Stock-Based Compensation:

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation:

Stock-Based Compensation:

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 the Consolidated Statement of Earnings:

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in millions)	2012			2011			2012			2011
Cost	$	34		$	35		$	99		$	81
Selling, general and administrative	133			116			370			372
Research, development and engineering	15			15			43			45
Other (income) and expense	(0		)	—			(0		)	—
Pre-tax stock-based compensation cost	183			166			510			498
Income tax benefits	(64		)	(57		)	(179		)	(177		)
Total stock-based compensation cost	$	119		$	109		$	331		$	321

The increase in pre-tax stock-based compensation cost for the three months ended September 30, 2012, 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 ($5 million) and increases related to performance share units ($11 million). The increase in pre-tax stock-based compensation cost for the nine months ended September 30, 2012, 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 ($23 million), partially offset by decreases in performance share units ($12 million).

As of September 30, 2012, the total unrecognized compensation cost of $1,227 million related to non-vested awards is expected to be recognized over a weighted-average period of approximately three years.

There was no significant capitalized stock-based compensation cost at September 30, 2012 and 2011.