Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

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 income from continuing operations.

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in millions)	2016			2015			2016			2015
Cost	$	23		$	24		$	67		$	78
Selling, general and administrative	105			82			295			260
Research, development and engineering	14			11			41			37
Other (income) and expense*	—			(5		)	—			(6		)
Pre-tax stock-based compensation cost	142			111			403			369
Income tax benefits	(47		)	(38		)	(131		)	(124		)
Total net stock-based compensation cost	$	95		$	73		$	272		$	244

* Reflects the one-time effects related to divestitures.

Pre-tax stock-based compensation cost for the three months ended September 30, 2016 increased $31 million compared to the corresponding period in the prior year. This was due to increases related to performance share units ($20 million), restricted stock units ($6 million), the conversion of stock-based awards previously issued by acquired entities ($5 million) and stock option awards ($1 million).

Pre-tax stock-based compensation cost for the nine months ended September 30, 2016 increased $34 million compared to the corresponding period in the prior year. This was due to increases related to performance share units ($29 million), the conversion of stock-based awards previously issued by acquired entities ($16 million) and stock option awards ($3 million); partially offset by decreases related to restricted stock units ($14 million).

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

As of September 30, 2016, the total unrecognized compensation cost of $1,011 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.6 years.

There was no significant capitalized stock-based compensation cost at September 30, 2016 and 2015.