Davey Tree Expert 10Q 2010 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 2, 2010

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 000-11917

THE DAVEY TREE EXPERT COMPANY

(Exact name of registrant as specified in its charter)

Ohio	34-0176110
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1500 North Mantua Street

P.O. Box 5193

Kent, Ohio 44240

(Address of principal executive offices) (Zip code)

(330) 673-9511

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes £ No S

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):	£ Large Accelerated Filer	S Accelerated Filer
	£ Non-Accelerated Filer	£ Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No S

There were 14,242,271 Common Shares, $1.00 par value, outstanding as of October 29, 2010.

The Davey Tree Expert Company

Quarterly Report on Form 10-Q

October 2, 2010

INDEX

		Page
Part I. Financial Information

Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets		2
Condensed Consolidated Statements of Operations		3
Condensed Consolidated Statements of Cash Flows		4
Notes to Condensed Consolidated Financial Statements
A — Basis of Financial Statement Preparation		5
B — Seasonality of Business		6
C — Accounts Receivable, Net		6
D — Business Combinations and Identified Intangible Assets and Goodwill, Net		7
E — Long-Term Debt		7
F — Stock-Based Compensation		9
G — Net Periodic Benefit Cost—Defined Benefit Pension Plans		12
H — Income Taxes		13
I — Comprehensive Income (Loss)		13
J — Per Share Amounts and Common Shares Outstanding		14
K — Operations by Business Segment		15
L — Fair Value Measurements and Derivative Financial Instruments		17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Results of Operations		21
Liquidity and Capital Resources		25
Cash Flow Summary		25
Off-Balance Sheet Arrangements		26
Contractual Obligations Summary		27
Capital Resources		27
Recent Accounting Guidance		28
Critical Accounting Policies and Estimates		28
Note Regarding Forward-Looking Statements		29

Item 3. Quantitative and Qualitative Disclosures about Market Risk		30

Item 4. Controls and Procedures		31

Part II. Other Information

Item 1A. Risk Factors		32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32

Item 6. Exhibits		32

Signatures		33

Exhibit Index		34

We,” “Us,” “Our,” “Davey” and “Davey Tree,” unless the context otherwise requires, means The Davey Tree Expert Company and its subsidiaries.

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Index

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data dollar amounts)

	October 2,			December 31,
	2010			2009
Assets
Current assets:
Cash	$	3,998		$	2,395
Accounts receivable, net		86,387			71,691
Operating supplies		4,892			4,968
Prepaid expenses		8,573			5,563
Other current assets		12,060			13,201
Total current assets		115,910			97,818

Property and equipment		413,644			395,670
Less accumulated depreciation		285,629			266,868
		128,015			128,802

Other assets		14,207			13,429
Identified intangible assets and goodwill, net		28,823			26,023
	$	286,955		$	266,072

Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	22,441		$	26,166
Accrued expenses		29,916			26,124
Other current liabilities		29,014			29,222
Total current liabilities		81,371			81,512

Long-term debt		31,605			45,843
Senior unsecured notes		30,000			-
Self-insurance accruals		37,844			32,648
Other noncurrent liabilities		7,417			8,846
		188,237			168,849

Common shareholders' equity:
Common shares, $1.00 par value, per share; 24,000 shares authorized; 21,457 shares issued		21,457			21,457
Additional paid-in capital		-			328
Common shares subscribed, unissued		-			1,204
Retained earnings		172,471			165,293
Accumulated other comprehensive loss		(3,979	)		(4,949	)
		189,949			183,333

Less: Cost of Common shares held in treasury; 7,039 shares at October 2, 2010 and 6,885 shares at December 31, 2009		91,231			86,084
Common shares subscription receivable		-			26

		98,718			97,223
	$	286,955		$	266,072

See notes to condensed consolidated financial statements.

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Index

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share dollar amounts)

	Three Months Ended						Nine Months Ended
	October 2,			October 3,			October 2,			October 3,
	2010			2009			2010			2009

Revenues	$	156,493		$	149,272		$	441,074		$	433,474

Costs and expenses:
Operating		100,861			95,790			290,225			279,343
Selling		26,147			23,268			72,546			67,244
General and administrative		10,101			11,338			30,922			35,543
Depreciation and amortization		9,411			9,413			27,463			28,378
(Gain) loss on sale of assets, net		(107	)		(16	)		(11	)		(105	)
		146,413			139,793			421,145			410,403

Income from operations		10,080			9,479			19,929			23,071

Other income (expense):
Interest expense		(827	)		(587	)		(1,868	)		(1,837	)
Interest income		15			10			38			22
Other, net		(957	)		(634	)		(2,074	)		(1,609	)

Income before income taxes		8,311			8,268			16,025			19,647

Income taxes		3,470			3,303			6,586			7,780

Net income	$	4,841		$	4,965		$	9,439		$	11,867

Net income per share:
Basic	$	.33		$	.33		$	.65		$	.80
Diluted	$	.32		$	.32		$	.62		$	.76

Weighted-average shares outstanding:
Basic		14,504			14,898			14,614			14,839
Diluted		14,993			15,565			15,131			15,681

Dividends declared per share	$	.043		$	.043		$	.128		$	.128

See notes to condensed consolidated financial statements.

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Index

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Nine Months Ended
	October 2,			October 3,
	2010			2009
Operating activities
Net income	$	9,439		$	11,867
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		27,463			28,378
Other		1,330			1,901
Changes in operating assets and liabilities:
Accounts receivable		(14,531	)		594
Operating liabilities		4,238			(3,350	)
Other		(3,728	)		(1,456	)
		14,772			26,067
Net cash provided by operating activities		24,211			37,934

Investing activities
Capital expenditures:
Equipment		(23,124	)		(16,353	)
Land and buildings		(440	)		(311	)
Purchases of businesses		(5,836	)		(708	)
Other		708			336
Net cash used in investing activities		(28,692	)		(17,036	)

Financing activities
Revolving credit facility proceeds, net		(12,550	)		(10,950	)
Purchase of common shares for treasury		(13,228	)		(16,123	)
Sale of common shares from treasury		5,394			6,968
Issuance of senior unsecured notes		30,000			-
Dividends		(1,854	)		(1,933	)
Other		(1,678	)		(400	)
Net cash provided by (used in) financing activities		6,084			(22,438	)

Increase (Decrease) in cash		1,603			(1,540	)
Cash, beginning of period		2,395			3,363
Cash, end of period	$	3,998		$	1,823

Supplemental cash flow information follows:
Interest paid	$	1,710		$	1,963
Income taxes paid		5,742			5,706

See notes to condensed consolidated financial statements.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

A.	Basis of Financial Statement Preparation

The condensed consolidated financial statements present the financial position, results of operations and cash flows of The Davey Tree Expert Company and its subsidiaries. “We,” “us,” “our,” “Davey,” “Davey Tree” and the “Company” means The Davey Tree Expert Company and its subsidiaries, unless the context indicates otherwise.

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The consolidated financial statements include all adjustments which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal, recurring nature. All significant intercompany accounts and transactions have been eliminated.

Certain information and disclosures required by U.S. GAAP for complete financial statements have been omitted in accordance with the rules and regulations of the SEC. We suggest that these condensed consolidated financial statements be read in conjunction with the financial statements included in our annual report on Form 10-K for the year ended December 31, 2009 (the “2009 Annual Report”).

Use of Estimates in Financial Statement Preparation--The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect reported amounts. Our consolidated financial statements include amounts that are based on management’s best estimates and judgments. Estimates are used for, but not limited to, accounts receivable valuation, depreciable lives of fixed assets, self-insurance accruals, income taxes and revenue recognition. Actual results could differ from those estimates.

Interim Results of Operations--Interim results may not be indicative of calendar year performance because of seasonal and short-term variations.

Recent Accounting Guidance

The FASB Accounting Standards Codification--In June 2009, the Financial Accounting Standards Board (the “FASB”) issued its final Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” (“FAS 168”). FAS 168 established the Accounting Standards Codification (the “Codification” or “FASB ASC”) as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SEC rules and interpretive releases are also sources of authoritative U.S. GAAP for SEC registrants. FAS 168 established two levels of U.S. GAAP R 11; authoritative and nonauthoritative – and was incorporated into the Codification at FASB ASC Topic 105, “Generally Accepted Accounting Principles.”

The Codification simplifies user access to all authoritative accounting guidance by reorganizing U.S. GAAP pronouncements into a single source arranged by topic within a consistent structure. Following FAS 168, the FASB issues new standards in the form of Accounting Standards Updates (Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts are no longer issued). The FASB does not consider Accounting Standards Updates as authoritative in their own right; these updates will serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the changes in the Codification.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

A.	Basis of Financial Statement Preparation (continued)

In the description of the Accounting Standards Update that follows, references relate to the Codification Topic and descriptive title.

Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements--In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” which adds disclosure requirements for transfers in and out of Levels 1 and 2, requires separate disclosures for activity relating to Level 3 measurements, and clarifies input and valuation techniques. This ASU was effective for interim and annual periods beginning after December 15, 2009 (that is, the quarter ended April 3, 2010 for us), except for the Level 3 disclosures, which are effective for fiscal years beginning after December 15, 2010 (that is, t he quarter ending April 2, 2011 for us) and for interim periods within those years. The adoption of the revised guidance in FASB ASC Topic 820 did not affect our financial position, results of operations or cash flows.

B.	Seasonality of Business

Due to the seasonality of our business, our operating results for the nine months ended October 2, 2010 are not indicative of results that may be expected for any other interim period or for the year ending December 31, 2010. Business seasonality is the result of traditionally higher revenues during the second and third quarters as compared with the first and fourth quarters of the year, while the methods of accounting for fixed costs, such as depreciation expense, amortization, rent and interest expense, are not significantly impacted by business seasonality.

C.	Accounts Receivable, Net

Our accounts receivable, net, consisted of the following:

	October 2,		December 31,
	2010		2009

Accounts receivable	$	75,599	$	66,703
Receivables under contractual arrangements		13,199		7,044
		88,798		73,747
Less allowances for doubtful accounts		2,411		2,056
	$	86,387	$	71,691

Receivables under contractual arrangements consist of work-in-process in accordance with the terms of contracts, primarily with utility services customers.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

D.	Business Combinations and Identified Intangible Assets and Goodwill, Net

At the end of June 2010, we acquired a business for $5,836 cash and the assumption of certain liabilities. The cash paid of $5,836 was preliminarily allocated, including the liabilities assumed, to the fair value of the primary assets acquired: fixed assets, intangibles and goodwill. The measurement period for purchase price allocations ends as soon as information of the facts and circumstances becomes available, but does not exceed twelve months.

During the nine months ended October 3, 2009, we acquired one business for an aggregate purchase price of $1,458, including cash payment of $708 and debt issued of $750.

The carrying amounts of the identified intangibles and goodwill acquired in connection with our investments in businesses were as follows:

	October 2, 2010				December 31, 2009
	Carrying		Accumulated		Carrying		Accumulated
Identified Intangible Assets and Goodwill, Net	Amount		Amortization		Amount		Amortization

Amortized intangible assets:
Customer lists/relationships	$	10,822	$	8,134	$	9,181	$	7,735
Employment-related		5,443		3,734		4,881		3,321
Tradenames		4,293		2,044		3,954		1,685

Amortized intangible assets	$	20,558	$	13,912	$	18,016	$	12,741

Less accumulated amortization		13,912				12,741

Identified intangibles, net		6,646				5,275

Unamortized intangible assets:
Goodwill Not amortized		22,177				20,748

	$	28,823			$	26,023

E.	Long-Term Debt

Our long-term debt consisted of the following:

	October 2,		December 31,
	2010		2009
Revolving credit facility
Prime rate borrowings	$	-	$	7,800
LIBOR borrowings		30,000		30,000
Term loan		-		4,750
		30,000		42,550
Senior unsecured notes		30,000		-
Term loans		9,129		9,787
		69,129		52,337
Less current portion		7,524		6,494
	$	61,605	$	45,843

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

E.	Long-Term Debt (continued)

Revolving Credit Facility and 5.09% Senior Unsecured Notes--On July 22, 2010, we issued $30,000 of 5.09% Senior Unsecured Notes, Series A, due July 22, 2020 and amended the Amended and Restated Credit Agreement dated November 21, 2006 to provide a revolving credit facility under which up to an aggregate of $140,000 is available (previously $159,000), with the term extended to December 19, 2014.

The 5.09% Senior Unsecured Notes, Series A, due July 22, 2020 (the “5.09% Senior Notes”), were issued pursuant to a Master Note Purchase Agreement (the “Purchase Agreement”), between the Company and the purchasers of the 5.09% Senior Notes. Subsequent series of promissory notes may be issued pursuant to supplemental note purchase agreements in an aggregate additional principal amount not to exceed $20,000.

The net proceeds of the 5.09% Senior Notes were used to pay down borrowings under our revolving credit facility.

The 5.09% Senior Notes are equal in right of payment with our revolving credit facility and all other senior unsecured obligations of the Company. Interest is payable semiannually and five equal, annual principal payments commence on July 22, 2016 (the sixth anniversary of issuance). The Purchase Agreement contains customary events of default and covenants related to limitations on indebtedness and transactions with affiliates and the maintenance of certain financial ratios.

The Amended Credit Agreement provides a revolving credit facility with a group of banks under which up to an aggregate of $140,000 is available, with a letter of credit sublimit of $100,000. Under certain circumstances, the amount available under the revolving credit facility may be increased to $160,000.

As at October 2, 2010, we had unused commitments under the facility approximating $52,783, with $87,217 committed, consisting of borrowings of $30,000 and issued letters of credit of $57,217. Borrowings outstanding bear interest, at Davey Tree’s option, of either (a) a base rate plus a margin adjustment ranging from .0% to .25% or (b) LIBOR plus a margin adjustment ranging from 1.25% to 1.75%--with the margin adjustments in both instances based on a ratio of funded debt to EBITDA. The base rate is the greater of (i) the agent ba nk’s prime rate (ii) LIBOR plus 1.5%, or (iii) the federal funds rate plus .5%. A commitment fee ranging from .20% to .30% is also required based on the average daily unborrowed commitment.

The Amended Credit Agreement extended the term of the revolving credit facility to December 19, 2014 from December 15, 2011. The revolving credit facility contains certain affirmative and negative covenants customary for this type of facility and includes financial covenant ratios, as defined, with respect to funded debt to EBITDA (earnings before interest, taxes, depreciation and amortization), and funded debt to capitalization.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

F.	Stock-Based Compensation

The Davey Tree Expert Company 2004 Omnibus Stock Plan (the “Stock Plan”) was approved by our shareholders at our annual shareholders' meeting in May 2004. The Stock Plan is administered by the Compensation Committee of the Board of Directors, with the maximum number of common shares that may be granted to or purchased by all employees and directors under the Stock Plan being 10,000,000. In addition to the maintenance of the Employee Stock Purchase Plan, the Stock Plan provides for the grant of stock options, restricted stock, stock appreciation rights, stock purchase rights, stock equivalent units, cash awards, and other stock or performance-based incentives. These awa rds are payable in cash or common shares, or any combination thereof, as established by the Compensation Committee.

Stock-based compensation expense under all share-based payment plans -- our Employee Stock Purchase Plan, stock option plans, stock appreciation rights and performance-based restricted stock units -- included in the results of operations follows:

	Three Months Ended				Nine Months Ended
	October 2,		October 3,		October 2,		October 3,
	2010		2009		2010		2009

Compensation expense, all share-based payment plans	$	298	$	272	$	909	$	802

Stock-based compensation consisted of the following:

Employee Stock Purchase Plan--Under the Employee Stock Purchase Plan, all full-time employees with one year of service are eligible to purchase, through payroll deduction, common shares. Employee purchases under the Employee Stock Purchase Plan are at 85% of the fair market value of the common shares--a 15% discount. We recognize compensation costs as payroll deductions are made. The 15% discount of total shares purchased under the plan resulted in compensation cost of $286 being recognized for the nine months ended October 2, 2010 and $275 for the nine months ended October 3, 2009.

Stock Option Plans--Stock options awarded before January 1, 2006 were granted at an exercise price equal to the fair market value of our common shares at the dates of grant. Stock options awarded on or after January 1, 2006 were required to be measured at fair value. At October 2, 2010, there were 584,068 stock options outstanding that were awarded after January 1, 2006. The stock options were awarded under a graded vesting schedule and have a term of ten years. Compensation costs for stock options are recognized over the requisite service period on the straight-line recognition method. Compensation cost recognized for stock options was $263 for the nine months ended October 2, 2010 and $223 for the nine months ended October 3, 2009.

Stock-Settled Stock Appreciation Rights--During the nine months ended October 2, 2010, the Compensation Committee of the Board of Directors awarded 89,421 Stock-Settled Stock Appreciation Rights (“SSARs”) to certain management employees and nonemployee directors which vest ratably over five years. A stock-settled stock appreciation right is an award that allows the recipient to receive common stock equal to the appreciation in the fair market value of our common stock between the date the award was granted and the conversion date of the shares vested.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

F.	Stock-Based Compensation (continued)

The following table summarizes our SSARs as of October 2, 2010.

						Weighted-
				Weighted-		Average
				Average		Remaining	Unrecognized		Aggregate
Stock-Settled	Number of			Award Date		Contractual	Compensation		Intrinsic
Stock Appreciation Rights	Rights			Value		Life	Cost		Value

Unvested, January 1, 2010		73,422		$	2.83
Granted		89,421			3.68
Forfeited		-
Vested		(14,684	)		2.83
Unvested, October 2, 2010		148,159		$	3.34	3.6 years	$	390	$	2,459

Employee SSARs		136,160		$	3.41	3.6 years	$	362	$	2,260
Nonemployee Director SSARs		11,999		$	2.58	4.4 years	$	28	$	199

Compensation costs for stock appreciation rights are determined using a fair-value method and amortized over the requisite service period. Compensation expense for stock appreciation rights was $78 for the nine months ended October 2, 2010 and $33 for the nine months ended October 3, 2009.

Performance-Based Restricted Stock Units--During the first nine months of 2010, the Compensation Committee of the Board of Directors awarded 29,038 Performance-Based Restricted Stock Units to certain management employees. The Compensation Committee made similar awards in prior periods. The awards vest over specified periods. The following table summarizes Performance-Based Restricted Stock Units as of October 2, 2010.

Weighted-

Average

Remaining

Unrecognized

Aggregate

Performance-Based

Number of

Grant Date

Contractual

Compensation

Intrinsic

Restricted Stock Units

Stock Units

Value

Life

Cost

Value

Unvested, January 1, 2010

118,666

12.94

Granted

29,038

15.42

Forfeited

Vested

(23,132

)

10.34

Unvested, October 2, 2010

124,572

14.00

2.7 years

$ 927

$ 2,068

The fair value of the restricted stock units for awards made prior to January 1, 2006 is based on the market price of our common shares on the date of award and is recognized as compensation cost on the straight-line recognition method over the vesting period. Compensation cost for awards made after December 31, 2005 is determined using a fair-value method and amortized over the requisite service period. Compensation expense on restricted stock awards totaled $282 for the nine months ended October 2, 2010 and $271 for the nine months ended October 3, 2009.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

F.	Stock-Based Compensation (continued)

For stock-based awards issued on or after January 1, 2006, we estimated the fair value of each award on the date of grant using a binomial option-pricing model. The binomial model considers a range of assumptions related to volatility, risk-free interest rate and employee exercise behavior. Expected volatilities utilized in the binomial model are based on historical volatility of our stock prices and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock-based awards is derived from the output of the binomial model and represents the period of time that awards granted are expected to be outstanding.

The fair values of stock-based awards granted were estimated at the dates of grant with the following weighted-average assumption.

	Nine Months Ended
	October 2,		October 3,
	2010		2009

Volatility rate		12.2%		12.5%
Risk-free interest rate		3.4%		2.3%
Expected dividend yield		1.5%		1.5%
Expected life of awards (years)		8.8		8.6

General Stock Option Information--The following table summarizes activity under the stock option plans for the nine months ended October 2, 2010.

						Weighted-
				Weighted-		Average
	Number of			Average		Remaining	Unrecognized		Aggregate
	Options			Exercise		Contractual	Compensation		Instrinic
Stock Options	Outstanding			Price		Life	Cost		Value

Outstanding, January 1, 2010		1,323,551		$	9.49
Granted		-			-
Exercised		(127,700	)		7.95
Forfeited		-			-
Outstanding, October 2, 2010		1,195,851		$	9.65	4.7 years	$	11,540	$	8,311

Exercisable, October 2, 2010		966,851		$	8.60	4.0 years			$	7,735

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

F.	Stock-Based Compensation (continued)

“Intrinsic value” is defined as the amount by which the market price of a common share exceeds the exercise price of an option. Information regarding the stock options outstanding at October 2, 2010 is summarized below:

				Weighted-	Weighted-				Weighted-
				Average	Average				Average
Stock Options		Number		Remaining	Exercise		Number		Exercise
Exercise Price		Outstanding		Contractual Life	Price		Exercisable		Price
Employee options:
	$ 6.75		603,783	3.2 years	$	6.75		603,783	$	6.75
	11.25		402,400	5.7 years		11.25		310,400		11.25
	16.00		137,000	9.1 years		16.00		-		16.00
			1,143,183	4.8 years		9.44		914,183		8.28
Director options:
	$7.85 to $16.40		52,668	3.0 years		14.20		52,668		14.20
			1,195,851	4.7 years		9.65		966,851		8.60

Common shares are issued from treasury upon the exercise of stock options, stock appreciation rights, restricted stock units or purchases under the Employee Stock Purchase Plan.

G.	Net Periodic Benefit Cost--Defined Benefit Pension Plans

The results of operations included the following net periodic benefit cost recognized related to our defined-benefit pension plans.

	Three Months Ended						Nine Months Ended
	October 2,			October 3,			October 2,			October 3,
	2010			2009			2010			2009
Components of pension cost

Service costs--increase in benefit obligation earned	$	33		$	29		$	98		$	88
Interest cost on projected benefit obligation		406			397			1,219		��	1,190
Expected return on plan assets		(442	)		(371	)		(1,325	)		(1,113	)
Amortization of net actuarial loss		154			210			461			630
Amortization of prior service cost		3			3			10			10
Amortization of transition asset		(18	)		(18	)		(52	)		(52	)
Net pension cost of defined-benefit pension plans	$	136		$	250		$	411		$	753

Employer Contributions--Contributions of $355 were made to our defined-benefit pension plans during the nine months ended October 2, 2010. We expect, as of October 2, 2010, to make additional defined-benefit plan contributions totaling $71 before December 31, 2010.

- 12 -

Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

H.	Income Taxes

Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate and, if our estimated annual tax rate changes, we make a cumulative adjustment. The 2010 annual effective tax rate is estimated to be 41.1%. Our annual effective tax rate for 2009 was 39.0%.

At December 31, 2009 we had unrecognized tax benefits of $2,165, of which $1,560 would affect our effective rate if recognized, and accrued interest expense related to unrecognized benefits of $290. At October 2, 2010, there were no significant changes in the unrecognized benefits, including the amount that would affect our effective tax rate if recognized, or the accrued interest expense related to the unrecognized tax benefits. Unrecognized tax benefits are the differences between a tax position taken, or expected to be taken in a tax return, and the benefit recognized for financial reporting purposes.

The amount of income taxes we pay is subject to audit by U.S. federal, state and Canadian tax authorities, which may result in proposed assessments. The tax years from 2006 to 2009 generally remain open to examination by the major tax jurisdictions. The Company’s U.S. tax returns for 2007 and 2008 are currently being examined by the Internal Revenue Service, the 2007 Canadian tax return is being examined by the Revenue Canada Agency, and various other state and provincial returns are also being examined. At October 2, 2010, we had $2,250 of unrecognized tax benefits of which $1,300 was classified as current related to the eventual outcome of the years currently under examination. We do not anticipate any such outcome to result in a material change to our results of operations.

I.	Comprehensive Income (Loss)

Comprehensive income (or loss) is comprised of net income (or net loss) and other components, including currency translation adjustments, changes in the fair value of interest rate contracts qualifying as cash flow hedges, and defined-benefit pension plan adjustments. The components of comprehensive income (loss) follow:

	Three Months Ended						Nine Months Ended
	October 2,			October 3,			October 2,			October 3,
	2010			2009			2010			2009
Comprehensive Income
Net income	$	4,841		$	4,965		$	9,439		$	11,867
Other comprehensive income (loss)
Currency translation adjustments		862			1,058			659			2,188
Interest rate swaps, change in fair value		84			(201	)		81			221
Defined benefit pension plans -- amortization of net
actuarial loss, prior service cost and transition asset		139			391			419			588
Other comprehensive income, before income taxes		1,085			1,248			1,159			2,997
Income tax expense, related to
items of other comprehensive income		(84	)		(72	)		(189	)		(308	)
Other comprehensive income		1,001			1,176			970			2,689

Comprehensive income	$	5,842		$	6,141		$	10,409		$	14,556

- 13 -

Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

I.	Comprehensive Income (Loss) (continued)

The following summarizes the components of other comprehensive income (loss) accumulated in shareholders’ equity:

						Defined			Accumulated
	Currency		Interest			Benefit			Other
	Translation		Rate			Pension			Comprehensive
	Adjustments		Contracts			Plans			Income (Loss)
Balance at January 1, 2010	$	2,055	$	(840	)	$	(6,164	)	$	(4,949	)
Unrealized gains		659		-			-			659
Unrealized gains in fair value		-		81			-			81
Unrecognized amounts from defined benefit pension plans		-		-			419			419
Tax effect		-		(31	)		(158	)		(189	)
Net of tax amount		659		50			261			970

Balance at October 2, 2010	$	2,714	$	(790	)	$	(5,903	)	$	(3,979	)

J.	Per Share Amounts and Common Shares Outstanding

We calculate our basic earnings per share by dividing net income or net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share are calculated in a similar manner, but include the effect of dilutive securities. To the extent these securities are antidilutive, they are excluded from the calculation of earnings per share. The per share amounts were computed as follows:

	Three Months Ended				Nine Months Ended
	October 2,		October 3,		October 2,		October 3,
	2010		2009		2010		2009
Income available to common shareholders:
Net income	$	4,841	$	4,965	$	9,439	$	11,867

Weighted-average shares:
Basic:
Outstanding		14,504,320		14,837,934		14,614,185		14,661,089
Partially-paid share subscriptions		-		59,836		-		177,556
Basic weighted-average shares		14,504,320		14,897,770		14,614,185		14,838,645

Diluted:
Basic from above		14,504,320		14,897,770		14,614,185		14,838,645
Incremental shares from assumed:
Exercise of stock subscription purchase rights		-		104,190		-		243,593
Exercise of stock options		488,422		562,849		517,168		598,290
Diluted weighted-average shares		14,992,742		15,564,809		15,131,353		15,680,528

Net income per share
Basic	$	.33	$	.33	$	.65	$	.80

Diluted	$	.32	$	.32	$	.62	$	.76

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

J.	Per Share Amounts and Common Shares Outstanding (continued)

Common Shares Outstanding--A summary of the activity of the common shares outstanding for the nine months ended October 2, 2010 follows:

Shares outstanding at January 1, 2010	14,572,228

Shares purchased	(798,292	)
Shares sold	267,259
Stock subscription offering, employee cash purchases	200,380
Options exercised	176,577
	(154,076	)

Shares outstanding at October 2, 2010	14,418,152

On October 2, 2010, we had 14,418,152 common shares outstanding and employee and director options exercisable to purchase 966,851 common shares.

During the second quarter 2010, the promissory notes related to the common share subscription offering completed in August 2002, were paid-in-full for stock subscription financing payments made by biweekly payroll deduction. All other promissory notes related to the common share offering completed in August 2002 whereby some employees opted to finance their subscription with a down-payment of at least 10% of their total purchase price and a seven-year promissory note for the balance due, with interest at 4.75% per year have been paid or, in a few instances, canceled. The promissory notes outstanding were collateralized with the common shares subscribed and the common shares were only issued when the related promissory note was paid-in-full. Dividends were paid on all unissued subscribed shares.

K.	Operations by Business Segment

Our operating results are reported in two segments: Residential and Commercial Services, and Utility Services.

Residential and Commercial Services provides for the treatment, preservation, maintenance, cultivation, planting and removal of trees, shrubs and other plant life; its services also include the practice of landscaping, tree surgery, tree feeding, and tree spraying, as well as the application of fertilizer, herbicides and insecticides. Utility Services is principally engaged in the practice of line clearing for investor-owned and municipal utilities, including the clearing of tree growth from power lines, clearance of rights-of-way and chemical brush control. Davey Resource Group, which provides services related to natural resource management and consulting, forestry research and development, and environmental planning and also maintains research, technical support and laboratory diagnostic facilities, is a nonreportable segment and, along with other operating activities, are included in “All Other.”

Measurement of Segment Profit and Loss and Segment Assets--We evaluate performance and allocate resources based primarily on operating income and also actively manage business unit operating assets. Segment information, including reconciling adjustments, is presented consistent with the basis described in the 2009 Annual Report.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

K.	Operations by Business Segment (continued)

Segment information reconciled to consolidated external reporting information follows:

			Residential
	Utility		Commercial		All			Reconciling
	Services		Services		Other			Adjustments				Consolidated

Three Months Ended October 2, 2010
Revenues	$	75,769	$	71,399	$	9,325		$	-			$	156,493
Income (loss) from operations		2,817		7,328		219			(284	)	(a)		10,080
Interest expense									(827	)			(827	)
Interest income									15				15
Other income (expense), net									(957	)			(957	)
Income before income taxes												$	8,311

Segment assets, total		111,651		105,183		12,091			58,030		(b)		286,955

Three Months Ended October 3, 2009
Revenues	$	75,091	$	65,120	$	9,061		$	-			$	149,272
Income (loss) from operations		3,956		5,741		658			(876	)	(a)		9,479
Interest expense									(587	)			(587	)
Interest income									10				10
Other income (expense), net									(634	)			(634	)
Income before income taxes												$	8,268

Segment assets, total		119,712		101,537		11,920			47,411		(b)		280,580

Nine Months Ended October 2, 2010
Revenues	$	216,873	$	195,777	$	28,424		$	-			$	441,074
Income (loss) from operations		6,822		15,969		(1,793	)		(1,069	)	(a)		19,929
Interest expense									(1,868	)			(1,868	)
Interest income									38				38
Other income (expense), net									(2,074	)			(2,074	)
Income before income taxes												$	16,025


Segment assets, total		111,651		105,183		12,091			58,030		(b)		286,955

Nine Months Ended October 3, 2009
Revenues	$	222,984	$	179,888	$	30,602		$	-			$	433,474
Income (loss) from operations		14,352		9,550		1,177			(2,008	)	(a)		23,071
Interest expense									(1,837	)			(1,837	)
Interest income									22				22
Other income (expense), net									(1,609	)			(1,609	)
Income before income taxes												$	19,647

Segment assets, total		119,712		101,537		11,920			47,411		(b)		280,580

(a) Reconciling adjustments from segment reporting to consolidated external financial reporting include reclassification of depreciation expense and allocation of corporate expenses.

(b) Corporate assets include cash, prepaid expenses, corporate facilities, enterprise-wide information systems and other nonoperating assets.

- 16 -

Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

L.	Fair Value Measurements and Derivative Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are defined as buyers or sellers in the principal or most advantageous market for the asset or liability that are independent of the reporting entity, knowledgeable, and able and willing to transact for the asset or liability.

Valuation Hierarchy--A valuation hierarchy is used for presentation of the inputs to measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A finan cial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Our assets and liabilities measured at fair value on a recurring basis at October 2, 2010, were as follows:

			Fair Value Measurements at October 2, 2010 Using:
	Total		Quoted prices		Significant		Significant
	Carrying		in		other observable		unobservable
	Value at		active markets		inputs		inputs
Description	October 2, 2010		(Level 1)		(Level 2)		(Level 3)

Assets:
Assets invested for self-insurance,
classified as other assets, noncurrent	$	10,675	$	10,675	$	-	$	-

Liabilities:
Interest rate swaps, classified as accrued expenses	$	1,274	$	-	$	1,274	$	-
Deferred compensation		685		-		685		-

There were no transfers of assets or liabilities between Level 1 and Level 2 during the third quarter ended October 2, 2010.

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

L.	Fair Value Measurements and Derivative Financial Instruments (continued)

Our assets and liabilities measured at fair value on a recurring basis at December 31, 2009 were as follows:

			Fair Value Measurements at December 31, 2009 Using:
	Total		Quoted prices		Significant		Significant
	Carrying		in		other observable		unobservable
	Value at		active markets		inputs		inputs
Description	December 31, 2009		(Level 1)		(Level 2)		(Level 3)

Assets:
Assets invested for self-insurance,
classified as other assets, noncurrent	$	9,487	$	9,487	$	-	$	-

Liabilities:
Interest rate swaps, classified as accrued expenses	$	1,355	$	-	$	1,355	$	-
Deferred compensation		773		-		773		-

Fair Value of Financial Instruments--The fair values of our current assets and current liabilities, including cash, accounts receivable, accounts payable, and accrued expenses among others, approximate their reported carrying values because of their short-term nature. Our noncurrent liabilities carried at historical cost and their estimated fair values were as follows:

	October 2, 2010				December 31, 2009
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Revolving credit facility, noncurrent	$	30,000	$	30,000	$	41,550	$	41,550
Term loans, noncurrent		1,605		1,598		4,293		4,267
Senior unsecured notes, noncurrent		30,000		30,368		-		-

Total	$	61,605	$	61,966	$	45,843	$	45,817

The carrying value of our revolving credit facility approximates fair value as the interest rates on the amounts outstanding are variable. The fair value of our term loans is determined based on expected future weighted-average interest rates with the same remaining maturities.

Derivative Financial Instruments and Market Risk

In the normal course of business, we are exposed to market risk related to changes in foreign currency exchange rates and changes in interest rates. We do not hold or issue derivative financial instruments for trading or speculative purposes. We manage interest rate risk by using derivative financial instruments, specifically interest rate swap contracts.

- 18 -

Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

L.	Fair Value Measurements and Derivative Financial Instruments (continued)

Foreign Currency Rate Risk--We are exposed to market risk related to foreign currency exchange rate risk resulting from our operations in Canada, where we provide a comprehensive range of horticultural services. Our financial results could be affected by factors such as changes in the foreign currency exchange rate or differing economic conditions in the Canadian markets as compared with the markets for our services in the United States. Our earnings are affected by translation exposures from currency fluctuations in the value of the U.S. dollar as compared to the Canadian dollar. Similarly, the Canadian dollar-denominated assets and liabilities may result in financial exposure as to the timing of transactions and the net asset / liability position of our Canadian operations. Presently, we do not engage in hedging activities related to our foreign currency rate risk.

Interest Rate Risk--We are exposed to market risk related to changes in interest rates on long-term debt obligations. The interest rates on substantially all of our long-term debt outstanding are variable. We have entered into interest rate swap contracts -- derivative financial instruments--with the objective of altering interest rate exposures related to variable debt.

Interest Rate Swaps--As of October 2, 2010, we held interest rate swap contracts—cash-flow hedges—to effectively convert a portion of our variable-rate revolving credit borrowings to a fixed rate, thus reducing the impact of interest-rate changes on future interest expense. Under the contracts, we agree with the counterparty to exchange, at specified intervals, the difference between variable rate and fixed rate amounts calculated on a notional principal amount. These interest rate swaps have reset dates and fixed-rate indices that match those of our underlying variable-rate long-term debt and have been designated as cash-flow hedges for a portion of that debt. As all of the critical terms of our interest rate swap contracts match the debt to which the y pertain, there was no ineffectiveness related to these interest rate swaps in 2010 or 2009 and all related unrealized gains and losses were deferred in accumulated other comprehensive income (loss). No material amounts were recognized in the results of operations related to our interest rate swaps during 2010 or 2009.

We had three interest rate swaps with the notional value totaling $30,000 as of October 2, 2010. The following summarizes the amount of the long-term debt hedged (which is the notional principal amount of the interest rate swaps), the percentage of long-term debt hedged and the gross fair value of the asset / (liability) position of the interest rate swaps.

	October 2,			December 31,
	2010			2009

Amount of long-term debt hedged	$	30,000		$	30,000

Percentage of long-term debt		49%			65%

Gross fair value asset/(liability) position, classified as accrued expenses	$	(1,274	)	$	(1,355	)

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Index

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

October 2, 2010

(Amounts in thousands, except share data)

L.	Fair Value Measurements and Derivative Financial Instruments (continued)

The following summarizes the amount of the gains (losses) recognized in other comprehensive income from the interest rate swaps for the nine months ended October 2, 2010 and October 3, 2009:

	Nine Months Ended
	October 2,		October 3,
	2010		2009
Derivatives in cash-flow hedging relationship:

Interest rate swaps	$	81	$	221

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

(Amounts in thousands, except share data)

Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to the accompanying condensed consolidated financial statements and notes to help provide an understanding of our financial condition, cash flows and results of operations.

We provide a wide range of horticultural services to residential, commercial, utility and institutional customers throughout the United States and Canada.

Our Business--Our operating results are reported in two segments: Residential and Commercial Services, and Utility Services for operations in the United States and Canada. Residential and Commercial Services provides for the treatment, preservation, maintenance, cultivation, planting and removal of trees, shrubs and other plant life; its services also include the practice of landscaping, tree surgery, tree feeding and tree spraying, as well as the application of fertilizer, herbicides and insecticides. Utility Services is principally engaged in the practice of line clearing for investor-owned and municipal utilities, including the clearing of tree growth from power lines, clearance of rights-of-way and chemical brush control.

Davey Resource Group, which provides services related to natural resource management and consulting, forestry research and development, and environmental planning and also maintains research, technical support and laboratory diagnostic facilities, is a nonreportable segment and, along with other operating activities, are included in “All Other.”

- 20 -

Index

RESULTS OF OPERATIONS

The following tables set forth our consolidated results of operations as a percentage of revenues and the percentage change in dollar amounts of the results of operations for the periods presented.

	Three Months Ended									Nine Months Ended
	October 2,			October 3,			Percentage			October 2,			October 3,			Percentage
	2010			2009			Change			2010			2009			Change

Revenues		100.0	%		100.0	%		4.8	%		100.0	%		100.0	%		1.8	%

Costs and expenses:
Operating		64.5			64.2			5.3			65.8			64.4			3.9
Selling		16.7			15.6			12.4			16.5			15.5			7.9
General and administrative		6.5			7.6			(10.9	)		7.0			8.2			(13.0	)
Depreciation and amortization		6.0			6.3			-			6.2			6.6			(3.2	)
Gain on sale of assets, net		(.1	)		-		nm				-			-		nm

Income from operations		6.4			6.3			6.3			4.5			5.3			(13.6	)

Other income (expense):
Interest expense		(.5	)		(.4	)		40.9			(.4	)		(.4	)		1.7
Interest income		-			-		nm				-			-		nm
Other, net		(.6	)		(.4	)		50.9			(.5	)		(.5	)		28.9

Income before income taxes		5.3			5.5			.5			3.6			4.4			(18.4	)

Income taxes		2.2			2.2			5.1			1.5			1.8			(15.3	)

Net income		3.1	%		3.3	%		(2.5	%)		2.1	%		2.6	%		(20.5	%)

nm--not meaningful

Third Quarter—Three Months Ended October 2, 2010 Compared to Three Months Ended October 3, 2009

Our results of operations for the three months ended October 2, 2010 compared to the three months ended October 3, 2009 follows:

	Three Months Ended
	October 2,			October 3,
	2010			2009			Change			% Change

Revenues	$	156,493		$	149,272		$	7,221			4.8	%

Costs and expenses:
Operating		100,861			95,790			5,071			5.3
Selling		26,147			23,268			2,879			12.4
General and administrative		10,101			11,338			(1,237	)		(10.9	)
Depreciation and amortization		9,411			9,413			(2	)		-
Gain on sale of assets, net		(107	)		(16	)		(91	)	nm
		146,413			139,793			6,620			4.7

Income from operations		10,080			9,479			601			6.3

Other income (expense):
Interest expense		(827	)		(587	)		(240	)		40.9
Interest income		15			10			5		nm
Other, net		(957	)		(634	)		(323	)		50.9

Income before income taxes		8,311			8,268			43			.5

Income taxes		3,470			3,303			167			5.1

Net income	$	4,841		$	4,965		$	(124	)		(2.5	%)

nm--not meaningful

- 21 -

Index

Revenues--Revenues of $156,493 increased $7,221 compared with $149,272 in the third quarter 2009. Utility Services increased $678 or .9% compared with the third quarter 2009. New contracts obtained during the third quarter 2010 in all utility operations were partially offset by reductions on existing contracts within our U.S. operations. Residential and Commercial Services increased $6,279 to $71,399 from the third quarter 2009, an increase of 9.6%. Residential and Commercial revenues for the third quarter 2010 were favorably impacted by the business we purchased at the end of June 2010 as well as a general increase in customer demand for our services. Total revenue of $156,493 includes production incentive revenue, recognized under the completed-perfor mance method, of $922 during the third quarter 2010 compared with $1,076 during the third quarter 2009.

Operating Expenses--Operating expenses of $100,861 increased $5,071 compared with the third quarter 2009 and, as a percentage of revenues, increased .3% to 64.5%. Utility Services increased $1,295 or 2.3% compared with the third quarter 2009, and as a percentage of revenues increased 1.1% to 76.7%. Increased fuel expense, equipment expense, tools expense and labor expenses, were partially offset by reductions in subcontractor expense and material expense. Residential and Commercial Services increased $3,738 or 11.4% compared with the third quarter 2009 and, as a percentage of revenues, increased .7% to 50.9%. Increased labor expense, subcontractor expense, material expense and fuel expense were partially offset by a reduction in equipment maintenance expense.

Fuel costs of $6,325 increased $657, or 11.6%, from the $5,668 incurred in the third quarter 2009 and impacted operating expenses within all segments.

Selling Expenses--Selling expenses of $26,147 increased $2,879 compared with the third quarter 2009 and as a percentage of revenues increased 1.1% to 16.7%. Utility Services increased $300 or 5.2% from the third quarter 2009. Increases in field management wages and incentive expense, communication expense, office rent and professional services expense were partially offset by decreases in field management travel expense and vehicle expense. Residential and Commercial Services experienced an increase of $2,623 or 15.4% over the third quarter 2009. Increases in field management wages and incentive expense, communication expense and sales and marketing expenses were partially offset by reductions in field management auto expense, professional services expense and fie ld management vehicle expense.

General and Administrative Expenses--General and administrative expenses of $10,101 decreased $1,237 from $11,338 in the third quarter 2009. Decreases in salary and incentive expense, professional service expense, employee development expense, office rent and utilities expense and pension expense were partially offset by increases in communications expense, postage expense and stock-based compensation expense.

Depreciation and Amortization Expense--Depreciation and amortization expense of $9,411 decreased $2 from $9,413 in the third quarter of 2010 and, as a percentage of revenues, decreased .3% to 6.0%. The decrease is attributable to a reduction in capital expenditures for equipment in the prior year.

Gain/Loss on the Sale of Assets, Net--Gain on the sale of assets was $107 for the third quarter 2010 as compared with a gain of $16 in the third quarter 2009. The increase is the result of an increase in the number of units disposed in the third quarter 2010 as compared with the third quarter 2009.

Interest Expense--Interest expense of $827 increased $240 from the $587 incurred in the third quarter 2009. The increase is attributable to higher average debt levels and higher average interest rates incurred on our Senior Notes issued during the third quarter 2010 as compared to the third quarter 2009.

Other, Net--Other, net, of $957 increased $323 from the $634 incurred in the third quarter 2009 and consisted of nonoperating income and expense, primarily foreign currency losses on the intercompany account balances of our Canadian operations, as compared to foreign currency gains in the third quarter 2009.

- 22 -

Index

Income Taxes--Income tax expense for the third quarter 2010 was $3,470, as compared to $3,303 for the third quarter 2009. Our tax provision for interim periods is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2010 annual effective tax rate is estimated to be 41.1%. Our annual effective tax rate for 2009 was 39.0%.

Net Income--Net income of $4,841 for the third quarter 2010 was $124 less than the $4,965 experienced in the third quarter 2009.

Nine Months Ended October 2, 2010 Compared to Nine Months Ended October 3, 2009

Our results of operations for the nine months ended October 2, 2010 compared to the nine months ended October 3, 2009 follows:

	Nine Months Ended
	October 2,			October 3,
	2010			2009			Change			% Change

Revenues	$	441,074		$	433,474		$	7,600			1.8	%

Costs and expenses:
Operating		290,225			279,343			10,882			3.9
Selling		72,546			67,244			5,302			7.9
General and administrative		30,922			35,543			(4,621	)		(13.0	)
Depreciation and amortization		27,463			28,378			(915	)		(3.2	)
Gain on sale of assets, net		(11	)		(105	)		94		nm
		421,145			410,403			10,742			2.6

Income from operations		19,929			23,071			(3,142	)		(13.6	)

Other income (expense):
Interest expense		(1,868	)		(1,837	)		(31	)		1.7
Interest income		38			22			16		nm
Other, net		(2,074	)		(1,609	)		(465	)		28.9

Income before income taxes		16,025			19,647			(3,622	)		(18.4	)

Income taxes		6,586			7,780			(1,194	)		(15.3	)

Net income	$	9,439		$	11,867		$	(2,428	)		(20.5	%)

nm--not meaningful

Revenues--Revenues of $441,074 increased $7,600 compared with $433,474 in the first nine months of 2009. Utility Services decreased $6,111 or 2.7% compared with the first nine months of 2009. Reductions on existing contracts within our U.S. and Canadian operations were partially offset by new accounts obtained in the third quarter 2010. Residential and Commercial Services increased $15,889 or 8.8% compared to the first nine months of 2009. Residential and Commercial revenues for the first nine months of 2010 were favorably impacted by winter and spring storms that occurred across the eastern and midwest parts of the U.S. as well as an increase in customer demand for our services. Total revenue of $441,0 74 includes production incentive revenue, recognized under the completed-performance method, of $4,227 during the first nine months of 2010 compared with $6,297 during the first nine months of 2009.

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Operating Expenses--Operating expenses of $290,225 increased $10,882 compared with the first nine months of 2009 and, as a percentage of revenues, increased 1.4% to 65.8%. Utility Services increased $1,191 or .7% compared with the first nine months of 2009. Increases in fuel expense, disposal expense and tools expense were partially offset by decreases in payroll expense, equipment expense and subcontractor expense. Residential and Commercial Services increased $9,940 or 10.7% compared with the first nine months of 2009 and, as a percentage of revenues, increased .8% to 52.3%. Increased labor expense, subcontractor expense, material expense and fuel expense, the result of the increased revenues, were partially offset by a reduction in equipment maintenance expense .

Fuel costs of $17,531 increased $2,783, or 18.9%, from the $14,748 incurred in the first nine months of 2009 and impacted operating expenses within all segments.

Selling Expenses--Selling expenses of $72,546 increased $5,302 compared with the first nine months of 2009 and as a percentage of revenues increased 1.0% to 16.5%. Utility Services decreased $686 to $17,229 from the $17,915 experienced in the first nine months of 2009. Reductions in field management wages and incentive expense, field management travel expense, office rent and communication expense were partially offset by increases in professional services expense and field management vehicle expense. Residential and Commercial Services experienced an increase of $5,493 or 11.5% over the first nine months of 2009. Increases in field management wages and incentive expense, field management travel expense, employee development expense and communication expense were partially offset by reductions in branch office wages, field management auto expense, office rent and utilities, sales and marketing expenses and office expenses.

General and Administrative Expenses--General and administrative expenses of $30,922 decreased $4,621 from $35,543 in the first nine months of 2009, and as a percentage of revenue decreased 1.2% to 7.0%. Decreases in salary and incentive expense, professional service expense, employee development expense, office rent and utilities expense and pension expense were partially offset by increases in communications expense and stock-based compensation expense. General and administrative expenses of $34,007 for the first nine months of 2008 included $2,916 related to businesses acquired in 2008 as well as other increases from the total $29,224 for the first nine months of 2007.

Depreciation and Amortization Expense--Depreciation and amortization expense of $27,463 decreased $915 from $28,378 in the first nine months of 2009 and, as a percentage of revenues, decreased .4% to 6.2%. The decrease is attributable to a reduction in capital expenditures for equipment in the prior year.

Gain/Loss on the Sale of Assets, Net--Gain on the sale of assets was $11 for the first nine months of 2010 as compared with a gain of $105 in the first nine months of 2009. The decrease is the result of a change in the mix of units sold in the first nine months of 2010 as compared with the first nine months of 2009.

Interest Expense--Interest expense of $1,868 increased $31 from the $1,837 incurred in the first nine months of 2009. The increase is attributable to slightly higher average debt levels and higher interest rates incurred on our Senior Notes issued during the third quarter of 2010 as compared to the first nine months of 2009.

Other, Net--Other, net, of $2,074 increased $465 from the $1,609 incurred in the first nine months of 2009 and consisted of nonoperating income and expense. The fluctuation was primarily due to foreign currency losses on the intercompany account balances of our Canadian operations as compared with foreign currency gains experienced in the first nine months of 2009.

Income Taxes--Income tax expense for the first nine months of 2010 was $6,586, as compared to $7,780 for the first nine months of 2009. Our tax provision for interim periods is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2010 annual effective tax rate is estimated to be 41.1%. Our annual effective tax rate for 2009 was 39.0%.

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Net Income--Net income of $9,439 for the first nine months of 2010 was $2,428 less than the $11,867 experienced in the first nine months of 2009.

LIQUIDITY AND CAPITAL RESOURCES

Our principal financial requirements are for capital spending, working capital and business acquisitions.

Cash Flow Summary

Our cash flows from operating, investing and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2010 and October 3, 2009, are summarized as follows:

	2010			2009
Cash provided by (used in):
Operating activities	$	24,211		$	37,934
Investing activities		(28,692	)		(17,036	)
Financing activites		6,084			(22,438	)
Increase (Decrease), in cash	$	1,603		$	(1,540	)

Cash Provided by Operating Activities--Cash provided by operating activities was $24,211 for the first nine months of 2010, $13,723 less than the $37,934 provided in the first nine months of 2009. The decrease in operating cash flow was primarily attributable to $9,809 more cash used for operating assets and liabilities and a decrease in depreciation and amortization of $915.

Overall, accounts receivable increased $14,531 during the first nine months of 2010, as compared to the $594 decrease during the first nine months of 2009. Included in the $594 decrease during first nine months of 2009 was the collection of receivables related to storm damage work performed in 2008, primarily related to hurricanes Gustav and Ike. With respect to the change in accounts receivable arising from business levels, the “days-sales-outstanding” in accounts receivable (sometimes referred to as “DSO”) at the end of the first nine months of 2010 was 50 days, the same as compared to the end of the first nine months of 2009.

Operating liabilities increased $4,238 in the first nine months of 2010, $7,588 more than the $3,350 decrease in the first nine months of 2009. Accounts payable and accrued expenses decreased $740 during the first nine months of 2010 as compared with a decrease of $9,717 for the first nine months of 2009. Decreases in trade payables and 401KSOP liabilities were partially offset by increases in employee compensation, compensated-absence and vacation accruals, self-insured medical claims, professional services and accrued interest. Self-insurance accruals increased $4,978 in the first nine months of 2010, which was $1,389 less than the increase of $6,367 experienced in the first nine months of 2009. The increase occurred in all classifications -- workers’ compens ation, general liability and vehicle liability--and resulted primarily from an overall increase in deductible amounts under commercial insurance and the self-insured risk retention.

For the first nine months of 2010, other, net, increased $3,728, $2,272 more than the $1,456 increase for the first nine months of 2009. The increase is attributable to increases in prepaid expenses and tax deposits, partially offset by a reduction in operating supplies and pension assets.

Cash Used In Investing Activities--Cash used in investing activities for the first nine months of 2010 was $28,692, or $11,656 more than the $17,036 used during the first nine months of 2009. The increase was a result of increased capital expenditures for equipment and purchases of a business.

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Cash Provided by Financing Activities--Cash provided by financing activities of $6,084 increased $28,522 during the first nine months of 2010 as compared with the $22,438 of cash used during the first nine months of 2009. During the first nine months of 2010, our unsecured borrowings, consisting of $30,000 senior unsecured notes issued less $12,550 paid-down on our revolving credit facility, provided $17,450 in cash as compared with the $10,950 borrowed during the first nine months of 2009. We use the credit facility primarily for capital expenditures and payments of notes payable related to acquisitions. Treasury share transactions (purchases and sales) used $1,321 less cash than the $9,155 used in the firs t nine months of 2009. Dividends paid of $1,854 decreased $79, as compared with $1,933 paid in the first nine months of 2009.

The net proceeds of the 5.09% Senior Notes were used to pay down borrowings under our revolving credit facility.

Off-Balance Sheet Arrangements

There are no “off-balance sheet arrangements” as that term is defined in Securities and Exchange Commission Regulation S-K, Item 303(a)(4)(ii).

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Contractual Obligations Summary

The following summarizes our long-term contractual obligations, as at October 2, 2010, to make future payments for the periods indicated.

			Three
			Months Ending
			December 31,		Year Ending December 31,
Description	Total		2010		2011		2012		2013		2014		Thereafter

Revolving credit facility	$	30,000	$	-	$	-	$	-	$	-	$	30,000	$	-
Senior notes		30,000		-		-		-		-		-		30,000
Term loans		9,129		1,868		5,671		730		480		380		-
Operating lease obligations		11,671		3,081		3,704		2,044		1,367		532		943
Self-insurance accruals		58,671		10,635		17,299		11,432		6,215		2,684		10,406
Purchase obligations		4,841		4,841		-		-		-		-		-
Other liabilities		7,417		1,964		563		615		425		334		3,516
	$	151,729	$	22,389	$	27,237	$	14,821	$	8,487	$	33,930	$	44,865

The self-insurance accruals in the summary above reflect the total of the undiscounted amount accrued, for which amounts estimated to be due each year may differ from actual payments required to fund claims. Purchase obligations in the summary above represent open purchase-order amounts we anticipate will become payable for goods and services we have negotiated for delivery as of October 2, 2010. Other liabilities include estimates of future expected funding requirements related to retirement plans and other sundry items. Because their future cash outflows are uncertain, accrued income tax liabilities for uncertain tax positions, as of October 2, 2010, have not been included in the summary above. Noncurrent deferred taxes and payments related to defined benefit pension plans are also not included in the summary.

As of October 2, 2010, we were contingently liable for letters of credit in the amount of $58,238, of which $57,217 is committed under the revolving credit facility. Substantially all of these letters of credit, which expire within a year, are planned for renewal as necessary.

Also, as is common in our industry, we have performance obligations that are supported by surety bonds, which expire during 2010 through 2014. We intend to renew the surety bonds where appropriate and as necessary.

Capital Resources

Cash generated from operations and our revolving credit facility are our primary sources of capital.

Business seasonality results in higher revenues during the second and third quarters as compared with the first and fourth quarters of the year, while our methods of accounting for fixed costs, such as depreciation expense, are not significantly impacted by business seasonality. Capital resources during these periods are equally affected. We satisfy seasonal working capital needs and other financing requirements with the revolving credit facility and three other short-term lines of credit. We are continually reviewing our existing sources of financing and evaluating alternatives. At October 2, 2010, we had working capital of $34,539, short-term lines of credit approximating $11,390 and $52,783 available under our revolving credit facility.

We believe our sources of capital, at this time, provide us with the financial flexibility to meet our capital-spending plans and to continue to complete business acquisitions for the foreseeable future.

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Recent Accounting Guidance

The Codification supersedes all existing non-SEC accounting and reporting standards and was effective for us beginning July 5, 2009. As the Codification was not intended to change or alter existing U.S. GAAP, it did not affect our financial position, results of operations or cash flows.

In the description of the Accounting Standards Update that follows, references relate to the Codification Topic and descriptive title.

Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements--In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” which adds disclosure requirements for transfers in and out of Levels 1 and 2, requires separate disclosures for activity relating to Level 3 measurements and clarifies input and valuation techniques. This ASU was effective for interim and annual periods beginning after December 15, 2009 (that is, the quarter ended April 3, 2010 for us), except for the Level 3 disclosures, which are effective for fiscal years beginning after December 15, 2010 (that is, th e quarter ending April 2, 2011 for us) and for interim periods within those years. The adoption of the revised guidance in FASB ASC Topic 820 did not affect our financial position, results of operations or cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented.

As discussed in our annual report on Form 10-K for the year ended December 31, 2009, we believe that our policies related to revenue recognition, the allowance for doubtful accounts and self-insurance accruals are our “critical accounting policies and estimates”—those most important to the financial presentations and those that require the most difficult, subjective or complex judgments.

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On an ongoing basis, we evaluate our estimates and assumptions, including those related to accounts receivable, specifically those receivables under contractual arrangements primarily arising from Utility Services customers; allowance for doubtful accounts; and self-insurance accruals. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, forward-looking statements may be identified by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to differ materially from what is expressed or implied in these forward-looking statements. Some importan t factors that could cause actual results to differ materially from those in the forward-looking statements include:

§	Our business, other than tree services to utility customers, is highly seasonal and weather dependent.

§	The current economic uncertainty and the continuing financial and credit disruptions may continue to reduce our customers’ spending, adversely impact pricing for our services, and impede our collection of accounts receivable.

§	Significant customers, particularly utilities, may experience financial difficulties, resulting in payment delays or delinquencies.

§	The seasonal nature of our business and changes in general and local economic conditions, among other factors, may cause our quarterly results to fluctuate, and our prior performance is not necessarily indicative of future results.

§	The current economic uncertainty may limit our access to capital.

§	Significant increases in fuel prices for extended periods of time will increase our operating expenses.

We have significant contracts with our utility, commercial and government customers that include liability risk exposure as part of those contracts. Consequently, we have substantial insurance, and increases in the cost of obtaining adequate insurance, or the inadequacy of our self-insurance accruals or insurance coverages, could negatively impact our liquidity.

§	Because no public market exists for our common shares, the ability of shareholders to sell their common shares is limited.

§	We are subject to intense competition.

§	Our failure to comply with environmental laws could result in significant liabilities, fines and/or penalties.

§	The impact of regulations initiated as a response to possible changing climate conditions could have a negative effect on our results of operations or our financial condition.

§	We may encounter difficulties obtaining surety bonds or letters of credit necessary to support our operations.

§	We are dependent, in part, on our reputation of quality, integrity and performance. If our reputation is damaged, we may be adversely affected.

§	We may be unable to attract and retain a sufficient number of qualified employees for our field operations, and we may be unable to attract and retain qualified management personnel.

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§	Our facilities could be damaged or our operations could be disrupted, or our customers or vendors may be adversely affected, by events such as natural disasters, pandemics, terrorist attacks or other external events.

§	We may become subject to claims and litigation that may have an adverse effect on us.

§	We may misjudge a competitive bid and be contractually bound to an unprofitable contract.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this quarterly report on Form 10-Q to conform these statements to actual future results.

The factors described above, as well as other factors that may adversely impact our actual results, are discussed in our annual report on Form 10-K for the year ended December 31, 2009 in “ Part I - Item 1A. Risk Factors.”

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

MARKET RISK INFORMATION

In the normal course of business, we are exposed to market risk related to changes in interest rates and changes in foreign currency exchange rates. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Interest Rate Risk

We are exposed to market risk related to changes in interest rates on long-term debt obligations. The interest rates on substantially all of our long-term debt outstanding are variable. We have entered into interest rate contracts--derivative financial instruments--with the objective of altering interest rate exposures related to variable debt.

The following table provides information, as of October 2, 2010, about our debt obligations and interest rate contracts. For debt obligations, the table presents principal cash flows, weighted-average interest rates by expected maturity dates and fair values. For the interest rate contracts, the table presents the underlying face (notional) amount, weighted-average interest rate by contractual maturity dates and the fair value to settle the contract at October 2, 2010. Weighted-average interest rates used for variable-rate obligations are based on rates as derived from published spot rates, in effect as at October 2, 2010.

															Fair Value
	Expected Maturity Date														October 2,
	2011		2012		2013		2014		2015		Thereafter		Total		2010

Liabilities
Long-term debt:
Fixed rate	$	4,902	$	114	$	100	$	-	$	-	$	30,000	$	35,116	$	35,477
Average interest rate		4.6%		5.1%		5.1%						5.1%

Variable rate	$	3,285	$	30,630	$	381	$	380	$	-	$	-	$	34,676	$	34,676
Average interest rate		1.9%		2.7%		3.4%		4.2%

Interest rate derivative instruments
Interest rate swap:
Pay fixed, notional amount	$	-	$	30,000	$	-	$	-	$	-	$	-	$	30,000	$	1,274
Average pay rate				3.42%
Average receive rate				0.26%

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Item 4. Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of October 2, 2010 in ensuring that information required to be included in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended October 2, 2010, there were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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The Davey Tree Expert Company

Part II. Other Information

Items 1, 3, 4 and 5 are not applicable.

Item 1A.	Risk Factors.

	Information regarding risk factors appears in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Note Regarding Forward-Looking Statements” in Part I – Item 2 of this Form 10-Q and in Part I – Item 1A of our annual report on Form 10-K for the year ended December 31, 2009. There have been no material changes from the risk factors described previously in our annual report on Form 10-K.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

	The following table provides information on purchases of our common shares outstanding made by us during the first nine months of 2010.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

Fiscal 2010

January 1 to January 30		726	$	16.00		n/a		n/a
January 31 to February 27		-		-		n/a		n/a
February 28 to April 3		119,606		16.60		n/a		n/a
Total First Quarter		120,332		16.50

April 4 to May 1		119,290		16.60		n/a		n/a
May 2 to May 29		170,007		16.60		n/a		n/a
May 30 to July 3		271,478		16.60		n/a		n/a
Total Second Quarter		560,775		16.60

July 4 to July 31		942		16.60		n/a		n/a
August 1 to August 28		20,699		16.60		n/a		n/a
August 29 to October 2		95,544		16.60		n/a		n/a
Total Third Quarter		117,185		16.60

Total Year to Date		798,292		16.58

n/a--Not applicable. There are no publicly announced plans or programs of the Company to purchase our common shares. Our common shares are not listed or traded on an established public trading market and market prices are, therefore, not available. Semiannually, for purposes of our 401KSOP, the fair market value of our common shares is determined by an independent stock valuation firm, based upon our performance and financial condition, using a peer group of comparable companies selected by that firm. The peer group currently consists of ABM Industries Incorporated, Comfort Systems USA, Inc., Dycom Industries, Inc., FirstService Corporation, Quanta Services, Inc., Rollins, Inc., and Scotts Miracle-Gro Company. The semiannual valuations are effective for a period of six months and the per share price established by those valuations is the price at which our Board of Directors has determined our common shares will be bough t and sold during that six-month period in transactions involving the Company or one of our employee benefit or stock purchase plans. Since 1979, we have provided a ready market for all shareholders through our direct purchase of their common shares, although we are under no obligation to do so. The purchases made of our common shares were added to our treasury stock.

Item 6. Exhibits.

See Exhibit Index page, below.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE DAVEY TREE EXPERT COMPANY



	By:	/s/ David E. Adante
Date: November 3, 2010		David E. Adante
		Executive Vice President, Chief Financial Officer and Secretary
		(Principal Financial Officer)



Date: November 3, 2010	By:	/s/ Nicholas R. Sucic
		Nicholas R. Sucic
		Vice President and Controller
		(Principal Accounting Officer)

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Exhibit Index

Exhibit No.	Description

10.1	Master Note Purchase Agreement dated July 22, 2010 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed July 22, 2010).

10.2	Amendment No. 2 to Amended and Restated Credit Agreement dated July 22, 2010 (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed July 22, 2010).

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed Herewith

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed Herewith

32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.	Furnished Herewith

32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.	Furnished Herewith

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Davey Tree Expert 10-Q2010 Q3 Quarterly report

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