10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

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

For the quarterly period ended July 1, 2017

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 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 ¨   No x

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 x

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

(Check one):	¨ Large Accelerated Filer	x Accelerated Filer	¨ Emerging Growth Company
	¨ Non-Accelerated Filer (Do not check if a smaller reporting company)	¨ Smaller Reporting Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

There were 24,579,989 Common Shares, $1.00 par value, outstanding as of July 28, 2017. 

EXPLANATORY NOTE

Amendment No. 1 on Form 10-Q/A (this “Amendment No. 1”) amends and restates certain items noted below in the Quarterly Report on Form 10-Q of The Davey Tree Expert Company (the “Company”) for the quarter ended July 1, 2017, as originally filed with the Securities and Exchange Commission on August 2, 2017 (the “Original Filing”).

Amendment No. 1 amends the Original Filing to reflect the correction of an error in the previously reported interim financial statements for the quarter ended July 1, 2017 related to the Company’s reclassification of shares of the Company’s common stock held by the Davey 401KSOP and ESOP Plan as well as common stock distributed from the Davey 401KSOP and ESOP plan, which remains subject to redemption from permanent equity to temporary equity in the mezzanine section of the Company’s consolidated balance sheet. The amendment also gives retroactive effect of the two-for-one stock split effective June 1, 2017.

For ease of reference, revisions to the Original Filing have been made to the following sections:

• Part I, Item 1 - Financial Statements and Supplementary Data

• Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

• Part I, Item 4 - Controls and Procedures

• Part II, Item 1A - Risk Factors

• Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

• Part II, Item 6 - Exhibits

• Signatures

In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Amendment No. 1 (Exhibits 31.1, 31.2, 32.1 and 32.2), and the Company has provided its revised unaudited consolidated financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibit 101.

Except as described above, no other changes have been made to the Original Filing. This Amendment No. 1 speaks as of the date of the Original Filing and does not reflect events that may have occurred after the date of the Original Filing, or modify or update any disclosures that may have been affected by subsequent events.

- 2 -

The Davey Tree Expert Company

Quarterly Report on Form 10-Q/A

July 1, 2017

INDEX

		Page
	Explanatory Note	2
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements
	A — Basis of Financial Statement Preparation	8
	B — Correction of an Error	11
	C — Seasonality of Business	12
	D — Accounts Receivable, Net and Supplemental Balance-Sheet Information	13
	E — Business Combinations	13
	F — Identified Intangible Assets and Goodwill, Net	15
	G — Long-Term Debt and Commitments Related to Letters of Credit	16
	H — Stock-Based Compensation	17
	I — Net Periodic Benefit Cost--Defined Benefit Pension Plans	21
	J —  Income Taxes	21
	K  — Accumulated Other Comprehensive Income (Loss)	21
	L — Per Share Amounts and Common and Redeemable Shares Outstanding	23
	M —  Operations by Business Segment	25
	N — Fair Value Measurements and Financial Instruments	27
	O — Contingencies	29
	P — The Davey 401KSOP and Employee Stock Ownership Plan	29
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Results of Operations	30
	Liquidity and Capital Resources	34
	Cash Flow Summary	35
	Contractual Obligations Summary and Commercial Commitments	37
	Capital Resources	38
	Recent Accounting Guidance	38
	Critical Accounting Policies and Estimates	40
	Note Regarding Forward-Looking Statements	41
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	42
Part II.	Other Information
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6.	Exhibits	50
Exhibit Index		51
Signatures		52

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

- 3 -

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data dollar amounts)

	July 1, 2017			December 31, 2016
Assets	(As Restated)			(As Restated)
Current assets:
Cash	$	9,683		$	9,006
Accounts receivable, net	157,555			146,134
Operating supplies	10,878			7,277
Other current assets	9,644			16,356
Total current assets	187,760			178,773
Property and equipment	608,435			588,650
Less accumulated depreciation	409,677			409,214
	198,758			179,436
Other assets	32,299			31,354
Identified intangible assets and goodwill, net	41,355			34,376
	$	460,172		$	423,939
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	38,507		$	41,283
Accrued expenses	37,622			37,659
Other current liabilities	33,071			39,963
Total current liabilities	109,200			118,905
Long-term debt	129,296			92,290
Self-insurance accruals	44,955			39,746
Other noncurrent liabilities	19,552			20,819
	303,003			271,760
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP); 6,731 and 7,057 at redemption value at July 1, 2017 and December 31, 2016	123,169			124,201
Common shareholders' equity:*
Common shares, $1.00 par value, per share; 48,000 shares authorized; 35,882 and 35,857 shares issued and outstanding before deducting treasury shares and which excludes 6,731 and 7,057 shares subject to redemption as of July 1, 2017 and December 31, 2016	36,183			35,857
Additional paid-in capital	52,514			41,626
Common shares subscribed, unissued	7,920			8,209
Retained earnings	138,468			133,951
Accumulated other comprehensive loss	(10,645		)	(12,162		)
	224,440			207,481
Less: Cost of common shares held in treasury; 18,336 shares at July 1, 2017 and 17,991 shares at December 31, 2016	187,888			176,530
Common shares subscription receivable	2,552			2,973
Total common shareholders' equity	34,000			27,978
	$	460,172		$	423,939
* Adjusted for two-for-one stock split
See notes to condensed consolidated financial statements.

- 4 -

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share dollar amounts)

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Revenues	$	245,037		$	224,763		$	437,850		$	405,596
Costs and expenses:
Operating	151,525			137,132			285,184			260,305
Selling	40,816			36,859			76,350			71,189
General and administrative	15,560			14,675			32,307			31,814
Depreciation and amortization	13,000			12,290			25,190			23,631
Gain on sale of assets, net	(1,176		)	(479		)	(2,151		)	(509		)
	219,725			200,477			416,880			386,430
Income from operations	25,312			24,286			20,970			19,166
Other income (expense):
Interest expense	(1,072		)	(1,062		)	(2,329		)	(2,027		)
Interest income	73			60			143			128
Other, net	(992		)	(1,156		)	(1,784		)	(1,755		)
Income before income taxes	23,321			22,128			17,000			15,512
Income taxes	9,098			8,819			6,664			6,391
Net income	$	14,223		$	13,309		$	10,336		$	9,121
Net income per share:*
Basic	$	.57		$	.52		$	.41		$	.35
Diluted	$	.55		$	.50		$	.40		$	.34
Weighted-average shares outstanding:*
Basic	24,998			25,740			24,984			25,958
Diluted	25,985			26,698			25,998			26,968
Dividends declared per share*	$	.025		$	.025		$	.050		$	.050
* Adjusted for two-for-one stock split
See notes to condensed consolidated financial statements.

- 5 -

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Net income	$	14,223	$	13,309	$	10,336	$	9,121
Components of other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	881		245		1,203		1,997
Adjustments to defined benefit pension plans:
Reclassification to results of operations:
Amortization of defined benefit pension items:
Net actuarial loss	147		146		294		508
Prior service cost	10		—		20		—
Defined benefit pension plan adjustments	157		146		314		508
Other comprehensive income, net of tax	1,038		391		1,517		2,505
Comprehensive income	$	15,261	$	13,700	$	11,853	$	11,626
See notes to condensed consolidated financial statements.

- 6 -

THE DAVEY TREE EXPERT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Six Months Ended
	July 1, 2017			July 2, 2016
Operating activities
Net income	$	10,336		$	9,121
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,190			23,631
Other	(909		)	1,135
Changes in operating assets and liabilities:
Accounts receivable	(9,662		)	(20,816		)
Operating liabilities	1,123			570
Other, net	1,589			4,993
	17,331			9,513
Net cash provided by operating activities	27,667			18,634
Investing activities
Capital expenditures:
Equipment	(37,858		)	(36,373		)
Land and building	(2,992		)	(1,463		)
Purchases of businesses, net of cash acquired	(7,452		)	(3,497		)
Other	2,667			671
Net cash used in investing activities	(45,635		)	(40,662		)
Financing activities
Revolving credit facility proceeds, net	35,500			31,500
Purchase of common shares for treasury	(17,002		)	(11,627		)
Sale of common shares from treasury	10,136			8,155
Dividends	(1,268		)	(1,314		)
Payments of notes payable	(8,721		)	(7,350		)
Net cash provided by financing activities	18,645			19,364
Increase/(decrease) in cash	677			(2,664		)
Cash, beginning of period	9,006			16,030
Cash, end of period	$	9,683		$	13,366
Supplemental cash flow information follows:
Interest paid	$	2,480		$	1,035
Income taxes paid	3,179			505
See notes to condensed consolidated financial statements.

- 7 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(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. When we refer to “we,” “us,” “our,” “Davey,” or “Davey Tree”, we mean The Davey Tree Expert Company and its subsidiaries, unless otherwise expressly stated or 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”), as codified in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), 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/A for the year ended December 31, 2016 (the “2016 Annual Report”).

Per Common Share Information--We have given consideration to the two-for-one stock split of our common shares effective June 1, 2017 including all common and per share data. In connection with the stock split, we made a classification adjustment between additional paid-in capital and retained earnings to adjust the effect of the original retroactive application of the two-for-one stock split as of July 1, 2017 and December 31, 2016.

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

Accounting Standards Adopted in 2017

Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting--In March 2016, the FASB issued ASU 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” with the objective to simplify several aspects of the accounting for share-based payment transactions, including: the income tax consequences; classification of awards as either equity or liabilities; classification of certain items on the statement of cash flows; and, accounting for forfeitures. ASU 2016-09 became effective for Davey Tree on January 1, 2017 and we elected to make an accounting policy change to recognize forfeitures as they occur. The adoption impact on the consolidated condensed balance sheet was a cumulative-effect adjustment of $162, increasing opening retained earnings and decreasing additional paid-in capital.

- 8 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

A. Basis of Financial Statement Preparation (continued)

Accounting Standards Not Yet Adopted

Accounting Standards Update 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting--In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance on which changes in the terms or conditions of a share-based payment award require modification accounting under Topic 718. Modification accounting is required for changes in terms or conditions unless the fair value, vesting condition and classification of the modified award is the same as the original award. The update is effective for annual and interim periods beginning after December 15, 2017, which for Davey Tree would be January 1, 2018. Early adoption is permitted. We do not expect the adoption of ASU 2017-09 to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment--In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350),” which simplifies the subsequent measurement of goodwill by eliminating Step 2 of the goodwill impairment test which required entities to fair value their assets and liabilities using procedures that would be followed in an assumed business combination to arrive at the impairment charge. Under ASU 2017-04, the goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount and an impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update is effective for annual or interim periods beginning after December 15, 2019, which for Davey Tree is January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company intends to early adopt ASU 2017-04 during the fourth quarter 2017 and does not expect the adoption to have a material effect on the Company’s consolidated financial statements or related disclosures.

Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)--In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on how cash receipts and cash payments related to eight specific cash flow issues are presented and classified in the statement of cash flows, with the objective of reducing the existing diversity in practice. The update is effective for annual periods beginning after December 15, 2017, which for Davey Tree would be January 1, 2018. Early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost--In March 2017, the FASB issued ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which changes the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Under ASU 2017-07, service costs will be included within the same income statement line item as other compensation costs arising from services rendered by pertinent employees during the period. The other components of net periodic benefit pension cost will be presented separately outside of income from operations. Additionally, only service costs may be capitalized in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, which for Davey Tree is January 1, 2018. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements.

- 9 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

A. Basis of Financial Statement Preparation (continued)

Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606)--In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which will replace all current U.S. GAAP guidance on revenue recognition and eliminate all industry-specific guidance.

The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The underlying principle is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced information to be presented in the financial statements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.

Subsequent to the issuance of ASU 2014-09, the FASB has provided additional implementation guidance updates related to ASU 2014-09, including:

a. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (‘Update 2015-14’),” which responded to stakeholders’ requests to defer the effective date of the guidance in ASU 2014-09.

b. ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net ) (‘Update 2016-08’),” which clarifies the implementation guidance on principal versus agent considerations.

c. ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (‘Update 2016-10’),” which clarifies multiple aspects of Topic 606.

d. ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (‘Update 2016-12’),” which provides clarifying guidance in a few narrow areas and adds some practical expedients to the guidance.

The effective date and the transition requirements for the Updates are the same as the effective date of Topic 606 ASU 2015-14, which becomes effective for Davey Tree beginning with the first quarter 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The FASB also affirmed its proposal to permit all entities to apply the new revenue standard early, but not before the original effective date, which for Davey Tree would be the first quarter 2017. The new revenue guidance will supersede existing revenue guidance affecting our Company, and may also affect our business processes and our information technology systems.

Management has assembled an internal project team and is analyzing contracts with our customers covering the significant streams of the Company’s annual revenues under the provisions of the new standard. The analysis of contracts with customers is time-consuming given the unique nature of the individual contracts with our customers and is expected to be completed in the near future.  While the full impact of adopting the standard is not currently known, the Company currently has identified certain impacts related to the recognition of certain variable, incentive-based components of contracts related to the timing of revenue recognition. The Company is

- 10 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

A. Basis of Financial Statement Preparation (continued)

continuing to assess all other aspects of the standard and the identification of other accounting impacts is possible.  The Company has evaluated the disclosure requirements under the standard and is in the process of implementing necessary changes to our systems, policies and the related internal controls as a result. We plan to adopt ASU 2014-09 using the modified retrospective approach effective January 1, 2018.

Accounting Standards Update 2016-02, Leases (Topic 842)--In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and, (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for interim and annual periods beginning after December 15, 2018, which for Davey Tree would be January 1, 2019. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. We are currently evaluating the impact of the new standard on our consolidated financial statements.

B. Correction of an Error

The Davey 401KSOP and ESOP Plan includes a put option for the Company’s common shares distributed from the Davey 401KSOP and ESOP Plan. Shares are distributed from the Davey 401KSOP and ESOP Plan to former participants of the plan, their beneficiaries, donees or heirs (each, a “participant”). Since our common shares are not readily tradeable on an established market, participants who receive a distribution of common shares from the Davey 401KSOP and ESOP Plan have two60-day periods in which they may require the Company to purchase the distributed shares at a per share price equal to their fair value. The first 60-day period begins to run upon the distribution of shares by the trustee of the Davey 401KSOP and ESOP Plan; if the participant does not exercise the put option within this period, an additional 60-day period will begin to run on the first anniversary of the date the shares were distributed by the trustee. Once the put option is exercised, the Company is obligated to repurchase the shares for cash. The common shares held by the Davey 401KSOP and ESOP Plan as well as shares distributed from the Davey 401KSOP and ESOP Plan, which remain subject to redemption (collectively the "Davey 401KSOP and ESOP Plan related shares") were previously classified in permanent equity. Due to the Company’s obligation under the put option, the Davey 401KSOP and ESOP Plan related shares are now recorded at fair value and classified as temporary equity in the mezzanine section of the consolidated balance sheets. The effects of the error correction on the consolidated balance sheets are shown below. See Notes L and P. The below amounts also reflect the adjustment related to the stock split described in Note A.

- 11 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

B. Correction of an Error (continued)

						Classification
	As Previously		Effect of			Adjustment
	Reported		Error			Related to			As Restated
	July 1, 2017		Correction			Stock Split			July 1, 2017
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$	—	$	123,169		$	—		$	123,169
Common Shares	42,914		(2,425		)	(4,306		)	36,183
Additional Paid-in Capital	7,899		23,158			21,457			52,514
Retained Earnings	299,521		(143,902		)	(17,151		)	138,468

						Classification
	As Previously		Effect of			Adjustment
	Reported		Error			Related to			As Restated
	December 31, 2016		Correction			Stock Split			December 31, 2016
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$	—	$	124,201		$	—		$	124,201
Common Shares	42,914		(2,751		)	(4,306		)	35,857
Additional Paid-in Capital	2,429		17,740			21,457			41,626
Retained Earnings	290,292		(139,190		)	(17,151		)	133,951

C. Seasonality of Business

Due to the seasonality of our business, our operating results for the six months endedJuly 1, 2017 are not indicative of results that may be expected for any other interim period or for the year ending December 31, 2017. Business seasonality traditionally results in 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.

- 12 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

D. Accounts Receivable, Net and Supplemental Balance-Sheet Information

Accounts receivable, net, consisted of the following:

Accounts receivable, net	July 1, 2017		December 31, 2016
Accounts receivable	$	126,751	$	128,202
Receivables under contractual arrangements	34,293		21,541
	161,044		149,743
Less allowances for doubtful accounts	3,489		3,609
Accounts receivable, net	$	157,555	$	146,134

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

The following items comprise the amounts included in the balance sheets:

Other current assets	July 1, 2017		December 31, 2016
Refundable income taxes	$	94	$	548
Prepaid expense	9,251		14,493
Other	299		1,315
Total	$	9,644	$	16,356

Accrued expenses	July 1, 2017		December 31, 2016
Employee compensation	$	14,189	$	18,438
Accrued compensated absences	9,663		9,215
Self-insured medical claims	5,428		2,961
Income tax payable	3,744		953
Customer advances, deposits	756		2,997
Taxes, other than income	2,431		2,166
Other	1,411		929
Total	$	37,622	$	37,659

E. Business Combinations

Our investment in businesses during the first six months of 2017 was $10,877, including debt issued, in the form of notes payable to the sellers, of $3,099, and have been included in our residential and commercial segment. Measurement-period adjustments are not complete. The measurement period for purchase price allocations ends as soon as information of the facts and circumstances becomes available, but does not exceed one year from the acquisition date. During the six months endedJuly 2, 2016, our investment in businesses was $4,170, with liabilities assumed of $98 and $575 debt issued.

- 13 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

E. Business Combinations (continued)

In March 2017, the Company acquired all of the outstanding common stock of Arborguard Tree Specialists Inc. (“Arborguard”), a residential and commercial tree care company, and certain assets of TTS&G, LLC, a leasing company related to Arborguard, for $7,200 in cash, with liabilities assumed of $1,416 and debt issued of $2,724. Arborguard’s revenue for the year ended February 28, 2017 was approximately $10,711.

The acquisition of Arborguard was accounted for under the acquisition method of accounting. The entire purchase price allocation for Arborguard is preliminary. At July 1, 2017, the fair values of the assets acquired and liabilities assumed have been preliminarily estimated and the excess consideration of $3,104 has been preliminarily recorded as goodwill pending finalization of the fair value. These preliminary estimates will be revised during the measurement period in 2017 as all pertinent information regarding finalization of the valuations for fixed assets, intangible assets, goodwill (including the amount expected to be deductible for tax purposes), tangible assets, other liabilities and deferred income tax assets and liabilities acquired are fully evaluated by the Company.

The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and liabilities assumed:

	Six Months Ended
	July 1, 2017
Detail of acquisitions:
Assets acquired:
Cash	$	326
Receivables	1,759
Prepaid expense	128
Equipment	1,904
Deposits and other	129
Finite-lived intangibles	4,566
Goodwill	3,504
Liabilities assumed	(1,439		)
Debt issued for purchases of businesses	(3,099		)
Cash paid	$	7,778

The results of operations of acquired businesses have been included in the consolidated statements of operations beginning as of the effective dates of acquisition. The effect of these acquisitions on our consolidated revenues and results of operations for the period ending July 1, 2017 was not significant. Pro forma net sales and results of operations for the acquisition had it occurred at the beginning of the six months endedJuly 1, 2017 are not material and, accordingly, are not provided.

- 14 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

F. Identified Intangible Assets and Goodwill, Net

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

	July 1, 2017				December 31, 2016
Identified Intangible Assets and Goodwill, Net	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists/relationships	$	21,711	$	16,036	$	17,822	$	15,171
Employment-related	7,389		6,499		7,032		6,386
Tradenames	5,960		5,001		5,634		4,860
Amortized intangible assets	$	35,060	$	27,536	$	30,488	$	26,417
Less accumulated amortization	27,536				26,417
Identified intangibles, net	7,524				4,071
Unamortized intangible assets:
Goodwill	33,831				30,305
	$	41,355			$	34,376

The changes in the carrying amounts of goodwill, by segment, for the year ended December 31, 2017 follow:

	Balance at January 1, 2017		Acquisitions		Translation and Other Adjustments		Balance at July 1, 2017
Utility	$	3,424	$	—	$	—	$	3,424
Residential and Commercial	26,881		3,504		22		30,407
Total	$	30,305	$	3,504	$	22	$	33,831

- 15 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

G. Long-Term Debt and Commitments Related to Letters of Credit

Our long-term debt consisted of the following:

	July 1, 2017		December 31, 2016
Revolving credit facility
Swing-line borrowings	$	7,500	$	10,000
LIBOR borrowings	95,000		57,000
	102,500		67,000
Senior unsecured notes	24,000		24,000
Term loans	10,252		16,151
Capital leases	2,620		2,343
	139,372		109,494
Less debt issuance costs	263		333
Less current portion	9,813		16,871
	$	129,296	$	92,290

Revolving Credit Facility --We have a $175,000 revolving credit facility with a group of banks, which will expire in November 2018 and permits borrowings, as defined, up to $175,000, including a letter of credit sublimit of $100,000 and a swing-line commitment of $15,000. Under certain circumstances, the amount available under the revolving credit facility may be increased to $210,000. The revolving credit facility contains certain affirmative and negative covenants customary for this type of facility and includes financial covenant ratios with respect to a maximum leverage ratio and a maximum balance-sheet leverage ratio. As of July 1, 2017, we had unused commitments under the facility approximating$68,429, with $106,571 committed, consisting of borrowings of$102,500 and issued letters of credit of$4,071.

Borrowings outstanding bear interest, at Davey Tree’s option, of either (a) a base rate or (b) LIBOR plus a margin adjustment ranging from .75% to 1.50%--with the margin adjustments in both instances based on the Company's leverage ratio at the time of borrowing. The base rate is the greater of (i) the agent bank’s prime rate, (ii) LIBOR plus 1.50%, or (iii) the federal funds rate plus .50%. A commitment fee ranging from .10% to .25% is also required based on the average daily unborrowed commitment.

5.09% Senior Unsecured Notes--The senior unsecured notes are due July 22, 2020 and were issued during July 2010 as 5.09% Senior Unsecured Notes, Series A (the "5.09% Senior Notes"), pursuant to a Master Note Purchase Agreement (the “Purchase Agreement”) between the Company and the purchasers of the 5.09% Senior Notes.  

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 commenced on July 22, 2016 (thesixth 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.

Accounts Receivable Securitization Facility--On May 8, 2017, the Company amended its Accounts Receivable Securitization Facility (the "AR Securitization program") to extend the scheduled termination date for an additional one-year period and increase the limit of the facility from $60,000 to $100,000.

- 16 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

G. Long-Term Debt and Commitments Related to Letters of Credit (continued)

As of July 1, 2017, we had issued letters of credit of $58,150 under the terms of the AR securitization program.

Under the AR securitization program, Davey Tree transfers by selling or contributing current and future trade receivables to a wholly-owned, bankruptcy-remote financing subsidiary which pledges a perfected first priority security interest in the trade receivables--equal to the issued letters of credit as of July 1, 2017--to the bank in exchange for the bank issuing letters of credit ("LCs").

Fees payable to the bank include: (a) an LC issuance fee, payable on each settlement date, in the amount of .90% per annum on the aggregate amount of all LCs outstanding plus outstanding reimbursement obligations (e.g., arising from drawn LCs), if any, and (b) an unused LC fee, payable monthly, equal to (i) .35% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligations is greater than or equal to 50% of the facility limit and (ii) .45% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligations is less than 50% of the facility limit. If an LC is drawn and the bank is not immediately reimbursed in full for the drawn amount, any outstanding reimbursement obligation will accrue interest at a per annum rate equal to a reserve-adjusted LIBOR or, in certain circumstances, a base rate equal to the higher of (i) the bank’s prime rate and (ii) the federal funds rate plus .50% and, following any default, 2.00% plus the greater of (a) adjusted LIBOR and (b) a base rate equal to the higher of (i) the bank’s prime rate and (ii) the federal funds rate plus .50%.

The agreements underlying the AR securitization program contain various customary representations and warranties, covenants, and default provisions which provide for the termination and acceleration of the commitments under the AR securitization program in circumstances including, but not limited to, failure to make payments when due, breach of a representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

Total Commitments Related to Issued Letters of Credit--As of July 1, 2017, total commitments related to issued letters of credit were $64,221, of which $4,071 were issued under the revolving credit facility, $58,150 were issued under the AR securitization program, and $2,000 were issued under short-term lines of credit. As of December 31, 2016, total commitments related to issued letters of credit were $64,225, of which $4,071 were issued under the revolving credit facility, $58,150 were issued under the AR securitization facility, and $2,004 were issued under short-term lines of credit.

H. Stock-Based Compensation

We have given consideration to the two-for-one stock split of our common shares effective June 1, 2017 including all common and per share data.

Our shareholders approved the 2014 Omnibus Stock Plan (the “2014 Stock Plan”) at our annual meeting of shareholders on May 20, 2014. The 2014 Stock Plan replaced the expired 2004 Omnibus Stock Plan (the “2004 plan”) previously approved by the shareholders in 2004. The 2014 Stock Plan is administered by the Compensation Committee of the Board of Directors and has a term of ten years. All directors of the Company and employees of the Company and its subsidiaries are eligible to participate in the 2014 Stock Plan. The 2014 Stock Plan (similar to the 2004 plan) continues the maintenance of the Employee Stock Purchase Plan, as well as provisions for the grant of stock options and other stock-based incentives. The 2014 Stock Plan provides for the grant of five percent of the number of the Company’s common shares outstanding as of the first day of each fiscal

- 17 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

H. Stock-Based Compensation (continued)

year plus the number of common shares that were available for grant of awards, but not granted, in prior years. In no event, however, may the number of common shares available for the grant of awards in any fiscal year exceed ten percent of the common shares outstanding as of the first day of that fiscal year. Common shares subject to an award that is forfeited, terminated, or canceled without having been exercised are generally added back to the number of shares available for grant under the 2014 Stock Plan.

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

	Three months ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Compensation expense, all share-based payment plans	$	1,462	$	678	$	2,448	$	1,324

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 $415 being recognized for the six months endedJuly 1, 2017 and $337for the six months endedJuly 2, 2016.

Stock Option Plans--The stock options outstanding were awarded under a graded vesting schedule, measured at fair value, 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 $395 for the six months endedJuly 1, 2017 and $270 for the six months endedJuly 2, 2016.

Stock-Settled Stock Appreciation Rights--During the six months endedJuly 1, 2017, the Compensation Committee awarded 152,000 stock-settled stock appreciation rights (“SSARs”) to certain management employees, which vest ratably over five years. A SSAR is an award that allows the recipient to receive common shares equal to the appreciation in the fair market value of our common shares between the date the award was granted and the conversion date of the shares vested.

- 18 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

H. Stock-Based Compensation (continued)

The following table summarizes our SSARs as of July 1, 2017.

Stock-Settled Stock Appreciation Rights	Number of Rights		Weighted- Average Award Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2017	743,662		$	2.75
Granted	152,000		3.57
Forfeited	—		—
Vested	(240,546	)	2.59
Unvested, July 1, 2017	655,116		$	3.00	2.7 years	$	1,301	$	11,530
Employee SSARs	655,116		$	3.00	2.7 years	$	1,301	$	11,530

Compensation costs for SSARs are determined using a fair-value method and amortized over the requisite service period. Compensation expense for SSARs was $757 for the six months endedJuly 1, 2017 and $292 for the six months endedJuly 2, 2016.

Restricted Stock Units--During the six months endedJuly 1, 2017, the Compensation Committee awarded 80,350 performance-based restricted stock units to certain directors and management employees. The Compensation Committee made similar awards in prior periods. The awards vest over specified periods. The following table summarizes restricted stock units as of July 1, 2017.

Restricted Stock Units	Number of Stock Units		Weighted- Average Grant Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2017	304,958		$	13.22
Granted	80,350		17.01
Forfeited	—		—
Vested	(49,964	)	11.38
Unvested, July 1, 2017	335,344		$	14.40	2.8 years	$	2,604	$	5,902

Compensation cost for restricted stock awards is determined using a fair-value method and amortized on the straight-line recognition method over the requisite service period. Compensation expense on restricted stock awards totaled $881 for the six months endedJuly 1, 2017 and $425 for the six months endedJuly 2, 2016.

We estimated the fair value of each stock-based 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

- 19 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

H.    Stock-Based Compensation (continued)

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 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.

	Six Months Ended
	July 1, 2017		July 2, 2016
Volatility rate	10.3	%	10.6	%
Risk-free interest rate	2.2	%	1.8	%
Expected dividend yield	.7	%	.7	%
Expected life of awards (years)	8.9		9.5

General Stock Option Information--The following table summarizes activity under the stock option plans for the six months endedJuly 1, 2017.

Stock Options	Number of Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2017	1,599,296		$	12.49
Granted	148,500		17.60
Exercised	(74,420	)	10.40
Forfeited	(64,574	)	12.75
Outstanding, July 1, 2017	1,608,802		$	13.05	6.7 years	$	7,320
Exercisable, July 1, 2017	869,302		$	11.23	5.4 years	$	5,537

As of July 1, 2017, there was approximately $1,438 of unrecognized compensation cost related to stock options outstanding. The cost is expected to be recognized over a weighted-average period of 2.3 years. “Intrinsic value” is defined as the amount by which the market price of a common share exceeds the exercise price of an option. 

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

- 20 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

I. Net Periodic Benefit Expense--Defined Benefit Pension Plans

The results of operations included the following net periodic benefit expense (income) recognized related to our defined-benefit pension plans.

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Components of pension expense (income)
Service costs--increase in benefit obligation earned	$	132		$	90		$	265		$	190
Interest cost on projected benefit obligation	264			310			527			627
Expected return on plan assets	(170		)	(276		)	(339		)	(553		)
Settlement loss	—			—			—			453
Amortization of net actuarial loss	238			237			475			480
Amortization of prior service cost	15			—			31			—
Net pension expense of defined benefit pension plans	$	479		$	361		$	959		$	1,197

J. 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 effective tax rate for the six months endedJuly 1, 2017 is estimated to approximate 39.2%.  Our effective tax rate for the six months endedJuly 2, 2016 was estimated at 41.2%.

At December 31, 2016, we had unrecognized tax benefits of $2,532, of which $2,053 would affect our effective rate if recognized, and accrued interest expense related to unrecognized benefits of $107. At July 1, 2017, there were no significant changes in the unrecognized tax benefits, including the amount that would affect our effective rate if recognized, or the accrued interest expense related to the unrecognized 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 Company is routinely under audit by federal, state, local and Canadian authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. During the fourth quarter 2013, the U.S. Internal Revenue Service completed its audit of the Company's U.S. income tax returns for 2010 and 2011 and, during 2010, Canada Revenue Agency completed its audit of the Company's Canadian operations for 2006, 2007 and 2008. With the exception of U.S. state jurisdictions, the Company is no longer subject to examination by tax authorities for the years through 2012. As of July 1, 2017, we believe it is reasonably possible that the total amount of unrecognized tax benefits will not significantly increase or decrease.

K. Accumulated Other Comprehensive Income (Loss)

Comprehensive income (or loss) is comprised of net income (or net loss) and other components, including currency translation adjustments and defined-benefit pension plan adjustments.

- 21 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

K. Accumulated Other Comprehensive Income (Loss) (continued)

The following summarizes the components of other comprehensive income (loss) accumulated in shareholders’ equity for the six months endedJuly 1, 2017 and six months endedJuly 2, 2016:

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2017	$	(5,500	)	$	(6,662	)	$	(12,162	)
Other comprehensive income (loss) before reclassifications
Unrealized gains	$	1,203		$	—		$	1,203
Amounts reclassified from accumulated other comprehensive income (loss)	—			506			506
Tax effect	—			(192		)	(192		)
Net of tax amount	1,203			314			1,517
Balance at July 1, 2017	$	(4,297	)	$	(6,348	)	$	(10,645	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2016	$	(6,244	)	$	(7,150	)	$	(13,394	)
Other comprehensive income (loss) before reclassifications
Unrealized gains	$	1,997		$	—		$	1,997
Amounts reclassified from accumulated other comprehensive income (loss)	—			829			829
Tax effect	—			(321		)	(321		)
Net of tax amount	1,997			508			2,505
Balance at July 2, 2016	$	(4,247	)	$	(6,642	)	$	(10,889	)

The change in defined benefit pension plans of $506 for the six months endedJuly 1, 2017 and the $829 for the six months endedJuly 2, 2016 is included in net periodic pension expense and is classified in the condensed statement of operations as costs and expenses, general and administrative.

- 22 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

L. Per Share Amounts and Common and Redeemable 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 (adjusted for the two-for-one stock split of our common shares effective June 1, 2017):

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Income available to common shareholders:
Net income	$	14,223	$	13,309	$	10,336	$	9,121
Weighted-average shares:
Basic:
Outstanding	24,797		25,528		24,582		25,534
Partially-paid share subscriptions	201		212		402		424
Basic weighted-average shares	24,998		25,740		24,984		25,958
Diluted:
Basic from above	24,998		25,740		24,984		25,958
Incremental shares from assumed:
Exercise of stock subscription purchase rights	141		136		143		136
Exercise of stock options and awards	846		822		871		874
Diluted weighted-average shares	25,985		26,698		25,998		26,968
Net income per share:
Basic	$	.57	$	.52	$	.41	$	.35
Diluted	$	.55	$	.50	$	.40	$	.34

- 23 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

L. Per Share Amounts and Common and Redeemable Shares Outstanding (continued)

Common and Redeemable Shares Outstanding--A summary of the activity of the common and redeemable shares outstanding for the six months endedJuly 1, 2017 follows:

	Common Shares		Redeemable
	Net of Treasury Shares		Shares		Total
	As Restated		As Restated		As Restated
Shares outstanding at January 1, 2017	17,866,236		7,056,904		24,923,140
Shares purchased	(351,033	)	(591,002	)	(942,035	)
Shares sold	184,651		264,647		449,298
Stock subscription offering -- cash purchases	41,781		—		41,781
Options and awards exercised	105,819		—		105,819
Shares outstanding at July 1, 2017	17,847,454		6,730,549		24,578,003

On July 1, 2017, we had 24,578,003 common and redeemable shares outstanding, employee options exercisable to purchase 869,302 common shares, partially-paid subscriptions for 804,048 common shares and purchase rights outstanding for 319,956 common shares.

Common Stock Split--On May 10, 2017, our Board of Directors declared a two-for-one stock split of our common shares, paid as a stock dividend to shareholders of record as of June 1, 2017. The par value of each common share remains at $1.00.

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 $9.85 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 1,275,428 common shares for $12,563 at $9.85 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 $9.85 per share for every three common shares purchased under the plan. As a result of the stock subscription, employees were granted rights to purchase 423,600 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.

- 24 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

M. Operations by Business Segment

We provide a wide range of arboricultural, horticultural, environmental and consulting services to residential, utility, commercial and government entities throughout the United States and Canada. We have two reportable operating segments organized by type or class of customer: Residential and Commercial, and Utility.

Residential and Commercial--Residential and Commercial provides services to our residential and commercial customers including: the treatment, preservation, maintenance, removal and planting of trees, shrubs and other plant life; the practice of landscaping, grounds maintenance, tree surgery, tree feeding and tree spraying; the application of fertilizer, herbicides and insecticides; and, natural resource management and consulting, forestry research and development, and environmental planning.

Utility--Utility is principally engaged in providing services to our utility customers--investor-owned, municipal utilities, and rural electric cooperatives--including: the practice of line-clearing and vegetation management around power lines, rights-of-way and chemical brush control; and, natural resource management and consulting, forestry research and development, and environmental planning.

All other operating activities, including research, technical support and laboratory diagnostic facilities, 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 our 2016 Annual Report.    

- 25 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

M. Operations by Business Segment (continued)

	Utility		Residential and Commercial		All Other			Reconciling Adjustments				Consolidated
Three Months Ended July 1, 2017
Revenues	$	112,903	$	131,299	$	835		$	—			$	245,037
Income (loss) from operations	4,270		23,837		(1,312		)	(1,483		)	(a)	25,312
Interest expense								(1,072		)		(1,072		)
Interest income								73				73
Other income (expense), net								(992		)		(992		)
Income before income taxes												$	23,321
Segment assets, total	$	171,472	$	202,502	$	—		$	86,198		(b)	$	460,172
Three Months Ended July 2, 2016
Revenues	$	105,285	$	118,945	$	533		$	—			$	224,763
Income (loss) from operations	5,587		21,226		(980		)	(1,547		)	(a)	24,286
Interest expense								(1,062		)		(1,062		)
Interest income								60				60
Other income (expense), net								(1,156		)		(1,156		)
Income before income taxes												$	22,128
Segment assets, total	$	159,824	$	181,945	$	—		$	84,375		(b)	$	426,144
Six Months Ended July 1, 2017
Revenues	$	225,381	$	210,886	$	1,583		$	—			$	437,850
Income (loss) from operations	6,928		20,255		(3,887		)	(2,326		)	(a)	20,970
Interest expense								(2,329		)		(2,329		)
Interest income								143				143
Other income (expense), net								(1,784		)		(1,784		)
Income before income taxes												$	17,000
Segment assets, total	$	171,472	$	202,502	$	—		$	86,198		(b)	$	460,172
Six Months Ended July 2, 2016
Revenues	$	205,313	$	199,279	$	1,004		$	—			$	405,596
Income (loss) from operations	7,061		19,790		(4,086		)	(3,599		)	(a)	19,166
Interest expense								(2,027		)		(2,027		)
Interest income								128				128
Other income (expense), net								(1,755		)		(1,755		)
Income before income taxes												$	15,512
Segment assets, total	$	159,824	$	181,945	$	—		$	84,375		(b)	$	426,144

Reconciling adjustments from segment reporting to consolidated external financial reporting include unallocated corporate items:

(a) 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.

- 26 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

N. Fair Value Measurements and Financial Instruments

Financial Accounting Standards Board Accounting Standard Codification 820, “Fair Value of Measurements and Disclosures (“Topic 820”)” defines fair value based on the price that would be received to sell an asset or the exit price that would be 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--Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The hierarchy prioritizes the inputs into three broad levels:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2 inputs are observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Our assets and liabilities measured at fair value on a recurring basis at July 1, 2017 were as follows:

			Fair Value Measurements at July 1, 2017 Using:
Assets and Liabilities Recorded at Fair Value on a Recurring Basis	Total Carrying Value at July 1, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets invested for self-insurance, classified as other assets, noncurrent	$	16,933	$	16,933	$	—	$	—
Liabilities:
Deferred compensation	$	1,985	$	—	$	1,985	$	—

- 27 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

N. Fair Value Measurements and Financial Instruments (continued)

Our assets and liabilities measured at fair value on a recurring basis at December 31, 2016 were as follows:

			Fair Value Measurements at December 31, 2016 Using:
Assets and Liabilities Recorded at Fair Value on a Recurring Basis	Total Carrying Value at December 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets invested for self-insurance, classified as other assets, noncurrent	$	15,492	$	15,492	$	—	$	—
Liabilities:
Deferred compensation	$	1,837	$	—	$	1,837	$	—

The assets invested for self-insurance are money market funds--classified as Level 1--based on quoted market prices of the identical underlying securities in active markets. The estimated fair value of the deferred compensation--classified as Level 2--is based on the value of the Company's common shares, determined by independent valuation.

Fair Value of Financial Instruments--The fair values of our current financial 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. Financial instruments classified as noncurrent liabilities and their carrying values and fair values were as follows:

	July 1, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility, noncurrent	$	102,500	$	102,500	$	67,000	$	67,000
Senior unsecured notes	18,000		18,497		18,000		18,509
Term loans, noncurrent	9,060		11,270		7,623		9,854
Total	$	129,560	$	132,267	$	92,623	$	95,363

The carrying value of our revolving credit facility approximates fair value--classified as Level 2--as the interest rates on the amounts outstanding are variable. The fair value of our senior unsecured notes and term loans--classified as Level 2--is determined based on expected future weighted-average interest rates with the same remaining maturities.

Market Risk--In the normal course of business, we are exposed to market risk related to changes in foreign currency exchange rates, changes in interest rates and changes in fuel prices. We do not hold or issue derivative financial instruments for trading or speculative purposes. In prior years, we have used derivative financial instruments to manage risk, in part, associated with changes in interest rates and changes in fuel prices. Presently, we are not engaged in any hedging or derivative activities.

- 28 -

The Davey Tree Expert Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2017

(Amounts in thousands, except share data)

O. Contingencies

We are party to a number of lawsuits, threatened lawsuits and other claims arising out of the normal course of business. Management is of the opinion that liabilities which may result are adequately covered by insurance, or reflected in the self-insurance accruals, and would not be material in relation to the financial position or results of operations.

P. The Davey 401KSOP and Employee Stock Ownership Plan

On March 15, 1979, the Company consummated a plan, which transferred control of the Company to its employees. As a part of this plan, the Company initially sold 120,000 common shares (presently, 23,040,000 common shares adjusted for stock splits) to its Employee Stock Ownership Trust (“ESOT”) for $2,700. The Employee Stock Ownership Plan (“ESOP”), in conjunction with the related ESOT, provided for the grant to certain employees of ownership rights in, but not possession of, the common shares held by the trustee of the ESOT. Annual allocations of shares have been made to individual accounts established for the benefit of the participants.

Defined Contribution and Savings Plans--Most employees are eligible to participate in The Davey 401KSOP and ESOP Plan. Effective January 1, 1997, the plan commenced operations and retained the existing ESOP participant accounts and incorporated a deferred savings plan (a “401(k) plan”) feature. Participants in the 401(k) plan are allowed to make before-tax contributions, within Internal Revenue Service established limits, through payroll deductions. Effective January 1, 2009 we match, in either cash or our common shares, 100% of the first one percent and 50% of the next three percent of each participant's before-tax contribution, limited to the first four percent of the employee’s compensation deferred each year. All nonbargaining domestic employees who attained age 21 and completed one year of service are eligible to participate.

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. The Davey 401KSOP and ESOP Plan includes a put option for shares of the Company’s common stock distributed from the plan. Shares are distributed from the Davey 401KSOP and ESOP Plan to former participants of the plan, their beneficiaries, donees or heirs (each, a “participant”). Since our common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value for two60-day periods after distribution of the shares from the Davey 401KSOP and ESOP. The fair value of distributed shares subject to the put option totaled $2,021 and $1,148 as of July 1, 2017 and December 31, 2016, respectively. The fair value of the shares held in the Davey 401KSOP and ESOP totaled $121,148 and $123,053 as of July 1, 2017 and December 31, 2016, respectively. Due to the Company’s obligation under the put option, the distributed shares subject to the put option and the shares held in the Davey 401KSOP and ESOP (collectively referred to as 401KSOP and ESOP related shares) are recorded at fair value, classified as temporary equity in the mezzanine section of the consolidated balance sheets and totaled $123,169 and $124,201 as of July 1, 2017 and December 31, 2016, respectively. Changes in the fair value of the 401KSOP and ESOP Plan related shares are reflected in retained earnings while net share activity associated with 401KSOP and ESOP Plan related shares are first reflected in additional paid-in capital and then retained earnings if additional paid-in capital is insufficient. See Note B.

- 29 -

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 arboricultural, horticultural, environmental and consulting services to residential, utility, commercial and government entities throughout the United States and Canada.

Our Business--Our operating results are reported in two segments: Residential and Commercial, and Utility. Residential and Commercial provides services to our residential and commercial customers including: the treatment, preservation, maintenance, removal and planting of trees, shrubs and other plant life; the practice of landscaping, grounds maintenance, tree surgery, tree feeding and tree spraying; the application of fertilizer, herbicides and insecticides; and, natural resource management and consulting, forestry research and development, and environmental planning. Utility is principally engaged in providing services to our utility customers--investor-owned, municipal utilities, and rural electric cooperatives--including: the practice of line-clearing and vegetation management around power lines, rights-of-way and chemical brush control; and, natural resource management and consulting, forestry research and development, and environmental planning. All other operating activities, including research, technical support and laboratory diagnostic facilities, are included in "All Other."

RESULTS OF OPERATIONS

The following table sets 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						Six Months Ended
	July 1, 2017		July 2, 2016		Percentage Change		July 1, 2017		July 2, 2016		Percentage Change
Revenues	100.0	%	100.0	%	—	%	100.0	%	100.0	%	—	%
Costs and expenses:
Operating	61.8		61.0		.8		65.1		64.2		.9
Selling	16.7		16.4		.3		17.4		17.6		(.2	)
General and administrative	6.4		6.5		(.1	)	7.4		7.8		(.4	)
Depreciation and amortization	5.3		5.5		(.2	)	5.8		5.8		—
Gain on sale of assets, net	(.5	)	(.2	)	(.3	)	(.5	)	(.1	)	(.4	)
Income from operations	10.3		10.8		(.5	)	4.8		4.7		.1
Other income (expense):
Interest expense	(.4	)	(.5	)	.1		(.5	)	(.5	)	—
Interest income	—		—		—		—		—		—
Other, net	(.4	)	(.5	)	.1		(.4	)	(.4	)	—
Income before income taxes	9.5		9.8		(.3	)	3.9		3.8		.1
Income taxes	3.7		3.9		(.2	)	1.5		1.6		(.1	)
Net income	5.8	%	5.9	%	(.1	)%	2.4	%	2.2	%	.2	%

- 30 -

Second Quarter—Three Months EndedJuly 1, 2017 Compared to Three Months EndedJuly 2, 2016

Our results of operations for the three months endedJuly 1, 2017 compared to the three months endedJuly 2, 2016 follows:

	Three Months Ended
	July 1, 2017			July 2, 2016			Change			Percentage Change
Revenues	$	245,037		$	224,763		$	20,274		9.0	%
Costs and expenses:
Operating	151,525			137,132			14,393			10.5
Selling	40,816			36,859			3,957			10.7
General and administrative	15,560			14,675			885			6.0
Depreciation and amortization	13,000			12,290			710			5.8
Gain on sale of assets, net	(1,176		)	(479		)	(697		)	nm
	219,725			200,477			19,248			9.6
Income from operations	25,312			24,286			1,026			4.2
Other income (expense):
Interest expense	(1,072		)	(1,062		)	(10		)	.9
Interest income	73			60			13			21.7
Other, net	(992		)	(1,156		)	164			(14.2	)
Income before income taxes	23,321			22,128			1,193			5.4
Income taxes	9,098			8,819			279			3.2
Net income	$	14,223		$	13,309		$	914		6.9	%
nm--not meaningful

Revenues--Revenues of $245,037increased $20,274 compared with $224,763 in the second quarter2016. Utility increased $7,618 or 7.2% compared with the second quarter2016. The increase is attributable to increased work year-over-year on existing accounts as well as new accounts and increased productivity which offset lost contracts and delays on other accounts. Residential and Commercial increased $12,354 or 10.4% compared with the second quarter2016. Increases in tree surgery, spraying and pest management were partially offset by a decrease in mowing and landscape materials. Total revenues of $245,037 include production incentive revenue, recognized under the completed-performance method,of $1,034during the second quarter2017 compared with $804 during the second quarter2016.

Operating Expenses--Operating expenses of $151,525increased $14,393 compared with the second quarter2016 and, as a percentage of revenues, increased .8% to 61.8%. Utility increased $7,480 or 9.7% compared with the second quarter2016 and, as a percentage of revenues, increased 1.7% to 75.1%. Increases in labor expenses, fuel expense, subcontractor expense, mileage, crew sustenance and insurance expense were partially offset by decreases in equipment maintenance expense.Residential and Commercial increased $5,871 or 9.9% compared with the second quarter2016 but, as a percentage of revenues, decreased .3% to 49.4%. Increases in labor expense, subcontractor expense, material, insurance, fuel, and equipment expense were the largest contributors to the increase.

Fuel costs of $6,712increased$938, or 16.2%, from the $5,774 incurred in the second quarter2016 and impacted operating expenses within all segments. The $938increase included price increases approximating $730 and usage increases approximating $208.

- 31 -

Selling Expenses--Selling expenses of $40,816increased $3,957 compared with the second quarter2016 and as a percentage of revenues increased .3% to 16.7%. Utility increased $1,249 or 11.6% over the second quarter2016 and as a percentage of revenues increased .4% to 10.6%. Increases in field management wages and incentive expense and communication expense were partially offset by decreases in employee development expense. Residential and Commercial increased $3,040 or 11.3% over the second quarter2016 and, as a percentage of revenues increased .2% to 22.9%. Increases in field management wages and incentive expense, office support wages and benefits, office rent, and marketing expense were the largest contributors to the increase.

General and Administrative Expenses--General and administrative expenses of $15,560 increased $885 from $14,675 in the second quarter2016. Increases in salaries expense, professional services, and computer expense were partially offset by decreases in insurance expense.

Depreciation and Amortization Expense--Depreciation and amortization expense of $13,000 increased $710from $12,290 in the second quarter of 2016.  The increase is attributable to capital expenditures necessary to support the business and purchases of businesses.

Gain on the Sale of Assets, Net--Gain on the sale of assets of $1,176 for the second quarter2017 increased $697 from the $479 gain in the second quarter2016 due to higher average sales prices on more units sold as compared to the second quarter2016.

Interest Expense--Interest expense of $1,072 increased $10 from the $1,062 incurred in the second quarter2016. Theincrease is attributable to higher interest rates and higher-average debt levels necessary to fund operations, and capital expenditures during the second quarter of 2017, as compared with the second quarter of 2016.

Other, Net--Other, net, of $992 decreased $164 from the $1,156 incurred in the second quarter2016 and consisted of nonoperating income and expense, including foreign currency transaction gains/losses on the intercompany account balances of our Canadian operations.

Income Taxes--Income tax expense for the second quarter2017 was $9,098, as compared to $8,819 for the second quarter2016. 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 effective tax rate for the three months endedJuly 1, 2017 is estimated to approximate 39.2%. Our annual effective tax rate for the three months endedJuly 2, 2016 was estimated at 41.2%.

Net Income--Net income of $14,223 for the second quarter2017 was $914 more than the $13,309 experienced in the second quarter2016.

- 32 -

First Half—Six Months EndedJuly 1, 2017 Compared to Six Months EndedJuly 2, 2016

Our results of operations for the six months endedJuly 1, 2017 compared to the six months endedJuly 2, 2016 follows:

	Six Months Ended
	July 1, 2017			July 2, 2016			Change			Percentage Change
Revenues	$	437,850		$	405,596		$	32,254		8.0	%
Costs and expenses:
Operating	285,184			260,305			24,879			9.6
Selling	76,350			71,189			5,161			7.2
General and administrative	32,307			31,814			493			1.5
Depreciation and amortization	25,190			23,631			1,559			6.6
Gain on sale of assets, net	(2,151		)	(509		)	(1,642		)	nm
	416,880			386,430			30,450			7.9
Income from operations	20,970			19,166			1,804			9.4
Other income (expense):
Interest expense	(2,329		)	(2,027		)	(302		)	14.9
Interest income	143			128			15			11.7
Other, net	(1,784		)	(1,755		)	(29		)	1.7
Income before income taxes	17,000			15,512			1,488			9.6
Income taxes	6,664			6,391			273			4.3
Net income	$	10,336		$	9,121		$	1,215		13.3	%
nm--not meaningful

Revenues--Revenues of $437,850 increased $32,254 compared with $405,596 in the first half of 2016. Utility Services increased $20,068 or 9.8% compared with the first half of 2016. The increase is attributable to increased work year-over-year on existing accounts as well as new accounts and increased productivity which offset lost contracts and delays on other accounts. Residential and Commercial Services increased $11,607 or 5.8% from the first half of 2016. Increases in tree surgery, spraying and pest management were partially offset by decreases in snow removal and mowing revenues. Total revenues of $437,850 include production incentive revenue, recognized under the completed-performance method,of $1,056during the first half of 2017 compared with $1,095 during the first half of 2016.

Operating Expenses--Operating expenses of $285,184 increased $24,879 compared with the first half of 2016 and, as a percentage of revenues, increased .9% to 65.1%. Utility Services increased $17,687 or 11.6% compared with the first half of 2016 and, as a percentage of revenue increased 1.2% to 75.8%. Increases in labor expense, fuel, subcontractor expense, crew expense and insurance were partially offset by decreases in material, equipment maintenance expense and tool and saw expense.Residential and Commercial Services increased $5,707 or 5.4% compared with the first half of 2016 and, as a percentage of revenue decreased .3% to 52.9%. Increases in labor expense, equipment maintenance expense, materials expense and insurance expense were partially offset by reductions in subcontractor expense.

Fuel costs of $12,323 increased $2,188, or 21.6%, from the $10,135 incurred in the first half of 2016 and impacted operating expenses within all segments. The $2,188 increase included price increases approximating $1,826 and usage increases approximating $362.

- 33 -

Selling Expenses--Selling expenses of $76,350 increased $5,161 compared with the first half of 2016 and, as a percentage of revenues decreased .2% to 17.4%. Utility Services increased $1,733 or 7.8% over the first half of 2016 but, as a percentage of revenue decreased .2% to 10.6%. Increases in field management wages and incentive expense and communication expense were partially offset by decreases in field management travel expense and employee development expense. Residential and Commercial Services experienced an increase of $3,859 or 7.6% over the first half of 2016 and as a percentage of revenue increased .4% to 25.8%. Increases in field management wages and incentive expense, employee development expense, and marketing expenses were the largest contributors to the increase.

General and Administrative Expenses--General and administrative expenses of $32,307 decreased $493 from $31,814 in the first half of 2016. Decreases in insurance expense were partially offset by increases in salary and incentive expense and professional service expense.

Depreciation and Amortization Expense--Depreciation and amortization expense of $25,190 increased $1,559 from $23,631 incurred in the first half of 2016. The increase is attributable to higher capital expenditures necessary to support the business and purchases of businesses.

Gain on the Sale of Assets, Net--Gain on the sale of assets of $2,151 for the first half of 2017 increased $1,642 from the $509 gain in the first half of 2016due to higher-average sales prices on more units sold in the first half of 2017 as compared with the first half of 2016.

Interest Expense--Interest expense of $2,329 increased $302 from the $2,027 incurred in the first half of 2016.The increase is attributable to higher-average debt levels necessary to fund operations, capital expenditures and purchases of businesses during the first six months of 2017, as compared with the first six months of 2016.

Other, Net--Other, net, of $1,784 increased $29 from the $1,755 incurred in the first half of 2016 and consisted of nonoperating income and expense, including foreign currency transaction gains/losses on the intercompany account balances of our Canadian operations.

Income Taxes--Income tax expense for the first half of 2017 was $6,664, as compared to $6,391 for the first half of 2016. 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 2017 effective tax rate for the first half of 2017 is estimated to approximate 39.2%. Our effective tax rate for the first half of 2016 was 41.2%.

Net Income--Net income of $10,336 for the first half of 2017 was $1,215 more than the $9,121 experienced in the first half of 2016.

LIQUIDITY AND CAPITAL RESOURCES

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

- 34 -

Cash Flow Summary

Our cash flows from operating, investing and financing activities for the six months endedJuly 1, 2017 and July 2, 2016 follow:

	Six Months Ended
	July 1, 2017			July 2, 2016
Cash provided by (used in):
Operating activities	$	27,667		$	18,634
Investing activities	(45,635		)	(40,662		)
Financing activities	18,645			19,364
Increase (decrease) in cash	$	677		$	(2,664	)

Cash Provided By Operating Activities--Cash provided by operating activities was $27,667 for the first six months of 2017, or $9,033 more than the $18,634 provided in the first six months of 2016. The $9,033 increase in operating cash flow was primarily attributable to an increase of $1,559 in depreciation and amortization, $11,154 less cash used by accounts receivable, a $1,215 increase in net income, and a $2,851 decrease in cash provided by operating assets and liabilities, excluding accounts receivable.

Overall, accounts receivable increased $9,662 during the first six months of 2017, as compared to the increase of $20,816 during the first six months of 2016. 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 six months of 2017 increased two days to 59 days, as compared to the end of the first six months of 2016. The DSO at July 2, 2016 was 57 days.

Operating liabilities increased $1,123 in the first six months of 2017, or $553 more than the $570 increase in the first six months of 2016. Accounts payable and accrued expenses decreased $4,252 during the first six months of 2017 as compared with a decrease of $6,375 for the first six months of 2016. Decreases in advance payments from customers, trade payables and employee compensation accruals were partially offset by increases in self insurance accruals and non-income taxes payable. Self-insurance accruals increased $5,375 in the first six months of 2017, which was $1,570 more than the increase of $6,945 experienced in the first six months of 2016. The increase occurred within our workers' compensation, general liability and vehicle liability classifications and resulted primarily from an overall increase in deductible amounts under commercial insurance and the self-insured risk retention.

The change in operating assets and liabilities other, net, increased $1,589 for the first six months of 2017 as compared with an increase of $4,993 for the first six months of 2016, with the $3,404 net change related primarily to an increase in operating supplies, a decrease in income taxes payable, a decrease in deposits and a decrease in pension and post-retirement benefits.

Cash Used In Investing Activities--Cash used in investing activities for the first six months of 2017 was $45,635, or $4,973 more than the $40,662 used during the first six months of 2016. An increase in the purchase of businesses and capital expenditures for equipment, land and buildings was partially offset by an increase in proceeds from sale of assets.

Cash Provided By Financing Activities--Cash provided by financing activities of $18,645 decreased $719 during the first six months of 2017 as compared with $19,364 of cash provided during the first six months of 2016. During the first six months of 2017, our revolving credit facility provided $35,500 in cash as compared with $31,500 provided during the first six months of 2016. We use the credit facility primarily for capital expenditures and payments of notes payable related to acquisitions. Payments of notes payable used $8,721 during the first six months of 2017, an increase of $1,371 when compared to the $7,350 used in the first six months of 2016. Treasury share transactions (purchases and sales) used $6,866 for the first six months of 2017, $3,394 more than

- 35 -

the $3,472 used in the first six months of 2016, and included $421 of cash received from our common share subscriptions. Dividends paid of $1,268 during the first six months of 2017 decreased $46 as compared with $1,314 paid in the first six months of 2016.

The Company currently repurchases common shares at the shareholders’ request in accordance with the terms of the Davey 401KSOP and ESOP Plan and also repurchases common shares from time to time at the Company’s discretion. The amount of common shares offered to the Company for repurchase by the holders of shares distributed from the Davey 401KSOP and ESOP Plan is not within the control of the Company, but is at the discretion of the shareholders. The Company expects to continue to repurchase its common shares, as offered by its shareholders from time to time, at their then current fair value. However, other than for repurchases pursuant to the put option under The Davey 401KSOP and ESOP Plan, as described in Note P, such purchases are not required, and the Company retains the right to discontinue them at any time. Repurchases of redeemable common shares from the Davey 401KSOP and ESOP Plan approximated $8,778 and $3,808 for the six months ended July 1, 2017 and July 2, 2016, respectively. Purchases of common shares, other than redeemable common shares, approximated $8,224 and $7,819 for the six months ended July 1, 2017 and 2016, respectively.

Revolving Credit Facility--We have a $175,000 revolving credit facility with a group of banks, which will expire in November 2018 and permits borrowings, as defined, up to $175,000, including a letter of credit sublimit of $100,000 and a swing-line commitment of $15,000. Under certain circumstances, the amount available under the revolving credit facility may be increased to $210,000.  The revolving credit facility contains certain affirmative and negative covenants customary for this type of facility and includes financial covenant ratios with respect to a maximum leverage ratio and a maximum balance-sheet leverage ratio.

As of July 1, 2017, we had unused commitments under the facility approximating$68,429, with $106,571 committed, consisting of borrowings of$102,500 and issued letters of credit of$4,071.

Borrowings outstanding bear interest, at Davey Tree’s option, of either (a) a base rate or (b) LIBOR plus a margin adjustment ranging from .75% to 1.50%--with the margin adjustments in both instances based on the Company's leverage ratio at the time of borrowing. The base rate is the greater of (i) the agent bank’s prime rate, (ii) LIBOR plus 1.50%, or (iii) the federal funds rate plus .50%. A commitment fee ranging from .10% to .25% is also required based on the average daily unborrowed commitment.

5.09% Senior Unsecured Notes--The senior unsecured notes are due July 22, 2020 and were issued during July 2010 as 5.09% Senior Unsecured Notes, Series A (the "5.09% Senior Notes"), pursuant to a Master Note Purchase Agreement (the “Purchase Agreement”) between the Company and the purchasers of the 5.09% Senior Notes.  

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 commenced on July 22, 2016 (thesixth 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.

Accounts Receivable Securitization Facility--On May 8, 2017, the Company amended its accounts receivable securitization facility to extend the scheduled termination date for an additional one-year period and increase the limit of the facility from $60,000 to $100,000.

As of July 1, 2017, we had issued letters of credit of $58,150 under the terms of the AR securitization program.

Under the AR securitization program, Davey Tree transfers by selling or contributing current and future trade receivables to a wholly-owned, bankruptcy-remote financing subsidiary which pledges a perfected first priority security interest in the trade receivables--equal to the issued letters of credit as of July 1, 2017--to the bank in exchange for the bank issuing letters of credit ("LCs").

- 36 -

Fees payable to the bank include: (a) an LC issuance fee, payable on each settlement date, in the amount of .90% per annum on the aggregate amount of all LCs outstanding plus outstanding reimbursement obligations (e.g., arising from drawn LCs), if any, and (b) an unused LC fee, payable monthly, equal to (i) .35% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligations is greater than or equal to 50% of the facility limit and (ii) .45% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligations is less than 50% of the facility limit. If an LC is drawn and the bank is not immediately reimbursed in full for the drawn amount, any outstanding reimbursement obligation will accrue interest at a per annum rate equal to a reserve-adjusted LIBOR or, in certain circumstances, a base rate equal to the higher of (i) the bank’s prime rate and (ii) the federal funds rate plus .50% and, following any default, 2.00% plus the greater of (a) adjusted LIBOR and (b) a base rate equal to the higher of (i) the bank’s prime rate and (ii) the federal funds rate plus .50%.

The agreements underlying the AR securitization program contain various customary representations and warranties, covenants, and default provisions which provide for the termination and acceleration of the commitments under the AR securitization program in circumstances including, but not limited to, failure to make payments when due, breach of a representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

Contractual Obligations Summary and Commercial Commitments

The following summarizes our long-term contractual obligations, as of July 1, 2017, to make future payments for the periods indicated:

			Six Months Ending December 31, 2017
					Year Ending December 31,
Description	Total				2018		2019		2020		2021		Thereafter
Revolving credit facility	$	102,500	$	—	$	102,500	$	—	$	—	$	—	$	—
Senior unsecured notes	24,000		6,000		6,000		6,000		6,000		—		—
Term loans	10,252		3,127		1,859		889		4,377		—		—
Capital lease obligations	2,620		686		694		664		552		24		—
Operating lease obligations	15,952		3,184		4,559		3,380		2,398		1,165		1,266
Self-insurance accruals	68,213		13,686		18,162		12,570		7,828		4,256		11,711
Purchase obligations	10,656		10,656		—		—		—		—		—
Other liabilities	19,553		1,434		1,433		1,467		2,018		2,389		10,812
	$	253,746	$	38,773	$	135,207	$	24,970	$	23,173	$	7,834	$	23,789

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 that we anticipate will become payable for goods and services that we have negotiated for delivery as of July 1, 2017. 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 July 1, 2017, 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 July 1, 2017, total commitments related to issued letters of credit were $64,221, of which $4,071 were issued under the revolving credit facility, $58,150 were issued under the AR securitization program, and $2,000 were issued under short-term lines of credit. As of December 31, 2016, total commitments related to issued letters of credit were $64,225, of which $4,071 were issued under the Revolving Credit Facility, $58,150 were issued under the AR securitization facility, and $2,004 were issued under short-term lines of credit.

Also, as is common in our industry, we have performance obligations that are supported by surety bonds, which expire during 2017 through 2023. We intend to renew the surety bonds where appropriate and as necessary.

- 37 -

Capital Resources

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

Business seasonality traditionally 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 and amortization expense, rent and interest 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 other short-term lines of credit. We are continually reviewing our existing sources of financing and evaluating alternatives. At July 1, 2017, we had working capital of $78,560, and short-term lines of credit approximating $7,158 and $68,429 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 at least the next twelve months and for the reasonably foreseeable future.

Recent Accounting Guidance

Accounting Standards Adopted in 2017

Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting--In March 2016, the FASB issued ASU 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” with the objective to simplify several aspects of the accounting for share-based payment transactions, including: the income tax consequences; classification of awards as either equity or liabilities; classification of certain items on the statement of cash flows; and, accounting for forfeitures. ASU 2016-09 became effective for Davey Tree on January 1, 2017 and we elected to make an accounting policy change to recognize forfeitures as they occur. The adoption impact on the consolidated condensed balance sheet was a cumulative-effect adjustment of $162, increasing opening retained earnings and decreasing additional paid-in capital.

Accounting Standards Not Yet Adopted

Accounting Standards Update 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting--In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance on which changes in the terms or conditions of a share-based payment award require modification accounting under Topic 718. Modification accounting is required for changes in terms or conditions unless the fair value, vesting condition and classification of the modified award is the same as the original award. The update is effective for annual and interim periods beginning after December 15, 2017, which for Davey Tree would be January 1, 2018. Early adoption is permitted. We do not expect the adoption of ASU 2017-09 to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment--In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350),” which simplifies the subsequent measurement of goodwill by eliminating Step 2 of the goodwill impairment test which required entities to fair value their assets and liabilities using procedures that would be followed in an assumed business combination to arrive at the impairment charge. Under ASU 2017-04, the goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount and an impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update is effective for annual or interim periods beginning after December 15, 2019, which for Davey Tree is January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company intends to early adopt ASU 2017-04 during the

- 38 -

fourth quarter 2017 and does not expect the adoption to have a material effect on the Company’s consolidated financial statements or related disclosures.

Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)--In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on how cash receipts and cash payments related to eight specific cash flow issues are presented and classified in the statement of cash flows, with the objective of reducing the existing diversity in practice. The update is effective for annual periods beginning after December 15, 2017, which for Davey Tree would be January 1, 2018. Early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost--In March 2017, the FASB issued ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which changes the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Under ASU 2017-07, service costs will be included within the same income statement line item as other compensation costs arising from services rendered by pertinent employees during the period. The other components of net periodic benefit pension cost will be presented separately outside of income from operations. Additionally, only service costs may be capitalized in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, which for Davey Tree is January 1, 2018. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements.

Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606)--In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which will replace all current U.S. GAAP guidance on revenue recognition and eliminate all industry-specific guidance.

The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The underlying principle is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced information to be presented in the financial statements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.

Subsequent to the issuance of ASU 2014-09, the FASB has provided additional implementation guidance updates related to ASU 2014-09, including:

a. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (‘Update 2015-14’),” which responded to stakeholders’ requests to defer the effective date of the guidance in ASU 2014-09.

b. ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net ) (‘Update 2016-08’),” which clarifies the implementation guidance on principal versus agent considerations.

c. ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (‘Update 2016-10’),” which clarifies multiple aspects of Topic 606.

- 39 -

d. ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (‘Update 2016-12’),” which provides clarifying guidance in a few narrow areas and adds some practical expedients to the guidance.

The effective date and the transition requirements for the Updates are the same as the effective date of Topic 606 ASU 2015-14, which becomes effective for Davey Tree beginning with the first quarter 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The FASB also affirmed its proposal to permit all entities to apply the new revenue standard early, but not before the original effective date, which for Davey Tree would be the first quarter 2017. The new revenue guidance will supersede existing revenue guidance affecting our Company, and may also affect our business processes and our information technology systems.

Management has assembled an internal project team and is analyzing contracts with our customers covering the significant streams of the Company’s annual revenues under the provisions of the new standard. The analysis of contracts with customers is time-consuming given the unique nature of the individual contracts with our customers and is expected to be completed in the near future.  While the full impact of adopting the standard is not currently known, the Company currently has identified certain impacts related to the recognition of certain variable, incentive-based components of contracts related to the timing of revenue recognition. The Company is continuing to assess all other aspects of the standard and the identification of other accounting impacts is possible.  The Company has evaluated the disclosure requirements under the standard and is in the process of implementing necessary changes to our systems, policies and the related internal controls as a result. We plan to adopt ASU 2014-09 using the modified retrospective approach effective January 1, 2018.

Accounting Standards Update 2016-02, Leases (Topic 842)--In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and, (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for interim and annual periods beginning after December 15, 2018, which for Davey Tree would be January 1, 2019. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. We are currently evaluating the impact of the new standard on our consolidated financial statements.

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/A for the year ended December 31, 2016, 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.

On an ongoing basis, we evaluate our estimates and assumptions, including those related to accounts receivable, specifically those receivables under contractual arrangements primarily with Utility 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

- 40 -

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/A contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. 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 important 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.

• Various economic factors may adversely impact our customers’ spending and 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 uncertainties in the credit and financial markets may limit our access to capital.

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

• Fluctuations in foreign currency exchange rates may have a material adverse impact on our operating results.

• 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 excess-umbrella liability 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 and financial condition.

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

• Significant increases in health care costs could negatively impact our results of operations or financial position.

• 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.

- 41 -

• 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.

• A disruption in our information technology systems, including a disruption related to cybersecurity, could adversely affect our financial performance.

• We may be subject to third-party and governmental regulatory 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.

• We may encounter difficulties maintaining effective disclosure controls and procedures.

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/A 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 "Part II - Item 1A. Risk Factors." of this quarterly report on Form 10-Q/A and in our annual report on Form 10-K/A for the year ended December 31, 2016 in “Part I - Item 1A. Risk Factors.”

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

During the quarter ended July 1, 2017, there have been no material changes in the market risk previously presented in our annual report on Form 10-K for the year ended December 31, 2016.

Item 4. Controls and Procedures.

(a) Management’s Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to the material weakness described below, the design and operation of our disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the period covered by this Form 10-Q/A in ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act 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 our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based upon our initial evaluation, our management concluded that our internal control over financial reporting was effective as of July 1, 2017. Subsequent to filing previously issued quarterly reports on Form 10-Q, including April 1, 2017 and July 1, 2017 financial statements, an error was discovered related to the classification of shares of the Company’s common stock held by the Davey 401KSOP and ESOP Plan which were historically classified as permanent equity rather than temporary equity in the mezzanine section of the balance sheet. This error resulted in a material misstatement of the financial statements and required restatement of the financial statements included in the Company’s Form 10-K for the year ended December 31, 2016 as well as the financial statements included in the Company's Form 10-Q's for the quarters ended April 1, 2017 and July 1, 2017. This error, which was not detected timely by management, was the result of inadequate design, as well as insufficient operating effectiveness, of the control pertaining to the Company’s review of redemption provisions and associated fair value and classification of the common shares held by the Davey 401KSOP and ESOP (the Plan) as well as shares

- 42 -

distributed from the Plan, which remain subject to redemption. The deficiency is considered to be indicative of a material weakness in our internal control over financial reporting. The material weakness continued to exist as of July 1, 2017.

(b) Changes in Internal Control over Financial Reporting

We have begun to enhance our controls and procedures in an effort to remediate the material weakness discussed above, including improving the precision of our review controls relating to the redemption provisions and associated fair value and classification of our common shares related to the Plan. We expect to fully remediate the above mentioned material weakness before the end of the fiscal year ending December 31, 2017. There were no changes in our internal control over financial reporting during the fourth quarter 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We continue to evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis and take action as appropriate.

The Davey Tree Expert Company

Part II. Other Information

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

Item 1A. Risk Factors.

The factors described below represent the principal risks we face. Except as otherwise indicated, these factors may or may not occur and we are not in a position to express a view on the likelihood of any such factor occurring. Other factors may exist that we do not consider to be significant based on information that is currently available or that we are not currently able to anticipate.

Our business is highly seasonal and weather dependent.

Our business, other than tree services to utility customers, is highly seasonal and weather dependent, primarily due to fluctuations in horticultural services provided to Residential and Commercial customers. We have historically incurred losses in the first quarter, while revenue and operating income are generally highest in the second and third quarters of the calendar year. Inclement weather, such as uncharacteristically low or high (drought) temperatures, in the second and third quarters could dampen the demand for our horticultural services, resulting in reduced revenues that would have an adverse effect on our results of operations.

Economic conditions may adversely impact our customers’ future spending as well as pricing and payment for our services, thus negatively impacting our operations and growth.

Various economic factors may adversely impact the demand for our services and potentially result in depressed prices for our services and the delay or cancellation of projects. That may make it difficult to estimate our customers' requirements for our services and, therefore, add uncertainty to customer demand. Various economic factors and customers' confidence in future economic conditions may cause a reduction in our customers' spending for our services and may also impact the ability of our customers to pay amounts owed, which could reduce our cash flow and adversely impact our debt or equity financing. These events could have a material adverse effect on our operations and our ability to grow at historical levels.

- 43 -

Financial difficulties or the bankruptcy of one or more of our major customers could adversely affect our results.

Our ability to collect our accounts receivable and future sales depends, in part, on the financial strength of our customers. We grant credit, generally without collateral, to our customers. Consequently, we are subject to credit risk related to changes in business and economic factors throughout the United States and Canada. In the event customers experience financial difficulty, and particularly if bankruptcy results, our profitability may be adversely impacted by our failure to collect our accounts receivable in excess of our estimated allowance for uncollectible accounts. Additionally, our future revenues could be reduced by the loss of a customer due to bankruptcy. Our failure to collect accounts receivable and/or the loss of one or more major customers could have an adverse effect on our net income and financial condition.

Our business is dependent upon service to our utility customers and we may be affected by developments in the utility industry.

We derive approximately 51% of our total annual revenues from our Utility segment, including approximately 12% of our total annual revenues from Pacific Gas & Electric Company. Significant adverse developments in the utility industry generally, or specifically for our major utility customers, could result in pressure to reduce costs by utility industry service providers (such as us), delays in payments of our accounts receivable, or increases in uncollectible accounts receivable, among other things. As a result, such developments could have an adverse effect on our results of operations.

Our quarterly results may fluctuate.

We have experienced and expect to continue to experience quarterly variations in revenues and operating income as a result of many factors, including:

▪ the seasonality of our business;

▪ the timing and volume of customers' projects;

▪ budgetary spending patterns of customers;

▪ the commencement or termination of service agreements;

▪ costs incurred to support growth internally or through acquisitions;

▪ changes in our mix of customers, contracts and business activities;

▪ fluctuations in insurance expense due to changes in claims experience and actuarial assumptions; and

▪ general and local economic conditions.

Accordingly, our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter or for the entire year.

We may not have access to capital in the future due to uncertainties in the financial and credit markets.

We may need new or additional financing in the future to conduct our operations, expand our business or refinance existing indebtedness. Future changes in the general economic conditions and/or financial markets in the United States or globally could affect adversely our ability to raise capital on favorable terms or at all. From time-to-time we have relied, and may also rely in the future, on access to financial markets as a source of liquidity for working capital requirements, acquisitions and general corporate purposes. Our access to funds under our revolving credit facility is dependent on the ability of the financial institutions that are parties to the facility to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Economic disruptions and any resulting limitations on future funding, including any restrictions on access to funds under our revolving credit facility, could have a material adverse effect on us.

- 44 -

We are subject to the risk of changes in fuel costs.

The cost of fuel is a major operating expense of our business. Significant increases in fuel prices for extended periods of time will cause our operating expenses to fluctuate. An increase in cost with partial or no corresponding compensation from customers would lead to lower margins that would have an adverse effect on our results of operations.

We are subject to the effect of foreign currency exchange rate fluctuations, which may have a material adverse impact on us.

We are exposed to foreign currency exchange rate risk resulting from our operations in Canada, where we provide a comprehensive range of horticultural services. Fluctuations in foreign currency exchange rates may make our services more expensive for others to purchase or increase our operating costs, affecting our competitiveness and our profitability. 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.

Revenues from customers in Canada are subject to foreign currency exchange. Thus, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have a material adverse impact on our operating results, asset values and could reduce shareholders’ equity. In addition, if we expand our Canadian operations, exposures to gains and losses on foreign currency transactions may increase.

We could be negatively impacted if our self-insurance accruals or our insurance coverages prove to be inadequate.

We are generally self-insured for losses and liabilities related to workers' compensation, vehicle liability and general liability claims (including any wildfire-related claims, up to certain retained coverage limits). A liability for unpaid claims and associated expenses, including incurred but not reported losses, is actuarially determined and reflected in our consolidated balance sheet as an accrued liability. The determination of such claims and expenses, and the extent of the need for accrued liabilities, are continually reviewed and updated. If we were to experience insurance claims or costs above our estimates and were unable to offset such increases with earnings, our business could be adversely affected. Also, where we self-insure, a deterioration in claims management, whether by our management or by a third-party claims administrator, could lead to delays in settling claims, thereby increasing claim costs, particularly as it relates to workers’ compensation. In addition, catastrophic uninsured claims filed against us or the inability of our insurance carriers to pay otherwise-insured claims would have an adverse effect on our financial condition.

Furthermore, many customers, particularly utilities, prefer to do business with contractors with significant financial resources, who can provide substantial insurance coverage. Should we be unable to renew our excess liability insurance and other commercial insurance policies at competitive rates, this loss would have an adverse effect on our financial condition and results of operations.

Increases in our health insurance costs and uncertainty about federal health care policies could adversely affect our results of operations and cash flows.

The costs of employee health care insurance have been increasing in recent years due to rising health care costs, legislative changes, and general economic conditions. We cannot predict what other health care programs and regulations will ultimately be implemented at the federal or state level or the effect of any future legislation or regulations on our business, results of operations and cash flows. In addition, we cannot predict when and if Congress will repeal and/or replace certain health care programs and regulations at the federal level and the impact that such changes would have on our business. A continued increase in health care costs or additional costs

- 45 -

incurred as a result of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 or other future health care reform laws imposed by Congress or state legislatures could have a negative impact on our financial position, results of operations and cash flows.

The unavailability or cancellation of third-party insurance coverage may have a material adverse effect on our financial condition and results of operations as well as disrupt our operations.

Any of our existing excess insurance coverage may not be renewed upon the expiration of the coverage period or future coverage may not be available at competitive rates for the required limits. In addition, our third-party insurers could fail, suddenly cancel our coverage or otherwise be unable to provide us with adequate insurance coverage. If any of these events occur, they may have a material adverse effect on our financial condition and results of operations as well as disrupt our operations. For example, we have operations in California, which has an environment prone to wildfires. Should our third-party insurers determine to exclude coverage for wildfires in the future, we could be exposed to significant liabilities, having a material adverse effect on our financial condition and results of operations and potentially disrupting our California operations.

Because no public market exists for our common shares, your ability to sell your common shares may be limited.

Our common shares are not traded on any national exchange, market system or over-the-counter bulletin board. Because no public market exists for our common shares, your ability to sell these shares is limited.

We are subject to intense competition.

We believe that each aspect of our business is highly competitive. Principal methods of competition in our operating segments are customer service, marketing, image, performance and reputation. Pricing is not always a critical factor in a customer’s decision with respect to our Residential and Commercial segment; however, pricing is generally the principal method of competition for our Utility segment, although in most instances consideration is given to reputation and past production performance. On a national level, our competition is primarily landscape construction and maintenance companies as well as residential and commercial lawn care companies. At a local and regional level, our competition comes mainly from small, local companies which are engaged primarily in tree care and lawn services. Our Utility segment competes principally with one major national competitor, as well as several smaller regional firms. Furthermore, competitors may have lower costs because privately-owned companies operating in a limited geographic area may have significantly lower labor and overhead costs. Our competitors may develop the expertise, experience and resources to provide services that are superior in both price and quality to our services. These strong competitive pressures could inhibit our success in bidding for profitable business and may have a material adverse effect on our business, financial condition and results of operations.

Our failure to comply with environmental laws could result in significant liabilities.

Our facilities and operations are subject to governmental regulations designed to protect the environment, particularly with respect to our services regarding insect and tree, shrub and lawn disease management, because these services involve to a considerable degree the blending and application of spray materials, which require formal licensing in most areas. Continual changes in environmental laws, regulations and licensing requirements, environmental conditions, environmental awareness, technology and social attitudes make it necessary for us to maintain a high degree of awareness of the impact such changes have on our compliance programs and the market for our services. We are subject to existing federal, state and local laws, regulations and licensing requirements regulating the use of materials in our spraying operations as well as certain other aspects of our business. If we fail to comply with such laws, regulations or licensing requirements, we may become subject to significant liabilities, fines and/or penalties, which could adversely affect our financial condition and results of operations.

- 46 -

We cannot predict the impact that the policies regarding changing climate conditions, including legal, regulatory and social responses thereto, may have on our business.

Many scientists, environmentalists, international organizations, political activists, regulators and other commentators believe that global climate change has added, and will continue to add, to the unpredictability, frequency and severity of natural disasters in certain parts of the world. In response, a number of legal and regulatory measures and social initiatives have been introduced in an effort to reduce greenhouse gas and other carbon emissions that these parties believe may be contributors to global climate change. These proposals, if enacted, could result in a variety of regulatory programs, including potential new regulations, additional charges and taxes to fund energy efficiency activities, or other regulatory actions. Any of these actions could result in increased costs associated with our operations and impact the prices we charge our customers.

We cannot predict the impact, if any, that changing climate conditions will have on us or our customers. However, it is possible that the legal, regulatory and social responses to real or perceived climate change could have a negative effect on our results of operations or our financial condition.

We may be adversely affected if we are unable to obtain necessary surety bonds or letters of credit.

Surety market conditions are currently difficult as a result of significant losses incurred by many sureties in recent years, both in the construction industry as well as in certain larger corporate bankruptcies. As a result, less bonding capacity is available in the market and terms have become more expensive and restrictive. Further, under standard terms in the surety market, sureties issue or continue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of collateral as a condition to issuing or renewing any bonds. If surety providers were to limit or eliminate our access to bonding, we would need to post other forms of collateral for project performance, such as letters of credit or cash. We may be unable to secure sufficient letters of credit on acceptable terms, or at all. Accordingly, if we were to experience an interruption or reduction in the availability of bonding capacity, our liquidity may be adversely affected.

We may be adversely affected if our reputation is damaged.

We are dependent, in part, upon our reputation of quality, integrity and performance. If our reputation were damaged in some way, it may impact our ability to grow or maintain our business.

We may be unable to employ a sufficient workforce for our field operations.

Our industry operates in an environment that requires heavy manual labor. We may experience slower growth in the labor force for this type of work than in the past. As a result, we may experience labor shortages or the need to pay more to attract and retain qualified employees.

We may be unable to attract and retain skilled management.

Our success depends, in part, on our ability to attract and retain key managers. Competition for the best people can be intense and we may not be able to promote, hire or retain skilled managers. The loss of services of one or more of our key managers could have a material adverse impact on our business because of the loss of the manager's skills, knowledge of our industry and years of industry experience, and the difficulty of promptly finding qualified replacement personnel.

Natural disasters, pandemics, terrorist attacks and other external events could adversely affect our business.

Natural disasters, pandemics, terrorist attacks and other adverse external events could materially damage our facilities or disrupt our operations, or damage the facilities or disrupt the operations of our customers or vendors. The occurrence of any such event could adversely affect our business, financial condition and results of operations.

- 47 -

A disruption in our information technology systems, including a disruption related to cybersecurity, could adversely affect our financial performance.

We rely on the accuracy, capacity and security of our information technology systems. Despite the security measures that we have implemented, including those measures related to cybersecurity, our systems could be breached or damaged by computer viruses, natural or man-made incidents or disasters or unauthorized physical or electronic access. A breach could result in business disruption, theft of our intellectual property, trade secrets or customer information and unauthorized access to personnel information. To the extent that our business is interrupted or data is lost, destroyed or inappropriately used or disclosed, such disruptions could adversely affect our competitive position, reputation, relationships with our customers, financial condition, operating results and cash flows. In addition, we may be required to incur significant costs to protect against the damage caused by these disruptions or security breaches in the future.

We may be subject to third-party and governmental regulatory claims and litigation.

From time-to-time, customers, vendors, employees, governmental regulatory authorities and others may make claims and take legal action against us. Whether these claims and legal actions are founded or unfounded, if such claims and legal actions are not resolved in our favor, they may result in significant financial liability. Any such financial liability could have a material adverse effect on our financial condition and results of operations. Any such claims and legal actions may also require significant management attention and may detract from management's focus on our operations.

We may be adversely affected if we enter into a major unprofitable contract.

Our Residential and Commercial segment and our Utility segment frequently operate in a competitive bid contract environment. As a result, we may misjudge a bid and be contractually bound to an unprofitable contract, which could adversely affect our results of operations.

We have identified a material weakness in our internal control over financial reporting that resulted in the restatement of certain of our financial statements.

We are restating our consolidated financial statements for the fiscal year ended December 31, 2016 and for the first and second quarterly periods of 2017 to correct an accounting error in the method historically used by the Company to classify shares of the Company’s common stock held by The Davey 401KSOP and ESOP Plan on the Company’s consolidated balance sheet. For a discussion of this error and the related adjustment, see Note B to the Consolidated Financial Statements of the Company included in this report. In connection with this restatement, we have identified a material weakness in our internal controls over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As a result of the material weakness, management has concluded that we did not maintain effective internal control over financial reporting or effective disclosure controls and procedures as of December 31, 2016. The material weakness continued to exist at April 1, 2017 and July 1, 2017.

As further described in Part I, Item 4 “Controls and Procedures,” we have undertaken steps to remediate our internal control over financial reporting. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, our liquidity, access to capital and perceptions of our creditworthiness may be adversely affected, we may be unable to maintain compliance with securities law and debt instruments regarding the timely filing of periodic reports, we may be subject to regulatory investigations and penalties, we may suffer defaults under our debt instruments, and the valuation of our shares may be impacted.

As a result of the restatement and the remediation of our ineffective disclosure controls and procedures and material weakness in our internal control over financial reporting, we have become subject to additional costs and risks, including costs for accounting and legal fees. In addition, the attention of our management team has been

- 48 -

diverted by these efforts. We could also be subject to regulatory, shareholder or other actions in connection with the restatement, which would, regardless of the outcome, consume management’s time and attention and may result in additional legal, accounting and other costs. In addition, the restatement and related matters could impair our reputation and could cause our customers, lenders, employees, shareholders, insurers, vendors, and other counterparties to lose confidence in us. Each of these occurrences could have an adverse effect on our business, results of operations, and financial condition.

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 six months of 2017. The numbers in the following table have been adjusted for a two-for-one stock split, effected in the form of a 100% stock dividend paid on June 15, 2017 to shareholders of record at the close of business on June 1, 2017.

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 2017
January 1 to January 28	610	$	16.95	n/a	n/a
January 29 to February 25	548	16.95		n/a	n/a
February 26 to April 1	117,878	17.60		n/a	n/a
Total First Quarter	119,036	17.59
April 2 to April 29	270,158	17.60		n/a	n/a
April 30 to May 27	434,290	17.60		—	200,000
May 28 to July 1	118,551	17.60		—	200,000
Total Second Quarter	822,999	17.60
Total Year-to-Date	942,035	$	17.60
n/a--Not applicable. There are no publicly announced plans or programs to purchase 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 the Davey 401KSOP and ESOP, 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.; MYR Group, Inc.; 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 bought and sold during that six-month period in transactions involving Davey Tree or one of its 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 (other than for repurchases pursuant to the put option under The Davey 401KSOP and ESOP Plan, as discussed in Note P, The Davey 401KSOP and Employee Stock Ownership Plan). The purchases described above were added to our treasury stock.

- 49 -

At the Annual Meeting of Shareholders of the Company held on May 16, 2017, the shareholders of the Company approved proposals to amend the Company's Articles of Incorporation to (i) expand the Company's current right of first refusal with respect to proposed transfers of shares of the Company's common shares, (ii) clarify provisions regarding when the Company may provide notice of its decision to exercise its right of first refusal with respect to proposed transfers of common shares by the estate or personal representative of a deceased shareholder, and (iii) grant the Company a right to repurchase common shares held by certain shareholders of the Company.

On May 10, 2017, the Board of Directors of the Company adopted a policy regarding the Company's exercise of the repurchase right granted to the Company through amendments to the Company's Articles of Incorporation, as approved by shareholders on May 16, 2017.

Until further action by the Board, it will be the policy of the Company not to exercise its repurchase rights under the amended Articles with respect to shares of the Company's common shares held by current and retired employees and current and former directors of the Company (subject to exceptions set forth in the policy) (collectively, "Active Shareholders"), their spouses, their first-generation descendants and trusts established exclusively for their benefit.

Until further action by the Board, it will also be the policy of the Company not to exercise its rights under the amended Articles to repurchase shares of the Company's common shares proposed to be transferred by an Active Shareholder to his or her spouse, a first-generation descendant, or a trust established exclusively for the benefit of one or more of an Active Shareholder, his or her spouse and first-generation descendants of an Active Shareholder, or upon the death of an Active Shareholder, such transfers from the estate or personal representative of a deceased Active Shareholder. The Board may suspend, change or discontinue the policy at any time without prior notice.

On May 17, 2017, in accordance with the amendments to the Articles approved by the Company's shareholders at the Annual Meeting, the Company's Board of Directors authorized the Company to repurchase up to 100,000 common shares (200,000 common shares on a post-split basis). Share repurchases may be made from time to time and the timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors. The Company is not obligated to purchase any shares, and repurchases may be commenced, suspended or discontinued form time ot time without prior notice. The repurchase program does not have an expiration date.

Item 6. Exhibits.

See Exhibit Index page below.

- 50 -

Exhibit Index

Exhibit No.	Description
3.1	2017 Amended Articles of Incorporation of the Davey Tree Expert Company (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2017).
3.2	2017 Amended and Restated Regulations of the Davey Tree Expert Company (Incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2017).
10.1	Amendment No. 2 to Receivable Financing Agreement, dated May 8, 2017, between The Davey Tree Expert Company, Davey Receivables LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 9, 2017).
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
99.1	Policy of Implementation of Certain Company Rights Under Article Sixth of the Amended Articles of Incorporation (Incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 11, 2017).
101	The following materials from the Company's Quarterly Report on Form 10-Q/A for the quarter ended July 1, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets (unaudited)(as restated), (ii) the Condensed Consolidated Statements of Operations (unaudited)(as restated), (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)(as restated), (iv) the Condensed Consolidated Statements of Cash Flows (unaudited)(as restated), and (v) Notes to Condensed Consolidated Financial Statements (unaudited)(as restated).	Filed Herewith

- 51 -

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/ Joseph R. Paul
Date:	November 21, 2017		Joseph R. Paul
			Executive Vice President, Chief Financial Officer and Secretary
			(Principal Financial Officer)
Date:	November 21, 2017	By:	/s/ Thea R. Sears
			Thea R. Sears
			Vice President and Controller
			(Principal Accounting Officer)

- 52 -

EX-31.1

Exhibit 31.1

Certification

Certification of Chief Executive Officer

I, Patrick M. Covey, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of The Davey Tree Expert Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 21, 2017	/s/ Patrick M. Covey
		Patrick M. Covey
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

Certification of Chief Financial Officer

I, Joseph R. Paul, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of The Davey Tree Expert Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 21, 2017	/s/ Joseph R. Paul
		Joseph R. Paul
		Executive Vice President, Chief Financial Officer and Secretary

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer

I, Patrick M. Covey, President and Chief Executive Officer of The Davey Tree Expert Company (the "Company"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1.) The Quarterly Report on Form 10-Q/A of the Company for the period ended July 1, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), as applicable; and

(2.) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 21, 2017	/s/ Patrick M. Covey
		Patrick M. Covey
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer

I, Joseph R. Paul, Executive Vice President, Chief Financial Officer and Secretary of The Davey Tree Expert Company (the "Company"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1.) The Quarterly Report on Form 10-Q/A of the Company for the period ended July 1, 2017  (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), as applicable; and

(2.) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 21, 2017	/s/ Joseph R. Paul
		Joseph R. Paul
		Executive Vice President, Chief Financial Officer and Secretary

XML

Document and Entity Information Document - shares	6 Months Ended
	Jul. 01, 2017	Jul. 28, 2017
Entity Information [Line Items]
Entity registrant name	DAVEY TREE EXPERT CO
Entity central index key	0000277638
Current fiscal year end date	--12-31
Entity filer category	Accelerated Filer
Document type	10-Q/A
Document period end date	Jul. 01, 2017
Document fiscal year focus	2017
Document fiscal period focus	Q2
Amendment flag	false
Entity common stock, shares outstanding		24,579,989

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands		Jul. 01, 2017	Dec. 31, 2016
Current assets:
Cash		$ 9,683	$ 9,006
Accounts receivable, net		157,555	146,134
Operating supplies		10,878	7,277
Other current assets		9,644	16,356
Total current assets		187,760	178,773
Property and equipment		608,435	588,650
Less accumulated depreciation		409,677	409,214
Property and equipment, net		198,758	179,436
Other assets		32,299	31,354
Identified intangible assets and goodwill, net		41,355	34,376
Total assets		460,172	423,939
Current liabilities:
Accounts payable		38,507	41,283
Accrued expenses		37,622	37,659
Other current liabilities		33,071	39,963
Total current liabilities		109,200	118,905
Long-term debt		129,296	92,290
Self-insurance accruals		44,955	39,746
Other noncurrent liabilities		19,552	20,819
Total liabilities		303,003	271,760
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)		123,169	124,201
Common shareholders' equity:
Common shares, $1.00 par value, per share; 48,000 shares authorized; 42,914 shares issued and outstanding before deducting treasury shares as of July 1, 2017 and December 31, 2016	[1]	36,183	35,857
Additional paid-in capital	[1]	52,514	41,626
Common shares subscribed, unissued		7,920	8,209
Retained earnings	[1]	138,468	133,951
Accumulated other comprehensive loss		(10,645)	(12,162)
Shareholders' equity before treasury stock		224,440	207,481
Less: Cost of common shares held in treasury; 18,336 shares at July 1, 2017 and 17,991 shares at December 31, 2016		187,888	176,530
Common shares subscription receivable		2,552	2,973
Common shareholders' equity		34,000	27,978
Total liabilities and shareholders' equity		$ 460,172	$ 423,939

[1] Adjusted for two-for-one stock split

XML

Condensed Consolidated Balance Sheets (Parenthetical)		6 Months Ended
		Jul. 01, 2017 $ / shares shares		Dec. 31, 2016 $ / shares shares
Statement of Financial Position [Abstract]
Common shares, par value | $ / shares		$ 1.00		$ 1.00
Common shares, authorized		48,000,000		48,000,000
Common shares, issued	[1]	36,183,000		35,857,000
Temporary Equity, Shares Outstanding		6,731,000		7,057,000
Common shares, outstanding		36,183,000	[1]	35,857,000
Common shares held in treasury	[1]	18,336,000		17,990,000
Stock split, conversion ratio		2

[1] Adjusted for two-for-one stock split

XML

Condensed Consolidated Statements of Operations shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 01, 2017 USD ($) $ / shares shares	Jul. 02, 2016 USD ($) $ / shares shares	Jul. 01, 2017 USD ($) $ / shares shares	Jul. 02, 2016 USD ($) $ / shares shares
Income Statement [Abstract]
Revenues		$ 245,037	$ 224,763	$ 437,850	$ 405,596
Costs and expenses:
Operating		151,525	137,132	285,184	260,305
Selling		40,816	36,859	76,350	71,189
General and administrative		15,560	14,675	32,307	31,814
Depreciation and amortization		13,000	12,290	25,190	23,631
Gain on sale of assets, net		(1,176)	(479)	(2,151)	(509)
Costs and expenses		219,725	200,477	416,880	386,430
Income from operations		25,312	24,286	20,970	19,166
Other income (expense):
Interest expense		(1,072)	(1,062)	(2,329)	(2,027)
Interest income		73	60	143	128
Other, net		(992)	(1,156)	(1,784)	(1,755)
Income before income taxes		23,321	22,128	17,000	15,512
Income taxes		9,098	8,819	6,664	6,391
Net income		$ 14,223	$ 13,309	$ 10,336	$ 9,121
Net income per share:
Basic | $ / shares	[1]	$ 0.57	$ 0.52	$ 0.41	$ 0.35
Diluted | $ / shares	[1]	$ 0.55	$ 0.50	$ 0.40	$ 0.34
Weighted-average shares outstanding:
Basic | shares	[1]	24,998	25,740	24,984	25,958
Diluted | shares	[1]	25,985	26,698	25,998	26,968
Dividends declared per share | $ / shares	[1]	$ 0.025	$ 0.025	$ 0.050	$ 0.050
Stock split, conversion ratio				2

[1] Adjusted for two-for-one stock split

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 14,223	$ 13,309	$ 10,336	$ 9,121
Components of other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	881	245	1,203	1,997
Amortization of defined benefit pension items:
Net actuarial loss	147	146	294	508
Prior service cost	10	0	20	0
Defined benefit pension plan adjustments	157	146	314	508
Other comprehensive income, net of tax	1,038	391	1,517	2,505
Comprehensive income	$ 15,261	$ 13,700	$ 11,853	$ 11,626

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Operating activities
Net income	$ 10,336	$ 9,121
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,190	23,631
Other	(909)	1,135
Changes in operating assets and liabilities:
Accounts receivable	(9,662)	(20,816)
Operating liabilities	1,123	570
Other, net	1,589	4,993
Adjustments to reconcile net income to net cash provided by operating activities:	17,331	9,513
Net cash provided by operating activities	27,667	18,634
Capital expenditures:
Equipment	(37,858)	(36,373)
Land and building	(2,992)	(1,463)
Purchases of businesses, net of cash acquired	(7,452)	(3,497)
Other	2,667	671
Net cash used in investing activities	(45,635)	(40,662)
Financing activities
Revolving credit facility proceeds, net	35,500	31,500
Purchase of common shares for treasury	(17,002)	(11,627)
Sale of common shares from treasury	10,136	8,155
Dividends	(1,268)	(1,314)
Payments of notes payable	(8,721)	(7,350)
Net cash provided by financing activities	18,645	19,364
Increase/(decrease) in cash	677	(2,664)
Cash, beginning of period	9,006	16,030
Cash, end of period	9,683	13,366
Supplemental cash flow information follows:
Interest paid	2,480	1,035
Income taxes paid	$ 3,179	$ 505

XML

Basis of Financial Statement Preparation

6 Months Ended

Jul. 01, 2017

Accounting Policies [Abstract]

Basis of Financial Statement Preparation [Text Block]

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. When we refer to “we,” “us,” “our,” “Davey,” or “Davey Tree”, we mean The Davey Tree Expert Company and its subsidiaries, unless otherwise expressly stated or 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”), as codified in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), 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/A for the year ended December 31, 2016 (the “2016 Annual Report”).

Per Common Share Information--We have given consideration to the two-for-one stock split of our common shares effective June 1, 2017 including all common and per share data. In connection with the stock split, we made a classification adjustment between additional paid-in capital and retained earnings to adjust the effect of the original retroactive application of the two-for-one stock split as of July 1, 2017 and December 31, 2016.

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

Accounting Standards Adopted in 2017

Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting--In March 2016, the FASB issued ASU 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” with the objective to simplify several aspects of the accounting for share-based payment transactions, including: the income tax consequences; classification of awards as either equity or liabilities; classification of certain items on the statement of cash flows; and, accounting for forfeitures. ASU 2016-09 became effective for Davey Tree on January 1, 2017 and we elected to make an accounting policy change to recognize forfeitures as they occur. The adoption impact on the consolidated condensed balance sheet was a cumulative-effect adjustment of $162, increasing opening retained earnings and decreasing additional paid-in capital.

A. Basis of Financial Statement Preparation (continued)

Accounting Standards Not Yet Adopted

Accounting Standards Update 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting--In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance on which changes in the terms or conditions of a share-based payment award require modification accounting under Topic 718. Modification accounting is required for changes in terms or conditions unless the fair value, vesting condition and classification of the modified award is the same as the original award. The update is effective for annual and interim periods beginning after December 15, 2017, which for Davey Tree would be January 1, 2018. Early adoption is permitted. We do not expect the adoption of ASU 2017-09 to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment--In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350),” which simplifies the subsequent measurement of goodwill by eliminating Step 2 of the goodwill impairment test which required entities to fair value their assets and liabilities using procedures that would be followed in an assumed business combination to arrive at the impairment charge. Under ASU 2017-04, the goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount and an impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update is effective for annual or interim periods beginning after December 15, 2019, which for Davey Tree is January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company intends to early adopt ASU 2017-04 during the fourth quarter 2017 and does not expect the adoption to have a material effect on the Company’s consolidated financial statements or related disclosures.

Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)--In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on how cash receipts and cash payments related to eight specific cash flow issues are presented and classified in the statement of cash flows, with the objective of reducing the existing diversity in practice. The update is effective for annual periods beginning after December 15, 2017, which for Davey Tree would be January 1, 2018. Early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost--In March 2017, the FASB issued ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which changes the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Under ASU 2017-07, service costs will be included within the same income statement line item as other compensation costs arising from services rendered by pertinent employees during the period. The other components of net periodic benefit pension cost will be presented separately outside of income from operations. Additionally, only service costs may be capitalized in assets. ASU 2017-07 is effective for fiscal years beginning after December 15, 2017, which for Davey Tree is January 1, 2018. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements.

A. Basis of Financial Statement Preparation (continued)

Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606)--In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which will replace all current U.S. GAAP guidance on revenue recognition and eliminate all industry-specific guidance.

The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The underlying principle is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced information to be presented in the financial statements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.

Subsequent to the issuance of ASU 2014-09, the FASB has provided additional implementation guidance updates related to ASU 2014-09, including:

a. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (‘Update 2015-14’),” which responded to stakeholders’ requests to defer the effective date of the guidance in ASU 2014-09.

b. ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net ) (‘Update 2016-08’),” which clarifies the implementation guidance on principal versus agent considerations.

c. ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (‘Update 2016-10’),” which clarifies multiple aspects of Topic 606.

d. ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (‘Update 2016-12’),” which provides clarifying guidance in a few narrow areas and adds some practical expedients to the guidance.

The effective date and the transition requirements for the Updates are the same as the effective date of Topic 606 ASU 2015-14, which becomes effective for Davey Tree beginning with the first quarter 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The FASB also affirmed its proposal to permit all entities to apply the new revenue standard early, but not before the original effective date, which for Davey Tree would be the first quarter 2017. The new revenue guidance will supersede existing revenue guidance affecting our Company, and may also affect our business processes and our information technology systems.

Management has assembled an internal project team and is analyzing contracts with our customers covering the significant streams of the Company’s annual revenues under the provisions of the new standard. The analysis of contracts with customers is time-consuming given the unique nature of the individual contracts with our customers and is expected to be completed in the near future.  While the full impact of adopting the standard is not currently known, the Company currently has identified certain impacts related to the recognition of certain variable, incentive-based components of contracts related to the timing of revenue recognition. The Company is

A. Basis of Financial Statement Preparation (continued)

continuing to assess all other aspects of the standard and the identification of other accounting impacts is possible.  The Company has evaluated the disclosure requirements under the standard and is in the process of implementing necessary changes to our systems, policies and the related internal controls as a result. We plan to adopt ASU 2014-09 using the modified retrospective approach effective January 1, 2018.

Accounting Standards Update 2016-02, Leases (Topic 842)--In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and, (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for interim and annual periods beginning after December 15, 2018, which for Davey Tree would be January 1, 2019. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. We are currently evaluating the impact of the new standard on our consolidated financial statements.

XML

Correction of an Error (Notes)

6 Months Ended

Jul. 01, 2017

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

Correction of an Error

The Davey 401KSOP and ESOP Plan includes a put option for the Company’s common shares distributed from the Davey 401KSOP and ESOP Plan. Shares are distributed from the Davey 401KSOP and ESOP Plan to former participants of the plan, their beneficiaries, donees or heirs (each, a “participant”). Since our common shares are not readily tradeable on an established market, participants who receive a distribution of common shares from the Davey 401KSOP and ESOP Plan have two60-day periods in which they may require the Company to purchase the distributed shares at a per share price equal to their fair value. The first 60-day period begins to run upon the distribution of shares by the trustee of the Davey 401KSOP and ESOP Plan; if the participant does not exercise the put option within this period, an additional 60-day period will begin to run on the first anniversary of the date the shares were distributed by the trustee. Once the put option is exercised, the Company is obligated to repurchase the shares for cash. The common shares held by the Davey 401KSOP and ESOP Plan as well as shares distributed from the Davey 401KSOP and ESOP Plan, which remain subject to redemption (collectively the "Davey 401KSOP and ESOP Plan related shares") were previously classified in permanent equity. Due to the Company’s obligation under the put option, the Davey 401KSOP and ESOP Plan related shares are now recorded at fair value and classified as temporary equity in the mezzanine section of the consolidated balance sheets. The effects of the error correction on the consolidated balance sheets are shown below. See Notes L and P. The below amounts also reflect the adjustment related to the stock split described in Note A.

B. Correction of an Error (continued)

						Classification
	As Previously		Effect of			Adjustment
	Reported		Error			Related to			As Restated
	July 1, 2017		Correction			Stock Split			July 1, 2017
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$	—	$	123,169		$	—		$	123,169
Common Shares	42,914		(2,425		)	(4,306		)	36,183
Additional Paid-in Capital	7,899		23,158			21,457			52,514
Retained Earnings	299,521		(143,902		)	(17,151		)	138,468

						Classification
	As Previously		Effect of			Adjustment
	Reported		Error			Related to			As Restated
	December 31, 2016		Correction			Stock Split			December 31, 2016
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$	—	$	124,201		$	—		$	124,201
Common Shares	42,914		(2,751		)	(4,306		)	35,857
Additional Paid-in Capital	2,429		17,740			21,457			41,626
Retained Earnings	290,292		(139,190		)	(17,151		)	133,951

XML

Seasonality of Business

6 Months Ended

Jul. 01, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information, Explanatory Disclosure

Seasonality of Business

Due to the seasonality of our business, our operating results for the six months endedJuly 1, 2017 are not indicative of results that may be expected for any other interim period or for the year ending December 31, 2017. Business seasonality traditionally results in 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.

XML

Accounts Receivable, Net and Supplemental Balance-Sheet Information

6 Months Ended

Jul. 01, 2017

Accounts Receivable, Net and Supplemental Balance-Sheet Information [Abstract] [Abstract]

Accounts receivable net and supplemental balance-sheet information [Text Block]

Accounts Receivable, Net and Supplemental Balance-Sheet Information

Accounts receivable, net, consisted of the following:

Accounts receivable, net	July 1, 2017		December 31, 2016
Accounts receivable	$	126,751	$	128,202
Receivables under contractual arrangements	34,293		21,541
	161,044		149,743
Less allowances for doubtful accounts	3,489		3,609
Accounts receivable, net	$	157,555	$	146,134

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

The following items comprise the amounts included in the balance sheets:

Other current assets	July 1, 2017		December 31, 2016
Refundable income taxes	$	94	$	548
Prepaid expense	9,251		14,493
Other	299		1,315
Total	$	9,644	$	16,356

Accrued expenses	July 1, 2017		December 31, 2016
Employee compensation	$	14,189	$	18,438
Accrued compensated absences	9,663		9,215
Self-insured medical claims	5,428		2,961
Income tax payable	3,744		953
Customer advances, deposits	756		2,997
Taxes, other than income	2,431		2,166
Other	1,411		929
Total	$	37,622	$	37,659

XML

Business Combinations (Notes)

6 Months Ended

Jul. 01, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

Our investment in businesses during the first six months of 2017 was $10,877, including debt issued, in the form of notes payable to the sellers, of $3,099, and have been included in our residential and commercial segment. Measurement-period adjustments are not complete. The measurement period for purchase price allocations ends as soon as information of the facts and circumstances becomes available, but does not exceed one year from the acquisition date. During the six months endedJuly 2, 2016, our investment in businesses was $4,170, with liabilities assumed of $98 and $575 debt issued.

E. Business Combinations (continued)

In March 2017, the Company acquired all of the outstanding common stock of Arborguard Tree Specialists Inc. (“Arborguard”), a residential and commercial tree care company, and certain assets of TTS&G, LLC, a leasing company related to Arborguard, for $7,200 in cash, with liabilities assumed of $1,416 and debt issued of $2,724. Arborguard’s revenue for the year ended February 28, 2017 was approximately $10,711.

The acquisition of Arborguard was accounted for under the acquisition method of accounting. The entire purchase price allocation for Arborguard is preliminary. At July 1, 2017, the fair values of the assets acquired and liabilities assumed have been preliminarily estimated and the excess consideration of $3,104 has been preliminarily recorded as goodwill pending finalization of the fair value. These preliminary estimates will be revised during the measurement period in 2017 as all pertinent information regarding finalization of the valuations for fixed assets, intangible assets, goodwill (including the amount expected to be deductible for tax purposes), tangible assets, other liabilities and deferred income tax assets and liabilities acquired are fully evaluated by the Company.

The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and liabilities assumed:

	Six Months Ended
	July 1, 2017
Detail of acquisitions:
Assets acquired:
Cash	$	326
Receivables	1,759
Prepaid expense	128
Equipment	1,904
Deposits and other	129
Finite-lived intangibles	4,566
Goodwill	3,504
Liabilities assumed	(1,439		)
Debt issued for purchases of businesses	(3,099		)
Cash paid	$	7,778

The results of operations of acquired businesses have been included in the consolidated statements of operations beginning as of the effective dates of acquisition. The effect of these acquisitions on our consolidated revenues and results of operations for the period ending July 1, 2017 was not significant. Pro forma net sales and results of operations for the acquisition had it occurred at the beginning of the six months endedJuly 1, 2017 are not material and, accordingly, are not provided.

XML

Identified Intangible Assets and Goodwill, Net

6 Months Ended

Jul. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Identified intangible assets and goodwill, net [Text Block]

Identified Intangible Assets and Goodwill, Net

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

	July 1, 2017				December 31, 2016
Identified Intangible Assets and Goodwill, Net	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists/relationships	$	21,711	$	16,036	$	17,822	$	15,171
Employment-related	7,389		6,499		7,032		6,386
Tradenames	5,960		5,001		5,634		4,860
Amortized intangible assets	$	35,060	$	27,536	$	30,488	$	26,417
Less accumulated amortization	27,536				26,417
Identified intangibles, net	7,524				4,071
Unamortized intangible assets:
Goodwill	33,831				30,305
	$	41,355			$	34,376

The changes in the carrying amounts of goodwill, by segment, for the year ended December 31, 2017 follow:

	Balance at January 1, 2017		Acquisitions		Translation and Other Adjustments		Balance at July 1, 2017
Utility	$	3,424	$	—	$	—	$	3,424
Residential and Commercial	26,881		3,504		22		30,407
Total	$	30,305	$	3,504	$	22	$	33,831

XML

Long-Term Debt and Commitments Related to Letters of Credit

6 Months Ended

Jul. 01, 2017

Debt Disclosure [Abstract]

Long-term debt and commitments related to letters of credit [Text Block]

Long-Term Debt and Commitments Related to Letters of Credit

Our long-term debt consisted of the following:

	July 1, 2017		December 31, 2016
Revolving credit facility
Swing-line borrowings	$	7,500	$	10,000
LIBOR borrowings	95,000		57,000
	102,500		67,000
Senior unsecured notes	24,000		24,000
Term loans	10,252		16,151
Capital leases	2,620		2,343
	139,372		109,494
Less debt issuance costs	263		333
Less current portion	9,813		16,871
	$	129,296	$	92,290

Revolving Credit Facility --We have a $175,000 revolving credit facility with a group of banks, which will expire in November 2018 and permits borrowings, as defined, up to $175,000, including a letter of credit sublimit of $100,000 and a swing-line commitment of $15,000. Under certain circumstances, the amount available under the revolving credit facility may be increased to $210,000. The revolving credit facility contains certain affirmative and negative covenants customary for this type of facility and includes financial covenant ratios with respect to a maximum leverage ratio and a maximum balance-sheet leverage ratio. As of July 1, 2017, we had unused commitments under the facility approximating$68,429, with $106,571 committed, consisting of borrowings of$102,500 and issued letters of credit of$4,071.

Borrowings outstanding bear interest, at Davey Tree’s option, of either (a) a base rate or (b) LIBOR plus a margin adjustment ranging from .75% to 1.50%--with the margin adjustments in both instances based on the Company's leverage ratio at the time of borrowing. The base rate is the greater of (i) the agent bank’s prime rate, (ii) LIBOR plus 1.50%, or (iii) the federal funds rate plus .50%. A commitment fee ranging from .10% to .25% is also required based on the average daily unborrowed commitment.

5.09% Senior Unsecured Notes--The senior unsecured notes are due July 22, 2020 and were issued during July 2010 as 5.09% Senior Unsecured Notes, Series A (the "5.09% Senior Notes"), pursuant to a Master Note Purchase Agreement (the “Purchase Agreement”) between the Company and the purchasers of the 5.09% Senior Notes.  

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 commenced on July 22, 2016 (thesixth 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.

Accounts Receivable Securitization Facility--On May 8, 2017, the Company amended its Accounts Receivable Securitization Facility (the "AR Securitization program") to extend the scheduled termination date for an additional one-year period and increase the limit of the facility from $60,000 to $100,000.

G. Long-Term Debt and Commitments Related to Letters of Credit (continued)

As of July 1, 2017, we had issued letters of credit of $58,150 under the terms of the AR securitization program.

Under the AR securitization program, Davey Tree transfers by selling or contributing current and future trade receivables to a wholly-owned, bankruptcy-remote financing subsidiary which pledges a perfected first priority security interest in the trade receivables--equal to the issued letters of credit as of July 1, 2017--to the bank in exchange for the bank issuing letters of credit ("LCs").

Fees payable to the bank include: (a) an LC issuance fee, payable on each settlement date, in the amount of .90% per annum on the aggregate amount of all LCs outstanding plus outstanding reimbursement obligations (e.g., arising from drawn LCs), if any, and (b) an unused LC fee, payable monthly, equal to (i) .35% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligations is greater than or equal to 50% of the facility limit and (ii) .45% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligations is less than 50% of the facility limit. If an LC is drawn and the bank is not immediately reimbursed in full for the drawn amount, any outstanding reimbursement obligation will accrue interest at a per annum rate equal to a reserve-adjusted LIBOR or, in certain circumstances, a base rate equal to the higher of (i) the bank’s prime rate and (ii) the federal funds rate plus .50% and, following any default, 2.00% plus the greater of (a) adjusted LIBOR and (b) a base rate equal to the higher of (i) the bank’s prime rate and (ii) the federal funds rate plus .50%.

The agreements underlying the AR securitization program contain various customary representations and warranties, covenants, and default provisions which provide for the termination and acceleration of the commitments under the AR securitization program in circumstances including, but not limited to, failure to make payments when due, breach of a representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

Total Commitments Related to Issued Letters of Credit--As of July 1, 2017, total commitments related to issued letters of credit were $64,221, of which $4,071 were issued under the revolving credit facility, $58,150 were issued under the AR securitization program, and $2,000 were issued under short-term lines of credit. As of December 31, 2016, total commitments related to issued letters of credit were $64,225, of which $4,071 were issued under the revolving credit facility, $58,150 were issued under the AR securitization facility, and $2,004 were issued under short-term lines of credit.

XML

Stock-Based Compensation

6 Months Ended

Jul. 01, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation[Text Block]

Stock-Based Compensation

We have given consideration to the two-for-one stock split of our common shares effective June 1, 2017 including all common and per share data.

Our shareholders approved the 2014 Omnibus Stock Plan (the “2014 Stock Plan”) at our annual meeting of shareholders on May 20, 2014. The 2014 Stock Plan replaced the expired 2004 Omnibus Stock Plan (the “2004 plan”) previously approved by the shareholders in 2004. The 2014 Stock Plan is administered by the Compensation Committee of the Board of Directors and has a term of ten years. All directors of the Company and employees of the Company and its subsidiaries are eligible to participate in the 2014 Stock Plan. The 2014 Stock Plan (similar to the 2004 plan) continues the maintenance of the Employee Stock Purchase Plan, as well as provisions for the grant of stock options and other stock-based incentives. The 2014 Stock Plan provides for the grant of five percent of the number of the Company’s common shares outstanding as of the first day of each fiscal

H. Stock-Based Compensation (continued)

year plus the number of common shares that were available for grant of awards, but not granted, in prior years. In no event, however, may the number of common shares available for the grant of awards in any fiscal year exceed ten percent of the common shares outstanding as of the first day of that fiscal year. Common shares subject to an award that is forfeited, terminated, or canceled without having been exercised are generally added back to the number of shares available for grant under the 2014 Stock Plan.

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

	Three months ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Compensation expense, all share-based payment plans	$	1,462	$	678	$	2,448	$	1,324

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 $415 being recognized for the six months endedJuly 1, 2017 and $337for the six months endedJuly 2, 2016.

Stock Option Plans--The stock options outstanding were awarded under a graded vesting schedule, measured at fair value, 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 $395 for the six months endedJuly 1, 2017 and $270 for the six months endedJuly 2, 2016.

Stock-Settled Stock Appreciation Rights--During the six months endedJuly 1, 2017, the Compensation Committee awarded 152,000 stock-settled stock appreciation rights (“SSARs”) to certain management employees, which vest ratably over five years. A SSAR is an award that allows the recipient to receive common shares equal to the appreciation in the fair market value of our common shares between the date the award was granted and the conversion date of the shares vested.

H. Stock-Based Compensation (continued)

The following table summarizes our SSARs as of July 1, 2017.

Stock-Settled Stock Appreciation Rights	Number of Rights		Weighted- Average Award Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2017	743,662		$	2.75
Granted	152,000		3.57
Forfeited	—		—
Vested	(240,546	)	2.59
Unvested, July 1, 2017	655,116		$	3.00	2.7 years	$	1,301	$	11,530
Employee SSARs	655,116		$	3.00	2.7 years	$	1,301	$	11,530

Compensation costs for SSARs are determined using a fair-value method and amortized over the requisite service period. Compensation expense for SSARs was $757 for the six months endedJuly 1, 2017 and $292 for the six months endedJuly 2, 2016.

Restricted Stock Units--During the six months endedJuly 1, 2017, the Compensation Committee awarded 80,350 performance-based restricted stock units to certain directors and management employees. The Compensation Committee made similar awards in prior periods. The awards vest over specified periods. The following table summarizes restricted stock units as of July 1, 2017.

Restricted Stock Units	Number of Stock Units		Weighted- Average Grant Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2017	304,958		$	13.22
Granted	80,350		17.01
Forfeited	—		—
Vested	(49,964	)	11.38
Unvested, July 1, 2017	335,344		$	14.40	2.8 years	$	2,604	$	5,902

Compensation cost for restricted stock awards is determined using a fair-value method and amortized on the straight-line recognition method over the requisite service period. Compensation expense on restricted stock awards totaled $881 for the six months endedJuly 1, 2017 and $425 for the six months endedJuly 2, 2016.

We estimated the fair value of each stock-based 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

H.    Stock-Based Compensation (continued)

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 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.

	Six Months Ended
	July 1, 2017		July 2, 2016
Volatility rate	10.3	%	10.6	%
Risk-free interest rate	2.2	%	1.8	%
Expected dividend yield	.7	%	.7	%
Expected life of awards (years)	8.9		9.5

General Stock Option Information--The following table summarizes activity under the stock option plans for the six months endedJuly 1, 2017.

Stock Options	Number of Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2017	1,599,296		$	12.49
Granted	148,500		17.60
Exercised	(74,420	)	10.40
Forfeited	(64,574	)	12.75
Outstanding, July 1, 2017	1,608,802		$	13.05	6.7 years	$	7,320
Exercisable, July 1, 2017	869,302		$	11.23	5.4 years	$	5,537

As of July 1, 2017, there was approximately $1,438 of unrecognized compensation cost related to stock options outstanding. The cost is expected to be recognized over a weighted-average period of 2.3 years. “Intrinsic value” is defined as the amount by which the market price of a common share exceeds the exercise price of an option. 

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

XML

Net Periodic Benefit Expense - Defined Benefit Pension Plans

6 Months Ended

Jul. 01, 2017

Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]

Net periodic benefit expense--defined benefit pension plans [Text Block]

Net Periodic Benefit Expense--Defined Benefit Pension Plans

The results of operations included the following net periodic benefit expense (income) recognized related to our defined-benefit pension plans.

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Components of pension expense (income)
Service costs--increase in benefit obligation earned	$	132		$	90		$	265		$	190
Interest cost on projected benefit obligation	264			310			527			627
Expected return on plan assets	(170		)	(276		)	(339		)	(553		)
Settlement loss	—			—			—			453
Amortization of net actuarial loss	238			237			475			480
Amortization of prior service cost	15			—			31			—
Net pension expense of defined benefit pension plans	$	479		$	361		$	959		$	1,197

XML

Income Taxes

6 Months Ended

Jul. 01, 2017

Income Tax Disclosure [Abstract]

Income taxes [Text Block]

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 effective tax rate for the six months endedJuly 1, 2017 is estimated to approximate 39.2%.  Our effective tax rate for the six months endedJuly 2, 2016 was estimated at 41.2%.

At December 31, 2016, we had unrecognized tax benefits of $2,532, of which $2,053 would affect our effective rate if recognized, and accrued interest expense related to unrecognized benefits of $107. At July 1, 2017, there were no significant changes in the unrecognized tax benefits, including the amount that would affect our effective rate if recognized, or the accrued interest expense related to the unrecognized 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 Company is routinely under audit by federal, state, local and Canadian authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. During the fourth quarter 2013, the U.S. Internal Revenue Service completed its audit of the Company's U.S. income tax returns for 2010 and 2011 and, during 2010, Canada Revenue Agency completed its audit of the Company's Canadian operations for 2006, 2007 and 2008. With the exception of U.S. state jurisdictions, the Company is no longer subject to examination by tax authorities for the years through 2012. As of July 1, 2017, we believe it is reasonably possible that the total amount of unrecognized tax benefits will not significantly increase or decrease.

XML

Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jul. 01, 2017

Equity [Abstract]

Accumulated other comprehensive income (loss) [Text Block]

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (or loss) is comprised of net income (or net loss) and other components, including currency translation adjustments and defined-benefit pension plan adjustments.

K. Accumulated Other Comprehensive Income (Loss) (continued)

The following summarizes the components of other comprehensive income (loss) accumulated in shareholders’ equity for the six months endedJuly 1, 2017 and six months endedJuly 2, 2016:

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2017	$	(5,500	)	$	(6,662	)	$	(12,162	)
Other comprehensive income (loss) before reclassifications
Unrealized gains	$	1,203		$	—		$	1,203
Amounts reclassified from accumulated other comprehensive income (loss)	—			506			506
Tax effect	—			(192		)	(192		)
Net of tax amount	1,203			314			1,517
Balance at July 1, 2017	$	(4,297	)	$	(6,348	)	$	(10,645	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2016	$	(6,244	)	$	(7,150	)	$	(13,394	)
Other comprehensive income (loss) before reclassifications
Unrealized gains	$	1,997		$	—		$	1,997
Amounts reclassified from accumulated other comprehensive income (loss)	—			829			829
Tax effect	—			(321		)	(321		)
Net of tax amount	1,997			508			2,505
Balance at July 2, 2016	$	(4,247	)	$	(6,642	)	$	(10,889	)

The change in defined benefit pension plans of $506 for the six months endedJuly 1, 2017 and the $829 for the six months endedJuly 2, 2016 is included in net periodic pension expense and is classified in the condensed statement of operations as costs and expenses, general and administrative.

XML

Per Share Amounts and Common Shares Outstanding

6 Months Ended

Jul. 01, 2017

Equity [Abstract]

Per share amounts and common shares outstanding [Text Block]

Per Share Amounts and Common and Redeemable 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 (adjusted for the two-for-one stock split of our common shares effective June 1, 2017):

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Income available to common shareholders:
Net income	$	14,223	$	13,309	$	10,336	$	9,121
Weighted-average shares:
Basic:
Outstanding	24,797		25,528		24,582		25,534
Partially-paid share subscriptions	201		212		402		424
Basic weighted-average shares	24,998		25,740		24,984		25,958
Diluted:
Basic from above	24,998		25,740		24,984		25,958
Incremental shares from assumed:
Exercise of stock subscription purchase rights	141		136		143		136
Exercise of stock options and awards	846		822		871		874
Diluted weighted-average shares	25,985		26,698		25,998		26,968
Net income per share:
Basic	$	.57	$	.52	$	.41	$	.35
Diluted	$	.55	$	.50	$	.40	$	.34

L. Per Share Amounts and Common and Redeemable Shares Outstanding (continued)

Common and Redeemable Shares Outstanding--A summary of the activity of the common and redeemable shares outstanding for the six months endedJuly 1, 2017 follows:

	Common Shares		Redeemable
	Net of Treasury Shares		Shares		Total
	As Restated		As Restated		As Restated
Shares outstanding at January 1, 2017	17,866,236		7,056,904		24,923,140
Shares purchased	(351,033	)	(591,002	)	(942,035	)
Shares sold	184,651		264,647		449,298
Stock subscription offering -- cash purchases	41,781		—		41,781
Options and awards exercised	105,819		—		105,819
Shares outstanding at July 1, 2017	17,847,454		6,730,549		24,578,003

On July 1, 2017, we had 24,578,003 common and redeemable shares outstanding, employee options exercisable to purchase 869,302 common shares, partially-paid subscriptions for 804,048 common shares and purchase rights outstanding for 319,956 common shares.

Common Stock Split--On May 10, 2017, our Board of Directors declared a two-for-one stock split of our common shares, paid as a stock dividend to shareholders of record as of June 1, 2017. The par value of each common share remains at $1.00.

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 $9.85 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 1,275,428 common shares for $12,563 at $9.85 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 $9.85 per share for every three common shares purchased under the plan. As a result of the stock subscription, employees were granted rights to purchase 423,600 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.

XML

Operations by Business Segment

6 Months Ended

Jul. 01, 2017

Segment Reporting [Abstract]

Operations by business segment [Text Block]

Operations by Business Segment

We provide a wide range of arboricultural, horticultural, environmental and consulting services to residential, utility, commercial and government entities throughout the United States and Canada. We have two reportable operating segments organized by type or class of customer: Residential and Commercial, and Utility.

Residential and Commercial--Residential and Commercial provides services to our residential and commercial customers including: the treatment, preservation, maintenance, removal and planting of trees, shrubs and other plant life; the practice of landscaping, grounds maintenance, tree surgery, tree feeding and tree spraying; the application of fertilizer, herbicides and insecticides; and, natural resource management and consulting, forestry research and development, and environmental planning.

Utility--Utility is principally engaged in providing services to our utility customers--investor-owned, municipal utilities, and rural electric cooperatives--including: the practice of line-clearing and vegetation management around power lines, rights-of-way and chemical brush control; and, natural resource management and consulting, forestry research and development, and environmental planning.

All other operating activities, including research, technical support and laboratory diagnostic facilities, 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 our 2016 Annual Report.    

M. Operations by Business Segment (continued)

	Utility		Residential and Commercial		All Other			Reconciling Adjustments				Consolidated
Three Months Ended July 1, 2017
Revenues	$	112,903	$	131,299	$	835		$	—			$	245,037
Income (loss) from operations	4,270		23,837		(1,312		)	(1,483		)	(a)	25,312
Interest expense								(1,072		)		(1,072		)
Interest income								73				73
Other income (expense), net								(992		)		(992		)
Income before income taxes												$	23,321
Segment assets, total	$	171,472	$	202,502	$	—		$	86,198		(b)	$	460,172
Three Months Ended July 2, 2016
Revenues	$	105,285	$	118,945	$	533		$	—			$	224,763
Income (loss) from operations	5,587		21,226		(980		)	(1,547		)	(a)	24,286
Interest expense								(1,062		)		(1,062		)
Interest income								60				60
Other income (expense), net								(1,156		)		(1,156		)
Income before income taxes												$	22,128
Segment assets, total	$	159,824	$	181,945	$	—		$	84,375		(b)	$	426,144
Six Months Ended July 1, 2017
Revenues	$	225,381	$	210,886	$	1,583		$	—			$	437,850
Income (loss) from operations	6,928		20,255		(3,887		)	(2,326		)	(a)	20,970
Interest expense								(2,329		)		(2,329		)
Interest income								143				143
Other income (expense), net								(1,784		)		(1,784		)
Income before income taxes												$	17,000
Segment assets, total	$	171,472	$	202,502	$	—		$	86,198		(b)	$	460,172
Six Months Ended July 2, 2016
Revenues	$	205,313	$	199,279	$	1,004		$	—			$	405,596
Income (loss) from operations	7,061		19,790		(4,086		)	(3,599		)	(a)	19,166
Interest expense								(2,027		)		(2,027		)
Interest income								128				128
Other income (expense), net								(1,755		)		(1,755		)
Income before income taxes												$	15,512
Segment assets, total	$	159,824	$	181,945	$	—		$	84,375		(b)	$	426,144

Reconciling adjustments from segment reporting to consolidated external financial reporting include unallocated corporate items:

(a) 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.

XML

Fair Value Measurements and Financial Instruments

6 Months Ended

Jul. 01, 2017

Fair Value Disclosures [Abstract]

Fair value measurements and financial instruments

Fair Value Measurements and Financial Instruments

Financial Accounting Standards Board Accounting Standard Codification 820, “Fair Value of Measurements and Disclosures (“Topic 820”)” defines fair value based on the price that would be received to sell an asset or the exit price that would be 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--Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The hierarchy prioritizes the inputs into three broad levels:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2 inputs are observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Our assets and liabilities measured at fair value on a recurring basis at July 1, 2017 were as follows:

			Fair Value Measurements at July 1, 2017 Using:
Assets and Liabilities Recorded at Fair Value on a Recurring Basis	Total Carrying Value at July 1, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets invested for self-insurance, classified as other assets, noncurrent	$	16,933	$	16,933	$	—	$	—
Liabilities:
Deferred compensation	$	1,985	$	—	$	1,985	$	—

N. Fair Value Measurements and Financial Instruments (continued)

Our assets and liabilities measured at fair value on a recurring basis at December 31, 2016 were as follows:

			Fair Value Measurements at December 31, 2016 Using:
Assets and Liabilities Recorded at Fair Value on a Recurring Basis	Total Carrying Value at December 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets invested for self-insurance, classified as other assets, noncurrent	$	15,492	$	15,492	$	—	$	—
Liabilities:
Deferred compensation	$	1,837	$	—	$	1,837	$	—

The assets invested for self-insurance are money market funds--classified as Level 1--based on quoted market prices of the identical underlying securities in active markets. The estimated fair value of the deferred compensation--classified as Level 2--is based on the value of the Company's common shares, determined by independent valuation.

Fair Value of Financial Instruments--The fair values of our current financial 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. Financial instruments classified as noncurrent liabilities and their carrying values and fair values were as follows:

	July 1, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility, noncurrent	$	102,500	$	102,500	$	67,000	$	67,000
Senior unsecured notes	18,000		18,497		18,000		18,509
Term loans, noncurrent	9,060		11,270		7,623		9,854
Total	$	129,560	$	132,267	$	92,623	$	95,363

The carrying value of our revolving credit facility approximates fair value--classified as Level 2--as the interest rates on the amounts outstanding are variable. The fair value of our senior unsecured notes and term loans--classified as Level 2--is determined based on expected future weighted-average interest rates with the same remaining maturities.

Market Risk--In the normal course of business, we are exposed to market risk related to changes in foreign currency exchange rates, changes in interest rates and changes in fuel prices. We do not hold or issue derivative financial instruments for trading or speculative purposes. In prior years, we have used derivative financial instruments to manage risk, in part, associated with changes in interest rates and changes in fuel prices. Presently, we are not engaged in any hedging or derivative activities.

XML

Contingencies

6 Months Ended

Jul. 01, 2017

Commitments and Contingencies Disclosure [Abstract]

Contingencies [Text Block]

Contingencies

We are party to a number of lawsuits, threatened lawsuits and other claims arising out of the normal course of business. Management is of the opinion that liabilities which may result are adequately covered by insurance, or reflected in the self-insurance accruals, and would not be material in relation to the financial position or results of operations.

XML

The Davey 401KSOP and Employee Stock Ownership Plan (Notes)

6 Months Ended

Jul. 01, 2017

The Davey 401KSOP and Employee Stock Ownership Plan [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

The Davey 401KSOP and Employee Stock Ownership Plan

On March 15, 1979, the Company consummated a plan, which transferred control of the Company to its employees. As a part of this plan, the Company initially sold 120,000 common shares (presently, 23,040,000 common shares adjusted for stock splits) to its Employee Stock Ownership Trust (“ESOT”) for $2,700. The Employee Stock Ownership Plan (“ESOP”), in conjunction with the related ESOT, provided for the grant to certain employees of ownership rights in, but not possession of, the common shares held by the trustee of the ESOT. Annual allocations of shares have been made to individual accounts established for the benefit of the participants.

Defined Contribution and Savings Plans--Most employees are eligible to participate in The Davey 401KSOP and ESOP Plan. Effective January 1, 1997, the plan commenced operations and retained the existing ESOP participant accounts and incorporated a deferred savings plan (a “401(k) plan”) feature. Participants in the 401(k) plan are allowed to make before-tax contributions, within Internal Revenue Service established limits, through payroll deductions. Effective January 1, 2009 we match, in either cash or our common shares, 100% of the first one percent and 50% of the next three percent of each participant's before-tax contribution, limited to the first four percent of the employee’s compensation deferred each year. All nonbargaining domestic employees who attained age 21 and completed one year of service are eligible to participate.

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. The Davey 401KSOP and ESOP Plan includes a put option for shares of the Company’s common stock distributed from the plan. Shares are distributed from the Davey 401KSOP and ESOP Plan to former participants of the plan, their beneficiaries, donees or heirs (each, a “participant”). Since our common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value for two60-day periods after distribution of the shares from the Davey 401KSOP and ESOP. The fair value of distributed shares subject to the put option totaled $2,021 and $1,148 as of July 1, 2017 and December 31, 2016, respectively. The fair value of the shares held in the Davey 401KSOP and ESOP totaled $121,148 and $123,053 as of July 1, 2017 and December 31, 2016, respectively. Due to the Company’s obligation under the put option, the distributed shares subject to the put option and the shares held in the Davey 401KSOP and ESOP (collectively referred to as 401KSOP and ESOP related shares) are recorded at fair value, classified as temporary equity in the mezzanine section of the consolidated balance sheets and totaled $123,169 and $124,201 as of July 1, 2017 and December 31, 2016, respectively. Changes in the fair value of the 401KSOP and ESOP Plan related shares are reflected in retained earnings while net share activity associated with 401KSOP and ESOP Plan related shares are first reflected in additional paid-in capital and then retained earnings if additional paid-in capital is insufficient. See Note B.

XML

Basis of Financial Statement Preparation (Policies)

6 Months Ended

Jul. 01, 2017

Accounting Policies [Abstract]

Basis of financial statement preparation, policy [Policy Text Block]

The condensed consolidated financial statements present the financial position, results of operations and cash flows of The Davey Tree Expert Company and its subsidiaries. When we refer to “we,” “us,” “our,” “Davey,” or “Davey Tree”, we mean The Davey Tree Expert Company and its subsidiaries, unless otherwise expressly stated or 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”), as codified in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), 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/A for the year ended December 31, 2016 (the “2016 Annual Report”).

Use of estimates, policy [Policy Text Block]

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.

Income tax, policy [Policy Text Block]

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.

Earnings per share, policy [Policy Text Block]

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. 

Segment reporting, policy [Policy Text Block]

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 our 2016 Annual Report.

XML

Correction of an Error (Tables)

6 Months Ended

Jul. 01, 2017

Error Corrections and Prior Period Adjustments Restatement [Line Items]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

The effects of the error correction on the consolidated balance sheets are shown below. See Notes L and P. The below amounts also reflect the adjustment related to the stock split described in Note A.

B. Correction of an Error (continued)

						Classification
	As Previously		Effect of			Adjustment
	Reported		Error			Related to			As Restated
	July 1, 2017		Correction			Stock Split			July 1, 2017
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$	—	$	123,169		$	—		$	123,169
Common Shares	42,914		(2,425		)	(4,306		)	36,183
Additional Paid-in Capital	7,899		23,158			21,457			52,514
Retained Earnings	299,521		(143,902		)	(17,151		)	138,468

						Classification
	As Previously		Effect of			Adjustment
	Reported		Error			Related to			As Restated
	December 31, 2016		Correction			Stock Split			December 31, 2016
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$	—	$	124,201		$	—		$	124,201
Common Shares	42,914		(2,751		)	(4,306		)	35,857
Additional Paid-in Capital	2,429		17,740			21,457			41,626
Retained Earnings	290,292		(139,190		)	(17,151		)	133,951

XML

Accounts Receivable, Net and Supplemental Balance-Sheet Information (Tables)

6 Months Ended

Jul. 01, 2017

Accounts Receivable, Net and Supplemental Balance-Sheet Information [Abstract] [Abstract]

Accounts receivable, net [Table Text Block]

Accounts receivable, net, consisted of the following:

Accounts receivable, net	July 1, 2017		December 31, 2016
Accounts receivable	$	126,751	$	128,202
Receivables under contractual arrangements	34,293		21,541
	161,044		149,743
Less allowances for doubtful accounts	3,489		3,609
Accounts receivable, net	$	157,555	$	146,134

Schedule of Other Current Assets [Table Text Block]

The following items comprise the amounts included in the balance sheets:

Other current assets	July 1, 2017		December 31, 2016
Refundable income taxes	$	94	$	548
Prepaid expense	9,251		14,493
Other	299		1,315
Total	$	9,644	$	16,356

Accrued expenses [Table Text Block]

Accrued expenses	July 1, 2017		December 31, 2016
Employee compensation	$	14,189	$	18,438
Accrued compensated absences	9,663		9,215
Self-insured medical claims	5,428		2,961
Income tax payable	3,744		953
Customer advances, deposits	756		2,997
Taxes, other than income	2,431		2,166
Other	1,411		929
Total	$	37,622	$	37,659

XML

Business Combinations Business Combinations (Tables)

6 Months Ended

Jul. 01, 2017

Business Acquisition [Line Items]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and liabilities assumed:

	Six Months Ended
	July 1, 2017
Detail of acquisitions:
Assets acquired:
Cash	$	326
Receivables	1,759
Prepaid expense	128
Equipment	1,904
Deposits and other	129
Finite-lived intangibles	4,566
Goodwill	3,504
Liabilities assumed	(1,439		)
Debt issued for purchases of businesses	(3,099		)
Cash paid	$	7,778

XML

Identified Intangible Assets and Goodwill, Net (Tables)

6 Months Ended

Jul. 01, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of identified intangible assets and goodwill, net [Table Text Block]

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

	July 1, 2017				December 31, 2016
Identified Intangible Assets and Goodwill, Net	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists/relationships	$	21,711	$	16,036	$	17,822	$	15,171
Employment-related	7,389		6,499		7,032		6,386
Tradenames	5,960		5,001		5,634		4,860
Amortized intangible assets	$	35,060	$	27,536	$	30,488	$	26,417
Less accumulated amortization	27,536				26,417
Identified intangibles, net	7,524				4,071
Unamortized intangible assets:
Goodwill	33,831				30,305
	$	41,355			$	34,376

Schedule of Goodwill [Table Text Block]

The changes in the carrying amounts of goodwill, by segment, for the year ended December 31, 2017 follow:

	Balance at January 1, 2017		Acquisitions		Translation and Other Adjustments		Balance at July 1, 2017
Utility	$	3,424	$	—	$	—	$	3,424
Residential and Commercial	26,881		3,504		22		30,407
Total	$	30,305	$	3,504	$	22	$	33,831

XML

Long-Term Debt and Commitments Related to Letters of Credit (Tables)

6 Months Ended

Jul. 01, 2017

Debt Disclosure [Abstract]

Schedule of long-term debt [Table Text Block]

Our long-term debt consisted of the following:

	July 1, 2017		December 31, 2016
Revolving credit facility
Swing-line borrowings	$	7,500	$	10,000
LIBOR borrowings	95,000		57,000
	102,500		67,000
Senior unsecured notes	24,000		24,000
Term loans	10,252		16,151
Capital leases	2,620		2,343
	139,372		109,494
Less debt issuance costs	263		333
Less current portion	9,813		16,871
	$	129,296	$	92,290

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jul. 01, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of stock-based compensation expense under all share-based payment plans [Table Text Block]

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

	Three months ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Compensation expense, all share-based payment plans	$	1,462	$	678	$	2,448	$	1,324

Schedule of share-based compensation, stock-settled stock appreciation rights award activity [Table Text Block]

The following table summarizes our SSARs as of July 1, 2017.

Stock-Settled Stock Appreciation Rights	Number of Rights		Weighted- Average Award Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2017	743,662		$	2.75
Granted	152,000		3.57
Forfeited	—		—
Vested	(240,546	)	2.59
Unvested, July 1, 2017	655,116		$	3.00	2.7 years	$	1,301	$	11,530
Employee SSARs	655,116		$	3.00	2.7 years	$	1,301	$	11,530

Schedule of share-based compensation, performance-based restricted stock units award activity [Table Text Block]

The following table summarizes restricted stock units as of July 1, 2017.

Restricted Stock Units	Number of Stock Units		Weighted- Average Grant Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2017	304,958		$	13.22
Granted	80,350		17.01
Forfeited	—		—
Vested	(49,964	)	11.38
Unvested, July 1, 2017	335,344		$	14.40	2.8 years	$	2,604	$	5,902

Schedule of share-based payment award, stock options, valuation assumptions [Table Text Block]

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

	Six Months Ended
	July 1, 2017		July 2, 2016
Volatility rate	10.3	%	10.6	%
Risk-free interest rate	2.2	%	1.8	%
Expected dividend yield	.7	%	.7	%
Expected life of awards (years)	8.9		9.5

Schedule of share-based compensation, stock options activity [Table Text Block]

The following table summarizes activity under the stock option plans for the six months endedJuly 1, 2017.

Stock Options	Number of Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2017	1,599,296		$	12.49
Granted	148,500		17.60
Exercised	(74,420	)	10.40
Forfeited	(64,574	)	12.75
Outstanding, July 1, 2017	1,608,802		$	13.05	6.7 years	$	7,320
Exercisable, July 1, 2017	869,302		$	11.23	5.4 years	$	5,537

XML

Net Periodic Benefit Expense - Defined Benefit Pension Plans (Tables)

6 Months Ended

Jul. 01, 2017

Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]

Schedule of defined benefit pension plans, components of pension expense [Table Text Block]

The results of operations included the following net periodic benefit expense (income) recognized related to our defined-benefit pension plans.

	Three Months Ended						Six Months Ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Components of pension expense (income)
Service costs--increase in benefit obligation earned	$	132		$	90		$	265		$	190
Interest cost on projected benefit obligation	264			310			527			627
Expected return on plan assets	(170		)	(276		)	(339		)	(553		)
Settlement loss	—			—			—			453
Amortization of net actuarial loss	238			237			475			480
Amortization of prior service cost	15			—			31			—
Net pension expense of defined benefit pension plans	$	479		$	361		$	959		$	1,197

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jul. 01, 2017

Equity [Abstract]

Schedule of other comprehensive income (loss) [Table Text Block]

The following summarizes the components of other comprehensive income (loss) accumulated in shareholders’ equity for the six months endedJuly 1, 2017 and six months endedJuly 2, 2016:

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2017	$	(5,500	)	$	(6,662	)	$	(12,162	)
Other comprehensive income (loss) before reclassifications
Unrealized gains	$	1,203		$	—		$	1,203
Amounts reclassified from accumulated other comprehensive income (loss)	—			506			506
Tax effect	—			(192		)	(192		)
Net of tax amount	1,203			314			1,517
Balance at July 1, 2017	$	(4,297	)	$	(6,348	)	$	(10,645	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2016	$	(6,244	)	$	(7,150	)	$	(13,394	)
Other comprehensive income (loss) before reclassifications
Unrealized gains	$	1,997		$	—		$	1,997
Amounts reclassified from accumulated other comprehensive income (loss)	—			829			829
Tax effect	—			(321		)	(321		)
Net of tax amount	1,997			508			2,505
Balance at July 2, 2016	$	(4,247	)	$	(6,642	)	$	(10,889	)

XML

Per Share Amounts and Common Shares Outstanding (Tables)

6 Months Ended

Jul. 01, 2017

Equity [Abstract]

Schedule of earnings per share, basic and diluted [Table Text Block]

The per share amounts were computed as follows (adjusted for the two-for-one stock split of our common shares effective June 1, 2017):

	Three Months Ended				Six Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Income available to common shareholders:
Net income	$	14,223	$	13,309	$	10,336	$	9,121
Weighted-average shares:
Basic:
Outstanding	24,797		25,528		24,582		25,534
Partially-paid share subscriptions	201		212		402		424
Basic weighted-average shares	24,998		25,740		24,984		25,958
Diluted:
Basic from above	24,998		25,740		24,984		25,958
Incremental shares from assumed:
Exercise of stock subscription purchase rights	141		136		143		136
Exercise of stock options and awards	846		822		871		874
Diluted weighted-average shares	25,985		26,698		25,998		26,968
Net income per share:
Basic	$	.57	$	.52	$	.41	$	.35
Diluted	$	.55	$	.50	$	.40	$	.34

Schedule of common shares outstanding [Table Text Block]

A summary of the activity of the common and redeemable shares outstanding for the six months endedJuly 1, 2017 follows:

	Common Shares		Redeemable
	Net of Treasury Shares		Shares		Total
	As Restated		As Restated		As Restated
Shares outstanding at January 1, 2017	17,866,236		7,056,904		24,923,140
Shares purchased	(351,033	)	(591,002	)	(942,035	)
Shares sold	184,651		264,647		449,298
Stock subscription offering -- cash purchases	41,781		—		41,781
Options and awards exercised	105,819		—		105,819
Shares outstanding at July 1, 2017	17,847,454		6,730,549		24,578,003

XML

Operations by Business Segment (Tables)

6 Months Ended

Jul. 01, 2017

Segment Reporting [Abstract]

Schedule of segment reporting information, by segment [Table Text Block]

M. Operations by Business Segment (continued)

	Utility		Residential and Commercial		All Other			Reconciling Adjustments				Consolidated
Three Months Ended July 1, 2017
Revenues	$	112,903	$	131,299	$	835		$	—			$	245,037
Income (loss) from operations	4,270		23,837		(1,312		)	(1,483		)	(a)	25,312
Interest expense								(1,072		)		(1,072		)
Interest income								73				73
Other income (expense), net								(992		)		(992		)
Income before income taxes												$	23,321
Segment assets, total	$	171,472	$	202,502	$	—		$	86,198		(b)	$	460,172
Three Months Ended July 2, 2016
Revenues	$	105,285	$	118,945	$	533		$	—			$	224,763
Income (loss) from operations	5,587		21,226		(980		)	(1,547		)	(a)	24,286
Interest expense								(1,062		)		(1,062		)
Interest income								60				60
Other income (expense), net								(1,156		)		(1,156		)
Income before income taxes												$	22,128
Segment assets, total	$	159,824	$	181,945	$	—		$	84,375		(b)	$	426,144
Six Months Ended July 1, 2017
Revenues	$	225,381	$	210,886	$	1,583		$	—			$	437,850
Income (loss) from operations	6,928		20,255		(3,887		)	(2,326		)	(a)	20,970
Interest expense								(2,329		)		(2,329		)
Interest income								143				143
Other income (expense), net								(1,784		)		(1,784		)
Income before income taxes												$	17,000
Segment assets, total	$	171,472	$	202,502	$	—		$	86,198		(b)	$	460,172
Six Months Ended July 2, 2016
Revenues	$	205,313	$	199,279	$	1,004		$	—			$	405,596
Income (loss) from operations	7,061		19,790		(4,086		)	(3,599		)	(a)	19,166
Interest expense								(2,027		)		(2,027		)
Interest income								128				128
Other income (expense), net								(1,755		)		(1,755		)
Income before income taxes												$	15,512
Segment assets, total	$	159,824	$	181,945	$	—		$	84,375		(b)	$	426,144

Reconciling adjustments from segment reporting to consolidated external financial reporting include unallocated corporate items:

(a) 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.

XML

Fair Value Measurements and Financial Instruments (Tables)

6 Months Ended

Jul. 01, 2017

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value on a recurring basis [Table Text Block]

Our assets and liabilities measured at fair value on a recurring basis at July 1, 2017 were as follows:

			Fair Value Measurements at July 1, 2017 Using:
Assets and Liabilities Recorded at Fair Value on a Recurring Basis	Total Carrying Value at July 1, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets invested for self-insurance, classified as other assets, noncurrent	$	16,933	$	16,933	$	—	$	—
Liabilities:
Deferred compensation	$	1,985	$	—	$	1,985	$	—

N. Fair Value Measurements and Financial Instruments (continued)

Our assets and liabilities measured at fair value on a recurring basis at December 31, 2016 were as follows:

			Fair Value Measurements at December 31, 2016 Using:
Assets and Liabilities Recorded at Fair Value on a Recurring Basis	Total Carrying Value at December 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets invested for self-insurance, classified as other assets, noncurrent	$	15,492	$	15,492	$	—	$	—
Liabilities:
Deferred compensation	$	1,837	$	—	$	1,837	$	—

Financial instruments recorded at historical carrying value [Table Text Block]

Financial instruments classified as noncurrent liabilities and their carrying values and fair values were as follows:

	July 1, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility, noncurrent	$	102,500	$	102,500	$	67,000	$	67,000
Senior unsecured notes	18,000		18,497		18,000		18,509
Term loans, noncurrent	9,060		11,270		7,623		9,854
Total	$	129,560	$	132,267	$	92,623	$	95,363

XML

Basis of Financial Statement Preparation Recent accounting guidance (Details) $ in Thousands	Apr. 01, 2017 USD ($)
Accounting Standards Update 2016 09 [Member] | Additional paid-in capital [Member]
New accounting pronouncement or change in accounting principle, cumulative effect of change on equity or net assets	$ (162)

XML

Basis of Financial Statement Preparation Details (Details)	6 Months Ended
	Jul. 01, 2017
Accounting Policies [Abstract]
Stock split, conversion ratio	2

XML

Correction of an Error (Details) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 01, 2017 USD ($)		Jul. 01, 2017 USD ($)		Apr. 01, 2017 USD ($)	Dec. 31, 2016 USD ($)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Temporary Equity, Other Changes		$ 4,711		$ 4,711
Number of put option periods				2
Duration of put option periods				60 days
Retained earnings	[1]	138,468		$ 138,468			$ 133,951
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)		123,169		123,169			124,201
Common shares		36,183	[1]	36,183	[1]	$ 36,183	35,857	[1]
Additional paid-in capital	[1]	52,514		52,514			41,626
Scenario, Previously Reported [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Retained earnings		299,521		299,521			290,292
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)		0		0			0
Common shares						42,914	42,914
Additional paid-in capital		7,899		7,899			2,429
Temporary equity [Member] | Restatement Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Retained earnings		(143,902)		(143,902)			(139,190)
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)		123,169		123,169			124,201
Common shares						(2,425)	(2,751)
Additional paid-in capital		23,158		23,158			17,740
Stock split [Member] | Restatement Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Retained earnings		(17,151)		(17,151)			(17,151)
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)		0		0			0
Common shares						$ (4,306)	(4,306)
Additional paid-in capital		$ 21,457		$ 21,457			$ 21,457

[1] Adjusted for two-for-one stock split

XML

Accounts Receivable, Net and Supplemental Balance-Sheet Information (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Accounts receivable, net
Accounts receivable	$ 126,751	$ 128,202
Receivables under contractual arrangements	34,293	21,541
Accounts receivable, gross	161,044	149,743
Less allowances for doubtful accounts	3,489	3,609
Accounts receivable, net	157,555	146,134
Other current assets
Refundable income taxes	94	548
Prepaid expense	9,251	14,493
Other	299	1,315
Total	9,644	16,356
Accrued expenses
Employee compensation	14,189	18,438
Accrued compensated absences	9,663	9,215
Self-insured medical claims	5,428	2,961
Income tax payable	3,744	953
Customer advances, deposits	756	2,997
Taxes, other than income	2,431	2,166
Other	1,411	929
Total	37,622	37,659
Other current liabilities
Long-term debt	9,813	16,871
Total	$ 33,071	$ 39,963

XML

Business Combinations (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Feb. 28, 2017
Investment in businesses	$ 10,877,000	$ 4,170,000
Liabilities assumed	1,439,000	98,000
Debt issued	3,099,000	$ 575,000
Cash paid	7,778,000
Cash	326,000
Receivables	1,759,000
Prepaid expense	128,000
Equipment	1,904,000
Deposits and other	129,000
Finite-lived intangibles	4,566,000
Goodwill	3,504,000
Arborguard Tree Specialists Inc. [Member]
Liabilities assumed	1,416,000
Debt issued	2,724,000
Cash paid	7,200,000
Revenue reported by acquired entity for last annual period			$ 10,711,000
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Intangible Assets, Including Goodwill	$ 3,104,000

XML

Identified Intangible Assets and Goodwill, Net (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, gross	$ 35,060	$ 30,488
Accumulated amortization	27,536	26,417
Identified intangible assets, net	7,524	4,071
Identified intangible assets and goodwill, net	41,355	34,376
Customer lists/relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, gross	21,711	17,822
Accumulated amortization	16,036	15,171
Employment-related [Member]
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, gross	7,389	7,032
Accumulated amortization	6,499	6,386
Tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, gross	5,960	5,634
Accumulated amortization	$ 5,001	$ 4,860

XML

Identified Intangible Assets and Goodwill, Net Schedule of Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Dec. 31, 2016
Goodwill [Line Items]
Goodwill	$ 33,831	$ 30,305
Goodwill, acquisitions	3,504
Goodwill, translation and other adjustments	22
Utility services [Member]
Goodwill [Line Items]
Goodwill	3,424	3,424
Goodwill, acquisitions	0
Goodwill, translation and other adjustments	0
Residential commercial services [Member]
Goodwill [Line Items]
Goodwill	30,407	$ 26,881
Goodwill, acquisitions	3,504
Goodwill, translation and other adjustments	$ 22

XML

Long-Term Debt and Commitments Related to Letters of Credit Long-Term Debt (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Revolving credit facility, noncurrent	$ 102,500	$ 67,000
Senior unsecured notes	24,000	24,000
Term loans	10,252	16,151
Capital leases	2,620	2,343
Long-term debt	139,372	109,494
Less debt issuance costs	263	333
Less current portion	9,813	16,871
Long-term debt, excluding current maturities	129,296	92,290
Swing-line borrowings [Member]
Revolving credit facility, noncurrent	7,500	10,000
London Interbank Offered Rate (LIBOR) [Member]
Revolving credit facility, noncurrent	$ 95,000	$ 57,000

XML

Long-Term Debt and Commitments Related to Letters of Credit (Narrative) (Details) $ in Thousands	6 Months Ended
	Jul. 01, 2017 USD ($)	May 07, 2017 USD ($)	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Revolving credit facility, current borrowing capacity	$ 175,000
Revolving credit facility, maximum borrowing capacity	210,000
Unused commitments under credit facility	68,429
Revolving credit facility borrowings	$ 102,500		$ 67,000
Number of principal payments	5
Anniversary when principal payments begin	6
Minimum [Member]
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.10%
Maximum [Member]
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.25%
Swing-line borrowings [Member]
Debt Instrument [Line Items]
Revolving credit facility, current borrowing capacity	$ 15,000
Revolving credit facility borrowings	$ 7,500		10,000
Unsecured debt [Member]
Debt Instrument [Line Items]
Interest rate	5.09%
Accounts receivable securitization [Member]
Debt Instrument [Line Items]
Interest rate	0.90%
Unused commitment fee threshold percent	0.50
Debt instrument variable rate base rate calculation, default rate	2.00%
Accounts receivable securitization [Member] | Base Rate, Federal Funds [Member]
Debt Instrument [Line Items]
Debt instrument, variable rate, base rate calculation	0.50%
Line of credit [Member]
Debt Instrument [Line Items]
Revolving credit facility borrowings	$ 106,571
Line of credit [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt instrument, variable rate, base rate calculation	1.50%
Line of credit [Member] | Base Rate, Federal Funds [Member]
Debt Instrument [Line Items]
Debt instrument, variable rate, base rate calculation	0.50%
Line of credit [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Outstanding borrowings interest rate margin adjustment, range	0.75%
Line of credit [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Outstanding borrowings interest rate margin adjustment, range	1.50%
Letter of credit [Member]
Debt Instrument [Line Items]
Letters of credit issued	$ 64,221		64,225
Letter of credit [Member] | Revolving credit facility [Member]
Debt Instrument [Line Items]
Letters of credit issued	4,071		4,071
Letter of credit [Member] | Accounts receivable securitization [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity	100,000	$ 60,000
Letters of credit issued	$ 58,150		58,150
Debt Instrument, Term	1 year
Letter of credit [Member] | Accounts receivable securitization [Member] | Minimum [Member]
Debt Instrument [Line Items]
Letter of credit, unused capacity, commitment fee percentage	0.0035
Letter of credit [Member] | Accounts receivable securitization [Member] | Maximum [Member]
Debt Instrument [Line Items]
Letter of credit, unused capacity, commitment fee percentage	0.0045
Letter of credit [Member] | Line of credit [Member]
Debt Instrument [Line Items]
Letters of credit issued	$ 2,000		$ 2,004
Letter of credit [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity	$ 100,000

XML

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, percentage of outstanding stock maximum				5.00%
Share-based compensation arrangement by share-based payment award, percentage of outstanding and available for grant, maximum				10.00%
Compensation expense, share-based payment plans		$ 1,462	$ 678	$ 2,448	$ 1,324
Stock split, conversion ratio				2
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Volatility rate				10.30%	10.60%
Risk-free interest rate				2.20%	1.80%
Expected dividend yield				0.70%	0.70%
Expected life of awards (years)				8 years 10 months 24 days	9 years 6 months
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning balance	[1]			1,599,296
Granted	[1]			148,500
Exercised	[1]			(74,420)
Forfeited	[1]			(64,574)
Outstanding, ending balance	[1]	1,608,802		1,608,802
Exercisable, ending balance	[1]	869,302		869,302
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Outstanding, weighted average exercise price, beginning balance	[1]			$ 12.49
Granted, weighted average exercise price	[1]			17.6
Exercised, weighted average exercise price	[1]			10.40
Forfeited, weighted average exercise price	[1]			12.75
Outstanding, weighted average exercise price, ending balance	[1]	$ 13.05		13.05
Exercisable, weighted average exercise price, ending balance	[1]	$ 11.23		$ 11.23
Exercisable, weighted average remaining contractual life (years)				5 years 4 months 24 days
Outstanding, aggregate intrinsic value		$ 7,320		$ 7,320
Exercisable, aggregate intrinsic value		5,537		5,537
Outstanding, unrecognized compensation cost		$ 1,438		$ 1,438
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition				2 years 3 months 18 days
Employee stock purchase plan [Domain]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense, share-based payment plans				$ 415	$ 337
Employee stock purchase plan, service period				1 year
Employee stock purchase plan, percentage of market price, purchase date				85.00%
Employee stock purchase plan, discount from market price, purchase date				15.00%
Stock option plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense, share-based payment plans				$ 395	270
Stock options awarded, term (years)				10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Outstanding, weighted average remaining contractual life (years)				6 years 8 months 12 days
Stock-settled stock appreciation rights (SSARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense, share-based payment plans				$ 757	292
Share-based compensation arrangement by share-based payment award, award vesting period				5 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Unvested, beginning balance	[1]			743,662
Granted	[1]			152,000
Forfeited	[1]			0
Vested	[1]			(240,546)
Unvested, ending balance	[1]	655,116		655,116
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Unvested, weighted average award date value, beginning balance	[1]			$ 2.75
Granted, weighted average award date value	[1]			3.57
Forfeited, weighted average award date value	[1]			0
Vested, weighted average award date value	[1]			2.59
Unvested, weighted average award date value, ending balance	[1]	$ 3.00		$ 3.00
Weighted average remaining contractual life (years)				2 years 8 months 12 days
Unrecognized compensation cost		$ 1,301		$ 1,301
Aggregate intrinsic value		$ 11,530		$ 11,530
Employee SSARs [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Unvested, ending balance	[1]	655,116		655,116
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Unvested, weighted average award date value, ending balance	[1]	$ 3.00		$ 3.00
Weighted average remaining contractual life (years)				2 years 8 months 12 days
Unrecognized compensation cost		$ 1,301		$ 1,301
Aggregate intrinsic value		$ 11,530		11,530
Restricted stock units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense, share-based payment plans				$ 881	$ 425
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Unvested, beginning balance	[1]			304,958
Granted	[1]			80,350
Forfeited	[1]			0
Vested	[1]			(49,964)
Unvested, ending balance	[1]	335,344		335,344
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Unvested, weighted average award date value, beginning balance	[1]			$ 13.22
Granted, weighted average award date value	[1]			17.01
Forfeited, weighted average award date value	[1]			0
Vested, weighted average award date value	[1]			11.38
Unvested, weighted average award date value, ending balance	[1]	$ 14.40		$ 14.40
Weighted average remaining contractual life (years)				2 years 9 months 18 days
Unrecognized compensation cost		$ 2,604		$ 2,604
Aggregate intrinsic value		$ 5,902		$ 5,902

[1] Adjusted for two-for-one stock split

XML

Net Periodic Benefit Expense - Defined Benefit Pension Plans (Details) - Pension plans, defined benefit [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Defined Benefit Plan Disclosure [Line Items]
Service costs--increase in benefit obligation earned	$ 132	$ 90	$ 265	$ 190
Interest cost on projected benefit obligation	264	310	527	627
Expected return on plan assets	(170)	(276)	(339)	(553)
Settlement loss	0	0	0	453
Amortization of net actuarial loss	238	237	475	480
Amortization of prior service cost	15	0	31	0
Net pension expense of defined benefit pension plans	$ 479	$ 361	$ 959	$ 1,197

XML

Income Taxes (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Effective income tax rate	39.20%	41.20%
Unrecognized tax benefits	$ 2,532		$ 2,532
Unrecognized tax benefits that would impact effective tax rate	2,053		2,053
Unrecognized tax benefits, interest on income taxes accrued	$ 107		$ 107

XML

Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Accumulated other comprehensive income (loss) [Roll Forward]
Beginning balance			$ (12,162)	$ (13,394)
Unrealized gains	$ 881	$ 245	1,203	1,997
Amounts reclassified from accumulated other comprehensive income (loss)			506	829
Tax effect			(192)	(321)
Net of tax amount			1,517	2,505
Ending balance	(10,645)	(10,889)	(10,645)	(10,889)
Foreign currency translation adjustments [Member]
Accumulated other comprehensive income (loss) [Roll Forward]
Beginning balance			(5,500)	(6,244)
Unrealized gains			1,203	1,997
Amounts reclassified from accumulated other comprehensive income (loss)			0	0
Tax effect			0	0
Net of tax amount			1,203	1,997
Ending balance	(4,297)	(4,247)	(4,297)	(4,247)
Defined benefit pension plans [member]
Accumulated other comprehensive income (loss) [Roll Forward]
Beginning balance			(6,662)	(7,150)
Unrealized gains			0	0
Amounts reclassified from accumulated other comprehensive income (loss)			506	829
Tax effect			(192)	(321)
Net of tax amount			314	508
Ending balance	$ (6,348)	$ (6,642)	$ (6,348)	$ (6,642)

XML

Per Share Amounts and Common Shares Outstanding (Details) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 01, 2017 USD ($) $ / shares shares	Jul. 02, 2016 USD ($) $ / shares shares	Jul. 01, 2017 USD ($) $ / shares shares	Jul. 02, 2016 USD ($) $ / shares shares	Dec. 31, 2016 $ / shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares outstanding at January 1, 2017				24,923,140
Shares purchased				(942,035)
Shares sold				449,298
Stock subscription offering -- cash purchases				41,781
Options and awards exercised				105,819
Shares outstanding at July 1, 2017		24,578,003		24,578,003
Stock split, conversion ratio				2
Net income | $		$ 14,223	$ 13,309	$ 10,336	$ 9,121
Weighted-average shares outstanding, basic	[1]	24,797,000	25,528,000	24,582,000	25,534,000
Weighted-average shares, partially-paid share subscriptions	[1]	201,000	212,000	402,000	424,000
Basic weighted average shares	[1]	24,998,000	25,740,000	24,984,000	25,958,000
Incremental shares from assumed exercise of stock subscription purchase rights	[1]	141,000	136,000	143,000	136,000
Incremental shares from assumed exercise of stock options and awards	[1]	846,000	822,000	871,000	874,000
Diluted weighted-average shares	[1]	25,985,000	26,698,000	25,998,000	26,968,000
Net income per share basic | $ / shares	[1]	$ 0.57	$ 0.52	$ 0.41	$ 0.35
Net income per share diluted | $ / shares	[1]	$ 0.55	$ 0.50	$ 0.40	$ 0.34
Employee and director options exercisable	[1]	869,302		869,302
Partially-paid subscriptions	[1]	804,048		804,048
Purchase rights outstanding	[1]	319,956		319,956
Common stock, par value | $ / shares		$ 1.00		$ 1.00		$ 1.00
Permanent equity [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares outstanding at January 1, 2017				17,866,236
Shares purchased				(351,033)
Shares sold				184,651
Stock subscription offering -- cash purchases				41,781
Options and awards exercised				105,819
Shares outstanding at July 1, 2017		17,847,454		17,847,454
Temporary equity [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares outstanding at January 1, 2017				7,056,904
Shares purchased				(591,002)
Shares sold				264,647
Stock subscription offering -- cash purchases				0
Options and awards exercised				0
Shares outstanding at July 1, 2017		6,730,549		6,730,549

[1] Adjusted for two-for-one stock split

XML

Per Share Amounts and Common Shares Outstanding Stock subscription (Details)	6 Months Ended
	Jul. 01, 2017 USD ($) $ / shares shares
Equity [Abstract]
Stock subscription offering, subscription price | $ / shares	$ 9.85	[1]
Stock subscription offering, number of shares subscribed | shares	1,275,428	[1]
stock subscription offering, value of shares subscribed | $	$ 12,563,000
Stock subscription offering, minimum financed amount | $	$ 5,000
Stock subscription offering, down payment	10.00%
Stock subscription offering, term (in years)	7 years
Stock subscription offering, interest rate	2.00%
Stock subscription offering, minimum amount to receive right | $	$ 5,000
Stock subscription offering, number of shares purchased to receive one right | shares	3
Stock subscription offering, number of rights issued | shares	423,600	[1]
Stock subscription offering, portion exercisable per year	14.29%
Stock subscription offering, right expiration term (in years)	7 years

[1] Adjusted for two-for-one stock split

XML

Operations by Business Segment (Details) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 01, 2017 USD ($)	Jul. 02, 2016 USD ($)	Jul. 01, 2017 USD ($)	Jul. 02, 2016 USD ($)	Dec. 31, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments				2
Revenues		$ 245,037	$ 224,763	$ 437,850	$ 405,596
Income (loss) from operations		25,312	24,286	20,970	19,166
Interest expense		(1,072)	(1,062)	(2,329)	(2,027)
Interest income		73	60	143	128
Other income (expense), net		(992)	(1,156)	(1,784)	(1,755)
Income before income taxes		23,321	22,128	17,000	15,512
Segment assets, total		460,172	426,144	460,172	426,144	$ 423,939
Utility services [Member]
Segment Reporting Information [Line Items]
Revenues		112,903	105,285	225,381	205,313
Income (loss) from operations		4,270	5,587	6,928	7,061
Segment assets, total		171,472	159,824	171,472	159,824
Residential commercial services [Member]
Segment Reporting Information [Line Items]
Revenues		131,299	118,945	210,886	199,279
Income (loss) from operations		23,837	21,226	20,255	19,790
Segment assets, total		202,502	181,945	202,502	181,945
All other [Member]
Segment Reporting Information [Line Items]
Revenues		835	533	1,583	1,004
Income (loss) from operations		(1,312)	(980)	(3,887)	(4,086)
Segment assets, total		0	0	0	0
Reconciling adjustments [Member]
Segment Reporting Information [Line Items]
Revenues		0	0	0	0
Income (loss) from operations	[1]	(1,483)	(1,547)	(2,326)	(3,599)
Interest expense		(1,072)	(1,062)	(2,329)	(2,027)
Interest income		73	60	143	128
Other income (expense), net		(992)	(1,156)	(1,784)	(1,755)
Segment assets, total	[2]	$ 86,198	$ 84,375	$ 86,198	$ 84,375

[1] (a)Reclassification of depreciation expense and allocation of corporate expenses.

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

XML

Fair Value Measurements and Financial Instruments (Details) - Fair value, measurements, recurring [Member] - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Quoted prices in active markets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets invested for self-insurance, classified as other assets, noncurrent	$ 16,933	$ 15,492
Deferred compensation	0	0
Significant other observable inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets invested for self-insurance, classified as other assets, noncurrent	0	0
Deferred compensation	1,985	1,837
Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets invested for self-insurance, classified as other assets, noncurrent	0	0
Deferred compensation	0	0
Total carrying value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets invested for self-insurance, classified as other assets, noncurrent	16,933	15,492
Deferred compensation	$ 1,985	$ 1,837

XML

Fair Value Measurements and Financial Instruments Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Liabilities, fair value disclosure [Abstract]
Revolving credit facility, noncurrent	$ 102,500	$ 67,000
Senior unsecured notes	24,000	24,000
Carrying value [Member]
Liabilities, fair value disclosure [Abstract]
Revolving credit facility, noncurrent	102,500	67,000
Senior unsecured notes	18,000	18,000
Term loans, noncurrent	9,060	7,623
Total	129,560	92,623
Fair value [Member]
Liabilities, fair value disclosure [Abstract]
Revolving credit facility, noncurrent	102,500	67,000
Senior unsecured notes	18,497	18,509
Term loans, noncurrent	11,270	9,854
Total	$ 132,267	$ 95,363

XML

The Davey 401KSOP and Employee Stock Ownership Plan (Details) $ in Thousands	6 Months Ended
	Jul. 01, 2017 USD ($) shares	Dec. 31, 2016 USD ($)
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Employee Stock Ownership Plan (ESOP), Initial Shares in ESOP | shares	120,000
Employee Stock Ownership Plan (ESOP), Shares Adjusted for Stock Split | shares	23,040,000
Employee Stock Ownership Plan (ESOP), Initial Value in ESOP	$ 3
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	3.00%
Defined Contribution Plan, Eligible Age	21
Defined Contribution Plan, Service Requirement for Eligibility	1 year
Number of put option periods	2
Duration of put option periods	60 days
Employee Stock Ownership Plan (ESOP), Fair Value of Shares Subject to Repurchase Obligation	$ 2	$ 1
Company shares held in 401KSOP and ESOP, fair value	121	123
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP)	$ 123,169	$ 124,201
Defined Contribution Plan, Tier 1 [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	100.00%
Defined Contribution Plan, Tier 2 [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	50.00%
Maximum [Member] | Defined Contribution Plan, Tier 1 [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	1.00%
Maximum [Member] | Defined Contribution Plan, Tier 2 [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	4.00%