Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

5. Stock-Based Compensation: Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2015		2014		2015		2014
Cost	$	27	$	28	$	54	$	59
Selling, general and administrative		92		100		178		188
Research, development and engineering		12		14		26		28
Other (income) and expense*		0		—		(1)		(9)
Pre-tax stock-based compensation cost		131		142		257		266
Income tax benefits		(45)		(48)		(87)		(89)
Total net stock-based compensation cost	$	86	$	94	$	171	$	176

* Reflects the one-time effects related to the divestiture of the customer care business and industry standard server businesses in 2014 and 2015, respectively.

Pre-tax stock-based compensation cost for the three months ended June 30, 2015 decreased $11 million compared to the corresponding period in the prior year. This was due to decreases related to performance share units ($7 million) and decreases in the company’s assumption of stock-based awards previously issued by acquired entities ($5 million), offset by an increase related to restricted stock units ($1 million). Pre-tax stock-based compensation cost for the six months ended June 30, 2015 decreased $8 million compared to the corresponding period in the prior year. This was due to decreases related to performance share units ($6 million) and decreases related to the company’s assumption of stock-based awards previously issued by acquired entities ($7 million), offset by an increase related to restricted stock units ($5 million).

The amount of stock-based compensation cost included in the loss from discontinued operations, net of tax, was immaterial in all periods.

As of June 30, 2015, the total unrecognized compensation cost of $1,111 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.7 years.

There was no significant capitalized stock-based compensation cost at June 30, 2015 and 2014.