11-K 1 jun0211k.htm UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________________

 

FORM 11-K



  X  

ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

 

For the fiscal year ended December 31, 2001

 

 

 

 

OR

 

 

 

     

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 0-11917

 ___________________________

 

 

A.  Full title of the plan and the address of the plan; if different from that of the issuer 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

 

 


 




 

 

The Davey 401KSOP and ESOP
REQUIRED INFORMATION

 

The following financial statements and exhibits are presented pursuant to Section 15(d) of the Securities Exchange Act of 1934:

 

(a)  Financial Statements:

 

       Financial statements of The Davey 401KSOP and ESOP for the year ended December 31, 2001

 

 

(b)  Exhibits:

 

       23.1 Consent of Ernst & Young LLP, Independent Auditors

       23.2 Consent of Deloitte & Touche LLP, Independent Auditors

 

 

 

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

 

 

 

 

 

 

Date:  June 26, 2002

By:

/s/ David E. Adante                            

 

 

David E. Adante

 

 

Executive Vice President, CFO

 

 

and Secretary

2


 


The Davey 401KSOP and ESOP
Financial Statements and Schedule
 December 31, 2001

 

Contents

 

 

 

Page

 

 

Financial Statements

 

 

 

       Report of Ernst & Young LLP, Independent Auditors

4

 

 

       Report of Deloitte & Touche LLP, Independent Auditors

5

 

 

       Statement of Net Assets Available for Benefits--December 31, 2001

6

 

 

       Statement of Net Assets Available for Benefits--December 31, 2000

7

 

 

       Statement of Changes in Net Assets Available for Benefits--
       Year Ended December 31, 2001


8

 

 

       Notes to Financial Statements--December 31, 2001

9

 

 

Schedule

 

 

 

       Schedule H, Line 4i--Schedule of Assets (Held at End of Year)--
       December 31, 2001


14

 

3

 

 

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

 

 

To the 401KSOP and ESOP Committee
The Davey 401KSOP and ESOP
Kent, Ohio

We have audited the accompanying statement of net assets available for benefits of The Davey 401KSOP and ESOP as of December 31, 2001, and the related statement of changes in net assets available for benefits for the year 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 audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2001, and the changes in its net assets available for benefits for the year then ended in conformity with accounting principles generally accepted in the United States.

 

Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2001 is presented for the purpose of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

 

                                                                              /s/ Ernst & Young LLP

 

Akron, Ohio
June 21, 2002

4

 

 

 

REPORT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS

 

 

To the 401KSOP and ESOP Committee
The Davey 401KSOP and ESOP
Kent, Ohio

We have audited the accompanying statement of net assets available for benefits of The Davey 401KSOP and ESOP (the "Plan") as of December 31, 2000.  This financial statement is the responsibility of the Plan's management.  Our responsibility is to express an opinion on this financial statement based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of net assets available for benefits is free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of net assets available for benefits.  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 audit provides a reasonable basis for our opinion.

 

In our opinion, such financial statement presents fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Deloitte & Touche LLP

 

Cleveland, Ohio
May 25, 2001

5


 


The Davey 401KSOP and ESOP

Statement of Net Assets Available for Benefits

December 31, 2001

 

 

 

Nonparticipant Directed--
The Davey Tree Expert Company Stock Fund

 



Participant Directed Investment Funds

 





2001
Total

 
 
 

 

 

 

 

 

 

Assets

 

 

 

 

 

Investments, at fair value:

 

 

 

 

 

     Common shares

$ 32,332,882

 

$    915,470

 

$ 33,248,352

     Mutual funds

-

 

4,660,352

 

4,660,352

     Common collective trust funds

        174,913

 

   1,978,528

 

     2,153,441

 
 
 

Total investments

32,507,795

 

7,554,350

 

40,062,145

 

 

 

 

 

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

     The Davey Tree Expert Company contributions

495,927

 

-

 

495,927

     Participants' contributions

-

 

71,364

 

71,364

     Dividends and interest

               322

 

                  -

 

               322

 
 
 

Total receivables

        496,249

 

        71,364

 

        567,613

 
 
 

Net assets available for benefits

$ 33,004,044

 

$ 7,625,714

 

$ 40,629,758

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

6


 


The Davey 401KSOP and ESOP

Statement of Net Assets Available for Benefits

December 31, 2000

 

 

 

Nonparticipant Directed--
The Davey Tree Expert Company Stock Fund

 



Participant Directed Investment Funds

 





2000
Total

 
 
 

 

 

 

 

 

 

Assets

 

 

 

 

 

Investments, at fair value:

 

 

 

 

 

     Common shares

$ 30,879,587

 

$    695,517

 

$ 31,575,104

     Mutual funds

-

 

4,125,955

 

4,125,955

     Common collective trust funds

        282,955

 

   1,812,777

 

     2,095,732

 
 
 

Total investments

31,162,542

 

6,634,249

 

37,796,791

 

 

 

 

 

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

     The Davey Tree Expert Company contributions

415,484

 

-

 

415,484

     Participants' contributions

-

 

69,369

 

69,369

     Dividends and interest

            1,242

 

                  -

 

            1,242

 
 
 

Total receivables

        416,726

 

        69,369

 

        486,095

 
 
 

Net assets available for benefits

$ 31,579,268

 

$ 6,703,618

 

$ 38,282,886

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

7


 


The Davey 401KSOP and ESOP

Statement of Changes in Net Assets Available for Benefits

Year ended December 31, 2001

 

 

 

Nonparticipant Directed--
The Davey Tree Expert Company Stock Fund

 



Participant Directed Investment Funds

 





2001
Total




           

 

 

 

 

 

 

Additions

 

 

 

 

 

Contributions:

 

 

 

 

 

Participants

$                  -

 

$ 1,687,413 

 

$   1,687,413

The Davey Tree Expert Company--
     common shares


555,444

 


 


555,444

Net appreciation (depreciation) in fair value
     of investments


2,711,148

 


(504,801)

 


2,206,347

Dividend and interest income

       615,585

 

     133,830 

 

        749,415

 
 
 

Total additions

3,882,177

 

1,316,442 

 

5,198,619

 

 

 

 

 

 

Deductions

 

 

 

 

 

Distributions to participants:

 

 

 

 

 

     Cash

1,737,363

 

391,334 

 

2,128,697

     Common shares

663,627

 

 

663,627

Administrative expenses

          56,411

 

         3,012 

 

          59,423

 
 
 

Total deductions

     2,457,401

 

     394,346 

 

     2,851,747

 
 
 

 

 

 

 

 

 

Net additions

1,424,776

 

922,096 

 

2,346,872

 

 

 

 

 

 

Net assets available for benefits:

 

 

 

 

 

     Beginning of year

   31,579,268

 

  6,703,618 

 

   38,282,886

 
 
 

     End of year

$ 33,004,044

 

$ 7,625,714 

 

$ 40,629,758

 
 
 

 

 

 

 

 

 

See notes to financial statements.

 

 

 

 

 

8


 


The Davey 401KSOP and ESOP

Notes to Financial Statements

December 31, 2001

 

 

A.  Description of the Plan

The following description of The Davey 401KSOP and ESOP (the Plan) provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan's provisions.

 

General

 The Plan is a defined contribution plan covering all domestic employees of The Davey Tree Expert Company (Company and Plan Sponsor) 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).

On March 15, 1979, the Company consummated a plan which transferred control of the Company to its employees through an employee stock ownership plan (the ESOP). At December 31, 1996, all of the 2,880,000 common 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.

KeyBank National Association (the Trustee) serves as the Plan's Trustee.

 

Contributions

Participating employees have the option to make elective contributions, subject to the limit allowed by the Internal Revenue Code ($10,500 for 2001 and 2000), further limited by other maximum contribution limits established by federal law, and subject to a weekly minimum contribution of $5. The Company makes a matching contribution equal to 50% of the first 3% of compensation that a participant contributes. Company contributions are made in either cash or the Company's common shares.

 

9


 


The Davey 401KSOP and ESOP

Notes to Financial Statements (continued)

 

 

A.  Description of the Plan (continued)

 

Participant Accounts

Each participant's account is credited with the participant's contribution and allocations of (a) the Company's contribution and, (b) plan earnings and charged with an allocation of administrative expenses. Allocations are based on the participant's selected investment mix. A participant is entitled to the benefit that can be provided from the participant's vested account balance.

 

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% vested after five years of continuous service, retirement (at 65 years of age or early retirement), permanent disability or death.

 

Investment Options

Participants may direct the investment of their contributions to the following fund options offered by the Plan, but not more than 25% of their total contributions may be made to The Davey Tree Expert Company Stock Fund.

Victory Money Market Fund--Invests in high-grade money market instruments.

Victory Intermediate Income Fund--Invests in bonds issued by corporations and obligations of the U.S. Government and its agencies or instrumentalities.

Aim Balanced Fund--Invests in a broadly diversified portfolio of stocks and bonds.

Victory Equity Index Fund--Invests 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.

Janus Twenty Fund Inc--Invests in a core of 20 to 30 companies that includes a combination of well established, multinational businesses and medium-size and faster-growing companies.

Invesco Dynamics Fund Inc--Invests in equity securities of mid-sized core growth companies.

Franklin Small-Mid Cap Growth Fund--Invests in common stocks of small and medium sized companies.

10


The Davey 401KSOP and ESOP

Notes to Financial Statements (continued)

 

 

A.  Description of the Plan (continued)

 

Mutual Discovery Fund--Invests in common and preferred stocks, debt securities and convertible securities of small sized companies. Approximately 50% of the funds are invested in foreign investments.

Templeton Growth Fund--Invests in common stocks and debt obligations of companies and governments in the U.S. and abroad.

The Davey Tree Expert Company Stock Fund--Invests in common shares of The Davey Tree Expert Company (with temporary investments made in the Employee Benefits Money Market Fund).

Participants may change their investment options once each quarter.

 

Payment of Benefits

Participants who terminate may elect to receive distributions of vested benefits either in cash or common shares of the Company. Shares of the Davey Tree Expert Company Stock Fund issued after January 1, 1997 are to be distributed in a lump sum as either shares or cash. Shares of the Davey Tree Expert Company Stock Fund issued before January 1, 1997 may be distributed in a lump sum of shares; or at the option of the participant, cash may be distributed either in lump-sum or monthly, quarterly, or annual installments over a period not to exceed 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 Company.

 

Forfeited Accounts

Forfeited nonvested accounts, used to reduce the Company's contributions for the year ended December 31, 2001, totaled $25,721.

 

Voting Rights

Each participant is entitled to exercise voting rights attributable to the common shares of the Company 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 common share for which instructions have not been given by a participant.

11


 


The Davey 401KSOP and ESOP

Notes to Financial Statements (continued)

 

 

B.  Summary of Significant Accounting Policies

 

Basis of Accounting

The financial statements have been prepared on the accrual basis of accounting.

 

Investment Valuation and Income Recognition

The Plan's investments are stated at fair value. Shares or units of mutual funds are valued at quoted market prices which represent the net asset value of shares or units held by the Plan at year-end. Common collective trust 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. The fair value of the Company's common shares is determined by an independent stock valuation firm.

Purchases and sales of securities are accounted for on the trade date.  Dividend income is accounted for on the ex-dividend date.

 

Administrative Expenses

The costs of administering the Plan are paid by the Company, 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 accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts. Actual results could differ from those estimates.

 

C.  Investments

The fair values of the investments representing 5% or more of the Plan's net assets at December 31, 2001 and 2000 were as follows:

 

 

December 31,

 

 

2001      

2000       

 

The Davey Tree Expert Company common shares,
     2,770,696 shares in 2001 and 2,870,464 shares in 2000


$ 33,248,352


$ 31,575,104

 

12


 


The Davey 401KSOP and ESOP

Notes to Financial Statements (continued)

 

 

C.  Investments (continued)

 

During the year ended December 31, 2001, the Plan's investments (including investments bought, sold, and held during the year) appreciated (depreciated) in value as follows:

 

 

Year Ended
December 31, 2001

 

 

Appreciation
(Depreciation)

 

 

 

The Davey Tree Expert Company common shares

$  2,800,824        

Mutual funds

(413,145)       

Common collective trust funds

(181,332)       

Net appreciation in fair value

$  2,206,347        

 

 

D.  Party-in-Interest Transactions

Certain plan investments include shares of funds managed by Key Trust Company of Ohio, N.A. Key Trust Company of Ohio, N.A. is an affiliate of the Plan Trustee and, therefore, these transactions qualify as party-in-interest transactions, as defined by ERISA.  Fees paid to the Trustee by the Plan totaled $33,981 for the year ended December 31, 2001.

 

E.  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 become 100% vested in their accounts.

 

F.  Tax Status of the Plan

The Internal Revenue Service (IRS) has determined and informed the Company, in 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 Company also received a favorable determination letter from the IRS, dated April 16, 2002, for Plan amendments executed subsequent to receiving the 1998 letter.  Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Sponsor believes that the Plan is operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.

13



 

The Davey 401KSOP and ESOP
EIN:  34-0176110              Plan Number:  004

Schedule H, Line 4i--Schedule of Assets
(Held at End of Year)

December 31, 2001

 

 

 

 

 

(a)

(b)
Identity of Issue, Borrower,
Lessor or Similar Party

(c)
Description of
Investment

(d)

Cost

(e)
Current
Value






 

 

 

 

 

*

The Davey Tree Expert Company (a)

2,770,696 common shares

$  4,811,855

$  33,248,352

 

 

 

 

 

 

Mutual Funds:

 

 

 

 

 

 

 

 

*

     Key Trust Company of Ohio, N.A.

Victory Intermediate Income
    Fund--49,705 units




485,617

 

 

 

 

 

 

     Aim Advisors

Aim Balanced Fund--
     1,185 shares

 


30,747

 

 

 

 

 

 

     Janus Capital

Janus Twenty Fund Inc--
     1,226 shares

 


47,146

 

 

 

 

 

 

     Invesco Funds Group

Invesco Dynamics Fund Inc--
     3,421 shares

 


54,500

 

 

 

 

 

 

     Franklin Templeton

Franklin Small-Mid Cap Growth
     Fund--51,043 shares

 


1,591,015

 

 

 

 

 

 

     Franklin Templeton

Mutual Discovery Fund--
     65,652 shares

 


1,186,994

 

 

 

 

 

 

     Franklin Templeton

Templeton Growth Fund--
     70,241 shares

 


1,264,333

 

 

 

 

 

 

Common Collective Trust Funds:

 

 

 

 

 

 

 

 

*

     Key Trust Company of Ohio, N.A.

Victory Money Market Fund--
     32,754 units

 


453,321

 

 

 

 

 

*

     Key Trust Company of Ohio, N.A.

Victory Equity Index Fund--
     18,700 units

 


1,468,204

 

 

 

 

 

*

     Key Trust Company of Ohio, N.A. (a)

Employee Benefits Money
     Market Fund--231,916 units


231,916


         231,916

       

 

 

 

 

 

 

 

 

 

$  40,062,145

*

A party-in-interest as defined by ERISA

 

 


(a)

Nonparticipant and participant directed

 

 

 

 

 

14