Stockholders' Equity

3 Months Ended

Oct. 31, 2019

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 515,000 shares for $139 million under these programs during the three months ended October 31, 2019. Included in this amount were $4 million of repurchases which occurred in late October 2019 and were settled in early November 2019. At October 31, 2019, we had authorization from our Board of Directors to expend up to an additional $2.5 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 condensed consolidated 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 three months ended October 31, 2019 we declared quarterly cash dividends that totaled $0.53 per share of outstanding common stock for a total of $141 million. In November 2019 our Board of Directors declared a quarterly cash dividend of $0.53 per share of outstanding common stock payable on January 21, 2020 to stockholders of record at the close of business on January 10, 2020. 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 or loss for the periods shown.



	Three Months Ended
(In millions)	October 31, 2019		October 31, 2018
Cost of revenue	$	15	$	14
Selling and marketing	30		30
Research and development	38		35
General and administrative	28		26
Total share-based compensation expense	$	111	$	105

We capitalized $1 million and $1 million in share-based compensation related to internal use software projects during the three months ended October 31, 2019 and October 31, 2018, respectively.

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, 2019 was as follows:



(Shares in thousands)	Shares Available for Grant
Balance at July 31, 2019	21,058
Options granted	—
Restricted stock units granted⁽¹⁾	(524	)
Share-based awards canceled/forfeited/expired^{(1) (2)}	1,313
Balance at October 31, 2019	21,847


(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.

Restricted Stock Unit Activity and Related Share-Based Compensation Expense

A summary of restricted stock unit (RSU) activity for the three months ended October 31, 2019 was as follows:



	Restricted Stock Units
(Shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at July 31, 2019	5,683		$	186.22
Granted	228		270.18
Vested	(416	)	138.05
Forfeited	(334	)	112.51
Nonvested at October 31, 2019	5,161		$	198.57

At October 31, 2019, there was approximately $879 million of unrecognized compensation cost related to non-vested RSUs with a weighted average vesting period of 3.0 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.

Stock Option Activity and Related Share-Based Compensation Expense

A summary of stock option activity for the three months ended October 31, 2019 was as follows:



	Options Outstanding
(Shares in thousands)	Number of Shares		Weighted Average Exercise Price Per Share
Balance at July 31, 2019	3,374		$	150.75
Granted	—		—
Exercised	(231	)	118.40
Canceled or expired	(26	)	135.92
Balance at October 31, 2019	3,117		$	153.26

Exercisable at October 31, 2019	2,092		$	120.51

At October 31, 2019, there was approximately $48 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.9 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.