UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)

            |X|   Quarterly Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

For the quarter ended June 30, 2001

                                       OR

            |_|   Transition Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

    For the transition period from .................. to ....................

                         Commission file Number 0-22053

                           GENERAL BEARING CORPORATION
                           ---------------------------
             (Exact name of registrant as specified in its charter)

Delaware                                              13-2796245
--------                                              ----------
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)

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

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

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

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

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

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

At August 8, 2001, the Registrant had issued 7,088,950 shares of common stock,
$.01 par value per share, and had outstanding 4,128,650 shares.
<PAGE>

          CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
               FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

      The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements, which are statements other than those of
historical fact, including, without limitation, ones identified by the use of
the words: "anticipates," "estimates," "expects," "intends," "plans,"
"predicts," and similar expressions. In this Quarterly Report such statements
may relate, among other things, to the recoverability of deferred taxes, likely
industry trends, the continued availability of credit lines, the suitability of
facilities, access to suppliers and implementation of joint ventures and
marketing programs. Such forward looking statements involve important risks and
uncertainties that could cause actual results to differ materially from those
expected by the Company, and such statements should be read along with the
cautionary statements accompanying them and mindful of the following additional
risks and uncertainties possibly affecting the Company: the possibility of a
general economic downturn, which is likely to have an important impact on
historically cyclical industries such as manufacturing; significant price,
quality or marketing efforts from domestic or overseas competitors; the loss of,
or substantial reduction in, orders from a major customer; the loss of, or
failure to attain additional quality certifications; changes in U.S. or foreign
government regulations and policies, including the imposition of antidumping
orders on the Company or any of its suppliers; a significant judgment or order
against the Company in a legal or administrative proceeding; and potential
delays in implementing planned sales and marketing expansion efforts and the
failure of their effectiveness upon implementation.
<PAGE>

                           GENERAL BEARING CORPORATION

                          QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 2001

                                TABLE OF CONTENTS

                                                                        Page No.
PART I

      Item 1. Financial Statements ...................................    2 - 10

      Item 2. Management's Discussion and Analysis of Results
              of Operations and Financial Condition ..................   11 - 14

PART II

      Item 1. Legal Proceedings ......................................        15

      Item 6. Exhibits and Reports on Form 8-K .......................        15

Signature ............................................................        16


                                                                               1
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

Item 1.                    CONSOLIDATED BALANCE SHEETS
              (In Thousands - Except for Shares and Per Share Data)

<TABLE>
<CAPTION>
                                                               June 30,       Dec. 30,
                                                                 2001           2000
                                                               --------       --------
                                                              (Unaudited)
<S>                                                            <C>            <C>
                          ASSETS
Current:
   Cash and cash equivalents                                   $    827       $    497
   Accounts receivable - net of allowance for doubtful
     accounts of $908 and $988                                    7,616          6,478
   Inventories                                                   24,867         29,560
   Prepaid expenses and other current assets                      1,807          1,568
   Advances to affiliates                                           827            230
   Deferred tax assets                                              481            445
                                                               --------       --------

       Total current assets                                      36,425         38,778

Fixed assets, net of accumulated depreciation                     8,691          8,643
Investment in and advances to joint ventures
   and affiliates                                                 8,794          7,475
Other assets                                                        296            368
                                                               --------       --------

Total Assets                                                   $ 54,206       $ 55,264
                                                               ========       ========

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
   Note payable - banks                                             286            339
   Accounts payable:
     Trade                                                        3,350          4,642
     Affiliates                                                     925            746
   Accrued expenses and other current liabilities                 3,743          4,623
   Current maturities of long-term debt                             189            182
                                                               --------       --------

       Total current liabilities                                  8,493         10,532
                                                               --------       --------

Long-term liabilities, less current maturities:
     Bank                                                        14,766         14,753
     Other                                                          567            663
     Affiliate                                                    1,059          1,038
   Other long-term liabilities - affiliate                          581             --
                                                               --------       --------

       Total long-term liabilities                               16,973         16,454
                                                               --------       --------

Deferred taxes                                                      275            275

Minority interests                                                3,644          3,218

Commitments and contingencies

Stockholders' equity:
   Preferred stock par value $.01 per share - shares
     authorized 1,000,000 none issued and outstanding                --             --
   Common stock par value $.01 per share - shares
     authorized 19,000,000, issued 7,088,950 and
     7,072,950 shares                                                71             71
   Additional paid-in capital                                    40,094         39,904
   Accumulated other comprehensive income                          (569)           (10)
   Treasury stock at cost, 2,960,300 and 2,960,300 shares           (51)           (51)
   Deficit                                                      (14,724)       (15,219)
                                                               --------       --------

       Total stockholders' equity                                24,821         24,785
                                                               --------       --------

Total liabilities and stockholder's equity                     $ 54,206       $ 55,264
                                                               ========       ========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               2
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (In Thousands - Except for Shares and Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Twenty-six weeks ended              Thirteen weeks ended
                                                  ---------------------------       -----------------------------
                                                   June 30,         July 1,          June 30,            July 1,
                                                     2001            2000              2001               2000
                                                  ----------      -----------       -----------       -----------
                                                                    Restated                            Restated
<S>                                               <C>             <C>               <C>               <C>
Sales                                             $   28,502      $    34,794       $    14,937       $    16,344

Cost of sales                                         19,052           22,580            10,046            10,573
                                                  ----------      -----------       -----------       -----------

Gross profit                                           9,450           12,214             4,891             5,771

Selling, general and administrative expenses           6,978            8,080             3,433             4,126
                                                  ----------      -----------       -----------       -----------

Operating income                                       2,472            4,134             1,458             1,645

Other expense, net                                     1,318              615             1,349               382
                                                  ----------      -----------       -----------       -----------

Income before income taxes                             1,154            3,519               109             1,263

Income taxes                                             233            1,450              (132)              654
                                                  ----------      -----------       -----------       -----------

Income before minority interests                         921            2,069               241               609

Minority interests                                       426             (365)              270              (256)
                                                  ----------      -----------       -----------       -----------

Net income / (loss)                               $      495      $     2,434       $       (29)      $       865
                                                  ==========      ===========       ===========       ===========

Net income / (loss) per common share:

     Basic                                        $     0.12      $      0.59       $     (0.01)      $      0.21
                                                  ----------      -----------       -----------       -----------

     Diluted                                      $     0.12      $      0.59       $     (0.01)      $      0.21
                                                  ----------      -----------       -----------       -----------
Weighted average number of common shares:

     Basic                                         4,121,529        4,106,481         4,128,650         4,113,759
                                                  ----------      -----------       -----------       -----------

     Diluted                                       4,121,735        4,106,481         4,128,650         4,113,759
                                                  ----------      -----------       -----------       -----------
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               3
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           Twenty-six weeks ended    Thirteen weeks ended
                                           ----------------------    --------------------
                                            June 30,     July 1,     June 30,     July 1,
                                              2001        2000         2001        2000
                                            --------     -------     --------     -------
<S>                                          <C>         <C>           <C>         <C>
Net income                                   $ 495       $ 2,434       $ (29)      $865
Foreign currency translation adjustment          0            (3)          0          0
Derivative fair market value adjustment        (56)            0         127          0
                                             -----       -------       -----       ----
Comprehensive income                         $ 439       $ 2,431       $  98       $865
                                             -----       -------       -----       ----
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               4
<PAGE>

                             FINANCIAL STATEMENTS OF
                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 Twenty-six weeks ended
                                                               ---------------------------
                                                               June 30, 2001  July 1, 2000
                                                               -------------  ------------
                                                                                Restated
<S>                                                                <C>           <C>
Cash flows from operating activities:
      Net income                                                   $   495       $ 2,434
   Adjustments to reconcile net income to cash provided
      by operating activities:
         Minority interests                                            426          (365)
         Depreciation and amortization                                 380           383
         Deferred income taxes                                         (36)          393
         Equity in income of joint ventures and affiliates             (27)         (288)
         Other non-cash items charged to income                        100            43
         Loss on sales of fixed assets                                  88            --
   Changes in:
         Accounts receivable                                        (1,138)       (2,418)
         Inventories                                                 4,694        (2,442)
         Prepaid expenses and other assets                             (79)          581
         Due to (from) affiliates                                       95            57
         Accounts payable and accrued expenses                      (2,732)        2,650
                                                                   -------       -------

            Net cash provided by operating activities                2,266         1,028
                                                                   -------       -------

Cash flows from investing activities:
   Investment in affiliate                                              --          (100)
   Advances to affiliates, net                                      (1,326)       (2,707)
   Fixed asset purchases                                              (527)         (258)
   Net proceeds from sale of fixed assets                               46            --
                                                                   -------       -------

            Net cash used in investing activities:                  (1,807)       (3,065)
                                                                   -------       -------

Cash flows from financing activities:
   Cash dividend                                                        --          (500)
   Purchase of treasury stock                                           --           (51)
   (Decrease) / increase in note payable - banks                       (53)          473
   Net proceeds from equipment financing                                --           950
   Repayment of long-term debt                                         (89)         (565)
   Net proceeds from (repayment of) revolving credit facility           13          (374)
                                                                   -------       -------

            Net cash used in financing activities                     (129)          (67)
                                                                   -------       -------

Net increase in cash and cash equivalents                              330         2,104
Cash and cash equivalents, beginning of period                         497         3,576
                                                                   -------       -------
Cash and cash equivalents, end of period                           $   827       $ 1,472
                                                                   =======       =======
Cash paid during the period for:
   Interest                                                        $   389       $   759
                                                                   =======       =======
   Income taxes                                                    $   306       $ 1,141
                                                                   =======       =======
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                                                               5
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of                The accompanying unaudited condensed consolidated
      Presentation            financial statements have been prepared in
                              accordance with generally accepted accounting
                              principles for interim financial information and
                              with the instructions to Form 10-Q and Regulation
                              S-X. Accordingly, they do not include all of the
                              information and footnotes required by generally
                              accepted accounting principles for complete
                              financial statements. In the opinion of
                              management, all adjustments (consisting solely of
                              normal recurring accruals) considered necessary
                              for a fair presentation have been included.
                              Operating results for the twenty-six weeks ended
                              June 30, 2001 are not necessarily indicative of
                              the results that may be expected for the year
                              ending December 29, 2001. For further information,
                              refer to the consolidated financial statements and
                              footnotes thereto included in the Company's Annual
                              Report on Form 10-K for the year ended December
                              30, 2000.

                              The Company uses an interest rate swap agreement
                              as a derivative to modify the interest
                              characteristics of its outstanding floating rate
                              long-term debt, 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.

                              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 (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.


                                                                               6
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.    Acquisition             In July 2000, General Bearing Corporation
                              ("General") acquired 100% of World Machinery
                              Company ("World"), which, prior to the
                              acquisition, owned 74.8% of the outstanding common
                              stock of General. World was principally owned by
                              certain 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 holds 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. The net stock of 190,000 shares
                              paid for the acquisition are considered
                              outstanding for all periods presented.

3.    Inventories             Inventories consist of the following: (In
                              Thousands)

<TABLE>
<CAPTION>
                                                                    June 30, 2001      Dec. 30, 2000
                              ----------------------------------------------------------------------
<S>                                                                       <C>                <C>
                              Finished Goods                              $ 6,666            $ 8,260
                              Bearing raw materials, purchased
                              parts and work in process                    13,201             15,736
                              Machines and machine tools                    3,374              2,936
                              Machine service parts and
                              accessories                                   1,626              2,628
                              ----------------------------------------------------------------------
                                                                          $24,867            $29,560
                              ======================================================================
</TABLE>

4.    Earnings per            Basic earnings per share includes no dilution and
      Share                   is computed by dividing net income by the weighted
                              average number of common shares outstanding for
                              the period. Diluted earnings per share reflect, in
                              periods in which they have a dilutive effect, the
                              dilution which would occur upon the exercise of
                              stock options. A reconciliation of the shares used
                              in calculating basic and diluted earnings per
                              share follows:

<TABLE>
<CAPTION>
                                                                         Twenty-six Weeks Ended
                                                                    --------------------------------
                                                                    June 30, 2001       July 1, 2000
                              ----------------------------------------------------------------------
<S>                                                                     <C>                <C>
                              Diluted earnings per share
                              computation:
                              Basic weighted average common
                              shares outstanding                        4,121,529          4,106,481
                              Incremental shares from assumed
                              exercise of dilutive options                    206                 --
                              ----------------------------------------------------------------------
                                                                        4,121,735          4,106,481
                              ----------------------------------------------------------------------
</TABLE>


                                                                               7
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                          Thirteen Weeks Ended
                                                                    --------------------------------
                                                                    June 30, 2001      Dec. 30, 2000
                              ----------------------------------------------------------------------
<S>                                                                     <C>                <C>
                              Diluted earnings per share
                              computation:
                              Basic weighted average common
                              shares outstanding                        4,128,650          4,113,759
                              Incremental shares from assumed
                              exercise of dilutive options                     --                 --
                              ----------------------------------------------------------------------
                                                                        4,128,650          4,113,759
                              ----------------------------------------------------------------------
</TABLE>

                              For the twenty-six weeks ended June 30, 2001 and
                              July 1, 2000, 332,800 and 342,800 options and
                              warrants outstanding, respectively, were
                              anti-dilutive. For the thirteen weeks ended June
                              30, 2001 and July 1, 2000, 427,800 and 342,800
                              options and warrants outstanding, respectively,
                              were anti-dilutive.

5.    Derivative              On December 30, 2000, the Company adopted
      Financial               Statement of Financial Accounting Standards No.
      Instruments             133 ("SFAS 133") "Accounting for Derivative
                              Instruments and Hedging Activities", as amended,
                              and interpreted, which requires that all
                              derivative instruments be recorded on the balance
                              sheet at their fair value. The impact of adopting
                              SFAS 133 on the Company's Statement of Operations
                              and Balance Sheet was not material.

                              In addition, to manage it's exposure to changes in
                              interest rates, the Company has entered into an
                              interest rate swap agreement to hedge a portion of
                              its total long-term debt that is subject to
                              variable interest rates. These contracts are
                              considered to be a hedge against changes in the
                              amount of future cash flows associated with the
                              interest payments on variable rate debt
                              obligations. Expenses recognized in earnings
                              during the period relating to the interest rate
                              swap totaled $70,000 for the twenty-six weeks
                              ended June 30, 2001 and are included in the
                              Statement of Operations in Other expenses, net.
                              Any values reported in Comprehensive Income will
                              be reclassified to earnings over the term of the
                              agreement, through 2007.

6.    Litigation              Except as explained in Part II of this report,
                              there has been no material change in litigation
                              since the events reported in the Company's 10-K
                              for the fiscal year ended December 30, 2000.

7.    Segment                 Statement of Financial Accounting Standards No.
      Information             131 ("SFAS 131"), Disclosures about Segments of an
                              Enterprise and Related Information replaces the
                              "industry segment" approach with the "management"
                              approach. The management approach


                                                                               8
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              designates the internal reporting that is used by
                              management for making operating decisions and
                              assessing performance as the source of the
                              Company's reportable segments.

                              The Company operates in three segments: the OEM
                              Division, which supplies bearings and bearing
                              components to Original Equipment Manufacturers
                              (OEMs), the Distribution Division, which serves
                              bearing distributors that supply the maintenance
                              and repair aftermarket and small OEM's, and the
                              Machine Tools Division, which manufactures and
                              sells machine tools.

                              The accounting policies of the segments are the
                              same as those described in the summary of
                              significant accounting policies outlined in the
                              Company's 10-K for the fiscal year ended December
                              30, 2000. The Company evaluates segment
                              performance based on operating income.

The table below presents information about the Company's business segments. (In
Thousands)

                           Year to Date June 30, 2001

<TABLE>
<CAPTION>
                                                              MACHINE
                                       OEM     DISTRIBUTOR     TOOLS        OTHER        TOTAL
                                     ==========================================================
<S>                                  <C>          <C>         <C>          <C>          <C>
Net sales to external customers      $17,530      $5,647      $ 5,325      $    --      $28,502
Gross Profit                           3,887       3,113        2,450           --        9,450
Operating income                       1,330         790          352           --        2,472
Depreciation / amortization              246          57           77           --          380
Capital expenditures                     195          --           21          311          527
Total Assets                         $23,780      $5,223      $13,314      $11,889      $54,206
</TABLE>

                            Year to Date July 1, 2000

<TABLE>
<CAPTION>
                                                              MACHINE
                                       OEM     DISTRIBUTOR     TOOLS        OTHER        TOTAL
                                     ==========================================================
<S>                                  <C>          <C>         <C>          <C>          <C>
Net sales to external customers      $21,571      $6,798      $ 6,425      $   --      $34,794
Gross Profit                           5,690       3,724        2,800          --       12,214
Operating income                       2,775       1,244          115          --        4,134
Depreciation / amortization              233          57           93          --          383
Capital expenditures                     163          --           50          45          258
Total Assets                         $25,169      $6,974      $16,405      $8,220      $56,768
</TABLE>


                                                                               9
<PAGE>

                           GENERAL BEARING CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           Quarter Ended June 30, 2001

<TABLE>
<CAPTION>
                                                              MACHINE
                                       OEM     DISTRIBUTOR     TOOLS        OTHER        TOTAL
                                     ==========================================================
<S>                                  <C>          <C>         <C>          <C>          <C>
Net sales to external customers      $ 9,239      $2,619      $ 3,079      $    --      $14,937
Gross Profit                           1,892       1,442        1,557           --        4,891
Operating income                         651         307          500           --        1,458
Depreciation / amortization              127          27           41           --          195
Capital expenditures                     169          --           21          236          426
Total Assets                         $23,780      $5,223      $13,314      $11,889      $54,206
</TABLE>

                           Quarter Ended July 1, 2000

<TABLE>
<CAPTION>
                                                              MACHINE
                                       OEM     DISTRIBUTOR     TOOLS        OTHER        TOTAL
                                     ==========================================================
<S>                                  <C>          <C>         <C>          <C>          <C>
Net sales to external customers      $10,560      $3,198      $  2,586     $    --      $16,344
Gross Profit                           2,778       1,792         1,201          --        5,771
Operating income / (loss)              1,245         580          (180)         --        1,645
Depreciation / amortization              121          27            54          --          202
Capital expenditures                     112          --            16          35          163
Total Assets                         $25,169      $6,974      $ 16,405     $ 8,220      $56,768
</TABLE>

   Depreciation expense was allocated based on material, labor, and overhead.



                                                                              10
<PAGE>

Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition

Results of Operations

      Sales. Sales for the second fiscal quarter ended June 30, 2001 ("Q-2
2001") of $14,937,000 represents an 8.6% decrease compared to the second fiscal
quarter ended July 1, 2000 ("Q-2 2000"). Sales in the OEM Division decreased
12.5% from Q-2 2000 to $9,239,000 primarily due to the economic slowdown that
began during the second half of 2000. The decrease was mainly due to lower sales
volume of tapered roller bearings for heavy duty truck trailers. Distribution
Division sales decreased 18.1% from Q-2 2000 to $2,619,000 also due primarily to
the economic slowdown. Machine tool sales of $3,079,000 were 19.1% higher than
Q-2 2000 due primarily to the shipment of orders delayed from prior periods,
partially offset by economic conditions in the United States.

      Sales for the twenty-six weeks ended June 30, 2001 ("2001") of $28,502,000
represents an 18.1% decrease compared to the twenty-six weeks ended July 1, 2000
("2000"). Sales in the OEM Division decreased 18.7% from 2000 to $17,530,000
primarily due to the economic slowdown that began during the second half of
2000. The largest decrease was due to lower sales volume of tapered roller
bearings for heavy duty truck trailers, however, the OEM Division's other
product lines were also negatively affected. Distribution Division sales
decreased 16.9% from 2000 to $5,647,000 also due primarily to the economic
slowdown. Machine tool sales of $5,325,000 were 17.1% lower than 2000 due
primarily to slower economic conditions in the United States, partially offset
by the continued development of markets for the Company's plant in Romania.

      Gross Profit. Gross profit for Q-2 2001 of $4,891,000 represents a 15.2%
decrease compared to Q-2 2000. As a percentage of sales, gross profit (GP%) was
32.7% for Q-2 2001 compared to 35.3% for Q-2 2000. GP% for the OEM Division was
20.5% in Q-2 2001 compared to 26.3% in Q-2 2000. This decrease was mainly due to
the lower volume and introductory pricing necessary to increase market share.
GP% for the Distribution Division was 55.1% in Q-2 2001 compared to 56.0% in Q-2
2000. This decrease was primarily due to the lower volume, partially offset by
higher selling prices. GP% for machine tools was 50.6% in Q-2 2001 compared to
46.4% in Q-2 2000. This increase is mainly due to the higher sales volume and
product mix.

      Gross profit for 2001 of $9,450,000 represents a 22.6% decrease compared
to 2000. As a percentage of sales, gross profit (GP%) was 33.2% for 2001
compared to 35.1% for 2000. GP% for the OEM Division was 22.2% in 2001 compared
to 26.4% in 2000. This decrease was mainly due to the lower volume and
introductory pricing necessary to increase market share. GP% for the
Distribution Division was 55.1% in 2001 compared to 54.8% in 2000. This increase
was primarily due to higher selling prices, partially offset by the lower
volume. GP% for machine tools was 46.0% in 2001 compared to 43.6% in 2000. This
increase is mainly due to higher international sales volume, partially offset by
lower domestic sales volume.


                                                                              11
<PAGE>

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses (S,G&A) as a percentage of sales were 23.0% in Q-2 2001
compared to 25.2% in Q-2 2000. S,G&A decreased by $693,000, primarily due to
cost reductions made in response to the lower sales. S,G&A decreased in the OEM
Division and the Distribution Division by $273,000 and $96,000, respectively,
due mainly to lower sales related variable costs, promotion expense and legal
expense. S,G&A for machine tools decreased by $324,000 mainly due to reduced bad
debt expense and lower costs for trade conventions.

      S,G&A as a percentage of sales were 24.5% in 2001 compared to 23.2% in
2000. This increase is primarily due to the decreased sales volume, partially
offset by reduced expenses. S,G&A decreased by $1,102,000. S,G&A decreased in
the OEM Division by $339,000 and in the Distribution Division by $175,000 due to
the same factors affecting the second quarter. S,G&A for machine tools decreased
by $588,000 mainly due to reduced bad debt expense and lower costs for trade
conventions.

      Operating Income. Operating income for Q-2 2001 of $1,458,000 represents
an 11.4% decrease compared to Q-2 2000. Operating income for the OEM Division
decreased 47.7% compared to Q-2 2000 to $651,000 primarily due to lower sales
volume and lower GP%, partially offset by lower S,G&A. Operating income in the
Distribution Division decreased 47.1% compared to Q-2 2000 to $307,000 due
mainly to lower sales volume. Operating income for Machine Tools was $500,000 in
Q-2 2001 compared to a loss of $180,000 in Q-2 2000 primarily due to higher
sales volume and lower S,G&A.

      Operating income for 2001 of $2,472,000 represents a 40.2% decrease
compared to 2000. Operating income for the OEM Division decreased 52.1% compared
to 2000 to $1,330,000 primarily due to the same factors affecting the second
quarter. Operating income in the Distribution Division decreased 36.5% compared
to 2000 to $790,000 due mainly to lower sales volume. Operating income for
Machine Tools increased 206.1% compared to 2000 to $352,000 primarily due to
reduced S,G&A and higher gross margin, partially offset by lower sales volume.

      Other Expense, net. Other expense, net was $1,349,000 in Q-2 2001 compared
to $382,000 in Q-2 2000 and is comprised of miscellaneous non-operating income
and expenses, interest expense and equity in income of affiliates ("equity
income"). Other non-operating expenses were $1,067,000 in Q-2 2001 compared to
$227,000 in Q-2 2000. Included in Q-2 2001 other non-operating expenses is a
one-time 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 will be
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. Also included in these expenses
are losses on net monetary positions of $235,000 and $161,000 for Q-2 2001 and
Q-2 2000, respectively, reflecting the effect of changes in foreign exchange
rates and accounting rules for financial reporting in hyperinflationary
economies (Romania). Net interest expense was $264,000 in Q-2 2001 compared to
$240,000 in Q-2 2000 mainly due to higher debt, partially offset by lower
interest rates. Equity income was a loss of $18,000 in Q-2 2001 compared to
income of $85,000 in Q-2 2000.


                                                                              12
<PAGE>

      Other expense, net was $1,318,000 in 2001 compared to $615,000 in 2000.
Other non-operating expenses were $786,000 in 2001 compared to $353,000 in 2000.
The 2001 expense is comprised mainly of the settlement with GRC. The 2000
expense is comprised mainly of a $242,000 loss on net monetary position
reflecting the effect of changes in foreign exchange rates and accounting rules
for financial reporting in hyperinflationary economies. Net interest expense was
$558,000 in 2001 compared to $550,000 in 2000 mainly due to higher debt,
partially offset by lower interest rates. Equity income was $27,000 in 2001
compared to $288,000 in 2000. The 2000 equity income includes the Company's
share of net earnings from a joint venture prior to the inclusion of an
additional partner.

      Income Tax. The Company's effective income tax rate was (121.1%) in Q-2
2001 compared to 51.8% in Q-2 2000. The benefit in Q-2 2001 is mainly due to
certain foreign income that is not taxable while the Q-2 2000 effective rate
reflects certain foreign losses for which there is no benefit. The Company's
effective income tax rate was 20.2% in 2001 compared to 41.2% in 2000 mainly due
to the factors affecting the quarterly effective rates.

      Net Income / (Loss). Net income for Q-2 2001 decreased 103.4% from Q-2
2000 to a net loss of $29,000 or ($.01) per basic and diluted share, from
$865,000 or $.21 per basic and diluted share in Q-2 2000. The decrease is
primarily due to the lower sales volume, partially offset by reduced S,G&A. Net
income for 2001 decreased 79.7% from 2000 to $495,000 or $.12 per basic and
diluted share, from $2,434,000 or $.59 per basic and diluted share in 2000, also
primarily due to the lower sales volume, partially offset by reduced S,G&A.

Financial Condition, Liquidity and Capital Resources

      During the periods presented, the Company's primary sources of capital
have been net cash provided by operating activities and lease financing. Working
capital requirements also have been financed by short term loans and a Revolving
Credit Facility. The primary demands on the Company's capital resources have
been the need to fund inventory and receivables growth created in normal
business cycles and expansion. At June 30, 2001 and December 30, 2000, the
Company had working capital of $27,932,000 and $28,246,000, respectively.

      Cash provided by operating activities in 2001 was $2,266,000. Cash used by
increased accounts receivable and reduced accounts payable and accrued expenses
was partially offset by cash provided by net income and reduced inventory. The
accounts receivable increase is directly related to higher periodic sales volume
as days sales outstanding are comparable with historic results. The decrease in
accounts payable and accrued expenses is primarily due to a reduction in
inventory in-transit. The decrease in inventory is also the result of reduced
purchases in line with the lower sales.

      Cash used in investing activities in 2001 was $1,807,000. The Company
loaned $1,035,000 to Ningbo General Bearing Company, Ltd., one of it's existing
joint ventures in China. In the third quarter of 2001, this loan was converted
to an investment as part of the $1,200,000 required to increase the Company's
ownership from 42% to 50%. The Company also loaned $300,000 to another existing
joint venture, Shanghai General Bearing Company, Ltd., which is also expected to
be converted to an investment for increased ownership. Cash used in investing
activities also includes $527,000 for capital expenditures.


                                                                              13
<PAGE>

      Cash used in financing activities in 2001 was $129,000. During 2001, the
Company had a net increase in debt under its revolving credit facility of
$13,000. It had a net decrease of $53,000 in Notes Payable - Banks and repaid
$89,000 of other long-term debt.

      At June 30, 2001, the Company had outstanding debt of $14,766,000 under
its Revolving Credit Facility and had further availability of approximately $4.6
million. The Company was in violation of certain of its financial covenants for
the period ending June 30, 2001. The bank waived these covenants.

      The Company believes that funds generated from continuing operations,
capital lease financing and borrowing under the existing and any future
revolving credit facilities will be sufficient to finance the Company's
anticipated working capital and capital expenditure requirements for at least
the next 24 months.

Inflation

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

Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk

      The Company's primary market risks are fluctuations in interest rates and
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
on its bank debt. As of June 30, 2001, the Company had $8,550,000 outstanding in
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 principal
amount of the swap amortizes by $75,000 per month and terminates in December
2007. Under the interest rate environment during the twenty-six weeks ended June
30, 2001, the Company's interest rate swap agreement resulted in additional
expense of approximately $70,000.

      The Company's management believes that fluctuations in interest rates in
the near term will 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. Due to this limited
activity, the Company does not expect any material loss with respect to foreign
currency risk.


                                                                              14
<PAGE>

                                       PART II

Item 1. Legal Proceedings

General Bearing Corporation and Gussack Realty Company vs. Xerox

      In the previously reported litigation with Xerox, the trial court entered
judgment on its remand decision on April 27, 2001, in the amount of $1,111,482
plus prejudgment interest of $872,627 to April 16th, 2001, with additional per
diem interest running from April 16th forward. The judgment was paid in full to
Gussack Realty Company by Xerox on May 23rd, 2001.

      For further details see the Company's reports on Form 10-K for the year
ended December 30, 2000 and Form 8-K dated May 29, 2001.

Item 6. Exhibits and Reports on Form 8-K

      (a) On April 20, 2001, the Company filed a report on Form 8-K dated April
16, 2001, reporting that the merger agreement had been terminated.

      (b) On July 23, 2001, the Company filed a report on Form 8-K dated May 29,
2001, reporting an agreement reached between the Company and Gussack Realty
Company, allocating the proceeds and litigation costs from the previously
reported litigation with Xerox.


                                                                              15
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: August 14, 2001.

GENERAL BEARING CORPORATION
-------------------------------------
(Registrant)


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


  /s/ Barry A. Morris
-------------------------------------
Barry A. Morris
Chief Financial Officer


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