Stock-Based Compensation

9 Months Ended

Sep. 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 September 30,						Nine Months Ended September 30,
(Dollars in millions)	2011			2010			2011			2010
Cost	$	35		$	23		$	81		$	72
Selling, general and administrative	116			118			372			366
Research, development and engineering	15			12			45			36
Other (income) and expense*	—			—			—			(1		)
Pre-tax stock-based compensation cost	166			153			498			474
Income tax benefits	(57		)	(57		)	(177		)	(174		)
Total stock-based compensation cost	$	109		$	96		$	321		$	300

* 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 September 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 ($2 million) and increases related to restricted stock units ($11 million). The increase in pre-tax stock-based compensation cost for the nine months ended September 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 ($21 million) and increases related to restricted stock units ($6 million), partially offset by a reduction related to stock options ($3 million).

As of September 30, 2011, the total unrecognized compensation cost of $1,455 million related to non-vested awards is expected to be recognized over a weighted-average period of approximately three years.

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