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HEALTHCARE SERVICES GROUP ANNOUNCES FILING OF FORM 12B-25 WITH SEC

 HEALTHCARE SERVICES GROUP ANNOUNCES FILING OF FORM 12B-25 WITH SEC
 HUNTINGDON VALLEY, Pa., April 1 /PRNewswire/ -- Healthcare Services Group, Inc. (NASDAQ-NMS: HCSG) yesterday filed a Form 12b-25 with the Securities and Exchange Commission to notify the Commission of its late filing of its Form 10K.
 The company anticipates filing the Form 10K for 1991 on or before April 15, 1992. The Form 12b-25 filing states that 1991 net income is estimated to be $600,000 as a result of the correction of inaccuracies in the accounting treatment for insurance costs related to the company's general liability, automobile and workers' compensation insurance, as well as several proposed year-end audit adjustments which will adversely affect the company's financial statements.
 For years 1986 through 1989, inclusive, the company had an Incurred Loss Retrospective Insurance Plan and for 1990 and 1991 the company had a Paid Loss Retrospective Insurance Plan for general liability, automobile and workers' compensation insurance coverage. The company was recently advised during its current 1991 year-end audit that, with respect to both plans, the effect of estimated and projected settlement amounts for known claims and incurred but not reported claims were not considered in prior periods, resulting in an understatement of insurance expense and accrued insurance claim liability. As a result, the company will restate net income for 1989 and 1990 and retained earnings as of Dec. 31, 1988, 1989 and 1990 to provide for these accrued insurance claims. The effect of the change in 1991 is estimated to decrease net income by approximately $2 million.
 The company is currently analyzing several proposed year-end adjustments which will adversely affect its financial statements. The most significant adjustments and their estimated effect on net income for 1991 are as follows: changing to a preferred method of accounting for revenue recognition on laundry equipment sales will decrease net income by approximately $1.5 million and the company will recognize this deferred profit in future periods in accordance with the originally agreed-upon payment terms associated with the financing of these transactions by the company; establishing a reserve for unpaid services rendered associated with certain service agreements cancelled in the third quarter of 1990 (which were obtained as part of the acquisition of American Services Company from Southmark Corporation) will decrease net income by approximately $600,000; and increasing its allowance for doubtful accounts will decrease net income by approximately $600,000.
 The company performs housekeeping, laundry and linen services for healthcare related facilities.
 /delval/
 -0- 4/1/92
 /CONTACT: Daniel P. McCartney, president of Healthcare Services Group, 215-938-1661/
 (HCSG) CO: Healthcare Services Group, Inc. ST: Pennsylvania IN: SU: ERP


SF-LJ -- PH002 -- 3722 04/01/92 08:26 EST
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Date:Apr 1, 1992
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