Company Quick10K Filing
Davey Tree Expert
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 24 $-0
10-Q 2019-11-05 Quarter: 2019-09-28
10-Q 2019-08-06 Quarter: 2019-06-29
10-Q 2019-05-07 Quarter: 2019-03-30
10-K 2019-03-11 Annual: 2018-12-31
10-Q 2018-11-06 Quarter: 2018-09-29
10-Q 2018-08-09 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-03-16 Annual: 2017-12-31
10-Q 2017-08-02 Quarter: 2017-07-01
10-Q 2017-05-03 Quarter: 2017-04-01
10-K 2017-03-14 Annual: 2016-12-31
10-Q 2016-11-01 Quarter: 2016-10-01
10-Q 2016-08-02 Quarter: 2016-07-02
10-Q 2016-05-03 Quarter: 2016-04-02
10-K 2016-03-09 Annual: 2015-12-31
10-Q 2015-11-03 Quarter: 2015-10-03
10-Q 2015-08-04 Quarter: 2015-07-04
10-Q 2015-05-05 Quarter: 2015-04-04
10-K 2015-03-10 Annual: 2014-12-31
10-Q 2014-11-06 Quarter: 2014-09-27
10-Q 2014-08-05 Quarter: 2014-06-28
10-Q 2014-05-06 Quarter: 2014-03-29
10-K 2014-03-10 Annual: 2013-12-31
10-Q 2013-11-05 Quarter: 2013-09-28
10-Q 2013-08-06 Quarter: 2013-06-29
10-Q 2013-05-08 Quarter: 2013-03-30
10-K 2013-03-12 Annual: 2012-12-31
10-Q 2012-10-30 Quarter: 2012-09-29
10-Q 2012-08-01 Quarter: 2012-06-30
10-Q 2012-05-02 Quarter: 2012-03-31
10-K 2012-03-09 Annual: 2011-12-31
10-Q 2011-11-02 Quarter: 2011-10-01
10-Q 2011-08-02 Quarter: 2011-07-02
10-Q 2011-05-03 Quarter: 2011-04-02
10-K 2011-03-10 Annual: 2010-12-31
10-Q 2010-11-03 Quarter: 2010-10-02
10-Q 2010-08-04 Quarter: 2010-07-03
10-Q 2010-05-05 Quarter: 2010-04-03
10-K 2010-03-11 Annual: 2009-12-31
8-K 2019-12-13 Officers
8-K 2019-05-21 Enter Agreement, Off-BS Arrangement, Shareholder Vote, Exhibits
8-K 2019-04-23 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-03-07 Officers, Exhibits
8-K 2019-02-05 Off-BS Arrangement
8-K 2019-01-29 Other Events
8-K 2019-01-24 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-09-21
8-K 2018-08-07 Accountant, Exhibits
8-K 2018-05-15 Shareholder Vote
8-K 2018-05-07 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-28 Officers
DAVEY 2019-09-28
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 dt2019q310qex311.htm
EX-31.2 dt2019q310qex312.htm
EX-32.1 dt2019q310qex321.htm
EX-32.2 dt2019q310qex322.htm

Davey Tree Expert Earnings 2019-09-28

DAVEY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
CNHC 12,949 11,626 877 0 149 771 5,714 0% 7.4 1%
RMES 1 1 0 0 -0 -0 -0 0.5 -13%
TCT 210 12 13 0 11 11 -200 0% -18.3 5%
VDI 1,766 1,288 779 0 465 632 222 0% 0.4 26%
POYE 0 0 0 0 -0 -0 -0 0.0 -1,973%
SCTF 0 0 0 0 -0 -0 -0 3.0 -33%
SEK 302,033 283,794 0 0 0 0 -0 0%
DAVEY 570 398 1,095 98 32 97 161 9% 1.7 6%
SLDV 25 6 2 0 13 19 -1 0% -0.0 53%
MBCC 216 243 112 0 -7 10 215 0% 21.5 -3%

Document
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2018-09-29 0000277638 davey:GroundsmaintenanceMember us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-29 0000277638 davey:StormdamageservicesMember 2018-01-01 2018-09-29 0000277638 country:CA us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-29 0000277638 davey:ConsultingandotherMember 2018-01-01 2018-09-29 0000277638 country:US davey:UtilityServicesMember 2018-01-01 2018-09-29 0000277638 country:US us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-29 0000277638 davey:ConsultingandotherMember davey:ResidentialandCommercialServicesMember 2018-01-01 2018-09-29 0000277638 country:CA davey:ResidentialandCommercialServicesMember 2018-01-01 2018-09-29 0000277638 davey:GroundsmaintenanceMember davey:UtilityServicesMember 2018-01-01 2018-09-29 0000277638 davey:ConsultingandotherMember us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-29 0000277638 davey:TreeandplantcareMember 2018-01-01 2018-09-29 0000277638 davey:TreeandplantcareMember us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-29 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2019-06-30 2019-09-28 0000277638 country:CA us-gaap:AllOtherSegmentsMember 2019-06-30 2019-09-28 0000277638 davey:GroundsmaintenanceMember davey:ResidentialandCommercialServicesMember 2019-06-30 2019-09-28 0000277638 davey:ConsultingandotherMember 2019-06-30 2019-09-28 0000277638 country:US davey:ResidentialandCommercialServicesMember 2019-06-30 2019-09-28 0000277638 davey:ConsultingandotherMember davey:ResidentialandCommercialServicesMember 2019-06-30 2019-09-28 0000277638 country:CA davey:ResidentialandCommercialServicesMember 2019-06-30 2019-09-28 0000277638 davey:StormdamageservicesMember us-gaap:AllOtherSegmentsMember 2019-06-30 2019-09-28 0000277638 country:US 2019-06-30 2019-09-28 0000277638 davey:GroundsmaintenanceMember 2019-06-30 2019-09-28 0000277638 country:US us-gaap:AllOtherSegmentsMember 2019-06-30 2019-09-28 0000277638 davey:TreeandplantcareMember 2019-06-30 2019-09-28 0000277638 davey:TreeandplantcareMember davey:ResidentialandCommercialServicesMember 2019-06-30 2019-09-28 0000277638 davey:StormdamageservicesMember 2019-06-30 2019-09-28 0000277638 davey:GroundsmaintenanceMember us-gaap:AllOtherSegmentsMember 2019-06-30 2019-09-28 0000277638 davey:GroundsmaintenanceMember davey:UtilityServicesMember 2019-06-30 2019-09-28 0000277638 country:CA 2019-06-30 2019-09-28 0000277638 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-28 0000277638 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-28 0000277638 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-28 0000277638 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2019-09-28 0000277638 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-09-28 0000277638 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-09-28 0000277638 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000277638 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Index

 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2019
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
davlogoca05.jpg
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, OH 44240
(Address of principal executive offices) (Zip code)
(330) 673-9511
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
N/A
 
N/A
 
N/A
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes    No
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.
Large Accelerated Filer
 
Accelerated Filer
 
Emerging Growth Company
Non-Accelerated Filer
 
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
There were 23,177,264 Common Shares, $1.00 par value, outstanding as of November 1, 2019
 
 
 
 
 


Index

The Davey Tree Expert Company
Quarterly Report on Form 10-Q
September 28, 2019
INDEX
 
 
 
 
 
 
 
Page
Part I.
Financial Information
 
 
 
 
Item 1.
Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
"We," "us" "our," "Davey" and "Davey Tree," unless the context otherwise requires, means The Davey Tree Expert Company and its subsidiaries.

- 1 -

Index

THE DAVEY TREE EXPERT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data dollar amounts)
 
September 28,
2019
 
December 31,
2018
Assets
 
 
 
Current assets:
 
 
 
Cash
$
13,702

 
$
22,661

Accounts receivable, net
232,245

 
195,906

Operating supplies
12,030

 
14,415

Other current assets
30,884

 
22,086

Total current assets
288,861

 
255,068

Property and equipment
662,256

 
639,396

Less accumulated depreciation
461,705

 
437,111

     Total property and equipment, net
200,551

 
202,285

Right-of-use assets - operating leases
40,189

 

Other assets
21,677

 
21,769

Intangible assets and goodwill, net
49,920

 
47,501

Total assets
$
601,198

 
$
526,623

Liabilities and shareholders' equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
39,276

 
$
43,958

Accrued expenses
61,220

 
44,061

Current portion of long-term debt and finance lease liabilities
30,532

 
23,859

Other current liabilities
41,683

 
27,434

Total current liabilities
172,711

 
139,312

Long-term debt
145,564

 
155,563

Lease liabilities - finance leases
1,787

 
2,862

Lease liabilities - operating leases
25,878

 

Self-insurance reserve
62,643

 
56,351

Other noncurrent liabilities
10,487

 
10,125

Total liabilities
419,070

 
364,213

Commitments and contingencies (Note P)
 
 
 
Redeemable common shares related to 401KSOP and Employee Stock Ownership Plan (ESOP); 5,299 and 5,642 shares at redemption value as of September 28, 2019 and December 31, 2018
119,758

 
119,049

Common shareholders' equity:
 

 
 

Common shares, $1.00 par value, per share; 48,000 shares authorized; 37,615 and 37,272 shares issued and outstanding before deducting treasury shares and which excludes 5,299 and 5,642 shares subject to redemption as of September 28, 2019 and December 31, 2018
37,623

 
37,272

Additional paid-in capital
91,448

 
82,623

Common shares subscribed, unissued
110

 
6,799

Retained earnings
180,470

 
157,472

Accumulated other comprehensive loss
(5,636
)
 
(5,034
)
 
304,015

 
279,132

Less: Cost of common shares held in treasury; 19,671 shares at September 28, 2019 and 20,033 shares at December 31, 2018
241,631

 
235,042

Common shares subscription receivable
14

 
729

Total common shareholders' equity
62,370

 
43,361

Total liabilities and shareholders' equity
$
601,198

 
$
526,623

 
 
 
 
See notes to condensed consolidated financial statements.
 

 
 


- 2 -

Index

THE DAVEY TREE EXPERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share dollar amounts)
 
 
Three Months Ended
 
Nine Months Ended
 
September 28,
2019
 
September 29,
2018
 
September 28,
2019
 
September 29,
2018
Revenues
$
307,473

 
$
265,318

 
$
856,796

 
$
744,618

 
 
 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
 
 
Operating
193,137

 
171,125

 
546,931

 
483,430

Selling
56,921

 
49,367

 
153,854

 
133,341

General and administrative
19,895

 
16,758

 
57,610

 
51,834

Depreciation and amortization
15,319

 
14,807

 
44,121

 
41,866

Gain on sale of assets, net
(582
)
 
(1,324
)
 
(1,751
)
 
(4,572
)
Total costs and expenses
284,690

 
250,733

 
800,765

 
705,899

 
 
 
 
 
 
 
 
Income from operations
22,783

 
14,585

 
56,031

 
38,719

 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Interest expense
(2,018
)
 
(1,811
)
 
(6,597
)
 
(4,966
)
Interest income
94

 
80

 
270

 
259

Other, net
(1,886
)
 
(1,322
)
 
(6,694
)
 
(4,036
)
 
 
 
 
 
 
 
 
Income before income taxes
18,973

 
11,532

 
43,010

 
29,976

 
 
 
 
 
 
 
 
Income taxes
5,539

 
3,148

 
10,322

 
6,505

 
 
 
 
 
 
 
 
Net income
$
13,434

 
$
8,384

 
$
32,688

 
$
23,471

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
.59

 
$
.35

 
$
1.43

 
$
.96

Diluted
$
.56

 
$
.34

 
$
1.37

 
$
.92

 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
22,793

 
23,768

 
22,830

 
24,443

Diluted
24,002

 
24,816

 
23,927

 
25,543

 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.
 
 
 
 
 
 


- 3 -

Index

THE DAVEY TREE EXPERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)


 
Three Months Ended
 
Nine Months Ended
 
September 28,
2019
 
September 29,
2018
 
September 28,
2019
 
September 29,
2018
Net income
$
13,434

 
$
8,384

 
$
32,688

 
$
23,471

Components of other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(384
)
 
517

 
823

 
(1,062
)
Amortization of defined benefit pension items:
 
 
 
 
 
 
 
Net actuarial (gain) loss
5

 
135

 
(1,461
)
 
404

Prior service cost
12

 
11

 
36

 
35

Defined benefit pension plan adjustments
17

 
146

 
(1,425
)
 
439

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
(367
)
 
663

 
(602
)
 
(623
)
 
 
 
 
 
 
 
 
Comprehensive income
$
13,067

 
$
9,047

 
$
32,086

 
$
22,848

 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.
 
 
 
 
 
 





- 4 -

Index

THE DAVEY TREE EXPERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
(In thousands, except per share data)
 
Common
Shares
Additional
Paid-in
Capital
Common
Shares
Subscribed,
Unissued
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
Common
Shares
Held in
Treasury
Common
Shares
Subscription
Receivable
Total Common
Shareholders'
Equity
Balances at June 29, 2019
$
37,617

$
91,921

$
5,948

$
167,611

$
(5,269
)
$
(245,116
)
$
(431
)
$
52,281

Net income



13,434




13,434

Change in 401KSOP and ESOP related shares
6

(61
)





(55
)
Shares sold to employees

193




250


443

Options exercised

216




283


499

Subscription shares

(1,413
)
(5,838
)


7,258

417

424

Stock-based compensation

592






592

Dividends, $.025 per share



(575
)



(575
)
Currency translation adjustments




(384
)


(384
)
Defined benefit pension plans




17



17

Shares purchased





(4,306
)

(4,306
)
Balances at September 28, 2019
$
37,623

$
91,448

$
110

$
180,470

$
(5,636
)
$
(241,631
)
$
(14
)
$
62,370

 
 
 
 
 
 
 
 
 
Balances at January 1, 2019
$
37,272

$
82,623

$
6,799

$
157,472

$
(5,034
)
$
(235,042
)
$
(729
)
$
43,361

Net income



32,688




32,688

Change in 401KSOP and ESOP related shares
351

6,886


(7,945
)



(708
)
Shares sold to employees

3,754




5,794


9,548

Options exercised

(793
)



2,572


1,779

Subscription shares

(1,981
)
(6,689
)


10,480

715

2,525

Stock-based compensation

959






959

Dividends, $.075 per share



(1,745
)



(1,745
)
Currency translation adjustments




823



823

Defined benefit pension plans




(1,425
)


(1,425
)
Shares purchased





(25,435
)

(25,435
)
Balances at September 28, 2019
$
37,623

$
91,448

$
110

$
180,470

$
(5,636
)
$
(241,631
)
$
(14
)
$
62,370

 
 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.
 

 

 
 
 


- 5 -

Index

THE DAVEY TREE EXPERT COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
(In thousands, except per share data)

 
Common
Shares
Additional
Paid-in
Capital
Common
Shares
Subscribed,
Unissued
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
Common
Shares
Held in
Treasury
Common
Shares
Subscription
Receivable
Total Common
Shareholders'
Equity
Balances at June 30, 2018
$
36,745

$
69,810

$
7,131

$
153,647

$
(9,679
)
$
(216,065
)
$
(1,447
)
$
40,142

Net income



8,384




8,384

Change in 401KSOP and ESOP related shares
11

209






220

Shares sold to employees

131




175


306

Options exercised

(25
)



359


334

Subscription shares

(40
)
(207
)


329

594

676

Stock-based compensation

648






648

Dividends, $.025 per share



(598
)



(598
)
Currency translation adjustments




517



517

Defined benefit pension plans




146



146

Shares purchased





(4,958
)

(4,958
)
Balances at September 29, 2018
$
36,756

$
70,733

$
6,924

$
161,433

$
(9,016
)
$
(220,160
)
$
(853
)
$
45,817

 
 
 
 
 
 
 
 
 
Balances at January 1, 2018
$
36,447

$
58,554

$
7,529

$
143,835

$
(8,393
)
$
(198,327
)
$
(1,775
)
$
37,870

Net income



23,471




23,471

Change in 401KSOP and ESOP related shares
309

5,607


(3,700
)



2,216

Shares sold to employees

4,575




6,697


11,272

Options exercised

239




1,561


1,800

Subscription shares

(20
)
(605
)


867

922

1,164

Stock-based compensation

1,778






1,778

Dividends, $.075 per share



(1,818
)



(1,818
)
Adoption of ASU 2014-09



(355
)



(355
)
Currency translation adjustments




(1,062
)


(1,062
)
Defined benefit pension plans




439



439

Shares purchased





(30,958
)

(30,958
)
Balances at September 29, 2018
$
36,756

$
70,733

$
6,924

$
161,433

$
(9,016
)
$
(220,160
)
$
(853
)
$
45,817

 
 
 
 
 
 
 
 
 
See notes to condensed consolidated financial statements.
 

 

 
 
 


- 6 -

Index

THE DAVEY TREE EXPERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
 
 
Nine Months Ended
 
 
September 28,
2019
 
September 29,
2018
Operating activities
 
 
 
 
Net income
 
$
32,688

 
$
23,471

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
44,121

 
41,866

Other
 
(1,106
)
 
(834
)
Changes in operating assets and liabilities, net of assets acquired:
 
 
 
 
Accounts receivable
 
(35,956
)
 
(24,370
)
Accounts payable and accrued expenses
 
18,691

 
1,276

Self-insurance reserve
 
5,952

 
5,391

Prepaid expenses
 
(10,388
)
 
(9,020
)
Other, net
 
3,212

 
(12,983
)
 
 
24,526

 
1,326

Net cash provided by operating activities
 
57,214

 
24,797

Investing activities
 
 

 
 

Capital expenditures:
 
 

 
 

Equipment
 
(45,148
)
 
(47,689
)
Land and building
 
(1,108
)
 
(591
)
Purchases of businesses, net of cash acquired
 
(3,800
)
 
(8,241
)
Proceeds from sales of fixed assets
 
2,502

 
5,836

Net cash used in investing activities
 
(47,554
)
 
(50,685
)
Financing activities
 
 

 
 

Revolving credit facility borrowings
 
358,000

 
396,500

Revolving credit facility payments
 
(386,500
)
 
(404,500
)
Purchase of common shares for treasury
 
(25,435
)
 
(30,958
)
Sale of common shares from treasury
 
13,852

 
14,235

Dividends paid
 
(1,745
)
 
(1,818
)
Proceeds from notes payable
 
95,200

 
72,746

Payments of notes payable
 
(71,027
)
 
(22,258
)
Payments of finance leases
 
(1,061
)
 
(664
)
Net cash (used in) provided by financing activities
 
(18,716
)
 
23,283

Effect of exchange rate changes on cash
 
97

 

Decrease in cash
 
(8,959
)
 
(2,605
)
Cash, beginning of period
 
22,661

 
13,121

Cash, end of period
 
$
13,702

 
$
10,516

Supplemental cash flow information follows:
 
 

 
 

Interest paid
 
$
7,355

 
$
5,163

Income taxes paid
 
2,239

 
7,898

 
 
 
 
 
See notes to condensed consolidated financial statements.
 
 

 
 


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Index
The Davey Tree Expert Company
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 28, 2019
(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 intercompany accounts and transactions have been eliminated.
Certain information and disclosures required by U.S. GAAP for complete financial statements have been omitted in accordance with the rules and regulations of the SEC. We suggest that these condensed consolidated financial statements be read in conjunction with the financial statements included in our annual report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”).
Use of Estimates in Financial Statement Preparation--The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect reported amounts. Our consolidated financial statements include amounts that are based on management’s best estimates and judgments. Estimates are used for, but not limited to, accounts receivable valuation, depreciable lives of fixed assets, self-insurance reserves, income taxes and revenue recognition. Actual results could differ from those estimates.
The Company’s fiscal quarters each contain thirteen operating weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains fourteen operating weeks. The Company’s fiscal quarter that ended September 28, 2019 is referred to as the third quarter of 2019, and the fiscal quarter ended September 29, 2018 is referred to as the third quarter of 2018.
Recent Accounting Guidance
Accounting Standards Adopted in 2019
Accounting Standards Update 2016-02, Leases (Topic 842)--In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, “Leases (Topic 842).” ASU 2016-02, along with several subsequent updates, requires lessees to recognize assets and liabilities created by leases on their balance sheet along with additional disclosure information. The Company adopted the standard on January 1, 2019 using the Comparative Under ASC 840 approach, which permitted the Company to not recast historical periods for the adoption, and utilized practical expedients as available. The adoption of the new standard resulted in the recording, as of January 1, 2019, of operating right-of-use assets and lease liabilities of $37,429. The adoption of the new standard did not impact our consolidated results of operations and had no impact on our cash flows.
Accounting Standards Update 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)--In February 2018, the FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220)." ASU 2018-02 provides an option to reclassify the stranded tax effects within accumulated other comprehensive income to retained earnings as a result of the Tax Cuts and Jobs Act of 2017. The Company adopted ASU 2018-02 effective January 1, 2019 and did not elect to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

- 8 -

Index
The Davey Tree Expert Company
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 28, 2019
(Amounts in thousands, except share data)

A.
Basis of Financial Statement Preparation (continued)
SEC Release No. 33-10532, Disclosure Update and Simplification--In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of shareholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of shareholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. We have incorporated the changes required by SEC Release No. 33-10532 in this report.
Accounting Standards Adopted Not Yet Adopted
Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326)--In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)." ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP for most financial instruments, including trade receivables, with an impairment model, known as the current expected credit loss model that is based on expected losses rather than incurred losses. The ASU is effective for fiscal years beginning after December 15, 2019. The Company is evaluating the potential impact of the standard on our consolidated financial statements and related disclosures.
B.
Seasonality of Business
Due to the seasonality of our business, our operating results for the three and nine months ended September 28, 2019 are not indicative of results that may be expected for any other interim period or for the year ending December 31, 2019. Our 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.
C.
Accounts Receivable, Net and Supplemental Balance-Sheet Information
Accounts receivable, net, consisted of the following:
Accounts receivable, net
September 28,
2019
 
December 31,
2018
Accounts receivable
$
177,644

 
$
158,556

Receivables under contractual arrangements (1)
57,430

 
40,671

 
235,074

 
199,227

Less allowances for doubtful accounts
2,829

 
3,321

Accounts receivable, net
$
232,245

 
$
195,906


(1) 
Receivables under contractual arrangements consist of work-in-process in accordance with the terms of contracts, primarily with utility services customers.

- 9 -

Index
The Davey Tree Expert Company
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 28, 2019
(Amounts in thousands, except share data)

C.
Accounts Receivable, Net and Supplemental Balance-Sheet Information (continued)
The following items comprise the amounts included in the balance sheets:
Other current assets
September 28,
2019
 
December 31,
2018
Refundable income taxes
$

 
$
1,625

Prepaid expense
29,979

 
19,529

Other
905

 
932

Total
$
30,884

 
$
22,086


Other assets, noncurrent
September 28,
2019
 
December 31,
2018
Assets invested for self-insurance
$
13,302

 
$
15,379

Investment--cost-method affiliate
1,251

 
1,218

Deferred income taxes
1,519

 
573

Other
5,605

 
4,599

Total
$
21,677

 
$
21,769


Accrued expenses
September 28,
2019
 
December 31,
2018
Employee compensation
$
25,052

 
$
24,086

Accrued compensated absences
10,327

 
9,711

Self-insured medical claims
6,611

 
3,343

Income tax payable
9,183

 
31

Customer advances, deposits
2,337

 
1,322

Taxes, other than income
5,059

 
2,546

Other
2,651

 
3,022

Total
$
61,220

 
$
44,061


Other current liabilities
September 28,
2019
 
December 31,
2018