Covanta Holding Corporation Reports 2011 Full Year and Fourth Quarter Results

2011 Adjusted EBITDA Up 5% From 2010

2011 Adjusted EPS Up 24% From 2010

Projecting 5% Adjusted EBITDA Growth for 2012

Marketwired

MORRISTOWN, NJ--(Marketwire -02/08/12)- Covanta Holding Corporation (NYSE: CVA - News) ("Covanta" or the "Company"), a leading global owner and operator of Energy-from-Waste ("EfW") projects, reported financial results today for the three and twelve months ended December 31, 2011.

Key Full Year 2011 Financial Highlights:

  • Revenue increased 4% to $1,650 million
  • Adjusted EBITDA increased 5% or $22 million to $492 million
  • Free Cash Flow was in line with guidance at $280 million
  • Adjusted EPS increased 24% or $0.10 to $0.52
  • Shareholder returns totaled $272 million, including quarterly dividend paying $0.30/share annually

Key Full Year 2011 Operational Highlights:

  • Achieved exemplary safety record and best ever 91.7% EfW Boiler Availability
  • Durham-York EfW project construction commenced
  • Honolulu EfW project expansion on schedule to be fully operational in 2012

Commenting on Covanta's 2011 results, Anthony Orlando, Covanta's President and CEO, stated, "Covanta had a very good 2011. Operational performance was outstanding and we executed on our plan to grow Adjusted EBITDA by 5 percent. I am also very pleased that we recently extended a number of municipal waste contracts to build upon our tradition of working in partnership with our client communities. These long-term relationships, coupled with our operational expertise and organic growth investments, position us to continue earnings growth in 2012 and beyond."

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

                                     (Unaudited, $ in millions, except per
                                                 share amounts)
Revenue                            $      1,583 $       1,650            N/A
Net Income from Continuing
 Operations                        $         30 $          79            N/A
Adjusted EBITDA                    $        470 $         492 $  485 - $ 505
Free Cash Flow                     $        318 $         280 $  260 - $ 290
Adjusted EPS                       $       0.42 $        0.52 $0.45 - $ 0.55

Full Year 2011 Results from Continuing Operations
For the twelve months ended December 31, 2011, total operating revenues increased 4% to $1,650 million from $1,583 million in 2010.

The increase is attributable to improvements in several areas across the business: price and volume increases in both recycled metals and waste; service fee escalations; and increased construction revenue. These increases were offset by lower production at certain biomass facilities that were economically dispatched off-line, lower debt service pass through revenue as project debt matures, and lower energy pricing.

Operating expenses of $1,432 million were flat versus the prior year. Excluding the non-cash write-downs in 2010, operating expenses increased $38 million or 3%, primarily due to normal cost escalations, higher fuel related costs, lower Renewable Energy Credits and increased construction expense, partially offset by lower costs at certain biomass facilities that were economically dispatched off-line.

Operating income increased by $63 million, or 41%, to $218 million compared with 2010. Excluding the non-cash write-downs in 2010, operating income increased by $29 million, or 15%, primarily as a result of higher recycled metal revenues, service fee contract escalations, higher waste volumes and operational improvements. This increase was partially offset by lower debt service pass through revenue, lower operating income at our biomass facilities and lower energy pricing.

Adjusted EBITDA increased $22 million, or 5%, to $492 million.

Free Cash Flow declined by $38 million, or 12%, to $280 million, which was in line with guidance. The decline was primarily due to interest payments made in 2011 for high yield notes issued in 2010 and unfavorable changes in working capital compared to 2010.

Adjusted EPS was $0.52, an increase of 24% compared to $0.42 in 2010, with the increase attributable to improved operating income and a lower number of shares outstanding due to the Company's common stock buyback program, offset by higher interest expense.

Shareholder Returns and Liquidity
In 2011, the Company sold three of the four Asia IPP assets held for sale, raising a total of $266 million in gross proceeds. The Company utilized cash on hand, Free Cash Flow and cash repatriated from the Asia asset divestitures to: return $272 million of capital to shareholders; invest $53 million in growth initiatives, net of project debt issued; and repay debt of $176 million.

The Company repurchased $230 million of common stock, or 14.4 million shares (10% of outstanding shares), at a weighted average cost of $15.99 per share in 2011. Aggregate repurchases since June 2010 total $325 million, or 20.5 million shares, representing 14% of outstanding shares. In the first quarter, the Company also initiated a quarterly cash dividend in the amount of $0.075 per share ($0.30 per share annualized).

Sanjiv Khattri, Covanta's Chief Financial Officer, commented, "Our disciplined balance sheet management, predictable business model and consistent Free Cash Flow generation continue to provide ample liquidity and flexibility to actively return capital to shareholders and pay down debt, while simultaneously investing in our business. I am also very pleased that in 2011, not only did we achieve our target for asset sales, but we also efficiently repatriated $137 million of these funds to the U.S."

Fourth Quarter Results
Operating revenues increased $11 million, or 3%, to $430 million, compared to the prior year period. Revenue growth was primarily due to service fee contract escalations, increased recycled metals pricing and volume, higher tip fee volume and increased construction revenue. These increases were partially offset by lower debt service pass through revenue, lower production at certain biomass facilities that were economically dispatched off-line and lower energy pricing.

Operating expenses of $350 million declined 2% from $356 million in the prior year comparative period. The decline was primarily attributable to a shift in timing of planned scheduled maintenance activity from the fourth quarter to the second quarter of this year and lower costs associated with certain biomass facilities being economically dispatched off-line, which was partially offset by lower alternative fuel tax credits and normal cost escalations.

Operating income increased by $17 million, or 27%, to $80 million compared with 2010 as a result of higher recycled metal revenues, service fee contract escalations, higher tip fee volume, and timing of scheduled maintenance activities offset by lower energy pricing.

Adjusted EBITDA was $146 million, up $17 million or 13% from the prior year comparative period, largely driven by higher waste and recycled metals revenues and lower maintenance expense. These benefits were partially offset by reduced debt service pass through billings and lower energy revenue.

Free Cash Flow was $65 million compared to $82 million in the prior year comparative period. The decline was primarily due to a semi-annual high yield interest payment and the expected working capital changes, offset by improved operating performance, as discussed above.

Adjusted EPS was $0.26 or a 37% increase compared to $0.19 in the prior year comparative period, with the increase attributable to improved operating income and a lower number of shares outstanding due to the Company's common stock buyback program, partially offset by a higher effective tax rate and increased interest expense.

2012 Guidance
The Company is establishing guidance for 2012 for the following key metrics:

 
                                     Continuing Operations
                                  --------------------------- ------------
                                    Full Year    Full Year     % Change At
                                   2011 Actual  2012 Guidance   Midpoint
                                  ------------ -------------- ------------
                                   (Unaudited, $ in millions,
                                   except per share amounts)
Adjusted EBITDA                   $        492 $  500 - $ 530            5%
Free Cash Flow                    $        280 $  250 - $ 280           (5)%
Adjusted EPS                      $       0.52 $0.55 - $ 0.65           15%

Commenting on Covanta's 2012 outlook, Anthony Orlando continued, "Our team continues to execute on our operational and organic growth initiatives. This positions us nicely to deliver earnings growth again this year, even in the face of challenging energy markets. Furthermore, we continue to successfully extend our long-term municipal client partnerships to support continued growth for years to come."

Conference Call Information
Covanta will host a conference call at 8:30 am (Eastern) on Thursday, February 9, 2012 to discuss its fourth quarter results. The conference call will begin with prepared remarks, which will be followed by a question and answer session. To participate, please dial 877-806-3982 approximately 10 minutes prior to the scheduled start of the call. If calling from outside of the United States, please dial 702-928-7062. Please utilize conference ID number 44475437 when prompted by the conference call operator. The conference call will also be webcast live from the Investor Information section of the Company's website. A presentation will be made available during the call and will be found on 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) on Thursday, February 9, 2012. To access the replay, please dial 855-859-2056 or 800-585-8367, or from outside of the United States 404-537-3406 and use the replay conference ID number 44475437. The webcast will also be archived on www.covantaenergy.com.

10-K Filing Update
The Company expects its 2011 Annual Report on Form 10-K to be filed the week of February 13, 2012.

About Covanta
Covanta Energy 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 46 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 create 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 grow its business as expected or 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 to 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    Twelve Months
                                                  Ended           Ended
                                              December 31,    December 31,
                                             --------------  --------------
                                              2011    2010    2011    2010
                                             ------  ------  ------  ------
                                                       (Unaudited)
                                             (In millions, except per share
                                                        amounts)
Operating revenues
  Waste and service revenues                 $  282  $  270  $1,082  $1,036
  Electricity and steam sales                    99     104     400     420
  Other operating revenues                       49      45     168     127
                                             ------  ------  ------  ------
    Total operating revenues                    430     419   1,650   1,583
                                             ------  ------  ------  ------
Operating expenses
  Plant operating expenses                      222     228     962     943
  Other operating expenses                       41      43     143     120
  General and administrative expenses            29      27     103     103
  Depreciation and amortization expense          51      48     193     190
  Net interest expense on project debt            7       8      31      38
  Write-down of assets (A)                        -       2       -      34
                                             ------  ------  ------  ------
    Total operating expenses                    350     356   1,432   1,428
                                             ------  ------  ------  ------
Operating income                                 80      63     218     155
                                             ------  ------  ------  ------
Other income (expense)
  Investment income                               -       -       1       1
  Interest expense                              (17)    (13)    (67)    (45)
  Non-cash convertible debt related expense      (5)     (9)    (25)    (39)
  Loss on extinguishment of debt (B)              -     (15)     (1)    (15)
  Other expenses, net                            (6)      -     (19)      -
                                             ------  ------  ------  ------
      Total other expenses                      (28)    (37)   (111)    (98)
                                             ------  ------  ------  ------
Income from continuing operations before
 income tax expense and equity in net income
 from unconsolidated investments                 52      26     107      57
Income tax expense                              (25)     (6)    (28)    (24)
Equity in net income from unconsolidated
 investments                                      2       1       5       2
                                             ------  ------  ------  ------
Income from continuing operations                29      21      84      35
                                             ------  ------  ------  ------
Income from discontinued operations, net of
 income tax expense of $0, $3, $3 and $8,
 respectively (C)                                (1)      4     143      36
                                             ------  ------  ------  ------
Net Income                                       28      25     227      71
                                             ------  ------  ------  ------
Noncontrolling interests:
Less: Net income from continuing operations
 attributable to noncontrolling interests in
 subsidiaries                                    (2)     (1)     (5)     (5)
Less: Net income from discontinued
 operations attributable to noncontrolling
 interests in subsidiaries (C)                    -      (1)     (3)     (4)
                                             ------  ------  ------  ------
Total net income attributable to
 noncontrolling interests in subsidiaries        (2)     (2)     (8)     (9)
                                             ------  ------  ------  ------
Net Income Attributable to Covanta Holding
 Corporation                                 $   26  $   23  $  219  $   62
                                             ======  ======  ======  ======


Amounts Attributable to Covanta Holding
 Corporation stockholders':
  Continuing operations                      $   27  $   20  $   79  $   30
  Discontinued operations (C)                    (1)      3     140      32
                                             ------  ------  ------  ------
Net Income Attributable to Covanta Holding
 Corporation                                 $   26  $   23  $  219  $   62
                                             ======  ======  ======  ======

Earnings Per Share Attributable to Covanta
 Holding Corporation stockholders':
Basic
  Continuing operations                      $ 0.20  $ 0.13  $ 0.56  $ 0.19
  Discontinued operations (C)                 (0.01)   0.02    0.99    0.21
                                             ------  ------  ------  ------
  Covanta Holding Corporation                $ 0.19  $ 0.15  $ 1.55  $ 0.40
                                             ======  ======  ======  ======
Weighted Average Shares                         136     151     141     153
                                             ======  ======  ======  ======

Diluted
  Continuing operations                      $ 0.20  $ 0.13  $ 0.56  $ 0.19
  Discontinued operations (C)                 (0.01)   0.02    0.98    0.21
                                             ------  ------  ------  ------
  Covanta Holding Corporation                $ 0.19  $ 0.15  $ 1.54  $ 0.40
                                             ======  ======  ======  ======
Weighted Average Shares                         137     152     142     154
                                             ======  ======  ======  ======

Cash Dividend Declared Per Share:            $0.075  $    -  $ 0.30  $ 1.50
                                             ======  ======  ======  ======


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

  Adjusted EPS (D)                           $ 0.26  $ 0.19  $ 0.52  $ 0.42



(A) In 2010, we recorded a non-cash write-down of assets related to a note
 receivable from our Harrisburg EfW facility, 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.

(B) As a result of the purchase of 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.

(C) During the first quarter of 2011, we completed the sale of our majority
 equity interests in a 106 MW (gross) heavy fuel-oil fired electric power
 generation facility in Tamil Nadu, India ("Samalpatti") and we completed
 the sale of our interests in a 510 MW (gross) coal-fired electric power
 generation facility in the Philippines ("Quezon"). The Quezon assets sold
 consisted of our entire interest in Covanta Philippines Operating, Inc.,
 which provided operation and maintenance services to the facility, as well
 as our 26% ownership interest in the project company, Quezon Power, Inc.
 In October 2011, we completed the sale of our interests in a 106 MW
 (gross) heavy fuel-oil fired electric power generation facility in Tamil
 Nadu, India ("Madurai"). The Madurai assets sold included our entire
 interest in Covanta Madurai Operating Private Limited, which provided
 operation and maintenance services to the facility, as well as our
 approximately 77% ownership interest in the project company, Madurai Power
 Corporation Private Ltd. We received a combined total of cash proceeds of
 approximately $255 million, net of transaction costs. During the three and
 twelve months ended December 31, 2011, we recorded a net after-tax (loss)
 gain on assets held for sale of $(1) million and $119 million,
 respectively.

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


Covanta Holding Corporation                                       Exhibit 2
Consolidated Balance Sheets
 

                                                             As of December
                                                                  31,
                                                            ---------------
                                                              2011    2010
                                                            ------- -------
                                                             (Unaudited)
                                                             (In millions,
                                                               except per
                                                             share amounts)
                           ASSETS
Current:
  Cash and cash equivalents                                 $   232 $   126
  Restricted funds held in trust                                101     126
  Receivables (less allowances of $5 and $3, respectively)      260     272
  Unbilled service receivables                                   20      23
  Deferred income taxes                                          28      27
  Prepaid expenses and other current assets                     105     110
  Assets held for sale (A)                                       18     191
                                                            ------- -------
Total Current Assets                                            764     875
  Property, plant and equipment, net                          2,423   2,478
  Investments in fixed maturities at market (cost: $31 and
   $29, respectively)                                            31      29
  Restricted funds held in trust                                 90     107
  Unbilled service receivables                                   25      32
  Waste, service and energy contracts, net                      434     472
  Other intangible assets, net                                   78      79
  Goodwill                                                      232     230
  Investments in investees and joint ventures                    43      46
  Other assets                                                  265     328
                                                            ------- -------
Total Assets                                                $ 4,385 $ 4,676
                                                            ======= =======

                   LIABILITIES AND EQUITY
Current:
  Current portion of long-term debt                         $    32 $     7
  Current portion of project debt                               147     141
  Accounts payable                                               25      23
  Deferred revenue                                               61      72
  Accrued expenses and other current liabilities                211     186
  Liabilities held for sale (A)                                   3      34
                                                            ------- -------
Total Current Liabilities                                       479     463
  Long-term debt                                              1,454   1,558
  Project debt                                                  533     662
  Deferred income taxes                                         633     605
  Waste and service contracts                                    76      89
  Other liabilities                                             122     140
                                                            ------- -------
Total Liabilities                                             3,297   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 158 and 157 shares; outstanding 136 and 150
   shares)                                                       16      16
  Additional paid-in capital                                    824     893
  Accumulated other comprehensive income                          1       5
  Accumulated earnings                                          244     213
  Treasury stock, at par                                         (2)     (1)
                                                            ------- -------
     Total Covanta Holding Corporation stockholders' equity   1,083   1,126
  Noncontrolling interests in subsidiaries                        5      33
                                                            ------- -------
Total Equity                                                  1,088   1,159
                                                            ------- -------
Total Liabilities and Equity                                $ 4,385 $ 4,676
                                                            ======= =======

(A) For additional information, see Exhibit 1 - Note C of this Press
Release.


Covanta Holding Corporation                                        Exhibit 3
Consolidated Statements of Cash Flow

                                                             Twelve Months
                                                                 Ended
                                                             December 31,
                                                           ----------------
                                                             2011     2010
                                                           -------  -------
                                                            (Unaudited, in
                                                               millions)
OPERATING ACTIVITIES:
Net income                                                 $   227  $    71
  Less: Income from discontinued operations, net of tax
   expense                                                     143       36
                                                           -------  -------
Income from continuing operations                               84       35

Adjustments to reconcile net income from continuing
 operations to net cash provided by operating activities
 from continuing operations:
  Depreciation and amortization expense                        193      190
  Write-down of assets                                           -       34
  Loss on extinguishment of debt                                 1       15
  Non-cash convertible debt related expense                     25       39
  Stock-based compensation expense                              18       17
  Deferred income taxes                                         30       20
  Other, net                                                     4       10
  Change in restricted funds held in trust                       4       11
  Reversal of uncertain tax positions related to pre-
   emergence tax matters                                       (24)       -
  Contractual liability to pre-petition creditors               15        -
  Change in restricted funds-other related to contractual
   liability to pre-petition creditors                           5        -
  Change in working capital, net of effects of
   acquisitions                                                  5       21
                                                           -------  -------
  Net cash provided by operating activities from
   continuing operations                                       360      392
  Net cash provided by operating activities from
   discontinued operations                                       1       39
                                                           -------  -------
Net cash provided by operating activities                      361      431
                                                           -------  -------
INVESTING ACTIVITIES:
  Proceeds from asset sales                                     12       12
  Purchase of property, plant and equipment                   (118)    (115)
  Acquisition of noncontrolling interests in subsidiaries        -       (2)
  Acquisition of businesses, net of cash acquired              (10)    (130)
  Acquisition of land use rights                                (8)     (19)
  Other, net                                                   (12)     (21)
                                                           -------  -------
Net cash used in investing activities from continuing
 operations                                                   (136)    (275)
Net cash provided by investing activities from
 discontinued operations                                       243        -
                                                           -------  -------
Net cash provided by (used in) investing activities            107     (275)
                                                           -------  -------
FINANCING ACTIVITIES:
  Proceeds from borrowings on long-term debt                     -      400
  Payment of deferred financing costs                            -      (10)
  Principal payments on long-term debt                         (39)    (320)
  Principal payments on project debt                          (137)    (202)
  Payments of borrowings on revolving credit facility            -      (79)
  Proceeds from borrowings on project debt                      15       39
  Proceeds from borrowings on revolving credit facility          -       79
  Change in restricted funds held in trust                      38        3
  Cash dividends paid to stockholders                          (32)    (233)
  Common stock repurchased                                    (229)     (95)
  Financings of insurance premiums, net                         10      (10)
  Payments to pre-petition creditors                           (12)       -
  Decrease in restricted funds for pre-petition creditors       12        -
  Other financing, net                                          (7)      19
                                                           -------  -------
Net cash used in financing activities from continuing
 operations                                                   (381)    (409)
Net cash provided by (used in) financing activities from
 discontinued operations                                         8      (40)
                                                           -------  -------
Net cash used in financing activities                         (373)    (449)
                                                           -------  -------
Effect of exchange rate changes on cash and cash
 equivalents                                                    (1)      (1)
                                                           -------  -------
Net increase (decrease) in cash and cash equivalents            94     (294)

Cash and cash equivalents at beginning of period               140      434
                                                           -------  -------
Cash and cash equivalents at end of period                     234      140
Less: Cash and cash equivalents of discontinued operations
 at end of period                                                2       14
                                                           -------  -------
Cash and cash equivalents of continuing operations at end
 of period                                                 $   232  $   126
                                                           =======  =======


Covanta Holding Corporation                                        Exhibit 4
Reconciliation of Diluted Income Per Share to Adjusted EPS


                             Three Months     Twelve Months
                                Ended             Ended
                             December 31,      December 31,      Full Year
                          ----------------- -----------------
                            2011     2010     2011     2010   Estimated 2012
                          -------- -------- -------  -------- --------------
                                     (Unaudited)
Continuing Operations -
 Diluted Earnings Per
 Share                    $   0.20 $   0.13 $  0.56  $   0.19  $0.55 - $0.65
Reconciling Items (A)         0.06     0.06   (0.04)     0.23        -
                          -------- -------- -------  -------- --------------
Adjusted EPS              $   0.26 $   0.19 $  0.52  $   0.42  $0.55 - $0.65
                          ======== ======== =======  ======== ==============

(A) For details related to the Reconciling Items, see Exhibit 4A of this
 Press Release.

Covanta Holding Corporation                                       Exhibit 4A
Reconciling Items

                                              Three Months    Twelve Months
                                                  Ended           Ended
                                              December 31,    December 31,
                                             --------------  --------------
                                              2011    2010    2011    2010
                                             ------  ------  ------  ------
                                                       (Unaudited)
                                             (In millions, except per share
                                                        amounts)
Reconciling Items
Loss on extinguishment of debt (A)           $    -  $   15  $    1  $   15
Effect on income of derivative instruments
 not designated as hedging instruments           (2)      -      (2)     (1)
Effect of foreign exchange loss on
 indebtedness (B)                                 6       -       4       -
Gain on sales of businesses (C)                  (8)      -      (9)      -
Development costs                                 5       -       5       -
Contractual liability to pre-petition
 creditors (D)                                    -       -      15       -
Non-cash write-down of loan issued for the
 Harrisburg EfW facility to fund certain
 facility improvements (E)                        -       -       -       7
Non-cash write-down of capitalized costs
 related to the Dublin development project
 (E)                                              -       -       -      23
Non-cash write-down of corporate real estate
 (E)                                              -       1       -       3
                                             ------  ------  ------  ------
   Total Reconciling Items, pre-tax               1      16      14      47
Pro forma income tax impact (F)                   7      (2)      3      (9)
Grantor trust activity                            -      (4)      1      (2)
Reversal of uncertain tax positions related
 to pre-emergence tax matters (D)                 -       -     (24)      -
                                             ------  ------  ------  ------
   Total Reconciling Items, net of tax       $    8  $   10  $   (6) $   36
                                             ======  ======  ======  ======

Diluted Earnings Per Share Impact            $ 0.06  $ 0.06   (0.04) $ 0.23
                                             ======  ======  ======  ======
Weighted Average Diluted Shares Outstanding     137     152     142     154
                                             ======  ======  ======  ======


(A) As a result of the purchase of 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.

(B) During the three and twelve months ended December 31, 2011, we recorded
 foreign exchange losses related to intercompany loans of approximately $6
 million and $4 million, respectively.

(C) In 2011, we recorded a $9 million gain related to the sale of two
 landfill gas projects. We received cash proceeds of approximately $12
 million.

(D) For the twelve months ended December 31, 2011, the income tax provision
 includes a $24 million benefit due to the reversal of uncertain tax
 positions, following the expiration of applicable statutes of limitations
 related to pre-emergence tax matters in the Covanta Energy bankruptcy.
 Since March 2004, we have held $20 million in restricted funds intended to
 cover those uncertain tax positions. The restricted funds were included in
 other assets on our consolidated balance sheet. The expiration of the
 statutes of limitations triggered a liability to pre-petition claimants of
 approximately 73% of the restricted fund balance. Therefore, we recorded
 approximately $15 million as other expense during the year ended December
 31, 2011. As of December 31, 2011, $12 million was paid to pre-petition
 claimants and $3 million of the non-current restricted funds was
 reclassified to other current assets on our consolidated balance sheet and
 is expected to be paid to third party claimants in the first half of 2012.
 The remaining $5 million was reclassified to cash and cash equivalents on
 our consolidated balance sheet as of December 31, 2011.

(E) In 2010, we recorded a non-cash write-down of assets related to a note
 receivable from our Harrisburg EfW facility, 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.

(F) There is minimal tax benefit from the contractual liability to pre-
 petition creditors and the non-cash write-down related to the Dublin
 assets. As a result, these items had an impact on the effective tax rate
 in the third quarter of 2010 and fourth quarter of 2011. Accordingly, we
 are presenting this pro forma calculation of the income tax effect on all
 reconciling items for each period to illustrate the pro forma impact on
 income tax expense and net income. The pro forma income tax impact
 represents the tax provision amount related to the overall tax provision
 calculated without the reconciling items when compared to the tax
 provision reported under GAAP in the consolidated statement of income.

Covanta Holding Corporation                                       Exhibit 4B
Effective Tax Rate

                             Three Months      Twelve Months
                                 Ended             Ended
                             December 31,      December 30,       Full Year
                           ----------------  ----------------
                                                                 Estimated
                             2011     2010     2011     2010        2012
                           -------  -------  -------  -------  -------------
                                       (Unaudited)
Effective Tax Rate (A)        48.7%    21.1%    26.8%    41.3%     40% - 45%


(A) Our full year effective tax rate ("ETR") increased during the fourth
quarter of 2011. The primary cause for this increase resulted from the
reversal in the third quarter of uncertain tax positions related to pre-
emergence tax matters. GAAP required the tax benefit from the reversal of
the tax reserve to be recognized in full during third quarter while the ETR
including the related non-deductible pre-tax expense is calculated on a full
year basis. This resulted in a decrease of the ETR in the third quarter of
2011 followed by a large increase to the ETR for the fourth quarter of 2011.
The ETR for the fourth quarter is in line with expectations. The full year
ETR decreased for 2011 primarily due to the reversal of uncertain tax
positions related to pre-emergence tax matters.



Covanta Holding Corporation                                        Exhibit 5
Reconciliation of Net Income to Adjusted EBITDA

                                      Three Months Twelve Months
                                         Ended         Ended
                                      December 31,  December 31,  Full Year
                                     ------------- -------------
                                                                  Estimated
                                      2011   2010   2011   2010      2012
                                     ------ ------ ------ ------ -----------
                                       (Unaudited, in millions)

Net Income from Continuing
 Operations Attributable to Covanta
 Holding Corporation                 $   27 $   20 $   79 $   30   $75 - $90

Depreciation and amortization
 expense                                 51     48    193    190   196 - 190

Debt service:
  Net interest expense on project
   debt                                   7      8     31     38
  Interest expense                       17     13     67     45
  Non-cash convertible debt related
   expense                                5      9     25     39
  Investment income                       -      -     (1)    (1)
                                     ------ ------ ------ ------
Subtotal debt service                    29     30    122    121   148 - 138

Income tax expense (adjusted for
 reversal of uncertain tax positions
 related to pre-emergence tax
 matters) (A)                            25      6     52     24     45 - 65

Reversal of uncertain tax positions
 related to pre-emergence tax
 matters (A)                              -      -    (24)     -

Contractual liability to pre-
 petition creditors (A)                   -      -     15      -

Write-down of assets (B)                  -      2      -     34

Development costs                         5      -      5      -

Loss on extinguishment of debt (C)        -     15      1     15

Gain on sale of business (D)             (8)     -     (9)     -

Net income attributable to
 noncontrolling interests in
 subsidiaries                             2      1      5      5       3 - 8

Other adjustments:
  Debt service billings in excess of
   revenue recognized (E)                 1      5     22     29
  Non-cash compensation expense           5      4     18     17
  Other non-cash items (F)                9     (2)    13      5
                                     ------ ------ ------ ------
Subtotal other adjustments               15      7     53     51     33 - 39

                                     ------ ------ ------ ------
Total adjustments                       119    109    413    440

                                     ------ ------ ------ ------ -----------
Adjusted EBITDA - Continuing
 Operations                          $  146 $  129 $  492 $  470 $500 - $530
                                     ====== ====== ====== ====== ===========



(A) See Exhibit 4A - Note D of this Press Release.

(B) See Exhibit 4A - Note E of this Press Release.

(C) See Exhibit 4A - Note A of this Press Release.

(D) See Exhibit 4A - Note C of this Press Release.

(E) Formally labeled "Decrease in Unbilled Service Receivables". This amount
 represents a true-up between (a) revenue recognized in the period for
 client payments of project debt principal under service fee contract
 structures, which is accounted for on a straight-line basis over the term
 of the project debt, and (b) actual billings to clients for debt principal
 payments in the period. As a result of this adjustment, Adjusted EBITDA
 reflects the actual amounts billed to clients for debt service principal,
 not the straight-lined revenue as recognized.

(F) 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,    Full Year
                                --------------  --------------
                                                                 Estimated
                                 2011    2010    2011    2010       2012
                                ------  ------  ------  ------  -----------
                                   (Unaudited, in millions)

Cash flow provided by operating
 activities from continuing
 operations                     $   84  $   99  $  360  $  392  $330 - $370
Less: Maintenance capital
 expenditures (A)                  (19)    (17)    (80)    (74)  (80) - (90)
                                ------  ------  ------  ------  -----------
Continuing Operations Free Cash
 Flow                           $   65  $   82  $  280  $  318  $250 - $280
                                ======  ======  ======  ======  ===========

Weighted Average Diluted Shares
 Outstanding                       137     152     142     154

Uses of Continuing Operations
 Free Cash Flow
-------------------------------
Investments:
  Acquisition of businesses,
   net of cash acquired         $    -  $   (2) $  (10) $ (130)
  Non-maintenance capital
   expenditures                     (8)    (15)    (38)    (41)
  Acquisition of land use
   rights                            -       -      (8)    (19)
  Acquisition of noncontrolling
   interests in subsidiaries         -       -       -      (2)
  Other investing activities,
   net (B)                          (6)     (7)    (12)    (21)
                                ------  ------  ------  ------
Total investments               $  (14) $  (24) $  (68) $ (213)
                                ------  ------  ------  ------

Return of capital to
 stockholders:
  Cash dividends paid to
   stockholders                 $  (10) $    -  $  (32) $ (233)
  Common stock repurchased         (26)    (58)   (229)    (95)
                                ------  ------  ------  ------
Total return of capital to
 stockholders                   $  (36) $  (58) $ (261) $ (328)
                                ------  ------  ------  ------

Capital raising activities:
  Net proceeds from issuance of
   corporate debt (C)           $    -  $  390  $    -  $  390
  Net proceeds from issuance of
   project debt (D)                  -       5      15      10
  Net proceeds from asset sales     12      12      12      12
  Other financing activities,
   net                               2      11      (1)     27
                                ------  ------  ------  ------
Net proceeds from capital
 raising activities             $   14  $  418  $   26  $  439
                                ------  ------  ------  ------

Debt repayments:
  Net cash used for scheduled
   principal payments on
   project debt (E)             $  (23) $  (27) $  (99) $ (170)
  Net cash used for scheduled
   principal payments on long-
   term debt                        (2)     (2)     (7)     (7)
  Optional repayment of
   corporate debt                    -    (313)    (32)   (313)
  Fees incurred for debt
   redemption                        -      (2)      -      (2)
                                ------  ------  ------  ------
Total debt repayments           $  (25) $ (344) $ (138) $ (492)
                                ------  ------  ------  ------

Short-term borrowing activities
 - Financing of insurance
 premiums, net                  $   10  $    -  $   10  $  (10)

Distributions to partners of
 noncontrolling interests in
 subsidiaries                   $   (1) $   (2) $   (6) $   (6)

Effect of exchange rate changes
 on cash and cash equivalents   $    3  $    -  $    1  $    -

                                ------  ------  ------  ------
Net change in cash and cash
 equivalents from continuing
 operations                     $   16  $   72  $ (156) $ (292)
                                ======  ======  ======  ======


(A) 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                 $  (19) $  (17) $  (80) $  (74)
  Capital expenditures
   associated with construction     (1)     (7)    (16)    (21)
  Capital expenditures
   associated with technology
   development                      (3)     (1)     (6)     (6)
  Capital expenditures
   associated with organic
   growth initiatives               (1)      -      (4)      -
  Capital expenditures - other      (3)     (7)    (12)    (14)
                                ------  ------  ------  ------
Total purchases of property,
 plant and equipment            $  (27) $  (32) $ (118) $ (115)
                                ======  ======  ======  ======

(B) Other investing activities is primarily comprised of net payments from
 the purchase/sale of investment securities and business development
 expenses.

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

Proceeds from borrowings on
 long-term debt                 $    -  $  400  $    -  $  400
Less: Financing costs related
 to issuance of long-term debt       -     (10)      -     (10)
                                ------  ------  ------  ------
Net proceeds from issuance of
 corporate debt                 $    -  $  390  $    -  $  390
                                ======  ======  ======  ======

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

Proceeds from issuance of
 project debt                   $    -  $   34  $   15  $   39
Less: Proceeds used to repay
 project debt (refinancing)          -     (29)      -     (29)
                                ------  ------  ------  ------
Net proceeds from issuance of
 project debt                   $    -  $    5  $   15  $   10
                                ======  ======  ======  ======

(E) Calculated as follows:

Total principal payments on
 project debt                   $  (54) $ (100) $ (137) $ (202)
Decrease in related restricted
 funds held in trust                31      44      38       3
Less: Repayments from cash
 prior to scheduled
 amortization, final maturity
 or investor put                     -      29       -      29
                                ------  ------  ------  ------
Net cash used for principal
 payments on project debt       $  (23) $  (27) $  (99) $ (170)
                                ======  ======  ======  ======



Covanta Holding Corporation                                        Exhibit 7
Capitalization Information


                                                         As of December 31,
                                                        -------------------
                                                           2011      2010
                                                        --------- ---------
                                                           (Unaudited, in
Cash and Cash Equivalents:                                   millions)
Domestic                                                $      49 $      68
International                                                 174        52
Insurance Subsidiary                                            9         6
                                                        --------- ---------
Total Cash and Cash Equivalents                         $     232 $     126
                                                        ========= =========

Restricted Funds Held in Trust: (A)
  Debt Service - Principal                              $     113 $     157
  Debt Service - Interest                                       8         6
                                                        --------- ---------
Debt Service Funds - Total                                    121       163
Revenue Funds                                                  16        18
Other Funds                                                    54        52
                                                        --------- ---------
Total Restricted Funds Held in Trust                    $     191 $     233
                                                        ========= =========

(A) 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.



                                                                  Exhibit 7A

                                   As of December 31,    As of December 31,
                                          2011                  2010
                                 --------------------- ---------------------
                                 Face Value Book Value Face Value Book Value
                                 ---------- ---------- ---------- ----------
Corporate Debt:                            (Unaudited, in millions)

Revolving Credit Facility        $        - $        - $        - $        -
Term Loan Facility                      619        619        626        626
7.25% Senior Notes due 2020             400        400        400        400
3.25% Cash Convertible Senior
 Notes due 2014                         460        442        460        485
1.00% Senior Convertible
 Debentures due 2027                     25         25         57         54
                                 ---------- ---------- ---------- ----------
Total corporate debt (including
 current portion)                $    1,504 $    1,486 $    1,543 $    1,565
                                 ---------- ---------- ---------- ----------

Project Debt:
Domestic project debt - service
 fee facilities                  $      291 $      295 $      395 $      402
Domestic project debt - tip fee
 facilities                             355        359        386        391
International project debt               26         26         10         10
                                 ---------- ---------- ---------- ----------
Total project debt (including
 current portion)                $      672 $      680 $      791 $      803
                                 ---------- ---------- ---------- ----------

                                 ---------- ---------- ---------- ----------
Total Debt Outstanding           $    2,176 $    2,166 $    2,334 $    2,368
                                 ========== ========== ========== ==========

                                 ----------            ----------
Net Debt (A)                     $    1,831            $    2,051
                                 ==========            ==========

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


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



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



During years ended December 31, 2010 and 2011, the following amounts were
 returned to stockholders:


                                                       Weighted  % of Common
                                                        Average     Stock
                                              Shares   Cost Per  Outstanding
                                    Amount Repurchased   Share  Repurchased
                                    ------ ----------- -------- ------------
Common Stock Repurchased (A)
Q3 2010                             $   37         2.5 $  14.69     1.6 %
Q4 2010                                 58         3.6 $  16.16     2.4 %
                                    ------ -----------
FY 2010 sub-total:                  $   95         6.1 $  15.56     4.0 %
                                    ------ -----------
Q1 2011                                 54         3.2 $  16.84     2.1 %
Q2 2011                                 70         4.2 $  16.58     2.9 %
Q3 2011                                 81         5.2 $  15.58     3.6 %
Q4 2011 (B)                             25         1.8 $  14.22     1.3 %
                                    ------ -----------
FY 2011 sub-total:                  $  230        14.4 $  15.99     9.9 %
                                    ------ -----------
Total Common Stock Repurchased      $  325        20.5 $  15.86    13.9 %
                                    ------ -----------

Cash Dividends Declared to
 Stockholders (C)
FY 2010                             $  233
                                    ------
Q1 2011                                 11
Q2 2011                                 11
Q3 2011                                 10
Q4 2011                                 10
                                    ------
FY 2011 sub-total:                  $   42
                                    ------
Total Cash Dividends Declared to
 Stockholders                       $  275
                                    ------

                                    ------
Total Return to Stockholders        $  600
                                    ======


(A) On June 17, 2010, the Board of Directors increased the authorization to
 repurchase shares of outstanding common stock to $150 million. On March
 14, May 6, and September 22, 2011, the Board of Directors approved an
 additional $50 million, $100 million and $100 million, respectively, of
 share repurchase authorization, bringing the total authorized amount to
 $400 million. As of December 31, 2011, the amount remaining under our
 currently authorized share repurchase program was $75 million.

(B) Approximately $1 million of common stock repurchased during the three
 months ended December 31, 2011 was paid in January 2012.

(C) 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. On March 14, 2011, the Board of Directors
 approved a quarterly regular cash dividend of $0.075 per share. The Q1
 2011 payment was made on April 12, 2011 to stockholders of record as of
 the close of business on March 30, 2011. The Q2 2011 payment was made on
 July 6, 2011 to stockholders of record as of the close of business on June
 22, 2011. The Q3 2011 payment was made on October 14, 2011 to stockholders
 of record as of the close of business on October 3, 2011. The Q4 2011
 payment was made on January 5, 2012 to stockholders of record as of the
 close of business on December 21, 2011.



Covanta Holding Corporation                                        Exhibit 9
Consolidated Reconciliation of Cash Flow Provided by Operating
 Activities to Adjusted EBITDA



                                  Three Months    Twelve Months
                                      Ended           Ended
                                  December 31,    December 31,    Full Year
                                 --------------  --------------
                                                                  Estimated
                                  2011    2010    2011    2010       2012
                                 ------  ------  ------  ------  -----------
                                    (Unaudited, in millions)
Cash flow provided by operating
 activities from continuing
 operations                      $   84  $   99  $  360  $  392  $330 - $370

Debt service                         29      30     122     121    148 - 138

Change in working capital            72      32      (5)    (21)
Change in restricted funds held
 in trust                           (39)    (32)     (4)    (11)
Non-cash convertible debt
 related expense                     (5)     (9)    (25)    (39)
Equity in net income from
 unconsolidated investments           2       1       5       2
Dividends from unconsolidated
 investments                         (3)     (1)     (8)     (5)
Current tax provision                18       7      (2)      4
Reversal of uncertain tax
 positions related to pre-
 emergence tax matters (A)            -       -      24       -
Contractual liability to pre-
 petition creditors (A)             (15)      -     (15)      -
Change in restricted funds-other
 related to contractual
 liability to pre-petition
 creditors (A)                        -       -      (5)      -
Other                                 3       2      45      27
                                 ------  ------  ------  ------  -----------
  Sub-total                          33       -      10     (43)          22
                                 ------  ------  ------  ------  -----------

Adjusted EBITDA - Continuing
 Operations                      $  146  $  129  $  492  $  470  $500 - $530
                                 ======  ======  ======  ======  ===========


(A) See Exhibit 4A - Note D of this Press Release.



Covanta Holding Corporation                                       Exhibit 10
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 and/or
 turbine units resume operations. This scheduled maintenance typically
 occurs during periods of off-peak electric demand and/or lower waste
 volumes, which are our first, second and fourth fiscal quarters. The first
 half of the year scheduled maintenance period is typically the most
 extensive. The third quarter scheduled maintenance period is typically the
 least extensive. Given these factors, we typically experience our lowest
 operating income from our projects during the first half of each year. The
 aggregate of all other components of plant operating expense is relatively
 consistent each quarter of the year.


                                            Three Months     Twelve Months
                                               Ended             Ended
                                            December 31,      December 31,
                                         ----------------- -----------------
                                           2011     2010     2011     2010
                                         -------- -------- -------- --------
                                                    (Unaudited, in
                                                      millions)
Plant Operating Expenses:
Plant maintenance (A)                    $     44 $     56 $    231 $    232
All other                                     171      166      703      685
                                         -------- -------- -------- --------
Plant operating expenses                 $    215 $    222 $    934 $    917
                                         ======== ======== ======== ========


(A) Plant maintenance costs include our internal maintenance team and non-
 facility employee costs for facility scheduled and unscheduled maintenance
 and repair expenses.



                                                                     Exhibit
Covanta Holding Corporation - Americas Segment                           11A
Statistics - (Unaudited, in millions, except percentages)

Boiler Availability                                         Twelve Months
                                                                Ended
                                                            December 31,
                                                         ------------------
                                                           2011      2010
                                                         --------  --------
EfW Facilities                                               91.7%     91.2%



Waste and Service Revenue                                Twelve Months Ended
                                                             December 31,
                                                         -------------------
                                                            2011      2010
                                                         --------- ---------
Waste and service revenue unrelated to project debt      $     953 $     902
Revenue earned explicitly to service project debt -
 principal                                                      42        60
Revenue earned explicitly to service project debt -
 interest                                                       11        18
Recycled metals revenue                                         74        55
                                                         --------- ---------
Total                                                    $   1,080 $   1,035
                                                         ========= =========



Energy Revenue and Megawatt hours (MWhs) At Market and Contracted by
 Facility Type

                                 Twelve Months Ended December 31,
                     -------------------------------------------------------
                                 2011                        2010
                     --------------------------- ---------------------------
                                          % of                        % of
                     Revenue   Volume    Total   Revenue   Volume    Total
                        (A)   (A), (B)   Volume     (A)   (A), (B)   Volume
                     -------- -------- --------- -------- -------- ---------
EfW
  At Market          $     79      1.3    23%    $    102      1.6    28%
  Contracted &
   Hedged                 227      3.4    61%         211      3.1    54%

Biomass
  At Market                12      0.2     4%          10      0.2     4%
  Contracted               58      0.6    11%          75      0.8    14%
                     -------- -------- --------- -------- -------- ---------
Total (B)            $    376      5.5    100%   $    398      5.7    100%
                     ======== ======== ========= ======== ======== =========

(A) Covanta share only
(B) Steam converted to MWhs
(C) Percentages may not sum to total due to rounding



Projected Energy Megawatt hours (MWhs) At Market and Contracted by Facility
 Type (A)

                                                           Full Year 2012E
                                                          As of January 1,
                                                                2012
                                                        --------------------
EfW
  At Market                                                      1.6
  Contracted & Hedged                                            3.3

Biomass
  At Market                                                      0.3
  Contracted                                                     0.5
  Economically Dispatched (Available to run)                     0.4
                                                        --------------------

Total                                                            6.1
                                                        ====================

(A) Covanta share only



Covanta Holding Corporation - Americas Segment                   Exhibit 11B
Statistics - (Unaudited, in millions, except percentages and
 pricing data in Economic Drivers Section)


Recycled Metal Net Revenue by Type (A)

                                                         Twelve Months Ended
                                                             December 31,
                                                         -------------------
                                                            2011      2010
                                                         --------- ---------
Ferrous Metal                                            $      60 $      43
Non-Ferrous Metal                                               14        12
                                                         --------- ---------
Total                                                    $      74 $      55
                                                         ========= =========

(A) Covanta share only



Recycled Metal Gross Tons Recovered by Type (A)

                                                         Twelve Months Ended
                                                             December 31,
                                                         -------------------
                                                            2011      2010
                                                         --------- ---------
Ferrous Metal                                                0.414     0.400
Non-Ferrous Metal                                            0.016     0.014
                                                         --------- ---------
Total                                                        0.430     0.414
                                                         ========= =========

(A) Gross volume: Both Covanta and client share



Published U.S. Economic Drivers(A)

                                                         As of December 31,
                                                         ------------------
                                                           2011      2010
                                                         --------  --------
Consumer Price Index (B)                                      3.0%      1.5%
PJM Pricing (Electricity)(C)                             $  48.31  $  50.85
Henry Hub Pricing (Natural Gas) (D)                      $   4.04  $   4.38
#1 HMS Pricing (Ferrous Metals) (E)                      $ 386.67  $ 373.67

(A) While these drivers impact our business, there is not an exact
 correlation between our results and changes in these metrics.
(B) Represents the year-over-year percent change in the Headline CPI
 number. The Consumer Price Index (CPI-U) data is provided by the U.S.
 Department of Labor Bureau of Labor Statistics.
(C) Average price per MWh for full year 2011 and 2010. Pricing for the PJM
 PSEG Zone is provided by the PJM ISO.
(D) Average price per MMBtu for full year 2011 and 2010. The Henry Hub
 Pricing data is provided by the Natural Gas Weekly Update, Energy
 Information Administration, Washington, DC. Nebraska Energy Office,
 Lincoln, NE.
(E) The #1 Heavy Melt Steel (HMS) composite index ($/gross ton) as provided
 by American Metal Market on December 12, 2011 and December 13, 2010.



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 results prepared in accordance with GAAP, we use the measures of Adjusted EBITDA, Free Cash Flow, and Adjusted EPS, which are non-GAAP measures as defined by the Securities and Exchange Commission. The non-GAAP financial measures of Adjusted EBITDA, Free Cash Flow, 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 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 for continuing operations.

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, 2011. 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, 2011 and 2010, reconciled for each such periods to net loss from continuing operations and cash flow provided by operating activities from continuing operations, 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 from continuing operations 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, 2011 and 2010, reconciled for each such periods to cash flow provided by operating activities from continuing operations, which we believe to be the most directly comparable measure 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 (Loss) 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 or restructuring of businesses, gains and losses on assets held for sale, 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.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EPS for the three and twelve months ended December 31, 2011 and 2010, reconciled for each such periods to diluted earnings per share from continuing operations, which is believed to be the most directly comparable measure under GAAP.

Contact:
Investor Contacts
Alan Katz
1.862.345.5456
Clare Rauseo
1.862.345.5236
Email Contact
Media Contact
James Regan
1.862.345.5216

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