PSE Circular for Brokers No. 1912-99

August 2, 1999 PSE CIRCULAR FOR BROKERS NO. 1912-99 July 30, 1999 SPI TECHNOLOGIES INC. RELEASES SECOND QUARTER RESULTS, ANNOUNCES STRATEGIC PARTNERSHIP IN US SCHOLARLY PUBLISHER MARKET Listed company SPI Technologies Inc. (Philippine Stock Exchange, ticker symbol "SPI"), a leading exporter of information technology services, today reported revenues for the second quarter ended June 30, 1999 of Pesos 145 million. Net loss for the quarter was Pesos 89 million. Several factors that affected financial results adversely in the first quarter continued to impact the Company in the second quarter. Most importantly, it has taken longer than expected to replace the declining AM/FM (Automated Mapping/Facilities Management) business line, and two very large Litigation Support projects that peaked in the first half of 1998. The substantial revenue shortfall led to an operating loss of Pesos 48 million because the Company's costs were largely fixed in nature. The operating loss was compounded by a large SGML (Standard Generalized Markup Language) project that was unprofitable in its early stages. The Company also decided to take a Pesos 37 million non-recurring writedown of work-in-process (WIP) inventory in the second quarter. As part of the transition to the new SAP Enterprise Resource Planning (ERP) system this quarter, a thorough review of all balance sheet items was conducted, and the Company decided to re-value its WIP inventory on a more conservative basis. The Company has made substantial progress in rebuilding its revenue pipeline, and reducing fixed costs. Consequently, losses are expected to narrow substantially in the third quarter. The Company is expected to return to profitability in the fourth quarter, and to reap the full benefits of the corrective actions in 2000. Going forward, the Company's most promising business lines will be those where growth is being driven by e-commerce and the Internet. SPI also reported that the Company's Scholarly Publisher Services Division (formerly the Electronic Pre-Press Division) has entered into a strategic partnership with Capital City Press ("CCP"), a member of The Sheridan Group. The Sheridan Group is the second largest provider in the US of scientific, scholarly, technical, and medical ("SSTM") journal printing and publishing services including composition, print production, distribution and the creation of electronic data formats. SPI and CCP are collaborating to offer a better solution for SSTM publishers who are seeking a more cost-effective approach to their content production needs. The initial project for Sheridan will be carried out on behalf of one of the world's leading international publishers of scientific journals. CCP will support certain logistical activities, customer service and illustration scanning from its facilities in Vermont, USA. It will transmit the input material to SPI's facility in Manila, Philippines for a range of journal production services. Production has commenced in the third quarter. SPI expects volumes to reach an annualized production rate of at least 25,000 journal pages by the fourth quarter of 1999. Frank Stumpf, Jr., the Virginian-based Executive Vice President of SPI's Scholarly Publisher Services Division commented. "This recent breakthrough in the US journal services market confirms our belief that the journal services outsourcing market is ripe to follow the European model. Our partnership with CCP has the potential to eventually grow to at least 50% of the size of our existing journal services business. This business line is one of SPI's key growth areas." SPI provides information technology services including (1) conversion of news, professional and technical information into electronic form for major Internet and online content providers, (2) conversion of legacy document collections into a standardized electronic form for use on corporate intranets or networks, (3) conversion of evidence related documents into a searchable CD-ROM format for corporations involved in major litigation, (4) electronic mapping and database building for utilities, and (5) software services. SPI is an ISO 9002 certified exporter whose clients are located largely in North America and Europe. Authenticated by: (SGD.) ERNEST L. CU President & CEO