Emerson 2005 Annual Report Download - page 57

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E M E R S O N 2 0 0 5 4 5
The principal items that gave rise to deferred income tax assets and liabilities follow:
2004 2005
Deferred tax assets:
Accrued liabilities $ 181 176
Postretirement and postemployment benefits 137 153
Employee compensation and benefits 114 149
NOL and tax credits 205 256
Capital loss benefit 74 72
Other 158 141
Total $ 869 947
Valuation allowance $(121) (137)
Deferred tax liabilities:
Property, plant and equipment $(291) (295)
Leveraged leases (128) (117)
Pension (244) (245)
Intangibles (200) (267)
Other (100) (82)
Total $(963) (1,006)
Net deferred income tax liability $(215) (196)
At September 30, 2005 and 2004, respectively, net current deferred tax assets were $315 and $255, and net noncurrent deferred tax
liabilities were $511 and $470. Total income taxes paid were approximately $600, $380 (net of the capital loss benefit received of $140)
and $310 in 2005, 2004 and 2003, respectively. The $72 capital loss carryforward can be utilized through 2008. The majority of the
$185 net operating losses can be carried forward indefinitely, while the remainder expire over varying periods. In addition, $71 of tax
credits can be carried back to prior years or carried forward through 2015.
(14) STOCK-BASED COMPENSATION
The Company’s stock-based compensation plans include stock options and incentive shares.
Stock Options
The Company’s Stock Option Plans 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. Compensation cost is recognized over the vesting period based on the number of options expected to vest.
At September 30, 2005, approximately 8.1 million options remained available for grant under these plans.
Changes in shares subject to option during the year ended September 30, 2005, follow:
Average Aggregate Average
Exercise Price Intrinsic Contractual
(shares in thousands) Per Share Shares Value Life
Beginning of year $51.22 9,071
Options granted $63.61 2,213
Options exercised $47.39 (1,321)
Options canceled $57.53 (104)
End of year $54.44 9,859 $169 5.4 years
Exercisable at year end 7,371 $146 4.2 years