Common Shares and Preferred Shares

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Common Shares and Preferred Shares

Common Shares and Preferred Shares

Preferred Shares--We have authorized a class of 4,000,000 preferred shares, no par value, of which none were issued.

Common Shares--The number of common shares authorized is 24,000,000, par value $1.00. The number of common shares issued during each of the three years in the period ended December 31, 2012 was 21,456,880. The number of shares in the treasury for each of the three years in the period ended December 31, 2012 was as follows: 2012--7,730,878; 2011--7,611,245; and 2010--7,344.624.

Our common shares are not listed or traded on an established public trading market, and market prices are, therefore, not available. Semiannually, an independent stock valuation firm determines the fair market value of our common shares based upon our performance and financial condition. 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. During 2012, purchases of common shares totaled 891,704 shares for $18,103 in cash; we also had direct sales to directors and employees of 8,549 shares for $169,371, excluding those shares issued through either the exercise of options or the Employee Stock Purchase Plan. We also sold 56,430 shares to our 401(k) plan for $1,133and issued 125,518 shares to participant accounts to satisfy our liability for the 2011 employer match in the amount of $2,473. The liability accrued at December 31, 2012 for the 2012 employer match was $2,643. There were also 136,947 shares purchased during 2012 under the Employee Stock Purchase Plan.

Common Shares Outstanding--The table below reconciles the activity of the common shares outstanding:

	December 31,
	2012		2011
Shares outstanding, beginning of year	13,845,635		14,112,256
Shares purchased	(891,704	)	(779,838	)
Shares sold	327,442		351,285
Stock subscription offering, employee cash purchases	76,525		—
Options exercised	368,104		161,932
	(119,633	)	(266,621	)
Shares outstanding, end of year	13,726,002		13,845,635

L. Common Shares and Preferred Shares (continued)

On December 31, 2012, we had 13,726,002 common shares outstanding, employee and director options exercisable to purchase 639,654 common shares, partially-paid subscription for 561,189 common shares and purchase rights outstanding for 211,580 common shares.

Stock Subscription Offering--Beginning May 2012, the Company offered to eligible employees and nonemployee directors the right to subscribe to common shares of the Company at $19.70 per share in accordance with the provisions of The Davey Tree Expert Company 2004 Omnibus Stock Plan and the rules of the Compensation Committee of the Company's Board of Directors (collectively, the "plan"). The offering period ended on August 1, 2012 and resulted in the subscription of 637,714 common shares for $12,563 at $19.70 per share.

Under the plan, a participant in the offering purchasing common shares for an aggregate purchase price of less than $5 had to pay with cash. All participants (excluding Company directors and officers) purchasing $5 or more of the common shares had an option to finance their purchase through a down-payment of at least 10% of the total purchase price and a seven-year promissory note for the balance due with interest at 2%. Payments on the promissory note can be made either by payroll deductions or annual lump-sum payments of both principal and interest.

Common shares purchased under the plan have been pledged as security for the payment of the promissory note and the common shares will not be issued until the promissory note is paid-in-full. Dividends will be paid on all subscribed shares, subject to forfeiture to the extent that payment is not ultimately made for the shares.

All participants in the offering purchasing in excess of $5 of common shares were granted a "right" to purchase one additional common share at a price of $19.70 per share for every three common shares purchased under the plan. As a result of the stock subscription, employees were granted rights to purchase 211,800 common shares. Each right may be exercised at the rate of one-seventh per year and will expire seven years after the date that the right was granted. Employees may not exercise a right should they cease to be employed by the Company.