##### Table of Contents





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,
    2009ORo

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(Address of principal
    executive offices)

19020(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   þ o
  o o
  þ o
  Regulation S-K Form 10-K þ
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### Table of Contents





Part I
    Item I.Business.
  (a)
    General        (b)
    Segment
    Information  Form 10-K
  (c)
    Description
    of Services  General
     2




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##### Table of Contents



90-day
        Housekeeping
  Housekeeping services. on-site on-site on-site
  Laundry and linen services.
 3




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##### Table of Contents



Maintenance and other services.
  Laundry installation sales.
    Dietary
  Dietary services. On-site
   4




---



##### Table of Contents



Operational
    Management Structure
    
   on-site on-site and/or
  Market
  not-for-profit,
 5




---



##### Table of Contents



Marketing
    and Sales
    on-site
  Government
    Regulation of Clients
       6




---



##### Table of Contents



and/or
  Service
    Agreements/Collections
  on-site
  90-day
  time-to-time
     7




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##### Table of Contents



Schedule II-Valuation
  Competition
    Employees
  on-site
   8




---



##### Table of Contents



(d)
    Financial
    Information About Geographic Areas    (e)
    Available
    Information  1-800-SEC-0330.
  Website
    Access
  www.hcsgcorp.com.
  Item 1A.  Risk
    Factors.
      We have
    one client, a nursing home chain, which due to its significant
    contribution to our total revenues, we consider a major
    client.
   9




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##### Table of Contents



Although
    we expect our acquisition of Contract Environmental Services,
    Inc. will result in benefits to our Company, those benefits may
    not occur, or may be delayed, because of integration and other
    challenges associated with the acquisition.
   
    potential loss of key employees and management;
    integration of acquired personnel into our culture and
    philosophies;
    diversion of management focus and attention;
    assumption of liabilities and potentially unknown liabilities
    including past failures to comply with healthcare or other
    authorities regulations;
    potential loss of clients acquired through the acquisition if
    there were changes in management of CES or if our operations do
    not meet the financial or service expectations of such clients.  Our
    clients are concentrated in the health care industry which is
    currently undergoing considerable legislative proposals to
    reform it.
    We have
    clients located in many states which have had and may continue
    to experience significant budget deficits and such deficits may
    result in reduction of reimbursements to nursing
    homes.
   10




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##### Table of Contents



We have a
    Paid Loss Retrospective Insurance Plan for general liability and
    workers compensation insurance.
  and/or
  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
 11




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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.
    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.
         12




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Item 3.  Legal
    Proceedings.
  and/or
  Item 4.  Submission
    of Matters to a Vote of Security Holders.
   13




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##### Table of Contents



Part II
  Item 5.  Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.
  (a)
    Market
    Information      2009

2009High

Low1st Qtr.

$
16.44


$
13.812nd Qtr.

$
19.73


$
14.323rd Qtr.

$
19.42


$
17.084th Qtr.

$
22.00


$
17.88   2008

2008High

Low1st Qtr.

$
24.94


$
19.782nd Qtr.

$
20.90


$
14.503rd Qtr.

$
20.02


$
14.684th Qtr.

$
18.09


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

Payment
    Date

Record
    Date1st Quarter

$
.17


February 20

February 62nd Quarter

$
.18


May 15

April 243rd Quarter

$
.19


August 7

July 244th Quarter

$
.20


November 6

October 23  14




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##### Table of Contents



three-for-two
    (d)
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans    Number of
    SecuritiesRemaining
    Availablefor FutureNumber of



Issuance UnderSecurities to
    be



EquityIssued Upon

Weighted-Average

Compensation
    PlansExercise of

Exercise Price
    of

(ExcludingOutstanding
    Options,

Outstanding
    Options,

SecuritiesWarrants and
    Rights

Warrants and
    Rights

Reflected in
    ColumnPlan
    Category

(a)

(b)

(a))(c)Equity compensation plans approved by security holders


2,049,000
(1)

$
11.33



4,216,000
(2)Equity compensation plans not approved by security holders


N/A



N/A



N/ATotal


2,049,000


$
11.33



4,216,000  (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 2,014,000 shares available for future
    grant under the Companys Stock Option Plans. Also includes
    1,845,000 and 357,000 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. 15




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##### Table of Contents



(e)
    Performance
    Graph  5-year 12/31/2004 12/31/2009.
  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
  
      ©
  12/04



12/05



12/06



12/07



12/08



12/09Healthcare Services Group, Inc.



100.00




151.58




216.36




242.40




188.75




264.92S&P 500



100.00




104.91




121.48




128.16




80.74




102.11S&P Health Care Distributors



100.00




129.26




127.51




132.80




83.39




121.38   The stock price performance included in this graph is not
    necessarily indicative of future price performance.
 16




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##### Table of Contents



Item 6.
    Selected
    Financial Data.  Form 10-K
  (in thousands
    except for per share data)Years Ended December
    31:2009


2008


2007


2006


2005Selected Operating Results:Total revenue

$
692,695


$
602,718


$
577,721


$
511,631


$
466,291Net income

$
30,342


$
26,614


$
29,578


$
25,452


$
19,096Basic earnings per Common Share

$
.70


$
.62


$
.70


$
.62


$
.47Diluted earnings per Common Share

$
.69


$
.60


$
.67


$
.59


$
.45Selected Balance Sheet Data:Total assets

$
265,892


$
248,561


$
243,368


$
215,556


$
188,430Stockholders equity

$
208,774


$
201,682


$
194,718


$
165,477


$
148,163Selected Other Financial Data:Working capital

$
177,453


$
177,573


$
167,217


$
140,627


$
142,535Cash dividends per common share

$
.74


$
.58


$
.42


$
.31


$
.20Weighted average number of common shares outstanding for basic
    EPS


43,584



43,131



42,286



41,176



40,381Weighted average number of common shares outstanding for diluted
    EPS


44,286



44,025



43,847



43,147



42,480   Item 7.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation.
  Cautionary
    Statement Regarding Forward Looking Statements
   17




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Results
    of Operations
      Overview
     18




---



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90-day
           19




---



##### Table of Contents



available-for-sale
  Consolidated
    Operations
    Relation to
    Consolidated RevenuesYears Ended
    December 31,2009


2008


2007Revenues


100.0
%


100.0
%


100.0
%Operating costs and expenses:Costs of services provided


86.3



86.5



85.4Selling, general and administration


7.3



6.5



7.0Investment and interest income


.7



.2



.7Income before income taxes


7.1



7.2



8.3Income taxes


2.7



2.8



3.2Net income


4.4
%


4.4
%


5.1
%  20




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##### Table of Contents



2009
    Compared with 2008
    Reportable
    SegmentsHousekeeping

DietaryPercentincrease

Corporate andConsolidated

(decrease)

eliminations

Amount

%incr

Amount

%incrRevenues

$
692,695,000



14.9
%

$
127,000


$
532,723,000



9.0
%

$
159,845,000



38.5
%Cost of services provided


597,715,000



14.7



(34,696,000
)


480,348,000



8.6



152,063,000



35.6Selling, general and administrative


50,269,000



27.2



50,269,000











Investment and interest income


4,624,000



242.8



4,624,000











Income before income taxes

$
49,335,000



14.0
%

$
(10,822,000
)

$
52,375,000



12.4
%

$
7,782,000



137.9
%   Revenues
  Consolidated
     21




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##### Table of Contents



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

2009%

2008%

Incr/(Decr)%Bad debt provision


.3



.7



(.4
)Workers compensation and general liability insurance


3.9



3.4



.5       Reportable
    Segments
   22




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##### Table of Contents



Cost of Services
    Provided-Key Indicators

2009%

2008%

Incr
    (Decr)%Housekeeping labor and other labor costs


81.3



81.4



(.1
)Housekeeping segment supplies


6.4



6.2



.2Dietary labor and other labor costs


52.5



53.2



(.7
)Dietary segment supplies


40.0



40.1



(.1
)        23




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##### Table of Contents



Consolidated
    Selling, General and Administrative Expense
  year-to-year
  Consolidated
    Investment and Interest Income
    Income
    before Income Taxes
  Consolidated
    Reportable
    Segments
      Consolidated
    Income Taxes
   24




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##### Table of Contents



Consolidated
    Net Income
    2008
    Compared with 2007
    Reportable
    SegmentsHousekeeping

DietaryPercentincrease

Corporate andConsolidated

(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
       25




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##### Table of Contents



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



1.0Dietary labor and other labor costs


53.2



54.9



(1.7
)Dietary segment supplies


40.1



38.6



1.5    26




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##### Table of Contents



Consolidated
    Selling, General and Administrative Expense
    Consolidated
    Investment and Interest Income
   27




---



##### Table of Contents



Income
    before Income Taxes
  Consolidated
    Reportable
    Segments
      Consolidated
    Income Taxes
    Consolidated
    Net Income
    Critical
    Accounting Policies and Estimates
      Form 10-K,
 28




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##### Table of Contents



Allowance
    for Doubtful Accounts
        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
    Accounts2007

$
9,363,000


$
4,574,000


$
6,142,000


$
4,284,0002008

$
8,417,000


$
5,304,000


$
4,234,000


$
3,214,0002009

$
9,874,000


$
978,000


$
2,404,000


$
4,640,000    29




---



##### Table of Contents



Form 10-K
  Accrued
    Insurance Claims
  and/or
      Asset
    Valuations and Review for Potential Impairment
   30




---



##### Table of Contents



Liquidity
    and Capital Resources
    Operating
    Activities
      Investing
    Activities
    Financing
    Activities
      1st
    Quarter

2nd
    Quarter

3rd
    Quarter

4th
    QuarterCash dividend per common share

$
.17


$
.18


$
.19


$
.20Total cash dividends paid

$
7,388,000


$
7,826,000


$
8,292,000


$
8,740,000Record date


February 6



April 24



July 24



October 23Payment date


February 20



May 15



August 7



November 6      31




---



##### Table of Contents



Contractual
    Obligations
    Payments Due by
    PeriodLess ThanContractual
    Obligations

Total

1 Year

1 -
    3 Years

3 -
    5 Years

After
    5 YearsOperating Lease Obligations

$
3,751,000


$
1,028,000


$
2,027,000


$
696,000


$
-0-   Line
    of Credit
      Covenant
    Description and Requirement

Status at
    December 31, 2009Commitment 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 2.63Tangible net worth: must exceed $168,000,000

Tangible net worth is $183,000,000     Accounts
    and Notes Receivable
   32




---



##### Table of Contents



agreed-upon
         33




---



##### Table of Contents



Insurance
    Programs
        and/or
  Capital
    Expenditures
    Material
    Off-Balance Sheet Arrangements
    Effects
    of Inflation
    Item 7A.  Quantitative
    and Qualitative Disclosures About Market Risk.
   34




---



##### Table of Contents



35




---



##### 



Item 8.  Financial
    Statements and Supplementary Data.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm


37Managements Report on Internal Control Over
    Financial Reporting


38Report of Independent Registered Public
    Accounting Firm (on Internal Control Over Financial
    Reporting)


39Consolidated Financial StatementsConsolidated Balance Sheets as of
    December 31, 2009 and 2008


41Consolidated Statements of Income for the Years
    Ended December 31, 2009, 2008 and 2007


42Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2009, 2008 and 2007


43Consolidated Statement of Changes in
    Stockholders Equity for the years Ended December 31,
    2009 2008 and 2007


44Notes to Consolidated Financial Statements for
    the Years Ended December 31, 2009, 2008 and 2007


45   36




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Stockholders and Board of
    Directors of
 Healthcare Services Group, Inc.
        Internal Control 
    Integrated Framework )
  
  Edison, New Jersey
 February 16, 2010
 37




---



##### Table of Contents



Managements
    Annual Report on Internal Control Over Financial
    Reporting  Rule 13a-15(f) 15d-15(f)
                -s- Daniel P. McCartney

-s- Richard W. HudsonDaniel P. McCartney

Richard W. HudsonChief Executive Officer

Chief Financial OfficerFebruary 16, 2010

February 16, 2010  38




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Stockholders and Board of
    Directors of
 Healthcare Services Group, Inc.
  Internal Control  Integrated Framework
        Internal Control  Integrated
    Framework
 39




---



##### Table of Contents



Edison, New Jersey
 February 16, 2010
 40




---



##### Table of Contents



Consolidated
    Balance Sheets  December 31,2009


2008AssetsCurrent Assets:Cash and cash equivalents

$
31,301,000


$
37,501,000Marketable securities, at fair value


52,648,000



49,414,000Accounts and notes receivable, less allowance for doubtful
    accounts of $4,640,000 in 2009 and $3,214,000 in 2008


104,356,000



96,558,000Prepaid income taxes






2,838,000Inventories and supplies


16,974,000



16,079,000Deferred income taxes


115,000



Prepaid expenses and other


6,776,000



4,225,000Total current assets


212,170,000



206,615,000Property and Equipment:Laundry and linen equipment installations


1,695,000



1,767,00Housekeeping equipment and office furniture


16,905,000



16,365,000Autos and trucks


278,000



93,00018,878,000



18,225,000Less accumulated depreciation


14,487,000



14,296,0004,391,000



3,929,000GOODWILL Less accumulated amortization of $1,743,000 in 2009 and
    2008


17,087,000



15,020,000OTHER INTANGIBLE ASSETS Less accumulated amortization of
    $4,038,000 in 2009 and $2,467,000 in 2008


8,862,000



5,033,000NOTES RECEIVABLE  long term portion, net of
    discount


4,623,000



3,202,000DEFERRED COMPENSATION FUNDING


10,783,000



8,287,000DEFERRED INCOME TAXES  long term portion


7,907,000



6,386,000OTHER NONCURRENT ASSETS


69,000



89,000TOTAL ASSETS

$
265,892,000


$
248,561,000Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable

$
9,134,000


$
9,301,000Accrued payroll, accrued and withheld payroll taxes


17,647,000



14,365,000Other accrued expenses


3,057,000



679,000Income taxes payable


35,000



Deferred income taxes






754,000Accrued insurance claims


4,844,000



3,943,000Total current liabilities


34,717,000



29,042,000ACCRUED INSURANCE CLAIMS  long term portion


11,302,000



9,201,000DEFERRED COMPENSATION LIABILITY


11,099,000



8,636,000COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock, $.01 par value, 100,000,000 shares
    authorized, 45,792,000 shares issued in 2009 and 45,563,000
    in 2008


458,000



456,000Additional paid-in capital


92,339,000



84,421,000Retained earnings


135,837,000



137,741,000Common stock in treasury, at cost, 2,211,000 shares in 2009
    and 2,335,000 shares in 2008


(19,860,000
)


(20,936,000
)Total Stockholders Equity


208,774,000



201,682,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
265,892,000


$
248,561,000   See
    accompanying notes
 41




---



##### Table of Contents



Consolidated
    Statements of Income  Years Ended
    December 31,2009


2008


2007Revenues

$
692,695,000


$
602,718,000


$
577,721,000Operating costs and expenses:Cost of services provided


597,715,000



521,269,000



493,364,000Selling, general and administrative


50,269,000



39,523,000



40,284,000Other income:Investment and interest


4,624,000



1,349,000



4,022,000Income before income taxes


49,335,000



43,275,000



48,095,000Income taxes


18,993,000



16,661,000



18,517,000Net Income

$
30,342,000


$
26,614,000


$
29,578,000Basic earnings per Common Share

$
.70


$
.62


$
.70Diluted earnings per Common Share

$
.69


$
.60


$
.67Cash dividends per common share

$
.74


$
.58


$
.42Basic weighted average number of common shares outstanding


43,584,000



43,131,000



42,286,000Diluted weighted average number of common shares outstanding


44,286,000



44,025,000



43,847,000   See
    accompanying notes
 42




---



##### Table of Contents



Consolidated
    Statements of Cash Flows  Years Ended
    December 31,2009


2008


2007Cash flows from operating activities:Net Income

$
30,342,000


$
26,614,000


$
29,578,000Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


3,229,000



2,852,000



3,004,000Bad debt provision


2,404,000



4,234,000



6,142,000Deferred income taxes


(2,390,000
)


1,182,000



(759,000
)Stock-based compensation expense


1,074,000



563,000



291,000Amortization of premium on marketable securities


956,000



174,000



Unrealized gain on marketable securities


(505,000
)


(1,146,000
)


Unrealized (gain) loss on deferred compensation fund investments


(1,797,000
)


2,389,000



(426,000
)Changes in operating assets and liabilities:Accounts and notes receivable


(10,202,000
)


(17,841,000
)


(11,008,000
)Inventories and supplies


(620,000
)


(963,000
)


(2,477,000
)Notes receivable  long term portion


(1,422,000
)


2,856,000



1,803,000Deferred compensation funding


(700,000
)


(315,000
)


(1,684,000
)Accounts payable and other accrued expenses


1,934,000



(85,000
)


(2,134,000
)Accrued payroll, accrued and withheld payroll taxes


2,800,000



3,753,000



2,261,000Accrued insurance claims


3,002,000



(1,195,000
)


(1,151,000
)Deferred compensation liability


2,817,000



(1,725,000
)


1,106,000Income taxes payable


35,000



(1,726,000
)


1,452,000Prepaid income taxes


2,838,000



(2,838,000
)


Prepaid expenses and other assets


4,512,000



(121,000
)


(227,000
)Net cash provided by operating activities


38,307,000



16,662,000



25,771,000Cash flows from investing activities:Disposals of fixed assets


218,000



157,000



132,000Additions to property and equipment


(2,154,000
)


(1,577,000
)


(1,505,000
)Purchases of marketable securities, net


(3,686,000
)


(48,442,000
)


Cash paid for acquisition


(4,613,000
)






(477,000
)Net cash used in investing activities


(10,233,000
)


(49,862,000
)


(1,850,000
)Cash flows from financing activities:Treasury stock transactions in benefit plans










1,142,000Acquisition of treasury stock






(4,652,000
)


Dividends paid


(32,246,000
)


(24,983,000
)


(17,736,000
)Reissuance of treasury stock pursuant to DividendReinvestment Plan


88,000



61,000



59,000Repayment of debt assumed in acquisition


(4,718,000
)






Tax benefit from equity compensation plans


722,000



4,267,000



6,616,000Proceeds from the exercise of stock options


1,880,000



3,547,000



5,462,000Net cash used in financing activities


(34,274,000
)


(21,760,000
)


(4,457,000
)Net increase (decrease) in cash and cash equivalents


(6,200,000
)


(54,960,000
)


19,464,000Cash and cash equivalents at beginning of the year


37,501,000



92,461,000



72,997,000Cash and cash equivalents at end of the year

$
31,301,000


$
37,501,000


$
92,461,000Supplementary Cash Flow Information:Issuance of 49,000, 61,000, and 65,000 shares of Common
    Stock in 2009, 2008 and 2007, respectively, pursuant to Employee
    Stock Plans

$
777,000


$
1,293,000


$
1,254,000Reclassification of deferred compensation obligation pursuant to
    Plan amendment

$



$



$
2,866,000Issuance of 66,000 shares of Common Stock related to
    acquisition

$
4,494,000


$



$
   See
    accompanying notes
 43




---



##### Table of Contents



Consolidated
    Statements of Stockholders Equity  Years Ended
    December 31, 2009, 2008 and 2007Additional


TotalCommon
    Stock


Paid-in


Retained


Treasury


StockholdersShares


Amount


Capital


Earnings


Stock


EquityBalance, 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
)


201,682,000Net income for the year














30,342,000







30,342,000Exercise of stock options and other stock-based compensation,
    net of 9,000 shares tendered for payment


229,000



2,000



1,890,000







(12,000
)


1,880,000Tax benefit arising from stock option transactions










722,000











722,000Share-based compensation expense  stock options










681,000











681,000Treasury shares issued for Deferred Compensation Plan funding
    and redemptions (3,000 shares)










328,000







26,000



354,000Shares issued pursuant to Employee Stock Plans
    (49,000 shares)










351,000







426,000



777,000Cash dividends  $.74 per common share














(32,246,000
)






(32,246,000
)Shares issued pursuant to Dividend Reinvestment Plan
    (5,000 shares)










43,000







45,000



88,000Shares issued pursuant to acquisition (66,000 shares)










3,903,000







591,000



4,494,000Balance, December 31, 2009


45,792,000


$
458,000


$
92,339,000


$
135,837,000


$
(19,860,000
)

$
208,774,000   See
    accompanying notes.
 44




---



##### Table of Contents



Notes to
    Consolidated Financial Statements  Note 1 Summary
    of Significant Accounting Policies
  Nature of
    Operations
    90-day
         45




---



##### Table of Contents



Principles
    of Consolidation
    Fair
    Value of Financial Instruments
      Cash and
    Cash Equivalents
    Investments
    in Marketable Securities
       46




---



##### Table of Contents



Inventories
    and Supplies
  first-in,
  Property
    and Equipment
    Revenue
    Recognition
        Income
    Taxes
   47




---



##### Table of Contents



Earnings
    per Common Share
    Share-Based
    Compensation
      Advertising
    Costs
    Impairment
    of Long-Lived Assets
    Acquisitions
  and/or
 48




---



##### Table of Contents



Identifiable
    Intangible Assets and Goodwill
        Treasury
    Stock
    Three-for-Two
    Stock Splits
  three-for-two three-for-two
  Reclassification
    Use of
    Estimates in Financial Statements
   49




---



##### Table of Contents



Concentrations
    of Credit Risk
          Major
    Client
    Reportable
    SegmentsRevenues

Amounts due at
    December 31,Total
    Revenues

Housekeeping

Dietary

% of accounts
    receivable balance2009


12%



13%



11%


less than 1%2008


15%



14%



17%


less than 1%2007


16%



15%



21%


less than 1%    50




---



##### Table of Contents



Recent
    Accounting Pronouncements
  2009-13 2009-13), 2009-13 2009-13
  105-10. 105-10 105-10
  805-10 805-10 805-10
  350-30 No. 142-3), 350-10
  855-10 855-10
 51




---



##### Table of Contents



Note 2  Acquisition
    Note 3 
    Goodwill and Other Intangible Assets
      Housekeeping

DietarySegment

Segment

TotalBalance as of December 31, 2008

$
13,841,000


$
1,179,000


$
15,020,000Goodwill acquired during year


1,072,000



995,000



2,067,000Balance as of December 31, 2009

$
14,913,000


$
2,174,000


$
17,087,000       December 312009

2008Customer Relationships

$
12,100,000


$
6,700,000Non-compete Agreements


800,000



800,000Total other intangibles, gross


12,900,000



7,500,000Less accumulated amortization


(4,038,000
)


(2,467,000
)Other intangibles, net

$
8,862,000


$
5,033,000  52




---



##### Table of Contents



Customer

Non-CompetePeriod/Year

Relationships

Agreements

Total2010

$
1,729,000


$
100,000


$
1,829,0002011

$
1,729,000


$
100,000


$
1,829,0002012

$
1,729,000


$
100,000


$
1,829,0002013

$
1,410,000


$
100,000


$
1,510,0002014

$
771,000


$
67,000


$
838,000     Note 4 
    Fair Value
    Measurements    As of
    December 31, 2009Fair 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

$
52,648,000


$
52,648,000


$



$
52,648,000


$
Deferred compensation funding

$
10,783,000


$
10,783,000


$
7,195,000


$
3,588,000


$
   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


$
4,485,000


$
3,802,000


$
    53




---



##### Table of Contents



Gross

GrossAmortized

Unrealized

Unrealized

Estimated FairDecember 31,
    2009

Cost

Gains

Losses

ValueType of security:Municipal bonds

$
50,997,000


$
1,651,000






$
52,648,000Total debt securities

$
50,997,000


$
1,651,000






$
52,648,000   Gross

GrossAmortized

Unrealized

Unrealized

Estimated FairDecember 31,
    2008

Cost

Gains

Losses

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   54




---



##### Table of Contents



December 31,Contractual
    maturity:

2009


2008Maturing in one year or less

$
15,653,000


$
694,000Maturing after one year through three years


26,002,000



31,428,000Maturing after three years


10,993,000



17,292,000Total debt securities

$
52,648,000


$
49,414,000   December 31,Classification in
    consolidated Balance Sheet

2009


2008Cash and cash equivalents

$
31,301,000


$
37,501,000Marketable securities


52,648,000



49,414,00083,949,000



86,915,000Less cash and cash equivalents


(31,301,000
)


(37,501,000
)$
52,648,000


$
49,414,000   Note 5 
    Allowance
    for Doubtful Accounts         55




---



##### Table of Contents



Impaired
    Notes Receivable
        Impaired Notes
    ReceivableBalance








BalanceBeginning








End ofof Year


Additions


Deductions


Year2009

$
3,000,000


$
100,000


$
200,000


$
2,900,0002008

$
400,000


$
3,000,000


$
400,000


$
3,000,000   Reserve for
    Impaired Notes ReceivableBalance








BalanceBeginning








End ofof Year


Additions


Deductions


Year2009

$
1, 300,000


$
900,000


$
100,000


$
2,100,0002008

$
200,000


$
1,300,000


$
200,000


$
1,300,000    56




---



##### Table of Contents



Note 6 
    Lease
    Commitments    OperatingYear

Leases2010

$
1,028,0002011


821,0002012


597,0002013


609,0002014


598,000Thereafter


98,000Total minimum lease payments

$
3,751,000     Note 7 
    Share-Based
    Compensation  (collectively
    Stock
    Option Plans
    Incentive
    Stock Options
   57




---



##### Table of Contents



2009

2008

2007Weighted



Weighted



WeightedAverage

Number

Average

Number

Average

NumberPrice

of
    Shares

Price

of
    Shares

Price

of
    SharesBeginning of period

$
11.25



1,028,000


$
7.63



999,000


$
6.85



1,754,000Granted


15.58



393,000



20.89



274,000







Cancelled


18.53



(34,000
)


8.79



(39,000
)


8.85



(1,000
)Exercised


8.55



(115,000
)


6.83



(206,000
)


5.81



(754,000
)End of period

$
12.70



1,272,000


$
11.25



1,028,000


$
7.63



999,000       Options
    Outstanding

Options
    ExercisableAverage

Weighted



WeightedRemaining

Average



AverageNumber

Contractual

Exercise

Number

ExerciseExercise Price
    Range

Outstanding

Life

Price

Exercisable

Price$1.50  2.74


37,000



1.73


$
2.50



37,000


$
2.50$3.01  5.53


302,000



3.44



4.67



302,000



4.67$9.10  9.10


143,000



4.99



9.10



143,000



9.10$13.81  15.58


542,000



6.68



15.06



158,000



13.81$20.89  20.89


248,000



8.01



20.89



49,000



20.891,272,000



5.84


$
12.70



689,000


$
8.73   Non-Qualified
    Options
   58




---



##### Table of Contents



2009

2008

2007Weighted



Weighted



WeightedAverage

Number

Average

Number

Average

NumberPrice

of
    Shares

Price

of
    Shares

Price

of
    SharesBeginning of period

$
8.79



866,000


$
5.43



1,413,000


$
4.83



1,896,000Granted


15.58



34,000



20.89



103,000







Cancelled


16.13



(2,000
)














Exercised


8.24



(121,000
)


3.40



(650,000
)


3.10



(483,000
)End of period

$
9.07



777,000


$
8.79



866,000


$
5.43



1,413,000       Options
    Outstanding

Options
    ExercisableAverage

Weighted



WeightedRemaining

Average



AverageNumber

Contractual

Exercise

Number

ExerciseExercise Price
    Range

Outstanding

Life

Price

Exercisable

Price$2.74  2.74


136,000



1.93


$
2.74



136,000


$
2.74$3.62  5.53


248,000



3.61



4.86



248,000



4.86$9.10  9.10


155,000



4.99



9.10



155,000



9.10$13.81  15.58


135,000



2.53



14.15



109,000



13.81$20.89  20.89


103,000



8.01



20.89



21,000



20.89777,000



3.99


$
9.07



669,000


$
7.36   Fair
    Value Valuation Estimates
    2009

2008Risk-Free Interest-Rate

2.49%

4.19%Weighted Average Expected Life  Incentive Options

4.5 years

4.5 yearsNon-Qualified Options

4.5 years

4.5 yearsExpected Volatility

41.0%

35.0%Dividend Yield

3.64%

1.98%Forfeiture rate

5.80%

3.10%  59




---



##### Table of Contents



Other
    Information
    2009

2008

2007Aggregate intrinsic value of stock options exercised

$
2,434,000


$
11,599,000


$
18,084,000Aggregate intrinsic value of outstanding stock options

$
20,759,000


$
12,833,000


$
35,723,000Total grant-date fair value of stock options granted

$
1,545,000


$
2,237,000



Not applicableTotal fair value of options vested during period

$
372,000


$
-0-


$
-0-   Non-vested shares outstanding at December 31, 2008


377,000Options granted


427,000Cancelled


(29,000
)Non-vested shares outstanding at December 31, 2009


775,000     Employee
    Stock Purchase Plan
      ESPP Annual
    Offering2009

2008

2007Common shares purchased

49,000

49,000

61,000Per common share purchase price

$13.51

$13.54

$16.41Amount expensed under ESPP

$393,000

$115,000

$291,000Common shares date of issue

January 4, 2010

January 14, 2009

January 14, 2008   Deferred
    Compensation Plan
   60




---



##### Table of Contents



SERP Plan
    Year2009


2008


2007Amount of company match expensed under SERP

$
315,000


$
353,000


$
371,000Treasury shares issued to fund SERP expense


15,000



22,000



18,000SERP trust account balance at December 31

$
14,591,000
(1)

$
10,828,000
(1)

$
13,578,000
(1)Unrealized gains (loss) recorded in SERP liability account

$
1,797,000
(2)

$
(2,389,000
)(2)

$
241,000
(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. 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 8 
    Other Employee
    Benefit Plans  Retirement
    Savings Plan
   61




---



##### Table of Contents



Note 9 
    Dividends    2009 Cash
    Dividend Payments

1st
    Quarter

2nd
    Quarter

3rd
    Quarter

4th
    QuarterCash dividend per common share

$ .17

$ .18

$ .19

$ .20Total cash dividends paid

$7,388,000

$7,826,000

$8,292,000

$8,740,000Record 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 10 
    Income
    Taxes    Year Ended
    December 31,2009


2008


2007Current:Federal

$
17,086,000


$
12,454,000


$
15,608,000State


4,439,000



3,225,000



3,529,00021,525,000



15,679,000



19,137,000Deferred:Federal


(1,988,000
)


815,000



(513,000
)State


(544,000
)


167,000



(107,000
)(2,532,000
)


982,000



(620,000
)Tax Provision

$
18,993,000


$
16,661,000


$
18,517,000    62




---



##### Table of Contents



Year Ended
    December 31,2009


2008Net current deferred assets (liabilities):Allowance for doubtful accounts

$
1,865,000


$
1,292,000Accrued insurance claims  current


1,947,000



1,585,000Expensing of housekeeping supplies


(3,279,000
)


(2,970,000
)Other


(418,000
)


(661,000
)$
115,000


$
(754,000
)Net noncurrent deferred tax assets:Deferred compensation

$
5,217,000


$
4,922,000Non-deductible reserves


31,000



39,000Depreciation of property and equipment


(881,000
)


(626,000
)Accrued insurance claims  noncurrent


4,543,000



3,699,000Amortization of intangibles


(1,268,000
)


(1,742,000
)Other


265,000



94,000$
7,907,000


$
6,386,000       Year Ended
    December 31,2009


2008


2007Tax expense computed at statutory rate

$
17,266,000


$
15,146,000


$
16,832,000Increases (decreases) resulting from:State income taxes, net of federal tax benefit


2,551,000



2,201,000



2,130,000Federal jobs credits


(881,000
)


(767,000
)


(379,000
)Tax exempt interest


(504,000
)


(339,000
)


(414,000
)Other, net


561,000



420,000



348,000$
18,993,000


$
16,661,000


$
18,517,000    63




---



##### Table of Contents



and/or
    Note 11 
    Related Party
    Transactions      Note 12 
    Segment
    Information  Reportable
    Operating Segments
     64




---



##### Table of Contents



Corporate andHousekeeping

Dietary

Eliminations

TotalYear Ended December 31, 2009Revenues

$
532,723,000


$
159,845,000


$
127,000


$
692,695,000Income before income taxes


52,375,000



7,782,000



(10,822,000
)(1)


49,335,000Depreciation and amortization


2,455,000



465,000



309,000



3,229,000Total assets


116,240,000



38,379,000



111,273,000
(2)


265,892,000Capital expenditures

$
1,602,000


$
150,000


$
402,000


$
2,154,000Year 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


$
1,505,000    (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 31,2009


2008


2007Housekeeping services

$
361,644,000


$
334,034,000


$
325,033,000Laundry and linen services


168,877,000



151,291,000



140,531,000Dietary services


159,767,000



115,165,000



110,002,000Maintenance services and Other


2,407,000



2,228,000



2,155,000$
692,695,000


$
602,718,000


$
577,721,000  65




---



##### Table of Contents



Major
    Client
    Note 13 
    Earnings
    Per Common Share    Year Ended
    December 31, 2009Income

Shares

Per-Share(Numerator)

(Denominator)

AmountNet Income

$
30,342,000Basic earnings per common share


30,342,000



43,584,000


$
.70Effect of dilutive securities: Options






702,000



(.01
)Diluted earnings per common share

$
30,342,000



44,286,000


$
.69   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    66




---



##### Table of Contents



Note 14 
    Other
    Contingencies             67




---



##### Table of Contents



Note 15 
    Accrued Insurance
    Claims    and/or
      Note 16 
    Subsequent
    Events   68




---



##### Table of Contents



Note 17 
    Selected
    Quarterly Financial Data (Unaudited)  Three Months
    EndedMarch 31


June 30


September 30


December 312009Revenues

$
160,409,000


$
170,896,000


$
178,829,000


$
182,561,000Operating costs and expenses

$
148,768,000


$
159,346,000


$
167,164,000


$
172,706,000Income before income taxes

$
12,578,000


$
12,707,000


$
13,374,000


$
10,677,000Net income

$
7,736,000


$
7,815,000


$
8,225,000


$
6,566,000Basic earnings per common
    share(1)

$
.18


$
.18


$
.19


$
.15Diluted earnings per common
    share(1)

$
.18


$
.18


$
.19


$
.15Cash dividends per common
    share(1)

$
.17


$
.18


$
.19


$
.202008Revenues

$
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


$
.16    (1)
    
    Year-to-date
    earnings and cash dividends per common share amounts may differ
    from the sum of quarterly amounts due to rounding.  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
 69




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##### Table of Contents



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.    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   70




---



##### Table of Contents



Part IV
  Item 15.
    Exhibits and
    Financial Statement Schedules  (a)
    Index of
    Financial Statements  Form 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).10
.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. 71




---



##### Table of Contents



ExhibitNumber

Description32
.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.99
.1

Preferability Letter of Grant Thornton dated February 16,
    2010    **
    
    indicates that exhibit is a
    management contract or a management compensatory plan or
    arrangement.  (c)
    Financial
    Statement Schedules   Healthcare Services Group, Inc. and
 Subsidiaries Schedule II Valuation
 and Qualifying Accounts
 Years Ended December 31, 2009, 2008,
 and 2007
  AdditionsBalance 


Charged to


Charged toBeginning of


Costs and


Other





Balance Description

Period


Expenses


Accounts


Deductions(A)


End of
    Period2009Allowance for Doubtful Accounts

$
3,214,000


$
2,404,000


$
0


$
978,000


$
4,640,0002008Allowance for Doubtful Accounts

$
4,284,000


$
4,234,000


$
0


$
5,304,000


$
3,214,0002007Allowance for Doubtful Accounts

$
2,716,000


$
6,142,000


$
0


$
4,574,000


$
4,284,000    (A)
    
    Represents
    write-offs 72




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##### Table of Contents



Signatures
    Dated: February 16, 2010
  HEALTHCARE SERVICES GROUP, INC.
  (Registrant)
  ­
    ­
 Daniel P. McCartney
 Chief Executive Officer and
 Chairman of the Board
    Signature

Title

Date/s/  Daniel
    P. McCartneyDaniel
    P. McCartney

Chief Executive
    Officer and Chairman

February 16, 2010/s/  Joseph
    F. McCartneyJoseph
    F. McCartney

Director and Vice
    President

February 16, 2010/s/  Robert
    L. FromeRobert
    L. Frome

Director

February 16, 2010/s/  Thomas
    A. CookThomas
    A. Cook

Director and President

February 16, 2010/s/  John
    M. BriggsJohn
    M. Briggs

Director

February 16, 2010/s/  Robert
    J. MossRobert
    J. Moss

Director

February 16, 2010/s/  Dino
    D. OttavianoDino
    D. Ottaviano

Director

February 16, 2010/s/  Richard
    W. HudsonRichard
    W. Hudson

Chief Financial
    Officer and Secretary

February 16, 2010  73