Emerson 2010 Annual Report Download - page 52

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50
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 fiscal 2007. The status of state and non-U.S. tax examina-
tions 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:
2009 2010
Deferred tax assets:
Net operating losses and tax credits $ 279
281
Accrued liabilities 186 225
Postretirement and postemployment benefits 181 153
Employee compensation and benefits 160 225
Pensions 118 143
Other 150 137
Total 1,074 1,164
Valuation allowances (103) (105)
Deferred tax liabilities:
Intangibles (587) (918)
Property, plant and equipment (233) (265)
Leveraged leases (59) (52)
Other (75) (84)
Total (954) (1,319)
Net deferred income tax asset (liability) $ 17 (260)
At September 30, 2010 and 2009, respectively, net current deferred tax assets were $374 and $290, and net noncur-
rent deferred tax liabilities were $634 and $273. Total income taxes paid were approximately $890, $780 and $1,110 in
2010, 2009 and 2008, respectively. The majority of the $281 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.
Options are granted at 100 percent of the average of the high and low 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. At September 30, 2010,
approximately 7.6 million options remained available for grant under these plans.
Changes in shares subject to option during the year ended September 30, 2010, follow:
average total average
exercise price intrinsic value remaining
(shares in thousands) per share shares of awards life (years)
Beginning of year $36.09 16,245
Options granted $42.09 623
Options exercised $27.48 (2,898)
Options canceled $42.45 (301)
End of year $38.04 13,669 $203 5.9
Exercisable at year end $37.47 9,504 $147 5.0
The weighted-average grant date fair value per option granted was $8.51, $4.45 and $10.59 for 2010, 2009 and 2008,
respectively. Cash received for option exercises was $53 in 2010, $33 in 2009 and $73 in 2008. The total intrinsic value
of options exercised was $59, $10 and $75 in 2010, 2009 and 2008, respectively, and the actual tax benefit realized
from tax deductions related to option exercises was $4, $7 and $19, respectively.