SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
OR
( ) 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
HEALTHCARE SERVICES GROUP, INC
RETIREMENT SAVINGS PLAN
Issuer: Healthcare Services Group, Inc.
3220 Tillman Drive - Suite 300
Bensalem, Pennsylvania 19020
(Principal Executive Office)
Total of 14 Pages
INDEX
PAGE NO.
Report of Independent Registered Public Accounting Firm 2
Financial Statements:
Statements of Net Assets Available for Benefits 3
Statements of Changes in Net Assets Available 4
For Benefits
Notes to Financial Statements 5 - 9
Signatures 10
Certifications 11 - 14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan Administrator:
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 (the "Plan") as of
December 31, 2003 and 2002, 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 the Plan as of
December 31, 2003 and 2002, 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.
GRANT THORNTON LLP
New York, New York
June 8, 2004
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
2003 2002
------------- --------------
Assets
Investments at fair value $ 1,029,201 $ 671,010
Non-interest bearing cash 1,411
Receivables
Participant contributions 2,081 12,862
------------- --------------
Net Investments Available for Benefits $ 1,031,282 $ 685,283
============= ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
DECEMBER 31,
2003 2002
------------- --------------
Additions:
Participant contributions $ 282,585 $ 303,125
Investment income:
Interest 43 15
Dividends 4,760 1,925
Net appreciation (depreciation) in fair value
of investments 112,438 (67,336)
------------- --------------
117,241 (65,396)
------------- --------------
Total Additions 399,826 237,729
Deductions:
Participant withdrawals (53,827) (29,648)
------------- --------------
NET INCREASE 345,999 208,081
Net assets available for benefits, beginning 685,283 477,202
------------- --------------
Net assets available for benefits, ending $ 1,031,282 $ 685,283
============= ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE A. - DESCRIPTION OF PLAN
The following description of the Healthcare Services Group, Inc.
Retirement Savings Plan (the "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
1. 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 is a defined contribution plan covering all
employees provided they are 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 highly compensated employees, as
defined by the Plan, or employees whose employment is governed by
a collective bargaining agreement.
The Plan was amended in 2002 to reflect and comply with certain
provisions of the Economic Growth and Tax Relief Reconciliation
Act of 2001 ("EGTRRA"). This amendment is effective for the plan
year beginning after December 31, 2001.
2. 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.
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.
3. Participant Accounts
Each participant's account is credited with the participant's
contribution and allocations of Plan earnings. 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.
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE A. (continued)
4. Vesting
Participants are vested immediately in their contributions plus
actual earnings thereon.
5. Administrative Expenses
All administrative expenses were paid by the plan sponsor,
Healthcare Services Group, Inc., although, under the plan
document, the plan sponsor is not responsible for administrative
expenses.
6. Payments of Benefits
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.
NOTE B. - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements follows:
1. Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and changes
therein, and disclosures of contingent assets and liabilities.
Actual results could differ from those estimates.
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE B. (continued)
2. Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, which
approximates market value, as reported to the Plan by PNC Bank.
Quoted market prices are used to value investments. Shares of
mutual funds are valued at the net asset value of shares held by
the Plan at year-end. Purchases and sales of securities are
recorded on a trade-date basis.
3. Participants' Withdrawals
Participants' withdrawals are recorded when paid.
NOTE C. - INVESTMENTS
The following presents investments that represent 5 percent or more of
the Plan's net assets as of:
December 31,
-------------------------------
2003 2002
Fidelity Advisor Equity Growth $ 55,260 $ 35,925
Fidelity Advisor Equity Income Fund 61,586 --
INVESCO Technology Fund (Class K) 56,658 --
Janus Advisor Capital Appreciation Fund 103,488 80,537
Janus Advisor Growth Fund 72,950 44,353
Black Rock Money Market 421,367 354,922
------------- -------------
$ 771,309 $ 515,737
============= =============
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE C. (continued)
During 2003 and 2002, the Plan's investments (including realized and
unrealized gains and losses) appreciated/(depreciated) in value by $112,438 and
$(67,336), respectively as follows:
December 31,
-------------------------------
2003 2002
Mutual Funds $ 98,588 $ (72,557)
Healthcare Services Group, Inc. common stock 12,155 1,927
Money Market Fund 1,695 3,294
------------- -------------
$ 112,438 $ (67,336)
============= =============
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 the Employee Retirement Income Security Act of 1974 ("ERISA").
NOTE E. - RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of a money market fund managed by
PNC Financial Services Group ("PNC"). PNC is the trustee as defined by the Plan
and, therefore, these transactions qualify as party-in-interest transactions.
In addition, certain plan investments are shares of the Healthcare
Services Group, Inc. common stock. Healthcare Services Group, Inc. is the Plan
sponsor as defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions. The Plan holds 2,322.741 and 1,504.851 shares of
Healthcare Services Group, Inc. common stock with a quoted market value of
$44,666 and $19,623 at December 31, 2003 and 2002, respectively.
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HEALTHCARE SERVICES GROUP, INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
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 Plan has been amended since receiving the determination letter
(Note A). However, the Plan administrator and the Plan's tax counsel believe
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.
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.
9
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 28, 2004 /s/ James L. DiStefano
-----------------------
By: James L. DiStefano
Title: Chairman of Plan Committee
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