Heidelberg, Workers Reach Agreement on Cost-Cutting Measures

HEIDELBERG, GERMANY—07/19/2010—The management and works council of Heidelberger Druckmaschinen AG (Heidelberg) have agreed on a package of measures in a reconciliation of interests. The highlights include:

• Agreement reached between management and employee representatives on job cuts and necessary adjustments to personnel capacities.

• Cost reductions of EUR 80 million will be achieved according to plan in financial year 2011/2012.

The package comprises an agreement to forgo collectively agreed payments and company contributions, the company's option of drawing on additional working hours and an innovative working-time concept. One element of the agreement is that staff can voluntarily reduce their contractual working hours to 57 percent of the original level on a permanent basis, with a corresponding cut in pay. The company will provide compensation for part of the lost salary for a period of maximum four years. The working hours of staff adopting this employment model will be based on company needs.

This concept is intended to reduce the number of compulsory redundancies still required. Taken as a whole, the package of measures is expected to cut around 500 jobs worldwide at Heidelberg until October 2010, around one third of these in the sales organizations. As part of this package, voluntary and socially acceptable measures have already resulted in some staff leaving the company or concluding agreements to terminate their contract of employment.

As planned, the company is thus implementing its package of cost-cutting measures, including saving of non-personnel cost. A key element of this package is to cut costs by an initial EUR 60 million in financial year 2010/2011 and a total of EUR 80 million in financial year 2011/2012. Together with the EUR 400 million of savings already achieved in financial year 2009/2010, this will result in total annual savings of EUR 480 million by financial year 2011/2012.

"Following constructive talks, management and employee representatives have agreed on a Heidelberger Weg (Heidelberg Way) - a strategy for adapting existing capacities to the order situation while still keeping as many staff and thus as much valuable know-how as possible at the company. We have also achieved our savings targets," said Heidelberg CEO Bernhard Schreier. "The package of measures now agreed marks a new departure for everyone involved in the negotiations and demonstrates a great sense of responsibility on all sides," he added.

As of June 30, 2010, the Heidelberg Group had a workforce of 16,218 worldwide, thereof 10,942 in Germany.