Form 11-K
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 11-K
 
(Mark One)
     
þ   ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 0-12015
 
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
HEALTHCARE SERVICES GROUP, INC.
3220 Tillman Drive
Suite 300
Bensalem, Pennsylvania 19020
 
 

 

 


 

Healthcare Services Group
Retirement Savings Plan
Financial Statements and Supplemental Schedule
As of December 31, 2010 and 2009 and for the year ended December 31, 2010
Table of Contents
         
Description Page  
 
       
    3  
 
       
Financial Statements:
       
 
       
    4  
 
       
    5  
 
       
    6 – 12  
 
       
Supplemental Schedule:
       
 
       
    13  
 
       
    14  
 
       

 

-2-


Table of Contents

Report of Independent Registered Public Accounting Firm
Trustees:
Healthcare Services Group, Inc. Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of Healthcare Services Group, Inc. Retirement Savings Plan as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits 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 the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Healthcare Services Group, Inc. Retirement Savings Plan as of December 31, 2010 and 2009, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at the end of the year) is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ GRANT THORNTON LLP
New York, New York
June 29, 2011

 

-3-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31,
                 
    2010     2009  
Assets
               
Investments at fair value
  $ 2,472,536     $ 2,081,969  
 
               
Receivables:
               
Participant contributions
    2,356        
 
           
 
               
Net Assets Available for Benefits
  $ 2,474,892     $ 2,081,969  
 
           
The accompanying notes are an integral part of these statements.

 

-4-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
For The Year Ended December 31,
                 
    2010     2009  
Additions
               
Additions attributable to:
               
Contributions:
               
Participants
  $ 243,596     $ 239,076  
Rollover
          24,437  
 
           
 
    243,596       263,513  
Earnings on Investments:
               
Interest and dividends
    28,272       23,722  
Net appreciation in fair value of investments
    202,327       314,160  
 
           
 
    230,599       337,882  
 
               
Other income
    2,011        
 
           
 
               
Total Additions
    476,206       601,395  
 
           
 
               
Deductions
               
Benefit payments
    (83,283 )     (172,819 )
 
           
Total Deductions
    (83,283 )     (172,819 )
 
           
 
               
Net Increase
    392,923       428,576  
 
               
Net Assets Available for Benefits, beginning of year
    2,081,969       1,653,393  
 
           
 
               
Net Assets Available for Benefits, end of year
  $ 2,474,892     $ 2,081,969  
 
           
The accompanying notes are an integral part of these statements.

 

-5-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements
December 31, 2010 and 2009
Note A — Description Of Plan
The following description of the Healthcare Services Group, Inc. Retirement Savings Plan, dated October 1, 1999, as amended, (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan commenced October 1, 1999 and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan was amended and restated effective January 1, 2009. One of the amendments was to allow for highly compensated employees to make catch-up contributions as of November 1, 2009. The Plan is a defined contribution plan covering all salaried employees who have one year of service (1,000 hours) and have attained the age of twenty-one or older with the exception of employees whose employment is governed by a collective bargaining agreement.
Contributions
Each year, participants may contribute up to 15% of their pretax annual compensation as defined in the Plan. There are no employer-matching contributions as defined in the Plan. A participant may elect to commence salary reductions as of the first day of the month coinciding with the date the employee satisfied the eligibility requirements.
An amendment has been made to the Plan that became effective January 1, 2009 that will allow the Plan to incorporate a qualified “Roth” contribution program. Under such a program, participants can elect to have all or a portion of their elective deferrals to be treated as Roth contributions. Unlike the regular deferrals, Roth contributions are included in the participant’s current income; however, qualified distributions from a designated Roth account are not included in income.
Participants may also rollover to the plan amounts representing distributions from other qualified defined benefit or defined contribution plans. Participants direct the investment of their contributions into various options offered by the Plan.
Contributions are subject to certain limitations.
Participant Accounts
Each participant’s account is credited with the participant’s contributions plus actual earnings thereon. Allocations are determined by the participant. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Participant Loans
The plan does not include a provision for participants to borrow money.

 

-6-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements (CONTINUED)
December 31, 2010 and 2009
Vesting
Participants are vested immediately in their contributions plus actual earnings thereon.
Administrative Expenses
All administrative expenses were paid by the plan sponsor, Healthcare Services Group, Inc. (the “Company”).
Benefit Payments
On termination of service due to death or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in his or her account or monthly, quarterly, semi-monthly or annual installments. No disability benefits, other than those payable upon termination of employment, are provided in the Plan. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account as a lump sum distribution.
A Participant who has attained the age of 59 1/2 years may elect to receive a distribution of all or a portion of the vested amounts then credited to the Participant’s account. The Participant will still continue to be eligible to participate in the Plan.
A Participant may elect to receive an advance distribution for hardship under certain conditions as defined in the Plan and as subject to the evaluation of the Plan Administrator based on whether certain conditions have been satisfied.
Note B — Summary of Accounting Policies
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows:
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Income Recognition
Dividends are recorded on the ex-dividend date. Net appreciation in fair value of investments includes net unrealized appreciation (depreciation) of investments and net realized gains (losses) on the sale of investments during the period. Interest income is recorded on the accrual basis. Purchases and sales of securities are recorded on a trade-date basis. Gains and losses on sales of securities are calculated based on the weighted-average cost.

 

-7-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements (CONTINUED)
December 31, 2010 and 2009
Benefit Payments
Participants’ withdrawals are recorded when paid.
Reclassification
Certain prior period amounts have been reclassified to conform to current year presentation.
Fair Value of Financial Instruments
The Plan’s financial instruments consist principally of cash and cash equivalents and marketable securities. The Plan’s marketable securities consist of the common stock of the Company, mutual funds and a money market fund. In accordance with U.S. GAAP, we define fair value as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (exit price). We believe recorded values of all of our financial instruments approximate their current fair values because of their nature and availability of quoted market values or market corroborated inputs.
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance for improving disclosures about fair value measurements. The new guidance requires new disclosures for transfers in and out of Level 1 and 2 classifications and for more detail about the activity in Level 3 fair value measurements. Neither of these new disclosures affects the Plan since there were no Level 3 assets or transfers between Level 1 and 2. The new guidance also clarifies previous disclosure requirements by increasing the level of disaggregation to the class level for investments and by requiring more disclosures about inputs and valuation techniques for fair value measurements in Level 2 and Level 3. The disclosures required under this guidance are included in Note H, Fair Value Measurements.
Note C — Investments
The following presents investments that represent 5 percent or more of the Plan’s net assets as of:
                 
    December 31,  
    2010     2009  
BlackRock Money Market Fund (PNC; Note E)
  $ 596,098     $ 658,454  
Fidelity Advisor Equity Income Fund
    192,284       167,990  
Growth Fund of America
    161,831       127,534  
Healthcare Services Group, Inc. common stock (Note E)
    168,476       140,670  
Janus Adviser Forty Fund
    204,299       169,480  
MFS Int’l New Discovery
    170,369       128,636  

 

-8-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements (CONTINUED)
December 31, 2010 and 2009
Note C — Investments (continued)
During 2010 and 2009, the Plan’s investments (including realized and unrealized gains and losses) appreciated in value by $202,327 and by $314,160, respectively as follows:
                 
    December 31,  
    2010     2009  
Mutual Funds
  $ 182,345     $ 275,382  
Healthcare Services Group, Inc. common stock (Note E)
    19,983       37,765  
BlackRock Money Market Fund (PNC; Note E)
    (1 )     1,013  
 
           
 
  $ 202,327     $ 314,160  
 
           
Note D — Plan Termination
Although it has not expressed intent to do so, the Company has the right under the Plan to terminate the Plan at any time subject to the provisions of ERISA.
Note E — Party-In-Interest Transactions
Certain Plan investments are shares of a money market fund managed by PNC. PNC is the trustee as defined by the Plan and, therefore, transactions involving these investments qualify as party-in-interest transactions.
In addition, certain plan investments are shares of the common stock of the Company. Healthcare Services Group, Inc. is the Plan sponsor as defined by the Plan and, therefore, transactions involving stock of the Company qualify as party-in-interest transactions. The Plan held 10,355 and 6,555 shares of Healthcare Services Group, Inc. common stock with a quoted market value of $168,476 and $140,670 at December 31, 2010 and 2009, respectively.
Note F — Tax Status Of Plan
The Internal Revenue Service has determined and informed the Company by a letter dated March 7, 2001 that the Plan and related Trust are designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). The Company received a favorable determination letter dated February 1, 2010 related to the Plan’s amendments. The Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements. The Plan Administrator has also concluded there are no uncertain positions taken or expected to be taken or associated interest or penalties, there are no audits of the Plan for any tax periods in progress, and that the Plan is not subject to income tax examinations for years prior to 2007.

 

-9-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements (CONTINUED)
December 31, 2010 and 2009
Note G — Risks And Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
Note H — Fair Value Measurements
The Plan utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs on the hierarchy, consist of unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority. Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are the lowest priority, they are unobservable and should be used to measure fair value to the extent that observable inputs are not available. The Plan uses appropriate valuation techniques based on the available inputs to measure the fair values of our assets and liabilities. When available, the Plan measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. Certain of the Plan’s assets are reported at fair value in the accompanying statements of net assets available for benefits. Such assets include cash and cash equivalents and marketable securities. The following tables provide fair value measurement information for the Plan’s financial assets as of December 31, 2010 and 2009:
                                 
    Fair Value Measurement Using:  
    Quoted     Significant              
    Prices in     Other     Significant        
    Active     Observable     Unobservable        
    Markets     Inputs     Inputs        
December 31, 2010   (Level 1)     (Level 2)     (Level 3)     Total  
Common Stock
  $ 168,476     $     $     $ 168,476  
Mutual Funds Balanced and Lifestyle
    87,047                   87,047  
Fixed Income
    177,953                   177,953  
International
    181,058                   181,058  
Large Cap Blend
    86,566                   86,566  
Large Cap Growth
    508,088                   508,088  
Large Cap Value
    322,779                   322,779  
Mid Cap Growth
    52,685                   52,685  
Small Cap Value
    201,126                   201,126  
Specialty
    90,108                   90,108  
Money Market Fund
          596,098             596,098  
Cash
    552                   552  
 
                       
Total Assets at Fair Value
  $ 1,876,438     $ 596,098     $     $ 2,472,536  
 
                       

 

-10-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements (CONTINUED)
December 31, 2010 and 2009
Note H — Fair Value Measurements (continued)
                                 
    Fair Value Measurement Using:  
    Quoted     Significant              
    Prices in     Other     Significant        
    Active     Observable     Unobservable        
    Markets     Inputs     Inputs        
December 31, 2009   (Level 1)     (Level 2)     (Level 3)     Total  
Common Stock
  $ 140,670     $     $     $ 140,670  
Mutual Funds
                               
Balanced and Lifestyle
    62,996                   62,996  
Fixed Income
    104,413                   104,413  
International
    132,027                   132,027  
Large Cap Blend
    78,598                   78,598  
Large Cap Growth
    404,838                   404,838  
Large Cap Value
    271,157                   271,157  
Mid Cap Growth
    36,881                   36,881  
Small Cap Value
    115,728                   115,728  
Specialty
    75,652                   75,652  
Money Market Fund
          658,454             658,454  
Cash
    555                   555  
 
                       
Total Assets at Fair Value
  $ 1,423,515     $ 658,454     $     $ 2,081,969  
 
                       
The valuation methodologies used for the Plan assets measure at fair value are as follows:
Common Stock (Healthcare Services Group, Inc.) — Valued at closing price reported on the NASDAQ on which the individual securities are traded.
Mutual Funds — valued at the net asset value (“NAV”) of the shares held by the plan at year end.
Money Market Fund — is valued at the net asset value held by the plan at year end.
Cash — is valued at cost, which approximates fair value.
As a practical expedient, fair value of our money market fund is valued at the NAV as determined by the custodian of the fund. The money market fund includes short-term United States dollar denominated money-market instruments. The money market fund can be redeemed at its NAV at its measurement date as there are no significant restrictions on the ability of participants to sell this investment.

 

-11-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Notes To Financial Statements (CONTINUED)
December 31, 2010 and 2009
Note I — Subsequent Events
We evaluated all subsequent events through the date these financial statements are being filed with the SEC. There were no events or transactions occurring during this subsequent event reporting period which require recognition or disclosure in the financial statements.

 

-12-


Table of Contents

Healthcare Services Group, Inc.
Retirement Savings Plan
Schedule Of Assets (Held At End Of Year)
Schedule H, Line 4i of Form 5500
                 
(a)       (c)      
Party-In-   (b)   Description of   (e)  
Interest   Identity of Issue   Investment   Current Value  
   
 
           
   
AIM Dynamics Fund Cl A
  Mutual Fund   $ 52,685  
   
AIM Global Health Care Fund
  Mutual Fund     59,183  
   
American Balanced Fund
  Mutual Fund     60,821  
   
American Beacon Sm Cap Value
  Mutual Fund     22,336  
   
American Century Sm Cap Value
  Mutual Fund     44,125  
   
American Century Value Fund
  Mutual Fund     39,609  
   
American Euro-Pacific Growth Fund
  Mutual Fund     10,689  
   
BlackRock GNMA Fund Cls A
  Mutual Fund     94,962  
   
BlackRock Managed Inc Fund Cls A
  Mutual Fund     17,762  
*  
BlackRock Money Market (PNC)
  Money Market Fund     596,098  
   
Federated High Income Bond Fund
  Mutual Fund     65,229  
   
Federated Stock Trust
  Mutual Fund     90,886  
   
Fidelity Advisor Equity Growth
  Mutual Fund     94,168  
   
Fidelity Advisor Equity Income
  Mutual Fund     192,284  
   
Growth Fund of America
  Mutual Fund     161,831  
*  
Healthcare Services Group
  Common Stock     168,476  
*  
Healthcare Services Stock Liquidity
  Cash     552  
   
Income Fund of America
  Mutual Fund     65,878  
   
Janus Adviser Forty Fund
  Mutual Fund     204,299  
   
Janus Fund Cls S
  Mutual Fund     47,790  
   
MFS Int’l New Discovery Fund
  Mutual Fund     170,369  
   
MFS Core Equity Cls A
  Mutual Fund     20,688  
   
MFS Technology Fund Cl A
  Mutual Fund     30,925  
   
My Retire 2015 Livestrong Portfolio A
  Mutual Fund     20,965  
   
My Retire 2025 Livestrong Portfolio A
  Mutual Fund     4,506  
   
My Retire 2035 Livestrong Portfolio A
  Mutual Fund     474  
   
My Retire Inc. Livestrong Income Port A
  Mutual Fund     281  
   
Royce Low Priced Stock Fund
  Mutual Fund     83,123  
   
Royce Opportunity Fund
  Mutual Fund     51,542  
   
 
         
   
 
      $ 2,472,536  
   
 
         

 

-13-


Table of Contents

Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  Healthcare Services Group, Inc. Retirement Savings Plan
 
 
Date: June 29, 2011  /s/ Richard W. Hudson    
  Name:   Richard W. Hudson   
  Title:   Chairman of Plan Committee   

 

-14-