Stockholders' Equity

6 Months Ended

Jan. 31, 2017

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 3.5 million shares for $390 million under these programs during the six months ended January 31, 2017. Included in this amount were $7 million of repurchases which occurred in late January 2017 and were settled in early February 2017. We repurchased 19.1 million shares for $1.7 billion under these programs during the six months ended January 31, 2016. At January 31, 2017, we had authorization from our Board of Directors to expend up to an additional $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 six months ended January 31, 2017 we declared and paid quarterly cash dividends that totaled $0.68 per share of outstanding common stock or $177 million. In February 2017 our Board of Directors declared a quarterly cash dividend of $0.34 per share of outstanding common stock payable on April 18, 2017 to stockholders of record at the close of business on April 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 income from continuing operations for the periods shown.

	Three Months Ended				Six Months Ended
(In millions, except per share amounts)	January 31, 2017		January 31, 2016		January 31, 2017		January 31, 2016
Cost of revenue	$	2	$	2	$	4	$	4
Selling and marketing	22		18		47		37
Research and development	29		21		65		42
General and administrative	28		24		54		49
Total share-based compensation expense	$	81	$	65	$	170	$	132

We capitalized $4 million in share-based compensation related to internal use software projects during the six months ended January 31, 2017 and $3 million during the six months ended January 31, 2016. The table above also excludes share-based compensation expense for our discontinued operations, which totaled $5 million during the six months ended January 31, 2016. 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 six months ended January 31, 2017 was as follows:

(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2016	8,990
Additional shares authorized	23,110
Options granted	(16	)
Restricted stock units granted (1)	(1,360	)
Share-based awards canceled/forfeited/expired (1)(2)	2,123
Balance at January 31, 2017	32,847

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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. Shares withheld for income taxes upon vesting of restricted stock units that were granted on or after July 21, 2016 are also 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, 2017 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	16		116.47
Exercised	(728	)	67.81
Canceled or expired	(159	)	96.36
Balance at January 31, 2017	7,475		$	90.46
Exercisable at January 31, 2017	3,673		$	72.52

At January 31, 2017, there was approximately $62 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.1 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 six months ended January 31, 2017 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	591		111.92
Vested	(1,134	)	61.94
Forfeited	(830	)	70.36
Nonvested at January 31, 2017	7,666		$	88.89

At January 31, 2017, there was approximately $476 million of unrecognized compensation cost related to non-vested RSUs with a weighted average vesting period of 2.1 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.