þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-6021257
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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445 South Street, Morristown, NJ
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07960
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(Address of Principal Executive Office)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Class
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Outstanding at July 31, 2014
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Common Stock, $0.10 par value
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130,930,910
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PART I. FINANCIAL INFORMATION
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Page
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PART II. OTHER INFORMATION
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OTHER
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•
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seasonal or long-term fluctuations in the prices of energy, waste disposal, scrap metal and commodities;
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•
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our ability to renew or replace expiring contracts at comparable prices and with other acceptable terms;
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•
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adoption of new laws and regulations in the United States and abroad, including energy laws, environmental laws, labor laws and healthcare laws;
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•
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our ability to utilize net operating loss carryforwards;
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•
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failure to maintain historical performance levels at our facilities and our ability to retain the rights to operate facilities we do not own;
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•
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our ability to avoid adverse publicity relating to our business;
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•
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advances in technology;
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•
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difficulties in the operation of our facilities, including fuel supply and energy delivery interruptions, failure to obtain regulatory approvals, equipment failures, labor disputes and work stoppages, and weather interference and catastrophic events;
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•
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difficulties in the financing, development and construction of new projects and expansions, including increased construction costs and delays;
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•
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limits of insurance coverage;
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•
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our ability to avoid defaults under our long-term contracts;
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•
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performance of third parties under our contracts and such third parties' observance of laws and regulations;
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•
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concentration of suppliers and customers;
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•
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geographic concentration of facilities;
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•
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increased competitiveness in the energy and waste industries;
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•
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changes in foreign currency exchange rates;
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•
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limitations imposed by our existing indebtedness and our ability to perform our financial obligations and guarantees and to refinance our existing indebtedness;
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•
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exposure to counterparty credit risk and instability of financial institutions in connection with financing transactions;
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•
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the scalability of our business;
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•
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restrictions in our certificate of incorporation and debt documents regarding strategic alternatives;
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•
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failures of disclosure controls and procedures and internal controls over financial reporting;
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•
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our ability to attract and retain talented people;
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•
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general economic conditions in the United States and abroad, including the availability of credit and debt financing; and
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•
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other risks and uncertainties affecting our businesses described in Item 1A. Risk Factors of Covanta's Annual Report on Form 10-K for the year ended December 31, 2013 and in other filings by Covanta with the SEC.
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2014
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2013
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2014
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2013
|
||||||||
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(Unaudited)
(In millions, except per share amounts) |
||||||||||||||
OPERATING REVENUES:
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||||||||
Waste and service revenues
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$
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267
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$
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257
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$
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508
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$
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487
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Recycled metals revenues
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25
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17
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46
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33
|
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||||
Energy revenues
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110
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|
103
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230
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|
|
205
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||||
Other operating revenues
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30
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|
|
34
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|
|
49
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|
|
58
|
|
||||
Total operating revenues
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432
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|
411
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833
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783
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OPERATING EXPENSES:
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Plant operating expenses
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268
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250
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550
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530
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||||
Other operating expenses
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29
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25
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47
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|
42
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||||
General and administrative expenses
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26
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21
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47
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42
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||||
Depreciation and amortization expense
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53
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52
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106
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105
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||||
Net interest expense on project debt
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2
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|
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4
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|
|
5
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7
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||||
Net write-offs
|
7
|
|
|
4
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|
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16
|
|
|
4
|
|
||||
Total operating expenses
|
385
|
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356
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|
|
771
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730
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||||
Operating income
|
47
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|
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55
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|
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62
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53
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||||
Other expenses:
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||||||||
Interest expense
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(33
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)
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(29
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)
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(62
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)
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(58
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)
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||||
Non-cash convertible debt related expense
|
(5
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)
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(7
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)
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(13
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)
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(14
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)
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||||
Loss on extinguishment of debt
|
—
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—
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(2
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)
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(1
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)
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||||
Total other expenses
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(38
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)
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(36
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)
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(77
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)
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(73
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)
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||||
Income (loss) from continuing operations before income tax (expense) benefit and equity in net income (loss) from unconsolidated investments
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9
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19
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(15
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)
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(20
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)
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||||
Income tax (expense) benefit
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(10
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)
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(7
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)
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4
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9
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Equity in net income from unconsolidated investments
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2
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1
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3
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|
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—
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||||
Income (loss) from continuing operations
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1
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13
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(8
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)
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(11
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)
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||||
Loss from discontinued operations, net of income tax benefit of $0, $0, $0 and $1, respectively
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—
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(51
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)
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—
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(53
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)
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||||
NET INCOME (LOSS)
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1
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(38
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)
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(8
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)
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(64
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)
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||||
Less: Net loss from continuing operations attributable to noncontrolling interests in subsidiaries
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—
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—
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—
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1
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||||
NET INCOME (LOSS) ATTRIBUTABLE TO COVANTA HOLDING CORPORATION
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$
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1
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$
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(38
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)
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$
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(8
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)
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$
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(63
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)
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Amounts Attributable to Covanta Holding Corporation stockholders:
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Continuing operations
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$
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1
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|
|
$
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13
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|
|
$
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(8
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)
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$
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(10
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)
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Discontinued operations
|
—
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(51
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)
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—
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(53
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)
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||||
Net Income (Loss) Attributable to Covanta Holding Corporation
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$
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1
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|
|
$
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(38
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)
|
|
$
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(8
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)
|
|
$
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(63
|
)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
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2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
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(Unaudited)
(In millions, except per share amounts) |
||||||||||||||
Income (Loss) Per Share Attributable to Covanta Holding Corporation stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Discontinued operations
|
—
|
|
|
(0.39
|
)
|
|
—
|
|
|
(0.41
|
)
|
||||
Covanta Holding Corporation
|
$
|
—
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.49
|
)
|
Weighted Average Shares
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Discontinued operations
|
—
|
|
|
(0.39
|
)
|
|
—
|
|
|
(0.41
|
)
|
||||
Covanta Holding Corporation
|
$
|
—
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.49
|
)
|
Weighted Average Shares
|
131
|
|
|
130
|
|
|
129
|
|
|
129
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash Dividend Declared Per Share:
|
$
|
0.18
|
|
|
$
|
0.165
|
|
|
$
|
0.36
|
|
|
$
|
0.33
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(Unaudited)
(In millions)
|
||||||||||||||
Net income (loss)
|
$
|
1
|
|
|
$
|
(38
|
)
|
|
$
|
(8
|
)
|
|
$
|
(64
|
)
|
Foreign currency translation
|
1
|
|
|
—
|
|
|
(2
|
)
|
|
(5
|
)
|
||||
Adjustment for defined benefit pension plan settlement, net of tax benefit of $0, $0, $0 and $2, respectively
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Pension and postretirement plan unrecognized benefits, net of tax expense of $0, $0, $0 and $1, respectively
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Net unrealized (loss) gain on derivative instruments, net of tax benefit of $1, $1, $3 and $0, respectively
|
(1
|
)
|
|
2
|
|
|
(5
|
)
|
|
—
|
|
||||
Net unrealized gain (loss) on available for sale securities, net of tax expense of $0, $0, $0 and $0, respectively
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
||||
Other comprehensive income (loss) attributable to Covanta Holding Corporation
|
1
|
|
|
1
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Comprehensive income (loss)
|
2
|
|
|
(37
|
)
|
|
(14
|
)
|
|
(70
|
)
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Comprehensive loss attributable to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Comprehensive income (loss) attributable to Covanta Holding Corporation
|
$
|
2
|
|
|
$
|
(37
|
)
|
|
$
|
(14
|
)
|
|
$
|
(69
|
)
|
|
For the Six Months Ended
June 30, |
||||||
|
2014
|
|
2013
|
||||
|
(Unaudited, in millions)
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(8
|
)
|
|
$
|
(64
|
)
|
Less: Loss from discontinued operations, net of tax expense
|
—
|
|
|
(53
|
)
|
||
Loss from continuing operations
|
(8
|
)
|
|
(11
|
)
|
||
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities from continuing operations:
|
|
|
|
||||
Depreciation and amortization expense
|
106
|
|
|
105
|
|
||
Amortization of long-term debt deferred financing costs
|
4
|
|
|
4
|
|
||
Amortization of debt premium and discount
|
—
|
|
|
(1
|
)
|
||
Net write-offs
|
16
|
|
|
4
|
|
||
Pension plan settlement gain
|
—
|
|
|
(6
|
)
|
||
Loss on extinguishment of debt
|
2
|
|
|
1
|
|
||
Non-cash convertible debt related expense
|
13
|
|
|
14
|
|
||
Stock-based compensation expense
|
8
|
|
|
9
|
|
||
Equity in net income from unconsolidated investments
|
(3
|
)
|
|
—
|
|
||
Dividends from unconsolidated investments
|
10
|
|
|
6
|
|
||
Deferred income taxes
|
1
|
|
|
(6
|
)
|
||
Other, net
|
1
|
|
|
(6
|
)
|
||
Change in restricted funds held in trust
|
1
|
|
|
8
|
|
||
Change in working capital
|
(8
|
)
|
|
(17
|
)
|
||
Total adjustments for continuing operations
|
151
|
|
|
115
|
|
||
Net cash provided by operating activities from continuing operations
|
143
|
|
|
104
|
|
||
Net cash used in operating activities from discontinued operations
|
—
|
|
|
(7
|
)
|
||
Net cash provided by operating activities
|
143
|
|
|
97
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Proceeds from the sale of investment securities
|
4
|
|
|
4
|
|
||
Purchase of investment securities
|
(2
|
)
|
|
(15
|
)
|
||
Purchase of property, plant and equipment
|
(115
|
)
|
|
(97
|
)
|
||
Acquisition of noncontrolling interest in subsidiary
|
—
|
|
|
(14
|
)
|
||
Other, net
|
(1
|
)
|
|
(3
|
)
|
||
Net cash used in investing activities from continuing operations
|
(114
|
)
|
|
(125
|
)
|
||
Net cash provided by investing activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash used in investing activities
|
(114
|
)
|
|
(125
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from borrowings on long-term debt
|
400
|
|
|
—
|
|
||
Payment of deferred financing costs
|
(10
|
)
|
|
(1
|
)
|
||
Principal payments on long-term debt
|
(556
|
)
|
|
(2
|
)
|
||
Payments related to Cash Conversion Option
|
(83
|
)
|
|
—
|
|
||
Proceeds from settlement of Note Hedge
|
83
|
|
|
—
|
|
||
Principal payments on project debt
|
(18
|
)
|
|
(29
|
)
|
||
Payments of borrowings on revolving credit facility
|
(221
|
)
|
|
(206
|
)
|
||
Proceeds from borrowings on revolving credit facility
|
391
|
|
|
292
|
|
||
Change in restricted funds held in trust
|
1
|
|
|
(3
|
)
|
||
Cash dividends paid to stockholders
|
(45
|
)
|
|
(22
|
)
|
||
Common stock repurchased
|
—
|
|
|
(34
|
)
|
||
Other, net
|
5
|
|
|
(18
|
)
|
||
Net cash used in financing activities from continuing operations
|
(53
|
)
|
|
(23
|
)
|
||
Net cash (used in) provided by financing activities from discontinued operations
|
(2
|
)
|
|
10
|
|
||
Net cash used in financing activities
|
(55
|
)
|
|
(13
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1
|
)
|
|
—
|
|
||
Net decrease in cash and cash equivalents
|
(27
|
)
|
|
(41
|
)
|
||
Cash and cash equivalents at beginning of period
|
200
|
|
|
246
|
|
||
Cash and cash equivalents at end of period
|
173
|
|
|
205
|
|
||
Less: Cash and cash equivalents of discontinued operations at end of period
|
1
|
|
|
5
|
|
||
Cash and cash equivalents of continuing operations at end of period
|
$
|
172
|
|
|
$
|
200
|
|
|
Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Operating expenses
|
$
|
—
|
|
|
$
|
53
|
|
|
$
|
1
|
|
|
$
|
57
|
|
Loss before income tax expense and equity in net income from unconsolidated investments
|
$
|
—
|
|
|
$
|
(51
|
)
|
|
$
|
—
|
|
|
$
|
(54
|
)
|
Loss from discontinued operations, net of income tax benefit of $0, $0, $0 and $1, respectively
|
$
|
—
|
|
|
$
|
(51
|
)
|
|
$
|
—
|
|
|
$
|
(53
|
)
|
Write-off of capitalized development costs included in Operating expenses
|
$
|
—
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
47
|
|
|
As of
|
||||||
|
June 30,
2014 |
|
December 31,
2013 |
||||
Cash and cash equivalents
|
$
|
1
|
|
|
$
|
2
|
|
Accounts receivable
|
—
|
|
|
2
|
|
||
Other noncurrent assets
|
3
|
|
|
3
|
|
||
Assets held for sale
|
$
|
4
|
|
|
$
|
7
|
|
Accrued expenses and other
|
$
|
1
|
|
|
$
|
2
|
|
Liabilities held for sale
|
$
|
1
|
|
|
$
|
2
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income (loss) from continuing operations
|
$
|
1
|
|
|
$
|
13
|
|
|
$
|
(8
|
)
|
|
$
|
(10
|
)
|
Net loss from discontinued operations
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(53
|
)
|
||||
Net income (loss) attributable to Covanta Holding Corporation
|
$
|
1
|
|
|
$
|
(38
|
)
|
|
$
|
(8
|
)
|
|
$
|
(63
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Weighted average basic common shares outstanding
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
||||
Continuing operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Discontinued operations
|
—
|
|
|
(0.39
|
)
|
|
—
|
|
|
(0.41
|
)
|
||||
Basic income (loss) per share
|
$
|
—
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Weighted average basic common shares outstanding
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
||||
Dilutive effect of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of restricted stock
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of convertible securities
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average diluted common shares outstanding
|
131
|
|
|
130
|
|
|
129
|
|
|
129
|
|
||||
Continuing operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Discontinued operations
|
—
|
|
|
(0.39
|
)
|
|
—
|
|
|
(0.41
|
)
|
||||
Diluted income (loss) per share
|
$
|
—
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Securities excluded from the weighted average dilutive common shares outstanding because their inclusion would have been anti-dilutive:
|
|
|
|
|
|
|
|
||||
Stock options
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
Restricted stock
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Warrants
|
30
|
|
|
29
|
|
|
30
|
|
|
29
|
|
|
|
As of June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
Noncontrolling interests in subsidiaries, balance as of beginning of period
|
|
$
|
4
|
|
|
$
|
7
|
|
Acquisition of noncontrolling interests in subsidiaries
|
|
(8
|
)
|
|
(2
|
)
|
||
Net loss
|
|
—
|
|
|
(1
|
)
|
||
Noncontrolling interests in subsidiaries, balance as of end of period
|
|
$
|
(4
|
)
|
|
$
|
4
|
|
|
North America
|
|
All Other
(1)
|
|
Total
|
||||||
Three Months Ended June 30, 2014
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
420
|
|
|
$
|
12
|
|
|
$
|
432
|
|
Depreciation and amortization expense
|
52
|
|
|
1
|
|
|
53
|
|
|||
Net write-offs
|
7
|
|
|
—
|
|
|
7
|
|
|||
Operating income (loss)
|
51
|
|
|
(4
|
)
|
|
47
|
|
|||
Three Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
402
|
|
|
$
|
9
|
|
|
$
|
411
|
|
Depreciation and amortization expense
|
52
|
|
|
—
|
|
|
52
|
|
|||
Net write-offs
|
4
|
|
|
—
|
|
|
4
|
|
|||
Operating income (loss)
|
57
|
|
|
(2
|
)
|
|
55
|
|
|||
|
|
|
|
|
|
||||||
|
North America
|
|
All Other
(1)
|
|
Total
|
||||||
Six Months Ended June 30, 2014
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
811
|
|
|
$
|
22
|
|
|
$
|
833
|
|
Depreciation and amortization expense
|
104
|
|
|
2
|
|
|
106
|
|
|||
Net write-offs
|
16
|
|
|
—
|
|
|
16
|
|
|||
Operating income (loss)
|
66
|
|
|
(4
|
)
|
|
62
|
|
|||
Six Months Ended June 30, 2013
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
765
|
|
|
$
|
18
|
|
|
$
|
783
|
|
Depreciation and amortization expense
|
104
|
|
|
1
|
|
|
105
|
|
|||
Net write-offs
|
4
|
|
|
—
|
|
|
4
|
|
|||
Operating income (loss)
|
57
|
|
|
(4
|
)
|
|
53
|
|
(1)
|
All other is comprised of the financial results of our insurance subsidiaries’ operations and our international assets.
|
|
As of
|
||||||
|
June 30,
2014 |
|
December 31,
2013 |
||||
LONG-TERM DEBT:
|
|
|
|
||||
Revolving credit facility
|
$
|
280
|
|
|
$
|
110
|
|
|
|
|
|
||||
Term loan
|
199
|
|
|
294
|
|
||
Debt discount related to Term loan
|
—
|
|
|
(1
|
)
|
||
Term loan, net
|
199
|
|
|
293
|
|
||
Credit Facilities Sub-total
|
$
|
479
|
|
|
$
|
403
|
|
7.25% Senior Notes due 2020
|
$
|
400
|
|
|
$
|
400
|
|
6.375% Senior Notes due 2022
|
400
|
|
|
400
|
|
||
5.875% Senior Notes due 2024
|
400
|
|
|
—
|
|
||
|
|
|
|
||||
3.25% Cash Convertible Senior Notes due 2014
|
—
|
|
|
460
|
|
||
Debt discount related to 3.25% Cash Convertible Senior Notes
|
—
|
|
|
(13
|
)
|
||
Cash conversion option derivative at fair value
|
—
|
|
|
78
|
|
||
3.25% Cash Convertible Senior Notes, net
|
—
|
|
|
525
|
|
||
Notes Sub-total
|
$
|
1,200
|
|
|
$
|
1,325
|
|
4.00% - 5.25% Tax-Exempt Bonds due from 2024 to 2042
|
$
|
335
|
|
|
$
|
335
|
|
Variable Rate Tax-Exempt Bonds due 2043
|
22
|
|
|
22
|
|
||
Tax-Exempt Bonds Sub-total
|
$
|
357
|
|
|
$
|
357
|
|
Total long-term debt
|
$
|
2,036
|
|
|
$
|
2,085
|
|
Less: current portion (includes $0 and $13 of unamortized discount, respectively, and $0 and $78 of cash conversion option derivative at fair value, respectively)
|
(2
|
)
|
|
(528
|
)
|
||
Noncurrent long-term debt
|
$
|
2,034
|
|
|
$
|
1,557
|
|
PROJECT DEBT:
|
|
|
|
||||
North America project debt
|
|
|
|
||||
4.00% - 7.00% project debt related to Service Fee structures due 2014 through 2022
|
$
|
152
|
|
|
$
|
167
|
|
5.248% - 8.375% project debt related to Tip Fee structures due 2014 through 2020
|
44
|
|
|
45
|
|
||
Unamortized debt premium, net
|
1
|
|
|
1
|
|
||
Total North America project debt
|
197
|
|
|
213
|
|
||
Other project debt
|
22
|
|
|
23
|
|
||
Total project debt
|
219
|
|
|
236
|
|
||
Less: Current project debt (includes $1 and $1 of unamortized premium, respectively)
|
(48
|
)
|
|
(55
|
)
|
||
Noncurrent project debt
|
$
|
171
|
|
|
$
|
181
|
|
TOTAL CONSOLIDATED DEBT
|
$
|
2,255
|
|
|
$
|
2,321
|
|
Less: Current debt
|
(50
|
)
|
|
(583
|
)
|
||
TOTAL NONCURRENT CONSOLIDATED DEBT
|
$
|
2,205
|
|
|
$
|
1,738
|
|
•
|
extend the termination date of the Revolving Credit Facility by two years from
March 28, 2017
to
March 21, 2019
;
|
•
|
increase the aggregate amount of the Revolving Credit Facility by
$100 million
to
$1.0 billion
; and
|
•
|
reduce the applicable margin payable on the Term Loan by
25
basis points, as noted below under
Interest and Fees
.
|
•
|
incur additional indebtedness (including guarantee obligations);
|
•
|
create certain liens against or security interests over certain property;
|
•
|
pay dividends on, redeem, or repurchase our capital stock or make other restricted junior payments;
|
•
|
enter into agreements that restrict the ability of our subsidiaries to make distributions or other payments to us;
|
•
|
make investments;
|
•
|
consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis;
|
•
|
dispose of certain assets; and
|
•
|
make certain acquisitions.
|
•
|
a maximum Leverage Ratio of
4.00
to 1.00 for the trailing four quarter period, which measures the principal amount of Covanta Energy’s consolidated debt less certain restricted funds dedicated to repayment of project debt principal and construction costs (“Consolidated Adjusted Debt”) to its adjusted earnings before interest, taxes, depreciation and amortization, as calculated in the Credit Agreement (“Adjusted EBITDA”). The definition of Adjusted EBITDA in the Credit Facilities excludes certain non-recurring and non-cash charges.
|
•
|
a minimum 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, as calculated in the Credit Agreement.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Waste and service revenue unrelated to project debt
|
$
|
261
|
|
|
$
|
248
|
|
|
$
|
496
|
|
|
$
|
469
|
|
Revenue earned explicitly to service project debt - principal
|
5
|
|
|
8
|
|
|
10
|
|
|
16
|
|
||||
Revenue earned explicitly to service project debt - interest
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Total waste and service revenue
|
$
|
267
|
|
|
$
|
257
|
|
|
$
|
508
|
|
|
$
|
487
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Construction costs
|
$
|
28
|
|
|
$
|
32
|
|
|
$
|
45
|
|
|
$
|
54
|
|
Insurance subsidiary operating expenses
|
1
|
|
|
1
|
|
|
2
|
|
|
3
|
|
||||
Defined benefit pension plan settlement gain
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Other
(2)
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(9
|
)
|
||||
Total other operating expenses
|
$
|
29
|
|
|
$
|
25
|
|
|
$
|
47
|
|
|
$
|
42
|
|
(1)
|
During the first quarter of 2013, we recorded a gain related to the final settlement of our defined benefit pension plan. For additional information, refer to
Note 16. Employee Benefit Plans of the Notes to Consolidated Financial Statements in our Form 10-K
.
|
(2)
|
During the three months ended June 30, 2013, we recognized operating income of
$8 million
related to early termination of a power purchase agreement.
|
|
Waste, Service and
Energy Contract Intangibles
(Amortization Expense)
|
|
Waste, Service and Other
Contract Intangibles
(Contra-Expense)
|
||||
Six Months Ended June 30, 2014
|
$
|
15
|
|
|
$
|
(6
|
)
|
Remainder of 2014
|
$
|
14
|
|
|
$
|
(5
|
)
|
2015
|
25
|
|
|
(6
|
)
|
||
2016
|
22
|
|
|
(6
|
)
|
||
2017
|
15
|
|
|
(4
|
)
|
||
2018
|
13
|
|
|
(2
|
)
|
||
Thereafter
|
244
|
|
|
(1
|
)
|
||
Total
|
$
|
333
|
|
|
$
|
(24
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Americas segment:
|
|
|
|
|
|
|
|
||||||||
Write-off of intangible asset - Hudson Valley EfW facility
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
Write-off of intangible asset - Abington Transfer Station
(2)
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Write-off of loan issued for the Harrisburg EfW facility to fund certain facility improvements
(3)
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Total net write-offs
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
16
|
|
|
$
|
4
|
|
(1)
|
See
Hudson Valley Energy-from-Waste Facility
discussion below.
|
(2)
|
See
Abington Transfer Station
discussion below.
|
(3)
|
See
Harrisburg Energy-from-Waste Facility
discussion below.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Debt discount accretion related to the 3.25% Notes
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
13
|
|
|
$
|
14
|
|
Fair value changes related to the cash convertible note hedge
|
(4
|
)
|
|
—
|
|
|
(5
|
)
|
|
(36
|
)
|
||||
Fair value changes related to the cash conversion option derivative
|
4
|
|
|
—
|
|
|
5
|
|
|
36
|
|
||||
Total non-cash convertible debt related expense
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
13
|
|
|
$
|
14
|
|
|
Total
|
||
Balance as of December 31, 2013
|
$
|
249
|
|
Purchase price allocation correction associated with the ARC Holdings acquisition in June 2005 (See Note 8)
|
47
|
|
|
Balance as of June 30, 2014
|
$
|
296
|
|
|
Foreign Currency Translation
|
|
Pension and Other Postretirement Plan Unrecognized Net Gain (Loss)
|
|
Net Unrealized Loss on Derivatives
|
|
Net Unrealized Gain on Securities
|
|
Total
|
||||||||||
Balance December 31, 2012
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
7
|
|
Other comprehensive (loss) income before reclassifications
|
(5
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Net current period comprehensive (loss)
|
(5
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Balance June 30, 2013
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance December 31, 2013
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(5
|
)
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
Other comprehensive (loss) income before reclassifications
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
|
1
|
|
|
(6
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net current period comprehensive (loss) income
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
|
1
|
|
|
(6
|
)
|
|||||
Balance June 30, 2014
|
$
|
(2
|
)
|
|
$
|
2
|
|
|
$
|
(10
|
)
|
|
$
|
2
|
|
|
$
|
(8
|
)
|
|
As of June 30, 2014
|
||
|
Unrecognized stock-
based compensation
|
|
Weighted-average years
to be recognized
|
Restricted Stock Awards
|
$ 12
|
|
1.6
|
Restricted Stock Units
|
$ 4
|
|
2.0
|
•
|
For cash and cash equivalents, restricted funds, and marketable securities, the carrying value of these amounts is a reasonable estimate of their fair value. The fair value of restricted funds held in trust is based on quoted market prices of the investments held by the trustee.
|
•
|
Fair values for long-term debt and project debt are determined using quoted market prices.
|
•
|
The fair value of the note hedge and the cash conversion option are determined using an option pricing model based on observable inputs such as implied volatility, risk free interest rate, and other factors. The fair value of the note hedge is adjusted to reflect counterparty risk of non-performance, and is based on the counterparty’s credit spread in the credit derivatives market. The contingent interest features related to the Debentures and the 3.25% Notes are valued quarterly using the present value of expected cash flow models incorporating the probabilities of the contingent events occurring.
|
|
|
|
|
As of
|
||||||
Financial Instruments Recorded at Fair Value on a Recurring Basis:
|
|
Fair Value Measurement Level
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
|
|
|
(In millions)
|
||||||
Assets:
|
|
|
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
|
|
1
|
|
$
|
164
|
|
|
$
|
195
|
|
Money market funds
|
|
1
|
|
8
|
|
|
3
|
|
||
Total cash and cash equivalents:
|
|
|
|
172
|
|
|
198
|
|
||
Restricted funds held in trust:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
|
|
1
|
|
3
|
|
|
4
|
|
||
Money market funds
|
|
1
|
|
50
|
|
|
52
|
|
||
U.S. Treasury/Agency obligations
(1)
|
|
1
|
|
1
|
|
|
2
|
|
||
State and municipal obligations
|
|
1
|
|
95
|
|
|
97
|
|
||
Commercial paper/Guaranteed investment contracts/Repurchase agreements
|
|
1
|
|
15
|
|
|
12
|
|
||
Total restricted funds held in trust:
|
|
|
|
164
|
|
|
167
|
|
||
Restricted funds — other:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
(2)(3)
|
|
1
|
|
1
|
|
|
1
|
|
||
Money market funds
(3)
|
|
1
|
|
3
|
|
|
5
|
|
||
Residential mortgage-backed securities
(3)
|
|
1
|
|
1
|
|
|
1
|
|
||
Total restricted funds other:
|
|
|
|
5
|
|
|
7
|
|
||
Investments:
|
|
|
|
|
|
|
||||
Mutual and bond funds
(2)(3)
|
|
1
|
|
14
|
|
|
13
|
|
||
Investments available for sale:
|
|
|
|
|
|
|
||||
U.S. Treasury/Agency obligations
(4)
|
|
1
|
|
7
|
|
|
6
|
|
||
Residential mortgage-backed securities
(4)
|
|
1
|
|
9
|
|
|
10
|
|
||
Other government obligations
(4)
|
|
1
|
|
5
|
|
|
4
|
|
||
Corporate investments
(4)
|
|
1
|
|
10
|
|
|
12
|
|
||
Equity securities
(3)
|
|
1
|
|
3
|
|
|
4
|
|
||
Total investments:
|
|
|
|
48
|
|
|
49
|
|
||
Derivative Asset — Note Hedge
|
|
2
|
|
—
|
|
|
78
|
|
||
Total assets:
|
|
|
|
$
|
389
|
|
|
$
|
499
|
|
Liabilities:
|
|
|
|
|
|
|
||||
Derivative Liability — Cash Conversion Option
|
|
2
|
|
$
|
—
|
|
|
$
|
78
|
|
Derivative Liabilities — Contingent interest features of the 3.25% Notes and Debentures
|
|
2
|
|
—
|
|
|
0
|
|
||
Derivative Liability — Energy Hedges
|
|
2
|
|
15
|
|
|
8
|
|
||
Total liabilities:
|
|
|
|
$
|
15
|
|
|
$
|
86
|
|
|
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||||||||||
Financial Instruments Recorded at Carrying Amount:
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
(5)
|
|
$
|
308
|
|
|
$
|
308
|
|
|
$
|
289
|
|
|
$
|
289
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
2,036
|
|
|
$
|
2,134
|
|
|
$
|
2,085
|
|
|
$
|
2,092
|
|
Project debt
|
|
$
|
219
|
|
|
$
|
232
|
|
|
$
|
236
|
|
|
$
|
248
|
|
(1)
|
The U.S. Treasury/Agency obligations in restricted funds held in trust are primarily comprised of Federal Home Loan Mortgage Corporation securities at fair value.
|
(2)
|
Included in other noncurrent assets in the condensed consolidated balance sheets.
|
(3)
|
Included in prepaid expenses and other current assets in the condensed consolidated balance sheets.
|
(4)
|
Included in investments in fixed maturities at market in the condensed consolidated balance sheets.
|
(5)
|
Includes
$24 million
of noncurrent receivables in other noncurrent assets in the condensed consolidated balance sheets as of both
June 30, 2014
and
December 31, 2013
.
|
|
As of June 30, 2014
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
Available-for-sale:
|
|
|
|
||||
One year or less
|
$
|
6
|
|
|
$
|
6
|
|
Over one year to five years
|
11
|
|
|
11
|
|
||
Over five years to ten years
|
14
|
|
|
14
|
|
||
More than ten years
|
—
|
|
|
—
|
|
||
Total fixed maturities
|
$
|
31
|
|
|
$
|
31
|
|
|
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||||||
Description of Investments
|
|
Fair
Value
|
|
Number of Investments
|
|
Fair
Value
|
|
Number of Investments
|
||||
U.S. Treasury and other direct U.S. Government obligations
|
|
$
|
3
|
|
|
4
|
|
$
|
6
|
|
|
8
|
Residential mortgage-backed securities
|
|
7
|
|
|
15
|
|
8
|
|
|
18
|
||
Other government obligations
|
|
2
|
|
|
6
|
|
1
|
|
|
3
|
||
Corporate bonds
|
|
2
|
|
|
4
|
|
2
|
|
|
3
|
||
Total fixed maturities
|
|
14
|
|
|
|
|
17
|
|
|
|
||
Equity securities
|
|
—
|
|
|
3
|
|
—
|
|
|
3
|
||
Total temporarily impaired investments
|
|
$
|
14
|
|
|
|
|
$
|
17
|
|
|
|
Derivative Instruments Not Designated
As Hedging Instruments
|
|
|
|
Fair Value as of
|
||||||
Balance Sheet Location
|
|
June 30,
2014 |
|
December 31,
2013 |
||||||
Asset Derivatives:
|
|
|
|
|
|
|
||||
Note Hedge
|
|
Note Hedge
|
|
$
|
—
|
|
|
$
|
78
|
|
Liability Derivatives:
|
|
|
|
|
|
|
||||
Cash Conversion Option
|
|
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
78
|
|
Contingent interest features of the Debentures and 3.25% Notes
|
|
|
|
$
|
—
|
|
|
$
|
0
|
|
|
|
Commitments Expiring by Period
|
||||||||||
|
|
Total
|
|
Less Than
One Year
|
|
More Than
One Year
|
||||||
Letters of credit
|
|
$
|
265
|
|
|
$
|
17
|
|
|
$
|
248
|
|
Surety bonds
|
|
312
|
|
|
—
|
|
|
312
|
|
|||
Total other commitments — net
|
|
$
|
577
|
|
|
$
|
17
|
|
|
$
|
560
|
|
•
|
holders may require us to repurchase their 7.25% Notes, 6.375% Notes, 5.875% Notes and Tax-Exempt Bonds if a fundamental change occurs; and
|
•
|
holders may exercise their conversion rights upon the occurrence of certain events, which would require us to pay the conversion settlement amount in cash.
|
•
|
Preserve and grow the value of our existing portfolio.
We intend to maximize the long-term value of our existing portfolio of facilities by continuously improving safety, health and environmental performance, working to provide superior customer service, continuing to operate at our historic production levels, maintaining our facilities in optimal condition, and extending waste and service contracts. We intend to achieve organic growth through expanding our customer base and service offerings, adding waste, service or energy contracts, seeking incremental revenue opportunities by investing in and enhancing the capabilities of our existing assets, and deploying new or improved technologies, systems, processes and controls targeted at increasing revenue or reducing costs.
|
•
|
Expand through acquisitions and/or development in selected attractive markets.
We seek to grow our portfolio primarily through acquisitions and the development of new facilities or businesses where we believe that market and regulatory conditions will enable us to utilize our skills and invest our capital at attractive risk-adjusted rates of return. We are currently focusing on opportunities in the United States, Canada, Ireland, and China.
|
•
|
Develop and commercialize new technology.
We believe that our efforts to protect and expand our business will be enhanced by the development of additional technologies in such fields as recycling, alternative waste treatment processes, gasification, combustion controls, emission controls and residue disposal. We have advanced our research and development efforts in some of these areas relevant to our EfW business, and have patents and patents pending for major advances in controlling nitrogen oxide (“NO
x
”) emissions.
|
•
|
Advocate for public policy favorable to EfW and other sustainable waste solutions.
We seek to educate policymakers and regulators about the environmental and economic benefits of energy-from-waste and advocate for policies and regulations that appropriately reflect these benefits. Our business is highly regulated, and as such we believe that it is critically important for us, as an industry leader, to play an active role in the debates surrounding potential policy developments that could impact our business.
|
•
|
Allocate capital efficiently for long-term shareholder value.
We plan to allocate capital to maximize shareholder value by: investing in our existing businesses to maintain and enhance assets; investing in strategic acquisitions or development projects, when available; and by returning surplus capital to our shareholders.
|
•
|
Maintain a focus on sustainability.
Our corporate culture is focused on themes of sustainability in all of its forms in support of our mission. We seek to achieve continuous improvement in environmental performance, beyond mere compliance with legally required standards.
|
•
|
increased our quarterly cash dividend by 9% to $0.72 per share on an annualized basis, and announced our expectation to further increase our dividend to $1.00 per share on an annualized basis beginning in the third quarter of 2014;
|
•
|
issued $400 million of 5.875% senior notes due March 2024 to fund the repayment of $460 million of 3.25% Cash Convertible Notes which matured on June 1, 2014; and
|
•
|
amended our Credit Facilities to:
|
◦
|
extend the termination date of our Revolving Credit Facility by two years from March 28, 2017 to March 21, 2019;
|
◦
|
increase the aggregate amount of the Revolving Credit Facility by $100 million to $1.0 billion; and
|
◦
|
lower the pricing on our Term Loan due 2019 by 0.25% from the prior rate.
|
Growth Investments (in millions):
|
Six Months Ended
June 30, 2014 |
||
Organic growth investments
|
$
|
16
|
|
New York City contract (intermodal equipment purchases and enhancements to existing facilities)
|
38
|
|
|
Total Organic Growth Investments and New York City contract
|
$
|
54
|
|
•
|
New strategic procurement practices to further leverage our scale and purchasing power; and
|
•
|
A multi-year effort to increase labor efficiency during maintenance outages. This is planned to be accomplished with a combination of best practices, enhanced planning and modest capital investments.
|
•
|
Upgrading and leveraging existing information technology systems to streamline processes; and
|
•
|
Centralization and reorganization of certain overhead functions, including accounting, finance, and procurement.
|
•
|
seasonal or long-term changes in market prices for waste, energy, or ferrous and non-ferrous metals for projects where we sell into those markets;
|
•
|
our ability to operate at historic performance levels as our facilities age, and the extent to which our annual maintenance expenditures increase over time;
|
•
|
our ability to avoid increases in operating and maintenance costs and unscheduled or extended outages while ensuring that adequate facility maintenance is conducted so that historic levels of operating performance can be sustained;
|
•
|
seasonal or geographic changes in the price and availability of wood waste as fuel for our biomass facilities;
|
•
|
seasonal, geographic and other variations in the heat content of waste processed, and thereby the amount of waste that can be processed by an EfW facility;
|
•
|
contract counterparties’ ability to fulfill their obligations, including the ability of our various municipal customers to supply waste in contractually committed amounts, and the availability of alternate or additional sources of waste if excess processing capacity exists at our facilities;
|
•
|
our ability to extend or replace existing waste and energy contracts, and the extent to which prevailing market conditions result in decreased or increased pricing or adjustment of other terms under such contracts;
|
•
|
the success or lack of success in implementing our organic growth programs which are focused on growing our waste revenue, increasing our metal revenue, managing our assets and improving efficiency to reduce cost;
|
•
|
the extent and success of our construction activity and the timing of payments we receive for such activity; and
|
•
|
the availability and adequacy of insurance to cover losses from business interruption in the event of casualty or other insured events.
|
|
|
Tip Fee
|
|
Service Fee
(Owned)
|
|
Service Fee
(Operated)
|
Number of facilities:
|
|
18
|
|
7
|
|
16
|
Client(s):
|
|
Host community and municipal and commercial waste customers
|
|
Host community, with limited merchant capacity in some cases
|
|
Dedicated to host community exclusively
|
Waste or service
revenue:
|
|
Per ton “tipping fee”
|
|
Fixed fee, with performance incentives and inflation escalation
|
||
Energy revenue:
|
|
Covanta retains 100%
|
|
Share with client
(Covanta retains approximately 20% on average)
|
||
Metals revenue:
|
|
Covanta retains 100%
|
|
Share with client
(Covanta typically retains approximately 50%)
|
||
Operating costs:
|
|
Covanta responsible for all operating costs
|
|
Pass through certain costs to municipal client
(e.g. ash disposal)
|
||
Project debt service:
|
|
Covanta project subsidiary responsible
|
|
Paid by client explicitly as part of service fee
|
|
Client responsible for debt service
|
After service contract
expiration:
|
|
N/A
|
|
Covanta owns the facility; clients have certain rights set forth in contracts; facility converts to Tip Fee or remains Service Fee with new terms
|
|
Client owns the facility; extend with Covanta or tender for new contract
|
|
|
Consolidated
|
|
North America
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Consolidated
|
|
North America
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Waste and service revenues
|
|
$
|
267
|
|
|
$
|
257
|
|
|
$
|
267
|
|
|
$
|
257
|
|
|
$
|
10
|
|
|
$
|
10
|
|
Recycled metals revenues
|
|
25
|
|
|
17
|
|
|
25
|
|
|
17
|
|
|
8
|
|
|
8
|
|
||||||
Energy revenues
|
|
110
|
|
|
103
|
|
|
99
|
|
|
96
|
|
|
7
|
|
|
3
|
|
||||||
Other operating revenues
|
|
30
|
|
|
34
|
|
|
29
|
|
|
32
|
|
|
(4
|
)
|
|
(3
|
)
|
||||||
Total operating revenues
|
|
432
|
|
|
411
|
|
|
420
|
|
|
402
|
|
|
21
|
|
|
18
|
|
||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Plant operating expenses
|
|
268
|
|
|
250
|
|
|
259
|
|
|
241
|
|
|
18
|
|
|
18
|
|
||||||
Other operating expenses
|
|
29
|
|
|
25
|
|
|
28
|
|
|
24
|
|
|
4
|
|
|
4
|
|
||||||
General and administrative expenses
|
|
26
|
|
|
21
|
|
|
25
|
|
|
21
|
|
|
5
|
|
|
4
|
|
||||||
Depreciation and amortization expense
|
|
53
|
|
|
52
|
|
|
52
|
|
|
52
|
|
|
1
|
|
|
—
|
|
||||||
Net interest expense on project debt
|
|
2
|
|
|
4
|
|
|
2
|
|
|
3
|
|
|
(2
|
)
|
|
(1
|
)
|
||||||
Net write-offs
|
|
7
|
|
|
4
|
|
|
7
|
|
|
4
|
|
|
3
|
|
|
3
|
|
||||||
Total operating expenses
|
|
385
|
|
|
356
|
|
|
373
|
|
|
345
|
|
|
29
|
|
|
28
|
|
||||||
Operating income
|
|
$
|
47
|
|
|
$
|
55
|
|
|
$
|
47
|
|
|
$
|
57
|
|
|
$
|
(8
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Plus: Net write-offs
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
|
|
|
|
|
||
Operating income excluding Net write-offs:
|
|
$
|
54
|
|
|
$
|
59
|
|
|
$
|
54
|
|
|
$
|
61
|
|
|
$
|
(5
|
)
|
|
$
|
(7
|
)
|
|
|
Consolidated
|
|
North America
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Consolidated
|
|
North America
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Waste and service revenues
|
|
$
|
508
|
|
|
$
|
487
|
|
|
$
|
507
|
|
|
$
|
486
|
|
|
$
|
21
|
|
|
$
|
21
|
|
Recycled metals revenues
|
|
46
|
|
|
33
|
|
|
46
|
|
|
33
|
|
|
13
|
|
|
13
|
|
||||||
Energy revenues
|
|
230
|
|
|
205
|
|
|
210
|
|
|
191
|
|
|
25
|
|
|
19
|
|
||||||
Other operating revenues
|
|
49
|
|
|
58
|
|
|
48
|
|
|
55
|
|
|
(9
|
)
|
|
(7
|
)
|
||||||
Total operating revenues
|
|
833
|
|
|
783
|
|
|
811
|
|
|
765
|
|
|
50
|
|
|
46
|
|
||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Plant operating expenses
|
|
550
|
|
|
530
|
|
|
532
|
|
|
513
|
|
|
20
|
|
|
19
|
|
||||||
Other operating expenses
|
|
47
|
|
|
42
|
|
|
46
|
|
|
40
|
|
|
5
|
|
|
6
|
|
||||||
General and administrative expenses
|
|
47
|
|
|
42
|
|
|
46
|
|
|
41
|
|
|
5
|
|
|
5
|
|
||||||
Depreciation and amortization expense
|
|
106
|
|
|
105
|
|
|
104
|
|
|
104
|
|
|
1
|
|
|
—
|
|
||||||
Net interest expense on project debt
|
|
5
|
|
|
7
|
|
|
5
|
|
|
6
|
|
|
(2
|
)
|
|
(1
|
)
|
||||||
Net write-offs
|
|
16
|
|
|
4
|
|
|
16
|
|
|
4
|
|
|
12
|
|
|
12
|
|
||||||
Total operating expenses
|
|
771
|
|
|
730
|
|
|
749
|
|
|
708
|
|
|
41
|
|
|
41
|
|
||||||
Operating income
|
|
$
|
62
|
|
|
$
|
53
|
|
|
$
|
62
|
|
|
$
|
57
|
|
|
$
|
9
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Plus: Net write-offs
|
|
$
|
16
|
|
|
$
|
4
|
|
|
$
|
16
|
|
|
$
|
4
|
|
|
|
|
|
||||
Operating income excluding Net write-offs:
|
|
$
|
78
|
|
|
$
|
57
|
|
|
$
|
78
|
|
|
$
|
61
|
|
|
$
|
21
|
|
|
$
|
17
|
|
•
|
same store revenues increased by $1 million, or 0.4%, driven by $4 million in price improvement due to contract escalation and special waste growth, offset by a $3 million reduction in revenue due to volume, as relatively less waste was processed at tip fee facilities (which earn revenue on a per-ton basis) as compared to service fee facilities (which earn a fixed operating fee);
|
•
|
an acquisition contributed $5 million; and
|
•
|
revenue earned explicitly to service project debt decreased by $4 million.
|
•
|
same store revenues increased by $12 million, or 2.7%, including $8 million in price improvement due to contract escalation and special waste growth, and $4 million in volume growth;
|
•
|
an acquisition contributed $9 million; and
|
•
|
revenue earned explicitly to service project debt decreased by $7 million.
|
Consolidated (in millions):
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Three Month
|
|
Six Month
|
||||||||||||
Waste and service revenue unrelated to project debt
|
|
$
|
261
|
|
|
$
|
248
|
|
|
$
|
496
|
|
|
$
|
469
|
|
|
$
|
13
|
|
|
$
|
27
|
|
Revenue earned explicitly to service project debt - principal
|
|
5
|
|
|
8
|
|
|
10
|
|
|
16
|
|
|
(3
|
)
|
|
(6
|
)
|
||||||
Revenue earned explicitly to service project debt - interest
|
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Total waste and service revenue
|
|
$
|
267
|
|
|
$
|
257
|
|
|
$
|
508
|
|
|
$
|
487
|
|
|
$
|
10
|
|
|
21
|
|
North America segment - EfW facilities - Tons
(1)
(in millions):
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
|
Variance
Increase (Decrease)
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Three Month
|
|
Six Month
|
||||||
Contracted
|
|
3.9
|
|
|
3.7
|
|
|
7.4
|
|
|
7.1
|
|
|
0.2
|
|
|
0.3
|
|
Internalization from Transfer Stations
|
|
0.3
|
|
|
0.1
|
|
|
0.4
|
|
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
Uncontracted
|
|
0.6
|
|
|
0.8
|
|
|
1.4
|
|
|
1.5
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
Total Tons
|
|
4.8
|
|
|
4.7
|
|
|
9.2
|
|
|
8.8
|
|
|
0.1
|
|
|
0.4
|
|
•
|
same store revenues increased by $10 million, driven by $7 million from higher volume of recovered metals, primarily as a result of the installation of new recovery systems, as well as $3 million from higher recycled metal pricing, due to both higher market prices and selling product at a higher percentage of underlying market indices; and
|
•
|
an acquisition contributed $1 million.
|
|
|
For the Quarters Ended
|
||||||||||
Recycled Metal Revenues (in millions):
|
|
2014
|
|
2013
|
|
2012
|
||||||
March 31,
|
|
$
|
21
|
|
|
$
|
16
|
|
|
$
|
20
|
|
June 30,
|
|
25
|
|
|
17
|
|
|
18
|
|
|||
September 30,
|
|
—
|
|
|
19
|
|
|
17
|
|
|||
December 31,
|
|
—
|
|
|
21
|
|
|
17
|
|
|||
Total for the Year Ended December 31,
|
|
N/A
|
|
|
$
|
73
|
|
|
$
|
72
|
|
|
|
Three Months Ended June 30,
|
||||||||||||
|
|
Recycled Metal Revenue by Type
(In millions)
|
|
Net Tons Recovered by Type
(In thousands)
(1)
|
||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||
Ferrous Metal
|
|
$
|
18
|
|
|
$
|
13
|
|
|
85
|
|
|
75
|
|
Non-Ferrous Metal
|
|
7
|
|
|
4
|
|
|
8
|
|
|
5
|
|
||
Total
|
|
$
|
25
|
|
|
$
|
17
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
•
|
same store revenues increased by $7 million, driven by $4 million in higher energy pricing and $3 million in higher energy production;
|
•
|
an acquisition contributed $1 million; and
|
•
|
revenue in connection with the transition of energy contracts to market prices declined by $3 million.
|
•
|
same store revenues increased by $11 million, driven by $10 million in higher energy pricing, primarily resulting from cold weather energy demands in the first quarter, and $1 million in higher energy production; and
|
•
|
an acquisition contributed $3 million.
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||||||||||||||
|
|
2014
|
|
2013
|
|
Variance
Increase (Decrease)
|
|||||||||||||||||||||
North America Segment:
|
|
Revenue
(1)
|
|
Volume
(1), (2)
|
|
% of Total Volume
|
|
Revenue
(1)
|
|
Volume
(1), (2)
|
|
% of Total Volume
|
|
Revenue
|
|
Volume
|
|||||||||||
EfW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
At Market
|
|
$
|
10
|
|
|
0.22
|
|
|
15
|
%
|
|
$
|
9
|
|
|
0.25
|
|
|
17
|
%
|
|
|
|
|
|||
Contracted
|
|
62
|
|
|
0.80
|
|
|
52
|
%
|
|
64
|
|
|
0.84
|
|
|
58
|
%
|
|
|
|
|
|||||
Hedged
|
|
15
|
|
|
0.34
|
|
|
22
|
%
|
|
9
|
|
|
0.21
|
|
|
14
|
%
|
|
|
|
|
|||||
Total EfW
|
|
$
|
87
|
|
|
1.36
|
|
|
89
|
%
|
|
$
|
82
|
|
|
1.30
|
|
|
89
|
%
|
|
$
|
5
|
|
|
0.06
|
|
Biomass
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
At Market
|
|
$
|
4
|
|
|
0.09
|
|
|
6
|
%
|
|
$
|
3
|
|
|
0.08
|
|
|
6
|
%
|
|
|
|
|
|||
Contracted
|
|
8
|
|
|
0.08
|
|
|
5
|
%
|
|
11
|
|
|
0.07
|
|
|
5
|
%
|
|
|
|
|
|||||
Total Biomass
|
|
$
|
12
|
|
|
0.17
|
|
|
11
|
%
|
|
$
|
14
|
|
|
0.15
|
|
|
11
|
%
|
|
$
|
(2
|
)
|
|
0.02
|
|
Total
|
|
$
|
99
|
|
|
1.53
|
|
|
100
|
%
|
|
$
|
96
|
|
|
1.45
|
|
|
100
|
%
|
|
$
|
3
|
|
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
same store expenses were flat, excluding the benefit from insurance recoveries of $3 million in the second quarter of 2013; and
|
•
|
an acquisition increased plant operating expenses by $6 million.
|
•
|
same store expenses decreased by $2 million, primarily due to lower plant maintenance expense ($10 million) partially offset by higher fuel expense incurred primarily as a result of cold weather in the first quarter of 2014 ($5 million) and insurance recoveries that occurred in the second quarter of 2013 ($3 million); and
|
•
|
an acquisition increased plant operating expenses by $12 million.
|
North America segment (in millions):
|
|
For the Three Months Ended
June 30,
|
|
For the Six Months Ended
June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Three Month
|
|
Six Month
|
||||||||||||
Plant Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Plant maintenance
(1)
|
|
$
|
62
|
|
|
$
|
63
|
|
|
$
|
145
|
|
|
$
|
151
|
|
|
$
|
(1
|
)
|
|
$
|
(6
|
)
|
All other
|
|
197
|
|
|
178
|
|
|
387
|
|
|
362
|
|
|
19
|
|
|
25
|
|
||||||
Plant operating expenses
|
|
$
|
259
|
|
|
$
|
241
|
|
|
$
|
532
|
|
|
$
|
513
|
|
|
18
|
|
|
19
|
|
(1)
|
Plant maintenance costs include our internal maintenance team and non-facility employee costs for facility scheduled and unscheduled maintenance and repair expenses.
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Three Month
|
|
Six Month
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
$
|
33
|
|
|
$
|
29
|
|
|
$
|
62
|
|
|
$
|
58
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Non-cash convertible debt related expense
|
5
|
|
|
7
|
|
|
13
|
|
|
14
|
|
|
(2
|
)
|
|
(1
|
)
|
||||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Total other expenses
|
$
|
38
|
|
|
$
|
36
|
|
|
$
|
77
|
|
|
$
|
73
|
|
|
2
|
|
|
4
|
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Three Month
|
|
Six Month
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income tax (expense) benefit
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
|
$
|
4
|
|
|
$
|
9
|
|
|
$
|
(3
|
)
|
|
$
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective income tax rate
|
114
|
%
|
|
42
|
%
|
|
(25
|
)%
|
|
(41
|
)%
|
|
N/A
|
|
|
N/A
|
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Three Month
|
|
Six Month
|
||||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Income (Loss) Attributable to Covanta Holding Corporation stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
$
|
1
|
|
|
$
|
13
|
|
|
$
|
(8
|
)
|
|
$
|
(10
|
)
|
|
$
|
(12
|
)
|
|
$
|
2
|
|
Discontinued operations
(1)
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(53
|
)
|
|
51
|
|
|
53
|
|
||||||
Net Income (Loss) Attributable to Covanta Holding Corporation
|
$
|
1
|
|
|
$
|
(38
|
)
|
|
$
|
(8
|
)
|
|
$
|
(63
|
)
|
|
39
|
|
|
55
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings (Loss) Per Share Attributable to Covanta Holding Corporation stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
0.01
|
|
Discontinued operations
|
—
|
|
|
(0.39
|
)
|
|
—
|
|
|
(0.41
|
)
|
|
0.39
|
|
|
0.41
|
|
||||||
Covanta Holding Corporation
|
$
|
—
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.49
|
)
|
|
0.30
|
|
|
0.42
|
|
||
Weighted Average Shares
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
|
1
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
0.01
|
|
Discontinued operations
|
—
|
|
|
(0.39
|
)
|
|
—
|
|
|
(0.41
|
)
|
|
0.39
|
|
|
0.41
|
|
||||||
Covanta Holding Corporation
|
$
|
—
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.49
|
)
|
|
0.30
|
|
|
0.42
|
|
||
Weighted Average Shares
|
131
|
|
|
130
|
|
|
129
|
|
|
129
|
|
|
1
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash Dividend Declared Per Share
(1)
|
$
|
0.18
|
|
|
$
|
0.165
|
|
|
$
|
0.36
|
|
|
$
|
0.33
|
|
|
0.015
|
|
|
0.03
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted EPS — Non-GAAP:
(2)
|
$
|
0.04
|
|
|
$
|
0.12
|
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
|
(0.08
|
)
|
|
0.09
|
|
(1)
|
For information on dividends declared to stockholders, see
Liquidity and Capital Resources
below.
|
(2)
|
See
Supplementary Financial Information — Adjusted EPS (Non-GAAP Discussion)
below.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Continuing Operations - Diluted Earnings (Loss) Per Share
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Reconciling Items
(1)
|
0.04
|
|
|
0.03
|
|
|
0.09
|
|
|
0.01
|
|
||||
Adjusted EPS
|
$
|
0.04
|
|
|
$
|
0.12
|
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
(1)
|
Additional information is provided in the Reconciling Items table below.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
Reconciling Items
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Operating loss related to insurance subsidiaries
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Net write-offs
(1)
|
7
|
|
|
4
|
|
|
16
|
|
|
4
|
|
||||
Severance and reorganization costs
(2)
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Pension plan settlement gain
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Effect of foreign exchange gain on indebtedness
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total reconciling items, pre-tax
|
10
|
|
|
5
|
|
|
22
|
|
|
—
|
|
||||
Pro forma income tax impact
|
(5
|
)
|
|
(2
|
)
|
|
(11
|
)
|
|
—
|
|
||||
Total reconciling items, net of tax
|
$
|
5
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings Per Share Impact
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.01
|
|
Weighted Average Diluted Shares Outstanding
|
131
|
|
|
130
|
|
|
129
|
|
|
129
|
|
(1)
|
See
Results of Operations - Net Write-offs
discussion above.
|
(2)
|
Includes certain costs incurred in connection with costs savings initiatives.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net Income (Loss) from Continuing Operations Attributable to Covanta Holding Corporation
|
$
|
1
|
|
|
$
|
13
|
|
|
$
|
(8
|
)
|
|
$
|
(10
|
)
|
Operating loss related to insurance subsidiaries
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Depreciation and amortization expense
|
53
|
|
|
52
|
|
|
106
|
|
|
105
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Debt service:
|
|
|
|
|
|
|
|
||||||||
Net interest expense on project debt
|
2
|
|
|
4
|
|
|
5
|
|
|
7
|
|
||||
Interest expense
|
33
|
|
|
29
|
|
|
62
|
|
|
58
|
|
||||
Non-cash convertible debt related expense
|
5
|
|
|
7
|
|
|
13
|
|
|
14
|
|
||||
Subtotal debt service
|
40
|
|
|
40
|
|
|
80
|
|
|
79
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax expense (benefit)
|
10
|
|
|
7
|
|
|
(4
|
)
|
|
(9
|
)
|
||||
Net write-offs
(1)
|
7
|
|
|
4
|
|
|
16
|
|
|
4
|
|
||||
Pension plan settlement gain
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Net loss attributable to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other adjustments:
|
|
|
|
|
|
|
|
||||||||
Debt service billing in excess of revenue recognized
|
2
|
|
|
1
|
|
|
2
|
|
|
8
|
|
||||
Severance and reorganization costs
(2)
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Non-cash compensation expense
|
4
|
|
|
4
|
|
|
8
|
|
|
9
|
|
||||
Other non-cash item
(1)
|
2
|
|
|
2
|
|
|
2
|
|
|
4
|
|
||||
Subtotal other adjustments
|
10
|
|
|
7
|
|
|
15
|
|
|
21
|
|
||||
Total adjustments
|
120
|
|
|
111
|
|
|
216
|
|
|
195
|
|
||||
Adjusted EBITDA
|
$
|
121
|
|
|
$
|
124
|
|
|
$
|
208
|
|
|
$
|
185
|
|
(1)
|
Includes certain non-cash items that are added back under the definition of Adjusted EBITDA in Covanta Energy’s credit agreement.
|
(2)
|
Includes certain costs incurred in connection with costs savings initiatives.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cash flow provided by operating activities from continuing operations
|
$
|
41
|
|
|
$
|
40
|
|
|
$
|
143
|
|
|
$
|
104
|
|
Cash flow (used in) provided by operating activities from insurance subsidiaries
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
3
|
|
||||
Debt service
|
40
|
|
|
40
|
|
|
80
|
|
|
79
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Change in working capital
|
51
|
|
|
50
|
|
|
8
|
|
|
17
|
|
||||
Change in restricted funds held in trust
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|
(8
|
)
|
||||
Non-cash convertible debt related expense
|
(5
|
)
|
|
(7
|
)
|
|
(13
|
)
|
|
(14
|
)
|
||||
Equity in net income from unconsolidated investments
|
2
|
|
|
1
|
|
|
3
|
|
|
—
|
|
||||
Dividends from unconsolidated investments
|
(10
|
)
|
|
(5
|
)
|
|
(10
|
)
|
|
(6
|
)
|
||||
Current tax provision
|
1
|
|
|
2
|
|
|
(5
|
)
|
|
(3
|
)
|
||||
Other
|
3
|
|
|
—
|
|
|
3
|
|
|
13
|
|
||||
Sub-total:
|
41
|
|
|
42
|
|
|
(15
|
)
|
|
(1
|
)
|
||||
Adjusted EBITDA
|
$
|
121
|
|
|
$
|
124
|
|
|
$
|
208
|
|
|
$
|
185
|
|
|
As of June 30, 2014
|
||
Unrestricted Cash and Cash Equivalents
|
$
|
172
|
|
Borrowings available under Revolving Credit Facility
|
455
|
|
|
Total available liquidity
|
$
|
627
|
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
2014 vs 2013
|
||||||||
|
2014
|
|
2013
|
|
|||||||
|
(Unaudited, in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
143
|
|
|
$
|
104
|
|
|
$
|
39
|
|
Net cash used in investing activities
|
(114
|
)
|
|
(125
|
)
|
|
(11
|
)
|
|||
Net cash used in financing activities
|
(53
|
)
|
|
(23
|
)
|
|
(30
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Net decrease in cash and cash equivalents
|
$
|
(25
|
)
|
|
$
|
(44
|
)
|
|
19
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cash flow provided by operating activities from continuing operations
|
$
|
41
|
|
|
$
|
40
|
|
|
$
|
143
|
|
|
$
|
104
|
|
Plus: Cash flow (provided by) used in operating activities from insurance activities
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
3
|
|
||||
Less: Maintenance capital expenditures
(1)
|
(25
|
)
|
|
(19
|
)
|
|
(61
|
)
|
|
(57
|
)
|
||||
Free Cash Flow
|
$
|
15
|
|
|
$
|
23
|
|
|
$
|
82
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Diluted Shares Outstanding
|
131
|
|
|
130
|
|
|
129
|
|
|
129
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Uses of Free Cash Flow
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||
Acquisition of noncontrolling interests in subsidiary
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
Non-maintenance capital expenditures
(1)
|
(18
|
)
|
|
(15
|
)
|
|
(54
|
)
|
|
(40
|
)
|
||||
Other investing activities, net
(1)
|
2
|
|
|
(4
|
)
|
|
1
|
|
|
(14
|
)
|
||||
Total investments
|
$
|
(16
|
)
|
|
$
|
(19
|
)
|
|
$
|
(53
|
)
|
|
$
|
(68
|
)
|
|
|
|
|
|
|
|
|
||||||||
Return of capital to stockholders:
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid to stockholders
|
$
|
(23
|
)
|
|
$
|
(22
|
)
|
|
$
|
(45
|
)
|
|
$
|
(22
|
)
|
Common stock repurchased
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(34
|
)
|
||||
Total return of capital to stockholders
|
$
|
(23
|
)
|
|
$
|
(32
|
)
|
|
$
|
(45
|
)
|
|
$
|
(56
|
)
|
|
|
|
|
|
|
|
|
||||||||
Capital raising activities:
|
|
|
|
|
|
|
|
||||||||
Net proceeds from issuance of corporate debt
(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
393
|
|
|
$
|
—
|
|
Other financing activities, net
|
(2
|
)
|
|
(3
|
)
|
|
5
|
|
|
(18
|
)
|
||||
Net proceeds from capital raising activities
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
398
|
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
|
|
||||||||
Debt repayments:
|
|
|
|
|
|
|
|
||||||||
Net cash used for scheduled principal payments on corporate debt
|
$
|
(461
|
)
|
|
$
|
(1
|
)
|
|
$
|
(461
|
)
|
|
$
|
(2
|
)
|
Payments related to Cash Conversion Option
|
(83
|
)
|
|
—
|
|
|
(83
|
)
|
|
—
|
|
||||
Proceeds from the settlement of Note Hedge
|
83
|
|
|
—
|
|
|
83
|
|
|
—
|
|
||||
Net cash used for scheduled principal payments on project debt
(4)
|
(10
|
)
|
|
(13
|
)
|
|
(17
|
)
|
|
(32
|
)
|
||||
Voluntary prepayment of corporate debt
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
||||
Fees incurred for debt refinancing
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(1
|
)
|
||||
Total debt repayments
|
$
|
(471
|
)
|
|
$
|
(14
|
)
|
|
$
|
(576
|
)
|
|
$
|
(35
|
)
|
|
|
|
|
|
|
|
|
||||||||
Borrowing activities - Revolving credit facility, net
|
$
|
280
|
|
|
$
|
39
|
|
|
$
|
170
|
|
|
$
|
86
|
|
|
|
|
|
|
|
|
|
||||||||
Effect of exchange rate changes on cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Net change in cash and cash equivalents
|
$
|
(217
|
)
|
|
$
|
(6
|
)
|
|
$
|
(25
|
)
|
|
$
|
(41
|
)
|
(1)
|
Purchases of property, plant and equipment are also referred to as capital expenditures. Capital expenditures that primarily maintain existing facilities are classified as maintenance capital expenditures. Growth investments includes investments in growth opportunities, including organic growth initiatives, technology, business development, and other similar expenditures. The following table provides the components of total purchases of property, plant and equipment:
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Maintenance capital expenditures
|
$
|
(25
|
)
|
|
$
|
(19
|
)
|
|
$
|
(61
|
)
|
|
$
|
(57
|
)
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures associated with organic growth initiatives
|
(8
|
)
|
|
(15
|
)
|
|
(16
|
)
|
|
(40
|
)
|
||||
Capital expenditures associated with the New York City contract
|
(10
|
)
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
||||
Total capital expenditures associated with organic growth initiatives, technology development and New York City contract
|
(18
|
)
|
|
(15
|
)
|
|
(54
|
)
|
|
(40
|
)
|
||||
Total purchases of property, plant and equipment
|
$
|
(43
|
)
|
|
$
|
(34
|
)
|
|
$
|
(115
|
)
|
|
$
|
(97
|
)
|
(2)
|
Other investing activities is primarily comprised of net payments from the purchase/sale of investment securities.
|
(3)
|
Excludes borrowings under Revolving Credit Facility. Calculated as follows:
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Proceeds from borrowings on long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
—
|
|
Less: Financing costs related to issuance of long-term debt
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
||||
Net proceeds from issuance of corporate debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
393
|
|
|
$
|
—
|
|
(4)
|
Calculated as follows:
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Total scheduled principal payments on project debt
|
$
|
(9
|
)
|
|
$
|
(13
|
)
|
|
$
|
(18
|
)
|
|
$
|
(29
|
)
|
(Increase) decrease in related restricted funds held in trust
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
(3
|
)
|
||||
Net cash used for principal payments on project debt
|
$
|
(10
|
)
|
|
$
|
(13
|
)
|
|
$
|
(17
|
)
|
|
$
|
(32
|
)
|
|
As of
|
||||||
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(in millions)
|
||||||
Domestic
|
$
|
18
|
|
|
$
|
21
|
|
International
|
148
|
|
|
174
|
|
||
Insurance Subsidiary
|
6
|
|
|
3
|
|
||
Total Cash and Cash Equivalents
|
$
|
172
|
|
|
$
|
198
|
|
•
|
extend the termination date of the Revolving Credit Facility by two years from March 28, 2017 to March 21, 2019;
|
•
|
increase the aggregate amount of the Revolving Credit Facility by $100 million to $1.0 billion; and
|
•
|
reduce the applicable margin payable on the Term Loan by 25 basis points, as noted below under
Interest and Fees
.
|
|
Total
Available Under Credit Facility |
|
Expiring
|
|
Direct Borrowings as of
June 30, 2014 |
|
Outstanding Letters of Credit as of
June 30, 2014 |
|
Availability as of
June 30, 2014 |
||||||||
Revolving Credit Facility
|
$
|
1,000
|
|
|
2019
|
|
$
|
280
|
|
|
$
|
265
|
|
|
$
|
455
|
|
•
|
a maximum Leverage Ratio of 4.00 to 1.00 for the trailing four quarter period, which measures the principal amount of Covanta Energy’s consolidated debt less certain restricted funds dedicated to repayment of project debt principal and construction costs (“Consolidated Adjusted Debt”) to its adjusted earnings before interest, taxes, depreciation and amortization, as calculated under the Credit Facilities (“Adjusted EBITDA”). The definition of Adjusted EBITDA in the Credit Facilities excludes certain non-cash charges.
|
•
|
a minimum 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.
|
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||||||||||
|
Face
Value
|
|
Book
Value
|
|
Face
Value
|
|
Book
Value
|
||||||||
Corporate Debt:
|
|
||||||||||||||
Revolving Credit Facility
|
$
|
280
|
|
|
$
|
280
|
|
|
$
|
110
|
|
|
$
|
110
|
|
Term Loan due 2019
|
199
|
|
|
199
|
|
|
295
|
|
|
293
|
|
||||
7.25% Senior Notes due 2020
|
400
|
|
|
400
|
|
|
400
|
|
|
400
|
|
||||
6.375% Senior Notes due 2022
|
400
|
|
|
400
|
|
|
400
|
|
|
400
|
|
||||
5.875% Senior Notes due 2024
|
400
|
|
|
400
|
|
|
—
|
|
|
—
|
|
||||
3.25% Cash Convertible Senior Notes due 2014
|
—
|
|
|
—
|
|
|
460
|
|
|
525
|
|
||||
4.00% - 5.25% Tax-Exempt Bonds due 2024 - 2043
|
357
|
|
|
357
|
|
|
357
|
|
|
357
|
|
||||
Total corporate debt (including current portion)
|
$
|
2,036
|
|
|
$
|
2,036
|
|
|
$
|
2,022
|
|
|
$
|
2,085
|
|
|
|
|
|
|
|
|
|
||||||||
Project Debt:
|
|
|
|
|
|
|
|
||||||||
Domestic project debt - service fee facilities
|
$
|
151
|
|
|
$
|
152
|
|
|
$
|
167
|
|
|
$
|
168
|
|
Domestic project debt - tip fee facilities
|
44
|
|
|
44
|
|
|
45
|
|
|
45
|
|
||||
International project debt
|
22
|
|
|
22
|
|
|
23
|
|
|
23
|
|
||||
Total project debt (including current portion)
|
$
|
217
|
|
|
$
|
218
|
|
|
$
|
235
|
|
|
$
|
236
|
|
|
|
|
|
|
|
|
|
||||||||
Total Debt Outstanding
|
$
|
2,253
|
|
|
$
|
2,254
|
|
|
$
|
2,257
|
|
|
$
|
2,321
|
|
|
|
Remainder of 2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
||||||||||||||
Revolving Credit Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280
|
|
|
$
|
280
|
|
Term Loan
|
|
1
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
190
|
|
|
199
|
|
|||||||
Senior Notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,200
|
|
|
1,200
|
|
|||||||
Tax-Exempt Bonds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
357
|
|
|
357
|
|
|||||||
Project Debt
|
|
36
|
|
|
40
|
|
|
17
|
|
|
19
|
|
|
20
|
|
|
85
|
|
|
217
|
|
|||||||
Total
|
|
$
|
37
|
|
|
$
|
42
|
|
|
$
|
19
|
|
|
$
|
21
|
|
|
$
|
22
|
|
|
$
|
2,112
|
|
|
$
|
2,253
|
|
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||||||||||
|
Current
|
|
Noncurrent
|
|
Current
|
|
Noncurrent
|
||||||||
Debt service funds - principal
|
$
|
29
|
|
|
$
|
14
|
|
|
$
|
31
|
|
|
$
|
14
|
|
Debt service funds - interest
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Total debt service funds
|
32
|
|
|
14
|
|
|
35
|
|
|
14
|
|
||||
Revenue funds
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Other funds
|
15
|
|
|
100
|
|
|
3
|
|
|
112
|
|
||||
Total
|
$
|
50
|
|
|
$
|
114
|
|
|
$
|
41
|
|
|
$
|
126
|
|
|
Commitments Expiring by Period
|
||||||||||
|
Total
|
|
Less Than
One Year
|
|
More Than
One Year
|
||||||
Letters of credit
|
$
|
265
|
|
|
$
|
17
|
|
|
$
|
248
|
|
Surety bonds
|
312
|
|
|
—
|
|
|
312
|
|
|||
Total other commitments — net
|
$
|
577
|
|
|
$
|
17
|
|
|
$
|
560
|
|
•
|
holders may require us to repurchase their 7.25% Notes, 6.375% Notes, 5.875% Notes, and Tax-Exempt Bonds if a fundamental change occurs; and
|
•
|
holders may exercise their conversion rights upon the occurrence of certain events, which would require us to pay the conversion settlement amount in cash.
|
Exhibit
Number
|
|
Description
|
10.1†*
|
|
Covanta Holding Corporation 2014 Equity Award Plan (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated May 8, 2014 and filed with the SEC on May 9, 2014).
|
10.2*
|
|
Covanta Holding Corporation Form of Restricted Stock Award Agreement for Officers and Employees.
|
10.3*
|
|
Covanta Holding Corporation Form of Restricted Stock Award Agreement for Directors.
|
10.4*
|
|
Covanta Holding Corporation Form of TSR Award Agreement.
|
10.5*
|
|
Covanta Holding Corporation Form of Stock Option Award Agreement for Directors.
|
31.1
|
|
Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.
|
31.2
|
|
Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.
|
32
|
|
Certification of periodic financial report pursuant to Section 906 of Sarbanes-Oxley Act of 2002 by the Chief Executive Officer and Chief Financial Officer.
|
Exhibit 101.INS:
|
|
XBRL Instance Document
|
Exhibit 101.SCH:
|
|
XBRL Taxonomy Extension Schema
|
Exhibit 101.CAL:
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
Exhibit 101.DEF:
|
|
XBRL Taxonomy Extension Definition Linkbase
|
Exhibit 101.LAB:
|
|
XBRL Taxonomy Extension Labels Linkbase
|
Exhibit 101.PRE:
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
†
|
Not filed herewith, but incorporated herein by reference.
|
*
|
Management contract or compensatory plan or arrangement.
|
|
COVANTA HOLDING CORPORATION
(Registrant)
|
|
|
|
|
|
By:
|
/
S
/ B
RADFORD
J. H
ELGESON
|
|
|
Bradford J. Helgeson
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
By:
|
/
S
/ N
EIL
C. Z
IESELMAN
|
|
|
Neil C. Zieselman
|
|
|
Vice President and Chief Accounting Officer
|
If Company’s TSR Percentile Rank against the
Peer Group Companies is
|
TSR Payout Factor
(% of Target Award)
|
less than the 40
th
percentile
|
0%
|
at the 40
th
percentile
|
25%
|
at the 50
th
percentile
|
50%
|
at the 70
th
percentile
|
100%
|
at the 90
th
percentile or higher
|
200%
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Covanta Holding Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/
S
/ A
NTHONY
J. O
RLANDO
|
|
Anthony J. Orlando
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Covanta Holding Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/
S
/
Bradford J. Helgeson
|
|
Bradford J. Helgeson
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Covanta Holding Corporation;
|
|
|
|
/
S
/ A
NTHONY
J. O
RLANDO
|
|
Anthony J. Orlando
|
|
President and Chief Executive Officer
|
|
|
|
/
S
/ B
RADFORD
J. H
ELGESON
|
|
Bradford J. Helgeson
|
|
Executive Vice President and Chief Financial Officer
|
|
|