Restructuring and Other Related Charges

Company-wide Reorganization Program:

During 2010, the Company initiated a “Company-wide Reorganization Program”, including a reshaping of the organization with the objective of deploying resources closer to the customers, allowing Omnicare to become more responsive to customer needs, better leveraging the Omnicare platform and better positioning the Company for potential growth. The program is anticipated to be completed in the next twelve months and is currently estimated to result in restructuring and other related charges of approximately $13 million, the majority of which is anticipated to be incurred in the LTC and Corporate/Other segments, and is largely related to severance, employee buyout and lease termination costs. In implementing these initiatives, the Company has recorded restructuring charges of approximately $3 million through December 31, 2011.

Details of the Company-wide Reorganization Program restructuring related charges follow (pretax, in thousands):



	2010 Provision/ Accrual		Utilized during 2010			Balance at December 31, 2010		Utilized during 2011			Balance at December 31, 2011
Restructuring charges:
Employee severance pay	$	446	$	(141	)	$	305	$	(278	)	$	27
Employment agreement buy-outs	2,733		(933		)	1,800		(1,432		)	368
Professional fees, facility exit costs and other	91		(91		)	—		—			—
Total restructuring charges	$	3,270	$	(1,165	)	$	2,105	$	(1,710	)	$	395

Omnicare Full Potential Plan:

In 2006, the Company commenced the implementation of the “Omnicare Full Potential” Plan, a major initiative primarily designed to re-engineer the Company’s pharmacy operating model to increase efficiency and enhance customer growth, which was substantially completed in 2010. The Omnicare Full Potential Plan optimized resources across the entire organization through implementing best practices, including the realignment and right-sizing of functions, and a “hub-and-spoke” model, whereby certain key administrative and production functions were transferred to regional support centers (“hubs”) specifically designed and managed to perform these tasks, with local pharmacies (“spokes”) focusing on time-sensitive services and customer-facing processes.

The Company recorded restructuring and other related charges for the Omnicare Full Potential Program of approximately $14 million and $20 million during the years ended December 31, 2010 and 2009, respectively, or cumulative aggregate restructuring and other related charges of approximately $110 million through 2010. The Company eliminated approximately 2,700 positions in completing the Omnicare Full Potential program.

The restructuring charges primarily included severance pay, the buy-out of employment agreements, lease terminations, and other exit-related asset disposals, professional fees and facility exit costs. The other related charges were primarily comprised of professional fees. Details of the Omnicare Full Potential Plan restructuring and other related charges follow (pretax, in thousands):



	Balance at December 31, 2008		2009 Provision/ Accrual		Utilized during 2009			Balance at December 31, 2009		2010 Provision/ Accrual
Restructuring charges:
Employee severance	$	—	$	5,759	$	(5,759	)	$	—	$	6,398
Employment agreement buy-outs	35		135		(170		)	—		—
Lease terminations	8,011		3,416		(4,314		)	7,113		3,578
Other assets, fees and facility exit costs	2,393		5,071		(7,005		)	459		2,453
Total restructuring charges	$	10,439	14,381		$	(17,248	)	$	7,572	12,429
Other related charges			5,433							1,466
Total restructuring and other related charges			$	19,814						$	13,895



	Utilized during 2010			Balance at December 31, 2010		Utilized during 2011			Balance at December 31, 2011
Restructuring charges:
Employee severance	$	(5,688	)	$	710	$	(486	)	$	224
Employment agreement buy-outs	—			—		—			—
Lease terminations	(4,119		)	6,572		(2,798		)	3,774
Other assets, fees and facility exit costs	(2,531		)	381		(359		)	22
Total restructuring charges	$	(12,338	)	$	7,663	$	(3,643	)	$	4,020

As of December 31, 2011, the Company has made cumulative payments of approximately $25 million of severance and other employee-related costs for the Omnicare Full Potential Plan. The remaining liabilities at December 31, 2011 represent amounts not yet paid relating to actions taken in connection with the program (primarily lease payments). The provision/accrual and corresponding payment amounts relating to employee severance were accounted for primarily in accordance with the authoritative guidance for employers’ accounting for postemployment benefits; and the provision/accrual and corresponding payment amounts relating to employment agreement buy-outs are being accounted for primarily in accordance with the authoritative guidance regarding accounting for costs associated with exit or disposal activities.