Employees of the McClatchy newspaper chain were told today that the company won’t be making 401(k) supplemental contributions for 2012. “We understand this is disappointing news, especially given that we were unable make a contribution for 2011,” says the memo.
DATE: Feb. 11, 2013
TO: All McClatchy Employees
FROM: Heather Fagundes, Vice President, Human Resources
SUBJECT: 401(k) Supplemental Contribution
Last week, McClatchy released earnings for 2012. We reported that year-over-year operating cash flow was just under $321 million, down from $352 million in 2011. Operating cash flow is generally defined as revenues minus cash operating expenses.
As you may recall, the payment of our 401(k) supplemental contribution is contingent upon growth in operating cash flow. Therefore, the company will not be making a 401(k) supplemental contribution for 2012.
We understand this is disappointing news, especially given that we were unable make a contribution for 2011. While there was much to be proud of in 2012, including the launch of several new initiatives, the introduction of our digital subscription program across all of our papers and a bond refinancing that helps stabilize the company’s debt commitments and reduce interest expenses, revenue performance continued to be a challenge, especially at the end of the year. Despite ongoing and often difficult reductions in expenses, we were unable to offset revenue declines significantly enough to allow for operating cash flow growth. However, the rate of our revenue decline appears to be slowing. We are optimistic that a strengthening economy and new revenue initiatives will help us return to a position of growth in the future.
We often get asked when the 401(k) match will be reinstated. Although reinstating a company match is a priority, the company’s financial performance must improve before we can start making matching contributions once again. For now, we will continue to closely monitor the company’s profitability to determine when we can reinstate the 401(k) match. We will update you as soon as any decision is made. Thank you.