital
reflective of the new ownership percentages. In 2002, General purchased $164,000
from JGBR which has been eliminated in consolidation.


                                       2
<PAGE>

      Rockland Manufacturing Company, ("Rockland") a 50% owned joint venture
with Wafangdian USA Ltd., was established in 1993 and shares facilities and
personnel with General at General's West Nyack facility. Rockland offers
flexibility to General by providing readily accessible inventory.

      Wafangdian General Bearing Co., Ltd. ("WGBC"), a joint venture with
Wafangdian Bearing Company, produces various bearing components. General sells
the WGBC bearings in the U.S. In 2002, Rockland paid $1.9 million for purchases
from WGBC.

SALES, MARKETING AND CUSTOMERS

      The Company markets its products principally in the U.S. through 8
salaried sales employees and 29 commissioned independent sales representative
organizations. In addition, the Company has 10 customer service representatives
responsible for handling orders and providing sales support. Products bear The
General(R) label for ball bearings and the Hyatt(R) brand for all types of
roller bearings.

      The Company's OEM markets include truck/trailer manufacturers, railroad
locomotive and freight car manufacturers, and automotive manufacturers. Beyond
the transportation industry, the Company supplies precision ball bearings to
manufacturers of office equipment, machinery and appliances.

      In addition to the OEM efforts, the Company markets a broad line of
products through distributors. The Distribution customer base varies from the
two largest multi-branch operations, which have in excess of 400 branches, to
independent single outlet operations. The Company provides distributors with a
high quality lower cost alternative for them to service their maintenance repair
order customers as well as small / medium sized OEM's.

      In 2002, 2001 and 2000, sales to a customer, Visteon Corporation,
represented more than 10% of the Company's total net sales.

      Shipments to OEMs can be within one to 365 days from the date an order is
placed. Actual shipments are dependent upon production schedules of the
Company's customers. Product is generally shipped to distributors within 24
hours of the time an order is placed. The Company's arrangements with its
customers typically provide that payments are due within 30 days following the
date of shipment of goods.

      In order to timely meet the delivery requirements of customers, the
Company maintains significant amounts of inventory.

      Our total backlog at year end 2002 and 2001 was $10,200,000 and
$8,900,000, respectively. The Company anticipates that approximately $10,200,000
of the 2002 backlog will be filled in 2003. The Company believes that backlog is
not necessarily a reliable indicator of our future sales because a substantial
portion of the orders constituting this backlog may be cancelled at the
customer's option.

EMPLOYEES

      The Company's bearing operations have 1,001 full-time employees, of whom
862 were engaged in production, shipping and receiving, quality control, and
maintenance, and 22 of whom were engaged in sales and marketing. The balance of
the Company's full-time employees is primarily administration. Seventy eight of
the Company's employees engaged in production, shipping and receiving, quality
control 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, 2003. The Company believes that relations with its
employees, including those subject to collective bargaining, are good. General
has a 23 year relationship with the Union and has never experienced a Union work
stoppage.


                                       3
<PAGE>

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. Among the Company's primary domestic and foreign competitors are
Timken, NSK Corporation and NN Inc. 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.

PATENTS, TRADEMARKS AND LICENSES

      The Company owns The General(R) trademark and the Hyatt(R) trademarks. The
Company does not own any other U.S. or foreign patents, trademarks or licenses
that are material to its business.

      During 2001, the Company purchased the Hyatt(R) trademark from an
affiliate of General Motors ("GM"). Prior to this, the Company's use of the
Hyatt(R) trademark was pursuant to a license from GM. The Company believes the
trademarks positively influence some customers but is unable to quantify or
estimate the extent of the benefits.

ENVIRONMENTAL COMPLIANCE

      The Company's operations are subject to 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 materially comply with applicable environmental
laws and regulations.

PROPERTIES

      The Company leases a facility located in West Nyack, New York, which has
approximately 190,000 square feet of floor space. Management believes that the
plant is adequate for the Company's present needs and anticipated expansion. The
West Nyack facility, which is used principally for administrative, assembly,
manufacturing, and distribution purposes, is owned by Gussack Realty Company
("Realty"). On 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. (See "Item 13 - Certain Relationships and Related
Transactions.")

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

      The amounts of sales and long-lived assets attributable to each of the
principal geographic areas where the Company has sales and the amount of export
sales from the U.S. for each of the last three fiscal years are set forth in
Note 17 to the Company's consolidated financial statements for the year ended
December 28, 2002.

DISCONTINUED OPERATIONS:

      In December of 2002, the Company's Board of Directors and management
resolved to discontinue the operations of the machine tool segment by disposing
of the net assets by sale during 2003. During 2002, the Company reduced the net
asset carrying amounts of machine tools to zero and recorded an impairment
writedown associated with discontinued operations of approximately $2,242,000.
The prior period financial statements of the Company have been reclassified to
segregate continuing operations from discontinued operations.

      The Company's machine tool operations are conducted through three
companies, World Machinery Group, BV ("WMG"), World Machinery Works, S.A. ("W.M.
Works") and WMW Machinery Company, Inc. ("WMW"), all direct or indirect
subsidiaries of World Machinery Company ("World"), which became a wholly owned
subsidiary of General in July 2000.

      WMG, a 60% owned subsidiary, owns 60% of W.M. Works, a Romanian machine
tool manufacturer, which was privatized by the Romanian government in 1998. The
Company contributed $1.5 million of the $2.5 million that WMG paid for the 51%
interest in W.M. Works and, under the share sale contract with the Romanian
government, was obligated to invest an additional $5.2 million in W.M. Works in
cash or in kind, over a four year period ending December 31, 2002. As of
December 28, 2002, the Company had satisfied its investment obligation for which
it received an additional 9% interest in W.M. Works. WMG has the exclusive right
to market the primary products of W.M. Works outside of Romania, with some minor
exceptions.


                                       4
<PAGE>

PRODUCTS

      W.M. Works, formerly known as Masini Unelte, Bacau, S.A., a Romanian
corporation, produces a variety of machine tools used for boring, turning,
milling and grinding metal work pieces. W.M. Works' product lines include
horizontal boring mills, bridge and gantry mills, vertical turning lathes, heavy
duty lathes, roll grinders, belt grinders and vertical grinders.

      WMW, a wholly owned subsidiary of General, is WMG's sole sales agent in
North America for most of the machine tool products manufactured by W.M. Works.
WMW also markets its own product lines of WMW HECKERT production milling
machines and WMW Radial Drills of 2" to 8" capacity, manufactured by independent
suppliers abroad. In addition, WMW imports and distributes CETOS grinding
machines from the Czech Republic.

SALES, MARKETING AND CUSTOMERS

      The majority of W.M. Works export sales are made through WMG, which
utilizes independent regional sales agencies in each sales territory. WMG
presently has approximately 5 sales agencies with exclusive distribution rights
in North America, Germany, India, Poland and Argentina. WMG also markets through
approximately 17 non-exclusive agents covering Italy, China, Denmark, the former
Soviet states, Finland, Turkey, Greece, Austria, Egypt, the United Kingdom, the
Czech Republic, Belgium, Holland, Brazil, South Africa, Pakistan, Vietnam and
Taiwan.

      WMW sells primarily in North America through approximately 150 independent
machine tool dealers on a non-exclusive basis.

      The machine tools produced by W.M. Works and WMW are sold to a wide
spectrum of customers, from large corporations to small job shops. W.M. Works
also produces the mechanical components of machines for certain machine tool
producers in Germany.

      No individual customers of W.M. Works and WMW represented 10% or more of
the Company's sales in 2002, 2001 and 2000.

EMPLOYEES

      The Company's machine tool operations have 492 employees, located
primarily in Romania, of whom 329 are in production, 19 are sales personnel, 56
are in-house technical engineers (both mechanical and electrical) and
technicians, 56 are in design and the balance are administrative.

COMPETITION

      The machine tool industry is highly competitive. The principal competitors
of W.M. Works and WMW are Tos Varnsdorf (Czech Republic), Union
Werkzeugmaschinen (Germany), Defum (Poland), Mitsubishi (Japan), Giddings &
Lewis (USA), Juristi (Spain), Toshiba (Japan), Dorris-Schamann (Germany),
Phoenix (USA), Karnaghi (Italy), Waldrich (Germany), Hercules (Germany), Cetos
(Czech Rep.) and Landis (USA).

PATENTS, TRADEMARKS AND LICENSES

      Except for the WMW(R) and WMW Heckert(R) trademarks owned by WMW in the
United States, neither WMW, W.M. Works nor WMG own any U.S. or foreign patents,
trademarks or licenses that are material to their businesses.


                                       5
<PAGE>

ENVIRONMENTAL COMPLIANCE

      WMW and W.M. Works's operations are subject to governmental regulatory
requirements relating to pollution control and protection of the environment.
Based on information compiled to date, management believes that all current
machine tool operations materially comply with applicable environmental laws and
regulations.

PROPERTIES

      W.M. Works owns and manufactures at a facility of approximately 680,000
sq. ft. in Bacau, Romania. Management believes the plant is adequate for all
present and future needs of W.M. Works. WMW operates at the Company's principal
facilities in West Nyack, NY and has a leased sales office in Brea, California.

Item 3. Legal Proceedings.

Antidumping Proceeding covering Ball Bearings and Parts thereof from China.

In its 10-K filed on April 15, 2002, the Company disclosed the filing of an
Antidumping proceeding (the "Proceeding") in the U.S. International Trade
Commission ("ITC") and U.S. Department of Commerce ("DOC") by the American
Bearing Manufacturer's Association ("ABMA"), seeking to impose antidumping
duties on ball bearings and parts thereof from the People's Republic of China.

On April 3, 2003, by a vote of 4 to 0, the ITC found that the United States ball
bearing industry has not been materially injured or threatened with material
injury by imports of ball bearings from China.

As a result, no antidumping duties or deposits will be imposed on imports of
ball bearings from PRC.

Arbitration Proceeding against World Machinery Company

On December 30, 2002, the Romanian authority for Privatization and Management of
State Ownership ("APAPS") filed a Request for Arbitration against World, with
the International Chamber of Commerce. The action arises out of the contract
under which World acquired a majority interest in W.M. Works from the Romanian
government in 1998 (the "Contract"). APAPS alleges that World breached its
contractual obligation to invest certain sums in W.M. Works in 1999 and 2000, as
required under the Contract. APAPS is seeking $570,000 in penalties and damages,
together with interest and costs, and any further damages and penalties to which
it would be entitled if it establishes that World also failed to make
investments required in 2001 and 2002.

World's management believes it has fully complied with its investment
obligations and has filed an Answer with the ICC disputing the allegations and
will vigorously defend the action. World is also considering the filing of
claims against APAPS based on APAPS' breach of the Contract by failing to honor
a representation and warranty as to the financial condition of W.M. Works, and
other acts of the Romanian government which have caused damages to World and
W.M. Works.

While the Company is confident that it will prevail in the arbitration, an
adverse ruling could be materially adverse to World's operations and financial
condition.

Arbitrators have been selected and the parties are awaiting scheduling from the
ICC.

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

      None.


                                       6
<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 following charts set forth the high and low bid prices for each
quarterly period in the last two fiscal years.

                                                              2002
                                                     ---------------------
                          Bid Prices                   High          Low
                                                     --------     --------
            1st Quarter                                3.670        2.600
            2nd Quarter                                4.050        3.100
            3rd Quarter                                4.250        2.810
            4th Quarter                                3.120        2.680

                                                              2001
                                                     ---------------------
                          Bid Prices                   High          Low
                                                     --------     --------
            1st Quarter                                6.310        4.750
            2nd Quarter                                5.940        3.150
            3rd Quarter                                3.790        2.270
            4th Quarter                                3.470        2.580

      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 26, 2003, the Company had in excess of 500 holders of its Common
Stock.


                                       7
<PAGE>

Item 6. Selected Financial Data

      Pursuant to SFAS No. 144, the selected financial data set forth below for
the statement of operations has been reclassified to segregate discontinued
operations from continuing operations (see Business and Properties Items 1 and
2). Any line item on the Statement of Operations above the net income line not
designated as relating to discontinued operations, relates solely to continuing
operations.

      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 Results of Operations
and Financial Condition.

                           General Bearing Corporation
                             Selected Financial Data
                    (In Thousands Except for Per Share Data)

                                   Years Ended

<TABLE>
<CAPTION>
                                                          Jan. 2         Jan. 1        Dec. 30        Dec. 29       Dec. 28
                                                           1999           2000           2000           2001          2002
----------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>            <C>            <C>           <C>
Statement of Operations Data:

  Sales                                                  $ 45,446       $ 51,789       $ 50,270       $ 44,474      $ 60,306

  Operating income                                       $  4,217       $  5,293       $  4,250       $  2,674      $  4,422

  Income from continuing operations before income tax    $  3,795       $  4,562       $  3,907       $    985      $  2,625

  Minority interests                                     $    (34)      $    (27)      $     (8)      $    405      $    672

  Income from continuing operations                      $  2,073       $  2,685       $  2,552       $    368      $    848

  Income / (loss) from discontinued operations           $ (1,275)      $   (441)      $   (673)      $    270      $ (2,932)

  Net income / (loss)                                    $    798       $  2,244       $  1,879       $    638      $ (2,084)

  Net income per basic share from
    continuing operations                                $   0.51       $   0.65       $   0.62       $   0.09      $   0.22

  Net income per diluted share from
    continuing operations                                $   0.50       $   0.65       $   0.62       $   0.09      $   0.22

  Net income/(loss) per basic share                      $   0.19       $   0.55       $   0.46       $   0.16      $  (0.54)

  Net income/(loss) per diluted share                    $   0.19       $   0.55       $   0.46       $   0.16      $  (0.54)
</TABLE>


                                       8
<PAGE>

                                      As Of

<TABLE>
<CAPTION>
                                       Jan. 2       Jan. 1       Dec. 30      Dec. 29      Dec. 28
                                        1999         2000          2000         2001        2002
--------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>          <C>          <C>          <C>
Balance Sheet Data:

  Total current assets                 $34,907      $38,778      $38,778      $50,819      $49,099

  Total assets                         $45,812      $53,340      $55,264      $76,624      $75,413

  Long-term debt (excluding current
    portion)                           $ 1,951      $12,861      $16,454      $20,580      $ 8,563
</TABLE>

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

Business Overview

General Bearing Corporation and subsidiaries (collectively, the "Company")
operates in two business segments: Bearings ("Continuing Operations") and
Machine Tools ("Discontinued Operations"). In December 2002, the Company's Board
of Directors and management resolved to discontinue the operations of the
machine tool segment by disposing of the net assets by sale during 2003. During
2002, the Company reduced the net asset carrying amounts of machine tools to
zero and recorded an impairment writedown associated with discontinued
operations of approximately $2,242,000. Pursuant to SFAS No. 144, the financial
statements of the Company have been reclassified to segregate discontinued
operations from continuing operations.

Continuing Operations:

The Company manufactures and distributes a variety of bearings and bearing
components under the Hyatt(R) and The General(R) trademarks. The Company
supplies original equipment manufacturers ("OEMs") and distributors. The
Company's products, sold principally in the United States ("U.S.") and Asia, are
used in a broad range of applications, including automobiles, railroad cars,
locomotives, trucks, heavy duty trailers, office equipment, machinery and
appliances. General has entered into six joint ventures (5 with manufacturers in
the Peoples Republic of China ("PRC")) to enable it to manufacture high quality,
low cost bearings and bearing components. General obtains a majority of its
bearing and component requirements from its manufacturing plants in the PRC.

In July 2001, General Bearing Corporation ("General") increased its ownership in
Ningbo General Bearing Company, Ltd. ("NGBC"), one of its joint ventures in
China, from 42% to 50% and assumed control of management of the operations. The
financial statements of NGBC have been fully consolidated beginning with the
start of the third fiscal quarter of 2001. The majority of NGBC's sales are
eliminated in consolidation as the majority of its production is sold to General
for sale in the U.S.

In December 2001, General increased its ownership in NN General, LLC ("NNG")
from 50% to 100%. NNG is a holding company that held as its primary asset, a 60%
investment in Jiangsu General Ball and Roller Company, Ltd. ("JGBR"), another
Chinese joint venture. Due to this increased ownership, the operations of NNG
and JGBR have been fully consolidated since the beginning of the first quarter
of 2002. On June 30, 2002, NNG's ownership in JGBR was reduced to 51% by
agreement of the partners, and in conjunction with commitments by the partners
to contribute additional capital reflective of the new ownership percentages.

Discontinued Operations:

In the Machine Tools segment, the Company produces and distributes a variety of
machine tools used for boring, turning, milling and grinding metal work pieces.
The Company's product lines include horizontal boring mills, bridge and gantry
mills, vertical turning lathes, heavy duty lathes, roll grinders, belt grinders
and vertical grinders.


                                       9
<PAGE>

Results of Operations

Fiscal 2002 compared to Fiscal 2001

      Sales. Sales for the fiscal year ended December 28, 2002 ("2002") of
$60,306,000 represents a 35.6% increase compared to the fiscal year ended
December 29, 2001 ("2001") primarily due to the consolidation of JGBR sales.
Additionally, increased sales of driveline components to the automotive
industry, tapered roller bearings for heavy duty truck trailers and tapered
journal bearings to the railroad industry were partially offset by lower sales
volume in the heavy duty aftermarket as well as lower sales volume to
distributors. The reductions in the sales to the heavy duty aftermarket and
distributors are believed to be related to the general downturn of the U.S.
economy.

      Gross Profit. Gross profit for 2002 of $17,155,000 represents a 29.9%
increase compared to 2001. As a percentage of sales, gross profit ("GP%") was
28.4% for 2002 compared to 29.7% in 2001. This decrease was mainly due to
product mix as well as the consolidation of JGBR's sales to the Chinese domestic
market, which have lower GP% than General's sales in the U.S.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("S,G&A") as a percentage of sales were 21.1% in 2002
compared to 23.7% in 2001. The decrease in S,G&A, as a percentage of sales, is
primarily due to higher sales volume. S,G&A increased by $2,205,000 in 2002
mainly due to the consolidation of the S,G&A expenses of NNG ($1,187,000) and
NGBC ($669,000). Additionally, 2002 S,G&A includes $500,000 in costs associated
with the start up of the Ball and Roller Division, as well as increases in
freight, professional fees, depreciation, and insurance partially offset by
reductions in bad debts.

      Operating Income. Operating income for 2002 of $4,422,000 represents a
65.4% increase compared to 2001 due to higher sales volume and the consolidation
of JGBR, partially offset by lower GP% and higher S,G&A.

      Other Expense, net. Other expense, net was $1,797,000 in 2002 compared to
$1,689,000 in 2001 and is comprised of miscellaneous non-operating income and
expenses, interest expense, and equity in income / loss of affiliates ("equity
income") as follows: (in thousands)

                                                           2002           2001
                                                         -------        -------

Litigation settlement                                    $     0        $   763
Interest expense, net                                      1,597            986
Equity (income) / loss in affiliates                         193            (60)
Other non-operating expenses, net                              7              0
                                                         -------        -------
                                                         $ 1,797        $ 1,689

2001 included a charge of $763,000 for an agreement reached between the Company
and Gussack Realty Company ("GRC"), allocating the proceeds and litigation costs
from the previously reported litigation with Xerox. The reimbursement is being
paid to GRC in the form of additional rent payments by the Company of $18,780.17
per month for 48 months beginning in June 2001. Even though the Company was not
legally or contractually obligated to reimburse GRC, a related party, the
Company agreed to enter into the reimbursement agreement because the Company
believed it was fair and equitable to do so as Realty had paid legal expenses
for the benefit of the Company.

Interest expense, net increased in 2002 mainly due to the consolidation of
interest expense incurred at JGBR and increased borrowings.

      Income tax. The Company recorded income tax expense of $1,105,000 in 2002
compared to income tax expense of $212,000 in 2001. The Company's effective
income tax rate was 42.1% in 2002 compared to 21.5% in 2001. The 2002 effective
rate is reflective of taxes being provided for previously earned foreign income
originally expected to be permanently reinvested.


                                       10
<PAGE>

      Discontinued Operations. Machine tools sales of $8,613,000 were 23.0%
lower than 2001 primarily due to lower export sales from Romania due to
irregularity in demand for the Company's products. GP% for machine tools was
28.5% in 2002 compared to 38.6% in 2001. The decrease is mainly due to lower
sales volume and product mix. S,G&A for machine tools increased by $4,000 in
2002 compared to 2001. Operating loss for machine tools was $1,632,000 in 2002
compared to operating income of $227,000 in 2001 due to the lower sales volume
and lower GP%. Other expense, net was $506,000 in 2002 compared to $28,000 in
2001 due to higher interest expense at W.M. Works relating to increased debt.
The net loss for machine tools was $2,932,000 in 2002 compared to net income of
$270,000 in 2001. The net loss consists of a loss from operations of $690,000
and a business impairment charge of $2,242,000.

      Net Income. Net loss for 2002 was $2,084,000 or ($.54) per basic and
diluted share compared to net income of $638,000 or $.16 per basic and diluted
share in 2001 primarily due to the loss from operations and the effect of the
impairment charge in the Machine Tool segment, partially offset by higher sales
volume in the Company's continuing operations.

Fiscal 2001 compared to Fiscal 2000

      Sales. Sales for the fiscal year ended 2001 of $44,474,000 represents an
11.5% decrease compared to the fiscal year ended 2000 ("2000") primarily due to
the economic slowdown that began during the second half of 2001. The largest
decrease was due to lower sales volume of tapered roller bearings for heavy duty
truck trailers, however other product lines were also negatively affected.

      Gross Profit. Gross profit for 2001 of $13,202,000 represents a 15.1%
decrease compared to 2000. As a percentage of sales, GP% was 29.7% for 2001
compared to 30.9% for 2000. This decrease was mainly due to lower sales volume
and introductory pricing necessary to increase market share.

      Selling, General and Administrative Expenses. S,G&A as a percentage of
sales was 23.7% in 2001 compared to 22.5% in 2000. The increase in S,G&A as a
percentage of sales is primarily due to decreased sales volume, partially offset
by reduced expenses. S,G&A decreased by $770,000 mainly due to lower sales
related variable costs, promotion expense and legal expense, partially offset by
higher bad debt expense.

      Operating Income. Operating income for 2001 of $2,674,000 represents a
37.1% decrease compared to 2000 primarily due to lower sales volume and lower
GP%, partially offset by lower S,G&A.

      Other Expenses, net. Other expenses, net was $1,689,000 in 2001 compared
to $343,000 in 2000 mainly due to reduced equity in income of affiliates
("equity income") and a one-time charge as described below. Net interest expense
was $986,000 in 2001 compared to $1,012,000 in 2000. Equity income was $60,000
in 2001 compared to $669,000 in 2000. Lower sales to General due to economic
conditions in the U.S. reduced the earnings of its joint ventures. The
consolidation of NGBC's financial statements also caused a decrease in equity
income. Additionally, the 2000 equity income includes the Company's share of net
earnings from a joint venture prior to the inclusion of an additional partner.
2001 also includes a one-time charge of $763,000 for an agreement reached
between General and GRC, allocating the proceeds and litigation costs from the
previously reported litigation with Xerox (see the Company's report on Form 8-K
dated May 29, 2001 as well as the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 2000.) Even though the Company was not legally or
contractually obligated to reimburse GRC, a related party, the Company agreed to
enter into the reimbursement agreement because the Company believed it was fair
and equitable to do so as Realty had paid legal expenses for the benefit of the
Company. The reimbursement, due to GRC in the form of additional rent payments
by General of $18,780.17 per month for 48 months, commenced in June 2001.

      Income Tax. The Company recorded income tax expense of $212,000 in 2001
compared to $1,363,000 in 2000. The Company's effective income tax rate was
21.5% in 2001 compared to 34.9% in 2000. The 2001 effective rate is reflective
of income taxes not being provided for on certain foreign income expected to be
permanently reinvested. The 2000 effective rate reflects a normal rate of
taxation.

      Discontinued Operations. Machine tool sales of $11,179,000 were 22.5%
higher than 2000 due primarily to the continued development of markets for the
Company's plant in Romania, partially offset by slower economic conditions in
the United States. GP% for machine tools was 38.6% in 2001 compared to 32.1% in
2000. This increase is mainly due to higher sales volume. S,G&A for machine
tools decreased by $1,231,000 mainly due to reduced bad debt expenses and lower
costs for trade conventions as well as the implementation of cost reduction
programs to offset the economic conditions in the United States. Operating
income for Machine Tools increased to $227,000 in 2001 compared to a loss of
$2,389,000 in 2000 primarily due to higher sales volume and reduced S,G&A. Other
expense, net was $28,000 in 2001 compared to income of $44,000 in 2000.


                                       11
<PAGE>

      Net Income. Net income for 2001 decreased 66.0% from 2000 to $638,000 or
$.16 per basic and diluted share, from $1,879,000 or $.46 per basic and diluted
share in 2000, primarily due to lower sales volume and increased other expenses,
net, partially offset by reduced S,G&A.

Financial Condition, Liquidity and Capital Resources

      During the three years ended December 28, 2002, the Company's primary
sources of capital have been net cash provided by operating activities and a
Revolving Credit Facility. The primary demands on the Company's capital
resources have been investments in and advances to affiliates (joint ventures)
and fixed asset purchases made to broaden the Company's product offering and
improve operations. At December 28, 2002 and December 29, 2001, the Company had
working capital of $14,201,000 and $30,276,000, respectively. The reduction in
working capital is attributable to the reclassification of the revolving line of
credit as short term as the agreement expires on June 30, 2003. The Company
expects to enter into a new Revolving Credit Facility upon its expiration.

      Cash provided by operating activities in 2002 was $2,346,000. Cash
provided from net income before the loss on impairment of the discontinued
operations, depreciation and amortization, reduced accounts receivable and
increased accounts payable and accrued expenses was partially offset by
increased inventory and prepaid expenses and other assets. The increase in
accounts payable and accrued expenses is primarily due to higher inventory in
transit.

      Cash used in investing activities in 2002 was $7,374,000. General invested
cash of $820,000 in SGBC as part of the new joint venture contract whereby
ownership will be shared equally, with General assuming control of operations
upon meeting its revised investment requirement. Cash used in investing
activities also includes $6,587,000 for capital expenditures. The majority of
the capital expenditures is related to the growth of NGBC and JGBR.

      Cash provided by financing activities in 2002 was $6,339,000. During 2002,
the Company had a net increase in debt under its revolving credit facility of
$1,711,000 and a net increase of $5,701,000 in Notes payable - banks mainly to
finance payments for capital equipment to support the growth of NGBC and JGBR.
The Company used cash of $720,000 for stock repurchases under the Company's
Stock Repurchase Program ("the Program") and repaid $153,000 against its lease
finance facility.

      At December 28, 2002, the Company had outstanding debt of $14,458,000
under its Revolving Credit Facility and had further availability of
approximately $6.0 million. The Company expects to enter into a new Revolving
Credit Facility upon its expiration. The Company is in compliance with all of
its loan covenants.

      During 2002, the Company repurchased 194,550 shares of its common stock
for a cost of $720,000 under its Program. The Company has purchased 284,820
shares for a cost of $996,000 since the inception of the Program on January
11,2000.

      The Company believes that funds generated from continuing operations,
capital lease financing and borrowing under the existing and any future
revolving credit facilities will be sufficient to finance the Company's
investment commitments, anticipated working capital and capital expenditure
requirements for at least the next 24 months. The Company's operating cash flow
could be adversely affected if there was a decrease in demand for the Company's
products, if the Company was unable to continue to reduce its inventory, or if
General was unable to renew or replace the revolving credit facility when the
current facility expires on June 30, 2003. The table and notes below describe
the Company's contractual obligations related to its liquidity.


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                 Payments Due by Period
                                               -----------------------------------------------------------
                                                              Less
                                                             than 1       1 - 3        4 - 5       After 5
                                                Total         year        years        years        years
                                               -------      -------      -------      -------      -------
<S>                                            <C>          <C>          <C>          <C>          <C>
Contractual Obligations:

  Bank revolving line of credit                $14,458      $14,458      $    --      $    --      $    --

  Notes payable - banks                         11,377        7,114        3,659          604           --

  Notes payable - other                          3,105          200        2,905           --           --

  Capital lease obligations                        467          196          271           --           --

  Other long term liabilities - affiliate        1,123           --        1,123           --           --
                                               -------      -------      -------      -------      -------

  Total obligations - per Balance Sheet         30,530       21,968        7,958          604           --

  Off Balance Sheet items:

  Operating leases                               6,414        1,323        3,857        1,234           --

  Investment obligations                         1,281          281        1,000           --           --
                                               -------      -------      -------      -------      -------

  Total contractual cash obligations           $38,225      $23,572      $12,815      $ 1,838      $    --
                                               =======      =======      =======      =======      =======
</TABLE>

Pursuant to requirements imposed in 1993 by the United States Office of Foreign
Assets Control ("OFAC"), at the end of 2002 the Company also carried on its
books a $619,000 net payable ("IKL payable") to General IKL Corp., an affiliate.
The requirement arose out of sanctions imposed by the U.S. government on the
countries comprising the former Republic of Yugoslavia, "freezing" certain
assets in the United States. In February, 2003, OFAC "unfroze" assets affected
by the sanctions and the Company reduced a significant portion of the IKL
payable which the Company disputed.

The Company uses letters of credit to support certain advance payments received
from customers in the normal course of business.

Inflation

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

Recent Accounting Standards

      In June 2000, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 138 ("FAS 138"), "Accounting for
Certain Derivative Instruments and Certain Hedging Activities" which amended FAS
133. The amendments in FAS 138 address certain implementation issues and relate
to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized foreign currency
denominated assets and liabilities, and intercompany derivatives.

      Effective December 31, 2000, the Company adopted FAS 133 and FAS 138. The
initial impact of adoption on the Company's financial statements was recorded in
2001 and was not material. The ongoing effect of adoption on the Company's
consolidated financial statements will be determined each quarter by several
factors, including the specific hedging instruments in place and their
relationships to hedged items, as well as market conditions at the end of each
period.


                                       13
<PAGE>

      In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition in financial statements. The Company adopted
SAB 101 in 2000 and there was no material effect on the Company's operating
results.

      The consolidated financial statements reflect, for all periods presented,
the adoption of the classification requirements pursuant to Emerging Issues Task
Force ("EITF") 00-10, Accounting for Shipping and Handling Fees and Costs, EITF
00-14, Accounting for Certain Sales Incentives, and EITF 00-22, Accounting for
"Points" and Certain Other Time Based or Volume Based Sales Incentive Offers,
and Offers for Free Products to be Delivered in the Future, which were effective
in the Company's fourth quarter of 2000. The Company reclassified to "Net sales"
income from freight charged to customers, and the cost of rebates provided to
customers pursuant to promotional incentive programs, which were historically
included in "Selling, general and administrative" expenses for all periods
presented.

      In June 2001, the FASB issued SFAS No. 141, "Business Combinations." This
pronouncement eliminated the use of the "pooling of interests" method of
accounting for all mergers and acquisitions. As a result, all mergers and
acquisitions will be accounted for using the "purchase" method of accounting.
SFAS No. 141 is effective for all mergers and acquisitions initiated after June
30, 2001. Adoption of this pronouncement had no impact on the Company's
financial results.

      In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This statement addresses financial accounting and reporting for
intangible assets (excluding goodwill) acquired individually or with a group of
other assets at the time of their acquisition. It also addresses financial
accounting and reporting for goodwill and other intangible assets subsequent to
their acquisition. Intangible assets (excluding goodwill) acquired outside of a
business combination will be initially recorded at their estimated fair value.
If the intangible asset has a finite useful life, it will be amortized over that
life. Intangible assets with an indefinite life are not amortized. Both types of
intangible assets will be reviewed annually for impairment and a loss recorded
when the asset's carrying value exceeds its estimated fair value. The impairment
test for intangible assets consists of comparing the fair value of the
intangible asset to its carrying value. Fair value for goodwill and intangible
assets is determined based upon discounted cash flows and appraised values. If
the carrying value of the intangible asset exceeds its fair value, an impairment
loss is recognized. Goodwill will be treated similar to an intangible asset with
an indefinite life. As required, the Company adopted SFAS No. 142 effective
December 30, 2001. The Company believes that the adoption of this pronouncement
will not have a material impact on the Company's financial results.

      In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement deals with the costs of closing
facilities and removing assets. SFAS No. 143 requires entities to record the
fair value of a legal liability for an asset retirement obligation in the period
it is incurred. This cost is initially capitalized and amortized over the
remaining life of the underlying asset. Once the obligation is ultimately
settled, any difference between the final cost and the recorded liability is
recognized as a gain or loss on disposition. As required, the Company will adopt
SFAS No. 143 effective January 1, 2003. The Company believes that the adoption
of this pronouncement will not have a material impact on the Company's financial
results.

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long Lived Assets." This pronouncement addresses how
to account for and report impairments or disposals of long lived assets. Under
SFAS No. 144, an impairment loss is to be recorded on long lived assets being
held or used when the carrying amount of the asset is not recoverable from its
expected future undiscounted cash flows. The impairment loss is equal to the
difference between the asset's carrying amount and estimated fair value. In
addition, SFAS No. 144 requires long lived assets to be disposed of by other
than a sale for cash to be accounted for and reported like assets being held and
used. Long lived assets to be disposed of by sale are to be recorded at the
lower of their carrying amount or estimated fair value (less costs to sell) at
the time the plan of disposition has been approved and committed to by the
appropriate company management. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. The Company adopted SFAS No. 144 on December
30, 2001 (for more information see Note 1 of Notes to Financial Statements and
the discontinued operations section of this MD&A).


                                       14
<PAGE>

      In June 2002, the FASB issued Statement of Financial Accounting Standards
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"
(SFAS No. 146), the provisions of which are effective for any exit or disposal
activities initiated by the Company after December 31, 2002. SFAS No. 146
provides guidance on the recognition and measurement of liabilities associated
with exit or disposal activities and requires that such liabilities be
recognized when incurred. The adoption of the provisions of SFAS No. 146 will
impact the measurement and timing of costs associated with any exit and disposal
activities initiated after December 31, 2002. The Company does not expect the
adoption of the provisions of SFAS No. 146 to have a material effect on its
consolidated results of operations or financial position.

      In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45), which expands previously issued
accounting guidance and disclosure requirements for certain guarantees. FIN 45
requires the Company to recognize an additional liability for the fair value of
an obligation assumed by issuing a guarantee. The disclosure provisions of FIN
45 are effective as of December 31, 2002. The provisions for initial recognition
and measurement of the liability are effective on a prospective basis for
guarantees that are issued or modified after December 31, 2002. The Company does
not expect the adoption of the provisions of FIN 45 to have a material effect on
its consolidated results of operations or financial position.

      In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" (FIN 46), which requires that the
primary beneficiary of a variable interest entity (VIE) consolidate the VIE. The
Company does not expect the adoption of the provisions of FIN 46 to have a
material effect on its consolidated results of operations or financial position.

Critical Accounting Policies:

The preparation of our consolidated financial statements in accordance with
generally accepted accounting principles is based on the selection and
application of accounting policies that require the Company to make significant
estimates and assumptions about the effect of matters that are inherently
uncertain. The Company considers the accounting policies discussed below to be
critical to the understanding of our financial statements. Actual results could
differ from our estimates and assumptions, and any such differences could be
material to our consolidated financial statements.

The Company did not initially adopt any accounting policies with a material
impact during 2002 other than the required adoption of SFAS No. 144.

Long Lived Assets (including Tangible and Definite Lived Intangible Assets).

The Company periodically evaluates the recoverability of the carrying amount of
its long lived assets (including property, plant and equipment and definite
lived intangible assets) whenever events or changes in circumstances indicate
that the carrying amount of a long lived asset group may not be fully
recoverable. These events or changes in circumstances include business plans and
forecasts, economic or competitive positions within an industry, as well as
current operating performance and anticipated future performance based on a
business' competitive position. An impairment is assessed when the undiscounted
expected future cash flows derived from an asset are less than its carrying
amount. Impairment losses are measured as the amount by which the carrying value
of a long lived asset exceeds its fair value and are recognized in earnings. The
Company continually applies its best judgment when applying the impairment rules
to determine the timing of the impairment test, the undiscounted cash flows used
to assess impairment, and the fair value of an impaired long lived asset group.
The dynamic economic environment in which our businesses operate and the
resulting assumptions used to estimate future cash flows impact the outcome of
all impaired tests. For information on recognized impairment charges see Note 1
of Notes to Financial Statements and the discontinued operations section of this
MD&A.

Interest Rate Swap

See Item 7a Quantitative and Qualitative Disclosure about Market Risk for
information about the Company's interest rate swap.


                                       15
<PAGE>

Forward Looking Statements

      Except for historical information contained herein, statements contained
in this Form 10-K constitute forward-looking statements made pursuant to the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve material risks and uncertainties,
including, without limitation, statements as to management's beliefs,
strategies, plans, projections, expectations or opinions related to the
Company's future performance which are based on a number of assumptions that may
ultimately prove to be inaccurate.

Item 7a. Quantitative and Qualitative Disclosure about Market Risk

      The Company is subject to market risk primarily associated with changes in
interest rates and foreign currency exchange rates. In order to manage the
volatility relating to interest rates, the Company has entered into an interest
rate swap agreement. In order to manage the volatility relating to foreign
currency exchange rates the Company denominates substantially all purchase and
sale transactions in U.S. dollars. The Company does not anticipate any material
changes in its primary market risk exposures in the near future.

The Company does not execute transactions or hold derivative financial
instruments for trading purposes.

INTEREST RATE RISK

      The Company's primary market risks are fluctuations in interest rates and
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
on its bank debt and interest rate swap (see Note 8 to the Consolidated
Financial Statements). As of December 28, 2002, the Company had $7.2 million
outstanding subject to an interest rate swap. This swap is used to convert
floating rate debt relating to the Company's revolving credit agreement to fixed
rate debt to reduce the Company's exposure to interest rate fluctuations. The
net result was to substitute a fixed interest rate of 9.17% for the variable
rate. The swap amortizes by $75,000 per month and terminates in December 2007.
Under the interest rate environment during the year ended December 28, 2002, the
Company's interest rate swap agreement resulted in additional expense of
approximately $422,000.

      The following table provides information about the Company's interest rate
swap agreement that is sensitive to changes in interest rates. The table
presents average notional amounts and weighted average interest rates by fiscal
year. Notional amounts are used to calculate the contractual cash flows to be
exchanged under the swap contract.

<TABLE>
<CAPTION>
                                                                                                                   Fair
                                          2003         2004        2005        2006         2007       Total       Value
<S>                    <C>               <C>          <C>         <C>         <C>          <C>         <C>         <C>
In Thousands
Interest Rate Swaps
  Variable to Fixed (US$)                6,712        5,812       4,912       4,012        3,112       7,200       1,084
    Average Pay Rate                      9.17%        9.17%       9.17%       9.17%        9.17%       9.17%
    Average Receive Rate                  3.35%        3.86%       4.40%       4.82%        5.17%
</TABLE>

The following table provides information about the Company's variable rate debt.

<TABLE>
<CAPTION>
                                                                                                                  Fair
                                         2003         2004        2005        2006         2007        Total      Value
<S>                                     <C>          <C>         <C>         <C>          <C>         <C>         <C>
In Thousands
Debt:
  Variable Rate (US$)                   17,737       18,135      16,007      16,500       17,000      14,458      14,458
    Average Interest Rate                 3.75%        4.25%       4.75%       5.25%        6.25%       3.75%
</TABLE>


                                       16
<PAGE>

      The Company's management believes that fluctuations in interest rates in
the near term would not materially affect the Company's consolidated operating
results, financial position or cash flows as the Company has limited risks
related to interest rate fluctuations.

FOREIGN CURRENCY RISK

      The Company does not use foreign currency forward exchange contracts or
purchased currency options to hedge local currency cash flows or for trading
purposes. All sales arrangements from domestic companies with international
customers are denominated in U.S. dollars. Only a small fraction of the
Company's purchases are denominated in foreign currency. The Company purchases
approximately $2,000,000 of product monthly from its Chinese joint ventures,
which use proceeds thereof, to satisfy locally incurred liabilities in Renminbi
(RMB). Had there been an adverse 10% fluctuation between the exchange rate of
the U.S. dollar and the RMB, it would have resulted in a potential loss of
earnings of approximately $2.4 million at December 28, 2002. However, based upon
minimal historical volatility between the RMB and the U.S. Dollar, the Company
believes the likelihood of a significant potential loss in future earnings from
changes in the foreign currency exchange rate to be minimal.


                                       17
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                              FINANCIAL STATEMENTS
                   FOR THE THREE YEARS ENDED DECEMBER 28, 2002

<PAGE>

Item 8. Financial Statements and Supplementary Data

                   Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                  <C>
Report of Independent Certified Public Accountants........................................F-19

Consolidated Balance Sheets as of, December 28, 2002 and December 29, 2001................F-20

Consolidated Statements of Operations for the Years Ended
December 28, 2002, December 29, 2001 and December 30, 2000................................F-21

Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 28, 2002, December 29, 2001 and December 30, 2000..........................F-22

Consolidated Statements of Cash Flows for the Years Ended
December 28, 2002, December 29, 2001 and December 30, 2000................................F-23

Notes to Consolidated Financial Statements...........................................F-24 - 45
</TABLE>


                                       18
<PAGE>

               Report of Independent Certified Public Accountants

To the Board of Directors and Stockholders
General Bearing Corporation

We have audited the accompanying consolidated balance sheets of General Bearing
Corporation and subsidiaries as of December 28, 2002 and December 29, 2001, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended December
28, 2002. 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 auditing standards generally accepted
in the United States of America. 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 28, 2002 and December 29, 2001, and
the results of their operations and their cash flows for each of the three years
in the period ended December 28, 2002, in conformity with accounting principles
generally accepted in the United States of America.

Urbach Kahn & Werlin LLP

New York, New York
April 8, 2003


                                      F-19
<PAGE>

                                    General Bearing Corporation and Subsidiaries

                                                     Consolidated Balance Sheets
                            (In Thousands, except for shares and per share data)
================================================================================

<TABLE>
<CAPTION>
                                                                December 28,   December 29,
                                                                    2002           2001
-------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>
Assets
Current assets
  Cash and cash equivalents                                       $  3,158       $  1,847
  Accounts receivable, net of allowance for doubtful
    accounts of $335 in 2002 and $874 in 2001                       10,742         13,355
  Inventories                                                       28,218         30,116
  Prepaid expenses and other current assets                          4,368          4,756
  Advances to affiliates                                               186            114
  Deferred tax assets                                                2,427            631
-------------------------------------------------------------------------------------------
      Total current assets                                          49,099         50,819
-------------------------------------------------------------------------------------------

Fixed assets, net of accumulated depreciation                       21,308         22,049
-------------------------------------------------------------------------------------------

Investment in, advances to and accounts receivable
  from joint ventures and affiliates                                 3,670          2,841
-------------------------------------------------------------------------------------------

Other assets                                                         1,336            915
-------------------------------------------------------------------------------------------
Total assets                                                      $ 75,413       $ 76,624
===========================================================================================

Liabilities and Stockholders' Equity
Current liabilities
  Notes payable - banks                                           $  7,114       $  5,415
  Bank - revolving line of credit                                   14,458             --
  Accounts payable                                                   7,127          9,781
  Due to affiliates                                                  1,696            306
  Accrued expenses and other current liabilities                     4,107          4,660
  Current maturities of long term debt                                 396            381
-------------------------------------------------------------------------------------------
      Total current liabilities                                     34,898         20,543
-------------------------------------------------------------------------------------------

Long term debt, net of current maturities                            8,563         20,580
-------------------------------------------------------------------------------------------

Other long term liabilities - affiliate                                315            491
-------------------------------------------------------------------------------------------

Deferred taxes                                                         714            320
-------------------------------------------------------------------------------------------

Minority interests                                                   9,464         10,119
-------------------------------------------------------------------------------------------

Commitments and contingencies (Note 16)

Stockholders' equity
  Common shares - par value $.01 per share; authorized
    19,000,000 shares; issued 7,102,200 and 7,088,950 shares            71             71
  Paid-in capital                                                   40,133         40,094
  Accumulated other comprehensive loss                              (1,084)          (737)
  Treasury stock, at cost; 3,234,820 and 3,040,270 shares             (996)          (276)
  Accumulated deficit                                              (16,665)       (14,581)
-------------------------------------------------------------------------------------------
      Total stockholders' equity                                    21,459         24,571
-------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                        $ 75,413       $ 76,624
===========================================================================================
</TABLE>

                                  See Notes to Consolidated Financial Statements


                                      F-20
<PAGE>

                                    General Bearing Corporation and Subsidiaries

                                           Consolidated Statements of Operations
                             (In Thousands except for shares and per share data)
================================================================================

<TABLE>
<CAPTION>
                                                                    December 28,      December 29,      December 30,
                                                                        2002              2001             2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>               <C>
Sales                                                               $    60,306       $    44,474       $    50,270
Cost of sales                                                            43,151            31,272            34,722
-------------------------------------------------------------------------------------------------------------------

Gross profit                                                             17,155            13,202            15,548

Selling, general and administrative expenses                             12,733            10,528            11,298
-------------------------------------------------------------------------------------------------------------------

Operating income                                                          4,422             2,674             4,250
Other expenses, net                                                       1,797             1,689               343
-------------------------------------------------------------------------------------------------------------------

Income from continuing operations before income taxes                     2,625               985             3,907
Income taxes                                                              1,105               212             1,363
-------------------------------------------------------------------------------------------------------------------

Income from continuing operations before minority interests               1,520               773             2,544
Minority interests                                                         (672)             (405)                8
-------------------------------------------------------------------------------------------------------------------

Income from continuing operations                                           848               368             2,552
-------------------------------------------------------------------------------------------------------------------

Income / (loss) from discontinued operations                             (4,706)              506              (724)

Income tax benefit (expense)                                              1,774              (236)               51
-------------------------------------------------------------------------------------------------------------------

Income / (loss) from discontinued operations                             (2,932)              270              (673)

-------------------------------------------------------------------------------------------------------------------
Net income / (loss)                                                 $    (2,084)      $       638       $     1,879
===================================================================================================================

Income per common share from continuing operations:

     Basic                                                          $      0.22       $      0.09       $      0.62

     Diluted                                                        $      0.22       $      0.09       $      0.62

Income / (loss) per common share from discontinued operations:

     Basic                                                          $     (0.76)      $      0.07       $     (0.16)

     Diluted                                                        $     (0.76)      $      0.07       $     (0.16)

Income / (loss) per common share from net income:

     Basic                                                          $     (0.54)      $      0.16       $      0.46

     Diluted                                                        $     (0.54)      $      0.16       $      0.46

Weighted average number of common shares:

     Basic                                                            3,867,380         4,108,993         4,109,565

     Diluted                                                          3,874,853         4,108,993         4,109,565
</TABLE>

                                  See Notes to Consolidated Financial Statements


                                      F-21
<PAGE>

                                    General Bearing Corporation and Subsidiaries

                      Consolidated Statements of Changes in Stockholders' Equity
                                                (In Thousands except for shares)
================================================================================

<TABLE>
<CAPTION>
                                                     Accumulated
                                 Common Shares         Other
                              --------------------  Comprehensive    Paid-In        Treasury Stock       Comprehensive      Accum.
                                Shares      Amt.       Income        Capital       Shares        Amt.        Income        Deficit
===================================================================================================================================
<S>                           <C>         <C>        <C>           <C>           <C>          <C>          <C>           <C>
Balance, January 1, 2000      7,064,950   $     71   $       (7)   $   39,744    3,000,000    $      --    $       --    $  (15,004)

Shares issued - board
compensation                      8,000         --           --            43           --           --            --            --

Treasury shares, at cost             --         --           --            --       10,300          (51)           --            --

Foreign currency translation
adjustment                           --         --           (3)           --           --           --            (3)           --

Distribution to WMC
shareholders                         --         --           --            --           --           --            --        (2,094)

Options exercised                    --         --           --           207      (50,000)          --            --            --

Net income                           --         --           --            --           --           --         1,879         1,879
                                                                                                           ----------

Comprehensive income                 --         --           --            --           --           --         1,876            --
                             ----------   --------   ----------    ----------   ----------    ---------    ----------    ----------

Balance, December 30, 2000    7,072,950         71          (10)       39,994    2,960,300          (51)           --       (15,219)

Shares issued - board
compensation                     16,000         --           --           100           --           --            --            --

Treasury shares, at cost             --         --           --            --       79,970         (225)           --            --

Net income                           --         --           --            --           --           --           638           638

Mark to market - interest
rate swap                            --         --         (727)           --           --           --          (727)           --
                             ----------   --------   ----------    ----------   ----------    ---------    ----------    ----------

Comprehensive loss                   --         --           --            --           --           --           (89)           --
                             ----------   --------   ----------    ----------   ----------    ---------    ----------    ----------

Balance, December 29, 2001    7,088,950         71         (737)       40,094    3,040,270         (276)           --       (14,581)

Shares issued - board
compensation                     12,000         --           --            33           --           --            --            --

Options exercised                 1,250         --           --             6           --           --            --            --

Treasury shares, at cost             --         --           --            --      194,550         (720)           --            --

Net loss                             --         --           --            --           --           --        (2,084)       (2,084)

Adjust for change in
foreign currency                     --         --           10            --           --           --            10            --

Mark to market - interest
rate swap                            --         --         (357)           --           --           --          (357)           --
                             ----------   --------   ----------    ----------   ----------    ---------    ----------    ----------

Comprehensive loss                   --         --           --            --           --           --        (2,431)           --
                             ----------   --------   ----------    ----------   ----------    ---------    ----------    ----------

Balance, December 28, 2002    7,102,200   $     71   $   (1,084)   $   40,133    3,234,820    $    (996)           --    $  (16,665)
===================================================================================================================================
</TABLE>

                                  See Notes to Consolidated Financial Statements


                                      F-22
<PAGE>

                                    General Bearing Corporation and Subsidiaries

                                           Consolidated Statements of Cash Flows
                                                                  (In Thousands)
================================================================================

<TABLE>
<CAPTION>
                                                                    December     December      December
                                                                    28, 2002     29, 2001      30, 2000
-------------------------------------------------------------------------------------------------------
<S>                                                                 <C>           <C>           <C>
Cash Flows from Operating Activities
  Net income / (loss)                                               $(2,084)      $   638       $ 1,879
  Adjustments to reconcile net income / (loss) to net cash
    provided by operating activities:
      Minority interests                                               (834)           98        (1,628)
      Depreciation and amortization                                   2,065         1,066         1,233
      Loss on impairment of discontinued operations, net              3,965            --            --
      Deferred income taxes                                          (1,350)         (142)          212
      Equity in (income) loss of joint ventures and affiliates          193           (60)         (669)
      Net (gain) loss on equipment sales and disposal                   (24)           57            --
      Other non - cash items charged to income                           38           100            43
      Changes in:
        Accounts receivable                                           1,935        (1,522)        1,505
        Inventories                                                  (3,899)        3,758        (4,202)
        Prepaid expenses and other assets                              (830)          554          (124)
        Advances to / (from) affiliates                               1,163           999           369
        Accounts payable and accrued expenses                         2,008        (1,273)        2,938
-------------------------------------------------------------------------------------------------------
          Net cash provided by operating activities                   2,346         4,273         1,556
-------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities
  Investments in affiliates, net                                       (820)           --          (750)
  Advances to affiliates                                                 --          (600)       (2,597)
  Increase in equity interests, net of cash acquired                     --         1,986            --
  Fixed asset purchases                                              (6,587)       (2,555)         (948)
  Proceeds from sale of fixed assets                                     33           100            --
-------------------------------------------------------------------------------------------------------
          Net cash used in investing activities                      (7,374)       (1,069)       (4,295)
-------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities
  Repayment of capital lease                                           (153)         (181)         (650)
  Increase (decrease) in note payable - banks                         5,701           440        (3,459)
  Decrease in note payable - other                                     (200)           --            --
  Net proceeds from / (repayment of) revolving credit facility        1,711        (2,006)        3,347
  Proceeds from equipment financing                                      --            --           968
  Proceeds from long-term debt                                           --           118            --
  Proceeds from sale of common shares                                    --            --             5
  Return of capital                                                      --            --          (500)
  Purchase of treasury stock                                           (720)         (225)          (51)
-------------------------------------------------------------------------------------------------------
          Net cash provided by (used in) financing activities         6,339        (1,854)         (340)
-------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                  1,311         1,350        (3,079)
Cash and cash equivalents, beginning of period                        1,847           497         3,576
-------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                            $ 3,158       $ 1,847       $   497
=======================================================================================================
</TABLE>

                                  See Notes to Consolidated Financial Statements


                                      F-23
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies

            The Company

            General Bearing Corporation ("General") and subsidiaries
            (collectively, "the Company") operates in two business segments:
            bearings and machine tools. In December of 2002, the Company's Board
            of Directors and management resolved to discontinue the operations
            of the machine tool segment by disposing of the net assets by sale
            during 2003. Subsequent to SFAS No. 144, prior year financial
            statements of the Company have been reclassified to segregate
            discontinued operations from continuing operations.

            >>    Continuing Operations (Bearing Segment). The Company, through
                  General and its 50% or more owned joint ventures, Rockland
                  Manufacturing Company ("Rockland"), Ningbo General Bearing
                  Company, Ltd. ("NGBC") and Jiangsu General Ball and Roller
                  Company, Ltd. ("JGBR"), manufactures, sources, assembles and
                  distributes a variety of bearings and bearing components,
                  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, both primarily in the United States and Asia. The
                  Company's products are used in a broad range of applications,
                  including automobiles, railroad cars, locomotives, trucks,
                  heavy duty truck trailers, office equipment, machinery and
                  appliances.

            >>    Discontinued Operations (Machine Tool Segment). The Company
                  manufactures machine tools through its majority owned
                  subsidiary World Machinery Works ("W.M. Works"). The Company,
                  through WMW Machinery Company, Inc. ("WMW"), a wholly-owned
                  subsidiary of General, distributes machine tools in North
                  America. The Company also distributes machine tools in other
                  countries through its majority-owned subsidiary, World
                  Machinery Group, BV ("WMG").

                  Based on several years of disappointing performance of the
                  machine tool segment and the Company's desire to focus its
                  resources on its core business, the Company's Board of
                  Directors and management resolved to discontinue the
                  operations of the segment by disposing of the net assets by
                  sale in 2003. During 2002, the Company reduced the net asset
                  carrying amounts of machine tools to zero and recorded an
                  impairment writedown associated with discontinued operations
                  of approximately $2,242,000.

            Summary of Significant Accounting Policies

            Principles of Consolidation: The accompanying consolidated financial
            statements include the accounts of General, its wholly owned
            subsidiaries and all joint ventures in which General maintains
            control and has at least a 50% ownership share. The Consolidated
            Statements of Operations have been restated to reflect the results
            from discontinued operations of the machine tool segment as a single
            line item for all years presented. Investments in other joint
            ventures are carried under the equity method. The years ended
            December 28, 2002, December 29, 2001, and December 30, 2000 are
            referred to as fiscal 2002, fiscal 2001, and fiscal 2000,
            respectively.

            A summary description of each of the Company's wholly owned
            subsidiaries and joint ventures in which General maintains control
            and has at least a 50% ownership interest are as follows:


                                      F-24
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            Continuing Operations:

            NGBC, established in 1998 for an initial term of sixteen years, is a
            joint venture with China Ningbo Genda Bearing Company, Ltd. Located
            in Yuyao City, Peoples Republic of China (PRC), this venture
            manufactures ball and roller bearings and their components.
            Initially a 33% owned joint venture of General, General increased
            its ownership to 42% in 2000 by contributing an additional $650,000
            in cash. In July 2001, General increased its ownership to 50% by
            contributing $1.2 million in cash and General assumed control of
            management of the operations. Operations since July 2001 have been
            fully consolidated in the financial statements. Upon expiration or
            early termination of the business term, assets will be distributed
            to the partners in the same proportion as their respective paid
            investments to the registered capital.

            NN General, LLC ("NNG") established in March 2000, was initially a
            50% owned joint venture with NN Ball & Roller, Inc. ("NN"), an
            unrelated party. Pursuant to the terms of this venture General
            assigned its 60% interest in JGBR to NNG. General's initial cash
            investment in NNG was $100,000. General also advanced NNG loans
            amounting to approximately $2,767,000 including interest at the
            applicable federal rate. On December 27, 2001, General and NN
            contributed all loans and accrued interest advanced to NNG to NNG's
            capital and General purchased NN's 50% interest for cash and notes
            valued at approximately $3.9 million (book value), effectively
            increasing General's interest in JGBR back to 60%. On June 30, 2002,
            NNG's ownership in JGBR was reduced to 51% by agreement of the
            partners, and in conjunction with commitments by the partners to
            contribute additional capital reflective of the new ownership
            percentages.

            JGBR, established in 1999, is a joint venture with Jiangsu Lixing
            Steel Ball Factory ("JSBF"), an unrelated party. Located in Rugao
            City, China, this venture is comprised of the operations of JSBF, a
            manufacturer of rolling elements for bearings. Effective with
            General's acquisition of NN's interest in NNG, the operations of
            JGBR have been fully consolidated.

            Rockland, a general partnership, is owned equally by General and
            Wafangdian USA, Inc., a wholly owned subsidiary of Wafangdian
            Bearing Company, Ltd. ("WFGDN"). Rockland's principal business is
            the design and manufacture of cylindrical roller and spherical
            roller bearings and bearing components. Substantially all of
            Rockland's inventory (see below) is purchased on a consigned basis
            from WFGDN, or Wafangdian General Bearing Company, Ltd. ("WGBC", see
            below), a foreign joint venture in which General owns a minority
            interest. Substantially all of Rockland's production is sold to
            General.

            General IKL Corporation ("IKL") is an inactive joint venture located
            in the former Republic of Yugoslavia in which General holds a 50%
            interest.

            World Machinery Company ("World") is a holding company and is 100%
            owned by General. World exists primarily to hold stock of other
            companies. World owns 2,950,000 shares of General's common stock
            which have been treated as treasury stock in the consolidated
            financial statements.

            Discontinued Operations:

            WMW is a wholly owned subsidiary of World. WMW is engaged in the
            distribution of machines and machine tools in North America,
            principally to machine tool dealers and manufacturing companies.

            WMG is a 60% owned joint venture of World located in the
            Netherlands, whose principal asset is a 60% interest in W.M. Works,
            a Romanian manufacturer of machine tools acquired during 1998
            pursuant to Romania's privatization program. The majority of W.M.
            Works' sales are made through WMG, which utilizes independent
            regional sales agencies.


                                      F-25
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            Revenues for discontinued operations for each of the three years in
            the period ended December 28, 2002 were $8,613,000, $11,179,000 and
            $9,123,000, respectively.

            A summary of joint ventures (all in continuing operations) in which
            the Company holds less than a 50% interest are as follows:

            Shanghai General Bearing Company, Ltd. ("SGBC") was established in
            1987 as a 25% owned joint venture with Shanghai Roller Bearing
            Factory ("SRBF"), located in Shanghai, PRC. The venture is a limited
            liability company formed in accordance with PRC law. SGBC produces
            tapered roller bearings, which the Company imports into the U.S. for
            further assembly, inspection, testing and distribution. In November
            2001, General and SRBF agreed to a new joint venture contract
            whereby ownership would be shared equally, with General assuming
            control of operations upon General meeting its requirement to
            contribute an additional $3 million through 2004. At March 24, 2003,
            General has satisfied $2 million of this requirement. The official
            business license for the revised joint venture company was granted
            in February 2002. General maintains the exclusive right to sell the
            products of SGBC in the United States.

            Shanghai Pudong General Bearing Company, Ltd ("SPGBC") is a 25%
            owned joint venture with Shanghai Xiua Industrial Corporation,
            established in 1996. Located in the Pudong Industrial Zone of
            Shanghai, China, this venture produces ball bearings for sale in the
            U.S. by General.

            WGBC is a 25% owned joint venture with Wafangdian Bearing Company.
            This venture produces components for spherical roller bearings and
            railroad bearings in the PRC. General sells WGBC's products in the
            United States.

            All significant intercompany accounts and transactions have been
            eliminated.

            Cash Equivalents: The Company considers all investments in highly
            liquid debt instruments with maturities of three months or less from
            date of purchase and money market funds to be cash equivalents.

            Inventories: Inventories are stated at the lower of cost (first-in,
            first-out method) or market.

            Rockland maintains the right to return all unsold inventory and is
            obligated to remit payment for inventory only upon sale.
            Accordingly, the Company treats these materials to be inventory held
            on consignment and has not recorded them in inventory at December
            28, 2002, December 29, 2001 and December 30, 2000. Inventory at
            December 28, 2002 and December 29, 2001 consists of approximately
            $1,686,000 and $1,494,000, respectively, of inventory acquired
            outside the consignment agreement and costs related to consigned
            goods. The consigned inventory amounted to approximately $2,604,000
            and $3,194,000 at December 28, 2002 and December 29, 2001,
            respectively.

            Comprehensive Income: Comprehensive income refers to revenue,
            expenses, gains and losses that under generally accepted accounting
            principles are excluded from net income, as these amounts are
            recorded directly as adjustments to stockholders' equity. The
            Company's comprehensive income is comprised of foreign currency
            translation adjustments and accounting for an interest rate swap.

            The Company uses an interest rate swap agreement as a derivative to
            hedge against the variable interest rate on a portion of its
            revolving credit facility, to reduce its exposure to fluctuations in
            interest rates. The Company's accounting policies for these
            instruments are based on its designation of such instruments as
            hedging transactions. The Company does not enter into such contracts
            for speculative purposes. The Company records all derivatives on the
            balance sheet at fair value.


                                      F-26
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            For derivative instruments that are designated and qualify as a fair
            value hedge (i.e. hedging the exposure to changes in the fair value
            of an asset or a liability or an identified portion thereof that is
            attributable to a particular risk), the gain or loss on the
            derivative instrument as well as the offsetting gain or loss on the
            hedged item attributable to the hedged risk are recognized in
            earnings in the current period. For derivative instruments that are
            designated and qualify as a cash flow hedge, such as the swap
            agreement, (i.e. hedging the exposure of variability of expected
            future cash flows that is attributable to a particular risk), the
            effective portion of the gain or loss on the derivative instrument
            is reported as a component of Accumulated Comprehensive Income (a
            component of stockholders' equity) and reclassified into earnings in
            the same period or periods during which the hedged transaction
            affects earnings. The remaining gain or loss on the derivative
            instrument, if any (i.e. the ineffective portion of any portion of
            the derivative excluded from the assessment of effectiveness) is
            recognized in earnings in the current period. For derivative
            instruments not designated as hedged instruments, changes in their
            fair values are recognized in earnings in the current period.

            Comprehensive income for each of the three years in the period ended
            December 28, 2002 is presented in the Statements of Changes in
            Stockholders' Equity.

            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:

            Classification                Estimated Life (Years)
            --------------------------------------------------------------------
              Land                        No depreciation
              Buildings                   10 to 40
              Machinery and equipment     3 to 10
              Furniture and fixtures      10
              Transportation equipment    3 to 5
              Leasehold improvements      Lesser of life of lease or useful life
              Software                    5
            --------------------------------------------------------------------

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

            Evaluating Recoverability of Long Lived Assets: The Company reviews
            the carrying values of its long lived and identifiable intangible
            assets for possible impairment whenever events or changes in
            circumstances indicate that the carrying amount of the assets may
            not be recoverable. The Company assesses recoverability of these
            assets by estimating future nondiscounted cash flows. Any long lived
            assets held for disposal are reported at the lower of their carrying
            amounts or fair value less cost to sell. During 2000, the Company
            recorded an impairment writedown of $501,000. During 2002, the
            Company recorded an impairment writedown, net of related tax
            effects, on assets associated with discontinued operations of
            approximately $2,242,000.

            Fiscal Year: The reporting period for the Company is a 52-53 week
            fiscal year. There were 52 weeks in the periods ended December 28,
            2002, December 29, 2001 and December 30, 2000.

            Revenue Recognition: The Company recognizes revenue when products
            are shipped and title passes to the customer. Selling prices are
            fixed based on purchase orders or contractual arrangements. Customer
            acceptance and account collectibility can be reasonably assured as
            write-offs of accounts receivable have historically been low. The
            Company provides, as a reduction in sales, for anticipated returns
            and allowances on defective merchandise based on known claims and an
            estimate of anticipated returns in accordance with SFAS No 5.


                                      F-27
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            Shipping and Handling Costs: The Company accounts for certain
            shipping and handling costs as a component of "Selling, general and
            administrative expenses." These costs represent primarily the
            freight and direct compensation costs of employees who pick, pack
            and otherwise prepare, if necessary, merchandise for shipment to the
            Company's customers. Total costs were $1,200,000, $644,000, and
            $671,000 in fiscal 2002, 2001 and 2000, respectively.

            Advertising: Advertising costs are expensed as incurred. Advertising
            expense for each of the three years in the period ended December 28,
            2002 was $91,000, $150,000, and $228,000, respectively.

            Income Taxes: Prior to the transaction described in Note 2, General
            filed a consolidated Federal income tax return with World through
            the date of its initial public offering, completed in February,
            1997; thereafter, it filed its own federal returns. State and local
            tax returns are filed separately. Federal income taxes were
            calculated as if General filed its tax return on a separate return
            basis for all periods presented. World filed a consolidated federal
            income tax return with its wholly owned subsidiaries and separate
            state and local tax returns. Subsequent to the transaction described
            in Note 2, the Company files a consolidated Federal income tax
            return.

            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, and operating loss carryforwards.

            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 Value of Financial Instruments: Statement of
            Financial Accounting Standards ("SFAS") No. 107, "Disclosure About
            Fair Value of Financial Instruments", requires disclosures of fair
            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. To
            reduce its exposure to fluctuations in interest rates, the Company
            is party to an interest rate swap with its bank (Note 8). It is not
            practical to determine the fair value of receivables from, payables
            to and long-term debt payable to affiliates and other because of the
            nature of their terms.

            Concentration of Credit and Other Risk: The Company extends credit
            based on an evaluation of 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. The Company obtained
            76%, 76%, and 85% of its bearing and component requirements from
            various Chinese joint ventures in the fiscal years ended 2002, 2001
            and 2000, respectively. In 2002, 2001 and 2000, respectively, the
            Company obtained 57%, 51% and 87% of its machine tool requirements
            from various companies in Romania.

            Cash accounts at financial institutions from time to time may exceed
            the federal depository insurance coverage limit.


                                      F-28
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            Foreign Currency Translation: Foreign currency financial statements
            of foreign operations where the local currency is the functional
            currency are translated using exchange rates in effect at period end
            for assets and liabilities and average exchange rates during the
            period for results of operations. Related translation adjustments
            are reported as a separate component of stockholders' equity. For
            foreign operations where the U.S. dollar is the functional currency
            and for countries which are considered highly inflationary,
            translation practices differ in that inventories, properties,
            accumulated depreciation and depreciation accounts are translated at
            historical rates of exchange and translation adjustments are
            included in earnings. Gains and losses from foreign currency
            transactions are generally included in earnings. All foreign
            subsidiaries, except for W.M. Works, use the local currency as the
            functional currency. The effect on cash of foreign currency
            translations is not material.

            Stock-Based Compensation: The Financial Accounting Standards Board
            ("FASB") Statement of Financial Accounting Standards No. 123,
            "Accounting for Stock-Based Compensation ("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.

            Income / (loss) Per Common Share: Income / (loss) per common share
            is computed on the basis of the weighted average number of common
            shares outstanding during the year. Basic income / (loss) per share
            excludes and diluted income / (loss) per share includes any dilutive
            effects of options, warrants, and convertible securities.

            Reclassification: Certain prior year amounts have been reclassified
            to conform with the current year presentation. The Consolidated
            Statements of Operations have been reclassified to reflect the
            results from discontinued operations of the machine tool segment as
            a single line item for all years presented.

            Recent Accounting Standards: In June 2000, the FASB issued Statement
            of Financial Accounting Standards No. 138 ("FAS 138"), "Accounting
            for Certain Derivative Instruments and Certain Hedging Activities"
            which amended FAS 133. The amendments in FAS 138 address certain
            implementation issues and relate to such matters as the normal
            purchases and normal sales exception, the definition of interest
            rate risk, hedging recognized foreign currency denominated assets
            and liabilities, and intercompany derivatives.

            Effective December 31, 2000, the Company adopted FAS 133 and FAS
            138. The initial impact of adoption on the Company's financial
            statements was not material. The ongoing effect of adoption on the
            Company's consolidated financial statements will be determined each
            quarter by several factors, including the specific hedging
            instruments in place and their relationships to hedged items, as
            well as market conditions at the end of each period.

            In December 1999, the Securities and Exchange Commission issued
            Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition
            in Financial Statements." SAB 101 provides guidance on applying
            generally accepted accounting principles to revenue recognition in
            financial statements. The Company adopted SAB 101 in 2000 and there
            was no material effect on the Company's operating results.

            The consolidated financial statements reflect, for all periods
            presented, the adoption of the classification requirements pursuant
            to Emerging Issues Task Force ("EITF") 00-10, Accounting for
            Shipping and Handling Fees and Costs, EITF 00-14, Accounting for
            Certain Sales Incentives, and EITF 00-22, Accounting for "Points"
            and Certain Other Time Based or Volume Based Sales Incentive Offers,
            and Offers for Free Products to be Delivered in the Future, which
            became effective in the Company's fourth quarter of 2000. The
            Company reclassified to "Net sales" income from freight charged to
            customers, and the cost of rebates provided to customers pursuant to
            promotional incentive programs, which were historically included in
            "Selling, general and administrative" expenses for all periods
            presented.


                                      F-29
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            In June 2001, the FASB issued SFAS No. 141, "Business Combinations."
            This pronouncement eliminated the use of the "pooling of interests"
            method of accounting for all mergers and acquisitions. As a result,
            all mergers and acquisitions will be accounted for using the
            "purchase" method of accounting. SFAS No. 141 is effective for all
            mergers and acquisitions initiated after June 30, 2001. Adoption of
            this pronouncement had no impact on the Company's financial results.

            In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
            Intangible Assets." This statement addresses financial accounting
            and reporting for intangible assets (excluding goodwill) acquired
            individually or with a group of other assets at the time of their
            acquisition. It also addresses financial accounting and reporting
            for goodwill and other intangible assets subsequent to their
            acquisition. Intangible assets (excluding goodwill) acquired outside
            of a business combination will be initially recorded at their
            estimated fair value. If the intangible asset has a finite useful
            life, it will be amortized over that life. Intangible assets with an
            indefinite life are not amortized. Both types of intangible assets
            will be reviewed annually for impairment and a loss recorded when
            the asset's carrying value exceeds its estimated fair value. The
            impairment test for intangible assets consists of comparing the fair
            value of the intangible asset to its carrying value. Fair value for
            goodwill and intangible assets is determined based upon discounted
            cash flows and appraised values. If the carrying value of the
            intangible asset exceeds its fair value, an impairment loss is
            recognized. Goodwill will be treated similar to an intangible asset
            with an indefinite life. As required, the Company adopted SFAS No.
            142 effective December 30, 2001. The Company believes that the
            adoption of this pronouncement will not have a material impact on
            the Company's financial results.

            In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
            Retirement Obligations." This statement deals with the costs of
            closing facilities and removing assets. SFAS No. 143 requires
            entities to record the fair value of a legal liability for an asset
            retirement obligation in the period it is incurred. This cost is
            initially capitalized and amortized over the remaining life of the
            underlying asset. Once the obligation is ultimately settled, any
            difference between the final cost and the recorded liability is
            recognized as a gain or loss on disposition. As required, the
            Company will adopt SFAS No. 143 effective January 1, 2003. The
            Company believes that the adoption of this pronouncement will not
            have a material impact on the Company's financial results.

            In August 2001, the FASB issued SFAS No. 144, "Accounting for the
            Impairment or Disposal of Long Lived Assets." This pronouncement
            addresses how to account for and report impairments or disposals of
            long lived assets. Under SFAS No. 144, an impairment loss is to be
            recorded on long lived assets being held or used when the carrying
            amount of the asset is not recoverable from its expected future
            undiscounted cash flows. The impairment loss is equal to the
            difference between the asset's carrying amount and estimated fair
            value. In addition, SFAS No. 144 requires long lived assets to be
            disposed of by other than a sale for cash to be accounted for and
            reported like assets being held and used. Long lived assets to be
            disposed of by sale are to be recorded at the lower of their
            carrying amount or estimated fair value (less costs to sell) at the
            time the plan of disposition has been approved and committed to by
            the appropriate company management. SFAS No. 144 is effective for
            fiscal years beginning after December 15, 2001. The Company adopted
            SFAS No. 144 on December 30, 2001.


                                      F-30
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 1.     The Company and Summary of Significant Accounting Policies,
            (Continued)

            In June 2002, the FASB issued Statement of Financial Accounting
            Standards No. 146, "Accounting for Costs Associated with Exit or
            Disposal Activities" (SFAS No. 146), the provisions of which are
            effective for any exit or disposal activities initiated by the
            Company after December 31, 2002. SFAS No. 146 provides guidance on
            the recognition and measurement of liabilities associated with exit
            or disposal activities and requires that such liabilities be
            recognized when incurred. The adoption of the provisions of SFAS No.
            146 will impact the measurement and timing of costs associated with
            any exit and disposal activities initiated after December 31, 2002.

            In November 2002, the FASB issued FASB Interpretation No. 45,
            "Guarantor's Accounting and Disclosure Requirements for Guarantees,
            Including Indirect Guarantees of Indebtedness of Others" (FIN 45),
            which expands previously issued accounting guidance and disclosure
            requirements for certain guarantees. FIN 45 requires the Company to
            recognize an additional liability for the fair value of an
            obligation assumed by issuing a guarantee. The disclosure provisions
            of FIN 45 are effective as of December 31, 2002. The provisions for
            initial recognition and measurement of the liability are effective
            on a prospective basis for guarantees that are issued or modified
            after December 31, 2002. The Company does not expect the adoption of
            the provisions of FIN 45 to have a material effect on its
            consolidated results of operations or financial position.

            In January 2003, the FASB issued FASB Interpretation No. 46,
            "Consolidation of Variable Interest Entities" (FIN 46), which
            requires that the primary beneficiary of a variable interest entity
            (VIE) consolidate the VIE. The Company does not expect the adoption
            of the provisions of FIN 46 to have a material effect on its
            consolidated results of operations or financial position.

Note 2.     Acquisition

            In July 2000, General acquired 100% of World, which, prior to the
            acquisition, owned 74.8% of the outstanding common stock of General.
            World was principally owned by members of General's Board of
            Directors and senior management. This combination was accounted for
            in a manner similar to a pooling of interests. In consideration for
            this transaction, General issued 3,140,000 shares of its common
            stock, $.01 per share par value. Shares of General's common stock,
            now owned by World (2,950,000), are now carried as treasury stock in
            consolidation. Net shares issued (190,000 shares) for the
            acquisition are considered outstanding for all periods presented.


                                      F-31
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 3.     Inventories

            Inventories are comprised as follows at: (In Thousands)

                                                     December 28,   December 29,
                                                        2002           2001
--------------------------------------------------------------------------------
     Bearings and Bearing Products
       Finished goods                                  $ 9,686        $ 9,096
       Raw materials, purchased parts and work-in
         process                                        18,532         16,824
--------------------------------------------------------------------------------
                                                        28,218         25,920
--------------------------------------------------------------------------------

     Machine Tools
       Machines and machine tools                           --          2,457
       Service parts and accessories                        --          1,739
--------------------------------------------------------------------------------
                                                            --          4,196
--------------------------------------------------------------------------------
                                                       $28,218        $30,116
================================================================================

Note 4.     Prepaid Expenses and Other Current Assets

            Prepaid Expenses and Other Current Assets are comprised as follows
            at: (In Thousands)

                                                     December 28,   December 29,
                                                         2002           2001
--------------------------------------------------------------------------------
     Prepaid taxes and taxes recoverable               $ 2,605        $   344
     Advances to suppliers                                 771          3,265
     Prepaid real estate taxes                             177            179
     Prepaid insurance                                     149            124
     Sundry receivables                                    427            587
     Other prepaids                                        239            257
--------------------------------------------------------------------------------
                                                       $ 4,368        $ 4,756
================================================================================

Note 5.     Fixed Assets

            Fixed Assets are comprised as follows at: (In Thousands)

                                                     December 28,   December 29,
                                                         2002           2001
--------------------------------------------------------------------------------
     Land and buildings                                $ 6,153        $11,154
     Machinery and equipment                            19,730         17,347
     Furniture and fixtures                              1,363          1,494
     Leasehold improvements                                808            776
     Software                                              867            891
     Transportation equipment                              510            666
--------------------------------------------------------------------------------
                                                        29,431         32,328

     Less: accumulated depreciation and amortization     8,123         10,279
--------------------------------------------------------------------------------
                                                       $21,308        $22,049
================================================================================


                                      F-32
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 5.     Fixed Assets, (Continued)

            Machinery and equipment at December 28, 2002 includes construction
            in process of $140,000. The estimated cost to complete construction
            in process is $101,000.

            Depreciation expense was $1,855,000, $995,000 and $1,162,000,
            respectively for each of the three years in the period ended
            December 28, 2002. Amortization expense was $104,000, $71,000 and
            $71,000, respectively for each of the three years in the period
            ended December 28, 2002.

Note 6.     Investments in, Advances to and Accounts Receivable from Joint
            Ventures and Affiliates

            Investments in, Advances to and Accounts Receivable from Joint
            Ventures and Affiliates consist of the following at: (In Thousands)

<TABLE>
<CAPTION>
                                                          December 28,   December 29,
                                                              2002          2001
-------------------------------------------------------------------------------------
<S>                                                          <C>           <C>
      Investments:
        Shanghai General Bearing Company, Ltd.  (c )         $2,573        $  822
        Shanghai Pudong General Bearing Company, Ltd. (a )      161           171
        Wafangdian General Bearing Company, Ltd.                432           766
-------------------------------------------------------------------------------------
                                                              3,166         1,759
-------------------------------------------------------------------------------------

      Advances and Accounts Receivable:
      Short-Term
        Shanghai Pudong General Bearing Company, Ltd. (a )       79            80
        Shanghai General Bearing Company, Ltd.                   89            18
        Wafangdian General Bearing Company, Ltd.                 18            16
-------------------------------------------------------------------------------------
                                                                186           114
-------------------------------------------------------------------------------------
      Long-Term
        General IKL Corp. (b )                                  504           482
        Shanghai General  Bearing Company, Ltd. (c )             --           600
-------------------------------------------------------------------------------------
                                                                504         1,082
-------------------------------------------------------------------------------------
                                                             $3,856        $2,955
=====================================================================================
</TABLE>

            (a)   General contributed $150,000 in fiscal 1998 representing its
                  interest in the registered capital. The advances related to
                  inventory returned to SPGBC. General is not required to
                  contribute additional capital.

            (b)   Amounts receivable from and payable to General IKL Corp., are
                  subject to collection and repayment restrictions due to
                  sanctions imposed by the U.S. government on the countries
                  comprising the former Republic of Yugoslavia. General accrues
                  interest on the balances due to and from this affiliate (see
                  Note 9). Subsequent to year end, the government imposed
                  restriction of economic activity was lifted.

            (c)   The $600,000 long term advance was contributed to equity in
                  2002 as part of the new joint venture contract whereby
                  ownership would be shared equally with General assuming
                  control of operations. The new joint venture contract requires
                  General to contribute an additional $3,000,000 through 2004.
                  At March 24, 2003, General has satisfied $2,000,000 of this
                  requirement (see Note 1). Condensed financial data of SGBC are
                  as follows: (In Thousands)


                                      F-33
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 6.     Investments in, Advances to and Accounts Receivable from Joint
            Ventures and Affiliates, (Continued)

|------------------------------------------------------------------------------|
|    Balance Sheet:                        December 28, 2002  December 29, 2001|
|------------------------------------------------------------------------------|
|Current assets                                      $ 6,986            $ 4,929|
|------------------------------------------------------------------------------|
|Total assets                                         10,614              8,201|
|------------------------------------------------------------------------------|
|Current liabilities                                   5,329              4,912|
|------------------------------------------------------------------------------|
|Total liabilities                                     5,329              4,912|
|------------------------------------------------------------------------------|
|Ventures' equity                                      5,285              3,289|
|------------------------------------------------------------------------------|

|------------------------------------------------------------------------------|
|  Income Statement:    December 28, 2002  December 29, 2001  December 30, 2000|
|------------------------------------------------------------------------------|
|Net sales                       $ 15,172           $ 13,763           $ 17,980|
|------------------------------------------------------------------------------|
|Gross profit                       1,485              1,067              2,512|
|------------------------------------------------------------------------------|
|Operating income                     791                239              1,699|
|------------------------------------------------------------------------------|
|Net income                           531                 83                835|
|------------------------------------------------------------------------------|

Note 7.     Notes Payable - Banks

            JGBR has short term unsecured notes payable aggregating $5,435,000,
            with an interest rate of 4.8675%, maturing throughout 2003.

            NGBC has a short term government loan in the amount of $1,679,000,
            with an interest rate of 4.43%, maturing on October 10, 2003. The
            loan is secured by NGBC's taxes receivable.

Note 8.     Accrued Expenses and Other Current Liabilities

            Accrued Expenses and Other Current Liabilities consist of the
            following: (In Thousands)

--------------------------------------------------------------------------------
                                           December 28, 2002   December 29, 2001
--------------------------------------------------------------------------------
Payroll and related benefits                          $  594              $  929
Insurance                                                  -                 280
Customer deposits                                          -                 197
Sales commissions                                        174                 189
Sales rebates                                            234                 212
Swap obligations                                       1,084                 727
Professional fees                                        374                 260
Other                                                  1,657               1,866
--------------------------------------------------------------------------------
Total                                                 $4,107              $4,660
--------------------------------------------------------------------------------


                                      F-34
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 9.     Long Term Debt

            Long Term Debt consists of the following at: (In Thousands)

                                                     December 28,   December 29,
                                                         2002          2001
--------------------------------------------------------------------------------
     Bank and other:
       Bank revolving line of credit (a)              $     --       $ 12,747
       Notes payable (b)                                 7,368          6,470
       Long term lease obligations (See Note 16)           468            663
--------------------------------------------------------------------------------
                                                         7,836         19,880
     Less current maturities                              (396)          (381)
--------------------------------------------------------------------------------
                                                         7,440         19,499
     Affiliates:
       General IKL Corp. (see Note 6(b))                 1,123          1,081
--------------------------------------------------------------------------------
     Total long term debt                             $  8,563       $ 20,580
================================================================================

            (a)   General is obligated to a bank under a revolving line of
                  credit, which expires on June 30, 2003. The credit agreement
                  provides General with a secured line of credit of up to $21
                  million for acquisitions, working capital and general
                  corporate purposes. The maximum amount available is reduced by
                  outstanding letters of credit. Interest on outstanding
                  obligations is payable at either the bank's prime rate plus up
                  to 1.00%, or LIBOR plus 1.00% to 2.00%. These percentages are
                  determined quarterly based upon the financial performance of
                  General. The average monthly rate in effect at December 28,
                  2002 was 5.05%. Also based upon the financial performance of
                  General is a commitment fee of either .125% or .25% of unused
                  availability. The loan is secured by General's assets. The
                  credit agreement also contains certain restrictive covenants,
                  which include, among others, maintenance of financial ratios
                  relating to funded debt, fixed charge coverage and interest
                  coverage and limitations on capital expenditures and
                  investments. General is in compliance with all of its loan
                  covenants.

                  As of December 28, 2002, borrowing under the credit line
                  amounted to $14,458,000, and letter of credit commitments
                  under this credit line amounted to $572,000.

                  As of December 28, 2002, General had $7.2 million outstanding
                  subject to an interest rate swap. This swap is used to convert
                  floating rate debt relating to the Company's revolving credit
                  agreement to fixed rate debt to reduce the Company's exposure
                  to interest rate fluctuations. The net result was to
                  substitute a fixed interest rate of 9.17% for the variable
                  rate. The swap amortizes by $75,000 per month and terminates
                  in December 2007. Under the interest rate environment during
                  the year ended December 28, 2002, the Company's interest rate
                  swap agreement resulted in additional expense of approximately
                  $422,000.

            (b)   JGBR has long term unsecured notes payable aggregating
                  $4,263,000, with various interest rates ranging from 4.65% to
                  5.275%, maturing between 2004 and 2007.

                  General has a long term note payable of $3,105,000. The
                  interest rate on the note is the 30 day LIBOR plus 1.5%.
                  Annual principal installments of $200,000 plus accrued
                  interest commenced December 2002, and will continue through
                  December 2005. In December 2006, the outstanding principal
                  balance is payable.


                                      F-35
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 9.     Long Term Debt, (Continued)

            Long Term Debt as of December 28, 2002 is payable as follows: (In
            Thousands)

-----------------------------------------------------------------------------
     2003                                                             $   396
     2004                                                               1,587
     2005                                                               2,139
     2006                                                               3,109
     2007                                                                 605
     Thereafter                                                            --
-----------------------------------------------------------------------------
                                                                      $ 7,836
=============================================================================

Note 10.    Income Taxes

            Federal, state and local income taxes consist of the following for
            the fiscal year ended : (In Thousands)

                                  December 28,     December 29,     December 30,
                                      2002             2001             2000
--------------------------------------------------------------------------------
     Deferred:
       Federal                      $ 1,188          $   299          $  (358)
       State and local                  160               38                4
       Foreign                           --             (195)             142
--------------------------------------------------------------------------------
                                      1,348              142             (212)
--------------------------------------------------------------------------------

     Current:
       Federal                         (345)            (431)            (912)
       State and local                  (86)            (118)             (96)
       Foreign                         (248)             (41)             (92)
--------------------------------------------------------------------------------
                                       (679)            (590)          (1,100)
--------------------------------------------------------------------------------
                                    $   669          $  (448)         $(1,312)
================================================================================


                                      F-36
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 10.    Income Taxes, (Continued)

            The major elements contributing to the difference between the
            Federal statutory rate and the Company's effective tax rate on
            income from continuing operations are as follows:

<TABLE>
<CAPTION>
                                                      December 28,    December 29,    December 30,
                                                          2002            2001            2000
--------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>             <C>
     Statutory rate                                       34.0%             34%             34%
     State and local income taxes
       less federal income tax benefit                     1.8             5.4             1.6
     Tax effect of differences between
     U.S. statutory and foreign effective rates           (2.0)          (42.9)            5.5
     Dividends recorded                                    5.7            23.4            (7.0)
     Other differences                                     2.6             1.6              .8
--------------------------------------------------------------------------------------------------
         Effective rate                                   42.1%           21.5%           34.9%
==================================================================================================
</TABLE>

            Temporary differences which give rise to a significant portion of
            deferred tax assets and liabilities are as follows: (In Thousands)

<TABLE>
<CAPTION>
                                                        December 28,    December 29,
                                                            2002            2001
------------------------------------------------------------------------------------
<S>                                                       <C>             <C>
     Gross deferred tax assets
       Accounts receivable and inventory allowances       $   532         $   477
       Net operating loss carryforwards                     1,471           1,464
       Foreign losses                                          --             613
       Loss from discontinued operations                    1,774              --
       All other                                              253             345
------------------------------------------------------------------------------------
                                                            4,030           2,899
     Gross deferred tax liabilities
       Plant and equipment depreciation differences          (335)           (204)
       Foreign income                                        (308)             --
       All other                                              (57)            (95)
------------------------------------------------------------------------------------
                                                            3,330           2,600
     Valuation allowance                                   (1,617)         (2,289)
------------------------------------------------------------------------------------
     Net deferred tax asset                               $ 1,713         $   311
====================================================================================
</TABLE>

            The Company has provided a valuation allowance against all of the
            deferred tax assets of World.

            The valuation allowance has increased / (decreased) by ($672,000),
            ($599,000) and $861,000 in 2002, 2001 and 2000, respectively.

            As of December 28, 2002, the Company had aggregate federal tax loss
            carryovers of approximately $4.0 million, which may be used to
            offset future taxable income of certain of its subsidiaries,
            expiring at various dates through the year 2019.


                                      F-37
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 11.    Discretionary Profit-Sharing Plan

            The Company maintains a profit-sharing plan covering eligible
            salaried and nonunion employees. Contributions are made to the plan
            at the discretion of the management of the Company. The Company
            recorded expense of approximately $78,000, $0, and $178,000 in
            fiscal 2002, 2001 and 2000, respectively.

Note 12.    Other Expenses, Net

            Other Expenses consist of the following for the fiscal years ended:
            (In Thousands)

<TABLE>
<CAPTION>
                                            December 28,     December 29,     December 30,
                                                2002            2001             2000
------------------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>
    Interest expense                          $ 1,679          $ 1,237          $ 1,176
    Interest income                               (82)            (251)            (164)
------------------------------------------------------------------------------------------

    Interest, net                               1,597              986            1,012
    Equity in (income) loss of affiliates         193              (60)            (669)
    Foreign currency exchange gain                (40)              --               --
    Legal settlement                               --              763               --
    Other                                          47               --               --
------------------------------------------------------------------------------------------
                                              $ 1,797          $ 1,689          $   343
==========================================================================================
</TABLE>

Note 13.    Transactions with Affiliates

            General made purchases of approximately $9.5 million, $11.4 million
            and $26.7 million from its joint ventures and affiliates in fiscal
            2002, 2001, and 2000, respectively.

            From 1995 through May 2001, the Company and Gussack Realty Company
            ("Realty"), an entity owned by the principal stockholders of
            General, were plaintiffs and counterclaim defendants in an action
            against Xerox for contamination to real property owned by Realty and
            previously leased by the Company from Realty. The action resulted in
            a judgment against Xerox for $1,111,483 (including sanctions awarded
            of $27,898) which, together with interest of $883,048 amounted to a
            total recovery of $1,994,530. The jury rejected Xerox's counterclaim
            in its entirety.

            Inasmuch as the judgment against Xerox was expressly for damage to
            Realty's property, and Realty expended $2.5 million in both the
            prosecution of Realty's and the Company's claims, and defense of
            Xerox's counterclaims against Realty and the Company, on May 29,
            2001, the Company and Realty entered into an agreement whereby (i)
            the Company waived any interest in the judgment, (ii) the Company
            agreed to reimburse Realty $763,387 over the next four years with
            interest at 8.4% per annum from the date of the agreement,
            representing 30% of the litigation costs in the action and (iii)
            Realty released the Company from any further claims for
            indemnification for litigation expenses in connection with the
            action. Even though the Company was not legally or contractually
            obligated to reimburse GRC, a related party, the Company agreed to
            enter into the reimbursement agreement because the Company believed
            it was fair and equitable to do so as Realty had paid legal expenses
            for the benefit of the Company. The reimbursement is being paid to
            Realty in the form of additional rent payments by the Company of
            $18,780 per month for 48 months beginning in June, 2001. The entire
            amount of the reimbursement was charged to operations in fiscal
            2001. At December 28, 2002, the Company has paid $357,000 toward
            this agreement.


                                      F-38
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 13.    Transactions with Affiliates, (Continued)

            The Company leases property from Realty. The Company entered into a
            lease agreement with Realty for its new premises effective November
            1, 1996 for an initial term of seven years. Rent and real estate
            taxes paid to this affiliate totaled $1,450,000, $1,373,000 and
            $1,302,000 in fiscal 2002, 2001, and 2000, respectively.

            Prior to 2003, the amounts receivable from and payable to General
            IKL Corp., a corporate joint venture with a manufacturer located in
            the former Republic of Yugoslavia, were restricted due to
            suspension, by the United States government, of certain economic
            activity with that country. The Company accrued interest on the
            balances due to and from this affiliate. In February 2003, the
            government imposed restriction of economic activity was lifted.

Note 14.    Stock Options

            In September 1996, General adopted the 1996 Stock Option and
            Performance Award Plan ("1996 Plan"), which authorizes the granting
            to directors, officers and key employees of General of incentive or
            non-qualified 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.
            Upon death of an optionee, vested options are exercisable according
            to the original term of the option grant. 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 and one year
            following such termination if such termination was because of death,
            retirement, disability or with the consent of General.

            General estimates the fair value of each stock option at the grant
            date by using the Black-Scholes option-pricing model with the
            following weighted average assumptions used for grants in the year
            ended December 28, 2002: no dividend yield, expected volatility of
            53.4%, risk free interest rate of 5.1% and expected life of 10
            years. For the year ended December 29, 2001, the weighted average
            assumptions used for grants were: no dividend yield, expected
            volatility of 54.0%, risk free interest rate of 5.0% and expected
            life of 10 years. If compensation cost for General's stock option
            plan had been determined in accordance with SFAS No. 123, net income
            / (loss) would have been increased / (decreased) by approximately
            $262,000 or $.07 per diluted share, ($138,000) or $.03 per diluted
            share, and ($161,000) or $.04 per diluted share for the fiscal years
            ended 2002, 2001, and 2000, respectively. The following table
            summarizes information about General's stock options outstanding at
            December 28, 2002:


                                      F-39
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 14.    Stock Options, (Continued)

<TABLE>
<CAPTION>
                                                              Options Outstanding
                                            ------------------------------------------------------
                                                                Weighted Average          Weighted
                                              Number          Remaining Contractual        Average
                                            Outstanding           Life (Years)              Price
--------------------------------------------------------------------------------------------------
<S>                                           <C>                      <C>                  <C>
     Exercise prices:
       $2.90 to $3.80                         210,000                  8.8                  $ 3.34
       $7.00 to $7.63                         172,800                  4.5                  $ 7.02
==================================================================================================
</TABLE>

            Transactions under the stock option plan are summarized as follows:

<TABLE>
<CAPTION>
                                                    December 28,                  December 29,                 December 30,
                                                       2002                         2001                          2000
                                              -----------------------      ------------------------     -----------------------
                                                            Weighted                      Weighted                     Weighted
                                                             Average                       Average                      Average
                                                            Exercise                      Exercise                     Exercise
                                                Shares        Price           Shares        Price           Shares       Price
-------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>            <C>            <C>            <C>           <C>
     Outstanding at beginning of year          337,800       $ 6.20         245,300        $ 7.16         259,800       $ 7.15
     Granted                                   125,000         3.05          95,000          3.75              --           --
     Exercised                                  (1,250)        3.75              --            --              --           --
     Canceled                                  (78,750)        7.08          (2,500)         7.00         (14,500)        7.00
-------------------------------------------------------------------------------------------------------------------------------

     Outstanding at end year                   382,800         5.00         337,800          6.20         245,300         7.16
===============================================================================================================================

     Options exercisable at year end           277,200         5.27         185,250          7.20         137,850         7.20
===============================================================================================================================

     Weighted average fair value of
       options granted during the year                       $ 2.02                        $ 2.06                       $   --
===============================================================================================================================
</TABLE>

Note 15.    Earnings per share

            (In Thousands except shares and per share data)

<TABLE>
<CAPTION>
                                                                       Year Ended
                                                       --------------------------------------------
                                                       December 28,    December 29,    December 30,
                                                           2002            2001            2000
                                                       --------------------------------------------
<S>                                                     <C>             <C>             <C>
       Income from continuing operations               $      848      $      368      $    2,552
                                                       --------------------------------------------
       Basic earnings per share computation:

       Weighted Average Common shares Outstanding        3,867,380       4,108,993       4,109,565
                                                       --------------------------------------------
       Basic earnings per share from continuing
       operations                                             0.22            0.09            0.62
                                                       --------------------------------------------
       Diluted earnings per share computation:
       Weighted Average Common shares Outstanding        3,867,380       4,108,993       4,109,565
       Incremental shares from assumed exercise of
       dilutive options                                      7,473              --              --
                                                       --------------------------------------------
                                                         3,874,853       4,108,993       4,109,565
                                                       --------------------------------------------
       Diluted earnings per share from continuing
       operations                                       $     0.22      $     0.09      $     0.62
                                                       --------------------------------------------
</TABLE>


                                      F-40
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 15.    Earnings per share, (Continued)

            For the years ended December 28, 2002, December 29, 2001 and
            December 30, 2000, 287,800, 427,800, and 335,300 options and
            warrants outstanding, respectively, were anti-dilutive.

Note 16.    Commitments, Contingencies and Other Comments

            Operating Lease: The Company leases its premises from Realty.

            The estimated future minimum annual rentals under the lease with
            Realty are as follows: (In Thousands)


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

     2003                                                               $ 1,323
     2004                                                                 1,378
     2005                                                                 1,258
     2006                                                                 1,222
     2007                                                                 1,233
-------------------------------------------------------------------------------
                                                                        $ 6,414
===============================================================================

            Rent expense was $1,036,000, $1,026,000 and $1,166,000 in fiscal
            2002, 2001, and 2000, respectively.

            Capital Leases: The Company also leases certain equipment under
            capital leases. The assets acquired under capital leases have a cost
            of $996,000 and accumulated depreciation of $348,000 as of December
            28, 2002. Interest rates on the Company's capital leases range from
            6.90% to 9.6425%.

            The following is a schedule, by year, of approximate future minimum
            lease payments under capitalized leases, together with the present
            value of the net minimum lease payment at December 28, 2002. (In
            Thousands)

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

     Payment for the year ending:
     2003                                                                 $ 223
     2004                                                                   235
     2005                                                                    51
     2006                                                                     -
     2007                                                                     -
-------------------------------------------------------------------------------
     Total minimum lease payments                                           509
     Less: amount representing interest                                      42
-------------------------------------------------------------------------------

     Present value of net minimum lease payments                            467
     Less: current portion                                                  196
-------------------------------------------------------------------------------
     Long-term lease obligation                                           $ 271
===============================================================================

            General has a management consulting and non-competition agreement
            with a former officer and shareholder. The agreement, which
            commenced as of January 1, 2000, provides for monthly payments
            aggregating $55,000 per annum for ten years. As of December 28, 2002
            future payments required under the agreement total $386,000.


                                      F-41
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 16.    Commitments, Contingencies and Other Comments, (Continued)

            Pursuant to related shareholder agreements, the Company (a) owns 60%
            of WMG (b) WMG assumed World's contractual obligation to invest $5.2
            million in W.M. Works over five years and agreed to indemnify and
            hold the Company harmless as to such obligation. The investment was
            required to be made in cash, machinery, equipment, services, "know
            how", or any equivalent thereof in any combination. In the event WMG
            did not make a scheduled investment in W.M. Works, it would have
            been obligated to pay the State Ownership Fund of Romania ("SOF") a
            penalty equal to 30% of such amount not invested. The contract with
            SOF provides for investment of $2,720,000 in 2002, which was
            satisfied by the Company.

            On December 30, 2002, the Romanian authority for Privatization and
            Management of State Ownership ("APAPS") filed a Request for
            Arbitration against World, with the International Chamber of
            Commerce ("ICC"). The action arises out of the contract under which
            World acquired a majority interest in W.M. Works from the Romanian
            government in 1998 (the "Contract"). APAPS alleges that World
            breached its contractual obligation to invest certain sums in W.M.
            Works in 1999 and 2000, as required under the Contract. APAPS is
            seeking $570,000 in penalties and damages, together with interest
            and costs, and any further damages and penalties to which it would
            be entitled if it establishes that World also failed to make
            investments required in 2001 and 2002. World's management believes
            it has fully complied with its investment obligations and has filed
            an Answer with the ICC disputing the allegations and will vigorously
            defend the action. World is also considering the filing of claims
            against APAPS based on APAPS' breach of the Contract by failing to
            honor a representation and warranty as to the financial condition of
            W.M. Works, and other acts of the Romanian government which have
            caused damages to World and W.M. Works. While the Company is
            confident that it will prevail in the arbitration, an adverse ruling
            could be materially adverse to World's operations and financial
            condition. Arbitrators have been selected and the parties are
            awaiting scheduling from the ICC.

            Additionally, U.S. 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 financial condition, operations or
            liquidity of the Company.

            General is currently undergoing a New York State Sales and Use Tax
            audit for the June 1996 - February 1999 periods. General believes
            that the audit will not have a material impact on the financial
            condition, operations or liquidity of the Company.


                                      F-42
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 17.    Financial Information About Geographic Areas

            The Company has adopted SFAS No. 131, Disclosures about Segments of
            an Enterprise and Related Information. FAS 131 supersedes FAS 14,
            Financial Reporting for Segments of a Business Enterprise replacing
            the "industry segment" approach with the "management" approach. The
            management approach designates the Internal reporting that is used
            by management for making operating decisions and assessing
            performance as the source of the Company's reportable segments.

            During 2001, the Company redefined its operating segments to more
            accurately reflect those used by management. Prior period
            information has been restated.

            The Company operates in two segments: Bearings, which manufactures
            bearings and bearing components for OEMs and distributors; and
            Machine Tools, which manufactures machine tools for dealers and
            manufacturers.

            In December 2002, the Company's Board of Directors and management
            resolved to discontinue the operations of the Machine Tool segment
            by disposing of the net assets by sale during 2003. As a result,
            pursuant to SFAS No. 144, the Company has not provided segment
            information.

            The following tables present information about the Company's
            geographic data: (In Thousands)

--------------------------------------------------------------------------------
                             December 28,       December 29,        December 30,
                                 2002               2001               2000
--------------------------------------------------------------------------------

Long lived Assets:

     United States             $ 3,680             $ 3,593            $ 3,351

     Europe                          -               5,083              5,292

     Asia                       17,628              13,373                  -
--------------------------------------------------------------------------------

Total                          $21,308            $ 22,049            $ 8,643
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                             December 28,        December 29,       December 30,
                                 2002               2001               2000
--------------------------------------------------------------------------------

Sales:

     United States            $ 47,164            $ 43,021           $ 47,812

     Asia                       11,967                 540                  -

     Other                       1,175                 913              2,458

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

Total                         $ 60,306            $ 44,474           $ 50,270
--------------------------------------------------------------------------------

            In fiscal 2002, 2001 and 2000, the Company had one customer that
            represented approximately 22%, 19% and 17% of total sales,
            respectively.


                                      F-43
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 18.    Supplemental Cash Flow Information

            The Company paid interest in the amount of $1,844,000 in fiscal
            2002, $1,172,000 in fiscal 2001 and $1,323,000 in fiscal 2000, and
            income taxes of $325,000, $318,000 and $1,415,000 in fiscal 2002,
            2001 and 2000, respectively.

            During fiscal 2002, the Company converted the $600,000 loan
            receivable from SGBC to investment as part of the new joint venture
            contract pursuant to which ownership would be shared equally, with
            General assuming control of operations upon meeting its revised
            investment requirement.

            In December 2002, the Company's Board of Directors and management
            resolved to discontinue the operations of the machine tool segment
            by disposing of the net assets by sale. The Company recorded an
            impairment writedown, net of related tax effects, on assets
            associated with discontinued operations of approximately $2,242,000
            in 2002.

            During fiscal 2001, the Company increased its equity interest in
            NGBC and JGBR resulting in the consolidation of these entities. The
            fair value of assets acquired at the date the Company increased its
            equity interests was approximately $9,577,000 and the Company
            assumed liabilities of approximately $4,450,000. Total cash paid in
            these transactions was approximately $1,822,000 and the Company
            issued debt amounting to approximately $3,305,000.

            World distributed a note receivable from Realty, in the amount of
            $1,594,000, to the former shareholders of World prior to the
            acquisition described in Note 2.

            The Company entered into a lease for new equipment in 2000 in the
            amount of $19,000.

Note 19.    Subsequent Events

            In February 2003, pursuant to the lifting of the sanctions on the
            countries comprising the former Republic of Yugoslavia, the Company
            reduced a significant portion of its payable to General IKL which
            the Company disputed.

Note 20.    Quarterly Financial Data (In Thousands except for per share data -
            Unaudited)

The net sales and gross profit presented are reflective of continuing operations
only.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                                            Basic          Diluted
                                                                           Earnings      Earnings Per
2002                      Net Sales     Gross Profit   Net Income/(loss)   Per Share        Share
-----------------------------------------------------------------------------------------------------
<S>                        <C>             <C>              <C>              <C>            <C>
First Qtr.                 $15,376         $4,483             $856           $0.21          $0.21

Second Qtr.                 15,136          4,458              207            0.06           0.06

Third Qtr.                  15,215          4,560              546            0.14           0.14

Fourth Qtr.                 14,579          3,654           (3,693)          (0.95)         (0.95)
-----------------------------------------------------------------------------------------------------
</TABLE>


                                      F-44
<PAGE>

                                    General Bearing Corporation and Subsidiaries
                                      Notes to Consolidated Financial Statements
================================================================================

Note 20.    Quarterly Financial Data (In Thousands except for per share data -
            Unaudited), (Continued)

The net sales and gross profit presented are reflective of continuing operations
only.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                           Basic         Diluted
                                                                          Earnings     Earnings Per
2001                      Net Sales     Gross Profit   Net Income/(loss)  Per Share       Share
---------------------------------------------------------------------------------------------------
<S>                        <C>             <C>               <C>           <C>            <C>
First Qtr.                 $11,320         $3,566            $524          $0.13          $0.13

Second Qtr.                 11,857          3,433             (29)         (0.01)         (0.01)

Third Qtr.                  10,748          3,245             280           0.07           0.07

Fourth Qtr.                 10,549          2,958            (137)         (0.03)         (0.03)
---------------------------------------------------------------------------------------------------
</TABLE>

            Sales:

            First Quarter 2002: The sales volume increase was mainly due to the
            consolidation of JGBR and NGBC as well as increased sales of
            driveline components to the automotive industry and tapered roller
            bearings for heavy duty truck trailers.

            Third Quarter 2001: The sales volume decrease was mainly due to
            seasonality as well as the worsening economic conditions in the
            Company's industrial markets.

            Net income:

            Second Quarter 2002: The reduction in net income is mainly due to
            increases in salaries, travel, professional fees, promotion and
            personnel expenses.

            Fourth Quarter 2002: The reduction in net income is primarily
            attributable to the business impairment recorded on the machine tool
            operations.

            Second Quarter 2001: The decrease in net income is primarily related
            to a one time charge of $763,000 for an agreement reached between
            the Company and Gussack Realty, allocating the proceeds and
            litigation costs from the litigation with Xerox. Even though the
            Company was not legally or contractually obligated to reimburse GRC,
            a related party, the Company agreed to enter into the reimbursement
            agreement because the Company believed it was fair and equitable to
            do so as Realty had paid legal expenses for the benefit of the
            Company. The reimbursement is being paid to Gussack Realty in the
            form of additional rent payments by the Company of $18,780 per month
            for 48 months beginning in June 2001.

            Third Quarter 2001: The increase in net income is due to the one
            time charge of $763,000 that the Company incurred in the second
            quarter partially offset by the effect of the Company's reduced
            sales volume.

            Fourth Quarter 2001: The decrease in net income is primarily due to
            a $350,000 increase to the allowance for doubtful accounts.


                                      F-45
<PAGE>

                          Supplementary Financial Data
                            Furnished Pursuant to the
                            Requirements of Form 10-K


                                      F-46
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders'
General Bearing Corporation

The audits referred to in our report dated April 8, 2003 relating to the
consolidated financial statements of General Bearing Corporation and
subsidiaries, which are referred to in Item 8 of this Form 10-K, includes the
audits of the accompanying financial statement schedule for each of the three
years in the period ended December 28, 2002. 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 each of the three years
in the period ended December 28, 2002.


Urbach Kahn & Werlin LLP

New York, New York
April 8, 2003


                                      F-47
<PAGE>

                                    General Bearing Corporation and Subsidiaries
================================================================================

Schedule II - Valuation and Qualifying Accounts (In Thousands)

Allowance for Doubtful Accounts

<TABLE>
<CAPTION>
               Column A                   Column B           Column C        Column D           Column E
               --------                   --------           --------        --------           --------

                                                               Add           Subtract
                                                               ---           --------

                                         Balance at         Charged to
                                        Beginning of         Costs and                          Balance at
             Description                   Period            Expenses      Deductions (1)     End of Period
             -----------                   ------            --------      --------------     -------------
<S>                                         <C>                 <C>             <C>                <C>
Year Ended December 30, 2000
   Allowance for Doubtful Accounts          $738                $280            $30                $988
                                            ----                ----            ---                ----
                                            $738                $280            $30                $988
                                            ====                ====            ===                ====

Year Ended December 29, 2001
   Allowance for Doubtful Accounts          $988                $428            $542               $874
                                            ----                ----            ----               ----
                                            $988                $428            $542               $874
                                            ====                ====            ====               ====

Year Ended December 28, 2002
   Allowance for Doubtful Accounts          $874                $17             $556 (2)           $335
                                            ----                ---             ----               ----
                                            $874                $17             $556               $335
                                            ====                ===             ====               ====
</TABLE>

Note: (1) Uncollectible accounts written off net of recoveries.
      (2) Includes the impairment recognized in the amount of $350,000 relating
to the writedown of allowance for doubtful accounts for machine tools.


                                       48
<PAGE>

                                    General Bearing Corporation and Subsidiaries
================================================================================

Schedule II - Valuation and Qualifying Accounts, continued (In Thousands)

Inventory Allowances

<TABLE>
<CAPTION>
               Column A                    Column B          Column C        Column D             Column E
               --------                    --------          --------        --------             --------

                                                               Add           Subtract
                                                               ---           --------

                                          Balance at        Charged to
                                         Beginning of        Costs and                           Balance at
             Description                    Period           Expenses        Deductions         End of Period
             -----------                    ------           --------        ----------         -------------
<S>                                         <C>                 <C>              <C>                <C>
Year Ended December 30, 2000
   Allowance for slow moving and
   obsolescence                             $1,744              $329             $39                $2,034
                                            ------              ----             ---                ------
                                            $1,744              $329             $39                $2,034
                                            ======              ====             ===                ======

Year Ended December 29, 2001
   Allowance for slow moving and
   obsolescence                             $2,034              $287             $0                 $2,321
                                            ------              ----             --                 ------
                                            $2,034              $287             $0                 $2,321
                                            ======              ====             ==                 ======

Year Ended December 28, 2002
   Allowance for slow moving and
   obsolescence                             $2,321              $712            $1,229 (1)          $1,804
                                            ------              ----            ------ --           ------
                                            $2,321              $712            $1,229              $1,804
                                            ======              ====            ======              ======
</TABLE>

Note: (1) Includes the impairment recognized in the amount of $1,119,000
relating to the writedown of inventory reserves for machine tools.

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

      None.


                                       49
<PAGE>

PART III

Item 10. Directors and Executive Officers of the Registrant

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

<TABLE>
<CAPTION>
                      NAME                 AGE                       POSITION
                      ----                 ---                       --------
<S>                                        <C>            <C>
    Seymour I. Gussack.....................79             Chairman of the Board of Directors
    David L. Gussack.......................46             President and Director
    Robert E. Baruc........................51             Director
    Peter Barotz...........................75             Director
    Nina M. Gussack........................47             Director
    Barbara M. Henagan.....................44             Director
    Ronald Fetzer..........................39             Director
    Thomas J. Uhlig........................53             Executive Vice President
    Corby W. Self..........................46             Vice President - Ball & Roller Operations
    William F. Kurtz.......................45             Vice President - Director of Operations
    Joseph J. Hoo..........................68             Vice President - Advanced Technology and China Affairs
    John E. Stein, Esq.....................46             Secretary & General Counsel
</TABLE>

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 General Bearing since its formation.
Seymour I. Gussack is also the Chairman of the Board of Directors and a Director
of World Machinery Company ("World") and a member of Realty. See "Certain
Relationships and Related Transactions". Seymour I. Gussack's son is David L.
Gussack, President of the Company and a Director. Seymour I. Gussack is also the
father of Nina M. Gussack, 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 1979, including Executive Vice President from 1991 to
1992, General Manager of the OEM Division from 1988 to 1990, Supervisor and
Coordinator, Hyatt Absorption Project from 1987 to 1988, Plant Manager from 1986
to 1987, Office Facilities Manager from 1985 to 1986, and Manager of Special
Projects from 1983 to 1985. David L. Gussack is a Director of Shanghai General
Bearing Co., Ltd. ("SGBC") and Ningbo General Bearing Co., Ltd. ("NGBC") . He
also is a Director of World and a member 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 and David L. Gussack is the brother of Nina M.
Gussack, Director.

      THOMAS J. UHLIG became Executive Vice President in 2003. Mr. Uhlig came to
General Bearing Corporation from The Timken Company where he was Vice President
of the Timken Super Precision Group from 1998 to 2002. His prior experiences
include senior management positions as President of Johnstown America
Corporation, Director of Manufacturing for Timken's North and South America
Operations and President of MPB Corporation. Mr. Uhlig holds BS and MBA degrees
from the University of Rhode Island.

      WILLIAM F. KURTZ has served as Vice President - Director of Operations
since 1997. He served as Vice President - Technical Services of the Company from
1993 to 1997. Mr. Kurtz was Chief Engineer of the Company from 1989 to 1993 and
Senior Project Engineer of the Company from 1988 to 1989. He is a graduate of
Manhattan College (B.E. and M.E. in Mechanical Engineering) and a licensed
professional engineer.

      JOSEPH J. 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).


                                       50
<PAGE>

      CORBY W. SELF has served as Vice President - Ball & Roller Operations
since January 2002. Prior to his appointment, Mr. Self spent eleven years at NN
Inc., a manufacturer of precision steel balls and rollers. There he progressed
from Quality Management to Operations Management, with full responsibility for
four plants. His early experience included quality management positions with
Eaton Corporation and CMI Corporation. Mr. Self obtained a BS in Computer
Science / Management from Johnson and Wales University in 1984.

      JOHN E. STEIN has served as Secretary and General Counsel since July 1998.
From February 1997 to June 1998, he served as General Counsel. From April 1995
to January 1997, Mr. Stein served as Staff Counsel to the Company. Mr. Stein is
a graduate of the State University of New York, Purchase, (B.A. in Philosophy)
and Brooklyn Law School (J.D.). He is a member of the bars of New York, New
Jersey and District of Columbia.

      ROBERT E. BARUC has been a Director of the Company since February 1997.
From August 2001 to present Mr. Baruc has been President of Screen Media Films,
a feature film acquisition and marketing company, which distributes to the U.S.
home video market through Universal Studios Home Entertainment. From August 1993
to December 2000 Mr. Baruc was President and CEO of A-Pix Entertainment an
independent distributor of film and television programming. He was also
Executive Vice President from 1994 to 1998 and Co-President from 1999 to 2000 of
A-Pix's parent company Unapix Entertainment Inc. Mr. Baruc was President of two
other home video distribution companies, Triboro Entertainment from 1992 to 1993
and Academy Entertainment from 1986 to 1991. He is the son-in-law of Seymour I.
Gussack and the brother-in-law of David L. Gussack and Nina M. Gussack.

      PETER BAROTZ has been a Director of the Company since December 30, 1997.
For the past 25 years, Mr. Barotz has been the President of Panda Capital
Corporation.

      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 LLP
in Philadelphia, Pennsylvania since 1987. 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.

      BARBARA M. HENAGAN was elected a Director of the Company on March 30,
1999. Ms. Henagan is presently Managing Director of Linx Partners. Previously
Ms. Henagan was Senior Managing Director of Bradford Ventures Ltd. She is also a
Director of Hampton Industries, V-Span, Inc. and Batteries Batteries, Inc. Ms.
Henagan is a graduate of Princeton University and Columbia University's MBA
program.

      RONALD FETZER was elected a Director of the Company on April 9, 2003. Mr.
Fetzer is and has been Director of Accounting and Finance and Controller at Bill
Blass, Ltd., New York, NY, a fashion and licensing company, for the past 3
years. Mr. Fetzer, who is a licensed and practicing CPA in New York, is a member
of the NYS Society of CPA's and a member of the American Institute of CPA's.
Prior to his employment at Bill Blass, Ltd., Mr. Fetzer was a senior manager at
the accounting firm of Urbach, Kahn & Werlin LLP for approximately three years.
Mr. Fetzer received an MBA in International Finance from Baruch College in 1991
and BA in Accounting and Economics from Queens College in 1985.

      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,
the Compensation/ Stock Option Committee and the Insider Trading Compliance
Committee.


                                       51
<PAGE>

      The Audit Committee of the Board of Directors consists of three directors,
Peter Barotz, Ron Fetzer and Barbara M. Henagan. Based on its charter, the Audit
Committee is to review the outside auditor designated by management and render
to the Board any of the Committee's comments and/or recommendations relating to
such auditor; meet with the outside auditor at least once per year to discuss
any issues raised by the auditor and report back to the Board for its
consideration; hold at least one meeting per year; submit the minutes of all
meetings of the Audit Committee to, or discuss matters discussed at each meeting
with the Board; ensure receipt from the outside auditor of a formal written
statement delineating all relationships between the auditor and the Company,
consistent with Independence Standards Board Standard 1; actively engage in a
dialogue with the outside auditor with respect to any disclosed relationships or
services that may impact the objectivity and independence of the auditor; take,
or recommend that the Board take, appropriate action to oversee the independence
of the outside auditor; and review and assess the adequacy of the Audit
Committee charter on an annual basis.

      The Compensation/Stock Option Committee consists of Messrs. Peter Barotz
and Robert E. Baruc, the former 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.

      The Insider Trading Compliance Committee ("Compliance Committee") consists
of the Insider Trading Compliance Officer (currently the Company's Secretary &
General Counsel) and the directors who are members of the Audit Committee. The
Compliance Committee reviews and either approves or prohibits proposed stock
trades by key insiders in accordance with the Company's Procedures and
Guidelines Governing Insider Trading and Tipping.

Item 11. Executive Compensation

      The following table sets forth the aggregate compensation paid for
services rendered in all capacities to the Company's most highly compensated
executive officers during the fiscal year ended December 28, 2002:

<TABLE>
<CAPTION>
                                                  ANNUAL
                                              COMPENSATION(1)                        LONG-TERM COMPENSATION
---------------------------------------------------------------------------------------------------------------------
                                                                           Restricted
Name and                              Fiscal      Salary         Bonus        Stock       Stock          All Other
Principal Position                     Year          $             $          Awards     Options#      Compensation $
---------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>            <C>            <C>      <C>              <C>
David L. Gussack, President            2002       318,510        21,586         --       100,000           5,600 (2)
                                       2001       315,495        75,287         --        20,000           5,620 (3)
                                       2000       307,789        62,213         --            --          25,000 (4)

Joseph J. Hoo, V.P. Advanced           2002       132,712         8,994         --            --              --
    Technology & China Affairs         2001       131,456         6,370         --         5,000              --
                                       2000       128,281        12,345         --            --              --

William F. Kurtz, V.P. Director        2002       121,580         8,486         --            --              --
    of Operations                      2001       112,304         5,442         --         5,000              --
                                       2000       104,817        12,078         --            --              --

Corby W. Self, V.P. Ball            *  2002       141,476        10,139         --        20,000              --
    and Roller Operations

John E. Stein, Secretary &             2002       127,404         8,634         --            --              --
    General Counsel                    2001       126,198        11,115         --         5,000              --
                                       2000       123,116        14,220         --            --              --
</TABLE>

      * - Fiscal 2002 was the first year of reportable compensation.


                                       52
<PAGE>

      Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                              Number of Securities
                                                                             Underlying Unexercised    Value of Unexercised
                                                                                   Options at          In-the-Money Options
                                                                                December 28, 2002      at December 28, 2002
                                                                             ----------------------------------------------
                                 Shares Acquired on
                                      Exercise        Value Realized               Exercisable/                Exercisable/
      Name                               #                  $                     Unexercisable               Unexercisable
---------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                <C>                 <C>       <C>
David L Gussack                          0                  0                   125,000 / 15,000                      N/A

Corby W. Self                            0                  0                         0 / 20,000                 0 / $200

Joseph J. Hoo                            0                  0                    17,250 /  7,750                      N/A

William F. Kurtz                         0                  0                    13,050 /  6,750                      N/A

John E. Stein                            0                  0                    13,250 /  6,750                      N/A
</TABLE>

Compensation of Directors

Standard Arrangements:

All fees described herein are for non-management directors only.

      a.    Attendance fee - $1,000 for actual physical attendance or $500 if
            attendance is by telephone.

      b.    Committee fee - $500 fee per director unless the committee meets
            immediately before or after a Board meeting in which case the fee
            will be $250. Fees will be halved for telephone attendance.

      c.    Stock grant - 2,000 shares per director per year will be issued at
            calendar year end for the year served. The intent of this specific
            quantity is to approximate $12,000 - $15,000 in value. It may be
            changed annually to reflect this goal.

      d.    Each member of the Board shall receive an option for 5,000 shares
            (at the then market price) when joining the Board.

Other Arrangements (1):

      In 2002, Seymour I. Gussack, Chairman of the Board of Directors, received
salary of $249,500, bonus of $16,908, other compensation of $5,600 (2) and was
granted 5,000 stock options. In 2003, he will receive salary and bonus as
approved by the Compensation/Stock Option Committee of the Board of Directors.

(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)   Board compensation: 2,000 shares at $2.80 per share, issued in 2003.
(3)   Board compensation: 2,000 shares at $2.81 per share, issued in 2002.
(4)   Board compensation: 4,000 shares at $6.25 per share, issued in 2001 (2,000
      shares earned in 1999 & 2,000 shares earned in 2000).


                                       53
<PAGE>

OPTION / SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>

                                                                                          Potential Realized Value
                                                                                         at Assumed Annual Rates of
                                                                                        Stock Price Appreciation for
                                      Individual Grants                                          Option Term
---------------------------------------------------------------------------------------------------------------------
                                              Percent of
                               Number of         total
                              securities     options/ SARS   Exercise     Expiration
           Name               underlying      granted to      of base        date             5%               10%
                               option /      employees in      price                        ($) / $           ($) / $
                             SARS granted     fiscal year     ($/Sh)
                                  (#)
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>          <C>        <C>              <C>               <C>
David L. Gussack               100,000            80%          $3.08      02/11/2012       $193,700          $491,000
---------------------------------------------------------------------------------------------------------------------
Seymour I. Gussack               5,000             4%          $3.08      02/11/2012       $  9,685          $ 24,550
---------------------------------------------------------------------------------------------------------------------
Corby W. Self                   20,000            16%          $2.90      01/22/2012       $ 36,400          $ 92,400
---------------------------------------------------------------------------------------------------------------------
</TABLE>

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.

<TABLE>
<CAPTION>
                                                      NUMBER OF
                                                      SHARES
NAME AND ADDRESS OF                                   BENEFICIALLY                PERCENTAGE OF SHARES
BENEFICIAL OWNER                                      OWNED (1)                   BENEFICIALLY OWNED (1)
----------------                                      ---------                   ----------------------
<S>                                                 <C>                                    <C>
David L. Gussack                                      726,974 (2,3)                        18.1%

Estate of Harold Geneen                               615,284                              15.9%

Nina M. Gussack                                       616,272 (2,4)                        15.9%

Seymour I. Gussack                                    327,486 (2,5)                         8.4%

Amy Gussack                                           380,970 (2,6)                         9.8%

Robert E. Baruc                                       341,302 (2,7)                         8.8%

Joseph Hoo                                             80,829 (8)                           2.1%

William F. Kurtz                                       16,500 (9)                             *

Peter Barotz                                            9,000 (10)                            *

Barbara Henagan                                        11,750 (11)                            *

John E. Stein                                          15,500 (12)                            *

Corby W. Self                                           4,000 (13)                            *

All Directors and Executive
 Officers as a Group                                2,134,613                              52.4%
</TABLE>

* Less than 1%

(1) Pursuant to Rule 13d-3 under the U.S. Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition) with
respect to a security whether through a contract, arrangement, understanding,
relationship or otherwise.


                                       54
<PAGE>

(2) Includes 5,000 shares of Common Stock owned by Realty over which Seymour I.
Gussack, David L. Gussack, Nina M. Gussack, Amy Gussack and Robert Baruc,
through his spouse Faith Gussack, as members of Realty, may be deemed to share
the power to vote and dispose of. Each disclaims beneficial ownership of the
shares of Common Stock owned by Realty.

(3) Includes 13,080 shares owned by his spouse, 4,076 shares owned by his
spouse's daughter, over which his spouse has voting power, 8,978 shares owned by
his daughter, over which he has voting power, and 130,000 vested options as of
June 30, 2003.

(4) Includes 13,280 shares owned by her spouse, 9,752 shares owned by her
children over which she has voting power, and 5,000 vested options as of June
30, 2003.

(5) Includes 7,500 vested options as of June 30, 2003.

(6) Includes 13,080 shares owned by her spouse.

(7) Includes 300,664 shares owned by his spouse, 17,956 shares owned by his
children over which he has voting power, and 5,000 vested options as of June 30,
2003.

(8) Includes 21,000 vested options as of June 30, 2003.

(9) Includes 16,300 vested options as of June 30, 2003.

(10) Includes 5,000 vested options as of June 30, 2003.

(11) Includes 3,750 vested options as of June 30, 2003.

(12) Includes 15,500 vested options as of June 30, 2003.

(13) Includes 4,000 vested options as of June 30, 2003.

Equity Compensation Plan Information

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                (a)                           (b)                            (c)
----------------------------------------------------------------------------------------------------------------------
                                                                                               Number of securities
                                                                                              remaining available for
                                Number of  securities  to be   Weighted average exercise       future issuance under
                                issued upon exercise of           price of outstanding       equity compensation plans
        Plan category           outstanding options,          options, warrants and rights     (excluding securities
                                warrants and rights                                           reflected in column (a))
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                            <C>                        <C>
Equity compensation plans
approved by security holders                382,800                        $5.00                      91,000
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders                     -                             -                           -
----------------------------------------------------------------------------------------------------------------------
Total                                       382,800                        $5.00                      91,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       55
<PAGE>

Item 13. Certain Relationships and Related Transactions

ACQUISITION OF WORLD

      In July 2000, General, acquired 100% of World, which, prior to the
acquisition, owned 74.8% of the outstanding common stock of General. World was
principally owned by members of General's Board of Directors and senior
management. World's principal business is the manufacture and sale of machine
tools, however, it also held interests in two bearing joint ventures for
General's benefit. This combination has been accounted for in a manner similar
to a pooling of interests. Prior periods have been restated as if the companies
have always been combined. In consideration for this transaction, General issued
3,140,000 shares of its common stock, $.01 per share par value. 2,950,000 shares
of General's common stock, owned by World, are now carried as treasury stock.
Net shares issued (190,000) for the acquisition are considered outstanding for
all periods presented.

In the acquisition transaction the following individuals, all former
shareholders of World, received the number of restricted shares of Company
common stock indicated:

<TABLE>
<CAPTION>
Name & Relationship to Registrant                                              Number of Shares
-----------------------------------------------------------------------------------------------
<S>                                                                            <C>
Seymour Gussack, Chairman of the Board                                         393,786

David Gussack, President, Director                                             597,850
Includes 11,280 shares received by spouse, 7,178 shares received
by child and 6,152 shares received by spouse's children.

Nina Gussack, Director                                                         590,672
Includes 11,280 shares received by spouse and 6,152 shares
received by children.

Amy Gussack, Daughter of Seymour Gussack & Sibling of                          369,170
David Gussack and Nina Gussack
Includes 11,280 shares received by spouse.

Faith Gussack, Daughter of Seymour Gussack , Sibling of                        333,278
David Gussack and Nina Gussack and Spouse of Robert Baruc, who is
a Director.
Includes 15,382 shares received by spouse and 17,432
shares received by children.

Lisa Gussack, Daughter of Seymour Gussack , Sibling of                         176,481
David Gussack and Nina Gussack
Includes 7,178 shares received by spouse and 22,560 shares received by
children.
</TABLE>


                                       56
<PAGE>

LEASES WITH REALTY

      The Company leases a facility located at West Nyack, New York comprising
189,833 square feet owned by Realty, whose members 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 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
initially paid rent of $4.81 per square foot (or $913,000) annually, payable in
monthly rent payments of $76,000. The Lease provides for an increase every other
year to the greater of: (i) 106% of the preceding year's rent; or (ii) the
preceding year's rent multiplied by a fraction, the numerator of which is the
CPI for the area including Rockland County or if no such index is published, for
Northern New Jersey in effect 90 days prior to November 1 of the new rent year,
and the denominator of which is the CPI in effect 90 days prior to November 1 of
the preceding year. The November 1998 increase amounted to 6% of the preceding
year, resulting in rent of $5.0986 per square foot (or $968,000) annually
effective through October 31, 2000. The November 2000 increase also amounted to
6% of the preceding year, resulting in rent of $5.4045 per square foot (or
$1,026,000) annually effective through October 31, 2002. The November 2002
increase amounted to 6% of the preceding year, resulting in rent of $5.7288 per
square foot (or $1,088,000) annually effective through October 31, 2003. The
Company and Realty are currently in negotiations on terms of a new lease to take
effect on expiration of the current lease.

TAX SHARING AGREEMENT

      General was included in the consolidated federal income tax returns filed
by World during all periods in which it was a wholly-owned subsidiary of World
("Affiliation Years"). Upon the completion of the IPO, General ceased to be
included in the consolidated federal income tax returns filed by World, and has
filed on a separate basis. As a result, General 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, General has paid
to World an amount equal to General's share of World's consolidated federal
income tax liability, generally determined on a separate return basis, for the
tax years which have ended and the portion of the tax year preceding
consummation of the IPO, and World will pay General for the use of General's
losses, and credits arising in such periods, in each case net of any amounts
theretofore paid or credited by World or General to the other with respect
thereto. Since the acquisition of World by General, the Company has filed a
consolidated Federal income tax return.

XEROX SETTLEMENT

From 1995 through May 2001, the Company and Gussack Realty Company ("Realty")
were plaintiffs and counterclaim defendants in an action against Xerox for
contamination to real property owned by Realty and previously leased by the
Company from Realty. The action resulted in a judgment against Xerox for
$1,111,483 (including sanctions awarded of $27,898) which, together with
interest of $883,048 amounted to a total recovery of $1,994,530. The jury
rejected Xerox's counterclaim in its entirety.

Inasmuch as the judgment against Xerox was expressly for damage to Realty's
property, and Realty expended $2.5 million in both the prosecution of Realty's
and the Company's claims, and defense of Xerox's counterclaims against Realty
and the Company, on May 29, 2001, the Company and Realty entered into an
agreement whereby (i) the Company waived any interest in the judgment, (ii) the
Company agreed to reimburse Realty $763,387 over the next four years with
interest at 8.4% per annum from the date of the agreement, representing 30% of
the litigation costs in the action and (iii) Realty released the Company from
any further claims for indemnification for litigation expenses in connection
with the action. Even though the Company was not legally or contractually
obligated to reimburse GRC, a related party, the Company agreed to enter into
the reimbursement agreement because the Company believed it was fair and
equitable to do so as Realty had paid legal expenses for the benefit of the
Company. The reimbursement is being paid to Realty in the form of additional
rent payments by the Company of $18,780 per month for 48 months beginning in
June, 2001. The entire amount of the reimbursement was charged to operations in
fiscal 2001. At December 28, 2002, the Company has paid $357,000 toward this
agreement.


                                       57
<PAGE>

Item 14. Controls and Procedures

      Within the 90 days prior to the filing of this report, General's
management, including the President and Controller, conducted an evaluation of
the effectiveness of the Company's disclosure controls and procedures pursuant
to Exchange Act Rule 13a-14. Based upon that evaluation, the President and the
Controller concluded that such disclosure controls and procedures are effective
in alerting them on a timely basis to material information relating to General
required to be included in General's periodic filings under the Exchange Act.
There have been no significant changes in internal controls or in factors that
could significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses, subsequent to
the date the President and Controller completed their evaluation.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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

            Report of Independent Certified Public Accountants dated April 8,
            2003.

            Consolidated Balance Sheets for years ended December 28, 2002 and
            December 29, 2001.

            Consolidated Statements of Operations for the years ended December
            28, 2002, December 29, 2001 and December 30, 2000.

            Consolidated Statements of Changes in Stockholders' Equity for the
            years ended December 28, 2002, December 29, 2001 and December 30,
            2000.

            Consolidated Statement of Cash Flows for the years ended December
            28, 2002, December 29, 2001 and December 30, 2000.

            Notes to Consolidated Financial Statements.

(a) 2. Financial Statement Schedules (included pursuant to Item 15 on pages
48-49 of this report):

            Report of Certified Public Accountants dated April 8, 2003.

            Schedule II - Valuation and Qualifying Accounts

(a) 3. Exhibits:

            Reference is made to the Exhibit Index commencing on page 62, filed
            pursuant to Item 14(c).

(b) Reports on Form 8-K:

            None.


                                       58
<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 April
9, 2003.

                                           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 April 9, 2003.

<TABLE>
<CAPTION>
            Signatures                          Title                                        Date
            ----------                          -----                                        ----
<S>                                             <C>                                          <C>
     /s/ Seymour I. Gussack                     Chairman of the Board of                     April 9, 2003
-------------------------------                 Directors                                    -------------
        Seymour I. Gussack

      /s/ David L. Gussack                      President and Director                       April 9, 2003
-------------------------------                 (Principal Executive Officer)                -------------
         David L. Gussack

     /s/ Barbara M. Henagan                     Director                                     April 9, 2003
-------------------------------                                                              -------------
       Barbara M. Henagan

       /s/ Nina M. Gussack                      Director                                     April 9, 2003
-------------------------------                                                              -------------
         Nina M. Gussack

        /s/ Peter Barotz                        Director                                     April 9, 2003
-------------------------------                                                              -------------
          Peter Barotz

      /s/ Robert E. Baruc                       Director                                     April 9, 2003
-------------------------------                                                              -------------
         Robert E. Baruc

       /s/ Ronald Fetzer                        Director                                     April 9, 2003
-------------------------------                                                              -------------
         Ronald Fetzer
</TABLE>


                                       59
<PAGE>

                  CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, David L. Gussack, President of General Bearing Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of General Bearing
Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's Board of Directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: April 9, 2003


/s/ David L. Gussack
--------------------
David L. Gussack
President


                                       60
<PAGE>

                         CERTIFICATION OF THE CONTROLLER

I, Rocky Cambrea, Controller of General Bearing Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of General Bearing
Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's Board of Directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: April 9, 2003


/s/ Rocky Cambrea
-----------------
Rocky Cambrea
Controller


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                                  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), or the
Company's Annual Report on Form 10-K for fiscal years 1996, 1997, 1998, 1999,
2000 and 2001.

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

        2.1         Agreement and Plan of Merger

        3.1         Second Restated Certificate of Incorporation

        3.2         By-Laws of the Company

        4.1         Specimen Stock Certificate

        4.1         Registration Rights Agreement

        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

        10.5        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

        10.19       Board Member Compensation Plan

        10.20       Credit Agreement dated December 20, 1999 between KeyBank
                    National Association and the Company

        10.21       List of Subsidiaries of the Company

        10.22 *     Amendment number 1 to the Credit Agreement between KeyBank
                    National Association and the Company

        10.23 *     Amendment number 2 to the Credit Agreement between KeyBank
                    National Association and the Company


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        10.24 *     Extension of the Credit Agreement between KeyBank National
                    Association and the Company

        99.2  *     Certification of the Chief Executive Officer and the
                    Controller


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