Emerson 2011 Annual Report Download - page 46

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44 | 2011 Emerson
The United States is the major jurisdiction for which the Company files income tax returns. Examinations by the U.S.
Internal Revenue Service are complete through fiscal 2007. The status of state and non-U.S. tax examinations varies by
the numerous legal entities and jurisdictions in which the Company operates.
The principal items that gave rise to deferred income tax assets and liabilities follow:
2010 2011
Deferred tax assets:
Net operating losses and tax credits $ 281
242
Accrued liabilities 225 219
Postretirement and postemployment benefits 153 137
Employee compensation and benefits 225 176
Pensions 143 196
Other 137 176
Total 1,164 1,146
Valuation allowances (105) (107)
Deferred tax liabilities:
Intangibles (918) (890)
Property, plant and equipment (265) (284)
Other (136) (133)
Total (1,319) (1,307)
Net deferred income tax asset (liability) $ (260) (268)
At September 30, 2011 and 2010, respectively, net current deferred tax assets were $400 and $374, and net noncur-
rent deferred tax liabilities were $668 and $634. Total income taxes paid were approximately $1,030, $890 and $780 in
2011, 2010 and 2009, respectively. Approximately half of the $242 net operating losses and tax credits can be carried
forward indefinitely, while the remainder expire over varying periods.
(14) Stock-Based Compensation
The Company’s stock-based compensation plans include stock options, performance shares, restricted stock and
restricted stock units. Although the Company has discretion, shares distributed under these plans are issued from
treasury stock.
STOCK OPTIONS
The Company’s stock option plans permit key officers and employees to purchase common stock at specified prices.
Outstanding options were granted at 100 percent of the average of the high and low market prices of the Company’s
common stock on the date of grant, generally vest one-third each year and expire 10 years from the date of grant.
Compensation expense is recognized ratably over the vesting period based on the number of options expected to
vest. The Company registered a new stock option plan in May 2011 and as of September 30, 2011, 23.2 million options
were available for grant under the plans.
Changes in shares subject to option during the year ended September 30, 2011 follow:
average total average
exercise price intrinsic value remaining
(shares in thousands) per share shares of awards life (years)
Beginning of year $38.04 13,669
Options granted $53.75 4,696
Options exercised $33.20 (2,117)
Options canceled $45.90 (296)
End of year $43.16 15,952 $78 6.3
Exercisable at year end $39.67 9,815 $64 4.9
The weighted-average grant date fair value per option granted was $11.00, $8.51 and $4.45 for 2011, 2010 and 2009,
respectively. Cash received for option exercises was $65 in 2011, $53 in 2010 and $33 in 2009. The total intrinsic value
of options exercised was $49, $59 and $10 in 2011, 2010 and 2009, respectively, and the actual tax benefit realized
from tax deductions related to option exercises was $16, $4 and $7, respectively.