Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

7. 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 the Consolidated Statement of Earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2011			2010			2011			2010
Cost	$	22		$	24		$	46		$	49
Selling, general and administrative	126			116			256			249
Research, development and engineering	14			12			30			24
Other (income) and expense*	—			(1		)	—			(1		)
Pre-tax stock-based compensation cost	162			151			332			320
Income tax benefits	(59		)	(55		)	(120		)	(117		)
Total stock-based compensation cost	$	104		$	96		$	212		$	203

* Reflects the one-time effects of the sale of the Product Lifecycle Management activities in 2010.

The increase in pre-tax stock-based compensation cost for the three months ended June 30, 2011, as compared to the corresponding period in the prior year, was primarily due to an increase related to the company’s assumption of stock-based awards previously issued by acquired entities ($8 million) and increases related to restricted stock units ($4 million). The increase in pre-tax stock-based compensation cost for the six months ended June 30, 2011, as compared to the corresponding period in the prior year, was primarily due to an increase related to the company’s assumption of stock-based awards previously issued by acquired entities ($19 million), partially offset by reductions related to performance-based stock units ($9 million).

As of June 30, 2011, the total unrecognized compensation cost of $1,668 million related to non-vested awards is expected to be recognized over a weighted-average period of approximately 3.1 years.

There were no significant capitalized stock-based compensation costs at June 30, 2011 and 2010.