| (in millions) | 2Q 2017 | 1Q 2017 | 2Q 2016 | |||
| Cash and cash equivalents, and short-term investments | $ | 306.0 | $ | 304.4 | $ | 219.1 |
| Bank loans | $ | 25.0 | $ | 25.0 | -- | |
| Capital expenditures | $ | 2.1 | $ | 3.1 | $ | 4.9 |
| Dividend payments | $ | 7.1 | $ | 7.1 | $ | 5.3 |
| Loan repayments | -- | -- | -- | |||
During the second quarter, we had $2.1 million of capital expenditures for the routine purchase of software and design tools.
Our second quarter cash flows were as follows:
| 3 months ended Jun. 30, 2017 | ||
| (In $ millions) | ||
| Net income (GAAP) | 24.0 | |
| Depreciation & amortization | 3.0 | |
| Changes in operating assets and liabilities | (17.9 | ) |
| Others | 1.2 | |
| Net cash provided by operating activities | 10.3 | |
| Acquisition of property and equipment | (2.1 | ) |
| Net cash used in investing activities | (2.1 | ) |
| Dividend | (7.1 | ) |
| Others | - | |
| Net cash used in financing activities | (7.1 | ) |
| Effects of changes in foreign currency exchange rates on cash | (0.1 | ) |
| Net increase in cash, cash equivalents and restricted cash | 1.0 | |
Returning Value to Shareholders
On October 24, 2016, the Board of Directors of the Company declared a $0.80 per ADS annual dividend to be paid in quarterly installments of $0.20 per ADS. On May 18, 2017, we paid $7.1 million to shareholders as the third installment of our annual dividend.
In addition, today, the Company announced that its Board of Directors has authorized a new program for the Company to repurchase up to $200 million of its ADS over a 12 month period.
Business Outlook
“We are now seeing material amounts of new 64L 3D NAND flash coming to market, with most still being directed towards the enterprise SSD market, which we believe will benefit our SSD solutions business,” said Wallace Kou, President and CEO of Silicon Motion. “Since NAND availability remains very tight, NAND pricing continues to be high, which will temporarily affect our SSD solutions and overall gross margins. Separately, based on what we are seeing from our customers’ rolling forecasts, we anticipate that our client SSD controller sales will rebound meaningfully in the fourth quarter. We believe our business will improve as NAND supply improvements accelerate over the next few quarters.”
For the third quarter of 2017, management expects:
| GAAP | Non-GAAP Adjustment | Non-GAAP | |
| Revenue | $122m to $129m
-8% to -3% Q/Q | -- | $122m to 129m
-8% to -3% Q/Q |
| Gross margin | 44.9% to 46.9% | Approximately $0.1m* | 45.0% to 47.0% |
| Operating margin | 14.9% to 17.1% | Approximately $4.9m to 5.0m** | 19.0 to 21.0% |
* Gross margin (non-GAAP) excludes $0.1 million of stock-based compensation.
** Operating margin (non-GAAP) excludes $0.5 million of amortization of intangible assets, and $4.4 million to $4.5 million of stock-based compensation.
For the full year 2017, management expects:
| GAAP | Non-GAAP Adjustment | Non-GAAP | |
| Revenue | $512m to $528m
-8% to -5% Y/Y | -- | $512m to $528m
-8% to -5% Y/Y |
| Gross margin | 47.4% to 48.9% | Approximately $0.3m* | 47.5% to 49.0% |
| Operating margin | 18.6% to 20.7% | Approximately $16.8m to 17.8m** | 22.0% to 24.0% |
* Gross margin (non-GAAP) excludes $0.3 million of stock-based compensation.
** Operating margin (non-GAAP) excludes $2.1 million of amortization of intangible assets, $0.3 million of litigation expense, and $14.4 million to $15.4 million of stock-based compensation.
