end of 1975, down 4% from the 1974 peak of $19.1 billion. The table below shows, for each of the last two years, the scheduled conversion of the orders backlog into sales during subsequent years: (Amounts in billions) Year Ended December 31, 1974 Year Ended December 31, 1975 Amount Percent Amount Percent 1975............... $ 6.0 31% 1976............... $ 5.8 32% 1976............... 3.1 16 1977............... 2.6 14 1977............... 2.3 12 1978............... 1.8 10 1978............... 2.0 11 1979............... 1.6 9 1979............... 2.2 12 1980............... 1.3 7 1980 +........... 3.5 18 1981 +........... 5.2 28 $19.1 100% $18.3 100% Industrial Power Equipment orders accounted for $13.5 billion of the backlog at the end of 1975. The utility industry made extensive deferments and cancellations of orders in the second half of 1974 and a modest 2% load growth by the utility industry in 1975 resulted in some additional deferments and cancellations. See "Industrial Power Equipment" above. The backlog of orders on hand at June 30, 1976 was $18.4 billion, of which approximately $13.6 billion was accounted for by Industrial Power Equipment. Research and Development Expenditures for research and development were $938 million in 1975 compared with $890 million in 1974. Of these amounts, $357 million was company funded in 1975 ($352 million in 1974), and $581 million ($538 million in 1974) was funded by others, principally the U.S. government. Approximately 13,200 scientists and engineers were engaged in research and development activities as of the end of 1975 (approximately 12,500 at the end of 1974). Of the foregoing, approximately 5,400 scientists and engineers were engaged in company funded activities at the end of 1975 compared with about 5,700 at the end of the previous year. The number of scientists and engineers employed at General Electric's Corporate Research and Development Center increased slightly in 1975. Expansion of Facilities During the five years ended December 31, 1975, General Electric invested approximately $2.7 billion in land, buildings, machinery and equipment (including equipment leased to customers) as shown in the table below: Retirements Plant and net of equipment accumulated expenditures depreciation (Amounts in millions) 1971.................................................................................... $553.1 $ 7.9 1972.................................................................................... 435.9 13.3 1973.................................................................................... 598.6 32.2 1974.................................................................................... 671.8 23.4 1975.................................................................................... 448.2 84.7 Expenditures in 1976 are expected to be approximately 15% greater than in 1975. General Electric operates some 228 manufacturing plants located in 34 states in the United States and Puerto Rico, and approximately 109 manufacturing plants in 23 other countries. Employee Relations During 1975 General Electric employed an average of 375,000 people throughout the world, of whom 274,000 were in the United States. Approximately 50% of the United States employees are represented for collective bargaining purposes by a total of around 325 different local collective bargaining groups. However, a large majority of these employees is represented by local unions which are affiliated with, and which bargain in conjunction with, one or the other of two national unions, namely, the International Union of Electrical, Radio and Machine Workers (AFL-CIO) and the United Electrical, Radio and Machine Workers of America. During June and July of 1976 General Electric negotiated three year contracts with almost all the United States unions with which it deals. Most of these contracts will terminate in June 1979 and the rest will terminate later in the same year. The wage and benefit improvements granted under these contracts 32 have already become or will become effective over the period of the contract and are tied in part to cost of living escalator clauses. Substantially similar improvements have been or will be made for General Electric's non-represented employees. Legal Proceedings In December, 1971 four subsidiaries of American Electric Power Co., filed suit in the United States District Court for the Southern District of New York against General Electric and Westinghouse Electric Corporation. The suit challenges General Electric's price policy for the sale of turbine-generators, alleges the existence of a combination in violation of the antitrust laws and requests treble damages in an unspecified amount with respect to turbine-generator purchases made by the American Electric subsid-iaries and such other relief as the court may deem necessary. The suit remains in the pretrial phase and a final decision is unlikely until the late 1970's. Based on the existing state of the law, General Electric is confident of its ability to prevail but the outcome is, of course, subject to the inevitable uncertainties of litigation. General Electric has granted an extension of the statute of limitations to other utilities with respect to their purchases of turbine-generators. The Department of Justice has been studying material produced during the discovery phase of the American Electric Power Co. case since shortly after its inception. In 1976 the Department increased its investigatory activities relating to turbine pricing practices. A number of discussions between General Electric representatives and the Department have been held; what action, if any, the Department may take is uncertain. On June 25, 1976, two law suits were filed in the Superior Court at Hartford, Connecticut seeking damages in connection with the termination by General Electric of contracts for the reprocessing of spent nuclear fuel at its Morris, Illinois plant. One law suit was brought by Northeast Utilities and seeks $200,000,000 damages; the other law suit was brought by Connecticut Yankee Atomic Power Company and seeks $100,000,000 damages. The complaints make allegations of breach of contract and misrepresentation. General Electric believes that its actions in connection with the reprocessing contracts were legally justified and is confident of its ability to prevail in the litigation. General Electric has removed the law suits to the U.S. District Court in Hartford; the plantiffs are protesting the removal. The Morris plant encountered severe technical problems during an unsuccessful effort to make it operational. As a result, the Atomic Energy Commission in August, 1974 terminated General Electric's construction permit which prohibits operation of the facility. General Electric sent termination notices to all 12 reprocessing customers in September, 1974. Discussions are continuing with the other former reprocessing customers concerning questions arising out of the unavailability of the Morris plant. In May, 1972 the United States Department of Justice filed a civil antitrust suit against General Electric in the United States District Court for the Northern District of New York. This suit claims that General Electric has used unlawful reciprocal purchasing arrangements since at least 1965, and seeks an injunction and related relief against continuation. General Electric is contesting these allegations. The suit is in the pretrial phase. Trial is not expected to commence until late in 1976 or early 1977. In September, 1975 the New York State Department of Environmental Conservation issued a Notice of Hearing and Complaint and proposed Abatement Order alleging violations by General Electric of the Environmental Conservation Law of the State of New York with respect to the discharge of PCBs (polychlorinated biphenyls), even though such discharge was authorized by a permit granted by the Environmental Protection Agency under the provisions of the Federal Water Pollution Control Act. Following hearings (during which the Hearing Officer found that certain of General Electric's past discharges had violated the water quality sections of the New York law), an order was entered by the Department on September 8, 1976, incorporating the abatement provisions of a settlement agreement also entered into on that date by the Department and General Electric. Under the terms of the order and agreement, General Electric must limit PCB discharges and install waste water treatment facilities. Installation of the facilities must be completed within five months after Departmental approval thereof. The cost of such facilities is estimated at $3.5 million. In addition, General Electric has agreed to discontinue using PCBs in capacitor manufacture in the State of New York by July 1, 1977, and will contribute $3 million to the Department for various environmental purposes related to PCBs and other environmentally hazardous substances generally. General Electric is also required, at its expense, to perform an additional $1 million of research related to PCBs and other hazardous substances for the Department. The order is expected to become final early next year. 33