Class Action Suit Filed Against Macromedia, Inc. and Its Officers and Directors Alleging Misrepresentations, False Financial Statements and Insider Trading

Business Wire, August 21, 1997

SAN DIEGO--(BUSINESS WIRE)--Aug. 21, 1997--A class action has been commenced in the California Superior Court for the County of San Francisco on behalf of purchasers of Macromedia, Inc. ("Macromedia") common stock during the period April 18, 1996 to January 9, 1997 the ("Class Period").

The complaint charges Macromedia and certain of its officers and directors with violations of the California Corporations Code. Macromedia is a computer software company. Prior to the commencement of the Class Period, Macromedia reported high profit margins and enormous growth in revenue and earnings. Based upon Macromedia's reported high profit margins and exponential growth in revenue and earnings, the Company's common stock traded at a very high multiple of its reported earnings and was particularly sensitive to any decrease in its sales, profit margins or rate of growth.

By the beginning of the Class Period, actual growth at the Company had stalled. The complaint alleges that to prevent Macromedia's stock price from collapsing, during the Class Period, defendants engaged in a fraudulent scheme and course of business that operated as a fraud and deceit on all persons who purchased Macromedia common stock. Defendants issued false and misleading statements about the success of Macromedia's principal products, Macromedia's business prospects, Macromedia's financial results, Macromedia's domestic and international sales, and other aspects of Macromedia's business. These statements drove Macromedia's stock to a Class Period high of $46-1/2 and enabled the Company to complete an acquisition in exchange for 600,000 shares of Macromedia stock and the Individual Defendants, who were all senior officers and/or directors of Macromedia, to sell 257,000 shares of their Macromedia stock at artificially inflated prices as high as $45-1/4 per share, realizing almost $9 million. The complaint further alleges that the Individual Defendants also profited from the fraudulent scheme because the overstatement of Macromedia's revenues and earnings and understatement of expenses during the Class Period allowed them to claim large bonuses under Macromedia's Executive Incentive Plan that otherwise would not have been payable.

Defendants' fraudulent scheme began to unravel after the close of the market on January 9, 1997, when it was exposed that its sales and prices had plummeted and expenses had drastically increased. On January 10, 1997, the day after defendants' shocking disclosure, the price of Macromedia common stock lost over 31% of its value, falling to as low as $9-1/16 per share.

Plaintiffs seek to recover damages on behalf of all purchasers of Macromedia common stock during the Class Period (the "Class"). They are represented by several law firms, including Milberg Weiss Bershad Hynes & Lerach LLP and Kaplan, Kilsheimer & Fox, LLP, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiffs' counsel, William Lerach or Mark Solomon of Milberg Weiss at 800/348-6192 or via e-mail at wsl@mwbhl.com or Jonathan Levine of Kaplan Kilsheimer at 800/290-1952 or 212/687-1980. Visit the Milberg Weiss website at http://www.milberg.com .

CONTACT: Milberg Weiss Bershad Hynes & Lerach, LLP

William Lerach/Mark Solomon, 800/348-6192

wsl@mwbhl.com

or

Kaplan, Kilsheimer & Fox, LLP

Jonathan Levine, 800/290-1952; 212/687-1980