Emerson 2004 Annual Report Download - page 48

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46 Emerson 2004
The principal items that gave rise to deferred income tax assets and liabilities follow:
2003 2004
Deferred tax assets:
Accrued liabilities $ 199 181
Postretirement and postemployment benefits 132 137
Employee compensation and benefits 98 114
NOL and tax credits 241 205
Capital loss benefit 238 74
Other 150 158
Total $1,058 869
Valuation allowance $ (127) (121)
Deferred tax liabilities:
Property, plant and equipment $ (298) (291)
Leveraged leases (137) (128)
Pension (214) (244)
Intangibles (156) (200)
Other (99) (100)
Total $ (904) (963)
Net deferred income tax asset (liability) $ 27 (215)
At September 30, 2004 and 2003, respectively, net current deferred tax assets were $255 and $435, and net noncurrent deferred tax
liabilities were $470 and $408. Total income taxes paid were approximately $340 (net of the capital loss benefit received of $164), $310
and $320 in 2004, 2003 and 2002, respectively. The Company received approximately $164 of the capital loss benefit in cash in 2004 due
to the carryback of a capital loss against prior capital gains and application to current year capital gains; the remaining $74 capital loss
carryforward can be utilized through 2008. In addition, the majority of the net operating losses can be carried forward indefinitely, while
the remainder expire over varying periods, and the Company expects to carryback $45 of tax credits to prior years (see Note 3).
(14) COMMON STOCK
The Company has various stock option plans that permit key officers and employees to purchase common stock at specified prices. Options
are granted at 100 percent of the market value of the Company’s common stock on the date of grant, generally vest one-third each year
and expire ten years from the date of grant. At September 30, 2004, approximately 10.2 million options were available for grant under
these plans. Changes in the number of shares subject to option during 2002, 2003 and 2004, follow (shares in thousands):
2002 2003 2004
Average Average Average
Price Shares Price Shares Price Shares
Beginning of year $48.42 9,088 $49.66 10,413 $50.09 10,059
Options granted $52.85 2,112 $46.50 335 $56.21 307
Options exercised $40.86 (591) $35.76 (444) $42.20 (1,133)
Options canceled $52.85 (196) $52.80 (245) $53.48 (162)
End of year $49.66 10,413 $50.09 10,059 $51.22 9,071
Exercisable at year end 6,016 7,610 7,914