CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)

Three Months Ended

June 30, 2017

March 31, 2017

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

Net revenue

$

242,093

$

229,577

GAAP gross profit

129,489

92,123

GAAP gross margin

53.5

%

40.1

%

Stock-based compensation and related payroll taxes

718

694

Inventory charges

1,661

25,803

Realignment charges

-

5,104

Amortization of acquisition related assets

27,706

27,053

Non-GAAP gross profit

$

159,574

$

150,777

Non-GAAP gross margin

65.9

%

65.7

%

Reconciliation of GAAP operating expenses to non-GAAP:

GAAP research and development expenses

$

94,758

$

90,713

Stock-based compensation and related payroll taxes

(18,298)

(16,214)

Realignment charges

-

(422)

Amortization of acquisition related assets

(731)

(743)

Acquisition and integration related costs

(811)

(1,346)

Non-GAAP research and development expenses

74,918

71,988

GAAP sales, general and administrative expenses

40,791

40,397

Stock-based compensation and related payroll taxes

(9,363)

(8,769)

Realignment charges

-

(552)

Amortization of acquisition related assets

(1,277)

(1,246)

Acquisition and integration related costs

(1,984)

(1,618)

Non-GAAP sales, general and administrative expenses

28,167

28,212

Total Non-GAAP operating expenses

$

103,085

$

100,200

Reconciliation of GAAP non-operating expenses to non-GAAP:

GAAP other expense, net

$

(6,061)

$

(10,257)

Acquisition related debt refinancing costs

-

2,680

Non-GAAP other expense, net

$

(6,061)

$

(7,577)

Reconciliation of GAAP Income tax to non-GAAP:

GAAP (benefit from) provision for income tax

$

(1,049)

$

1,279

Acquisition related tax adjustments

2,605

-

Non-GAAP provision for income tax

$

1,556

$

1,279