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Covanta Reports 2010 Full Year and Fourth Quarter Results

February 9, 2011

MORRISTOWN, N.J., Feb. 9, 2011 /PRNewswire/ — Covanta Holding Corporation (NYSE: CVA) (“Covanta” or the “Company”) reported unaudited financial results today for the three and twelve months ended December 31, 2010.


                                            Full Year
                                            ---------
                              2009               2010       2010 Guidance
                              ----               ----       -------------
                            ($ in millions, except per share amounts)

    Revenue                 $1,384             $1,583                 N/A
    Net Income Attributable
     to Covanta               $102                $62                 N/A
    Adjusted EBITDA           $515               $531         $525 - $550
    Free Cash Flow            $345               $357         $325 - $350
    EPS, Excluding Special
     Items                   $0.67              $0.68       $0.55 - $0.65

Commenting on the year just completed, Anthony Orlando, President and CEO stated, “I’m pleased with our overall performance in 2010, particularly Free Cash Flow generation, which not only exceeded guidance but established a new company record. Covanta’s team accomplished this by maintaining boiler availability above 91%, successfully integrating the EfW businesses acquired from Veolia (“the Veolia acquisition”) and exercising good working capital management. We also followed through on our commitment to return excess capital to shareholders by returning $328 million and to proactively manage our balance sheet by issuing new 10-year senior notes to refinance our 1.00% senior convertible debentures.”

Assets Held for Sale

During the fourth quarter of 2010, our interests in non-core legacy IPP assets located in India, Bangladesh and the Philippines were classified as Assets Held for Sale as a result of our ongoing effort to sell them. Consequently, all corresponding prior year periods have been reclassified to reflect those assets as discontinued operations. Please note that all results presented in the balance of this press release reflect only the results of continuing operations, unless otherwise noted.

Full Year 2010 Results – From Continuing Operations

For the twelve months ended December 31, 2010, total operating revenues increased 14% to $1.6 billion from $1.4 billion in 2009.

Increased revenues due to the Veolia acquisition, higher metals revenues and higher construction revenues were partially offset by the impact of contract transitions, further weakness in power pricing and continued softness in spot waste disposal pricing.

Operating expenses of $1.4 billion, rose 17% from $1.2 billion. The increase was primarily attributable to the Veolia acquisition and higher construction expenses as well as the non-cash write-down of certain assets.

Adjusted EBITDA was $470 million in 2010 compared to $454 million in 2009. This $16 million, or 4% increase was primarily due to the Veolia acquisition, higher metals revenues and improved performance at recently acquired facilities, partially offset by the impact of the contract transitions and weakness in power pricing and continued softness in spot waste disposal pricing.

For the year, Free Cash Flow was $318 million, an increase of 6% over the $300 million generated in 2009. Strong operating performance and the Veolia acquisition were key contributors to this growth, along with a positive $21 million working capital change. The working capital change is expected to largely reverse during 2011 and 2012.

Diluted earnings per share (“EPS”), excluding special items, was $0.42 compared to $0.40 in 2009. GAAP EPS was $0.19 compared to $0.39 in 2009.

During 2010, we utilized Free Cash Flow and cash on hand to: return $328 million to shareholders; invest $130 million to complete the Veolia acquisition; and pay down $177 million of debt. We ended the year with a strong balance sheet and ample liquidity. As of December 31, 2010, unrestricted cash was $126 million, restricted cash was $233 million (of which $157 million is designated for future project debt principal repayment), and our $300 million revolving credit facility was undrawn and fully available.

Fourth Quarter Results – From Continuing Operations

For the three months ended December 31, 2010, consolidated operating revenues increased $51 million or 14% to $419 million, up from $368 million in the prior year comparative period. Revenues associated with the Veolia acquisition and higher construction revenues were the main drivers, with higher metals revenues and service fee contract escalations also contributing to the increase. Collectively, these increases were partially offset by lower tip fee and lower power pricing as well as by lower power production due to unprofitable biomass operations being suspended. We refer to this biomass operation suspension as economic dispatch.

Operating expenses of $356 million rose 13% from $315 million. The increase, which was primarily attributable to the Veolia acquisition and higher construction related expenses, was partially offset by receipt of a full year of alternative fuel tax credits and the economic dispatching of certain biomass facilities.

Adjusted EBITDA was $129 million, up $3 million or 2% compared to last year’s fourth quarter, primarily due to higher recycled metal prices, the benefit of the Veolia acquisition and increased alternative fuel tax credits. We recorded a full year of these credits in the fourth quarter because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which passed at the end of the year, provided for the retroactive application of those credits from January 1, 2010 as well as their extension through 2011.

Free Cash Flow was $82 million in the fourth quarter, compared to $120 million in the prior year comparative period, with the reduction primarily attributable to the reversal of favorable working capital changes realized earlier in the year.

Our EPS, excluding special items, was $0.20 for the fourth quarter of 2010 compared to $0.10 in the prior year quarter, with the increase attributable to the growth in our operating income as well as the impact of a lower effective tax rate. The special items for the quarter totaling $16 million, pre-tax, relate primarily to a loss incurred on the extinguishment of debt in connection with the tender offer for the 1.00% Senior Convertible Debentures completed in December 2010. On a reported basis, GAAP EPS was $0.13, which compares to EPS of $0.11 in the prior year quarter.

During the quarter, Covanta repurchased $58 million in common stock, or 3.6 million shares (2.4% of our outstanding shares), at a weighted average cost of $16.16 per share, bringing the total amount of stock repurchased in 2010 to $95 million (6.1 million shares) and the total amount of capital returned to shareholders to $328 million.

2011 Guidance

The Company is establishing guidance for 2011 for the following key metrics (in millions, except per share amounts):


                                      Continuing Operations
                                      ---------------------
                                Full Year              Full Year
    Guidance Metrics                    2010                   2011
    ----------------                    ----                   ----

    Adjusted EBITDA                     $470            $480 - $520
    Free Cash Flow                      $318            $250 - $300
    Adjusted EPS(1)                    $0.42          $0.40 - $0.55
                                      Continuing Operations
                                      ---------------------
                                Full Year              Full Year
    Guidance Metrics                    2010                   2011
    ----------------                    ----                   ----

    Adjusted EBITDA                     $470            $480 - $520
    Free Cash Flow                      $318            $250 - $300
    Adjusted EPS(1)                    $0.42          $0.40 - $0.55

(1) We will utilize Adjusted EPS as one of our 2011 guidance metrics. The difference between this metric and EPS, Excluding Special Items are adjustments to exclude the net impact of the changes in fair value of the conversion feature in our cash convertible notes and the related hedges and transaction-related costs. There was no net EPS impact for these items for the year ended December 31, 2010.

Commenting on the Company’s 2011 guidance, Mr. Orlando noted that, “I am pleased that at the mid-point of our guidance, we’re targeting about 5% Adjusted EBITDA growth with continued strong free cash flow. I am confident in our team’s ability to accomplish this by improving recently acquired facilities, effectively managing our assets, controlling costs and being more focused with our development efforts. We are also renewing our commitment to continue returning surplus capital to shareholders in a prudent and timely manner and to fund high value development projects as they come to fruition.”

Conference Call Information

Covanta will host a conference call at 8:30 am (Eastern) on Thursday, February 10, 2011 to discuss its results for the three and twelve months ended December 31, 2010. To participate, please dial 877-806-3982 approximately 10 minutes prior to the scheduled start of the call. If you are calling from outside of the United States, please dial 702-928-7062. Please utilize conference ID number 37581766 when prompted by the conference call operator. We will also be referring to supplemental slides and webcasting the conference call, either of which can be accessed from the Investor Relations section of the Covanta website at www.covantaenergy.com.

A replay of the conference call will be available from 11:30 am (Eastern) Thursday, February 10, 2011. To access the replay, please dial 800-642-1687, or from outside of the United States 706-645-9291 and use the replay conference ID number 37581766. The webcast will also be archived on www.covantaenergy.com.

About Covanta

Covanta Energy Corporation is an internationally recognized owner and operator of large-scale Energy-from-Waste and renewable energy projects and a recipient of the Energy Innovator Award from the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy. Covanta’s 44 Energy-from-Waste facilities provide communities with an environmentally sound solution to their solid waste disposal needs by using that municipal solid waste to generate clean, renewable energy. Annually, Covanta’s modern Energy-from-Waste facilities safely and securely convert approximately 20 million tons of waste into 9 million megawatt hours of clean renewable electricity and more than 9 billion pounds of steam that are sold to a variety of industries. For more information, visit www.covantaenergy.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission (“SEC”), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta and its subsidiaries, or general industry or broader economic performance in global markets in which Covanta operates or competes, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Covanta cautions investors that any forward-looking statements made by Covanta are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Covanta, include, but are not limited to, the risk that Covanta may not successfully close its announced or planned acquisitions or projects in development and those factors, risks and uncertainties that are described in periodic securities filings by Covanta with the SEC. Although Covanta believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any forward-looking statements. Covanta’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and Covanta does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

    Covanta Holding Corporation       Exhibit 1
    Consolidated Statements of Income
                                                Three Months
                                                    Ended
                                                December 31,
                                                ------------
                                                         2009
                                             2010        (A)
                                             ----       -----
                                                (Unaudited)
                                             (In millions, except per share
                                                  amounts)
     Operating revenues
       Waste and service revenues            $270        $251
       Electricity and steam sales            104         102
       Other operating revenues                45          15
         Total operating revenues             419         368
                                              ---         ---

     Operating expenses
      Plant operating expenses                228         212
       Other operating expenses                43          14
       General and administrative
        expenses                               27          28
       Depreciation and amortization
        expense                                48          51
       Net interest expense on project
        debt                                    8          10
      Write-down of assets (B)                  2           -
         Total operating expenses             356         315
                                              ---         ---

     Operating income                          63          53
                                              ---         ---

     Other income (expense)
        Investment income                       -           -
        Interest expense                      (13)        (11)
        Non-cash convertible debt related
         expense                               (9)         (9)
        Loss on extinguishment of debt (C)    (15)          -
         Total other expenses                 (37)        (20)
                                              ---         ---

     Income from continuing operations
      before income tax                        26          33
         expense and equity in net income
          from unconsolidated
         investments
     Income tax expense                        (6)        (16)
     Equity in net income from
      unconsolidated investments                1           1
                                              ---         ---

     Income from continuing operations         21          18
                                              ---         ---

    Income from discontinued
     operations (including loss on
     assets held
      for sale of $8, pre-tax in 2010),
       net of income taxes of $3 and
              $8 in 2010, respectively (A)      4          12
                                              ---         ---
     Net Income                                25          30
                                              ---         ---

     Noncontrolling interests:
     Less: Income from continuing
      operations attributable to
      noncontrolling
          interests in subsidiaries            (1)         (1)
     Less: Income from discontinued
      operations attributable to
      noncontrolling
          interests in subsidiaries (A)        (1)         (1)
                                              ---         ---
     Total net income attributable to
      noncontrolling interests in
      subsidiaries                             (2)         (2)
                                              ---         ---
     Net Income Attributable to Covanta
      Holding Corporation                     $23         $28
                                              ===         ===

     Amounts Attributable to Covanta
      Holding Corporation
         stockholders:
        Continuing operations                 $20         $17
        Discontinued operations, net of
         taxes (A)                              3          11
                                              ---         ---
     Net Income Attributable to Covanta
      Holding Corporation                     $23         $28
                                              ===         ===

     Earnings Per Share Attributable to
      Covanta Holding Corporation
       stockholders:
     Basic
        Continuing operations               $0.13       $0.11
        Discontinued operations (A)          0.02        0.07
                                             ----        ----
        Covanta Holding Corporation         $0.15       $0.18
                                            =====       =====
     Weighted Average Shares                  151         154
                                              ===         ===

     Diluted
        Continuing operations               $0.13       $0.11
        Discontinued operations (A)          0.02        0.07
                                             ----        ----
        Covanta Holding Corporation         $0.15       $0.18
                                            =====       =====
     Weighted Average Shares                  152         155
                                              ===         ===

     Cash Dividend Paid Per Share:             $-          $-
                                              ===         ===

    Supplemental Information - Non-
     GAAP
    -------------------------------

      Diluted Earnings Per Share,
       Excluding Special Items (D)          $0.27       $0.17


                                                Twelve Months
                                                    Ended
                                                December 31,
                                                ------------
                                                          2009
                                              2010        (A)
                                              ----      -----
                                            (Unaudited)
                                             (In millions, except per share
                                               amounts)
     Operating revenues
       Waste and service revenues           $1,036        $916
       Electricity and steam sales             420         417
       Other operating revenues                127          51
         Total operating revenues            1,583       1,384
                                             -----       -----

     Operating expenses
      Plant operating expenses                 943         821
       Other operating expenses                120          48
       General and administrative
        expenses                               103         109
       Depreciation and amortization
        expense                                190         197
       Net interest expense on project
        debt                                    38          45
      Write-down of assets (B)                  34           -
         Total operating expenses            1,428       1,220
                                             -----       -----

     Operating income                          155         164
                                               ---         ---

     Other income (expense)
        Investment income                        1           2
        Interest expense                       (45)        (38)
        Non-cash convertible debt related
         expense                               (39)        (24)
        Loss on extinguishment of debt (C)     (15)          -
         Total other expenses                  (98)        (60)
                                               ---         ---

     Income from continuing operations
      before income tax                         57         104
         expense and equity in net income
          from unconsolidated
         investments
     Income tax expense                        (24)        (42)
     Equity in net income from
      unconsolidated investments                 2           3
                                               ---         ---

     Income from continuing operations          35          65
                                               ---         ---

    Income from discontinued
     operations (including loss on
     assets held
      for sale of $8, pre-tax in 2010),
       net of income taxes of $3 and
              $8 in 2010, respectively (A)      36          46
                                               ---         ---
     Net Income                                 71         111
                                               ---         ---

     Noncontrolling interests:
     Less: Income from continuing
      operations attributable to
      noncontrolling
          interests in subsidiaries             (5)         (4)
     Less: Income from discontinued
      operations attributable to
      noncontrolling
          interests in subsidiaries (A)         (4)         (5)
                                               ---         ---
     Total net income attributable to
      noncontrolling interests in
      subsidiaries                              (9)         (9)
                                               ---         ---
     Net Income Attributable to Covanta
      Holding Corporation                      $62        $102
                                               ===        ====

     Amounts Attributable to Covanta
      Holding Corporation
         stockholders:
        Continuing operations                  $30         $61
        Discontinued operations, net of
         taxes (A)                              32          41
                                               ---         ---
     Net Income Attributable to Covanta
      Holding Corporation                      $62        $102
                                               ===        ====

     Earnings Per Share Attributable to
      Covanta Holding Corporation
       stockholders:
     Basic
        Continuing operations                $0.19       $0.39
        Discontinued operations (A)           0.21        0.27
                                              ----        ----
        Covanta Holding Corporation          $0.40       $0.66
                                             =====       =====
     Weighted Average Shares                   153         154
                                               ===         ===

     Diluted
        Continuing operations                $0.19       $0.39
        Discontinued operations (A)           0.21        0.27
                                              ----        ----
        Covanta Holding Corporation          $0.40       $0.66
                                             =====       =====
     Weighted Average Shares                   154         155
                                               ===         ===

     Cash Dividend Paid Per Share:           $1.50          $-
                                             =====         ===

    Supplemental Information - Non-
     GAAP
    -------------------------------

      Diluted Earnings Per Share,
       Excluding Special Items (D)           $0.68       $0.67
    (A) In 2010, we adopted a plan to sell our interests in our non-core
    legacy fossil fuel independent power production facilities located
    in the Philippines, India, and Bangladesh.  During the fourth
    quarter of 2010, our interests in the Quezon facility in the
    Philippines, the Haripur facility in Bangladesh and our two India
    projects were classified as Assets Held for Sale as a result of our
    ongoing effort to sell them.  Consequently, all corresponding prior
    year periods presented in our consolidated financial statements have
    been reclassified to reflect these assets as discontinued
    operations.  For additional information, see Exhibit 9 of this Press
    Release.

    (B) In 2010, we recorded a non-cash write-down of assets related to
    a notes receivable from our Harrisburg EfW facility and the write-
    down of assets related to the Dublin project, and the write-down to
    fair value of corporate real estate and certain other assets.  For
    additional information, see Exhibit 4A of this Press Release and
    Note 8 - Supplementary Information of the Notes to the Condensed
    Consolidated Financial Statements included in our Quarterly Report
    on Form 10-Q for the third quarter ended September 30, 2010.

    (C) During the fourth quarter of 2010, as a result of the tender
    offer to purchase our outstanding Debentures, we recorded a loss on
    extinguishment of debt which is comprised of the difference between
    the fair value and carrying value of the liability component of the
    Debentures tendered, the write-off of deferred financing costs and
    fees incurred in conjunction with the tender offer.  For details
    related to the tender offer transaction, see Exhibit 7 of this Press
    Release.

    (D) For additional information, see Exhibit 4 of this Press Release.

    Covanta Holding Corporation                                      Exhibit 2
    Condensed Consolidated Balance Sheets
                                                          As of December 31,
                                                          ------------------
                                                          2010        2009(A)
                                                          ----        -------
                                                             (Unaudited)
                                                         (In millions, except
                                                          per share amounts)
                         ASSETS
    Current:
      Cash and cash equivalents                           $126            $418
      Restricted funds held in trust                       126             106
      Receivables  (less allowances of $3 and
       $3, respectively)                                   272             297
      Unbilled service receivables                          23              38
      Deferred income taxes                                 27               9
      Prepaid expenses and other current assets            110             102
      Assets held for sale (A)                             191             200
                                                           ---             ---
    Total Current Assets                                   875           1,170
      Property, plant and equipment, net                 2,478           2,541
      Investments in fixed maturities at market
       (cost: $29 and $28, respectively)                    29              28
      Restricted funds held in trust                       107             134
      Unbilled service receivables                          32              37
      Waste, service and energy contracts, net             472             380
      Other intangible assets, net                          79              85
      Goodwill                                             230             203
      Investments in investees and joint
       ventures                                             46              50
      Other assets                                         328             306
    Total Assets                                        $4,676          $4,934
                                                        ======          ======

                 LIABILITIES AND EQUITY
    Current:
      Current portion of long-term debt                     $7              $7
      Current portion of project debt                      141             164
      Accounts payable                                      23              19
      Deferred revenue                                      72              60
      Accrued expenses and other current
       liabilities                                         186             209
      Liabilities held for sale (A)                         34              52
                                                           ---             ---
    Total Current Liabilities                              463             511
      Long-term debt                                     1,558           1,431
      Project debt                                         662             764
      Deferred income taxes                                605             571
      Waste and service contracts                           89             101
      Other liabilities                                    140             139
    Total Liabilities                                    3,517           3,517
                                                         -----           -----

    Equity:
    Covanta Holding Corporation stockholders'
     equity:
      Preferred stock ($0.10 par value;
       authorized 10 shares; none
        issued and outstanding)                              -               -
      Common stock ($0.10 par value; authorized
        250 shares; issued
        157 and 156 shares; outstanding 150 and
         155 shares)                                        16              16
      Additional paid-in capital                           827             909
      Accumulated other comprehensive income                 5               7
      Accumulated earnings                                 279             451
      Treasury stock, at par                                (1)              -
         Total Covanta Holding Corporation
          stockholders' equity                           1,126           1,383
      Noncontrolling interests in subsidiaries              33              34
                                                           ---             ---
    Total Equity                                         1,159           1,417
    Total Liabilities and Equity                        $4,676          $4,934
                                                        ======          ======
    (A) See Exhibit 1 - Note A of this Press Release.

    Covanta Holding Corporation                                   Exhibit 3
    Condensed Consolidated Statements of Cash Flow
                                                             Twelve Months
                                                                 Ended
                                                             December 31,
                                                             ------------
                                                          2010      2009(A)
                                                          ----      -------
                                                            (Unaudited, in
                                                               millions)
    OPERATING ACTIVITIES:
    Net income                                             $71          $111
      Less: Income from discontinued operations, net
       of tax expense (A)                                   36            46
                                                           ---           ---
    Income from continuing operations                       35            65

    Adjustments to reconcile net income from
     continuing operations to net
      cash provided by operating activities from
       continuing operations:
      Depreciation and amortization expense                190           197
      Write-down of assets                                  34             -
      Loss on extinguishment of debt                        15             -
      Non-cash convertible debt related expense             39            24
      Stock-based compensation expense                      17            14
      Deferred income taxes                                 19            33
      Decrease in restricted funds held in trust            11            19
      Other, net                                            11             2
      Change in working capital, net of effects of
       acquisitions                                         21            (2)
                                                           ---           ---
      Net cash provided by operating activities from
       continuing operations                               392           352
      Net cash provided by operating activities of
       discontinued operations (A)                          39            45
                                                                         ---
    Net cash provided by operating activities              431           397
                                                           ---           ---
    INVESTING ACTIVITIES:
      Proceeds from asset sales                             12             -
      Purchase of property, plant and equipment           (115)          (74)
      Purchase of equity interest                            -            (9)
      Acquisition of noncontrolling interests in
       subsidiaries                                         (2)          (24)
      Acquisition of businesses, net of cash acquired     (130)         (266)
      Loan issued for the Harrisburg EfW facility to
       fund certain facility
         improvements, net of repayments                     -           (11)
      Acquisition of land use rights                       (19)            -
      Other, net                                           (21)           (3)
                                                           ---           ---
    Net cash used in investing activities from
     continuing operations                                (275)         (387)
    Net cash used in investing activities of
     discontinued operations (A)                             -             -
                                                                         ---
    Net cash used in investing activities                 (275)         (387)
                                                          ----          ----
    FINANCING ACTIVITIES:
      Proceeds from borrowings on long-term debt           400           460
      Proceeds from issuance of warrants                     -            54
      Purchase of convertible note hedge                     -          (112)
      Payment of deferred financing costs                  (10)          (14)
      Payment of interest rate swap termination costs        -           (11)
      Principal payments on long-term debt                (320)           (7)
      Principal payments on project debt                  (202)         (230)
      Payments of borrowings on revolving credit
       facility                                            (79)            -
      Proceeds from borrowings on project debt              39            70
      Proceeds from borrowings on revolving credit
       facility                                             79             -
      Change in restricted funds held in trust               3            45
      Cash dividends paid to shareholders                 (233)            -
      Common stock repurchased                             (95)            -
      Financings of insurance premiums, net                (10)            -
      Other financing                                       19            30
                                                           ---           ---
    Net cash (used in) provided by financing
     activities from continuing operations                (409)          285
    Net cash used in financing activities from
     discontinued operations (A)                           (40)          (54)
    Net cash (used in) provided by financing
     activities                                           (449)          231
                                                          ----           ---
    Effect of exchange rate changes on cash and
     cash equivalents                                       (1)            1
                                                           ---           ---
    Net (decrease) increase in cash and cash
     equivalents                                          (294)          242
    Cash and cash equivalents at beginning of year         434           192
                                                           ---           ---
    Cash and cash equivalents at end of year               140           434
    Less: Cash and cash equivalents of discontinued
     operations at end of year(A)                           14            16
    Cash and cash equivalents of continuing
     operations at end of year                            $126          $418
                                                          ====          ====
    (A) See Exhibit 1 - Note A of this Press Release.


    Covanta Holding Corporation                               Exhibit 4
    Reconciliation of Diluted Earnings Per Share ("EPS") to Diluted EPS,
    Excluding Special Items 

                       Three Months Ended  Twelve Months Ended
                           December 31,        December 31,      Full Year
                         2010    2009(A)     2010     2009 (A) Estimated 2011
                                      (Unaudited)
    Continuing
     Operations -
     Diluted EPS       $ 0.13    $  0.11    $ 0.19   $ 0.39    $0.40 - $0.55
    Continuing
     Operations -
     Special Items (B)   0.07      (0.01)     0.23     0.01          -
    Continuing
     Operations -
     Diluted EPS,
     Excluding Special
     Items               0.20       0.10      0.42     0.40     $0.40 - $0.55 

    Discontinued
     Operations -
     Diluted EPS         0.02       0.07      0.21     0.27
    Discontinued
     Operations -
     Special Items (B)   0.05          -      0.05        -
    Discontinued
     Operations -
     Diluted EPS,
     Excluding Special
     Items               0.07       0.07      0.26      0.27 

    Consolidated -
     Diluted EPS,
     Excluding Special
     Items             $ 0.27    $  0.17    $ 0.68    $ 0.67 

    Covanta Holding Corporation                       Exhibit 4A
    Reconciliation of Special Items
                 Three Months Ended   Twelve Months Ended
                                December 31,      December 31,
                              2010      2009     2010    2009
                                         (Unaudited)
                           (In millions, except per share amounts)
    Continuing Operations
      - Special Items
    Non-cash write-down of
     loan issued for the
     Harrisburg EfW facility
     to fund certain facility
     improvements               $ -     $ -        $7         $-
    Non-cash write-down of
     capitalized costs related
     to the Dublin development
     project                      -        -       23          -
    Other asset write-downs,
      net                         1        -        3          -
    Loss on extinguishment
     of debt (C)                 15        -       15          -
    Total Continuing Operations
      - Special Items, pre-tax   16        -       48          -
    Proforma income tax
     impact (D)                  (1)       -      (10)         -
     Grantor trust activity      (5)      (1)      (2)         1
    Total Continuing Operations
     - Special Items, net
     of tax                     $10      $(1)     $36         $1 

    Discontinued Operations -
     Special Items
    Loss on assets held for
      sale (A)(E)                $8       $-        $8        $-
    Total Discontinued
     Operations - Special
     Items, pre-tax               8        -         8         -
    Proforma income tax
     impact (F)                   -        -         -         -
    Total Discontinued
     Operations - Special
     Items, net of tax           $8       $-        $8        $-  

    Diluted EPS Impact
    Continuing Operations
     - Diluted EPS Impact    $ 0.07  $ (0.01)   $ 0.23     $ 0.01

    Discontinued Operations
      - Diluted EPS Impact   $ 0.05       $-    $ 0.05         $- 

    Weighted Average
     Diluted Shares
     Outstanding                152       155      154         155 

    Covanta Holding Corporation                           Exhibit 4B
    Effective Tax Rate
                           Three Months Ended       Twelve Months Ended
                               December 31,             December 31,
                             2010       2009          2010        2009
                                            (Unaudited)
    Effective Tax Rate
     from Continuing
     Operations (G)          21.1%      48.3%        41.3%       41.1%

    (A) See Exhibit 1 - Note A of this Press Release.

    (B)  For details related to the Special Items and Diluted Earnings
     Per Share, Excluding Special Items, see Exhibit 4A of this Press Release.

    (C) See Exhibit 1 - Note C of this Press Release.

    (D) There is minimal tax benefit from the non-cash write-down related to
    the Dublin assets due to absence of offsetting income. As a result, this
     non-cash write-down has a significant impact on the effective tax rate.
     Accordingly, we are presenting this proforma calculation of the income
     tax effect from the total non-cash write-downs to illustrate the
    proforma impact upon income tax expense and net income.  The proforma
     income tax impact represents the tax provision amount related to the
     overall tax provision calculated without the special items when compared
     to the tax provision reported under GAAP in the consolidated statement
     of income.  

    (E) During the three months ended December 31, 2010, we recorded an $8
     million loss on assets held for sale, related to our assets in India.
      If we complete all of the transactions involving the assets classified
     as held for sale, we expect to realize an after-tax net gain between
    $120 - $140 million.

    (F) The loss on assets held for sale had no book tax benefit because
     these losses will be recognized in a foreign jurisdiction in which
    the Company has little or no offsetting tax liability.

    (G) The Effective Tax Rate was substantially lower as a result of
     additional permanent tax benefits realized in Q4.  These tax
    benefits were primarily related to the grantor trust and several
     other favorable net tax adjustments.

    Covanta Holding Corporation                     Exhibit 5
    Reconciliation of Net Income to Adjusted EBITDA
                                        Three Months Ended
                                           December 31,
                                           ------------
                                                                  2010
                                                                   ---
                               Total       Discontinued    Continuing
                               -----       ------------    ----------
                                            Operations     Operations
                                            ----------     ----------
                                     (Unaudited, in millions)

    Net Income                       $23              $3           $20
     attributable to
      Covanta
      Holding
       Corporation
      Special Items, net
       of                             18               8            10
            tax (B)                  ---             ---           ---
    Net Income
     Excluding                       $41             $11           $30
      Special Items,
      net of tax

    Depreciation and                  50               2            48
      Amortization
       expense

    Debt service:
       Net interest
        expense                        9               1             8
         on project debt
       Interest expense               13               -            13
       Non-cash
        Convertible                    9               -             9
         debt related
          expense
       Investment income              (1)             (1)            -
                                     ---             ---           ---
     Subtotal debt
      service                         30               -            30

    Income tax
     expense,                         13               3            10
      excluding tax
       effect
      of Special Items
       (B)

    Net income
     attributable                      2               1             1
      to noncontrolling
      interests in
      subsidiaries

    Other adjustments:
       Decrease in
        Unbilled                       5               -             5
         service
          receivables
       Non-cash
        compensation                   4               -             4
         expense
       Transaction-
        related                        1               1             -
           costs (C)
       Other non-cash                  1               -             1
         expenses (D)                ---             ---           ---
     Subtotal other                   11               1            10
       adjustments

    Total adjustments                106               7            99

    Adjusted EBITDA                 $147             $18          $129
                                    ====             ===          ====


                                        Twelve Months Ended
                                           December 31,
                                           ------------
                                                                  2010
                                                                   ---
                               Total       Discontinued    Continuing
                               -----       ------------    ----------
                                            Operations     Operations
                                            ----------     ----------
                                     (Unaudited, in millions)

    Net Income                       $62             $32           $30
     attributable to
      Covanta
      Holding
       Corporation
      Special Items, net
       of                             44               8            36
            tax (B)                  ---             ---           ---
    Net Income
     Excluding                      $106             $40           $66
      Special Items,
      net of tax

    Depreciation and                 196               6           190
      Amortization
       expense

    Debt service:
       Net interest
        expense                       41               3            38
         on project debt
       Interest expense               45               -            45
       Non-cash
        Convertible                   39               -            39
         debt related
          expense
       Investment income              (3)             (2)           (1)
                                     ---             ---           ---
     Subtotal debt
      service                        122               1           121

    Income tax
     expense,                         44               8            36
      excluding tax
       effect
      of Special Items
       (B)

    Net income
     attributable                      9               4             5
      to noncontrolling
      interests in
      subsidiaries

    Other adjustments:
       Decrease in
        Unbilled                      29               -            29
         service
          receivables
       Non-cash
        compensation                  17               -            17
         expense
       Transaction-
        related                        2               2             -
           costs (C)
       Other non-cash                  6               -             6
         expenses (D)                ---             ---           ---
     Subtotal other                   54               2            52
       adjustments

    Total adjustments                425              21           404

    Adjusted EBITDA                 $531             $61          $470
                                    ====             ===          ====


                               Full Year
                          Estimated 2011 (A)
                          ------------------
                              Continuing
                              ----------
                               Operations
                               ----------

    Net Income
     attributable to
      Covanta
      Holding
       Corporation
      Special Items, net
       of
            tax (B)
    Net Income
     Excluding                     $60 - $83
      Special Items,
      net of tax

    Depreciation and             $196 - $190
      Amortization
       expense

    Debt service:
       Net interest
        expense
         on project debt
       Interest expense
       Non-cash
        Convertible
         debt related
          expense
       Investment income
     Subtotal debt
      service                    $133 - $128

    Income tax
     expense,                      $41 - $67
      excluding tax
       effect
      of Special Items
       (B)

    Net income
     attributable                    $3 - $9
      to noncontrolling
      interests in
      subsidiaries

    Other adjustments:
       Decrease in
        Unbilled
         service
          receivables
       Non-cash
        compensation
         expense
       Transaction-
        related
           costs (C)
       Other non-cash
         expenses (D)
     Subtotal other                $47 - $43
       adjustments

    Total adjustments

    Adjusted EBITDA              $480 - $520
                                 ===========


                                        Three Months Ended
                                           December 31,
                                           ------------
                                             2009 (E)
                                             --------
                               Total       Discontinued    Continuing
                               -----       ------------    ----------
                                            Operations     Operations
                                            ----------     ----------
                                     (Unaudited, in millions)

    Net Income                       $28             $11           $17
     Attributable to
      Covanta
      Holding
       Corporation
      Special Items,
       net of                         (1)              -            (1)
           tax (B)                   ---             ---           ---
    Net Income
     Excluding                       $27             $11           $16
      Special Items,
      net of tax

    Depreciation and                  53               2            51
      Amortization
       expense

    Debt service:
       Net interest
        expense on                    11               1            10
         project debt
       Interest expense               11               -            11
       Non-cash
        Convertible                    9               -             9
         debt related
          expense
       Investment income               -               -             -
                                     ---             ---           ---
     Subtotal debt
      service                         31               1            30

    Income tax
     expense,                         16              (1)           17
      excluding tax
       effect of
      Special Items (B)

    Net income                         2               1             1
      attributable to
      noncontrolling
      interests in
      subsidiaries

    Other
     adjustments:
       Decrease in
        unbilled                       6               -             6
         service
          receivables
       Non-cash
        compensation                   4               -             4
         expense
       Transaction-
        related                        -               -             -
           costs (C)
       Other non-cash                  1               -             1
         expenses (D)                ---             ---           ---
     Subtotal other                   11               -            11
       adjustments

    Total adjustments                113               3           110

    Adjusted EBITDA                 $140             $14          $126
                                    ====             ===          ====


                                        Twelve Months Ended
                                           December 31,
                                           ------------
                                             2009 (E)
                                             --------
                               Total       Discontinued    Continuing
                               -----       ------------    ----------
                                            Operations     Operations
                                            ----------     ----------
                                     (Unaudited, in millions)

    Net Income                      $102             $41           $61
     Attributable to
      Covanta
      Holding
       Corporation
      Special Items,
       net of                          1               -             1
           tax (B)                   ---             ---           ---
    Net Income
     Excluding                      $103             $41           $62
      Special Items,
      net of tax

    Depreciation and                 203               6           197
      Amortization
       expense

    Debt service:
       Net interest
        expense on                    49               4            45
         project debt
       Interest expense               38               -            38
       Non-cash
        Convertible                   24               -            24
         debt related
          expense
       Investment income              (4)             (2)           (2)
                                     ---             ---           ---
     Subtotal debt
      service                        107               2           105

    Income tax
     expense,                         48               7            41
      excluding tax
       effect of
      Special Items (B)

    Net income                         9               5             4
      attributable to
      noncontrolling
      interests in
      subsidiaries

    Other
     adjustments:
       Decrease in
        unbilled                      20               -            20
         service
          receivables
       Non-cash
        compensation                  14               -            14
         expense
       Transaction-
        related                        6               -             6
           costs (C)
       Other non-cash                  5               -             5
         expenses (D)                ---             ---           ---
     Subtotal other                   45               -            45
       adjustments

    Total adjustments                412              20           392

    Adjusted EBITDA                 $515             $61          $454
                                    ====             ===          ====
    (A) 2011 Guidance is for Continuing Operations.
    (B) For additional information, see Exhibit 4A of this Press Release.
    (C) The continuing operations amount relates primarily to
    transaction-related costs associated with the acquisition of Veolia
    energy-from-waste businesses in 2009.
    (D) Includes certain non-cash items that are added back under the
    definition of Adjusted EBITDA in Covanta Energy Corporation's credit
    agreement.


    Covanta Holding Corporation               Exhibit 6
    Reconciliation of Cash Flow Provided by Operating Activities to Free
    Cash Flow

                              Three Months           Twelve Months
                                 Ended                   Ended
                             December 31,            December 31,
                             ------------            ------------
                            2010       2009(A)        2010       2009(A)
                            ----       ------         ----       ------
                                  (Unaudited, in millions)
    Cash flow provided
     by operating
     activities             $103          $149        $431          $397
    Less: Maintenance
     capital
     expenditures (B)        (17)           (8)        (74)          (52)
    Free Cash Flow           $86          $141        $357          $345
                             ===          ====        ====          ====

    Cash flow provided
     by operating
     activities of
     continuing
     operations              $99       $128     $392       $352
    Less: Maintenance
     capital
     expenditures (B)        (17)           (8)        (74)          (52)
    Continuing
     Operations Free
     Cash Flow               $82          $120        $318          $300
                             ===          ====        ====          ====

    Uses of Continuing
     Operations Free
     Cash Flow
    ------------------

    Continuing
     Operations Free
     Cash Flow               $82          $120        $318          $300

    Net cash used for
     scheduled principal
     payments on project
     debt (C)                (27)          (29)       (170)         (121)
    Net cash used for
     scheduled principal
     payments on long-
     term debt                (2)           (2)         (7)           (7)
    Distributions to
     partners of
     noncontrolling
     interests in
     subsidiaries             (2)        (1)      (6)        (6)
    Free Cash Flow
     Available After
     Scheduled Payments      $51           $88        $135          $166
                             ---           ---        ----          ----

    Other Sources and
     Uses of Cash:
    -----------------

    Investments:
      Acquisition of
       businesses, net of
       cash acquired         $(2)         $(14)      $(130)        $(266)
      Non-maintenance
       capital
       expenditures          (15)           (7)        (41)          (22)
      Acquisition of land
       use rights              -             -         (19)            -
      Acquisition of
       noncontrolling
       interests in
       subsidiaries            -           (24)         (2)          (24)
      Purchase of equity
       interests               -             -           -            (9)
      Other investing
       activities, net (D)    (7)           (5)        (21)          (14)
    Total investments       $(24)         $(50)      $(213)        $(335)
                            ----          ----       -----         -----

    Return of capital to
     shareholders:
      Cash dividends paid
       to shareholders        $-            $-       $(233)           $-
      Common stock
       repurchased           (58)            -         (95)            -
    Total return of
     capital to
     shareholders           $(58)           $-       $(328)           $-
                            ----           ---       -----           ---

    Capital raising
     activities:
      Net proceeds from
       issuance of
       corporate debt (E)    $390            $2        $390          $388
      Net proceeds from
       issuance of project
       debt (F)                5            (1)         10            (5)
      Net proceeds from
       asset sales            12             -          12             -
      Other financing
       activities, net        11             7          27            36
    Net proceeds from
     capital raising
     activities             $418            $8        $439          $419
                            ----           ---        ----          ----

    Optional debt
     repayments:
      Optional repayment
       of corporate debt   $(313)           $-       $(313)           $-
      Optional repayment
       of project debt         -             -           -             -
      Fees incurred for
       debt redemption        (2)            -          (2)            -
    Total optional debt
     repayments            $(315)           $-       $(315)           $-
                           -----           ---       -----           ---

    Short-term
     borrowing
     activities:
      Borrowing
       (repayment) under
       Revolving Credit
       Facility, net          $-            $-          $-            $-
      Financing of
       insurance premiums,
       net                     -            10         (10)            -
    Short-term
     borrowing
     activities, net          $-           $10        $(10)           $-
                             ---           ---        ----           ---

    Net change in cash
     and cash
     equivalents from
     continuing
     operations              $72        $56    $(292)      $250
                             ===           ===       =====          ====

    (A) See Exhibit 1 -
     Note A of this
     Press Release.

    (B) Purchases of
     property, plant and
     equipment is also
     referred to as
     capital
     expenditures.
     Capital
     expenditures that
     primarily maintain
     existing facilities
     are classified as
     maintenance capital
     expenditures.  The
     following table
     provides the
     components of total
     purchases of
     property, plant and
     equipment:

      Maintenance capital
       expenditures         $(17)          $(8)       $(74)         $(52)
      Capital expenditures
       associated with
       project
       construction /
       development            (7)        (3)     (21)       (13)
      Capital expenditures
       associated with
       technology
       development            (2)           (2)         (6)           (5)
      Capital expenditures
       -other                 (6)           (2)        (14)           (4)
    Total purchases of
     property, plant and
     equipment              $(32)         $(15)      $(115)         $(74)
                            ====          ====       =====          ====

    (C) Calculated as
     follows:

    Total principal
     payments on project
     debt                  $(100)         $(60)      $(202)        $(230)
    Decrease in related
     restricted funds
     held in trust            44            31           3            45
    Less: repayments
     from cash prior to
     scheduled
     amortization, final
     maturity or
     investor put             29          -       29         64
    Net cash used for
     principal payments
     on project debt        $(27)         $(29)      $(170)        $(121)
                            ====          ====       =====         =====

    (D) On November 16, 2010, we sold
    $400 million aggregate principal
    amount of 7.25% senior notes due
    2020 ("7.25% Notes"). We used a
    portion of the net proceeds of the
    7.25% Notes offering to fund the
    purchase price and accrued and
    unpaid interest for the tender
    offer of the outstanding 1.00%
    Senior Convertible Debentures
    due 2027.  We redeemed 84.67%
    of the outstanding Debentures
    at a tender price of $990 per
    $1,000 principal amount.  The
    remaining net proceeds from
    the offering will be used for
    general corporate purposes.

    (E) Excludes
     borrowings under
     Revolving Credit
     Facility.
     Calculated as
     follows:

    Proceeds from
     borrowings on long-
     term debt              $400            $-        $400          $460
    Financing costs
     related to issuance
     of long-term debt       (10)            2         (10)          (14)
    Purchase of
     convertible note
     hedge                     -             -           -          (112)
    Proceeds from
     issuance of
     warrants                  -             -           -            54
    Net proceeds from
     issuance of
     corporate debt         $390            $2        $390          $388
                            ====           ===        ====          ====

    (F) Excludes
     borrowings under
     project working
     capital facilities.
      Calculated as
      follows:

    Proceeds from
     issuance of project
     debt                    $34            $-         $39           $70
    Less: proceeds used
     to repay project
     debt (refinancing)      (29)            -         (29)          (64)
    Interest rate swap
     termination costs         -            (1)          -           (11)
    Net proceeds from
     issuance of project
     debt                     $5           $(1)        $10           $(5)
                             ===           ===         ===           ===


                                           Full Year
                                           Estimated
                                               2011
                                          ----------

    Cash flow provided by operating
     activities
    Less: Maintenance capital
     expenditures (B)
    Free Cash Flow

    Cash flow provided by operating
     activities of continuing
     operations                            $325 - $385
    Less: Maintenance capital                ($75) -
     expenditures (B)                           ($85)
    Continuing Operations Free Cash
     Flow                                  $250 - $300
                                           ===========

    Uses of Continuing Operations Free
     Cash Flow
    ----------------------------------

    Continuing Operations Free Cash
     Flow

    Net cash used for scheduled
     principal payments on project
     debt (C)                                    ($102)
    Net cash used for scheduled
     principal payments on long-term
     debt                                          ($7)
    Distributions to partners of
     noncontrolling interests in
     subsidiaries                                  ($6)
    Free Cash Flow Available After
     Scheduled Payments                    $135 - $185
                                           -----------

    Other Sources and Uses of Cash:
    -------------------------------

    Investments:
      Acquisition of businesses, net of
       cash acquired
      Non-maintenance capital
       expenditures
      Acquisition of land use rights
      Acquisition of noncontrolling
       interests in subsidiaries
      Purchase of equity interests
      Other investing activities, net
       (D)
    Total investments

    Return of capital to shareholders:
      Cash dividends paid to
       shareholders
      Common stock repurchased
    Total return of capital to
     shareholders

    Capital raising activities:
      Net proceeds from issuance of
       corporate debt (E)
      Net proceeds from issuance of
       project debt (F)
      Net proceeds from asset sales
      Other financing activities, net
    Net proceeds from capital raising
     activities

    Optional debt repayments:
      Optional repayment of corporate
       debt
      Optional repayment of project debt
      Fees incurred for debt redemption
    Total optional debt repayments

    Short-term borrowing activities:
      Borrowing (repayment) under
       Revolving Credit Facility, net
      Financing of insurance premiums,
       net
    Short-term borrowing activities,
     net

    Net change in cash and cash
     equivalents from continuing
     operations

    (A) See Exhibit 1 -Note A of this
     Press Release.

    (B) Purchases of property, plant
     and equipment is also referred to
     as capital expenditures.  Capital
     expenditures that primarily
     maintain existing facilities are
     classified as maintenance capital
     expenditures.  The following
     table provides the components of
     total purchases of property,
     plant and equipment:

      Maintenance capital expenditures
      Capital expenditures associated
       with project construction /
       development
      Capital expenditures associated
       with technology development
      Capital expenditures - other
    Total purchases of property, plant
     and equipment

    (C) Calculated as follows:

    Total principal payments on
     project debt                                ($140)
    Decrease in related restricted
     funds held in trust                           $38
    Less: repayments from cash prior
     to scheduled amortization, final
     maturity or investor put
    Net cash used for principal
     payments on project debt                    ($102)
                                                 -----

    (D) On November 16, 2010, we sold
    $400 million aggregate principal
    amount of 7.25% senior notes due
    2020 ("7.25% Notes"). We used a
    portion of the net proceeds of the
    7.25% Notes offering to fund the
    purchase price and accrued and
    unpaid interest for the tender
    offer of the outstanding 1.00%
    Senior Convertible Debentures
    due 2027.  We redeemed 84.67%
    of the outstanding Debentures
    at a tender price of $990 per
    $1,000 principal amount.  The
    remaining net proceeds from
    the offering will be used for
    general corporate purposes.

    (E) Excludes borrowings under
     Revolving Credit Facility.
     Calculated as follows:

    Proceeds from borrowings on long-
     term debt
    Financing costs related to
     issuance of long-term debt
    Purchase of convertible note hedge
    Proceeds from issuance of warrants
    Net proceeds from issuance of
     corporate debt

    (F) Excludes borrowings under
     project working capital
     facilities.  Calculated as
     follows:

    Proceeds from issuance of project
     debt
    Less: proceeds used to repay
     project debt (refinancing)
    Interest rate swap termination
     costs
    Net proceeds from issuance of
     project debt

    Covanta Holding Corporation Exhibit 7
    Capitalization Information
    From Continuing Operations
                                         As of December 31,
                                         ------------------
                                         2010      2009(A)
                                         ----      -------
                                           (Unaudited, in
    Cash and Cash Equivalents:               millions)
    Domestic                              $68          $352
    International                          52            59
    Insurance                               6             7
    Total Cash and Cash Equivalents      $126          $418
                                         ====          ====

    Restricted Funds Held in Trust: (B)
      Debt Service - Principal           $157          $161
      Debt Service - Interest               6             7
                                          ---           ---
    Debt Service Funds - Total            163           168
    Revenue Funds                          18            13
    Other Funds                            52            59
    Total Restricted Funds Held in Trust $233          $240
                                         ====          ====
    (A) See Exhibit 1 - Note A of this Press Release.
    (B) Restricted funds held in trust are primarily amounts received by
    third party trustees relating to certain projects we own which may
    be used only for specified purposes. We generally do not control
    these accounts. They primarily include debt service reserves for
    payment of principal and interest on project debt.  Revenue funds
    are comprised of deposits of revenues received with respect to
    projects prior to their disbursement. Other funds are primarily
    amounts held in trust for operations, maintenance, environmental
    obligations and operating lease reserves in accordance with
    agreements with our clients.


                                             As of December 31,
                                                    2010
                                           -------------------
                                            Face          Book
                                           Value         Value
                                           -----         -----
                                               (Unaudited, in
    Corporate Debt:                              millions)
    Revolving Credit Facility                  $-            $-
    Term Loan Facility                        626           626
    7.25% Senior Notes due 2020               400           400
    3.25% Cash Convertible Senior Notes
     due 2014                                 460           485
    1.00% Senior Convertible Debentures
     due 2027 (the                             57            54
       "Debentures")
    Other long-term debt                        -             -
    Total corporate debt (including
     current portion)                      $1,543        $1,565
                                           ------        ------

    Project Debt:
    Domestic project debt -service fee
     facilities                              $395          $402
    Domestic project debt -tip fee
     facilities                               386           391
    International project debt                 10            10
    Total project debt (including
     current portion)                        $791          $803
                                             ----          ----

    Total Debt Outstanding                 $2,334        $2,368
                                           ======        ======

    Net Debt (C)                           $2,051
                                           ======

    Availability for Borrowings under
     the Revolving Credit                    $300
       Facility                              ====

    (C) Net Debt is calculated as total
     principal amount of debt
     outstanding less cash and cash
     equivalents and debt service
     principal restricted funds.

    2010 Refinancing Details
    Unaudited, in millions

    Offering -7.25% Senior Notes due
     2020 (D)                                              $400
    Offering Costs                                          (10)
                                                            ---
    Net Proceeds                                            390
    Debenture Redemption (D)(E)                            (316)
    Remaining principal amount of
     Debentures outstanding                                 (57)
    Offering funds available for
     general corporate purposes                             $17
                                                            ===


                                             As of December 31,
                                                  2009 (A)
                                             ------------------
                                            Face          Book
                                           Value         Value
                                           -----         -----
                                               (Unaudited, in
    Corporate Debt:                              millions)
    Revolving Credit Facility                  $-            $-
    Term Loan Facility                        632           632
    7.25% Senior Notes due 2020                 -             -
    3.25% Cash Convertible Senior Notes
     due 2014                                 460           476
    1.00% Senior Convertible Debentures
     due 2027 (the                            374           329
       "Debentures")
    Other long-term debt                        1             1
    Total corporate debt (including
     current portion)                      $1,467        $1,438
                                           ------        ------

    Project Debt:
    Domestic project debt -service fee
     facilities                              $452          $462
    Domestic project debt -tip fee
     facilities                               458           466
    International project debt                  -             -
    Total project debt (including
     current portion)                        $910          $928
                                             ----          ----

    Total Debt Outstanding                 $2,377        $2,366
                                           ======        ======

    Net Debt (C)                           $1,798
                                           ======

    Availability for Borrowings under
     the Revolving Credit                    $300
       Facility                              ====

    (C) Net Debt is calculated as total
     principal amount of debt
     outstanding less cash and cash
     equivalents and debt service
     principal restricted funds.

    2010 Refinancing Details
    Unaudited, in millions

    Offering -7.25% Senior Notes due
     2020 (D)
    Offering Costs
    Net Proceeds
    Debenture Redemption (D)(E)
    Remaining principal amount of
     Debentures outstanding
    Offering funds available for
     general corporate purposes
    (D) On November 16, 2010, we sold $400 million aggregate principal
    amount of 7.25% senior notes due 2020 ("7.25% Notes"). We used a
    portion of the net proceeds of the 7.25% Notes offering to fund the
    purchase price and accrued and unpaid interest for the tender offer
    of the outstanding 1.00% Senior Convertible Debentures due 2027.
    We redeemed 84.67% of the outstanding Debentures at a tender price
    of $990 per $1,000 principal amount.  The remaining net proceeds
    from the offering will be used for general corporate purposes.
    (E) Includes $1 million of accrued interest and $2 million of fees
    associated with the tender offer.

    Covanta Holding Corporation                                   Exhibit 8
    Return to Stockholders
    (Unaudited, in millions, except per share amount and percentages)

    During year ended December 31, 2010,  the following amounts were
    returned to stockholders:
                                                      Weighted     % of
                                 Amount    Shares     Average    Common
                                 ------    ------     --------    ------
                                                      Cost Per
                                         Repurchased    Share     Stock
                                         ----------- ---------    -----
                                                               Outstanding
                                                               -----------
                                                               Repurchased
                                                               -----------
    Common Stock Repurchased (A)
    Q310                             $37         2.5    $14.69         1.6%
    Q410                              58         3.6    $16.16         2.4%
    Total Common Stock
     Repurchased                     $95         6.1    $15.56         4.0%

    Cash Dividends Paid to
     Stockholders (A)                233

    Total Return to Stockholders    $328
                                    ====
    (A) On June 17, 2010, the Board of Directors declared a special cash
    dividend of $1.50 per share (approximately $233 million in
    aggregate) which was paid on July 20, 2010 and also increased the
    authorization to repurchase shares of outstanding common stock to
    $150 million.  As of December 31, 2010, the amount remaining under
    the current authorized share repurchase program was $55 million.

    Covanta Holding Corporation                                     Exhibit 9
    Assets Held for Sale

    In 2010, we adopted a plan to sell our interests in our non-core
    legacy fossil fuel independent power production facilities located
    in the Philippines, India and Bangladesh.  During the fourth quarter
    of 2010, our interests in the Quezon facility in the Philippines,
    the Haripur facility in Bangladesh and our two India projects were
    classified as Assets Held for Sale as a result of our ongoing effort
    to sell them.  Consequently, all corresponding prior year periods
    presented in our consolidated financial statements have been
    reclassified to reflect these assets as discontinued operations.
    The following table summarizes the operating results of the
    discontinued operations for the periods indicated:
                            Three Months Ended        Twelve Months Ended
                               December 31,               December 31,
                               ------------               ------------
                            2010           2009     2010             2009
                            ----           ----     ----             ----
                                         (Unaudited, in
                                                 millions)
     Operating revenues
       Waste and service
        revenues              $1              $1      $3               $3
       Electricity and
        steam sales           27              38     149              163
         Total operating
          revenues            28              39     152              166
                             ---             ---     ---              ---

     Operating expenses
        Plant operating
         expenses             19              30     117              125
        Other operating
         expenses             (1)              -      (1)               -
        General and
         administrative
         expenses              -               -       1                -
        Depreciation and
         amortization
         expense               2               2       6                6
        Net interest
         expense on project
         debt                  1               1       3                4
        Loss on assets held
         for sale              8               -       8                -
         Total operating
          expenses            29              33     134              135
                             ---             ---     ---              ---

     Operating income         (1)              6      18               31
                             ---             ---     ---              ---

     Other income
        Investment income      1               -       2                2
         Total other income    1               -       2                2
                             ---             ---     ---              ---

     Income from
      discontinued
      operations
      before income tax
       (expense)               -               6      20               33
      benefit and equity
       in net income
      from unconsolidated
       investments
     Income tax
      (expense) benefit       (3)              1      (8)              (7)
     Equity in net
      income from
      unconsolidated           7               5      24               20
        investments          ---             ---     ---              ---

     Income from
      discontinued
      operations,             $4             $12     $36              $46
         net of tax          ===             ===     ===              ===


    The following table sets forth the assets and liabilities held for
    sale included in the consolidated balance sheets as of the dates
    indicated:
                                                      As of
                                                      -----
                                       December 31,        December 31,
                                           2010                2009
                                      -------------       -------------
                                            (Unaudited, in millions)
    Current:
      Cash and cash equivalents                 $14                 $16
      Restricted funds held in trust             19                  25
      Receivables                                20                  10
      Prepaid expenses and other
       current assets                            26                  24
    Noncurrent:
      Property, plant and equipment,
       net                                       30                  42
      Restricted funds held in trust              -                  12
      Investments in investees and
       joint ventures                            81                  70
      Other assets                                1                   1
      Assets held for sale                     $191                $200
                                               ====                ====

    Current:
      Current portion of project debt           $16                 $28
      Accounts payable                            3                   9
      Accrued expenses and other
       current liabilities                       11                   8
    Noncurrent:
      Project debt                                -                   3
      Deferred income taxes                       1                   1
      Other liabilities                           3                   3
      Liabilities held for sale                 $34                 $52
                                                ===                 ===

    Covanta Holding Corporation                                    Exhibit 10
    Consolidated Reconciliation of Cash Flow Provided by Operating
    Activities to Adjusted EBITDA
                             Three Months               Twelve Months
                                Ended                       Ended
                            December 31,                December 31,
                            ------------                ------------
                          2010       2009(A)           2010       2009(A)
                          ----       -------           ----       -------
                                   (Unaudited, in millions)
    Cash flow provided by
     operating activities
     from continuing
     operations            $99          $128           $392          $352

    Debt service            30            30            121           105

    Change in working
     capital                31             -            (21)            2
    Change in restricted
     funds held in trust   (33)          (26)           (11)          (19)
    Non-cash convertible
     debt related expense   (9)           (9)           (39)          (24)
    Amortization of debt
     premium and deferred
     financing costs         -             1              1             4
    Equity in net income
     from unconsolidated
     investments             1             1              2             3
    Dividends from
     unconsolidated
     investments            (1)            -             (5)           (1)
    Current tax provision   10            (2)             5             9
    Other                    1             3             25            23
                           ---           ---            ---           ---
        Sub-total            -           (32)           (43)           (3)
                           ---           ---            ---           ---

    Continuing Operations
     -Adjusted EBITDA     $129          $126           $470          $454
                          ====          ====           ====          ====


                                                        Full Year
                                                        Estimated
                                                            2011
                                                       ----------

    Cash flow provided by operating activities from
     continuing operations                              $325 - $385

    Debt service                                        $133 - $128

    Change in working capital
    Change in restricted funds held in trust
    Non-cash convertible debt related expense
    Amortization of debt premium and deferred
     financing costs
    Equity in net income from unconsolidated
     investments
    Dividends from unconsolidated investments
    Current tax provision
    Other
        Sub-total                                          $22 - $7
                                                           --------

    Continuing Operations - Adjusted EBITDA             $480 - $520
                                                        ===========
    (A) See Exhibit 1 - Note A of this Press Release.

    Covanta Holding Corporation                          Exhibit 11
    Energy Revenue -Volume and Unit Statistics -Americas
                                   Twelve Months Ended December 31, 2010
                                   -------------------------------------
                               Revenue          Covanta         Avg Revenue
                                  ($)           Share(A)            Per
                              --------         --------        ------------
                                                 (MWh)              MWh
                                                 -----              ---
                                     (Unaudited, in millions, except per
                                                unit amounts)

    Contracted and Hedged (B)      $286               3.9               $74
    Exposed (C)                     112               1.8               $61
    Total                          $398               5.7               $70
                                   ====               ===
    (A) Covanta share of energy sold (both electricity and steam sales).
    The MWhs shown above include steam sales converted to MWhs.
    (B) Reflects energy that is sold at contractual rates that are not
    subject to significant market price fluctuation or that is hedged at
    fixed prices.
    (C) Reflects energy that is sold at or indexed to volatile market
    prices, whether or not under contract.  This includes certain
    facilities that sell energy at "avoided cost" rates that are linked
    to energy commodities with volatile pricing.

    Covanta Holding Corporation                                    Exhibit 12
    Plant Operating Expenses Detail -Americas

    The Americas segment quarterly plant operating expenses typically
    differs substantially as a result of the timing of scheduled plant
    maintenance. We typically conduct scheduled maintenance periodically
    each year, which requires that individual boiler units temporarily
    cease operations. During these scheduled maintenance periods, we
    incur material repair and maintenance expenses and receive less
    revenue until the boiler units resume operations. This scheduled
    maintenance typically occurs during periods of off-peak electric
    demand and/or periods of lower waste volumes, which occur during
    all of the first quarter and portions of the second and fourth
    fiscal quarters. The first quarter scheduled maintenance period is
    typically the most extensive, with the second and fourth quarters
    historically being at similar levels.  Given these factors, we
    typically experience our highest plant maintenance expense during
    our first quarter of each year and our lowest plant maintenance
    expense during the third quarter of each year.  The aggregate of all
    other components of plant operating expense is relatively consistent
    each quarter of the year.

                                       2010 Quarters
                                       -------------
                                                                      FY
                            Q1        Q2        Q3        Q4         2010
                           ---       ---       ---       ---       -----
                                 (Unaudited, in millions)
    Plant Operating
     Expenses:
    Plant maintenance (A)   $85       $53       $38       $56        $232
    All other               172       173       174       166         685
    Plant operating
     expenses              $257      $226      $212      $222        $917
                           ====      ====      ====      ====        ====

    Quarterly % of full-
     year plant
     maintenance             37%       23%       16%       24%
    Quarterly % of full-
     year all other          25%       25%       25%       25%
    (A) Plant maintenance costs include all non-employee related costs
    for facility scheduled and unscheduled equipment maintenance and
    repair expenses.

Discussion of Non-GAAP Financial Measures

We use a number of different financial measures, both United States generally accepted accounting principles (“GAAP”) and non-GAAP, in assessing the overall performance of our business. To supplement our assessment of 2010 results prepared in accordance with GAAP, we use the measures of Adjusted EBITDA, Free Cash Flow, and Diluted Earnings Per Share, Excluding Special Items, which are non-GAAP measures as defined by the Securities and Exchange Commission. To supplement our assessment of 2011 results, we have determined that we will use Adjusted EBITDA, Free Cash Flow, and Adjusted EPS, and no longer use Diluted Earnings Per Share, Excluding Special Items. This press release described the differences between Diluted Earnings Per Share, Excluding Special Items and Adjusted EPS. The non-GAAP financial measures of Adjusted EBITDA, Free Cash Flow, Diluted Earnings Per Share, Excluding Special Items, and Adjusted EPS as described below, and used in the tables above, are not intended as a substitute or as an alternative to net income, cash flow provided by operating activities or diluted earnings per share as indicators of our performance or liquidity or any other measures of performance or liquidity derived in accordance with GAAP. In addition, our non-GAAP financial measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes.

The presentations of Adjusted EBITDA, Free Cash Flow, Diluted Earnings Per Share, Excluding Special Items and Adjusted EPS are intended to enhance the usefulness of our financial information by providing measures which management internally use to assess and evaluate the overall performance of its business and those of possible acquisition candidates, and highlight trends in the overall business.

Adjusted EBITDA

We use Adjusted EBITDA to provide further information that is useful to an understanding of the financial covenants contained in the credit facilities of our most significant subsidiary, Covanta Energy, through which we conduct our core waste and energy services business, and as additional ways of viewing aspects of its operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our core business. The calculation of Adjusted EBITDA is based on the definition in Covanta Energy’s credit facilities, which we have guaranteed. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as adjusted for additional items subtracted from or added to net income. Because our business is substantially comprised of that of Covanta Energy, our financial performance is substantially similar to that of Covanta Energy. For this reason, and in order to avoid use of multiple financial measures which are not all from the same entity, the calculation of Adjusted EBITDA and other financial measures presented herein are ours, measured on a consolidated basis.

Under these credit facilities, Covanta Energy is required to satisfy certain financial covenants, including certain ratios of which Adjusted EBITDA is an important component. Compliance with such financial covenants is expected to be the principal limiting factor which will affect our ability to engage in a broad range of activities in furtherance of our business, including making certain investments, acquiring businesses and incurring additional debt. Covanta Energy was in compliance with these covenants as of December 31, 2010. Failure to comply with such financial covenants could result in a default under these credit facilities, which default would have a material adverse affect on our financial condition and liquidity.

These financial covenants are measured on a trailing four quarter period basis and the material covenants are as follows:

  • maximum Covanta Energy leverage ratio of 3.50 to 1.00, which measures Covanta Energy’s Consolidated Adjusted Debt (which is the principal amount of its consolidated debt less certain restricted funds dedicated to repayment of project debt principal and construction costs) to its Adjusted EBITDA (which for purposes of calculating the leverage ratio and interest coverage ratio, is adjusted on a pro forma basis for acquisitions and dispositions made during the relevant period); and
  • minimum Covanta Energy interest coverage ratio of 3.00 to 1.00, which measures Covanta Energy’s Adjusted EBITDA to its consolidated interest expense plus certain interest expense of ours, to the extent paid by Covanta Energy.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EBITDA for the three and twelve months ended December 31, 2010 and 2009, reconciled for each such periods to net income and cash flow provided by operating activities, which are believed to be the most directly comparable measures under GAAP.

Free Cash Flow

Free Cash Flow is defined as cash flow provided by operating activities less maintenance capital expenditures, which are capital expenditures primarily to maintain our existing facilities. We use the non-GAAP measure of Free Cash Flow as a criterion of liquidity and performance-based components of employee compensation. We use Free Cash Flow as a measure of liquidity to determine amounts we can reinvest in our core businesses, such as amounts available to make acquisitions, invest in construction of new projects or make principal payments on debt.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Free Cash Flow for the three and twelve months ended December 31, 2010 and 2009, reconciled for each such periods to cash flow provided by operating activities, which we believe to be the most directly comparable measure under GAAP.

Diluted Earnings Per Share, Excluding Special Items

Diluted Earnings Per Share, Excluding Special Items excludes certain income and expense items that are not representative of our ongoing business and operations, which are included in the calculation of Diluted Earnings Per Share in accordance with GAAP. The following items are not all-inclusive, but are examples of items that would be included as Special Items in prior comparative and future periods. They would include write-down of assets, significant gains or losses from the disposition of businesses, gains or losses on the extinguishment of debt and other significant items that would not be representative of our ongoing business.

We use the non-GAAP measure of Diluted Earnings Per Share, Excluding Special Items to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance and highlight trends in the ongoing business.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Diluted Earnings Per Share, Excluding Special Items for the three and twelve months ended December 31, 2010 and 2009, reconciled for each such period to diluted earnings per share, which is believed to be the most directly comparable measures under GAAP.

Adjusted EPS

Adjusted EPS excludes certain income and expense items that are not representative of our ongoing business and operations, which are included in the calculation of Diluted Earnings Per Share in accordance with GAAP. The following items are not all-inclusive, but are examples of reconciling items in prior comparative and future periods. They would include write-down of assets, the effect of derivative instruments not designated as hedging instruments, significant gains or losses from the disposition of businesses, income and loss on the disposal of discontinued operations, transaction-related costs, income and loss on the extinguishment of debt and other significant items that would not be representative of our ongoing business.

We will use the non-GAAP measure of Adjusted EPS to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance and highlight trends in the ongoing business.

SOURCE Covanta Holding Corporation


Source: newswire



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