Stock-Based Compensation

6 Months Ended

Jun. 30, 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.

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2017			2016			2017			2016
Cost	$	23		$	23		$	46		$	44
Selling, general and administrative	98			91			189			190
Research, development and engineering	15			14			29			27
Pre-tax stock-based compensation cost	136			128			265			261
Income tax benefits	(38		)	(42		)	(86		)	(84		)
Total net stock-based compensation cost	$	97		$	86		$	178		$	176

Pre-tax stock-based compensation cost for the three months ended June 30, 2017 increased $8 million compared to the corresponding period in the prior year. This was due to increases related to restricted stock units ($8 million) and performance share units ($7 million) partially offset by the conversion of stock-based awards previously issued by acquired entities ($7 million).

Pre-tax stock-based compensation cost for the six months ended June 30, 2017 increased $4 million compared to the corresponding period in the prior year. This was due to increases related to restricted stock units ($24 million), partially offset by decreases in the conversion of stock-based awards previously issued by acquired entities ($13 million) and performance share units ($7 million).

Income tax benefits of $38 million and $86 million for the three and six months ended June 30, 2017 include a charge of $4 million and a benefit of $4 million, respectively, which resulted from the implementation of the new FASB guidance for share-based payment transactions. Refer to note 2, “Accounting Changes,” for additional information.

As of June 30, 2017, the total unrecognized compensation cost of $1,057 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.7 years.

There was no significant capitalized stock-based compensation cost at June 30, 2017 and 2016.