CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)

Three Months Ended

December 31,
2017

September 30,
2017

Reconciliation of GAAP gross profit and margin to non-GAAP:

Net revenue

$

260,361

$

251,987

GAAP gross profit

140,440

137,532

GAAP gross margin

53.9

%

54.6

%

Stock-based compensation and related payroll taxes

887

879

Inventory charges

543

(18)

Amortization of acquisition related assets

27,947

27,947

Non-GAAP gross profit

$

169,817

$

166,340

Non-GAAP gross margin

65.2

%

66.0

%

Reconciliation of GAAP operating expenses to non-GAAP:

GAAP research and development expenses

$

98,610

$

93,860

Stock-based compensation and related payroll taxes

(16,647)

(17,437)

Amortization of acquisition related assets

(646)

(725)

Acquisition and integration related costs

(3,068)

(743)

Non-GAAP research and development expenses

78,249

74,955

GAAP sales, general and administrative expenses

53,963

43,184

Stock-based compensation and related payroll taxes

(8,909)

(9,035)

Amortization of acquisition related assets

(1,280)

(1,278)

Acquisition and integration related costs

(15,108)

(3,997)

Non-GAAP sales, general and administrative expenses

28,666

28,874

Total Non-GAAP operating expenses

$

106,915

$

103,829

Reconciliation of GAAP Income tax to non-GAAP:

GAAP provision for (benefit from) income tax

$

(17,476)

$

486

Tax reform impact and acquisition related tax adjustment

13,232

-

Non-GAAP provision for (benefit from) income tax

$

(4,244)

$

486