Interim Financial Data

The interim financial data is unaudited; however, in the opinion of Omnicare management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Omnicare consolidated results of operations, financial position and cash flows for the interim periods presented have been made. All significant intercompany accounts and transactions have been eliminated.

Stock-Based Compensation

Stock-based compensation expense recognized in the Consolidated Statement of Comprehensive Income for stock options, restricted stock units, performance share units and stock awards totaled approximately $6 million and $5 million for the three months ended March 31, 2014 and 2013 respectively.

Accounts Receivable

The following table is an aging of the Company’s gross accounts receivable (net of allowances for contractual adjustments), aged based on payment terms and categorized based on the three primary types of accounts receivable characteristics (in thousands):



March 31, 2014	Current and 0-180 Days Past Due		181 Days and Over Past Due		Total
Medicare (Part D and Part B), Medicaid and Third-Party payors	$	234,075	$	49,819	$	283,894
Facility payors	357,955		132,088		490,043
Private Pay payors	78,768		83,276		162,044
Total gross accounts receivable	$	670,798	$	265,183	$	935,981
December 31, 2013
Medicare (Part D and Part B), Medicaid and Third-Party payors	$	195,544	$	67,791	$	263,335
Facility payors	328,444		146,751		475,195
Private Pay payors	75,655		84,101		159,756
Total gross accounts receivable	$	599,643	$	298,643	$	898,286

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) ("AOCI") by component and in the aggregate, follows (in thousands):



	March 31, 2014			December 31, 2013
Unrealized loss on fair value of investments	$	(539	)	$	(702	)
Pension and postemployment benefits	(1,779		)	(1,839		)
Total accumulated other comprehensive income (loss), net	$	(2,318	)	$	(2,541	)

The amounts are net of applicable tax benefits, which were not material at March 31, 2014 and December 31, 2013. The reclassifications out of AOCI did not materially affect any individual line item on the Consolidated Statement of Comprehensive Income.

Fair Value

The Company’s financial assets and liabilities, measured at fair value on a recurring basis, were as follows (in thousands):



			Based on
	Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
March 31, 2014
Bond portfolio	$	25,167	$	—	$	25,167	$	—
7.75% interest rate swap agreements - fair value hedge	19,766		—		19,766		—
Derivatives	—		—		—		—
Total	$	44,933	$	—	$	44,933	$	—
December 31, 2013
Bond portfolio	$	25,140	$	—	$	25,140	$	—
7.75% interest rate swap agreements - fair value hedge	18,671		—		18,671		—
Derivatives	—		—		—		—
Total	$	43,811	$	—	$	43,811	$	—

The fair value of the Company’s fixed-rate debt facilities are shown at the "Debt" note.

Offsetting Assets and Liabilities

The Company has interest rate swap agreements (the "Interest Rate Swap Agreements") with multiple counterparties on its 7.75% Senior Subordinated Notes due 2020 (the "2020 Notes"), which are subject to this guidance. The following table presents the Interest Rate Swap Agreements offsetting securities as of March 31, 2014 and December 31, 2013



							Gross Amounts not offset in the statement of financial position
Interest Rate Swaps as of:	Gross amount of recognized assets (liabilities)		Gross amount offset in the statement of financial position		Net amount of assets (liabilities) presented in the statement of financial position		Financial instruments		Cash collateral received		Net amount
March 31, 2014
Swap A	$	10,013	$	—	$	10,013	$	—	$	—	$	10,013
Swap B	9,753		—		9,753		—		—		9,753
	$	19,766	$	—	$	19,766	$	—	$	—	$	19,766

December 31, 2013
Swap A	$	9,408	$	—	$	9,408	$	—	$	—	$	9,408
Swap B	9,263		—		9,263		—		—		9,263
	$	18,671	$	—	$	18,671	$	—	$	—	$	18,671

Income Taxes

The quarterly effective tax rates are different than the federal statutory rate largely as a result of the impact of state and local income taxes and certain non-deductible charges.

Other Charges

Other charges (on a pre-tax basis) consist of the following (in thousands):



	Three months ended March 31,
	2014		2013
Separation and other costs	$	10,276	$	3,469
Acquisition and other related costs	—		537
Total - other charges	$	10,276	$	4,006

Separation and Other Costs

In the three months ended March 31, 2014 and 2013, the Company recorded separation related costs and accelerated stock based compensation expense for certain employees of approximately $10 million and $3 million, respectively. These charges are reflected in the "Other charges" caption of the Consolidated Statement of Comprehensive Income and include charges related to the previously announced retirement of the Chief Executive Officer in the current quarter.

Restructuring and Other Related Charges

The Company continues to make payments in connection with its Company-wide Reorganization Program (the “CWR Program”), primarily related to certain severance amounts and its relocation of the corporate office. As of March 31, 2014, the Company has made cumulative payments of approximately $3 million for severance and other employee-related costs for the CWR Program. The Company had liabilities related to the CWR Program of approximately $5 million at December 31, 2013, with utilization of approximately $1 million in the three months ended March 31, 2014. The remaining liabilities pursuant to the CWR Program of $4 million at March 31, 2014, represent amounts not yet paid relating to actions taken in connection with the CWR Program (primarily lease termination costs) and will be settled as these matters are finalized.

Common Stock Repurchase Program

In the three months ended March 31, 2014, the Company repurchased approximately 1.6 million shares through its authorized share repurchase program at an aggregate cost of approximately $95 million, for a cumulative amount of approximately 26 million shares of common stock repurchased at an aggregate cost of approximately $945 million from the inception of the share repurchase programs in May 2010 through March 31, 2014. In the three months ended March 31, 2013, the Company did not repurchase any shares through authorized share repurchase programs. The Company had approximately $405 million of share repurchase authority remaining as of March 31, 2014, which expires on December 31, 2015.

Capped Call

On April 2, 2012, the Company entered into capped call transactions with a counterparty, paying $48.1 million for the purchase of the capped calls, which were recorded as additional paid in capital. The capped call transactions are intended to reduce potential economic dilution upon conversion of the 3.75% Convertible Senior Subordinated Notes due 2042. The capped calls settle in tranches through March 2016, one of which settled in the first quarter of 2014. The adjusted strike price for the capped calls ranged from $40.96 to $41.05 and the adjusted cap price for the tranche settled in 2014 ranged from $56.75 to $56.88; the strike and cap prices adjust for the Company's dividend payments. The Company received approximately 0.6 million net shares upon settlement with a value of approximately $38 million.

Recently Issued Accounting Standards

There are no recently issued accounting standards that are expected to have a material impact on the Company's consolidated results of operations, financial position and cash flows.