1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------------------------
FORM 11-K/A*
ANNUAL REPORT PURSUANT
TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------------
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 13 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number: 0-11917
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
The Davey 401KSOP and ESOP
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
The Davey Tree Expert Company
1500 North Mantua Street
P. O. Box 5193
Kent, Ohio 44240-5193
*This 11-K/A is being submitted to amend the Registrant's 1998 annual 11-K for
the following processing issues: correct formatting and missing tags on pages
4 through 15; submit pages 1-3 missing from original filing; add 1998 Victory
Intermediate Income Fund Net Assets available for benefits amount; add 1997
Interest Receivable line; and complete Item 27D - the 1998 Schedule of
Reportable Transactions.
2
FINANCIAL STATEMENTS AND EXHIBIT(S)
PAGE NO.
(a) FINANCIAL STATEMENTS (IN THIS REPORT)
-------------------- --------------
Independent Auditors' Report 6
Statement of Net Assets Available For Benefits -
December 31, 1998 7
Statement of Net Assets Available For Benefits -
December 31, 1997 8
Statement of Changes in Net Assets Available for Benefits -
Year Ended December 31, 1998 9
Statement of Changes in Net Assets Available for Benefits -
Year Ended December 31, 1997 10
Notes to Financial Statements - Years Ended
December 31, 1998 and 1997 11 - 13
Supplemental Schedules 14 - 15
(b) EXHIBIT(S)
Independent Auditors' Consent 16
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned, hereto duly authorized.
THE DAVEY 401KSOP AND ESOP
By: The Davey Tree Expert Company,
as Plan Administrator
By: /s/ David E. Adante
-------------------
David E. Adante
Executive Vice President, CFO and
Secretary-Treasurer
June 28, 1999
4
THE DAVEY 401KSOP AND ESOP
Financial Statements for the Years Ended
December 31, 1998 and 1997;
Supplemental Schedules for the Year Ended
December 31, 1998, and Independent
Auditors' Report
5
THE DAVEY 401KSOP AND ESOP
TABLE OF CONTENTS
- ----------------------------------------------------------------------
PAGE
----
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998
AND 1997 AND FOR THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits 2-3
Statements of Changes in Net Assets Available
for Benefits 4-5
Notes to Financial Statements 6-8
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1998:
Item 27a - Schedule of Assets Held for
Investment Purposes 9
Item 27d - Schedule of Reportable Transactions 10
6
INDEPENDENT AUDITORS' REPORT
To the 401KSOP and ESOP Committee
The Davey 401KSOP and ESOP
Kent, Ohio
We have audited the accompanying statements of net assets available for benefits
of The Davey 401KSOP and ESOP (the "Plan") as of December 31, 1998 and 1997, 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 generally accepted auditing
standards. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 1998 and (2) reportable
transactions for the year ended December 31, 1998 are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental
information by fund in the statements of net assets available for benefits and
the statements of changes in net assets available for benefits is presented for
the purpose of additional analysis rather than to present the net assets
available for benefits and changes in net assets available for benefits of the
individual funds. The supplemental schedules and supplemental information by
fund are the responsibility of the Plan's management. Such supplemental
schedules and supplemental information by fund have been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
/s/ Deloitte & Touche LLP
Cleveland, Ohio
June 18, 1999
7
THE DAVEY 401KSOP AND ESOP
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998
- ----------------------------------------------------------------------
SUPPLEMENTAL INFORMATION BY FUND
-----------------------------------------------------------------
NON-PARTICIPANT
DIRECTED PARTICIPANT DIRECTED
--------------- ----------------------------
THE DAVEY TREE TOTAL PRISM MONEY VICTORY
EXPERT COMPANY PARTICIPANT MARKET INTERMEDIATE
TOTAL STOCK FUND DIRECTED FUND INCOME FUND
----- -------------- ----------- ----------- ------------
ASSETS:
Investments, at fair value:
Common stock $ 47,639,232 $ 47,101,888 $ 537,344
Registered investment companies 1,621,143 1,621,143 $ 184,594
Collective funds 1,382,597 391,118 991,479 $ 193,158
------------ ------------ ------------ ------------ ------------
Total investments 50,642,972 47,493,006 3,149,966 193,158 184,594
Receivables:
Employer's contribution 450,144 450,144
Interest receivable 1,163 1,163
------------ ------------ ------------ ------------ ------------
Total receivables 451,307 451,307
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 51,094,279 $ 47,944,313 $ 3,149,966 $ 193,158 $ 184,594
============= ============= ============= ============ ============
SUPPLEMENTAL INFORMATION BY FUND
---------------------------------------------------------------------------------
PARTICIPANT DIRECTED
---------------------------------------------------------------------------------
EB EQUITY FRANKLIN MUTUAL TEMPLETON THE DAVEY TREE
INDEX SMALL CAP DISCOVERY GROWTH EXPERT COMPANY
FUND GROWTH FUND FUND FUND STOCK FUND
---------- -------------- ----------- ----------- --------------
ASSETS:
Investments, at fair value:
Common stock $ 537,344
Registered investment companies $ 577,975 $ 385,524 $ 473,050
Collective Funds $ 765,842 32,479
------------ ------------ ------------ ------------ ------------
Total investments 765,842 577,975 385,524 473,050 569,823
Receivables:
Employer's contribution
Interest receivable
------------ ------------ ------------ ------------ ------------
Total receivables
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 765,842 $ 577,975 $ 385,524 $ 473,050 $ 569,823
============ ============ ============ ============ ============
See notes to financial statements.
8
THE DAVEY 401KSOP AND ESOP
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
- ----------------------------------------------------------------------
SUPPLEMENTAL INFORMATION BY FUND
-----------------------------------------------------------------
NON-PARTICIPANT
DIRECTED PARTICIPANT DIRECTED
--------------- ----------------------------
THE DAVEY TREE TOTAL PRISM MONEY VICTORY
EXPERT COMPANY PARTICIPANT MARKET INTERMEDIATE
TOTAL STOCK FUND DIRECTED FUND INCOME FUND
----- -------------- ----------- ----------- ------------
ASSETS:
Investments, at fair value:
Common stock $ 41,450,438 $ 41,231,097 $ 219,341
Registered investment companies 749,730 749,730 $ 87,796
Collective funds 780,405 376,785 403,620 $ 90,435
------------ ------------ ------------ ------------ ------------
Total investments 42,980,573 41,607,882 1,372,691 90,435 87,796
Receivables:
Employer's contribution 404,472 404,472
Participants' contributions 47,763 47,763 2,371 2,410
Interest receivable 1,448 1,448
------------ ------------ ------------ ------------ ------------
Total receivables 453,683 405,920 47,763 2,371 2,410
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 43,434,256 $ 42,013,802 $ 1,420,454 $ 92,806 $ 90,206
============ ============ ============ ============ ============
SUPPLEMENTAL INFORMATION BY FUND
---------------------------------------------------------------------------------
PARTICIPANT DIRECTED
---------------------------------------------------------------------------------
EB EQUITY FRANKLIN MUTUAL TEMPLETON THE DAVEY TREE
INDEX SMALL CAP DISCOVERY GROWTH EXPERT COMPANY
FUND GROWTH FUND FUND FUND STOCK FUND
---------- -------------- ----------- ----------- --------------
ASSETS:
Investments, at fair value:
Common Stock $ 219,341
Registered investment companies $ 252,225 $ 187,203 $ 222,506
Collective funds $ 289,982 23,203
------------ ------------ ------------ ------------ ------------
Total investments 289,982 252,225 187,203 222,506 242,544
Receivables:
Employer's contribution
Participant's contributions 10,234 9,850 6,890 8,676 7,332
Interest receivable
------------ ------------ ------------ ------------ ------------
Total receivables 10,234 9,850 6,890 8,676 7,332
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 300,216 $ 262,075 $ 194,093 $ 231,182 $ 249,876
============= ============= ============= ============= ============
See notes to financial statements.
9
THE DAVEY 401KSOP AND ESOP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
- ----------------------------------------------------------------------
SUPPLEMENTAL INFORMATION BY FUND
-----------------------------------------------------------------
NON-PARTICIPANT
DIRECTED PARTICIPANT DIRECTED
--------------- ----------------------------
THE DAVEY TREE TOTAL PRISM MONEY VICTORY
EXPERT COMPANY PARTICIPANT MARKET INTERMEDIATE
TOTAL STOCK FUND DIRECTED FUND INCOME FUND
----- -------------- ----------- ----------- ------------
ADDITIONS:
Participant contributions $ 1,522,723 $ 1,522,723 $ 78,783 $ 82,450
Employer contributions - common shares 450,144 $ 450,144
Net appreciation (depreciation) in fair
value of investments 8,959,219 8,818,019 141,200 6,741 1,871
Dividend and interest income 705,676 608,045 97,631 4 7,203
----------- ------------ ----------- ----------- -----------
Total additions 11,637,762 9,876,208 1,761,554 85,528 91,524
----------- ------------ ----------- ----------- -----------
DEDUCTIONS:
Distributions to participants:
Cash 3,334,526 3,303,593 30,933 1,631 2,326
Common shares 581,495 581,495
Administrative expenses 61,718 60,609 1,109 24 24
----------- ------------ ----------- ----------- -----------
Total deductions 3,977,739 3,945,697 32,042 1,655 2,350
----------- ------------ ----------- ----------- -----------
TRANSFERS BETWEEN FUNDS - NET 16,479 5,214
---------- ----------- ----------- ----------- -----------
NET ADDITIONS 7,660,023 5,930,511 1,729,512 100,352 94,388
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 43,434,256 42,013,802 1,420,454 92,806 90,206
----------- ------------ ----------- ----------- -----------
End of year $51,094,279 $ 47,944,313 $ 3,149,966 $ 193,158 $ 184,594
=========== ============ =========== =========== ===========
SUPPLEMENTAL INFORMATION BY FUND
---------------------------------------------------------------------------------
PARTICIPANT DIRECTED
---------------------------------------------------------------------------------
EB EQUITY FRANKLIN MUTUAL TEMPLETON THE DAVEY TREE
INDEX SMALL CAP DISCOVERY GROWTH EXPERT COMPANY
FUND GROWTH FUND FUND FUND STOCK FUND
---------- -------------- ----------- ----------- --------------
ADDITIONS:
Participant contributions $ 331,815 $ 310,277 $ 219,907 $ 262,064 $ 237,427
Employer contributions-
common shares
Net appreciation (depreciation) in
fair value of investments 130,339 8,711 (37,624) (64,450) 95,612
Dividend and interest income 16 7,904 23,463 53,242 5,799
------------ ------------ ------------ ----------- ------------
Total additions 462,170 326,892 205,746 250,856 338,838
------------ ------------ ------------ ----------- ------------
DEDUCTIONS:
Distributions to participants:
Cash 7,338 6,474 1,554 5,791 5,819
Common shares
Administrative expenses 89 67 49 61 795
------------ ------------ ------------ ----------- ------------
Total deductions 7,427 6,541 1,603 5,852 6,614
------------ ------------ ------------ ----------- ------------
TRANSFERS BETWEEN FUNDS - NET 10,883 (4,451) (12,712) (3,136) (12,277)
------------ ------------ ------------ ----------- ------------
NET ADDITIONS 465,626 315,900 191,431 241,868 319,947
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 300,216 262,075 194,093 231,182 249,876
------------ ------------ ------------ ----------- ------------
End of year $ 765,842 $ 577,975 $ 385,524 $ 473,050 $ 569,823
============ ============ ============ =========== ============
See notes to financial statements.
10
THE DAVEY 401KSOP AND ESOP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1997
- ----------------------------------------------------------------------
SUPPLEMENTAL INFORMATION BY FUND
-----------------------------------------------------------------
NON-PARTICIPANT
DIRECTED PARTICIPANT DIRECTED
--------------- ----------------------------
THE DAVEY TREE TOTAL PRISM MONEY VICTORY
EXPERT COMPANY PARTICIPANT MARKET INTERMEDIATE
TOTAL STOCK FUND DIRECTED FUND INCOME FUND
----- -------------- ----------- ----------- ------------
ADDITIONS:
Participant contributions $ 1,323,529 $ 1,323,529 $ 91,170 $ 88,208
Employer contributions -
common shares 404,472 $ 404,472
Net appreciation (depreciation)
in fair value of investments 12,535,387 12,496,367 39,020 1,652 618
Dividend and interest income 616,208 557,760 58,448 54 2,038
------------ ------------ ------------- ----------- ------------
Total additions 14,879,596 13,458,599 1,420,997 92,876 90,864
------------ ------------ ------------- ----------- ------------
DEDUCTIONS:
Distributions to participants:
Cash 1,117,208 1,117,208
Common shares 10,373 10,373
Administrative expenses 43,969 43,426 543
------------ ------------ ------------- ----------- ------------
Total deductions 1,171,550 1,171,007 543
------------ ------------ ------------- ----------- ------------
TRANSFERS BETWEEN FUNDS - NET (70) (658)
------------ ------------ ------------- ----------- ------------
NET ADDITIONS 13,708,046 12,287,592 1,420,454 92,806 90,206
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 29,726,210 29,726,210
------------ ------------ ------------- ----------- ------------
End of year $ 43,434,256 $ 42,013,802 $ 1,420,454 $ 92,806 $ 90,206
============ ============ ============ =========== ============
SUPPLEMENTAL INFORMATION BY FUND
---------------------------------------------------------------------------------
PARTICIPANT DIRECTED
---------------------------------------------------------------------------------
EB EQUITY FRANKLIN MUTUAL TEMPLETON THE DAVEY TREE
INDEX SMALL CAP DISCOVERY GROWTH EXPERT COMPANY
FUND GROWTH FUND FUND FUND STOCK FUND
---------- -------------- ----------- ----------- --------------
Participant contributions $ 279,947 $ 251,707 $ 183,698 $ 229,103 $ 199,696
Employer contributions -
common shares
Net appreciation (depreciation)
in fair value of investments 20,718 (1,540) (7,758) (24,539) 49,869
Dividend and interest income 221 10,319 17,061 26,528 2,227
------------ ------------ ------------ ----------- ------------
Total additions 300,886 260,486 193,001 231,092 251,792
------------ ------------ ------------ ----------- ------------
DEDUCTIONS:
Distributions to participants:
Cash
Common shares
Administrative expenses 543
------------ ------------ ------------ ----------- ------------
Total deductions 543
------------ ------------ ------------ ----------- ------------
TRANSFERS BETWEEN FUNDS - NET (670) 1,589 1,092 90 (1,373)
------------ ------------ ------------ ----------- ------------
NET ADDITIONS 300,216 262,075 194,093 231,182 249,876
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year
------------ ------------ ------------ ----------- ------------
End of year $ 300,216 $ 262,075 $ 194,093 $ 231,182 $ 249,876
============ ============ ============ =========== ============
11
THE DAVEY 401KSOP AND ESOP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- ----------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of The Davey 401KSOP and ESOP (the "Plan")
(formerly The Davey Tree Company Employee Stock Ownership Plan) is provided
for general information purposes only. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
GENERAL - On March 15, 1979, The Davey Tree Expert Company (the "Employer" or
("Company") consummated a plan which transferred control of the Employer to
its employees through an Employee Stock Ownership Plan (the "ESOP"). At
December 31, 1996, all of the 2,880,000 shares sold to the ESOP had been
allocated to the participants in the Plan. Accordingly, effective January 1,
1997, an amendment was adopted which renamed and restated the Plan in its
entirety to incorporate a deferred savings plan (401(k) plan) feature. The
Plan retained the existing ESOP assets and participant accounts.
The Plan is a qualified defined contribution plan covering all domestic
employees who have attained age 21, completed one year of continuous service
and who are not members of a collective bargaining unit. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Key Trust Company of Ohio, N.A. (the "Trustee") serves as the Plan's trustee.
CONTRIBUTIONS - Contributions made by the participants are limited to the
amount allowed by the Internal Revenue Service with a weekly minimum
contribution of $5. The Company contributes 50 percent of the first 3
percent of compensation that a participant contributes to the Plan. Employer
contributions are made in either cash or the Employer's common stock.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and allocations of(a) the Employer's
contribution and (b) Plan earnings and charged with an allocation of
administrative expenses. Allocations are based on the participant's selected
investment mix. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
VESTING - Participants are immediately vested in their contributions plus
actual earnings thereon. Vesting in the Company's matching contribution plus
actual earnings thereon is based on years of continuous service. A
participant is 100 percent vested after five years of continuous service,
retirement (at 65 years of age or early retirement), permanent disability or
death.
INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may direct
employee contributions in any of seven investment options; however, a
participant may not elect to invest more than 25 percent of their
contribution in The Davey Tree Expert Company Stock Fund.
PRISM MONEY MARKET FUND - Based on the prospectus, funds are invested in
high-grade money market instruments.
VICTORY INTERMEDIATE INCOME FUND - Based on the prospectus, funds are
invested in bonds issued by corporations and obligations of the U.S.
Government and its agencies or instrumentalities.
EMPLOYEE BENEFITS EQUITY INDEX FUND - Based on the prospectus, funds are
invested in a diversified portfolio of common stocks included in the
Standard and Poor's 500 Index designed to replicate the performance of the
Standard & Poor's 500 Index.
12
1. DESCRIPTION OF THE PLAN (Continued)
FRANKLIN SMALL CAP GROWTH FUND - Based on the prospectus, funds are
invested in common stocks of small and medium sized companies.
MUTUAL DISCOVERY FUND - Based on the prospectus, funds are invested in
common and preferred stocks, debt securities and convertible securities of
small sized companies. Approximately 50 percent of the funds are invested
in foreign investments.
TEMPLETON GROWTH FUND - Based on the prospectus, funds are invested in
common stocks and debt obligations of companies and governments in the U.S.
and abroad.
THE DAVEY TREE EXPERT COMPANY STOCK FUND - Funds are invested in common
stock of The Davey Tree Expert Company and can be temporarily invested in
the EB Money Market Fund.
Participants may change their investment options quarterly.
PAYMENT OF BENEFITS - Participants who terminate may elect to receive
distributions of vested benefits either in the form of cash or common shares
of the Company. Shares are to be distributed in a lump-sum whereas, at the
option of the participant, cash may be distributed either in lump-sum or
monthly, quarterly, or annual installments over a period not exceeding either
the participant's normal life expectancy, or the normal life expectancy of
the participant and their beneficiary. Former participants wishing to sell
their shares must offer such shares first to the Plan and then to the
Employer.
FORFEITED ACCOUNTS - During the years ended December 31, 1998 and 1997,
forfeited nonvested amounts totaled $165,408 and $7,735, respectively. These
amounts are used to reduce future Employer contributions.
VOTING RIGHTS - Each participant is entitled to exercise voting rights
attributable to the shares allocated to his or her account and is notified by
the Trustee at least thirty days prior to the time such rights are to be
exercised. The Trustee is not permitted to vote any share for which
instructions have not been given by a participant.
ESOP - The ESOP was a non-contributory defined contribution plan, the assets
of which were invested in common shares of the Employer. Participation and
vesting requirements were the same as those of the Plan.
The ESOP was funded solely by the Employer's contributions to the ESOP in
such an amount, if any, as determined by the Employer's Board of Directors.
During the period that the debt under the loan agreement was outstanding, the
Employer, as guarantor, agreed to make contributions to the ESOP which would
be sufficient, along with all dividends and other earnings of the ESOP, to
enable the Trustee to make payments of the principal and interest due under
the loan agreement.
Allocations of the Employer's common shares were made to participants'
accounts as of the Plan's year-end. The number of shares released from
collateral and available for allocation was determined by dividing the sum of
the current year loan principal and interest payments by the sum of the
current and future years principal and interest payments. As of December 31,
1996, all 2,880,000 shares had been released from collateral. Of the
2,880,000 shares released, 242,795 shares have been distributed to
participants and 1,010,090 shares have been sold to the Employer primarily to
fund cash distributions to terminated participants through December 31, 1996.
The remaining 1,627,115 shares were allocated to the participants at a
current value of $18.20 per share or $29,613,493 ($1,525,420 at cost) at
December 31, 1996.
Allocations of shares were made to participants based on the ratio of each
participant's W-2 earnings to the earnings of all participants, subject to
certain limitations as defined by the ESOP. Participant forfeited nonvested
accounts were allocated in the same manner among the remaining eligible
participants and former participants.
13
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared on
the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value. Shares of registered investment companies are valued
at quoted market prices which represent the net asset value of shares held by
the Plan at year-end. Collective funds are stated at fair value as measured
by Key Asset Management, Inc., an affiliate of the Trustee, based on the fair
market value of the underlying investments of each collective fund. The fair
value of the Employer's common stock is based upon a common stock valuation
performed by an independent stock valuation firm.
Purchases and sales of securities are recorded on a trade-date basis.
Interest and dividend income is recorded on the accrual basis.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
ADMINISTRATIVE EXPENSES - Costs of administering the Plan are paid by the
Employer, except for trustee and recordkeeping fees, Company stock valuation
services and audit fees, which are paid by the Plan.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS - Reclassifications have been made to the prior-year
financial statements to conform to the current year presentation.
3.RELATED PARTY TRANSACTIONS
Certain plan investments are shares of investment funds managed by Key Trust
Company. Key Trust Company is the Trustee and, therefore, these transactions
qualify as party-in-interest. Fees paid to the Trustee by the Plan amount to
$48,614 and $20,785 for the years ended December 31, 1998 and 1997,
respectively.
4.TERMINATION OF THE PLAN
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
5.TAX STATUS OF THE PLAN
The Internal Revenue Service has determined and informed the Company by a
letter dated November 14, 1998 that the Plan is qualified and the trust
established under the Plan is tax-exempt under the appropriate sections of
the Internal Revenue Code (IRC). 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 IRC. Therefore, they
believe that the Plan was qualified and the related trust was tax-exempt as
of the financial statement date.
* * * * * *
14
THE DAVEY 401KSOP AND ESOP
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
- ----------------------------------------------------------------------
(a) (b) (c) (d) (e)
IDENTITY OF ISSUER, BORROWER,
CURRENT LESSOR OR SIMILAR PARTY DESCRIPTION OF INVESTMENT COST VALUE
------------------------------- ------------------------- ---- -----
* Key Trust Company of Ohio, N.A. Prism Money Market Fund -
16,127 units $ 184,819 $ 193,158
* Key Trust Company of Ohio, N.A. Victory Intermediate Income
Fund - 18,875 units 182,145 184,594
* Key Trust Company of Ohio, N.A. Employee Benefits Equity Index
Fund - 1,562 units 615,669 765,842
* Key Trust Company of Ohio, N.A. Employee Benefits Money
Market Fund - 423,597 units 423,597 423,597
Franklin Templeton Franklin Small Cap Growth Fund -
25,608 shares 570,429 577,975
Franklin Templeton Mutual Discovery Fund -
22,427 shares 428,970 385,524
Franklin Templeton Templeton Growth Fund -
28,897 shares 561,381 473,050
* The Davey Tree Expert Company 1,488,726 Common Shares 2,013,943 47,639,232
------------
$ 50,642,972
============
* Represents a party-in-interest.
15
THE DAVEY 401KSOP AND ESOP
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
- ----------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Current
Expense Value of
Description Incurred Asset on
Identity of of Purchase Selling Lease With Cost of Transaction Net Gain
Party Involved Asset Price Price Rental Transaction Asset Date or (Loss)
- -------------- ------------ -------- ------- ------- ----------- ------- ----------- ----------
Key Trust
Company of EB Money $ 2,233,850 None $ 2,233,850 $ 2,233,850 N/A
Ohio, N.A. Market Fund
Key Trust
Company of EB Money $ 2,210,241 None $ 2,210,241 $ 2,210,241 None
Ohio, N.A. Market Fund
The Davey Tree Common Shares $ 90,883 None $ 90,883 $ 90,883 N/A
Expert Company
The Davey Tree Common Shares $ 3,220,506 None $ 133,351 $ 3,220,506 $ 3,087,155
Expert Company
Note: Reportable transactions represent transactions or series of transactions
in excess of 5% of the fair value of Plan assets at the beginning of the
year.