Stockholders' Equity

3 Months Ended

Oct. 31, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Repurchase Programs and Treasury Shares

Intuit’s Board of Directors has authorized a series of common stock repurchase programs. Shares of common stock repurchased under these programs become treasury shares. We repurchased 14.4 million shares for $1.3 billion under these programs during the three months ended October 31, 2015. Included in this amount were $17 million of repurchases which occurred in late October 2015 and were settled in early November 2015. We repurchased 1.3 million shares for $114 million under these programs during the three months ended October 31, 2014. At October 31, 2015, we had authorization from our Board of Directors to expend up to an additional $1.4 billion for stock repurchases through May 19, 2019. Future stock repurchases under the current program are at the discretion of management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.

Our treasury shares are repurchased at the market price on the trade date; accordingly, all amounts paid to reacquire these shares have been recorded as treasury stock on our balance sheets. Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceeds from the sale are more than the average price we paid to acquire the shares we record an increase in additional paid-in capital. Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount.

In the past we have satisfied option exercises and restricted stock unit vesting under our employee equity incentive plans by reissuing treasury shares, and we may do so again in the future. During the second quarter of fiscal 2014 we began issuing new shares of common stock to satisfy option exercises and RSU vesting under our 2005 Equity Incentive Plan. We have not yet determined the ultimate disposition of the shares that we have repurchased in the past, and consequently we continue to hold them as treasury shares.

Dividends on Common Stock

During the three months ended October 31, 2015 we declared and paid quarterly cash dividends that totaled $0.30 per share of outstanding common stock or $82 million. In November 2015 our Board of Directors declared a quarterly cash dividend of $0.30 per share of outstanding common stock payable on January 19, 2016 to stockholders of record at the close of business on January 11, 2016. Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors.

Share-Based Compensation Expense

The following table summarizes the total share-based compensation expense that we recorded in operating income from continuing operations for the periods shown.

	Three Months Ended
(In millions, except per share amounts)	October 31, 2015			October 31, 2014
Cost of revenue	$	2		$	1
Selling and marketing	19			16
Research and development	21			19
General and administrative	25			21
Total share-based compensation expense	67			57
Income tax benefit	(20		)	(18		)
Increase in net loss from continuing operations	$	47		$	39
Increase in net loss per share:
Basic	$	0.17		$	0.14
Diluted	$	0.17		$	0.14

We capitalized $2 million in share-based compensation related to internal use software projects during the three months ended October 31, 2015. The table above also excludes share-based compensation expense for our discontinued operations, which totaled $2 million during the three months ended October 31, 2015 and $4 million during the three months ended October 31, 2014. Because we have not reclassified our statements of cash flows to segregate discontinued operations, these amounts are included in share-based compensation expense on our statements of cash flows for those periods.

Share-Based Awards Available for Grant

A summary of share-based awards available for grant under our 2005 Equity Incentive Plan for the three months ended October 31, 2015 was as follows:

(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2015	17,183
Options granted	(3	)
Restricted stock units granted (1)	(433	)
Share-based awards canceled/forfeited/expired (1)(2)	2,244
Balance at October 31, 2015	18,991

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(1) RSUs granted from the pool of shares available for grant under our 2005 Equity Incentive Plan reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 shares for each share forfeited.

(2) Stock options and restricted stock units canceled, expired or forfeited under our 2005 Equity Incentive Plan are returned to the pool of shares available for grant. Stock options and restricted stock units canceled, expired or forfeited under older expired plans are not returned to the pool of shares available for grant.

Stock Option Activity and Related Share-Based Compensation Expense

A summary of stock option activity for the three months ended October 31, 2015 was as follows:

	Options Outstanding
(Shares in thousands)	Number of Shares		Weighted Average Exercise Price Per Share
Balance at July 31, 2015	8,713		$	69.13
Granted	3		88.30
Exercised	(357	)	53.17
Canceled or expired	(210	)	70.78
Balance at October 31, 2015	8,149		$	69.79
Exercisable at October 31, 2015	4,367		$	52.27

At October 31, 2015, there was approximately $56 million of unrecognized compensation cost related to non-vested stock options that we expect to recognize as expense in the future. We will adjust unrecognized compensation cost for future changes in estimated forfeitures. We expect to recognize that cost over a weighted average vesting period of 2.2 years.

Restricted Stock Unit Activity and Related Share-Based Compensation Expense

A summary of restricted stock unit activity for the three months ended October 31, 2015 was as follows:

	Restricted Stock Units
(Shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at July 31, 2015	8,916		$	76.64
Granted	188		96.08
Vested	(407	)	66.43
Forfeited	(947	)	65.70
Nonvested at October 31, 2015	7,750		$	78.99

At October 31, 2015, there was approximately $392 million of unrecognized compensation cost related to non-vested RSUs that we expect to recognize as expense in the future. We will adjust unrecognized compensation cost for future changes in estimated forfeitures. We expect to recognize that cost over a weighted average vesting period of 2.1 years.