Customers have required that nuclear fuel be sold with warranties covering the useful life of the fuel, even though the experience base for predicting the life of nuclear fuel under power plant operating conditions is still relatively small. As of December 31, 1975, these warranty commitments related to fuel in service with an original sales value of $712 million, and to fuel in the backlog presently valued at $2.9 billion, covering deliveries through the 1980's. In addition, fulfillment of a small number of its nuclear fuel orders requires General Electric to procure uranium concentrate. General Electric's maximum uranium concentrate requirements are estimated to total about 28 million pounds, but actual requirements are likely to be about 20 million pounds or less. General Electric has on hand or under contract about 21 million pounds of uranium concentrate. Also, some fuel orders include uranium enrichment, reprocessing, plutonium fabrication and waste disposal services. In view of continuing uncertainties as to government policies regarding key segments of the nuclear fuel cycle, and ongoing discussions with customers, the availability and costs of these services are not now determinable. Power Delivery products include transformers, power circuit breakers, switchgear, lighting systems and meters, the principal market for which is the electric utility industry. Margins are vulnerable to intense competition, both from domestic and foreign competitors, to sharp swings in demand and to rapid materials cost escalation. Ongoing cost and productivity improvement programs, coupled with escalation provisions for longer term contracts, are being aggressively pursued to improve the generally poor profit performance which has characterized some of these products. The large variety of power generation products offered by the Industrial Power Equipment category well positions General Electric to continue to serve the electric utility industry, whatever the future directions of national energy policy. International The International category includes exports to external customers world-wide and the operation of diversified foreign affiliates each of which manufactures and sells a variety of products. Operations of non-diversified foreign affiliates are included in the other categories, as appropriate. Export Sales derive mostly from high technology products such as aircraft engines, steam and gas turbines, transportation equipment and nuclear steam supply systems, but also include products from most other General Electric businesses. International customers include many large foreign government agencies and utilities but exports are not significantly dependent on any single customer or country. Diversified foreign affiliates manufacture products whose sale has historically been principally in their respective home markets. The largest of these affiliates is Canadian General Electric Company Limited which had 1975 sales of $822 million (Canadian). Sales of General Electric's Italian affiliate (together with its foreign and domestic subsidiaries) accounted for less than 15% of International category sales in 1975. Other principal diversified foreign affiliates, none of which accounted for more than 6% of 1975 International category sales, are located in Brazil, Venezuela, Spain and Mexico, with a number of smaller affiliates operating in other countries. In the International category, competition and market conditions vary with the product and the country involved. Local government policies and economic conditions can have significant effectsparticularly rates of inflation, monetary fluctuations and balance of payments problems. For a number of years General Electric has had written policies directed to the standard of conduct that should be maintained by its employees in its conduct of international business. Comprehensive revisions of these international policies were issued in 1973 and were called to the attention of the management of General Electric by the Chief Executive Officer. In September 1975, the Chief Executive Officer wrote again to all general managers stressing the company policy "that no employee of General Electric or of any of its subsidiaries will arrange or make payments in the nature of kickbacks or bribes, nor will the Company and its subsidiaries use intermediate parties such as sales representatives for such purposes." Concurrently, a review of prior compliance was commenced covering the period since the end of 1971. Included in the review were the export sales of the International Sales Division and the sales of a number of General Electric's foreign first-tier subsidiaries. 30 Periodic reports concerning the conduct of the review and findings were made to the Board of Directors and discussed with General Electric's independent certified public accountants. The review disclosed: no illegal political contributions in the U.S. or abroad; no secret funds, and all payments were reported within the consolidated accounts and records of General Electric; no participation of senior corporate officers in unlawful or otherwise improper activities. In the case of the first-tier subsidiaries referred to above, the review determined that during the period 1972 through 10 months 1975, approximately $550,000 was paid abroad by certain of these subsidiaries to minor employees of foreign governments in connection with importation, customs, tax and other regulatory matters and for general good will in connection with contracts. These payments were made by local companies in foreign countries to promote their local business. While the payments were recorded in accounting records under appropriate classifications, the nature of some of the payments was not fully disclosed. These companies were directed to cease any payments which might be construed as improper. Total sales of the subsidiaries reviewed for the years 1972 through 1975 amounted to $4,650,000,000. The International Sales Division and the first-tier subsidiaries have long utilized the services of distributors and sales representatives for assistance in marketing products outside the United States. Over 110 sales representatives were employed by the International Sales Division alone throughout the world. During the four year period reviewed, the International Sales Division and these affiliates paid sales commissions to sales representatives of substantially less than 1% of sales. The investigations indicate that the great bulk of these sales representatives were performing entirely legitimate functions and that the sales commissions represent appropriate compensation for such services. However, an analysis of the circumstances surrounding certain of these transactions raised questions as to whether improper payments were made by the sales representatives. General Electric has no means of verifying that any such payments actually were made. The review found some evidence that General Electric employees, in dealing with some sales representatives, were led to believe that portions of the sales commission might be shared with customer officials. As a result of such circumstances, sales representation agreements with a limited number of representatives were terminated. As a result of the review, additional criteria and methods for the selection of sales representatives and periodic evaluations of their conduct and performance were established. A newly revised comprehensive policy has been published throughout General Electric. Commission rates have again been reviewed to avoid the likelihood of excessive sales commissions being generated. Adherence to company policy by General Electric employees has been reemphasized at special meetings throughout the world and will be the subject of periodic review. Management is of the opinion that any questionable payments which may have been made were not material to General Electric's business. General Electric Credit Corporation General Electric Credit Corporation ("GECC"), a wholly-owned nonconsolidated finance affiliate, primarily engages in consumer financing and commercial and industrial financing. Products of companies other than General Electric constitute the major portion of products financed by GECC. Substantially all of the products financed by GECC are new products. Consumer financing consists mainly of retail time sales and dealer inventory financing of home products (major appliances, television sets, furniture and other home furnishings) and special products (primarily mobile homes). Consumer financing also includes installment loan financing. Commercial and industrial financing consists of equipment sales financing provided through time sales, loans and leases; industrial loans and leases; commercial loan financing (revolving credit and accounts receivable financing); and real estate financing. _ Orders Backlog Products sold by General Electric range from those which are manufactured to be sold from inventory, through those for which the time from receipt of an order to completion of sale is short, to those which involve a considerable period of elapsed time in the order-manufacture-shipment cycle. The backlog of orders on hand, many involving products with a long production cycle, was $18.3 billion at the 31