FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (TMF Debit)

National Semiconductor Corporation
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2900 Semiconductor Drive
Santa Clara, CA 95052
(408) 721-5000
http://www.nsc.com

Cyrix Corporation
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2703 N. Central Expressway
Richardson, TX 75080
(972) 968-8388
http://www.cyrix.com

ALEXANDRIA, VA (July 29, 1997)/FOOLWIRE/ --- Cyrix Corporation and National Semiconductor announced on Monday that Cyrix would merge into National Semiconductor. Both of their boards of directors are pleased with the merger. Each share of Cyrix common stock will be exchanged for approximately 0.825 shares of National Semiconductor stock. Based on Friday's closing price, the approximate value of this transaction is $550 million. The transaction is intended to be accounted for as a pooling of interests to qualify for tax-free reorganization. It is still subject to regulatory and shareholder approvals. They expect to close the transaction before the close of National Semiconductor's November quarter.

EXPAND THE PC MARKETPLACE. Along with National's recent acquisition, they have now put in place all of the pieces and building blocks together necessary to put a complete PC system on a chip. They feel that this market could expand from 70 million PCs per year to 700 million PCs per year and the merger and ability to do the system-on-a-chip is how that would happen. The Cyrix strategy to offer higher integration processors have them currently positioned uniquely as the company offering solutions which already incorporate the CPU, graphics, and audio all on one circuit. National has long been a leader in the forward integration of 10-100 Ethernet, super I/O, and the system environmental monitoring functions currently on the motherboards of PCs. Then they had the current acquisition of Mediamatics in which they rounded off the complete set of building blocks with the addition of MPEG-2, Dolby technology and the corresponding PC software drivers to implement additional multimedia capabilities such as digital TV decoding. The key to National Semiconductor is that they now own all of the intellectual property necessary to make the PC on a single chip a reality. They have the manufacturing in place. They just opened their new 0.25 micron 8-inch fab in Maine 3 weeks ago and formalized a strategic foundary partnership to produce some 0.25 micron prototypes in their Santa Clara fab. They are also working on installing equipment to support 0.18 micron technology.

LOW COST PCs. From enabling the sub-$500 PC, they plan to target a sub-$200 PC and other low-cost information appliances. They will work with their system partners to drive Internet access capabilities to every desk and every conference room in every office and to every desk in every classroom, and every desk in every bedroom, and into the dashboards of every car. National is also a major, if not dominant player in the flat panel display market with low-EMI flat-panel bus solutions, flat panel display system transistor buffers, and are the leader in RF technology for the exploding digital cellular industry.

MERGER FILLS CYRIX HOLES. People who have followed Cyrix closely in the past have often expressed some concern about their fab capabilities, their tier 1 customer relationships, and their product breadth. Cyrix feels that this merger should solve all of those concerns. National has put in place world-class manufacturing and other foundary relationships around the world. This capability in addition to Cyrix's relationship with IBM will provide Cyrix rapid access to 0.25 micron technology. National's customer list reads like a "Who's Who" of tier 1 companies and includes customers such as Compaq, IBM, HP, Sony, NEC, Samsung, and Siemens. National's product breadth includes analog, system components, consumer ICs. System components include capabilities such as chip sets, MPEG, power management, modem, Ethernet, and super I/O. These are all the building blocks that are essential to their long-term MediaGX strategy.

CYRIX STRENGTHS. Cyrix has a world-class design team, advanced expertise in systems and software to support their x86 processor designs. Cyrix has established a clear leadership position in the sub-$1000 PC marketplace. Last year they outlined their vision of the integrated processor that would enable a sub-$1000 PC. Today it is a reality. Drawing on the strengths of both companies, Cyrix feels they can reach their strategic goals much more rapidly. The Cyrix strategy is to participate significantly in the mid-range PC market with the 6x86MX and to dominate entry-level sub-$1000 PC markets by their integrated MediaGX processor. This merger is going to give them access to resources and technologies required to drive PC prices well below the $1000 point using an integrated system-on-a-chip design philosophy which also expands their access to key customers.

INDUSTRY GROWTH TRENDS SUPPORT STRATEGY. Growth rates in the retail PC marketplace support the strategy. During the first quarter of this year the marketshare data of sub-$1500 PCs climbed from about 40% of sales to 65% of total sales, indicating that this segment is one of the fastest growing. They expect the trend to continue with the most dramatic growth coming in the sub-$1000 PC market.

CYRIX HISTORY OF ACCOMPLISHMENTS AND GOALS. Cyrix has a long heritage of engineering excellence and they plan to continue it. They were founded in 1988. They introduced the first mass-coprocessor in 1989. In 1992 they introduced the 486 and in 1995 the 6x86 which was the 6th generation processor. In 1997 they introduced both the MMX-enhanced 6x86MX and established the leadership position in the sub-$1000 PC market with their integrated MediaGX processors. Their goal is to introduce products going forward that expand the PC marketplace with a paradigm shift toward information appliances. The power of information technology is going to be unlocked by making it available to all who seek it and they feel that the best way to achieve this vision is to provide low-cost computing devices and information appliances. Cyrix and National Semiconductor together are uniquely positioned with the right product portfolio to deliver on that promise. They feel that there is a paradigm shift coming in the market and that they will lead it. They will be able to anticipate customer requirements with the best analog or digital solutions available. The thing they are most pleased about is that they feel the two companies' capabilities and strategies fit like a glove.

EXPECTATIONS FOR NATIONAL SEMI. National Semiconductor continues to target August quarter sales that exceed the May quarter sales of their core National Semiconductor business. They are pleasantly surprised by the order rate they have been experiencing for the first 8 weeks of the quarter and are very comfortable with the backlog that they have at this point going into the November quarter. They expect that Cyrix and National will continue to operate independently without any synergies. Looking forward for the rest of the fiscal year, once the merger is completed at the end of National Semiconductor's second fiscal quarter, they expect that the merger will be dilutive for the next two quarters (i.e., Q3 and Q4 of the fiscal year). They are making a base premise at this point that Cyrix business will be in the region of break-even. Obviously the transaction will be dilutive to the extent of the extra shares issued which is about 10%. Following the end of the fiscal year they expect the transaction to become accretive as they go into FY99 as they recognize the results of systems integration opportunities, revenue to their sales opportunities, and look at the opportunity for National Semiconductor going forward in the PC marketplace.

IMPACT ON EXISTING RELATIONSHIPS. In terms of the licensing agreement with Intel, they have a very broad cross-license agreement that will allow them complete flexibility to manufacture. Cyrix and National both have long-standing relationships with IBM and don't really expect to see any dramatic shift in that relationship in the near term. National believes that if they are successful, they will need all the capacity they have, so they anticipate that the IBM relationship will continue. They also still think there is room for a working relationship with SGS Thompson. As part of all of their discussions and relationships with various groups within Cyrix, they have done extreme due diligence of all of their process technology as it relates to Cyrix's architecture. They have had those discussions independent of merger discussions and are completely confident that they can easily run all of the various technologies required. Related to the architecture due diligence, they were impressed with how scalable the architecture is and they believe Cyrix can substantially turn up the clockspeed.

DESIGN SCHEDULE AND NEW PRODUCTS. The companies were asked about their design schedule and the timing of new products going forward. They answered that they have been working together as silicon partners well in advance of signing this agreement and over the next couple of weeks they will be making the first product announcements. One of the things they were most excited about is that the methodology used by Cyrix is almost the exact same methodology used by National in both the personal systems group as well as the Mediamatics group. The first thing they want to do is work with all of the various intellectual property and design groups to make sure they have very coherent strategic roadmaps and that they have all of the resources working where they are most capable. They will come out with those roadmaps as soon as possible, but a May 1998 timeframe is realistic.

WHERE WILL NATIONAL COMPETE. They were asked if it is National's intention to compete in the mainstream in the personal computer market or will they stay in the highly integrated strictly low-end market where they are unlikely to run into Intel. They answered that they have been advocates of driving this information appliance market for some time. They believe this market is very real. They believe that what the market needs is high integration which is an extention of what Cyrix has already been able to accomplish with the MediaGX. Having said that, they think that a high-performance offering like the M2 is required as the future center of the onion for these information appliances. So, they will continue to exist in the high-end having a clock speed and a CPU performance that is competitive or better than what else is out there. But their primary thrust is into the areas of the information appliance market. They were asked if the sub-$500 PC was going to be manufactured by National Semiconductor. They responded that they are not in the PC systems business, but are in the business of enabling that industry.

MARGIN GOALS. They were asked about margin goals and how the financial model changes. They responded that their intention is that in the medium term that National's portfolio will gravitate toward the 45% gross margin model. There is no reason why they think they can change that. In fact, they believe that the building blocks they have acquired could be potentially beneficial to margins going forward.

MARKETING AND SALES ORGANIZATIONS. They were asked if National's marketing and sales organizations would integrate the marketing and sales tasks for the mainstream microprocessors or do they intend to let Cyrix's intact organization run that autonomously. They responded that they place a high degree of value on the sales force that Cyrix has and the technical applications field sales force that Cyrix has. Selling microprocessors is a special skill. Having said that, they would obviously like the Cyrix people to be able to carry the rest of the bag of the National parts on sales calls and vice versa for National's sales force. The first scenario will happen almost immediately and the second scenario will happen after they can get the National sales force trained on the microprocessors. They have already looked at the numbers and don't think there is a huge amount of overlap here. They think there isn't going to be a whole lot of disruption other than the fact that it is obviously going to make sense to have one combined marketing thrust and then support that with both sales forces.

ONE-TIME CHARGES. They were asked if there was a collar on the deal and replied that there wasn't. It is a straight-forward exchange rate deal at the exchange rate of 0.825 that they put in place. National will be taking a charge related to the deal in the November quarter. They indicated that it is too early to guess at the numbers at this point.

PHYSICAL LOCATION CHANGES. From a physical standpoint, they are encouraging the product group to build the capability where they could reach critical mass in senior management any place where that critical mass resides. They see the Cyrix organization not only staying in Richardson, TX and Longmont, CO but growing their resources in both of those areas. One of the real strengths they have had over the years has been the ability to retain strong engineering talent and the quality of life in Dallas and Colorado is pretty good and the people who have chosen to locate here tend to be very locked into the communities and very satisfied where they are and Cyrix's ability to retain them is very high. They are always worried a little bit that because of where they are located they haven't always been as well connected to what is going on in Silicon Valley as they would like to be. They will suddenly be plugged into every technology that people have been working on that relates to the CPU and, while they have been able to do that reasonably so far, their ability to exploit those technologies and figure out how to integrate them with the CPU is going to go up 10x as a result of this merger. They are quite comfortable with the Cyrix location being and staying where it is and will continue to pour resources into this location.

TARGET MARKETS. They were asked what they see as the disadvantages of going after the standalone microprocessor market. They responded that the desireable market for them is the volumes associated with the information appliances and being able to be the ones that drive the net-PC cost of ownership as that unfolds in the office. Beyond that, they want to expand the market as they talked about earlier. They think it is logical to assume that the personal computer market that is not going after this relatively smaller volume workstation market would be displaced by some of these high-performance information appliances. One of the ways they get to high performance and these higher levels of integration is by distributing the processors on a single circuit. So they will have a processor responsible for the I/O and another processor responsible for the multimedia, and then the CPU processor responsible for the windows. They have talked about "Smart Node" well before this acquisition as capability of being able to handle all the packets that come flying down the network without bothering the CPU. They think they are going to be able to produce very powerful information appliances that will find themselves competing with the personal computer.

ANTICIPATED REVENUE PERCENTAGES. They were asked to look two years out and indicate what percentage of revenues coming out of Cyrix would be system-on-a-chip as opposed to dedicated microprocessors. And, how soon can Cyrix margins approach the 45% target margin goal set for National. They answered that they are definitely not abandoning the high-end, high-performance M2, 6x86 type of product. They will continue to invest in the high performance and high clockspeed again because ultimately high performance PCs become midrange PCs and ultimately the high volume information appliances. So they will continue to invest in high performance. They know that some of that product will find its way into high performance PCs. Certainly the CPU is capable of doing that today. What they are announcing is not that they are abandoning that. They are emphasizing that what they have now, with the combination of these two companies, is the opportunity to go drive the whole information appliance market and realize these 600 million personal computers per year maybe going to a billion personal computers per year and are going to do everything it takes to drive that. They think that the single microprocessor will be very important to the combined company right up to the point that the whole concept of the standalone processor or mainframe on a chip disappears.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.