Stockholders' Equity

6 Months Ended

Jan. 31, 2018

8. 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 $253 million under these programs during the six months ended January 31, 2018. At January 31, 2018, we had authorization from our Board of Directors to expend up to an additional $1.3 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, 2018 we declared quarterly cash dividends that totaled $0.78 per share of outstanding common stock or $202 million. In February 2018 our Board of Directors declared a quarterly cash dividend of $0.39 per share of outstanding common stock payable on April 18, 2018 to stockholders of record at the close of business on April 10, 2018. 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) for the periods shown.



	Three Months Ended				Six Months Ended
(In millions)	January 31, 2018		January 31, 2017		January 31, 2018		January 31, 2017
Cost of revenue	$	13	$	2	$	16	$	4
Selling and marketing	25		22		50		47
Research and development	30		29		69		65
General and administrative	26		28		56		54
Total share-based compensation expense	$	94	$	81	$	191	$	170

We capitalized $2 million in share-based compensation related to internal use software projects during the six months ended January 31, 2018 and $4 million during the six months ended January 31, 2017.

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, 2018 was as follows:



(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2017	25,164
Options granted	—
Restricted stock units granted (1)	(991	)
Share-based awards canceled/forfeited/expired (1)(2)	1,984
Balance at January 31, 2018	26,157

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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 RSUs 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 RSUs that were granted on or after July 21, 2016 are also returned to the pool of shares available for grant. Stock options and RSUs 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, 2018 was as follows:



	Options Outstanding
(Shares in thousands)	Number of Shares		Weighted Average Exercise Price Per Share
Balance at July 31, 2017	7,488		$	104.50
Granted	—		—
Exercised	(1,345	)	82.11
Canceled or expired	(181	)	116.87
Balance at January 31, 2018	5,962		$	109.17

Exercisable at January 31, 2018	2,892		$	92.17

At January 31, 2018, there was approximately $61 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.0 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, 2018 was as follows:



	Restricted Stock Units
(Shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at July 31, 2017	8,636		$	98.76
Granted	431		149.35
Unregistered restricted stock granted in connection with acquisitions	75		163.00
Vested	(840	)	72.58
Forfeited	(723	)	86.02
Nonvested at January 31, 2018	7,579		$	106.39

At January 31, 2018, there was approximately $570 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.