Stockholders' Equity

9 Months Ended

Apr. 30, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

Stock Repurchase Programs

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 23.3 million shares for $1.11 billion under these programs during the nine months ended April 30, 2011 and 24.6 million shares for $750 million under these programs during the nine months ended April 30, 2010. At April 30, 2011, we had authorization from our Board of Directors to expend up to an additional $890 million for stock repurchases through August 16, 2013.

To facilitate the stock repurchase program described above, from time to time we repurchase shares in the open market. On January 3, 2011 we entered into an accelerated share repurchase (ASR) agreement with a large financial institution to repurchase $250 million of Intuit’s common stock on an accelerated basis. We entered into this ASR agreement in order to repurchase shares at a guaranteed discount from the average price of our stock over a specified period of time. We had the contractual right to cancel the ASR agreement without any financial or other obligation at any time prior to February 2, 2011. On February 2, 2011 we paid $250 million to the financial institution and received an initial delivery of 4.2 million shares of Intuit common stock. On April 21, 2011 we received a final delivery of 0.7 million shares for a total of 4.9 million shares at $51.12 per share. The total number of shares delivered generally was determined by applying an agreed discount to the average of the daily volume weighted average price of Intuit common shares traded during the pricing period. We reflected the shares delivered to us by the financial institution as treasury shares as of the dates they were delivered in computing weighted average shares outstanding for both basic and diluted net income per share.

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.

Share-Based Compensation Expense

The following table summarizes the total share-based compensation expense that we recorded for the periods shown.

	Three Months Ended						Nine Months Ended
	April 30,			April 30,			April 30,			April 30,
(In millions, except per share amounts)	2011			2010			2011			2010
Cost of revenue	$	2		$	2		$	5		$	7
Selling and marketing		12			11			33			30
Research and development		13			10			38			30
General and administrative		12			11			36			31
Discontinued operations		—			—			—			1
Total share-based compensation expense		39			34			112			99
Income tax benefit		(14	)		(12	)		(39	)		(35	)
Decrease in net income	$	25		$	22		$	73		$	64
Decrease in net income per share:
Basic	$	0.08		$	0.07		$	0.24		$	0.20
Diluted	$	0.08		$	0.07		$	0.23		$	0.20

Stock Option Activity and Related Share-Based Compensation Expense

A summary of activity under all share-based compensation plans for the nine months ended April 30, 2011 was as follows:

				Options Outstanding
							Weighted
							Average
	Shares						Exercise
	Available			Number			Price
(Shares in thousands)	for Grant			of Shares			Per Share
Balance at July 31, 2010		8,761			32,593		$	28.45
Additional shares authorized		31,000			—			—
Options granted		(772	)		772			47.22
Restricted stock units granted (2)		(982	)		—			—
Options exercised		—			(10,361	)		25.68
Options canceled or expired (1)		749			(787	)		31.08
Restricted stock units forfeited (1)(2)		1,217			—			—
Balance at April 30, 2011		39,973			22,217		$	30.30
Exercisable at April 30, 2011					13,342		$	27.36

(1)	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.
(2)	Under the terms of our 2005 Equity Incentive Plan as amended on January 19, 2011, RSUs granted from the pool of shares available for grant on or after November 1, 2010 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.

At April 30, 2011, there was approximately $62 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 1.9 years.

Restricted Stock Unit Activity and Related Share-Based Compensation Expense

A summary of restricted stock unit activity for the nine months ended April 30, 2011 was as follows:

	Restricted Stock Units
				Weighted
				Average
	Number			Grant Date
(Shares in thousands)	of Shares			Fair Value
Nonvested at July 31, 2010		11,531		$	30.93
Granted		585			42.34
Vested		(3,379	)		26.21
Forfeited		(692	)		31.23
Nonvested at April 30, 2011		8,045		$	33.71

At April 30, 2011, there was approximately $142 million of unrecognized compensation cost related to non-vested RSUs and restricted stock 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 2.0 years.