Stockholders' Equity

3 Months Ended

Oct. 31, 2013

Equity [Abstract]

Stockholders' Equity

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 17.6 million shares for $1.4 billion under these programs during the three months ended October 31, 2013 and 1.7 million shares for $100 million under these programs during the three months ended October 31, 2012. At October 31, 2013, we had authorization from our Board of Directors to expend up to an additional $2.0 billion for stock repurchases through August 19, 2017. 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.

To facilitate our stock repurchase program, from time to time we repurchase shares in the open market. On August 23, 2013 we entered into an accelerated share repurchase (ASR) agreement with a large financial institution to repurchase $1.4 billion of Intuit's common stock on an accelerated basis. On August 23, 2013 we paid $1.4 billion to the financial institution and received an initial delivery of 17.6 million shares of Intuit common stock. The total number of shares to be delivered will be calculated using the daily volume weighted average price of Intuit common shares traded during the pricing period, less an agreed discount. The pricing period is scheduled to end in December 2013, but it may conclude sooner at the election of the financial institution. If the total number of shares to be delivered exceeds the number of shares delivered on August 23, 2013, we will receive the remaining balance of shares from the financial institution. Based on the current trading prices of our common stock, we expect to receive additional shares. If the total number of shares to be delivered is less than the number of shares delivered on August 23, 2013, we have the contractual right to deliver to the financial institution either shares of Intuit common stock or cash equal to the value of those shares. We have treated the ASR as a forward contract indexed to our own common stock. The forward contract meets all of the applicable criteria for equity classification, so we have not accounted for it as a derivative instrument. We have reflected the shares delivered to us by the financial institution in the first quarter of fiscal 2014 as treasury shares as of the date they were physically delivered in computing weighted average shares outstanding for both basic and diluted net loss per share. The repurchased shares did not have a material impact on our net loss per share calculations in the first quarter of fiscal 2014.

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.

Dividends on Common Stock

During the three months ended October 31, 2013 we declared and paid a quarterly cash dividend of $0.19 per share of outstanding common stock or approximately $55 million. In November 2013 our Board of Directors declared a quarterly cash dividend of $0.19 per share of outstanding common stock payable on January 21, 2014 to stockholders of record at the close of business on January 10, 2014. 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, 2013			October 31, 2012
Cost of revenue	$	2		$	2
Selling and marketing	15			16
Research and development	14			13
General and administrative	16			15
Total share-based compensation expense	47			46
Income tax benefit	(15		)	(15		)
Increase in net loss from continuing operations	$	32		$	31
Increase in net loss per share:
Basic	$	0.11		$	0.10
Diluted	$	0.11		$	0.10

The table above excludes share-based compensation expense for our discontinued operations, which totaled approximately $3 million for the three months ended October 31, 2012. 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, 2013 was as follows:

(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2013	12,120
Options granted	(25	)
Restricted stock units granted (1)	(740	)
Share-based awards canceled/forfeited/expired (1)(2)	2,559
Balance at October 31, 2013	13,914

________________________________

(1) Under the terms of our Amended and Restated 2005 Equity Incentive Plan, as amended through July 24, 2012 (2005 Equity Incentive Plan), 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.

(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, 2013 was as follows:

	Options Outstanding
(Shares in thousands)	Number of Shares		Weighted Average Exercise Price Per Share
Balance at July 31, 2013	14,206		$	43.77
Options granted	25		64.45
Options exercised	(1,864	)	37.11
Options canceled or expired	(335	)	53.14
Balance at October 31, 2013	12,032		$	44.59
Exercisable at October 31, 2013	7,295		$	36.34

At October 31, 2013, there was approximately $48 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 2.1 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, 2013 was as follows:

	Restricted Stock Units
(Shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at July 31, 2013	9,184		$	55.23
Granted	322		64.86
Restricted stock units assumed or granted in connection with acquisitions	656		69.48
Vested	(679	)	47.44
Forfeited	(1,013	)	64.50
Nonvested at October 31, 2013	8,470		$	56.21

At October 31, 2013, there was approximately $308 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 2.4 years.