Cost Savings Initiatives and Other Restructuring Costs, Acquisition and Integration Activities and Legal Settlements

The Company recorded net charges relating to restructuring, acquisition and integration activities, and legal settlements of $1.7 million and $2.6 million for the third quarter and first nine months of 2013, respectively, and $0.1 million and $5.5 million for the third quarter and first nine months of 2012, respectively, which were recorded in selling, general and administrative expenses in the Company’s consolidated statements of comprehensive income.

Cost Savings Initiatives and Other Restructuring Costs

During the third quarter and first nine months of 2012, the Company continued a comprehensive review of its branch structure, support infrastructure and other significant expenditures in order to reduce its ongoing operating costs given the challenging rate environment facing the Company. As a result of this effort, the Company closed or divested 46 home health branches in the first quarter of 2012 and completed significant reductions in staffing levels in regional, area and corporate support functions. In connection with these activities, the Company recorded charges of $0.1 million and $0.3 million in the third quarter and first nine months of 2013, respectively, as compared to $0.1 million and $1.5 million in the third quarter and first nine months of 2012, respectively, related to severance costs, facility lease and other costs.

Acquisition and Integration Activities

The Company recorded charges of $1.6 million and $2.3 million in the third quarter and first nine months of 2013, respectively, primarily related to the Company's acquisition of Harden Healthcare Holdings, Inc. These costs consisted of legal, accounting and other professional fees and expenses. During the first nine months of 2012, the Company recorded positive adjustments of $1.0 million related to acquisition and integration activities, primarily associated with favorable lease settlements associated with the acquisition of Odyssey HealthCare, Inc.

Legal Settlements

During the first nine months of 2012, the Company recorded legal settlements of $5.0 million related to certain wage and hour litigation and paid approximately $26.0 million in settlement with the United States regarding Odyssey’s provision of continuous care services prior to the Company’s acquisition of Odyssey in August 2010.

The costs incurred and cash expenditures associated with these activities by component were as follows (in thousands):



	Cost Savings and Other Restructuring			Acquisition & Integration			Legal Settlements			Total
Balance at December 31, 2011	$	8,671		$	3,708		$	26,000		$	38,379
Charge in first quarter 2012	842			(409		)	4,958			5,391
Cash expenditures	(3,527		)	(755		)	(25,958		)	(30,240		)
Non-cash expenditures	19			(216		)	—			(197		)
Ending balance at March 31, 2012	6,005			2,328			5,000			13,333
Charge in second quarter 2012	542			(517		)	—			25
Cash expenditures	(2,462		)	(421		)	(5,000		)	(7,883		)
Non-cash expenditures	(114		)	—			—			(114		)
Ending balance at June 30, 2012	3,971			1,390			—			5,361
Charge in third quarter 2012	98			(45		)	—			53
Cash expenditures	(1,466		)	(143		)	—			(1,609		)
Non-cash expenditures	(4		)	—			—			(4		)
Ending balance at September 30, 2012	$	2,599		$	1,202		$	—		$	3,801

Balance at December 31, 2012	$	1,685		$	1,011		$	—		$	2,696
Charge in first quarter 2013	47			94			—			141
Cash expenditures	(1,104		)	(322		)	—			(1,426		)
Ending balance at March 31, 2013	628			783			—			1,411
Charge in second quarter 2013	138			606			—			744
Cash expenditures	(685		)	(234		)	—			(919		)
Ending balance at June 30, 2013	81			1,155			—			1,236
Charge in third quarter 2013	77			1,622			—			1,699
Cash expenditures	(240		)	(283		)	—			(523		)
Non-cash reclassification	476			(476		)	—			—
Ending balance at September 30, 2013	$	394		$	2,018		$	—		$	2,412

The balance of unpaid charges relating to cost savings initiatives and other restructuring costs and acquisition and integration activities approximated $2.4 million at September 30, 2013 and $2.7 million at December 31, 2012, which were included in other accrued expenses in the Company’s consolidated balance sheets.