Restructuring Costs, Acquisition and Integration Activities and Legal Settlements

During the second quarter and first six months of 2011, the Company recorded net charges relating to restructuring, acquisition and integration activities, and legal settlements of $21.2 million and $25.0 million, respectively, and $2.5 million and $18.0 million for the corresponding periods in 2010, which were recorded in selling, general and administrative expenses in the Company's consolidated statements of income.

Restructuring Costs

During the second quarter and first six months of 2011, the Company recorded charges of $0.5 million and $1.8 million, respectively, as compared to $1.9 million and $2.3 million for the second quarter and first six months of 2010, respectively, in connection with restructuring activities, including severance costs in connection with the termination of personnel and facility lease and other costs. These charges included non-cash charges of approximately $0.4 million and $0.6 million, recorded in the second quarter of 2011 and 2010, respectively, associated with the acceleration of compensation expense relating to future vesting of stock options under severance agreements for certain of the Company's former executive officers. Additional restructuring costs to be incurred during 2011, primarily related to back office integration, are expected to approximate $0.5 million for the remainder of 2011.

Acquisition and Integration Activities

During the second quarter and first six months of 2011, the Company recorded charges of $2.2 million and $4.7 million, respectively, compared to $2.0 million during the second quarter and first six months of 2010, in connection with costs of acquisition and integration activities, primarily related to the Odyssey transaction. These costs consisted of legal, accounting and other professional fees and expenses, severance costs and facility lease costs. Additional acquisition and integration costs to be incurred during 2011 primarily relate to the Odyssey acquisition and are expected to range between $1.0 million and $2.0 million for the remainder of 2011.

Legal Settlements

During the second quarter and first six months of 2011, the Company recorded charges of $18.5 million related to discussion of potential legal settlements associated with certain of the investigations assumed in connection with the Odyssey transaction. (See Note 14).

During the second quarter of 2010, the Company recorded a net reduction in charges related to legal settlements of $1.4 million which included (i) a reduction of $1.8 million associated with the reclassification of the tax impact of the settlement charges recorded in the first quarter of 2010 and (ii) incremental legal fees of approximately $0.4 million, both relating to the settlement of the three-year old commercial contractual dispute involving the Company's former subsidiary, CareCentrix.

For the first six months of 2010, the Company recorded legal settlements of $13.7 million consisting of (i) settlement costs and legal fees of $4.2 million related to a three-year old commercial contractual dispute involving the Company's former subsidiary, CareCentrix and (ii) incremental charges of $9.5 million in connection with an agreement in principle, subject to final approvals, between the Company and the federal government to resolve the matters which were subject to a 2003 subpoena relating to the Company's cost reports for the 1998 to 2000 period. See Note 14 for further information.

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


	Restructuring			Acquisition & Integration			Legal Settlements			Total
Ending balance at January 3, 2010	$	646		$	—		$	3,000		$	3,646
Charge in first quarter 2010		357			—			15,134			15,491
Cash expenditures		(396	)		—			(751	)		(1,147	)

Ending balance at April 4, 2010		607			—			17,383			17,990
Charge in second quarter 2010		1,882			2,034			(1,440	)		2,476
Cash expenditures		(316	)		(471	)		(5,222	)		(6,009	)
Non-cash expenditures		(577	)		—			1,800			1,223

Ending balance at July 4, 2010	$	1,596		$	1,563		$	12,521		$	15,680


Ending balance at December 31, 2010	$	2,893		$	3,984		$	12,500		$	19,377
Charge in first quarter 2011		1,259			2,506			—			3,765
Cash expenditures		(1,490	)		(2,346	)		—			(3,836	)

Ending balance at March 31, 2011		2,662			4,144			12,500			19,306
Charge in second quarter 2011		504			2,242			18,500			21,246
Cash expenditures		(788	)		(2,198	)		(12,500	)		(15,486	)
Non-cash expenditures		(407	)		—			—			(407	)

Ending balance at June 30, 2011	$	1,971		$	4,188		$	18,500		$	24,659

The balance of unpaid charges relating to restructuring, acquisition and integration activities and legal settlements approximated $24.7 million at June 30, 2011, which were included in other accrued expenses in the Company's consolidated balance sheets. The balance of unpaid charges relating to restructuring and acquisition and integration activities approximated $6.9 million at December 31, 2010, which were included in other accrued expenses in the Company's consolidated balance sheets. Unpaid charges associated with the government subpoena and investigation were included in Medicare liabilities in the Company's consolidated balance sheets and aggregated $12.5 million at December 31, 2010 which was paid in the second quarter of 2011 (see Note 14).