Emerson 2013 Annual Report Download - page 51

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Emerson > 2013 Annual Report 49
If none of the unrecognized tax benefits shown is ultimately paid, the tax provision and the calculation of the effective tax
rate would be favorably impacted by $90. The Company accrues interest and penalties related to income taxes in income
tax expense. Total interest and penalties recognized were $(6), $(1) and $(3) in 2013, 2012 and 2011, respectively. As of
September 30, 2013 and 2012, total accrued interest and penalties were $27 and $35, respectively.
The United States is the major jurisdiction for which the Company files income tax returns. Examinations by the U.S.
Internal Revenue Service are substantially complete through 2009. 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:
2012 2013
Deferred tax assets:
Net operating losses and tax credits $ 237 231
Accrued liabilities 247 262
Postretirement and postemployment benefits 135 102
Employee compensation and benefits 194 256
Pensions 224 —
Other 138 124
Total 1,175 975
Valuation allowances (113) (131)
Deferred tax liabilities:
Intangibles (780) (780)
Pensions — (38)
Property, plant and equipment (282) (255)
Other (110) (158)
Total (1,172) (1,231)
Net deferred income tax liability $ (110) (387)
At September 30, 2013 and 2012, respectively, current deferred tax assets, net were $354 and $377, and noncurrent
deferred tax liabilities, net were $741 and $487. Total income taxes paid were approximately $1,270, $1,300 and $1,030
in 2013, 2012 and 2011, respectively. Approximately half of the $231 of 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.
Awards are granted at 100 percent of the closing market price of the Company’s common stock on the date of grant.
Awards made prior to 2011 were granted at 100 percent of the average of the high and low market prices on the date of
grant. Options generally vest one-third in each of the three years subsequent to grant 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. As of September 30, 2013, 19.1 million options were available for grant under the plans.