Texas Instruments to Acquire Telogy Networks®, Inc. to Fuel DSP Growth in Fast-Growing Internet Telephony Market

Acquisition Further Strengthens TI's Leadership in Digital Signal Processing as Demand for Packet Switching and Internet Communications Proliferates

• Telogy Networks®, Inc.

Dallas (June 2, 1999) - Texas Instruments (NYSE:TXN) announced today it will acquire Telogy Networks, Inc. to strengthen its leadership in the emerging, fast-growing market for Internet telephony. The acquisition is being made through a stock-for-stock transaction. Based on TI's closing stock price on June 1, 1999, TI expects to issue 4.1 million shares in connection with the transaction worth about $435 million.

The acquisition merges the leaders in programmable digital signal processors (DSP) and embedded communications software, the combination of which is central to the ability to send digital voice and data packets over the Internet. With this merger, TI is well positioned to be the engine of the communications market as it transitions from circuit-switched to packet-switched networks.

"Over the next decade, close to 700 million phone lines will transition to digital voice," said Mike Hames, TI vice president and manager of the company's worldwide DSP business. "With this acquisition, we offer the combined programmable DSP and software solution that communications equipment manufacturers are demanding to support this rapid transition. This will potentially put TI in every phone, every interface to the telecommunications infrastructure and every Internet appliance in the digital communications network."

"The move to packet networks is the beginning of a revolution even larger in scale than the migration from analog to digital in wireless telephony," said Joseph A. Crupi, president and CEO of Telogy Networks. "With this rapid growth, customers are asking for bundled solutions. Together, Telogy and TI can offer a full solution of hardware and embedded software that shortens the time to market and improves quality of service for our customers. We're excited about combining forces to address the incredible market opportunity in packet telephony."

One of the emerging segments in digital communications is Voice over Internet Protocol (VoIP), a market that grew by more than 400% last year. VoIP allows voice and data to travel simultaneously over a single network line, resulting in better, more flexible, and more cost-effective phone service for end users. This market will depend on programmable DSPs and software to convert and compress voice, data and fax into small digital packets that travel quickly and reliably across corporate local area networks, intranets and the Internet at quality levels equivalent to traditional circuit switched telephony. The DSP also supports rapidly changing industry standards and enables enhanced features such as voice recognition, voice mail and text to speech.

With VoIP, businesses will be able to reduce operating costs by eliminating the traditional voice-only line, thus managing only one network that can transmit both voice and data simultaneously. It also can lower long-distance and fax costs by routing calls over private data lines. Individuals can realize similar benefits through long-distance suppliers that offer per-minute rate savings with VoIP technology.

Applications that will fuel this growing market include gateways; remote access servers and concentrators; Internet feature phones; digital subscriber loop (DSL) modems; cable modems; Internet fax machines; and Internet appliances.

Telogy, an active member of TI's DSP third-party program, developed its Golden Gateway® software to run on TI DSPs. The software, which powers voice, fax and data modem transmission over the Internet, is inside products made by industry leaders such as Cisco Systems, 3Com, Nortel Networks and many other leading voice and data communications equipment manufacturers.

Telogy will become a wholly owned subsidiary of TI reporting into the worldwide DSP business and will continue to operate from its headquarters in Germantown, MD. The boards of directors of both companies have approved the acquisition, which is expected to be completed in August 1999. The transaction is intended to qualify as a pooling of interests for accounting purposes. Consummation of the acquisition is contingent upon approval by Telogy stockholders, the termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

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NOTE TO EDITORS: Texas Instruments Incorporated is a global semiconductor company and the world's leading designer and supplier of digital signal processing and analog technologies, the engines driving the digitization of electronics. Headquartered in Dallas, Texas, the company's businesses also include materials and controls, education technology, and digital imaging. The company has manufacturing or sales operations in more than 25 countries.

Texas Instruments is traded on the New York Stock Exchange under the symbol TXN. More information is located on the World Wide Web at http://www.ti.com.

Telogy Networks is the leading provider of embedded communications software to global equipment manufacturers. Telogy's Golden Gateway software enables its customers to develop connected products that send real-time voice, fax and data over packet networks (such as Internet/Intranet, Frame Relay and ATM). As one of the few embedded software companies with both microprocessor and DSP expertise, Telogy Networks offers its customers truly comprehensive product solutions. Telogy's customers include Cisco Systems, 3Com, Nortel Networks, Motorola, Touchwave, American Communications Technologies International, Vegastream, Entrata Communications, Soliton Systems KK, Accelerated Networks, Assured Access Technology, Abatis Systems Corporation, e-Net, Inc., FastComm Communications, Fibex Systems, Mariner Networks, Telco Systems, Cortelco Systems, TEK Digitel Inc., Stanford Telecom, Paradyne, Voiceboard Corporation, Xylan Corporation and many other leading equipment manufacturers. Company news and product information are available at http://www.telogy.com.

Golden Gateway® is a registered trademark of Telogy Networks Inc.