UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008 DRAFTORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)For the transition period
    from          to   Commission file
    number. 0-12015
      HEALTHCARE SERVICES GROUP,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Pennsylvania

23-2018365(State or other jurisdiction
    of
    incorporated or organization)

(IRS Employer Identification
    No.)3220 Tillman Drive, Suite 300,Bensalem, PA

19020(Address of principal executive
    offices)

(Zip Code)   Registrants telephone number, including area code:
 (215)
    639-4274
  Securities
    registered pursuant to Section 12(b) of the
    1934 Act:
  Common Stock ($.01 par value)

The NASDAQ Global Select MarketTitle of Class

Name of each exchange on which
    securities registered   o þ
  o þ
  þ o
  Regulation S-K 10-K - þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





Part I
    Item I.Business.
  (a)
    General     (b)
    Segment Information Form 10-K
  (c)
    Description of
    Services  General
      1




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##### 



90-day
     2




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##### 



Housekeeping
 Housekeeping
    services. on-site on-site on-site
  Laundry and linen
    services.
  Maintenance and
    other services.
  Laundry installation
    sales.
   3




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##### 



Food
 Food
    services. On-site
    Operational
    Management Structure
   
  on-site on-site
 4




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##### 



Market
     Marketing and
    Sales
   on-site
  Government
    Regulation of Clients
  5




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##### 



and/or
  Service
    Agreements/Collections
 on-site
  90-day
   6




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##### 



Schedule II-Valuation
  Competition
  7




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##### 



Employees
 on-site
    (d)
    Financial
    Information About Geographic Areas   (e)
    Available Information 1-800-SEC-0330.
  Website
    Access
 www.hcsgcorp.com.
  Item 1A.
    Risk
    Factors.  8




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##### 



We have one
    client, a nursing home chain, which due to its significant
    contribution to our total revenues, we consider a major
    client.
   Our clients are
    concentrated in the health care industry which, among other
    things, is subject to significant government funding.
   We have clients
    located in certain states which have had and may continue to
    experience significant budget deficits and such deficits may
    result in reduction of reimbursements to nursing
    homes.
   We have a Paid
    Loss Retrospective Insurance Plan for general liability and
    workers compensation insurance.
 and/or
 9




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##### 



We provide
    services in 47 states and are subject to numerous local
    taxing jurisdictions within those states.
   Our business and
    financial results could be adversely affected by unfavorable
    results of material litigation or governmental
    inquiries.
   We primarily
    provide our services pursuant to agreements which have a one
    year term, cancelable by either party upon 30 to
    90 days notice after the initial
    90-day
    service agreement period.
 start-up
  We are dependent
    on the management experience of our key personnel.
 on-site
  We may be
    adversely affected by inflationary or market fluctuations in the
    cost of products consumed in providing our services or our cost
    of labor.
  10




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##### 



Our investments
    represent a significant amount of our assets that may be subject
    to fluctuating and even negative returns depending upon interest
    rate movements and financial market conditions.
   Market
    expectations are high and rely greatly on execution of our
    growth strategy and related increases in financial
    performance.
   Item 1B.
    Unresolved Staff
    Comments.   Item 2.
    Properties.           Item 3.
    Legal
    Proceedings. and/or
  Item 4.
    Submission of
    Matters to a Vote of Security Holders.  11




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##### 



PART II
  Item 5.
    Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities.  (a)
    Market Information     2008 High


2008 Low1st Qtr.


$24.94



$19.782nd Qtr.


$20.90



$14.503rd Qtr.


$20.02



$14.684th Qtr.


$18.09



$12.91   2007 High


2007 Low1st Qtr.


$20.02



$17.812nd Qtr.


$20.18



$17.673rd Qtr.


$23.32



$18.474th Qtr.


$23.51



$19.95   (b)
    Holders   (c)
    Dividends     Cash Dividend

Payment Date

Record Date1st Quarter

$.13

February 15

February 42nd Quarter

$.14

May 12

April 253rd Quarter

$.15

August 8

July 254th Quarter

$.16

November 7

October 24    12




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##### 



(d)
    Securities
    Authorized for Issuance Under Equity Compensation Plans   Number of
    SecuritiesNumber of Securities
    to be

Weighted-Average

Remaining Available
    for FutureIssued Upon Exercise
    of

Exercise Price of

Issuance Under
    EquityOutstanding
    Options,

Outstanding
    Options,

Compensation Plans
    (ExcludingWarrants and
    Rights

Warrants and
    Rights

Securities Reflected
    in Column (a))Plan Category

(a)

(b)

(c)Equity compensation plans approved by security holders

1,894,000(1)

$10.12

4,664,000(2)Equity compensation plans not approved by security holders

N/A

N/A

N/ATotal

1,894,000

$10.12

4,664,000    (1)

    
    Represents shares of Common Stock issuable upon exercise of
    outstanding options granted under either the 2002 Stock Option
    Plan, the 1996 Non-employee Directors Stock Option Plan,
    or the 1995 Incentive and Non-Qualified Stock Option Plan (the
    Stock Option Plans).(2)

    
    Includes options to purchase 2,399,000 shares available for
    future grant under the Companys Stock Option Plans. Also
    includes 1,894,000 and 372,000 shares available for
    issuance under the Companys 1999 Employee Stock Purchase
    Plan and 1999 Deferred Compensation Plan, respectively
    (collectively, the 1999 Plans). Treasury shares may
    be issued under the 1999 Plans. 13




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##### 



(e)
    Performance Graph  5-year 12/31/2003 12/31/2008.
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    Healthcare Services Group, Inc., The S&P 500 Index
    And The S&P Health Care Distributors Index
  
  12/31/03
  ©
  12/03



12/04



12/05



12/06



12/07



12/08Healthcare Services Group, Inc.



100.00




165.23




250.45




357.49




400.52




311.87S&P 500



100.00




110.88




116.33




134.70




142.10




89.53S&P Health Care Distributors



100.00




97.47




125.99




124.27




129.44




81.28   The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.
 14




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##### 



Begin:

12/31/2003Period End:

12/31/2008Healthcare Services Group -NASNM

End:

12/31/2008C000002202   BeginningTransaction

Closing


No. Of


Dividend


Dividend


Shares


Ending


Cum. Tot.Date*

Type

Price**


Shares***


per
    Share


Paid


Reinvested


Shares


Return31-Dec-03

Begin


5.698



17.55















17.551



100.0028-Jan-04

Dividend


5.884



17.55



0.02



0.42



0.071



17.621



103.6928-Apr-04

Dividend


7.031



17.62



0.03



0.47



0.067



17.688



124.3728-Jul-04

Dividend


7.560



17.69



0.03



0.55



0.073



17.761



134.2727-Oct-04

Dividend


8.120



17.76



0.04



0.63



0.078



17.839



144.8531-Dec-04

Year End


9.262



17.84















17.839



165.2326-Jan-05

Dividend


8.733



17.84



0.04



0.71



0.082



17.921



156.512-May-05

Dividend


11.271



17.92



0.03



0.56



0.049



17.970



202.5427-Jul-05

Dividend


12.427



17.97



0.05



0.96



0.077



18.047



224.2727-Oct-05

Dividend


11.720



18.05



0.06



1.08



0.092



18.139



212.5931-Dec-05

Year End


13.807



18.14















18.139



250.451-Feb-06

Dividend


13.193



18.14



0.07



1.21



0.092



18.231



240.5326-Apr-06

Dividend


14.327



18.23



0.07



1.34



0.093



18.324



262.5326-Jul-06

Dividend


13.887



18.32



0.08



1.47



0.106



18.430



255.9325-Oct-06

Dividend


18.473



18.43



0.09



1.60



0.086



18.516



342.0631-Dec-06

Year End


19.307



18.52















18.516



357.491-Feb-07

Dividend


18.827



18.52



0.09



1.73



0.092



18.608



350.3325-Apr-07

Dividend


19.613



18.61



0.10



1.86



0.095



18.703



366.8325-Jul-07

Dividend


19.613



18.70



0.11



2.00



0.102



18.805



368.8325-Oct-07

Dividend


21.450



18.80



0.12



2.26



0.105



18.910



405.6231-Dec-07

Year End


21.180



18.91















18.910



400.5231-Jan-08

Dividend


24.260



18.91



0.13



2.46



0.101



19.011



461.2223-Apr-08

Dividend


14.510



19.01



0.14



2.66



0.183



19.195



278.5223-Jul-08

Dividend


16.540



19.19



0.15



2.88



0.174



19.369



320.3622-Oct-08

Dividend


14.850



19.37



0.16



3.10



0.209



19.578



290.7331-Dec-08

End


15.930



19.58















19.578



311.87    *
    
    Specified ending dates or ex-dividends dates.**
    
    All Closing Prices and Dividends are adjusted for stock splits
    and stock dividends.***
    
    Begin Shares based on $100 investment.  Recent sales of
    Unregistered Securities
    Purchases of
    Equity Securities by the Issuer and Affiliated
    Purchasers
   15




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##### 



Item 6.
    Selected
    Financial Data. Form 10-K
  (in thousands
    except for per share data)Years Ended December
    31:

2008


2007


2006


2005


2004Selected Operating Results:Total revenue

$
602,718


$
577,721


$
511,631


$
466,291


$
442,568Net income

$
26,614


$
29,578


$
25,452


$
19,096


$
14,699Basic earnings per Common Share

$
.62


$
.70


$
.62


$
.47


$
.37Diluted earnings per Common Share

$
.60


$
.67


$
.59


$
.45


$
.35Selected Balance Sheet Data:Total assets

$
248,561


$
243,368


$
215,556


$
188,430


$
166,964Stockholders equity

$
201,682


$
194,718


$
165,477


$
148,163


$
131,460Selected Other Financial Data:Working capital

$
177,573


$
167,217


$
140,627


$
142,535


$
125,012Cash dividends per common share

$
.58


$
.42


$
.31


$
.20


$
.11Weighted average number of common shares outstanding for basic
    EPS


43,131



42,286



41,176



40,381



39,331Weighted average number of common shares outstanding for diluted
    EPS


44,025



43,847



43,147



42,480



41,490   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation.  Cautionary
    Statement Regarding Forward Looking Statements
   16




---



##### 



Results of
    Operations
     No. 97-14 No. 97-14),
 17




---



##### 



Overview
     90-day
         18




---



##### 



19




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##### 



Consolidated
    Operations
   Relation to
    Consolidated RevenuesYears Ended
    December 31,2008


2007


2006Revenues


100.0
%


100.0
%


100.0
%Operating costs and expenses:Costs of services provided


86.5



85.4



85.7Selling, general and administration


6.5



7.0



7.3Investment and interest income


.2



.7



1.0Income before income taxes


7.2



8.3



8.0Income taxes


2.8



3.2



3.0Net income


4.4
%


5.1
%


5.0
%        20




---



##### 



2008 Compared with
    2007
   Percent





Reportable Segmentsincrease


Corporate and


Housekeeping


FoodConsolidated


(decrease)


eliminations


Amount


%incr


Amount


%incrRevenues

$
602,718,000



4.3
%

$
(1,645,000
)

$
488,954,000



4.5
%

$
115,409,000



4.9
%Cost of services provided


521,269,000



5.7



(33,223,000
)


442,354,000



4.6



112,138,000



4.6Selling, general and administrative


39,523,000



(1.9
)


39,523,000











Investment and interest income


1,349,000



(66.5
)


1,349,000











Income before income taxes

$
43,275,000



(10.0
)%

$
(6,596,000
)

$
46,600,000



3.9
%

$
3,271,000



15.6
%   Revenues
  Consolidated
     Reportable
    Segments
      21




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##### 



Costs of
    services provided
  Consolidated
   Cost of Services
    Provided-Key Indicators

2008%

2007%

Incr (Decr)%Bad debt provision



.7


1
.1

(.4)Workers compensation and general liability insurance


3
.4


3
.1

.3       Reportable
    Segments
     Cost of Services
    Provided-Key Indicators

2008%

2007%

Incr (Decr)%Housekeeping labor and other labor costs


81
.4


81
.5


(
.1)Housekeeping segment supplies


6
.2


5
.2


1
.0Food labor and other labor costs


53
.2


54
.9


(1
.7)Food segment supplies


40
.1


38
.6


1
.5    22




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##### 



Consolidated
    Selling, General and Administrative Expense
   Consolidated
    Investment and Interest Income
  23




---



##### 



Income before
    Income Taxes
  Consolidated
   Reportable
    Segments
     Consolidated
    Income Taxes
   Consolidated Net
    Income
   2007 Compared with
    2006
   Percent





Reportable Segmentsincrease


Corporate and


Housekeeping


FoodConsolidated


(decrease)


eliminations


Amount


%incr


Amount


%incr(decr)Revenues

$
577,721,000



12.9
%

$
(126,000
)

$
467,833,000



13.5
%

$
110,014,000



8.5
%Cost of services provided


493,364,000



12.5



(36,803,000
)


422,982,000



13.0



107,185,000



9.4Selling, general and administrative


40,284,000



8.3



40,284,000











Investment and interest income


4,022,000



(18.0
)


4,022,000











Income before income taxes

$
48,095,000



18.1
%

$
415,000


$
44,851,000



18.5
%

$
2,829,000



(16.7
)%   Revenues
  Consolidated
    24




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##### 



Reportable
    Segments
       Costs of
    services provided
  Consolidated
   Cost of Services
    Provided-Key Indicators

2007%

2006%

Incr (Decr)%Bad debt provision


1
.1



.1


1
.0Workers compensation and general liability insurance


3
.1


3
.5


(
.4)     Reportable
    Segments
     Cost of Services
    Provided-Key Indicators

2007%

2006%

Incr (Decr)%Housekeeping labor and other labor costs


81
.5


81
.6


(
.1)Housekeeping segment supplies


5
.2


5
.6


(
.4)Food labor and other labor costs


54
.9


54
.3



.6Food segment supplies


38
.6


37
.4


1
.2  25




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##### 



Consolidated
    Selling, General and Administrative Expense
   Consolidated
    Investment and Interest Income
   Income before
    Income Taxes
  Consolidated
   Reportable
    Segments
     Consolidated
    Income Taxes
  26




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##### 



Consolidated Net
    Income
   Critical
    Accounting Policies and Estimates
     Form 10-K,
  Allowance for
    Doubtful Accounts
        27




---



##### 



and/or
      Aggregate AccountBalances of
    Clientsin Bankruptcy orin/or Pending


Net Write-Offs


Bad Debt


Allowance forYear Ending

Collection/Litigation


of Client Accounts


Provision


Doubtful Accounts2006

$
6,098,000



181,000



622,000



2,716,0002007


9,363,000



4,574,000



6,142,000



4,284,0002008


8,417,000



5,304,000



4,234,000



3,214,000     Form 10-K
  Accrued
    Insurance Claims
    28




---



##### 



Asset
    Valuations and Review for Potential Impairment
   Liquidity and
    Capital Resources
   Operating
    Activities
    29




---



##### 



Investing
    Activities
   Financing
    Activities
   1st Quarter

2nd Quarter

3rd Quarter

4th QuarterCash dividend per common share

$   .13

$      .14

$      .15

$      .16Total cash dividends paid

$5,579,000

$6,023,000

$6,474,000

$6,907,000Record date

February 4

April 25

July 25

October 24Payment date

February 15

May 12

August 8

November 7           Contractual
    Obligations
   Payments Due by
    PeriodLess thanContractual
    Obligations

Total


1 year


1  3 years


3  5 years


More than
    5 yearsOperating Lease Obligations

$
2,229,000


$
974,000


$
1,199,000


$
56,000


$
-0-   Line of
    Credit
  30




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##### 



Covenant Description
    and Requirement

Status at
    December 31, 2008Commitment coverage ratio: cash and cash
    equivalents plus marketable securities must equal or exceed
    outstanding obligations under the line of credit by a multiple
    of 2

Commitment coverage is 2.72Tangible net worth: must exceed $149,000,000

Tangible net worth is $182,000,000     Accounts and
    Notes Receivable
 agreed-upon
   31




---



##### 



Insurance
    Programs
       and/or
  Capital
    Expenditures
  32




---



##### 



Material
    Off-Balance Sheet Arrangements
   Effects of
    Inflation
  33




---



##### 



Item 7A.
    Quantitative and
    Qualitative Disclosures About Market Risk.     Item 8.
    Financial
    Statements and Supplementary Data.  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public Accounting Firm

35Managements Report on Internal Control Over Financial
    Reporting

36Report of Independent Registered Public Accounting Firm (on
    Internal Control Over Financial Reporting)

37Consolidated Financial StatementsConsolidated Balance Sheets as of December 31, 2008 and 2007

38Consolidated Statements of Income for the Years Ended
    December 31, 2008, 2007 and 2006

39Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2008, 2007 and 2006

40Consolidated Statement of Changes in Stockholders Equity
    for the years Ended December 31, 2008, 2007 and 2006

41Notes to Consolidated Financial Statements for the Years Ended
    December 31, 2008, 2007 and 2006

42  34




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##### 



Report of
    Independent Registered Public Accounting Firm  
            
  
 35




---



##### 



Managements
    Annual Report on Internal Control Over Financial
    Reporting  13a-15(f) 15d-15(f)
                Signatures

SignaturesDaniel P. McCartney

Richard W. HudsonChief Executive Officer

Chief Financial OfficerFebruary 16, 2009

February 16, 2009  36




---



##### 



Report of
    Independent Registered Public Accounting Firm

The Stockholders and Board of Directors of

Healthcare Services Group, Inc.



We have audited Healthcare Services Group, Inc. and
    Subsidiaries (the Company) (a Pennsylvania
    Corporation) internal control over financial reporting as of
    December 31, 2008, based on criteria established in
    Internal Control  Integrated Frameworkissued
    by the Committee of Sponsoring Organizations of the Treadway
    Commission (COSO). Healthcare Services Group, Inc.s
    management is responsible for maintaining effective internal
    control over financial reporting and for its assessment of the
    effectiveness of internal control over financial reporting,
    included in the accompanying Managements Annual Report on
    Internal Control Over Financial Reporting. Our responsibility is
    to express an opinion on Healthcare Services Group, Inc.s
    internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether effective internal control
    over financial reporting was maintained in all material
    respects. Our audit included obtaining an understanding of
    internal control over financial reporting, assessing the risk
    that a material weakness exists, testing and evaluating the
    design and operating effectiveness of internal control based on
    the assessed risk, and performing such other procedures as we
    considered necessary in the circumstances. We believe that our
    audit provides a reasonable basis for our opinion.



A companys internal control over financial reporting is a
    process designed to provide reasonable assurance regarding the
    reliability of financial reporting and the preparation of
    financial statements for external purposes in accordance with
    generally accepted accounting principles. A companys
    internal control over financial reporting includes those
    policies and procedures that (1) pertain to the maintenance
    of records that, in reasonable detail, accurately and fairly
    reflect the transactions and dispositions of the assets of the
    company; (2) provide reasonable assurance that transactions
    are recorded as necessary to permit preparation of financial
    statements in accordance with generally accepted accounting
    principles, and that receipts and expenditures of the company
    are being made only in accordance with authorizations of
    management and directors of the company; and (3) provide
    reasonable assurance regarding prevention or timely detection of
    unauthorized acquisition, use, or disposition of the
    companys assets that could have a material effect on the
    financial statements.



Because of its inherent limitations, internal control over
    financial reporting may not prevent or detect misstatements.
    Also, projections of any evaluation of effectiveness to future
    periods are subject to the risk that controls may become
    inadequate because of changes in conditions, or that the degree
    of compliance with the policies or procedures may deteriorate.



In our opinion, Healthcare Services Group, Inc. and Subsidiaries
    maintained, in all material respects, effective internal control
    over financial reporting as of December 31, 2008, based on
    criteria established in Internal Control 
    Integrated Frameworkissued by COSO.



We also have audited, in accordance with the standards of the
    Public Company Accounting Oversight Board (United States), the
    consolidated balance sheets of the Company as of
    December 31, 2008 and 2007, and the related consolidated
    statements of income, cash flows, and stockholders equity,
    for each of the three years in the period ended
    December 31, 2008, and our report dated February 16,
    2009 expressed an unqualified opinion thereon.



(SIGNATURE)

New York, New York

February 16, 2009

37




---



##### 



Consolidated
    Balance Sheets  December 31,2008


2007AssetsCurrent Assets:Cash and cash equivalents

$
37,501,000


$
92,461,000Marketable securities, at fair value


49,414,000



Accounts and notes receivable, less allowance for doubtful
    accounts of $3,214,000 in 2008 and $4,284,000 in 2007


96,558,000



82,951,000Prepaid income taxes


2,838,000



Inventories and supplies


16,079,000



15,117,000Deferred income taxes






465,000Prepaid expenses and other


4,225,000



4,104,000Total current assets


206,615,000



195,098,000Property and Equipment:Laundry and linen equipment installations


1,767,000



1,718,000Housekeeping equipment and office furniture


16,365,000



16,588,000Autos and trucks


93,000



103,00018,225,000



18,409,000Less accumulated depreciation


14,296,000



14,106,0003,929,000



4,303,000GOODWILL Less accumulated amortization of $1,743,000 in 2008 and
    2007


15,020,000



15,020,000OTHER INTANGIBLE ASSETS Less accumulated amortization of
    $2,466,000 in 2008 and $1,409,000 in 2007


5,033,000



6,090,000NOTES RECEIVABLE  long term portion, net of
    discount


3,202,000



6,058,000DEFERRED COMPENSATION FUNDING


8,287,000



10,361,000DEFERRED INCOME TAXES  long term portion


6,386,000



6,349,000OTHER NONCURRENT ASSETS


89,000



89,000TOTAL ASSETS

$
248,561,000


$
243,368,000Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable

$
9,301,000


$
8,902,000Accrued payroll, accrued and withheld payroll taxes


14,365,000



11,613,000Other accrued expenses


679,000



1,338,000Income taxes payable






1,726,000Deferred income taxes


754,000



Accrued insurance claims


3,943,000



4,302,000Total current liabilities


29,042,000



27,881,000ACCRUED INSURANCE CLAIMS  long term portion


9,201,000



10,037,000DEFERRED COMPENSATION LIABILITY


8,636,000



10,732,000COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock, $.01 par value, 100,000,000 shares
    authorized, 45,563,000 shares issued in 2008 and 44,715,000
    in 2007


456,000



447,000Additional paid-in capital


84,421,000



75,064,000Retained earnings


137,741,000



136,110,000Common stock in treasury, at cost, 2,335,000 shares in 2008
    and 2,119,000 shares in 2007


(20,936,000
)


(16,903,000
)Total Stockholders Equity


201,682,000



194,718,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
248,561,000


$
243,368,000    38




---



##### 



Consolidated
    Statements of Income  Years Ended
    December 31,2008


2007


2006Revenues

$
602,718,000


$
577,721,000


$
511,631,000Operating costs and expenses:Cost of services provided


521,269,000



493,364,000



438,617,000Selling, general and administrative


39,523,000



40,284,000



37,196,000Other income:Investment and interest


1,349,000



4,022,000



4,905,000Income before income taxes


43,275,000



48,095,000



40,723,000Income taxes


16,661,000



18,517,000



15,271,000Net Income

$
26,614,000


$
29,578,000


$
25,452,000Basic earnings per Common Share

$
.62


$
.70


$
.62Diluted earnings per Common Share

$
.60


$
.67


$
.59Cash dividends per common share

$
.58


$
.42


$
.31Basic weighted average number of common shares outstanding


43,131,000



42,286,000



41,176,000Diluted weighted average number of common shares outstanding


44,025,000



43,847,000



43,147,000    39




---



##### 



Consolidated
    Statements of Cash Flows  Years Ended
    December 31,2008


2007


2006Cash flows from operating activities:Net Income

$
26,614,000


$
29,578,000


$
25,452,000Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


2,852,000



3,004,000



2,306,000Bad debt provision


4,234,000



6,142,000



622,000Deferred income taxes


1,182,000



(759,000
)


(1,386,000
)Stock-based compensation expense


563,000



291,000



481,000Amortization of premium on marketable securities


174,000







Unrealized gain on marketable securities


(1,146,000
)






Unrealized (gain) loss on deferred compensation fund investments


2,389,000



(426,000
)


(976,000
)Changes in operating assets and liabilities:Accounts and notes receivable


(17,841,000
)


(11,008,000
)


(9,422,000
)Inventories and supplies


(963,000
)


(2,477,000
)


(840,000
)Notes receivable  long term portion


2,856,000



1,803,000



(3,306,000
)Deferred compensation funding


(315,000
)


(1,684,000
)


(783,000
)Accounts payable and other accrued expenses


(85,000
)


(2,134,000
)


(774,000
)Accrued payroll, accrued and withheld payroll taxes


3,753,000



2,261,000



1,890,000Accrued insurance claims


(1,195,000
)


(1,151,000
)


413,000Deferred compensation liability


(1,725,000
)


1,106,000



3,285,000Income taxes payable


(1,726,000
)


1,452,000



(896,000
)Prepaid income taxes


(2,838,000
)






Prepaid expenses and other assets


(121,000
)


(227,000
)


54,000Net cash provided by operating activities


16,662,000



25,771,000



16,120,000Cash flows from investing activities:Disposals of fixed assets


157,000



132,000



151,000Additions to property and equipment


(1,577,000
)


(1,505,000
)


(1,854,000
)Purchases of marketable securities, net


(48,442,000
)






Cash paid for acquisition






(477,000
)


(9,736,000
)Net cash used in investing activities


(49,862,000
)


(1,850,000
)


(11,439,000
)Cash flows from financing activities:Treasury stock transactions in benefit plans






1,142,000



(261,000
)Acquisition of treasury stock


(4,652,000
)






(8,227,000
)Dividends paid


(24,983,000
)


(17,736,000
)


(12,627,000
)Reissuance of treasury stock pursuant to DividendReinvestment Plan


61,000



59,000



44,000Repayment of debt assumed in acquisition










(6,163,000
)Tax benefit from equity compensation plans


4,267,000



6,616,000



1,247,000Proceeds from the exercise of stock options


3,547,000



5,462,000



3,298,000Net cash used in financing activities


(21,760,000
)


(4,457,000
)


(22,689,000
)Net increase (decrease) in cash and cash equivalents


(54,960,000
)


19,464,000



(18,008,000
)Cash and cash equivalents at beginning of the year


92,461,000



72,997,000



91,005,000Cash and cash equivalents at end of the year

$
37,501,000


$
92,461,000


$
72,997,000Supplementary Cash Flow Information:Issuance of 61,000, 65,000, and 96,000 shares of CommonStock in 2008, 2007 and 2006, respectively, pursuant to Employee
    Stock Plans

$
1,293,000


$
1,254,000


$
728,000Reclassification of deferred compensation obligation pursuant to
    Plan amendment

$



$
2,866,000


$
Issuance of 554,000 shares of Common Stock related to
    acquisition

$



$



$
8,516,000    40




---



##### 



Consolidated
    Statements of Stockholders Equity  Years Ended
    December 31, 2008, 2007 and 2006Additional


TotalCommon Stock


Paid-in


Retained


Treasury


StockholdersShares


Amount


Capital


Earnings


Stock


EquityBalance, December 31, 2005


43,016,000



431,000



48,459,000



112,299,000



(13,026,000
)


148,163,000Cumulative effect adjustment (See Note 13)














(856,000
)






(856,000
)Net income for the year














25,452,000







25,452,000Exercise of stock options and other share-based compensation,
    net of 6,000 shares tendered for payment


483,000



4,000



3,294,000











3,294,000Tax benefit arising from stock option transactions










1,247,000











1,247,000Shares issued pursuant to acquisition (554,000 shares)










5,429,000







3,087,000



8,516,000Acquisition of treasury stock (503,000 shares)


















(8,227,000
)


(8,227,000
)Shares purchased and shares sold in employee Deferred
    Compensation Plan and other Plan and other benefit plans
    (2,000 shares)


















(261,000
)


(261,000
)Shares issued pursuant to Employee Stock Plans
    (96,000 shares)










210,000







518,000



728,000Cash dividends  $.31 per common share














(12,627,000
)






(12,627,000
)Shares issued pursuant to Dividend Reinvestment Plan
    (3,000 shares)










25,000







19,000



44,000Balance, December 31, 2006


43,499,000



435,000



58,664,000



124,268,000



(17,890,000
)

$
165,477,000Net income for the year














29,578,000







29,578,000Exercise of stock options and other stock-based compensation,
    net of 23,000 shares tendered for payment


1,216,000



12,000



5,450,000











5,462,000Tax benefit arising from stock option transactions










6,616,000











6,616,000Shares purchased and shares sold in employee Deferred
    Compensation Plan and other benefit plans (89,000 shares)










690,000







452,000



1,142,000Shares issued pursuant to Employee Stock Plans
    (65,000 shares)










745,000







509,000



1,254,000Reclassification of deferred compensation plan liability










2,866,000











2,866,000Cash dividends  $.42 per common share














(17,736,000
)






(17,736,000
)Shares issued pursuant to Dividend Reinvestment Plan
    (3,000 shares)










33,000







26,000



59,000Balance, December 31, 2007


44,715,000



447,000



75,064,000



136,110,000



(16,903,000
)

$
194,718,000Net income for the year














26,614,000







26,614,000Exercise of stock options and other stock-based compensation,
    net of 7,000 shares tendered for payment


848,000



9,000



3,538,000











3,547,000Tax benefit arising from stock option transactions










4,267,000











4,267,000Purchase of common stock for treasury (296,000 shares)


















(4,652,000
)


(4,652,000
)Share-based compensation expense  stock options










447,000











447,000Treasury shares issued for Deferred Compensation Plan funding
    and redemptions(35,000 shares)










269,000







101,000



370,000Shares issued pursuant to Employee Stock Plans
    (61,000 shares)










806,000







487,000



1,293,000Cash dividends  $.58 per common share














(24,983,000
)






(24,983,000
)Shares issued pursuant to Dividend Reinvestment Plan
    (4,000 shares)










30,000







31,000



61,000Balance, December 31, 2008


45,563,000


$
456,000


$
84,421,000


$
137,741,000


$
(20,936,000
)

$
201,682,000    41




---



##### 



Notes to
    Consolidated Financial Statements  Note 1 Summary
    of Significant Accounting Policies
  Nature of
    Operations
   90-day
          Principles of
    Consolidation
   Fair Value of
    Financial Instruments
  42




---



##### 



Cash and Cash
    Equivalents
   Investments in
    Marketable Securities
          43




---



##### 



Inventories and
    Supplies
 first-in,
  Property and
    Equipment
   Revenue
    Recognition
     Income
    Taxes
     Earnings per
    Common Share
   Share-Based
    Compensation
  44




---



##### 



Advertising
    Costs
   Impairment of
    Long-Lived Assets
   Identifiable
    Intangible Assets and Goodwill
      45




---



##### 



Treasury
    Stock
   Three-for-Two
    Stock Splits
 three-for-two three-for-two
  Use of Estimates
    in Financial Statements
   Concentrations of
    Credit Risk
      46




---



##### 



Major
    Client
   Reportable
    SegmentsRevenues


Amounts due at
    December 31,Total Revenues


Housekeeping


Food


% of accounts
    receivable balance2008


15
%


14
%


17
%

less than 1%2007


16
%


15
%


21
%

less than 1%2006


18
%


16
%


26
%

less than 1%     Recent Accounting
    Pronouncements
   No. 142-3, (FSP 142-3), 142-3 FSP 142-3,
 47




---



##### 



Note 2 Acquisition
     Accounts and notes receivable, net

$
10,441,000Other assets


312,000Fixed assets


382,000Identifiable Intangible Assets


7,500,000Goodwill


13,409,000Total assets acquired


32,044,000Accounts payable, accrued expenses and other liabilities


(13,315,000
)Net assets acquired

$
18,729,000    48




---



##### 



Customer


Non-CompeteYear

Relationships


Agreements


Total2009

$
957,000


$
100,000


$
1,057,0002010

$
957,000


$
100,000


$
1,057,0002011

$
957,000


$
100,000


$
1,057,0002012

$
957,000


$
100,000


$
1,057,0002013

$
638,000


$
100,000


$
738,000     Note 3Fair
    Value Measurements
   As of
    December 31, 2008Fair Value
    Measurement Using:SignificantQuoted Prices


Other


Significantin Active


Observable


UnobservableCarrying





Markets


Inputs


InputsAmount


Total Fair Value


(Level 1)


(Level 2)


(Level 3)Financial AssetsMarketable securities

$
49,414,000


$
49,414,000


$
49,414,000


$



$
Deferred compensation funding

$
8,287,000


$
8,287,000


$
8,287,000


$



$
   As of
    December 31, 2007Fair Value
    Measurement Using:SignificantQuoted Prices


Other


Significantin Active


Observable


UnobservableCarrying





Markets


Inputs


InputsAmount


Total Fair Value


(Level 1)


(Level 2)


(Level 3)Financial AssetsDeferred compensation funding

$
10,361,000


$
10,361,000


$
10,361,000


$



$
    49




---



##### 



Level 1

Fair Value Measurements Marketable securities- fair values of
    these investments are based on quoted market prices. Such
    investments as of December 31, 2008 consisted of tax-exempt
    municipal bond investmentsDeferred compensation fund- fair value of these investments are
    based on quoted market prices. Such investments as of
    December 31, 2008 and 2007 consisted of cash and cash
    equivalents, and mutual fund and equity investmentsLevel 2

Fair Value MeasurementsNoneLevel 3

Fair Value MeasurementsNone       Gross


GrossAmortized


Unrealized


Unrealized


EstimatedDecember 31,
    2008

Cost


Gains


Losses


Fair ValueType of security:Municipal bonds

$
48,268,000


$
1,146,000






$
49,414,000Total debt securities

$
48,268,000


$
1,146,000






$
49,414,000   Gross


GrossAmortized


Unrealized


Unrealized


EstimatedDecember 31,
    2007

Cost


Gains


Losses


Fair ValueType of security:Municipal bonds














Total debt securities














   50




---



##### 



December 31,Contractual maturity:

2008


2007Maturing in one year or less

$
694,000


$
Maturing after one year through three years


31,428,000



Maturing after three years


17,292,000



Total debt securities

$
49,414,000


$
   December 31,Classification in
    consolidated Balance Sheet

2008


2007Cash and cash equivalents

$
37,501,000


$
92,461,000Marketable securities


49,414,000



86,915,000



92,461,000Less cash


(37,501,000
)


(92,461,000
)$
49,414,000


$
   Note 4 Allowance
    for Doubtful Accounts
        51




---



##### 



Impaired Notes
    Receivable
       Impaired Notes
    ReceivableBalance








BalanceBeginning








End ofof Year


Additions


Deductions


Year2008

$
400,000


$
3,000,000


$
400,000


$
3,000,0002007

$
200,000


$
400,000


$
200,000


$
400,0002006

$
2,500,000


$



$
2,300,000


$
200,000   Reserve for Impaired
    Notes ReceivableBalance








BalanceBeginning








End ofof Year


Additions


Deductions


Year2008

$
200,000


$
1,300,000


$
200,000


$
1,300,0002007

$
200,000


$
200,000


$
200,000


$
200,0002006

$
1,300,000


$



$
1,100,000


$
200,000    52




---



##### 



Note 5 Lease
    Commitments
   OperatingYear

Leases2009

$
974,0002010


797,0002011


268,0002012


134,0002013


56,000Total minimum lease payments

$
2,229,000     Note 6 Share-Based
    Compensation
 Non-Employee (
    share-based
  Stock Option
    Plans
  53




---



##### 



Incentive Stock
    Options
     2008


2007


2006Weighted





Weighted





WeightedAverage


Number


Average


Number


Average


NumberPrice


of Shares


Price


of Shares


Price


of SharesBeginning of period

$
7.63



999,000


$
6.85



1,754,000


$
6.93



2,294,000Granted


20.89



274,000















Cancelled


8.79



(39,000
)


8.85



(1,000
)


6.45



(126,000
)Exercised


6.83



(206,000
)


5.81



(754,000
)


7.45



(414,000
)End of period

$
11.25



1,028,000


$
7.63



999,000


$
6.85



1,754,000       Options Outstanding


Options ExercisableAverage


Weighted





WeightedRemaining


Average





AverageNumber


Contractual


Exercise


Number


ExerciseExercise Price Range

Outstanding


Life


Price


Exercisable


Price$1.50  2.74


61,000



2.43


$
2.26



61,000


$
2.26$3.01  5.53


329,000



4.45



4.68



329,000



4.68$9.10  9.10


173,000



5.99



9.10



173,000



9.10$13.81  13.81


199,000



2.03



13.81



199,000



13.81$20.89  20.89


266,000



9.01



20.89







1,028,000



5.30


$
11.25



762,000


$
7.88   Non-Qualified
    Options
  54




---



##### 



2008


2007


2006Weighted





Weighted





WeightedAverage


Number


Average


Number


Average


NumberPrice


of Shares


Price


of Shares


Price


of SharesBeginning of period

$
5.43



1,413,000


$
4.83



1,896,000


$
4.79



1,971,000Granted


20.89



103,000















Cancelled






















Exercised


3.40



(650,000
)


3.10



(483,000
)


3.63



(75,000
)End of period

$
8.79



866,000


$
5.43



1,413,000


$
4.83



1,896,000       Options Outstanding


Options ExercisableAverage


Weighted





WeightedRemaining


Average





AverageNumber


Contractual


Exercise


Number


ExerciseExercise Price Range

Outstanding


Life


Price


Exercisable


Price$2.74  2.74


153,000



2.93


$
2.74



153,000


$
2.74$3.75  5.53


291,000



4.60



4.86



291,000



4.86$9.10  9.10


166,000



5.99



9.10



166,000



9.10$13.81  13.81


153,000



2.00



13.81



153,000



13.81$20.89  20.89


103,000



9.00



20.89







866,000



4.64


$
8.79



763,000


$
7.15   Fair Value
    Valuation Estimates
   2008Risk-Free Interest-Rate


4.19
%Weighted Average Expected Life  Incentive Options


4.5 yearsNon-Qualified Options


4.5 yearsExpected Volatility


35.0
%Dividend Yield


1.98
%Forfeiture rate


3.10
%  55




---



##### 



Other
    Information
   2008


2007


2006Aggregate intrinsic value of stock options exercised

$
11,599,000


$
18,084,000


$
3,689,000Aggregate intrinsic value of outstanding stock options

$
12,833,000


$
35,723,000


$
49,322,000Total grant-date fair value of stock options granted

$
2,237,000



Not applicable



Not applicableTotal fair value of options vested during period

$
-0-


$
-0-


$
-0-     Employee Stock
    Purchase Plan
     ESPP Annual Offering2008

2007

2006Common shares purchased

49,000

61,000

65,000Per common share purchase price

$13.54

$16.41

$11.95Amount expensed under ESPP

$115,000

$291,000

$481,000Common shares date of issue

January 14, 2009

January 14, 2008

January 17, 2007   Deferred
    Compensation Plan
  56




---



##### 



SERP Plan Year2008

2007

2006Amount of company match expensed under SERP

$353,000

$371,000

$353,000Treasury shares issued to fund SERP expense

22,000

18,000

18,000SERP trust account balance at December 31

$10,828,000(1)

$13,578,000(1)

$11,705,000(1)Unrealized gains (loss) recorded in SERP liability account

$(2,389,000)(2)

$241,000(2)

$1,944,000(2)    (1)

    
    SERP trust account investments are recorded at their fair value
    which is based on quoted market prices. Differences between such
    amounts in the table above and the deferred compensation funding
    asset reported on our Consolidated Balance Sheets represent the
    value of our Common Stock held in the Plans
    participants trust account and reported by us as treasury
    stock in our Consolidated Balance Sheets.(2)

    
    Includes unrecognized loss on our Common Stock held in
    Plans participants trust account of $185,000 in the
    2007 SERP Plan year, and unrecognized gains on our Common Stock
    held in the Plans participants trust account of
    $970,000 for the 2006 SERP Plan year. The Common Stock
    unrecognized loss in 2007 represents such loss as of
    May 31, 2007, the date of the modification of the SERP Plan.      Note 7 Other
    Employee Benefit Plans
  Retirement
    Savings Plan
  57




---



##### 



Note 8 Dividends
   2008 Cash Dividend
    Payments

1st Quarter

2nd Quarter

3rd Quarter

4th QuarterCash dividend per common share

$.13

$.14

$.15

$.16Total cash dividends paid

$5,579,000

$6,023,000

$6,474,000

$6,907,000Record date

February 4

April 25

July 25

October 24Payment date

February 15

May 12

August 8

November 7       three-for-two three-for-two
  Note 9 Income
    Taxes
   Year Ended
    December 31,2008


2007


2006Current:Federal

$
12,454,000


$
15,608,000


$
14,131,000State


3,225,000



3,529,000



2,526,00015,679,000



19,137,000



16,657,000Deferred:Federal


815,000



(513,000
)


(1,138,000
)State


167,000



(107,000
)


(248,000
)982,000



(620,000
)


(1,386,000
)Tax Provision

$
16,661,000


$
18,517,000


$
15,271,000    58




---



##### 



Year Ended
    December 31,2008


2007Net current deferred assets (liabilities):Allowance for doubtful accounts

$
1,292,000


$
1,892,000Accrued insurance claims  current


1,585,000



1,682,000Expensing of housekeeping supplies


(2,970,000
)


(2,848,000
)Other


(661,000
)


(261,000
)$
(754,000
)

$
465,000Net noncurrent deferred tax assets:Deferred compensation

$
4,922,000


$
4,965,000Non-deductible reserves


39,000



59,000Depreciation of property and equipment


(626,000
)


(483,000
)Accrued insurance claims  noncurrent


3,699,000



3,926,000Amortization of intangibles


(1,742,000
)


(2,143,000
)Other


94,000



25,000$
6,386,000


$
6,349,000     Year Ended
    December 31,2008


2007


2006Tax expense computed at statutory rate

$
15,146,000


$
16,832,000


$
14,253,000Increases (decreases) resulting from:State income taxes, net of federal tax benefit


2,201,000



2,130,000



1,198,000Federal jobs credits


(767,000
)


(379,000
)


(183,000
)Tax exempt interest


(339,000
)


(414,000
)


(373,000
)Other, net


420,000



348,000



376,000$
16,661,000


$
18,517,000


$
15,271,000      59




---



##### 



and/or
      Note 10Related
    Party Transactions
     Note 11Segment
    Information
  Reportable
    Operating Segments
    60




---



##### 



Corporate andHousekeeping


Food


Eliminations


TotalYear Ended December 31, 2008Revenues

$
488,954,000


$
115,409,000


$
(1,645,000
)

$
602,718,000Income before income taxes


46,600,000



3,271,000



(6,596,000
)(1)


43,275,000Depreciation and amortization


2,246,000



238,000



368,000



2,852,000Total assets


102,511,000



25,583,000



120,467,000(2
)


248,561,000Capital Expenditures

$
1,266,000


$
106,000


$
205,000


$
1,577,000Year Ended December 31, 2007Revenues

$
467,833,000


$
110,014,000


$
(126,000
)

$
577,721,000Income before income taxes


44,851,000



2,829,000



415,000(1
)


48,095,000Depreciation and amortization


2,311,000



248,000



445,000



3,004,000Total assets


100,529,000



24,873,000



117,966,000(2
)


243,368,000Capital Expenditures

$
1,049,000


$
70,000


$
386,000


$
1,505,000Year Ended December 31, 2006Revenues

$
412,271,000


$
101,379,000


$
(2,019,000
)

$
511,631,000Income before income taxes


37,857,000



3,398,000



(532,000
)(1)


40,723,000Depreciation


1,356,000



136,000



814,000



2,306,000Total assets


101,066,000



23,126,000



91,364,000
(2)


215,556,000Capital Expenditures

$
1,359,000


$
16,000


$
479,000


$
1,854,000    (1)

    
    represents primarily corporate office cost and related overhead,
    recording of transactions at the reportable segment level which
    use methods other than generally accepted accounting principles,
    as well as consolidated subsidiaries operating expenses
    that are not allocated to the reportable segments, net of
    investment and interest income.(2)

    
    represents primarily cash and cash equivalents, marketable
    securities, deferred income taxes and other current and
    noncurrent assets.  Total Revenues
    from Clients
   Year Ended
    December 31,2008


2007


2006Housekeeping services

$
334,034,000


$
325,033,000


$
293,374,000Laundry and linen services


151,291,000



140,531,000



116,254,000Food services


115,165,000



110,002,000



99,513,000Maintenance services and Other


2,228,000



2,155,000



2,490,000$
602,718,000


$
577,721,000


$
511,631,000  61




---



##### 



Major
    Client
   Note 12 Earnings
    Per Common Share
   Year Ended
    December 31, 2008Income


Shares


Per-Share(Numerator)


(Denominator)


AmountNet Income

$
26,614,000Basic earnings per common share


26,614,000



43,131,000


$
.62Effect of dilutive securities: Options






894,000



(.02
)Diluted earnings per common share

$
26,614,000



44,025,000


$
.60   Year Ended
    December 31, 2007Income


Shares


Per-Share(Numerator)


(Denominator)


AmountNet Income

$
29,578,000Basic earnings per common share


29,578,000



42,286,000


$
.70Effect of dilutive securities: Options






1,561,000



(.03
)Diluted earnings per common share

$
29,578,000



43,847,000


$
.67   Year Ended
    December 31, 2006Income


Shares


Per-Share(Numerator)


(Denominator)


AmountNet Income

$
25,452,000Basic earnings per common share


25,452,000



41,176,000


$
.62Effect of dilutive securities: Options






1,971,000



(.03
)Diluted earnings per common share

$
25,452,000



43,147,000


$
.59    62




---



##### 



Note 13Other
    Contingencies
           Note 14Cumulative
    Effect of Adjustment to Deferred Compensation
    Liability
 No. 97-14 No. 97-14),
 63




---



##### 



Note 15Accrued
    Insurance Claims
   and/or
     64




---



##### 



Note 16Selected
    Quarterly Financial Data (Unaudited)
  Three Months EndedMarch 31


June 30


September 30


December 312008Revenues

$
147,259,000


$
147,918,000


$
152,978,000


$
154,563,000Operating costs and expenses

$
136,433,000


$
137,198,000


$
143,843,000


$
143,317,000Income before income taxes

$
11,150,000


$
11,305,000


$
11,868,000


$
11,842,000Net income

$
6,857,000


$
6,953,000


$
5,522,000


$
7,283,000Basic earnings per common
    share(1)

$
.16


$
.16


$
.13


$
.17Diluted earnings per common
    share(1)

$
.16


$
.16


$
.13


$
.17Cash dividends per common
    share(1)

$
.13


$
.14


$
.15


$
.162007Revenues

$
140,679,000


$
142,377,000


$
146,081,000


$
148,584,000Operating costs and expenses

$
129,825,000


$
131,190,000


$
135,341,000


$
137,292,000Income before income taxes

$
12,115,000


$
12,234,000


$
11,868,000


$
11,878,000Net income

$
7,450,000


$
7,524,000


$
7,299,000


$
7,305,000Basic earnings per common
    share(1)

$
.18


$
.18


$
.17


$
.17Diluted earnings per common
    share(1)

$
.17


$
.17


$
.17


$
.17Cash dividends per common
    share(1)

$
.09


$
.10


$
.11


$
.12    (1)

    
    Year-to-date earnings and cash dividends per common share
    amounts may differ from the sum of quarterly amounts due to
    rounding. 65




---



##### 



Item 9.
    Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure.    Item 9A.
    Controls and Procedures.
  Evaluation of
    Disclosure Controls and Procedures
 Rules 13a-15 15a-15,
  Design and
    Evaluation of Internal Control Over Financial
    Reporting
 Form 10-K Form 10-K
  Changes in
    Internal Control over Financial Reporting
 Form 10-K
  Item 9B.
    Other
    Information.   Part III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.   Item 11.
    Executive
    Compensation.  66




---



##### 



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.   Item 13.
    Certain
    Relationships and Related Transactions.   Item 14.
    Principal
    Accounting Fees and Services   Part IV
  Item 15.
    Exhibits and
    Financial Statement Schedules  (a)  Index
    of Financial Statements
 10-K Item 8-
  (b)  Index
    of Exhibits
   ExhibitNumber

Description3.1

Articles of Incorporation of the Registrant, as amended, are
    incorporated by reference to Exhibit 4.1 to the
    Companys Registration Statement on
    Form S-2
    (File
    No. 33-35798).3.2

Amendment to Articles of Incorporation of the Registrant as of
    May 30, 2000, is incorporated by reference to
    Exhibit 3.2 to the Companys
    Form 10-K
    for the period ended December 31, 20013.3

Amendment to Articles of Incorporation of the Registrant as of
    May 22, 2007, is incorporated by reference to
    Exhibit 3.1 to the Companys
    Form 8-K
    filed May 24, 2007.4.1

Specimen Certificate of the Common Stock, $.01 par value,
    of the Registrant is incorporated by reference to
    Exhibit 4.1 of Registrants Registration Statement on
    Form S-18
    (Commission File
    No. 2-87625-W).4.2**

Employee Stock Purchase Plan of the Registrant is incorporated
    by reference to Exhibit 4(a) of Registrants
    Registration Statement on
    Form S-8
    (Commission File
    No. 333-92835).4.3**

Amendment to Employee Stock Purchase Plan is incorporated by
    reference to Exhibit 4.3 to the Companys
    Form 10-K
    for the period ended December 31, 2003.4.4**

Deferred Compensation Plan is incorporated by reference to
    Exhibit 4(b) of Registrants Registration Statement on
    Form S-8
    (Commission File
    No. 333-92835).10.1**

1995 Incentive and Non-Qualified Stock Option Plan, as amended
    is incorporated by reference to Exhibit 4(d) of the
    Form S-8
    filed by the Registrant, Commission File
    No. 33-58765.10.2**

Amendment to the 1995 Employee Stock Option Plan is incorporated
    by reference to Exhibit 4(a) of Registrants
    Registration Statement on
    Form S-8
    (Commission File
    No. 333-46656). 67




---



##### 



ExhibitNumber

Description10.3**

1996 Non-Employee Directors Stock Option Plan, Amended and
    Restated as of October 28, 1997 is incorporated by
    reference to Exhibit 10.6 of
    Form 10-Q
    Report for the quarter ended September 30, 1997 filed by
    Registrant on November 14, 1997).10.4**

Form of Non-Qualified Stock Option Agreement granted to certain
    Directors is incorporated by reference to Exhibit 10.9 of
    Registrants Registration Statement on
    Form S-1
    (Commission
    File No. 2-98089).10.5**

Amended and restated 2002 Stock Option Plan is incorporated by
    reference to Exhibit 4(1) to the Companys
    Registration Statement on
    Form S-8
    (Commission File
    No. 333-127747).10.7

Healthcare Services Group, Inc. Dividend Reinvestment Plan is
    incorporated by reference to the Companys Registration
    Statement on
    Form S-3
    (Commission File
    No. 333-108182).14.

Code of Ethics and Business Conduct. Such document is available
    at our website www.hcsgcorp.com21.

List of subsidiaries is filed herewith in Part I,
    Item I.23.

Consent of Independent Registered Public Accounting Firm.31.1

Certification of Principal Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act.31.2

Certification of Principal Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act.32.1

Certification of the Principal Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act.32.2

Certification of the Principal Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act.    **
    
    indicates that exhibit is a management contract or a management
    compensatory plan or arrangement.  (c)  Financial
    Statement Schedules
  68




---



##### 



Signatures
     
  By:
    /s/  Daniel
    P. McCartney        Signature

Title

Date/s/  Daniel
    P. McCartneyDaniel
    P. McCartney

Chief Executive
    Officer and Chairman

February 16, 2009/s/  Joseph
    F. McCartneyJoseph
    F. McCartney

Director and Vice
    President

February 16, 2009/s/  Barton
    D. WeismanBarton
    D. Weisman

Director

February 16, 2009/s/  Robert
    L. FromeRobert
    L. Frome

Director

February 16, 2009/s/  Thomas
    A. CookThomas
    A. Cook

Director and President

February 16, 2009/s/  John
    M. BriggsJohn
    M. Briggs

Director

February 16, 2009/s/  Robert
    J. MossRobert
    J. Moss

Director

February 16, 2009/s/  Dino
    D. OttavianoDino
    D. Ottaviano

Director

February 16, 2009/s/  Richard
    W. HudsonRichard
    W. Hudson

Chief Financial
    Officer and Secretary

February 16, 2009  69