Stockholders' Equity

6 Months Ended

Jan. 31, 2014

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 20.2 million shares for $1.4 billion under these programs during the six months ended January 31, 2014 and 3.4 million shares for $200 million under these programs during the six months ended January 31, 2013. At January 31, 2014, 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. On December 23, 2013 we received a final delivery of 2.6 million shares of Intuit common stock. We treated the ASR as a forward contract indexed to our own common stock. The forward contract met all of the applicable criteria for equity classification, so we did not account for it as a derivative instrument. We have reflected the shares delivered to us by the financial institution 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 for the three or six months ended January 31, 2014.

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 six months ended January 31, 2014 we declared and paid quarterly cash dividends that totaled $0.38 per share of outstanding common stock or $111 million. In February 2014 our Board of Directors declared a quarterly cash dividend of $0.19 per share of outstanding common stock payable on April 18, 2014 to stockholders of record at the close of business on April 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 income (loss) from continuing operations for the periods shown.

	Three Months Ended						Six Months Ended
(In millions, except per share amounts)	January 31, 2014			January 31, 2013			January 31, 2014			January 31, 2013
Cost of revenue	$	2		$	1		$	4		$	3
Selling and marketing	16			16			31			32
Research and development	16			13			30			26
General and administrative	18			14			34			29
Total share-based compensation expense	52			44			99			90
Income tax benefit	(16		)	(15		)	(32		)	(30		)
Decrease in net income or increase in net loss from continuing operations	$	36		$	29		$	67		$	60
Decrease in net income or increase in net loss per share:
Basic	$	0.13		$	0.10		$	0.23		$	0.20
Diluted	$	0.13		$	0.10		$	0.23		$	0.20

The table above excludes share-based compensation expense for our discontinued operations, which totaled approximately $3 million and $6 million for the three and six months ended January 31, 2013. Because we have not reclassified our statements of cash flows to segregate discontinued operations, the $6 million in share-based compensation for discontinued operations is included in share-based compensation expense on our statement of cash flows for the six months ended January 31, 2013.

Share-Based Awards Available for Grant

A summary of share-based awards available for grant under our 2005 Equity Incentive Plan for the six months ended January 31, 2014 was as follows:

(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2013	12,120
Additional shares authorized	19,000
Options granted	(28	)
Restricted stock units granted (1)	(1,436	)
Share-based awards canceled/forfeited/expired (1)(2)	2,986
Balance at January 31, 2014	32,642

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(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 six months ended January 31, 2014 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 assumed and converted in connection with acquisitions	17		13.61
Options granted	28		66.00
Options exercised	(3,064	)	38.12
Options canceled or expired	(447	)	52.77
Balance at January 31, 2014	10,740		$	45.02
Exercisable at January 31, 2014	6,395		$	36.38

At January 31, 2014, there was approximately $42 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 2.0 years.

Restricted Stock Unit Activity and Related Share-Based Compensation Expense

A summary of restricted stock unit activity for the six months ended January 31, 2014 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	624		69.82
Restricted stock units assumed or granted in connection with acquisitions	656		69.48
Vested	(784	)	48.25
Forfeited	(1,161	)	63.65
Nonvested at January 31, 2014	8,519		$	56.89

At January 31, 2014, there was approximately $289 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 2.2 years.