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McClatchy to cut an additional 1600 Jobs

Tuesday, March 10, 2009

Press release from the issuing company

SACRAMENTO, Calif. -- The McClatchy Company today provided additional details about its previously announced restructuring plan.

On Feb. 5, 2009, at the time of its fourth quarter earnings release, McClatchy announced that given the unprecedented deterioration in revenues and with no visibility of an improving economy, the company was developing a plan to reduce costs.

Today, the company said it plans to reduce its workforce by approximately 15% or 1,600 full-time equivalent employees as the company accelerates efforts to manage through an increasingly poor national economic environment. The headcount reductions will be achieved through severance programs, attrition and further consolidations and outsourcing of some business functions. The company expects to incur an estimated $30 million of severance costs in connection with these reductions. The workforce reductions will begin by the end of the first quarter of 2009. The plan also involves wage reductions across the company for additional savings.

McClatchy's February announcement noted that Gary Pruitt, McClatchy's chairman and chief executive officer, declined his 2008 and 2009 bonuses and other executive officers did not receive bonuses for 2008. Today, the company announced that Pruitt's base salary will be reduced by 15%, other executive officers' salaries will be cut by 10%, and no bonuses will be paid to any executive officers for 2009. In addition, the company has reduced the cash compensation, including retainers and meeting fees, paid to its directors by approximately 13%, and the directors declined any stock awards for 2008 and 2009.

"We have been transitioning steadily from a traditional newspaper company to a hybrid print and online, news and advertising company for some time," Pruitt said. "The effects of the current national economic downturn make it essential that we move even faster to realign our workforce and make our operations more efficient. We previously discussed a plan to reach a targeted level of cost savings, but given the worsening economy, we must do more. I'm sorry we have to take these actions, but we believe they are necessary.

"While painful, we know these actions are working. Evidence of our cost reduction efforts can be found in our results. Excluding severance and other benefit charges related to our previously announced restructuring plans, cash expenses were down 14.4% in the fourth quarter of 2008 and were down 11.5% in all of 2008."

The headcount reductions will affect virtually every area of the organization, but each newspaper will determine how best to implement the savings in its market, while retaining its strategic focus on sales, news and online operations. McClatchy said the company would work to ensure a smooth transition during the downsizing, providing severance packages to affected employees.




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