Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

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.

(Dollars in millions)
For the three months ended March 31:	2017			2016
Cost	$	23		$	21
Selling, general and administrative	91			99
Research, development and engineering	15			13
Pre-tax stock-based compensation cost	129			133
Income tax benefits	(48		)	(43		)
Total net stock-based compensation cost	$	81		$	90

Pre-tax stock-based compensation cost for the three months ended March 31, 2017 decreased $4 million compared to the corresponding period in the prior year. This was due to decreases in performance share units ($14 million) and the conversion of stock-based awards previously issued by acquired entities ($6 million), partially offset by increases related to restricted stock units ($16 million).

Income tax benefits for the three months ended March 31, 2017 include an $8 million benefit which resulted from the implementation of the new FASB guidance for share-based payment transactions. Refer to note 2, “Accounting Changes,” for additional information.

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

As of March 31, 2017, the total unrecognized compensation cost of $804 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.5 years.

There was no significant capitalized stock-based compensation cost at March 31, 2017 and 2016.