Xibei Bearing Company, Ltd. (China), a subsidiary of Xibei Bearing Group Co. Ltd. (XBG; China), reported third quarter 2002 financial results.

Sales: 70.76 million Yuan (USD $8.5 million)
Net Profit: 15.23 million Yuan (USD $1.8 million)

NOTE: figures are unaudited representations of management, and are compiled under Chinese accounting standards.

However, the company also reported that its Board of Directors and Board of Supervisors were notified of serious problems in an audit report by the China Securities Regulatory Commission (CSRC).

During a routine audit, the CSRC found a 332 million Yuan (USD $40 million) "misappropriation" by Xibei Bearings' largest shareholder.

The CSRC also found that parent XBG had improperly guaranteed loans of 275 million Yuan -- 110 million Yuan in loan guarantees to Xibei Bearings and 165 million Yuan in loan guarantees to private individuals.

The Boards of Directors and Supervisors immediately approved a report and a plan to rectify the problems found.

Situated in Yinchuran, the capital of the Ningxia Hui Autonomous Region, Xibei Bearing Group (XBG) is a major Chinese manufacturing conglomerate, all in one location. The six plants making up XBG cover 101 hectares and together employ over 9,000 people. Annual sales for the combined companies is over 750 million Yuan.

Xibei Bearing Co,. Ltd. is a subsidiary of XBG and the first publicly-held bearing manufacturing company in China. Xibei Bearing is ISO certified, producing 2,500 different ball and roller bearings across nine different styles. The company can manufacture bearings ranging from 40mm to 2,250mm in diameter. Xibei's products are often found with the trademark "NXZ".

Ningxia Xizhou Industrial Co., Ltd. is another division of XBG. It employs more than 3,000 people to manufacture and remanufacture railroad bearings. The company also manufactures balls as rolling elements.

The third directly controlled subsidiary company making up XBG is Changchai-Yinchuan Diesel Engine Co., Ltd., a joint venture with Chingchai Co., Ltd. The company produces approximately 200,000 diesel engines every year.

XBG is permitted to handle its own importing and exporting, selling products from the six companies to over 60 countries worldwide.