Stockholders' Equity

3 Months Ended

Oct. 31, 2016

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 1.8 million shares for $192 million under these programs during the three months ended October 31, 2016. Included in this amount were $17 million of repurchases which occurred in late October 2016 and were settled in early November 2016. We repurchased 14.4 million shares for $1.3 billion under these programs during the three months ended October 31, 2015. At October 31, 2016, we had authorization from our Board of Directors to expend up to an additional $2.2 billion for stock repurchases. Future stock repurchases under the current programs 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, 2016 we declared and paid quarterly cash dividends that totaled $0.34 per share of outstanding common stock or $89 million. In November 2016 our Board of Directors declared a quarterly cash dividend of $0.34 per share of outstanding common stock payable on January 18, 2017 to stockholders of record at the close of business on January 10, 2017. 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 loss from continuing operations for the periods shown.

	Three Months Ended
(In millions, except per share amounts)	October 31, 2016		October 31, 2015
Cost of revenue	$	2	$	2
Selling and marketing	25		19
Research and development	36		21
General and administrative	26		25
Total share-based compensation expense	$	89	$	67

We capitalized $2 million in share-based compensation related to internal use software projects during the three months ended October 31, 2016 and $2 million 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. Because we have not reclassified our statements of cash flows to segregate discontinued operations, this amount is included in share-based compensation expense on our statement of cash flows for that period.

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, 2016 was as follows:

(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2016	8,990
Options granted	—
Restricted stock units granted (1)	(862	)
Share-based awards canceled/forfeited/expired (1)(2)	1,675
Balance at October 31, 2016	9,803

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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, 2016 was as follows:

	Options Outstanding
(Shares in thousands)	Number of Shares		Weighted Average Exercise Price Per Share
Balance at July 31, 2016	8,346		$	88.55
Granted	—		—
Exercised	(251	)	66.40
Canceled or expired	(81	)	87.16
Balance at October 31, 2016	8,014		$	89.26
Exercisable at October 31, 2016	3,806		$	69.97

At October 31, 2016, there was approximately $73 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.3 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.

Restricted Stock Unit Activity and Related Share-Based Compensation Expense

A summary of restricted stock unit (RSU) activity for the three months ended October 31, 2016 was as follows:

	Restricted Stock Units
(Shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at July 31, 2016	9,039		$	82.30
Granted	374		110.35
Vested	(659	)	50.54
Forfeited	(668	)	65.06
Nonvested at October 31, 2016	8,086		$	87.61

At October 31, 2016, there was approximately $536 million of unrecognized compensation cost related to non-vested RSUs with a weighted average vesting period of 2.3 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.