Music CorporationSEC Reg. No. ASO92-000589 Disclosure Statement 98-09

June 19, 1998 PSE CIRCULAR FOR BROKERS NO. 1380-98 SECURITIES AND EXCHANGE COMMISSION SEC Building, EDSA City of Mandaluyong, Metro Manila Attention: MMOD SUBJECT : Music Corporation SEC Reg. No. ASO92-000589 Disclosure Statement 98-09 Gentlemen : We advise that at a special meeting of the Board of Directors of the Corporation held today, 19th June 1998, at the Manila Polo Club, the Board of Directors 1. Employee Stock Investment Loan Policy . Approved the institution of an Employee Stock Investment Loan Policy to enable MUSIC Employees to purchase MUSIC shares at the stock market. Employees may avail themselves of the loan in proportion to a certain percentage of the employee's monthly salary. 2. Share Buy-Back . Noted with approval, Management's evaluation and recommendation against a buy-back of MUSIC shares at the present time. 3. Insider Trading Policy . Approved amendments to the Company's Insider Trading Policy authorizing the Board to open special trading windows, as and when it deems appropriate. 4. 2Q 1998 Revenue . Noted Management's report that as a result of the increasing longevity and depth of the Asian crisis the market for Layer 2 networking systems has settled at a level lower than planned by MUSIC's customers. One consequence of this is that the pace of new Layer 2 related orders from MUSIC's customers has slowed during the 2Q 1998 which may mean that MUSIC's revenue in 2Q 1998 will come in bout 20% below 1Q 1998's PhP196.0 million. Management is confident that the 2Q drop represents a single quarter anomaly and that the return to normal quarterly growth will resume with 3Q 1998. This confidence is based on our customers moving at a accelerated pace to introduce their Layers 3 and 4 new products. MUSIC has looked forward to this for some time since all of its new product developments sin 1996 have been focused on the higher technology Layers 3 and 4 systems. The market is catching up to MUSIC, and we will begin to see the first positive impacts on the 3Q 1998 income statements. 5. Netlogic Microsystems, Inc . Lawsuit . Noted Management's report on a lawsuit filed by Netlogic Microsystems, Inc. vs. MUSIC Semiconductors, Inc., one of the Company's U.S. subsidiary with the U.S. District court for the Northern District of California under N.D. Cal. Docket No. C-9801262 VRW. Netlogic claims that it believes that MUSIC will sue Netlogic on MUSIC's U.S. Patent No. 5,383.146 issued on an invention of Norman Threewitt (the "Threewitt patent") in the immediate future. Netlogic is seeking a declaration from the Court that Netlogic does not infringe the Threewitt patent and that MUSIC's Threewitt patent is invalid or otherwise unenforceable. The Company's U.S. counsels have advised that the lawsuit is concerned with whether Netlogic's products infringe MUSIC's Threewitt patent. Netlogic has not made any claim that any of MUSIC's products infringe any Netlogic patents. Thus, the lawsuit can have no effect on MUSIC's ability to provide products and services to its customers. If you should have any questions, please call us. Very truly yours, (SGD.) MITOS TANTUICO-ZSHORNACK Assistant Corporate Secretary