þ
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ANNUAL 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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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.10 par value per share
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New York Stock Exchange
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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 February 17, 2017
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Common Stock, $0.10 par value
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130,401,036
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Part of Form 10-K of Covanta Holding Corporation
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Documents Incorporated by Reference
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Part III
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Portions of the Proxy Statement to be filed with the Securities and Exchange Commission in connection with the 2017 Annual Meeting of Stockholders.
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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, tax laws, labor laws and healthcare laws;
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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 or reputational damage 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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our ability to attract and retain talented people;
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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 utilize net operating loss carryforwards;
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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;
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•
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restrictions in our certificate of incorporation and debt documents regarding strategic alternatives; and
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•
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other risks and uncertainties affecting our businesses described in
Item 1A. Risk Factors
of this Annual Report on Form 10-K and in other filings by Covanta with the SEC.
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•
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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, extending waste and service contracts, and conducting our business more efficiently. We intend to achieve organic growth by expanding our customer base, service offerings and metal recovery, adding waste, service or energy contracts, investing in and enhancing the capabilities of our existing assets, and deploying new or improved technologies, systems, processes and controls, all targeted at increasing revenue or reducing costs.
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•
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Expand through acquisitions and/or development in selected attractive markets.
We seek to grow our portfolio primarily through acquisitions, competitive bids for new contracts, and development of new facilities or businesses where we believe that market and regulatory conditions will enable us to utilize our skills and/or invest our capital at attractive risk-adjusted rates of return. We focus these efforts in markets where we currently have projects in operation or under construction, and in other markets with strong economic fundamentals and predictable legal and policy support. In addition to our focus on EfW and related waste sourcing activities, we are seeking to expand our environmental service offerings through both organic growth and acquisitions.
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•
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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 recovery, reuse or 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 advances in controlling emissions.
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•
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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.
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•
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Maintain a focus on sustainability.
Providing sustainable waste, materials, and energy services to our customers is the cornerstone of our business. Our corporate culture is focused on the triple bottom line of sustainability (people, planet, prosperity) in support of our mission. In addition to robust financial reporting, we are committed to transparently reporting our environmental, social and governance standards, policies, and performance, including through our corporate sustainability report. We seek to continuously improve our performance across these aspects to remain an industry leader.
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•
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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 that offer attractive returns on invested capital and further our strategic goals; maintaining a strong balance sheet; and consistently returning capital to our shareholders.
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•
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We acquired two environmental services businesses which will further expand our presence in this sector and allow us to direct additional non-hazardous profiled waste volumes into our EfW facilities.
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•
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Construction is progressing on the Dublin EfW facility, a 600,000 metric ton-per-year, 58 megawatt facility in Dublin, Ireland. During 2016, 90% of the facility’s waste processing capacity was secured under long-term contracts with leading waste and recycling collection companies in Ireland. We expect the facility to begin commercial operations in late 2017. For information on the funding of project construction, see
Item 8. Financial Statements And Supplementary Data —
Note 11.
Consolidated Debt
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•
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The Durham York facility commenced commercial operations in January 2016 under a 20-year service fee contract. Construction of the municipally-owned 140,000 tonne-per-year EfW facility located in the Durham Region of Canada was completed in 2015.
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We extended our waste services agreement with the City of Huntsville to September 2020, and our waste disposal agreement with the City of Indianapolis to December 2025. Both were extended under terms similar to the existing agreements.
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Construction of a state-of-the-art particulate emissions control system at our Essex County EfW facility was completed. The total cost of the project totaled approximately $90 million, of which
$33 million
was incurred in 2016.
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•
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$150 million
capital returned to shareholders, including
$132 million
declared in dividends and
$18 million
for common share repurchases;
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•
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$162 million
towards construction of the Dublin EfW facility, of which $155 million was funded by limited recourse project subsidiary financing; and
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•
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$91 million
for other growth investments, including
$33 million
towards the Essex County facility emissions control system upgrade,
$9 million
to acquire environmental services businesses,
$3 million
related to our New York City transportation and disposal contract, and
$46 million
for various organic growth investments, including metals recovery projects, investments related to our profiled waste and environmental services businesses, and continuous improvement projects.
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Tip Fee
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Service Fee
(Owned)
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Service Fee
(Operated)
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Number of facilities:
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20
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4
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17
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Client(s):
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Host community and municipal and commercial waste customers
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Host community, with limited merchant capacity in some cases
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Dedicated to host community exclusively
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Waste or service
revenue:
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Per ton “tipping fee”
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Fixed fee, with performance incentives and inflation escalation
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Energy revenue:
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Covanta retains 100%
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Share with client
(Covanta retains approximately 20% on average)
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Metals revenue:
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Covanta retains 100%
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Share with client
(Covanta typically retains approximately 50%)
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Operating costs:
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Covanta responsible for all operating costs
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Pass through certain costs to municipal client
(e.g. ash disposal)
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Project debt service:
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Covanta project subsidiary responsible
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Paid by client explicitly as part of service fee
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Client responsible for debt service
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After service contract
expiration:
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N/A
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Covanta owns the facility; clients have certain rights set forth in contracts; facility converts to Tip Fee or remains Service Fee with new terms
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Client owns the facility; extend with Covanta or tender for new contract
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Design Capacity
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Contract
Expiration Dates
(1)
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Location
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Waste
Processing
(TPD)
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Gross
Electric
(MW)
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Nature of Interest
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Waste Service
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Energy
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TIP FEE STRUCTURES
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1.
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Southeast Connecticut
(2)
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Connecticut
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689
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17.0
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Owner/Operator
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2017
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2017
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2.
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Fairfax County
(5)
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Virginia
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3,000
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93.0
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Owner/Operator
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2021
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N/A
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3.
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Southeast Massachusetts
(3)
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Massachusetts
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2,700
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78.0
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Owner/Operator
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N/A
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2017
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4.
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Delaware Valley
(5)
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Pennsylvania
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2,688
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87.0
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Owner/Operator
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2035
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N/A
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5.
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Hempstead
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New York
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2,505
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72.0
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Owner/Operator
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2034
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2027
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6.
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Indianapolis
(4)
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Indiana
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2,362
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6.5
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Owner/Operator
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2025
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2028
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7.
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Niagara
(4)
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New York
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2,250
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50.0
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Owner/Operator
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2035
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2017-2024
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8.
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Essex County
(5)
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New Jersey
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2,277
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66.0
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Owner/Operator
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2032
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N/A
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9.
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Haverhill
(5)
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Massachusetts
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1,650
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44.6
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Owner/Operator
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N/A
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N/A
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10.
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Union County
(5)
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New Jersey
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1,440
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42.1
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Lessee/Operator
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2031
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N/A
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11.
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Plymouth
(5)
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Pennsylvania
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1,216
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32.0
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Owner/Operator
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N/A
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N/A
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12.
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Tulsa
(4)(5)
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Oklahoma
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1,125
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16.8
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Owner/Operator
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2022
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2019
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13.
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Camden
(5)
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New Jersey
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1,050
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21.0
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Owner/Operator
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N/A
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N/A
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14.
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Alexandria/Arlington
(5)
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Virginia
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975
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22.0
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Owner/Operator
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N/A
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2023
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15.
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Stanislaus County
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California
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800
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22.4
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Owner/Operator
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2027
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N/A
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16.
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Bristol
(5)
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Connecticut
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650
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16.3
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Owner/Operator
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2034
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N/A
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17.
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Lake County
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Florida
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528
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14.5
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Owner/Operator
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N/A
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2024
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18.
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Warren County
(5)
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New Jersey
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450
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13.5
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Owner/Operator
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N/A
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N/A
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19.
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Springfield
(5)
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Massachusetts
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400
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9.4
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Owner/Operator
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2024
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N/A
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20.
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Pittsfield
(4)
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Massachusetts
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240
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0.9
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Owner/Operator
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N/A
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2020
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SERVICE FEE (OWNED) STRUCTURES
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21.
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Onondaga County
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New York
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990
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39.2
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Owner/Operator
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2035
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2025
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22.
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Huntington
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New York
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750
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24.3
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Owner/Operator
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2019
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2027
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23.
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Babylon
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New York
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750
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16.8
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Owner/Operator
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2019
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|
2027
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24.
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Marion County
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Oregon
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550
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13.1
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Owner/Operator
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2019
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2017
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SERVICE FEE (OPERATED) STRUCTURES
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25.
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Pinellas County
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Florida
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3,150
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75.0
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Operator
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2024
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2024
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26.
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Miami-Dade County
(3)(5)
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Florida
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3,000
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77.0
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Operator
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2023
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N/A
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27.
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Honolulu
(3)(6)
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Hawaii
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2,950
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90.0
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Operator
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2032
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2033
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28.
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Lee County
(6)
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Florida
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1,836
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57.3
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Operator
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2024
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N/A
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29.
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Montgomery County
(5)(6)
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Maryland
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1,800
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63.4
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Operator
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2021
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N/A
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30.
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Hillsborough County
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Florida
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1,800
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46.5
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Operator
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2029
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2025
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31.
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Long Beach
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California
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1,380
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36.0
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Operator
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2024
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2018
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32.
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York County
(5)
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Pennsylvania
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1,344
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42.0
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Operator
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2035
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N/A
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33.
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Hennepin County
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Minnesota
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1,212
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38.7
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Operator
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2018
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2018
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34.
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Lancaster County
(5)
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Pennsylvania
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1,200
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33.1
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Operator
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2017
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N/A
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35.
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Pasco County
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Florida
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1,050
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29.7
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Operator
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2024
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2024
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36.
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Harrisburg
(5)
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Pennsylvania
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800
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20.8
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Operator
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2017
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2033
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37.
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Burnaby
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British Columbia
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800
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23.9
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Operator
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2025
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2025
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38.
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Huntsville
(4)
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Alabama
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690
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—
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Operator
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2020
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N/A
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39.
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Kent County
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Michigan
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625
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16.8
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Operator
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2023
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2023
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40.
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MacArthur
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New York
|
|
486
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12.0
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Operator
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2030
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2027
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41.
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Durham-York
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Durham Region, Canada
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480
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|
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17.4
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Operator
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2036
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N/A
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SUBTOTAL
|
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55,949
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1,481.0
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(1)
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Expiration dates are for significant contracts; expiration dates refer to contracts with the host client communities (if any) or other contracts representing at least 40% of facility waste capacity. "N/A" denotes that no contract represents greater than 40% of facility capacity.
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(2)
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This facility transitioned from a service fee (owned) to a tip fee contract effective February 2017.
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(3)
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These facilities use a refuse-derived fuel technology.
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(4)
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These facilities have been designed to export steam for sale. See table below for the equivalent electric output. The equivalent electric output is part of, not in addition to, the design capacity megawatts ("MW") listed in the table above.
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Facility
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Equivalent Electric Output (MW)
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Niagara
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66
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Indianapolis
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52
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Tulsa
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25
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Huntsville
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15
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Pittsfield
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5
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(5)
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These facilities either sell electricity into the regional power pool at prevailing market rates or have contractual arrangements to sell electricity at prevailing market rates.
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(6)
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The client has a termination option under the service agreement.
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Design Capacity
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Contract
Expiration Dates
|
||||||
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Location
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Waste
Processing
(Metric
TPD)
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Gross
Electric
(MW)
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Nature of Interest
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|||||
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Waste Service
|
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Energy
|
||||||||||||
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ENERGY-FROM-WASTE
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TIP FEE STRUCTURES
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|
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1.
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Dublin
(1)
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Ireland
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1,800
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58
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100% Owner/Operator (Under Construction)
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2062
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N/A
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2.
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Trezzo
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Italy
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500
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18
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13% Owner/JV Operator
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2023
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|
2023
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SUBTOTAL
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2,300
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76
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|
|
|
|
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(1)
|
We expect operations to commence in late 2017. We will operate the facility under a 45-year public-private-partnership agreement, after which ownership of the facility will transfer to City of Dublin. Waste supply contracts have been entered into with private waste haulers.
|
|
|
As of December 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||
Consumer Price Index
(1)
|
|
2.1
|
%
|
|
0.7
|
%
|
|
0.8
|
%
|
|
1.5
|
%
|
||||
PJM Pricing (Electricity)
(2)
|
|
$
|
24.85
|
|
|
$
|
36.00
|
|
|
$
|
56.99
|
|
|
$
|
41.93
|
|
NE ISO Pricing (Electricity)
(3)
|
|
$
|
29.74
|
|
|
$
|
42.93
|
|
|
$
|
64.58
|
|
|
$
|
56.43
|
|
Henry Hub Pricing (Natural Gas)
(4)
|
|
$
|
2.52
|
|
|
$
|
2.60
|
|
|
$
|
4.33
|
|
|
$
|
3.72
|
|
#1 HMS Pricing (Ferrous Metals)
(5)
|
|
$
|
197
|
|
|
$
|
217
|
|
|
$
|
355
|
|
|
$
|
344
|
|
Scrap Metals - Old Cast Aluminum Scrap
(6)
|
|
$
|
0.57
|
|
|
$
|
0.63
|
|
|
$
|
0.75
|
|
|
$
|
0.73
|
|
(1)
|
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.
|
(2)
|
Average price per MWh for full year. Pricing for the PJM PSEG Zone is provided by the PJM ISO.
|
(3)
|
Average price per MWh for full year. Pricing for the Mass Hub Zone is provided by the NE ISO.
|
(4)
|
Average price per MMBtu for full year. The Henry Hub Pricing data is provided by the Natural Gas Weekly Update, Energy Information Administration, Washington, DC.
|
(5)
|
Average price per gross ton for full year. The #1 Heavy Melt Steel ("HMS") composite index ($/gross ton) price is published by American Metal Market.
|
(6)
|
Average price per pound for full year. Calculated using the high price of Old Cast Aluminum Scrap ($/lb) published by American Metal Market.
|
•
|
regional population and overall waste production rates;
|
•
|
the number of waste disposal sites (including principally landfills, other EfW facilities and transfer stations) in existence or in the planning or permitting process;
|
•
|
the available disposal capacity (in terms of tons of waste per day) that can be offered by other regional disposal sites;
|
•
|
the extent to which local governments seek to control transportation and/or disposal of waste within their jurisdictions;
|
•
|
the extent to which local governments and businesses continue to value sustainable approaches to handling of wastes; and
|
•
|
the availability and cost of transportation options (e.g., rail, inter-modal, trucking) to provide access to more distant disposal sites, thereby affecting the size of the waste market itself.
|
•
|
avoids CO
2
emissions from fossil fuel power plants;
|
•
|
avoids methane emissions from landfills; and
|
•
|
avoids GHG emissions from mining and processing metal because it recovers and recycles metals from waste.
|
•
|
The Regional Greenhouse Gas Initiative (“RGGI”) is an operating regional “cap-and-trade” program focused on fossil fuel-fired electric generators which does not directly affect EfW facilities. We operate one fossil-fuel fired boiler at our Niagara facility included in the RGGI program.
|
•
|
California's Global Warming Solutions Act of 2006 ("AB 32"), seeks to reduce GHG emissions in California to 1990 levels by 2020. AB 32 includes an economy-wide “cap-and-trade” program, which could impact our California EfW facilities, but not our biomass facilities. Regulatory amendments in 2013 and 2014 excluded EfW facilities from the cap-and-trade program through the end of 2015 and proposed amendments to the program would exclude EfW through the end of 2017. The future treatment of EfW facilities under this program is uncertain at this time.
|
•
|
The province of Ontario, Canada has developed a greenhouse gas cap and trade program under which EfW facilities, including the Durham-York facility, do not incur a compliance obligation under the program through the end of 2020. We cannot predict at this time the treatment of EfW facilities after 2020.
|
Name and Title
|
Age
|
Experience
|
Stephen J. Jones
President and Chief Executive Officer
|
55
|
President and Chief Executive Officer since 2015. Prior to joining Covanta, Mr. Jones was employed by Air Products and Chemicals, Inc. (“Air Products”), a global supplier of industrial gases, equipment and services from 1992 through 2014. Mr. Jones served as Senior Vice President and General Manager, Tonnage Gases, Equipment and Energy, from 2009 through 2014. Mr. Jones also served as Air Products’ China President from 2011 through 2014 at Air Products’ office in Shanghai. He was also a member of Air Products’ Corporate Executive Committee from 2007 through 2014. Mr. Jones joined Air Products in 1992 as an attorney in the Law Group representing various business areas and functions and in 2007 he was appointed Senior Vice President, General Counsel and Secretary.
|
Michael J. de Castro
Executive Vice President, Supply Chain
|
54
|
Executive Vice President, Supply Chain since 2015. Prior to joining Covanta, Mr. de Castro was employed by Air Products beginning in 2006, serving in various operational capacities including Director, Global Operations Americas. Mr. de Castro left Air Products in 2010 to become Chief Executive Officer of Interstate Waste Services ("IWS"). In 2013, he returned to Air Products, serving as Director, Global Operations Strategic Development and most recently as Fulfillment Director in the Performance Materials Division. Prior to his tenure at IWS and Air Products, Mr. de Castro held a variety of positions at American Ref-Fuel Company for 16 years, culminating with the role of Vice President, Operations.
|
Bradford J. Helgeson
Executive Vice President and Chief Financial Officer
|
40
|
Executive Vice President and Chief Financial Officer since 2013. Mr. Helgeson served as Vice President and Treasurer from 2007 to 2013. Prior to joining Covanta in 2007, Mr. Helgeson was Vice President, Finance and Treasurer at Waste Services, Inc., a publicly-traded environmental services company with operations in the United States and Canada, from 2004 to 2007. Prior to these roles, Mr. Helgeson held positions in the investment banking departments at Lehman Brothers from 2000 to 2004 and at Donaldson, Lufkin & Jenrette from 1998 to 2000, where he worked on a wide range of capital markets and merger and acquisition transactions for industrial companies, with a particular focus in the environmental services sector.
|
Matthew R. Mulcahy
Executive Vice President and Head of Corporate Development
|
53
|
Executive Vice President and Head of Corporate Development since 2017. Mr. Mulcahy served as Senior Vice President and Head of Corporate Development for Covanta from 2012 to 2016 and Senior Vice President of Business Development from 2007 through 2011. From 2003 to 2007, Mr. Mulcahy served as Vice President of Covanta Secure Service and TransRiver Marketing, a Covanta subsidiary. From 2000 to 2003, Mr. Mulcahy was Covanta’s Vice President, Project Implementation. Mr. Mulcahy joined Covanta in 1990.
|
Timothy J. Simpson
Executive Vice President, General Counsel and Secretary
|
58
|
Executive Vice President, General Counsel and Secretary since 2007. Mr. Simpson served as Senior Vice President, General Counsel and Secretary from 2004 to 2007. Previously, he served as Senior Vice President, General Counsel and Secretary of Covanta Energy from March 2004 to October 2004. From 2001 to March 2004, Mr. Simpson served as Vice President, Associate General Counsel and Assistant Secretary. Mr. Simpson joined Covanta in 1992.
|
Paul E. Stauder
President, Covanta Environmental Solutions
|
51
|
President of Covanta Environmental Solutions, a subsidiary of Covanta Energy, since 2015. Mr. Stauder served as Senior Vice President of Business Management for Covanta Energy from 2008 to 2014, with primary responsibility for all commercial and client aspects of Covanta’s EFW facilities. Prior to that role, Mr. Stauder served in a number of positions with Covanta Energy, including Regional Vice President, overseeing EfW plants and independent power plants. Mr. Stauder joined Covanta in 1997.
|
Derek W. Veenhof
Executive Vice President, Sustainable Solutions
|
50
|
Executive Vice President - Sustainable Solutions since 2013. Mr. Veenhof served as Senior Vice President of Covanta 4Recovery L.P., from 2011 to 2013. From 2007 to 2011, Mr. Veenhof served as Vice President of TransRiver Marketing, a Covanta Energy subsidiary, and managed contract efforts in recycling and waste. From 2002 to 2006, Mr. Veenhof was Covanta Energy’s New York Metro Area Manager responsible for waste contract negotiations, business operations and business marketing and development for the Metro NY, NJ and Philadelphia market areas.
|
Michael A. Wright
Senior Vice President and Chief Human Resources Officer
|
54
|
Senior Vice President and Chief Human Resources Officer since 2009. Mr. Wright served as President of The Wright Group, Inc., a boutique human capital consulting firm from 2008 to 2009, prior to which Mr. Wright spent 25 years serving in a variety of positions at the Altria family of companies (Kraft and Philip Morris), including Vice President-Human Resources & Technology for Altria Corporate Services, Inc. from 2006 to 2008.
|
•
|
performance by multiple contractors critical to our ability to perform under our new customer agreements;
|
•
|
logistics associated with transportation of waste via barge, rail or other methods with which we have limited experience;
|
•
|
reliance on joint venture parties or technology providers with whom we have limited experience; and
|
•
|
risks associated with providing new materials handling or treatment services.
|
•
|
supply or transportation interruptions;
|
•
|
the breakdown, failure or unplanned maintenance or repair of equipment or processes;
|
•
|
difficulty or inability to find suitable replacement parts for equipment;
|
•
|
the unavailability of sufficient quantities of waste or fuel;
|
•
|
fluctuations in the heating value of the waste we use for fuel at our EfW facilities;
|
•
|
failure or inadequate performance by subcontractors;
|
•
|
disruption in the transmission of electricity generated;
|
•
|
labor disputes and work stoppages;
|
•
|
unforeseen engineering and environmental problems;
|
•
|
unanticipated cost overruns;
|
•
|
weather interferences and catastrophic events including fires, explosions, earthquakes, droughts, pandemics and acts of terrorism; and
|
•
|
the exercise of the power of eminent domain.
|
•
|
making it difficult for us to meet our payment and other obligations under our outstanding indebtedness;
|
•
|
limiting our ability to obtain additional financing to fund working capital, capital expenditures, new projects, acquisitions and other general corporate purposes;
|
•
|
subjecting us to the risk of increased sensitivity to interest rate increases on indebtedness under our credit facilities;
|
•
|
limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate and the general economy; and
|
•
|
placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.
|
•
|
the continued operation and maintenance of our facilities, consistent with historical performance levels;
|
•
|
maintenance or enhancement of revenue from renewals or replacement of existing contracts and from new contracts to expand existing facilities or operate additional facilities;
|
•
|
market conditions affecting waste disposal and energy pricing, as well as competition from other companies for contract renewals, expansions and additional contracts, particularly after our existing contracts expire;
|
•
|
the continued availability of the benefits of our net operating loss carryforwards; and
|
•
|
general economic, financial, competitive, legislative, regulatory and other factors.
|
•
|
difficulties in identifying, obtaining and permitting suitable sites for new projects;
|
•
|
the inaccuracy of our assumptions with respect to the cost of and schedule for completing construction;
|
•
|
difficulty, delays or inability to obtain financing for a project on acceptable terms;
|
•
|
delays in deliveries of, or increases in the prices of, equipment sourced from other countries;
|
•
|
the unavailability of sufficient quantities of waste or other fuels for startup;
|
•
|
permitting and other regulatory issues, license revocation and changes in legal requirements;
|
•
|
labor disputes and work stoppages;
|
•
|
unforeseen engineering and environmental problems;
|
•
|
interruption of existing operations;
|
•
|
unanticipated cost overruns or delays; and
|
•
|
weather interferences and catastrophic events including fires, explosions, earthquakes, droughts, pandemics and acts of terrorism.
|
•
|
support agreements in connection with construction, service or operating agreement-related obligations;
|
•
|
direct guarantees of certain debt relating to our facilities;
|
•
|
contingent obligations to pay lease payment installments in connection with certain of our facilities;
|
•
|
agreements to arrange financing for projects under development;
|
•
|
contingent credit support for damages arising from performance failures;
|
•
|
environmental indemnities; and
|
•
|
contingent capital and credit support to finance costs, in most cases in connection with a corresponding increase in service fees, relating to uncontrollable circumstances.
|
•
|
changes in law or regulations;
|
•
|
changes in electricity pricing;
|
•
|
changes in foreign tax laws and regulations;
|
•
|
changes in United States federal, state and local laws, including tax laws, related to foreign operations;
|
•
|
compliance with United States federal, state and local foreign corrupt practices laws;
|
•
|
changes in government policies or personnel;
|
•
|
changes in general economic conditions affecting each country, including conditions in financial markets;
|
•
|
changes in labor relations in operations outside the United States;
|
•
|
political, economic or military instability and civil unrest;
|
•
|
expropriation and confiscation of assets and facilities; and
|
•
|
credit quality of entities that purchase our power.
|
Item 5.
|
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
2016
|
|
2015
|
||||||||||||||||||||
|
|
High
|
|
Low
|
|
Dividend
Declared
|
|
High
|
|
Low
|
|
Dividend
Declared
|
||||||||||||
First Quarter
|
|
$
|
17.75
|
|
|
$
|
12.48
|
|
|
$
|
0.25
|
|
|
$
|
23.04
|
|
|
$
|
19.25
|
|
|
$
|
0.25
|
|
Second Quarter
|
|
$
|
17.22
|
|
|
$
|
15.52
|
|
|
$
|
0.25
|
|
|
$
|
22.85
|
|
|
$
|
19.99
|
|
|
$
|
0.25
|
|
Third Quarter
|
|
$
|
17.16
|
|
|
$
|
14.43
|
|
|
$
|
0.25
|
|
|
$
|
21.80
|
|
|
$
|
17.08
|
|
|
$
|
0.25
|
|
Fourth Quarter
|
|
$
|
15.95
|
|
|
$
|
13.45
|
|
|
$
|
0.25
|
|
|
$
|
18.36
|
|
|
$
|
13.69
|
|
|
$
|
0.25
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(In millions, except per share amounts)
|
||||||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenue
|
|
$
|
1,699
|
|
|
$
|
1,645
|
|
|
$
|
1,682
|
|
|
$
|
1,630
|
|
|
$
|
1,643
|
|
Operating expense
|
|
$
|
1,590
|
|
|
$
|
1,536
|
|
|
$
|
1,528
|
|
|
$
|
1,395
|
|
|
$
|
1,339
|
|
Operating income
(1)
|
|
$
|
109
|
|
|
$
|
109
|
|
|
$
|
154
|
|
|
$
|
235
|
|
|
$
|
304
|
|
(Loss) income from continuing operations
|
|
$
|
(4
|
)
|
|
$
|
69
|
|
|
$
|
(1
|
)
|
|
$
|
42
|
|
|
$
|
138
|
|
Loss from discontinued operations, net of taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(52
|
)
|
|
$
|
(20
|
)
|
Net (loss) income
|
|
$
|
(4
|
)
|
|
$
|
69
|
|
|
$
|
(1
|
)
|
|
$
|
(10
|
)
|
|
$
|
118
|
|
Net (loss) income attributable to Covanta Holding Corporation stockholders:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
(4
|
)
|
|
$
|
68
|
|
|
$
|
(2
|
)
|
|
$
|
43
|
|
|
$
|
136
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(52
|
)
|
|
$
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic (Loss) Earnings per share attributable to Covanta Holding Corporation:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
(0.03
|
)
|
|
$
|
0.52
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.33
|
|
|
$
|
1.03
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.40
|
)
|
|
(0.15
|
)
|
|||||
Covanta Holding Corporation
|
|
$
|
(0.03
|
)
|
|
$
|
0.52
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.88
|
|
Diluted (Loss) Earnings per share attributable to Covanta Holding Corporation:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
(0.03
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.33
|
|
|
$
|
1.02
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.40
|
)
|
|
(0.15
|
)
|
|||||
Covanta Holding Corporation
|
|
$
|
(0.03
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividend declared per share
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
0.86
|
|
|
$
|
0.66
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
129
|
|
|
132
|
|
|
130
|
|
|
129
|
|
|
132
|
|
|||||
Diluted
|
|
129
|
|
|
133
|
|
|
130
|
|
|
130
|
|
|
133
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Balance Sheet Data:
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
84
|
|
|
$
|
94
|
|
|
$
|
84
|
|
|
$
|
190
|
|
|
$
|
233
|
|
Property, plant and equipment, net
|
|
$
|
3,024
|
|
|
$
|
2,690
|
|
|
$
|
2,607
|
|
|
$
|
2,579
|
|
|
$
|
2,509
|
|
Total assets
|
|
$
|
4,284
|
|
|
$
|
4,234
|
|
|
$
|
4,178
|
|
|
$
|
4,357
|
|
|
$
|
4,501
|
|
Long-term debt (incl. current portion)
|
|
$
|
2,252
|
|
|
$
|
2,263
|
|
|
$
|
1,948
|
|
|
$
|
2,062
|
|
|
$
|
1,988
|
|
Project debt (incl. current portion)
|
|
$
|
383
|
|
|
$
|
198
|
|
|
$
|
222
|
|
|
$
|
212
|
|
|
$
|
293
|
|
Total liabilities
|
|
$
|
3,815
|
|
|
$
|
3,594
|
|
|
$
|
3,394
|
|
|
$
|
3,451
|
|
|
$
|
3,452
|
|
Total Covanta Holding Corporation stockholders' equity
|
|
$
|
469
|
|
|
$
|
638
|
|
|
$
|
782
|
|
|
$
|
902
|
|
|
$
|
1,042
|
|
(1)
|
As revised for the years ended December 31, 2015 and prior. See
Item 8. Financial Statements and Supplementary Data - Note 1. Organization and Summary of Significant Accounting Policies - Reclassifications
and
Accounting Pronouncements Recently Adopted.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
“Organic growth”: reflects the performance of the business on a comparable period-over-period basis, excluding the impacts of transactions and contract transitions.
|
•
|
“Transactions”: includes the impacts of acquisitions, divestitures, and the addition or loss of operating contracts.
|
•
|
“Contract transitions”: includes the impact of the expiration of: (a) long-term major waste and service contracts, most typically representing the transition to a new contract structure, and (b) long-term energy contracts.
|
|
For the Years Ended December 31,
|
|
|
||||||||
Consolidated:
|
2016
|
|
2015
|
|
Variance
Increase (Decrease) |
||||||
|
(In millions)
|
||||||||||
OPERATING REVENUE:
|
|
|
|
|
|
||||||
Waste and service revenue
|
$
|
1,187
|
|
|
$
|
1,104
|
|
|
$
|
83
|
|
Energy revenue
|
370
|
|
|
421
|
|
|
(51
|
)
|
|||
Recycled metals revenue
|
61
|
|
|
61
|
|
|
—
|
|
|||
Other operating revenue
|
81
|
|
|
59
|
|
|
22
|
|
|||
Total operating revenue
|
1,699
|
|
|
1,645
|
|
|
54
|
|
|||
OPERATING EXPENSE:
|
|
|
|
|
|
||||||
Plant operating expense
|
1,177
|
|
|
1,129
|
|
|
48
|
|
|||
Other operating expense
|
86
|
|
|
73
|
|
|
13
|
|
|||
General and administrative expense
|
100
|
|
|
93
|
|
|
7
|
|
|||
Depreciation and amortization expense
|
207
|
|
|
198
|
|
|
9
|
|
|||
Impairment charges
|
20
|
|
|
43
|
|
|
(23
|
)
|
|||
Total operating expense
|
1,590
|
|
|
1,536
|
|
|
54
|
|
|||
Operating income
|
$
|
109
|
|
|
$
|
109
|
|
|
$
|
—
|
|
Consolidated (in millions):
|
|
For the Years Ended
December 31, |
|
|
||||||||
|
|
2016
|
|
2015
|
|
Variance
|
||||||
EfW waste and service revenue
|
|
$
|
962
|
|
|
$
|
929
|
|
|
$
|
33
|
|
Environmental services
|
|
99
|
|
|
56
|
|
|
43
|
|
|||
Municipal services
|
|
186
|
|
|
159
|
|
|
27
|
|
|||
Other revenue
|
|
36
|
|
|
38
|
|
|
(2
|
)
|
|||
Intercompany
|
|
(96
|
)
|
|
(78
|
)
|
|
(18
|
)
|
|||
Total waste and service revenue
|
|
$
|
1,187
|
|
|
$
|
1,104
|
|
|
83
|
|
EfW Facilities - Tons Received
(1)
(in millions):
|
|
For the Years Ended
December 31, |
|
|
|||||
|
|
2016
|
|
2015
|
|
Variance
|
|||
Contracted
|
|
17.4
|
|
|
17.2
|
|
|
0.2
|
|
Uncontracted
|
|
2.2
|
|
|
2.2
|
|
|
—
|
|
Total Tons
|
|
19.5
|
|
|
19.4
|
|
|
0.1
|
|
Consolidated
(1)
(in millions):
|
|
For the Years Ended
December 31, |
|
|
||||||||
|
|
2016
|
|
2015
|
|
Variance
|
||||||
EfW energy sales
|
|
$
|
321
|
|
|
$
|
308
|
|
|
$
|
13
|
|
EfW capacity
|
|
40
|
|
|
38
|
|
|
2
|
|
|||
Other revenue
|
|
9
|
|
|
75
|
|
|
(66
|
)
|
|||
Total energy revenue
|
|
$
|
370
|
|
|
$
|
421
|
|
|
(51
|
)
|
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Total EfW (in millions):
|
|
2016
|
|
2015
|
|
Variance
|
|||||||||||||||||||||
|
|
Revenue
(1)
|
|
Volume
(1), (2)
|
|
% of Total Volume
|
|
Revenue
(1)
|
|
Volume
(1), (2)
|
|
% of Total Volume
|
|
Revenue
|
|
Volume
|
|||||||||||
At Market
|
|
$
|
33
|
|
|
1.0
|
|
|
17
|
%
|
|
$
|
46
|
|
|
1.4
|
|
|
24
|
%
|
|
$
|
(13
|
)
|
|
(0.4
|
)
|
Contracted
|
|
245
|
|
|
3.1
|
|
|
51
|
%
|
|
238
|
|
|
3.0
|
|
|
53
|
%
|
|
7
|
|
|
0.1
|
|
|||
Hedged
|
|
83
|
|
|
1.9
|
|
|
32
|
%
|
|
62
|
|
|
1.4
|
|
|
23
|
%
|
|
21
|
|
|
0.5
|
|
|||
Total EfW
|
|
$
|
361
|
|
|
6.0
|
|
|
100
|
%
|
|
$
|
346
|
|
|
5.8
|
|
|
100
|
%
|
|
15
|
|
|
0.2
|
|
Recycled Metal Revenue (in millions):
|
For the
Quarters Ended
|
||||||
|
2016
|
|
2015
|
||||
March 31,
|
$
|
13
|
|
|
$
|
16
|
|
June 30,
|
17
|
|
|
17
|
|
||
September 30,
|
14
|
|
|
16
|
|
||
December 31,
|
17
|
|
|
12
|
|
||
Total for the Year Ended December 31,
|
$
|
61
|
|
|
$
|
61
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
Metal Revenue
(in millions)
|
|
Tons Sold
(in thousands) (1) |
|
Tons Recovered
(in thousands) |
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Ferrous Metal
|
$
|
38
|
|
|
$
|
38
|
|
|
345
|
|
|
330
|
|
|
401
|
|
|
353
|
|
Non-Ferrous Metal
|
23
|
|
|
23
|
|
|
36
|
|
|
32
|
|
|
36
|
|
|
32
|
|
||
Total
|
$
|
61
|
|
|
$
|
61
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the portion of total volume that is equivalent to Covanta’s share of revenue under applicable client revenue sharing arrangements.
|
Consolidated (in millions):
|
|
For the Years Ended
December 31,
|
|
|
||||||||
|
|
2016
|
|
2015
|
|
Variance
|
||||||
Plant maintenance
(1)
|
|
$
|
279
|
|
|
$
|
270
|
|
|
$
|
9
|
|
All other
|
|
898
|
|
|
859
|
|
|
39
|
|
|||
Plant operating expense
|
|
$
|
1,177
|
|
|
$
|
1,129
|
|
|
48
|
|
(1)
|
Plant maintenance costs include our internal maintenance team and non-facility employee costs for facility scheduled and unscheduled maintenance and repair expense.
|
|
For the Years Ended December 31,
|
|
|
||||||||
Consolidated:
|
2015
|
|
2014
|
|
Variance
Increase (Decrease) |
||||||
|
(In millions)
|
||||||||||
OPERATING REVENUE:
|
|
|
|
|
|
||||||
Waste and service revenue
|
$
|
1,104
|
|
|
$
|
1,032
|
|
|
$
|
72
|
|
Energy revenue
|
421
|
|
|
460
|
|
|
(39
|
)
|
|||
Recycled metals revenue
|
61
|
|
|
93
|
|
|
(32
|
)
|
|||
Other operating revenue
|
59
|
|
|
97
|
|
|
(38
|
)
|
|||
Total operating revenue
|
1,645
|
|
|
1,682
|
|
|
(37
|
)
|
|||
OPERATING EXPENSE:
|
|
|
|
|
|
||||||
Plant operating expense
|
1,129
|
|
|
1,055
|
|
|
74
|
|
|||
Other operating expense
|
73
|
|
|
101
|
|
|
(28
|
)
|
|||
General and administrative expense
|
93
|
|
|
97
|
|
|
(4
|
)
|
|||
Depreciation and amortization expense
|
198
|
|
|
211
|
|
|
(13
|
)
|
|||
Impairment charges
|
43
|
|
|
64
|
|
|
(21
|
)
|
|||
Total operating expense
|
1,536
|
|
|
1,528
|
|
|
8
|
|
|||
Operating income
|
$
|
109
|
|
|
$
|
154
|
|
|
$
|
(45
|
)
|
Consolidated (in millions):
|
|
For the Years Ended
December 31, |
|
|
||||||||
|
|
2015
|
|
2014
|
|
Variance
|
||||||
EfW waste and service revenue
|
|
$
|
929
|
|
|
$
|
933
|
|
|
$
|
(4
|
)
|
Environmental services
|
|
56
|
|
|
9
|
|
|
47
|
|
|||
Municipal services
|
|
159
|
|
|
93
|
|
|
66
|
|
|||
Other revenue
|
|
38
|
|
|
47
|
|
|
(9
|
)
|
|||
Intercompany
|
|
(78
|
)
|
|
(50
|
)
|
|
(28
|
)
|
|||
Total waste and service revenue
|
|
$
|
1,104
|
|
|
$
|
1,032
|
|
|
72
|
|
North America Segment - EfW Facilities - Tons Received
(1)
(in millions):
|
|
For the Years Ended
December 31, |
|
|
||||
|
|
2015
|
|
2014
|
|
Variance
|
||
Contracted
|
|
17.2
|
|
|
16.0
|
|
|
1.2
|
Uncontracted
|
|
2.2
|
|
|
2.7
|
|
|
(0.5)
|
Total Tons
|
|
19.4
|
|
|
18.7
|
|
|
0.7
|
Consolidated
(1)
(in millions):
|
|
For the Years Ended
December 31, |
|
|
||||||||
|
|
2015
|
|
2014
|
|
Variance
|
||||||
EfW energy sales
|
|
$
|
308
|
|
|
$
|
325
|
|
|
$
|
(17
|
)
|
EfW capacity
|
|
38
|
|
|
32
|
|
|
6
|
|
|||
Other revenue
|
|
75
|
|
|
103
|
|
|
(28
|
)
|
|||
Total energy revenue
|
|
$
|
421
|
|
|
$
|
460
|
|
|
(39
|
)
|
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
|
2015
|
|
2014
|
|
Variance
|
|||||||||||||||||||||
Total EfW (in millions):
|
|
Revenue
(1)
|
|
Volume
(1), (2)
|
|
% of Total Volume
|
|
Revenue
(1)
|
|
Volume
(1), (2)
|
|
% of Total Volume
|
|
Revenue
|
|
Volume
|
|||||||||||
At Market
|
|
$
|
46
|
|
|
1.4
|
|
|
24
|
%
|
|
$
|
52
|
|
|
1.1
|
|
|
19
|
%
|
|
$
|
(6
|
)
|
|
0.3
|
|
Contracted
|
|
238
|
|
|
3.0
|
|
|
53
|
%
|
|
247
|
|
|
3.2
|
|
|
56
|
%
|
|
(9
|
)
|
|
(0.2
|
)
|
|||
Hedged
|
|
62
|
|
|
1.4
|
|
|
23
|
%
|
|
59
|
|
|
1.4
|
|
|
25
|
%
|
|
3
|
|
|
—
|
|
|||
Total EfW
|
|
$
|
346
|
|
|
5.8
|
|
|
100
|
%
|
|
$
|
358
|
|
|
5.6
|
|
|
100
|
%
|
|
(12
|
)
|
|
0.2
|
|
Recycled Metal Revenue (in millions):
|
|
For the
Quarters Ended
|
||||||
|
|
2015
|
|
2014
|
||||
March 31,
|
|
$
|
16
|
|
|
$
|
21
|
|
June 30,
|
|
17
|
|
|
25
|
|
||
September 30,
|
|
16
|
|
|
26
|
|
||
December 31,
|
|
12
|
|
|
21
|
|
||
Total for the year ended December 31,
|
|
$
|
61
|
|
|
$
|
93
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
Metal Revenue
(in millions)
|
|
Tons Sold
(in thousands) (1) |
|
Tons Recovered
(in thousands) |
||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Ferrous Metal
|
$
|
38
|
|
|
$
|
65
|
|
|
330
|
|
|
340
|
|
|
353
|
|
|
327
|
|
Non-Ferrous Metal
|
23
|
|
|
28
|
|
|
32
|
|
|
30
|
|
|
32
|
|
|
30
|
|
||
Total
|
$
|
61
|
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the portion of total volume that is equivalent to Covanta’s share of revenue under applicable client revenue sharing arrangements.
|
Consolidated (in millions):
|
|
For the Years Ended
December 31,
|
|
|
||||||||
|
|
2015
|
|
2014
|
|
Variance
|
||||||
Plant maintenance
(1)
|
|
$
|
270
|
|
|
$
|
245
|
|
|
$
|
25
|
|
All other
|
|
859
|
|
|
810
|
|
|
49
|
|
|||
Plant operating expense
|
|
$
|
1,129
|
|
|
$
|
1,055
|
|
|
74
|
|
(1)
|
Plant maintenance costs include our internal maintenance team and non-facility employee costs for facility scheduled and unscheduled maintenance and repair expense.
|
|
|
For the Years Ended
December 31,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment income
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
Interest expense
|
|
(139
|
)
|
|
(134
|
)
|
|
(135
|
)
|
|
(5
|
)
|
|
1
|
|
|||||
Non-cash convertible debt related expense
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
13
|
|
|||||
Gain on asset sales
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|||||
Other expense, net
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||||
Total other expense
|
|
$
|
(95
|
)
|
|
$
|
(137
|
)
|
|
$
|
(150
|
)
|
|
42
|
|
|
13
|
|
|
|
For the Years Ended
December 31,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||
|
|
(In millions, except percentages)
|
||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income tax expense (benefit)
|
|
$
|
22
|
|
|
$
|
(84
|
)
|
|
$
|
15
|
|
|
$
|
106
|
|
|
$
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Effective income tax rate
|
|
150
|
%
|
|
302
|
%
|
|
388
|
%
|
|
|
|
|
|
|
For the Years Ended
December 31,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||
|
|
(In millions, except per share amounts)
|
||||||||||||||||||
CONSOLIDATED RESULTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (Loss) Income Attributable to Covanta Holding Corporation
|
|
$
|
(4
|
)
|
|
$
|
68
|
|
|
$
|
(2
|
)
|
|
$
|
(72
|
)
|
|
$
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) Earnings Per Share Attributable to Covanta Holding Corporation stockholders:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted Average Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
129
|
|
|
132
|
|
|
130
|
|
|
(3
|
)
|
|
2
|
|
|||||
Diluted:
|
|
129
|
|
|
133
|
|
|
130
|
|
|
(4
|
)
|
|
3
|
|
|||||
(Loss) Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
$
|
(0.03
|
)
|
|
$
|
0.52
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
0.53
|
|
Diluted:
|
|
$
|
(0.03
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Dividend Declared Per Share
(1)
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
0.86
|
|
|
$
|
—
|
|
|
$
|
0.14
|
|
(1)
|
For information on dividends declared to shareholders and share repurchases, see
Liquidity and Capital Resources
below.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Diluted (Loss) Earnings Per Share from Continuing Operations
|
|
$
|
(0.03
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
Reconciling items
(1)
|
|
(0.03
|
)
|
|
(0.44
|
)
|
|
0.40
|
|
|||
Adjusted EPS
|
|
$
|
(0.06
|
)
|
|
$
|
0.07
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Reconciling Items
|
|
|
|
|
|
|
||||||
Operating loss related to insurance subsidiaries
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Impairment charges
(a)
|
|
20
|
|
|
43
|
|
|
64
|
|
|||
Severance and reorganization costs
(b)
|
|
2
|
|
|
7
|
|
|
9
|
|
|||
Gain on asset sales
(c)
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
2
|
|
|
2
|
|
|||
Effect on income of derivative instruments not designated as hedging instruments
|
|
2
|
|
|
(6
|
)
|
|
|
||||
Effect of foreign exchange (gain) loss on indebtedness
|
|
(1
|
)
|
|
3
|
|
|
1
|
|
|||
Other
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Total reconciling items, pre-tax
|
|
(21
|
)
|
|
50
|
|
|
79
|
|
|||
Pro forma income tax impact
(d)
|
|
2
|
|
|
(20
|
)
|
|
(32
|
)
|
|||
Impact of IRS audit settlement
(e)
|
|
—
|
|
|
(93
|
)
|
|
—
|
|
|||
Adjustment to uncertain tax positions
|
|
14
|
|
|
—
|
|
|
—
|
|
|||
Tax liability related to expected gain on sale of China assets
(c) (e)
|
|
—
|
|
|
4
|
|
|
—
|
|
|||
ARC purchase accounting adjustment tax impact
|
|
—
|
|
|
—
|
|
|
4
|
|
|||
Grantor trust activity
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Total Continuing Operations Reconciling Items, net of tax
|
|
$
|
(4
|
)
|
|
$
|
(59
|
)
|
|
$
|
52
|
|
Diluted (Loss) Earnings Per Share Impact
|
|
$
|
(0.03
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
0.40
|
|
Weighted Average Diluted Shares Outstanding
|
|
129
|
|
|
133
|
|
|
130
|
|
(a)
|
For additional information, see
Item 8. Financial Statements And Supplementary Information —
Note 14.
Supplementary Information
- Impairment charges.
|
(b)
|
The year ended December 31, 2015 included $6 million of costs incurred in connection with separation agreements related to the departure of two executive officers of which $4 million relates to non-cash compensation. The year ended December 31, 2014 included certain costs incurred in connection with cost savings initiatives.
|
(c)
|
Gain on assets sales for the year ended December 31, 2016, is primarily due to the sale of our interests in China. For additional information see
Item 8. Financial Statements And Supplementary Data —
Note 4.
Dispositions, Assets Held for Sale and Discontinued Operations
.
|
(d)
|
W
e calculate the federal and state tax impact of each item using the statutory federal tax rate and applicable blended state rate.
|
(e)
|
For additional information,
see Item 8. Financial Statements And Supplementary Data
—
Note 15.
Income Taxes
.
|
|
|
Years Ended
December 31, |
||||||||||
Adjusted EBITDA
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net (Loss) Income Attributable to Covanta Holding Corporation
|
|
$
|
(4
|
)
|
|
$
|
68
|
|
|
$
|
(2
|
)
|
Operating loss related to insurance subsidiaries
|
|
—
|
|
|
—
|
|
|
2
|
|
|||
Depreciation and amortization expense
|
|
207
|
|
|
198
|
|
|
211
|
|
|||
Interest expense, net
|
|
138
|
|
|
134
|
|
|
134
|
|
|||
Non-cash convertible debt related expense
|
|
—
|
|
|
—
|
|
|
13
|
|
|||
Income tax expense (benefit)
|
|
22
|
|
|
(84
|
)
|
|
15
|
|
|||
Impairment charges
(a)
|
|
20
|
|
|
43
|
|
|
64
|
|
|||
Gain on asset sales
(a)
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
2
|
|
|
2
|
|
|||
Net income attributable to noncontrolling interests in subsidiaries
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Other adjustments:
|
|
|
|
|
|
|
||||||
Capital-type expenditures at service fee operated facilities
(b)
|
|
39
|
|
|
31
|
|
|
—
|
|
|||
Debt service billing in excess of revenue recognized
|
|
4
|
|
|
1
|
|
|
2
|
|
|||
Severance and reorganization costs
(a)
|
|
3
|
|
|
4
|
|
|
9
|
|
|||
Non-cash compensation expense
(c)
|
|
16
|
|
|
18
|
|
|
17
|
|
|||
Other non-cash items
|
|
6
|
|
|
6
|
|
|
5
|
|
|||
Other
(d)
|
|
3
|
|
|
6
|
|
|
1
|
|
|||
Total adjustments
|
|
414
|
|
|
360
|
|
|
476
|
|
|||
Adjusted EBITDA
|
|
$
|
410
|
|
|
$
|
428
|
|
|
$
|
474
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flow provided by operating activities from continuing operations
|
|
$
|
282
|
|
|
$
|
249
|
|
|
$
|
340
|
|
Cash paid for interest, net of capitalized interest
|
|
135
|
|
|
131
|
|
|
119
|
|
|||
Cash paid for taxes
|
|
6
|
|
|
2
|
|
|
11
|
|
|||
Capital type expenditures at service fee operated facilities
(a)
|
|
39
|
|
|
31
|
|
|
—
|
|
|||
Adjustment for working capital and other
|
|
(52
|
)
|
|
15
|
|
|
4
|
|
|||
Adjusted EBITDA
|
|
$
|
410
|
|
|
$
|
428
|
|
|
$
|
474
|
|
|
As of December 31, 2016
|
||
Cash
|
$
|
84
|
|
Available borrowing capacity under Revolving Credit Facility
|
501
|
|
|
Total available liquidity
|
$
|
585
|
|
•
|
We received pre-tax proceeds of
$105 million
from the sale of our ownership interests in China, utilizing approximately $95 million of the proceeds to repay borrowings under our Revolving Credit Facility.
|
•
|
We extended the lease term related to our Union County EfW facility through 2053. Due primarily to the length of the extension, we recorded a lease liability of $104 million, calculated utilizing an incremental borrowing rate of 5.0%.
|
•
|
In December 2016, at our option, we redeemed $30 million of 6.45% tax-exempt project bonds due 2022 related to our Southeastern Connecticut EfW facility.
|
•
|
During 2016, we utilized €147 million of the €250 million Dublin Senior Term Loan to fund construction costs of the Dublin EfW facility.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Cash flow provided by operating activities of continuing operations
|
|
$
|
282
|
|
|
$
|
249
|
|
|
$
|
340
|
|
Plus: Cash flow used in operating activities from insurance activities
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Less: Maintenance capital expenditures
(a)
|
|
(110
|
)
|
|
(102
|
)
|
|
(101
|
)
|
|||
Free Cash Flow
|
|
$
|
172
|
|
|
$
|
147
|
|
|
$
|
240
|
|
|
|
|
|
|
|
|
||||||
Uses of Free Cash Flow
|
|
|
|
|
|
|
||||||
Investments:
|
|
|
|
|
|
|
||||||
Growth investments
(b)
|
|
$
|
(253
|
)
|
|
$
|
(346
|
)
|
|
$
|
(143
|
)
|
Other investing activities, net
(c)
|
|
4
|
|
|
—
|
|
|
12
|
|
|||
Total investments
|
|
$
|
(249
|
)
|
|
$
|
(346
|
)
|
|
$
|
(131
|
)
|
|
|
|
|
|
|
|
||||||
Return of capital to shareholders:
|
|
|
|
|
|
|
||||||
Cash dividends paid to shareholders
|
|
$
|
(131
|
)
|
|
$
|
(133
|
)
|
|
$
|
(101
|
)
|
Common stock repurchased
|
|
(20
|
)
|
|
(30
|
)
|
|
—
|
|
|||
Total return of capital to shareholders
|
|
$
|
(151
|
)
|
|
$
|
(163
|
)
|
|
$
|
(101
|
)
|
|
|
|
|
|
|
|
||||||
Capital raising activities:
|
|
|
|
|
|
|
||||||
Net proceeds from issuance of corporate debt
(d)
|
|
$
|
—
|
|
|
$
|
98
|
|
|
$
|
405
|
|
Net proceeds from issuance of project debt
(e)
|
|
—
|
|
|
15
|
|
|
—
|
|
|||
Net proceeds from Dublin financing
|
|
159
|
|
|
85
|
|
|
—
|
|
|||
Net proceeds from equipment financing capital lease
(f)
|
|
—
|
|
|
15
|
|
|
63
|
|
|||
Net proceeds from the exercise of options for common stock
|
|
—
|
|
|
—
|
|
|
10
|
|
|||
Change in restricted funds held in trust
|
|
29
|
|
|
—
|
|
|
(3
|
)
|
|||
Other financing activities, net
|
|
(6
|
)
|
|
5
|
|
|
(3
|
)
|
|||
Deferred financing costs
|
|
(6
|
)
|
|
(7
|
)
|
|
(29
|
)
|
|||
Proceeds from sale of China assets
|
|
105
|
|
|
—
|
|
|
—
|
|
|||
Net proceeds from capital raising activities
|
|
$
|
281
|
|
|
$
|
211
|
|
|
$
|
443
|
|
|
|
|
|
|
|
|
||||||
Debt repayments:
|
|
|
|
|
|
|
||||||
Net cash used for scheduled principal payments on corporate debt
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(462
|
)
|
Payments related to Cash Conversion Option
(g)
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
|||
Proceeds from the settlement of Note Hedge
(g)
|
|
—
|
|
|
—
|
|
|
83
|
|
|||
Net cash used for principal payments on project debt
(h)
|
|
(52
|
)
|
|
(38
|
)
|
|
(29
|
)
|
|||
Payment of equipment financing capital lease
(f)
|
|
(4
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|||
Voluntary prepayment of corporate debt
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|||
Total debt repayments
|
|
$
|
(60
|
)
|
|
$
|
(43
|
)
|
|
$
|
(587
|
)
|
Borrowing activities - Revolving Credit Facility, net
|
|
$
|
(5
|
)
|
|
$
|
203
|
|
|
$
|
35
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
Net change in cash and cash equivalents from continuing operations
|
|
$
|
(12
|
)
|
|
$
|
5
|
|
|
$
|
(106
|
)
|
(a)
|
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 include 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:
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Maintenance capital expenditures
|
|
$
|
(110
|
)
|
|
$
|
(102
|
)
|
|
$
|
(101
|
)
|
Capital expenditures associated with construction of Dublin EfW facility
|
|
(162
|
)
|
|
(184
|
)
|
|
(14
|
)
|
|||
Capital expenditures associated with organic growth initiatives
|
|
(46
|
)
|
|
(34
|
)
|
|
(25
|
)
|
|||
Capital expenditures associated with the New York City MTS contract
|
|
(3
|
)
|
|
(30
|
)
|
|
(59
|
)
|
|||
Capital expenditures associated with Essex County EfW emissions control system
|
|
(33
|
)
|
|
(26
|
)
|
|
(17
|
)
|
|||
Total capital expenditures associated with growth investments
|
|
(244
|
)
|
|
(274
|
)
|
|
(115
|
)
|
|||
Capital expenditures associated with property insurance events
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|||
Total purchases of property, plant and equipment
|
|
$
|
(359
|
)
|
|
$
|
(376
|
)
|
|
$
|
(216
|
)
|
(b)
|
Growth investments include investments in growth opportunities, including organic growth initiatives, technology, business development, and other similar expenditures.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Capital expenditures associated with growth investments
|
|
$
|
(244
|
)
|
|
$
|
(274
|
)
|
|
$
|
(115
|
)
|
Investments in connection with the Dublin EfW facility, net of capital expenditures
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||
Other organic growth investments
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Acquisitions, net of cash acquired
|
|
(9
|
)
|
|
(72
|
)
|
|
(13
|
)
|
|||
Total growth investments
|
|
$
|
(253
|
)
|
|
$
|
(346
|
)
|
|
$
|
(143
|
)
|
(c)
|
Other investing activities include net payments from the purchase/sale of investment securities.
|
(d)
|
Excludes borrowings under the Revolving Credit Facility. Calculated as follows:
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Proceeds from borrowings on long-term debt
|
|
$
|
—
|
|
|
$
|
294
|
|
|
$
|
412
|
|
Refinanced long-term debt
|
|
—
|
|
|
(195
|
)
|
|
—
|
|
|||
Less: Financing costs related to issuance of long-term debt
|
|
—
|
|
|
(1
|
)
|
|
(7
|
)
|
|||
Net proceeds from issuance of corporate debt
|
|
$
|
—
|
|
|
$
|
98
|
|
|
$
|
405
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Proceeds from borrowings on project debt
|
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
63
|
|
Refinanced project debt
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|||
Change in restricted funds held in trust
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Less: Funding into escrow
|
|
|
|
|
|
(63
|
)
|
|||||
Less: Financing cost related to the issuance of project debt
|
|
—
|
|
|
$
|
(2
|
)
|
|
|
|||
Net proceeds from issuance of project debt
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
(h)
|
Calculated as follows:
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total principal payments on project debt
|
|
$
|
(51
|
)
|
|
$
|
(43
|
)
|
|
$
|
(52
|
)
|
Decrease in related restricted funds held in trust
|
|
(1
|
)
|
|
5
|
|
|
23
|
|
|||
Net cash used for principal payments on project debt
|
|
$
|
(52
|
)
|
|
$
|
(38
|
)
|
|
$
|
(29
|
)
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Domestic
|
$
|
18
|
|
|
$
|
44
|
|
International
|
66
|
|
|
50
|
|
||
Total Cash and Cash Equivalents
|
$
|
84
|
|
|
$
|
94
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Corporate Debt:
|
|
||||||
Revolving Credit Facility
|
$
|
343
|
|
|
$
|
348
|
|
Term Loan due 2019
|
196
|
|
|
200
|
|
||
7.25% Senior Notes due 2020
|
400
|
|
|
400
|
|
||
6.375% Senior Notes due 2022
|
400
|
|
|
400
|
|
||
5.875% Senior Notes due 2024
|
400
|
|
|
400
|
|
||
4.00% - 5.25% Tax-Exempt Bonds due 2024 - 2045
|
464
|
|
|
464
|
|
||
3.48% - 4.52% Equipment Leases due 2020 - 2027
|
69
|
|
|
73
|
|
||
Total corporate debt (including current portion)
|
$
|
2,272
|
|
|
$
|
2,285
|
|
|
|
|
|
||||
Project Debt:
|
|
|
|
||||
Domestic project debt - service fee facilities
|
$
|
78
|
|
|
$
|
117
|
|
Domestic project debt - tip fee facilities
|
16
|
|
|
23
|
|
||
Union capital lease
|
99
|
|
|
—
|
|
||
Dublin Senior Term Loan due 2021
|
155
|
|
|
—
|
|
||
Dublin Junior Term Loan due 2022
|
58
|
|
|
57
|
|
||
Total project debt (including current portion)
|
$
|
406
|
|
|
$
|
197
|
|
Total Debt Outstanding
|
$
|
2,678
|
|
|
$
|
2,482
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Revolving Credit Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
343
|
|
Term Loan
|
|
5
|
|
|
5
|
|
|
5
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|
196
|
|
|||||||
Senior Notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400
|
|
|
—
|
|
|
800
|
|
|
1,200
|
|
|||||||
Tax-Exempt Bonds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
464
|
|
|
464
|
|
|||||||
Equipment Leases
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
44
|
|
|
69
|
|
|||||||
Project Debt
|
|
22
|
|
|
31
|
|
|
26
|
|
|
17
|
|
|
144
|
|
|
166
|
|
|
406
|
|
|||||||
Total
|
|
$
|
32
|
|
|
$
|
41
|
|
|
$
|
36
|
|
|
$
|
946
|
|
|
$
|
149
|
|
|
$
|
1,474
|
|
|
$
|
2,678
|
|
|
|
Total
|
|
Payments Due by Period
|
||||||||||||||||
2017
|
|
2018 and
2019
|
|
2020 and
2021
|
|
2022 and
Beyond
|
||||||||||||||
RECORDED LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Project debt
|
|
$
|
406
|
|
|
$
|
22
|
|
|
$
|
57
|
|
|
$
|
161
|
|
|
$
|
166
|
|
Term Loan
(1)
|
|
196
|
|
|
5
|
|
|
10
|
|
|
181
|
|
|
—
|
|
|||||
Revolving Credit Facility
(1)
|
|
343
|
|
|
—
|
|
|
—
|
|
|
343
|
|
|
—
|
|
|||||
7.25% Senior Notes
(2)
|
|
400
|
|
|
—
|
|
|
—
|
|
|
400
|
|
|
—
|
|
|||||
6.375% Senior Notes
(3)
|
|
400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400
|
|
|||||
5.875% Senior Notes
(4)
|
|
400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400
|
|
|||||
Tax-exempt bonds due 2024-2045
(5)
|
|
464
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
464
|
|
|||||
Equipment leases
(6)
|
|
69
|
|
|
5
|
|
|
10
|
|
|
10
|
|
|
44
|
|
|||||
Total debt obligations
|
|
2,678
|
|
|
32
|
|
|
77
|
|
|
1,095
|
|
|
1,474
|
|
|||||
Less: Non-recourse debt
(7)
|
|
(475
|
)
|
|
(27
|
)
|
|
(67
|
)
|
|
(171
|
)
|
|
(210
|
)
|
|||||
Total recourse debt
|
|
$
|
2,203
|
|
|
$
|
5
|
|
|
$
|
10
|
|
|
$
|
924
|
|
|
$
|
1,264
|
|
Dublin Convertible Preferred
(8)
|
|
$
|
117
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
107
|
|
Uncertainty in income tax obligations
(9)
|
|
$
|
43
|
|
|
$
|
1
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
26
|
|
OTHER:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest payments
(10)
|
|
$
|
1,304
|
|
|
$
|
149
|
|
|
$
|
293
|
|
|
$
|
215
|
|
|
$
|
647
|
|
Less: Non-recourse interest payments
|
|
(184
|
)
|
|
(20
|
)
|
|
(34
|
)
|
|
(31
|
)
|
|
(99
|
)
|
|||||
Total recourse interest payments
|
|
$
|
1,120
|
|
|
$
|
129
|
|
|
$
|
259
|
|
|
$
|
184
|
|
|
$
|
548
|
|
Dublin future obligations
(11)
|
|
$
|
108
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
100
|
|
|
$
|
—
|
|
Interest related to Dublin future obligations
(11)
|
|
$
|
48
|
|
|
$
|
10
|
|
|
$
|
21
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Purchase obligations
(12)
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
|
|
$
|
57
|
|
|
$
|
8
|
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
24
|
|
Retirement plan obligations
(13)
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Total obligations
|
|
$
|
3,733
|
|
|
$
|
154
|
|
|
$
|
358
|
|
|
$
|
1,251
|
|
|
$
|
1,970
|
|
(1)
|
Interest payments on the Term Loan and letter of credit fees are estimated based on current LIBOR rates and are estimated assuming scheduled principal repayments.
See Item 8. Financial Statements And Supplementary Data — Note 11. Consolidated Debt
.
|
(2)
|
Interest on the 7.25% Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2011 and will mature on December 1, 2020 unless earlier redeemed or repurchased.
See Item 8. Financial Statements And Supplementary Data — Note 11. Consolidated Debt
.
|
(3)
|
Interest on the 6.375% Notes is payable semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2012 and will mature on October 1, 2022 unless earlier redeemed or repurchased.
See Item 8. Financial Statements And Supplementary Data — Note 11. Consolidated Debt
.
|
(4)
|
Interest on the 5.875% Notes is payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2014 and will mature on March 21, 2024 unless earlier redeemed or repurchased.
See Item 8. Financial Statements And Supplementary Data — Note 11. Consolidated Debt
.
|
(5)
|
The tax-exempt bonds bear interest between 4% and 5.25%. Interest on the $335 million of tax-exempt bonds issued in 2012, is payable semi-annually on May 1 and November 1 of each year, commencing on May 1, 2013. Interest on the $130 million of tax-exempt bonds issued in 2015, is payable semi-annually on January 1 and July 1 of each year, commencing on January 1, 2016. For a detailed description of the terms of the Tax-Exempt bonds, see
Item 8. Financial Statements And Supplementary Data — Note 11. Consolidated Debt.
|
(6)
|
The original lease terms range from
10 years
to
12 years
and the fixed interest rates range from
3.48%
to
4.52%
.
|
(7)
|
Payment obligations for the project debt and equipment leases associated with owned energy-from-waste facilities are limited recourse to operating subsidiaries and non-recourse to us, subject to operating performance guarantees and commitments.
|
(8)
|
The Stakeholder Loan accrues dividends at a fixed rate of
13.50%
per annum. The dividends are payable 50% in cash and 50% accrued to the principal balance on a monthly basis prior to the operational commencement date, and payable 100% in cash semi-annually thereafter,
|
(9)
|
Accounting for uncertainty in income tax obligations is based upon the expected date of settlement taking into account all of our administrative rights including possible litigation.
|
(10)
|
Interest payments represent accruals for cash interest payments. Excludes interest payments on Dublin Senior Term Loan.
|
(11)
|
Projected obligations relating to our Dublin Senior Term Loan.
See Item 8. Financial Statements And Supplementary Data — Note 11. Consolidated Debt
.
|
(12)
|
Purchase obligations relate to capital commitments related to our New York City waste transport and disposal contract. See
Item 8. Financial Statements And Supplementary Data — Note 3. New Business and Asset Management
for additional information
.
|
(13)
|
Retirement plan obligations are based on actuarial estimates for the non-qualified pension plan obligations and post-retirement plan obligations only as of December 31, 2016. In 2012, the qualified pension plan was terminated and final settlement occurred in 2013. See
Item 8. Financial Statements And Supplementary Data — Note 16. Employee Benefit Plans.
|
|
Commitments Expiring by Period
|
||||||||||
|
Total
|
|
Less Than
One Year
|
|
More Than
One Year
|
||||||
Letters of credit issued under the Revolving Credit Facility
|
$
|
156
|
|
|
$
|
—
|
|
|
$
|
156
|
|
Letters of credit - other
|
61
|
|
|
—
|
|
|
61
|
|
|||
Surety bonds
|
158
|
|
|
—
|
|
|
158
|
|
|||
Total other commitments — net
|
$
|
375
|
|
|
$
|
—
|
|
|
$
|
375
|
|
Policy
|
|
Judgments and estimates
|
|
Effect if actual results differ
from assumptions
|
Revenue and Expense Recognition (Construction Contracts)
Construction contracts are typically signed in conjunction with agreements to operate a newly constructed project. Upon completion of the construction element of these contracts, we recognize service revenue over the term of the service element of the contract.
Revenue under existing fixed-price construction contracts are recognized using the percentage-of-completion method, measured by the cost-to-cost method.
If we enter new contracts that contain multiple element arrangements, the revenue will be allocated between construction revenue and other project revenue (waste disposal revenue and electricity and steam sales) based on the relative fair value of each element provided the delivered elements have value to customers on a standalone basis. Amounts allocated to each element are based on its objectively determined fair value, such as the sales price for the product or service when it is sold separately or competitor prices for similar products or services.
|
|
We estimate our total construction costs for the contract throughout the project. As the project progresses, revisions to our estimated costs may be necessary.
Given the unique nature of our business, we are likely to use our best estimate of selling price in allocating revenue between construction, and other project revenue (waste and service revenue, and electricity and steam sales). This allocation would be performed at the inception of the new contracts and when a material modification occurs.
|
|
If a revision to our estimated construction costs is required, the amount of revenue and the related operating income recognized will also fluctuate.
The allocation of revenue will impact the timing of revenue recognized for each unit, where the amount allocated to construction will be recognized in earlier periods followed by the remainder over the service period. Any subsequent modification to the contracts that are considered material could result in a change in the amount and timing of revenue to be recognized.
|
Purchase Accounting
We allocate acquisition purchase prices to identified tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition, with any residual amounts allocated to goodwill. The fair value estimates used reflect our best estimates for the highest and best use by market participants.
|
|
These estimates are subject to uncertainties and contingencies. For example, we used the discounted cash flow method to estimate the value of many of our assets, which entailed developing projections of future cash flows.
|
|
If the cash flows from the acquired net assets differ significantly from our estimates, the amounts recorded could be subject to impairments. Furthermore, to the extent we change our initial estimates of the remaining useful life of the assets or liabilities, future depreciation and amortization expense could be impacted.
|
|
|
|
|
|
Policy
|
|
Judgments and estimates
|
|
Effect if actual results differ
from assumptions |
Long-lived Assets and Intangible Assets
Our long-lived assets include property, plant and equipment; waste, service and energy contracts; amortizable intangible assets; and other assets. We evaluate the recoverability of the long-lived assets when there are indicators of possible impairment. Such indicators may include a decline in market, new regulation, recurring or expected operating losses, change in business strategy, or other changes that would impact the use or benefit received from the assets. The assessment is performed by grouping the long-lived assets at the lowest level of identifiable cash flows for the related assets or group of assets (such as the facility level). Initially the carrying value of the asset or asset group is compared to its undiscounted expected future cash flows. If the carrying value is in excess of the undiscounted cash flows, the carrying value is then compared to the fair value. Fair value may be estimated based upon the discounted cash flows, market or replacement cost methods based on the assumptions of a third-party market participant. Impairment is recognized if the fair value is less than the carrying value.
|
|
Our judgments regarding the existence of impairment indicators are based on regulatory factors, market conditions, anticipated cash flows and operational performance of our assets. When determining the fair value of our asset groupings and intangible assets for impairment assessments, we make assumptions regarding their fair values which are dependent on estimates of future cash flows, discount rates, and other factors. |
|
Future events or change in circumstances may occur that require another assessment in future periods based on cash flows and discount rates in effect at that time. |
Goodwill
As of December 31, 2016, we had $302 million of goodwill recorded in our North America reportable segment, which is comprised of two reporting units (see
Note 8. Other Intangible Assets and Goodwill).
We evaluate our goodwill annually and when indications of impairment exist.
We have the option to perform our initial assessment over the possible impairment of goodwill either qualitatively or quantitatively. Under the qualitative assessment, consideration is given to both external factors (including macroeconomic and industry conditions) and our own internal factors (including internal costs, recent financial performance, management, business strategy, customers, and stock price). During the fourth quarter of 2016 we performed the required annual impairment review of our recorded goodwill. We determined that there was no indication of impairment as the fair value of our reporting units exceeded their carrying values.
|
|
Our judgments regarding the existence of impairment indicators are based on regulatory factors, market conditions, anticipated cash flows and operational performance of our assets.
When determining the fair value of our reporting unit for impairment assessments, we make assumptions regarding the fair value which is dependent on estimates of future cash flows, discount rates, and other factors.
|
|
The impairment assessment of goodwill performed in the periods presented resulted in the conclusion that the fair value was not less than the carrying value.
In future years, if there is a significant change in the estimated cash flows, discount rates or other factors that cause the fair values to significantly decrease, there could be impairments which could materially impact our results of operations.
|
Policy
|
|
Judgments and estimates
|
|
Effect if actual results differ
from assumptions
|
I
nsurance Reserves and Self-Insurance for Employee Benefit Plans
We retain a substantial portion of the risk related to certain general liability, workers’ compensation and medical claims. However, we maintain stop-loss coverage to limit the exposure related to employee benefit plans and liability insurance over retained risks. Liabilities associated with these losses include estimates of both claims filed and losses incurred but not yet reported ("IBNR"). We use actuarial methods which consider a number of factors to estimate our ultimate cost of losses. Our insurance reserves and medical liability accrual was $16 million and $14 million as of December 31, 2016 and 2015, respectively.
|
|
We believe that the amounts accrued are adequate; however, our liabilities could be significantly affected if future occurrences or loss developments differ from our estimates of both claims filed and losses incurred but not yet reported.
|
|
A 1% change in average claim costs would impact our self-insurance expense by less than $1 million.
|
Deferred Tax Assets
As described in
Item 8. Financial Statements And Supplementary Data — Note 15. Income Taxes
, we have recorded a deferred tax asset related to our NOLs.
The NOLs will expire in various amounts beginning on December 31, 2028 through December 31, 2033, if not used.
Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
|
|
We estimated that we had gross NOLs of approximately $288 million for federal income tax purposes and $291 million for state income tax purposes as of the end of 2016. We also estimated our tax credits as approximately $54 million and our deferred tax assets are offset by a valuation allowance of approximately $71 million. The amount recorded was calculated based upon future taxable income arising from (a) the reversal of temporary differences during the period the NOLs are available and (b) future operating income expected, to the extent it is reasonably predictable. Judgment is involved in assessing whether a valuation allowance is required on our deferred tax assets. |
|
To the extent our estimation of the reversal of temporary differences and operating income generated differs from actual results, we could be required to adjust the carrying amount of the deferred tax assets.
|
|
|
|
Page
|
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Balance Sheets as of December 31, 2016 and 2015
|
|
Consolidated Statements of Cash Flow for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Equity for the Years Ended December 31, 2016, 2015 and 2014
|
|
Note 4.
Dispositions, Assets Held for Sale and Discontinued Operations
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(In millions, except per share amounts)
|
||||||||||
OPERATING REVENUE:
|
|
|
|
|
|
|
||||||
Waste and service revenue
|
|
$
|
1,187
|
|
|
$
|
1,104
|
|
|
$
|
1,032
|
|
Energy revenue
|
|
370
|
|
|
421
|
|
|
460
|
|
|||
Recycled metals revenue
|
|
61
|
|
|
61
|
|
|
93
|
|
|||
Other operating revenue
|
|
81
|
|
|
59
|
|
|
97
|
|
|||
Total operating revenue
|
|
1,699
|
|
|
1,645
|
|
|
1,682
|
|
|||
OPERATING EXPENSE:
|
|
|
|
|
|
|
||||||
Plant operating expense
|
|
1,177
|
|
|
1,129
|
|
|
1,055
|
|
|||
Other operating expense, net
|
|
86
|
|
|
73
|
|
|
101
|
|
|||
General and administrative expense
|
|
100
|
|
|
93
|
|
|
97
|
|
|||
Depreciation and amortization expense
|
|
207
|
|
|
198
|
|
|
211
|
|
|||
Impairment charges
|
|
20
|
|
|
43
|
|
|
64
|
|
|||
Total operating expense
|
|
1,590
|
|
|
1,536
|
|
|
1,528
|
|
|||
Operating income
|
|
109
|
|
|
109
|
|
|
154
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Investment income
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Interest expense
|
|
(139
|
)
|
|
(134
|
)
|
|
(135
|
)
|
|||
Non-cash convertible debt related expense
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Gain on asset sales
|
|
44
|
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Other expense, net
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total other expense
|
|
(95
|
)
|
|
(137
|
)
|
|
(150
|
)
|
|||
Income (loss) before income tax (expense) benefit and equity in net income from unconsolidated investments
|
|
14
|
|
|
(28
|
)
|
|
4
|
|
|||
Income tax (expense) benefit
|
|
(22
|
)
|
|
84
|
|
|
(15
|
)
|
|||
Equity in net income from unconsolidated investments
|
|
4
|
|
|
13
|
|
|
10
|
|
|||
NET (LOSS) INCOME
|
|
(4
|
)
|
|
69
|
|
|
(1
|
)
|
|||
Less: Net income attributable to noncontrolling interests in subsidiaries
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
NET (LOSS) INCOME ATTRIBUTABLE TO COVANTA HOLDING CORPORATION
|
|
$
|
(4
|
)
|
|
$
|
68
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
||||||
Weighted Average Common Shares Outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
129
|
|
|
132
|
|
|
130
|
|
|||
Diluted
|
|
129
|
|
|
133
|
|
|
130
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
(Loss) Income Per Share Attributable to Covanta Holding Corporation Stockholders:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(0.03
|
)
|
|
$
|
0.52
|
|
|
$
|
(0.01
|
)
|
Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
||||||
Cash Dividend Declared Per Share:
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
0.86
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(In millions)
|
||||||||||
Net (loss) income
|
|
$
|
(4
|
)
|
|
$
|
69
|
|
|
$
|
(1
|
)
|
Foreign currency translation
|
|
(7
|
)
|
|
(22
|
)
|
|
(12
|
)
|
|||
Net unrealized (loss) gain on derivative instruments, net of tax (benefit) expense of $(8), $7, and $2, respectively
|
|
(21
|
)
|
|
10
|
|
|
(7
|
)
|
|||
Net unrealized loss on available for sale securities
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Other comprehensive loss attributable to Covanta Holding Corporation
|
|
(28
|
)
|
|
(12
|
)
|
|
(20
|
)
|
|||
Comprehensive (loss) income
|
|
(32
|
)
|
|
57
|
|
|
(21
|
)
|
|||
Less: Net income attributable to noncontrolling interests in subsidiaries
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Comprehensive (loss) income attributable to Covanta Holding Corporation
|
|
$
|
(32
|
)
|
|
$
|
56
|
|
|
$
|
(22
|
)
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In millions, except per
share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
84
|
|
|
$
|
94
|
|
Restricted funds held in trust
|
56
|
|
|
77
|
|
||
Receivables (less allowances of $9 million and $7 million, respectively)
|
332
|
|
|
312
|
|
||
Prepaid expenses and other current assets
|
72
|
|
|
117
|
|
||
Assets held for sale
|
—
|
|
|
97
|
|
||
Total Current Assets
|
544
|
|
|
697
|
|
||
Property, plant and equipment, net
|
3,024
|
|
|
2,690
|
|
||
Restricted funds held in trust
|
54
|
|
|
83
|
|
||
Waste, service and energy contracts, net
|
263
|
|
|
284
|
|
||
Other intangible assets, net
|
34
|
|
|
38
|
|
||
Goodwill
|
302
|
|
|
301
|
|
||
Other assets
|
63
|
|
|
141
|
|
||
Total Assets
|
$
|
4,284
|
|
|
$
|
4,234
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
9
|
|
|
$
|
8
|
|
Current portion of project debt
|
22
|
|
|
16
|
|
||
Accounts payable
|
98
|
|
|
90
|
|
||
Accrued expenses and other current liabilities
|
289
|
|
|
234
|
|
||
Liabilities held for sale
|
—
|
|
|
23
|
|
||
Total Current Liabilities
|
418
|
|
|
371
|
|
||
Long-term debt
|
2,243
|
|
|
2,255
|
|
||
Project debt
|
361
|
|
|
182
|
|
||
Deferred income taxes
|
617
|
|
|
595
|
|
||
Waste and service contracts, net
|
7
|
|
|
13
|
|
||
Other liabilities
|
169
|
|
|
178
|
|
||
Total Liabilities
|
3,815
|
|
|
3,594
|
|
||
Commitments and Contingencies (Note 18)
|
|
|
|
||||
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 136 shares, outstanding 130 and 131, respectively)
|
14
|
|
|
14
|
|
||
Additional paid-in capital
|
807
|
|
|
801
|
|
||
Accumulated other comprehensive loss
|
(62
|
)
|
|
(34
|
)
|
||
Accumulated deficit
|
(289
|
)
|
|
(143
|
)
|
||
Treasury stock, at par
|
(1
|
)
|
|
—
|
|
||
Total Covanta Holding Corporation stockholders' equity
|
469
|
|
|
638
|
|
||
Noncontrolling interests in subsidiaries
|
—
|
|
|
2
|
|
||
Total Equity
|
469
|
|
|
640
|
|
||
Total Liabilities and Equity
|
$
|
4,284
|
|
|
$
|
4,234
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
OPERATING ACTIVITIES:
|
(In millions)
|
||||||||||
Net (loss) income
|
$
|
(4
|
)
|
|
$
|
69
|
|
|
$
|
(1
|
)
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
207
|
|
|
198
|
|
|
211
|
|
|||
Amortization of long-term debt deferred financing costs
|
6
|
|
|
8
|
|
|
8
|
|
|||
Gain on asset sales
|
(44
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment charges
|
20
|
|
|
43
|
|
|
64
|
|
|||
Amortization of debt premium and discount
|
1
|
|
|
—
|
|
|
(1
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
2
|
|
|
2
|
|
|||
Non-cash convertible debt related expense
|
—
|
|
|
—
|
|
|
13
|
|
|||
Provision for doubtful accounts
|
2
|
|
|
1
|
|
|
4
|
|
|||
Stock-based compensation expense
|
16
|
|
|
18
|
|
|
17
|
|
|||
Equity in net income from unconsolidated investments
|
(4
|
)
|
|
(13
|
)
|
|
(10
|
)
|
|||
Dividends from unconsolidated investments
|
2
|
|
|
5
|
|
|
11
|
|
|||
Deferred income taxes
|
21
|
|
|
(11
|
)
|
|
4
|
|
|||
IRS audit settlement
|
—
|
|
|
(93
|
)
|
|
—
|
|
|||
Change in restricted funds held in trust
|
22
|
|
|
28
|
|
|
11
|
|
|||
Other, net
|
(6
|
)
|
|
16
|
|
|
2
|
|
|||
Change in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
||||||
Receivables
|
(19
|
)
|
|
(12
|
)
|
|
(40
|
)
|
|||
Debt services billings in excess of revenue recognized
|
(1
|
)
|
|
5
|
|
|
17
|
|
|||
Accounts payable and accrued expenses
|
45
|
|
|
(8
|
)
|
|
57
|
|
|||
Deferred revenue
|
(2
|
)
|
|
(5
|
)
|
|
(22
|
)
|
|||
Other, net
|
20
|
|
|
(2
|
)
|
|
(7
|
)
|
|||
Total adjustments for continuing operations
|
286
|
|
|
180
|
|
|
341
|
|
|||
Net cash provided by operating activities from continuing operations
|
282
|
|
|
249
|
|
|
340
|
|
|||
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
—
|
|
|
1
|
|
|||
Net cash provided by operating activities
|
282
|
|
|
249
|
|
|
341
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchase of property, plant and equipment
|
(359
|
)
|
|
(376
|
)
|
|
(216
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
(9
|
)
|
|
(72
|
)
|
|
(13
|
)
|
|||
Acquisition of noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||
Purchase of investment securities
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Proceeds from asset sales
|
109
|
|
|
—
|
|
|
—
|
|
|||
Property insurance proceeds
|
3
|
|
|
1
|
|
|
2
|
|
|||
Proceeds from the sale of investment securities
|
—
|
|
|
—
|
|
|
6
|
|
|||
Proceeds from available-for-sale marketable securities
|
—
|
|
|
—
|
|
|
11
|
|
|||
Other, net
|
2
|
|
|
(1
|
)
|
|
(6
|
)
|
|||
Net cash used in investing activities from continuing operations
|
(254
|
)
|
|
(448
|
)
|
|
(232
|
)
|
|||
Net cash provided by investing activities from discontinued operations
|
—
|
|
|
—
|
|
|
3
|
|
|||
Net cash used in investing activities
|
(254
|
)
|
|
(448
|
)
|
|
(229
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In millions)
|
||||||||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from borrowings on long-term debt
|
—
|
|
|
294
|
|
|
412
|
|
|||
Proceeds from borrowings on revolving credit facility
|
744
|
|
|
895
|
|
|
531
|
|
|||
Proceeds from equipment financing capital lease
|
—
|
|
|
15
|
|
|
63
|
|
|||
Proceeds from borrowings on project debt
|
—
|
|
|
59
|
|
|
63
|
|
|||
Proceeds from borrowings on Dublin project financing
|
159
|
|
|
86
|
|
|
—
|
|
|||
Proceeds from the exercise of options for common stock, net
|
—
|
|
|
—
|
|
|
10
|
|
|||
Proceeds from settlement of Note Hedge
|
—
|
|
|
—
|
|
|
(83
|
)
|
|||
Payments related to Cash Conversion Option
|
—
|
|
|
—
|
|
|
83
|
|
|||
Principal payments on long-term debt
|
(4
|
)
|
|
(196
|
)
|
|
(557
|
)
|
|||
Payments of borrowings on revolving credit facility
|
(749
|
)
|
|
(692
|
)
|
|
(496
|
)
|
|||
Payments of equipment financing capital lease
|
(4
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|||
Principal payments on project debt
|
(51
|
)
|
|
(85
|
)
|
|
(52
|
)
|
|||
Payments of deferred financing costs
|
(6
|
)
|
|
(11
|
)
|
|
(36
|
)
|
|||
Cash dividends paid to stockholders
|
(131
|
)
|
|
(133
|
)
|
|
(101
|
)
|
|||
Common stock repurchased
|
(20
|
)
|
|
(30
|
)
|
|
—
|
|
|||
Change in restricted funds held in trust
|
28
|
|
|
5
|
|
|
(43
|
)
|
|||
Other, net
|
(6
|
)
|
|
5
|
|
|
(3
|
)
|
|||
Net cash (used in) provided by financing activities from continuing operations
|
(40
|
)
|
|
208
|
|
|
(210
|
)
|
|||
Net cash used in financing activities from discontinued operations
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||
Net cash (used in) provided by financing activities
|
(40
|
)
|
|
208
|
|
|
(216
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(4
|
)
|
|
(5
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(12
|
)
|
|
5
|
|
|
(109
|
)
|
|||
Cash and cash equivalents at beginning of period
|
96
|
|
|
91
|
|
|
200
|
|
|||
Cash and cash equivalents at end of period
|
84
|
|
|
96
|
|
|
91
|
|
|||
Less: Cash and cash equivalents of assets held for sale and discontinued operations at end of period
|
—
|
|
|
2
|
|
|
7
|
|
|||
Cash and cash equivalents of continuing operations at end of period
|
$
|
84
|
|
|
$
|
94
|
|
|
$
|
84
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Cash Paid for Interest and Income Taxes:
|
|
|
|
|
|
||||||
Interest
|
$
|
150
|
|
|
$
|
141
|
|
|
$
|
121
|
|
Income taxes, net of refunds
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
Covanta Holding Corporation Stockholders’ Equity
|
|
Noncontrolling
Interests in
Subsidiaries
|
|
Total
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Earnings (Deficit)
|
|
Treasury Stock
|
|
|||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2013
|
|
136
|
|
|
$
|
14
|
|
|
$
|
790
|
|
|
$
|
(2
|
)
|
|
$
|
101
|
|
|
6
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
906
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|||||||
Dividend declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(114
|
)
|
|
|
|
|
|
|
|
|
|
|
(114
|
)
|
|||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|||||||
Exercise of options to purchase common stock
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
10
|
|
|||||||
Exercise of warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
1
|
|
|
|
|
|
1
|
|
|||||||
Shares issued in non-vested stock award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||
Other
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|||||||
Acquisition of noncontrolling interests in subsidiaries
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
(12
|
)
|
|||||||
Comprehensive (loss) income, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
(2
|
)
|
|
|
|
|
|
|
|
1
|
|
|
(21
|
)
|
|||||||
Balance as of December 31, 2014
|
|
136
|
|
|
$
|
14
|
|
|
$
|
805
|
|
|
$
|
(22
|
)
|
|
$
|
(15
|
)
|
|
3
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
784
|
|
Opening retained earnings adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
(45
|
)
|
|||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|||||||
Dividend declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
|
|
|
|
(133
|
)
|
|||||||
Common stock repurchased
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
(19
|
)
|
|
2
|
|
|
|
|
|
|
|
|
(32
|
)
|
|||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|||||||
Distribution to partners of noncontrolling interest of subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|||||||
Adjustment for acquisition of noncontrolling interests in subsidiaries
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|||||||
Comprehensive (loss) income, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
68
|
|
|
|
|
|
|
|
|
1
|
|
|
57
|
|
|||||||
Balance as of December 31, 2015
|
|
136
|
|
|
$
|
14
|
|
|
$
|
801
|
|
|
$
|
(34
|
)
|
|
$
|
(143
|
)
|
|
5
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
640
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|||||||
Dividend declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(132
|
)
|
|
|
|
|
|
|
|
|
|
|
(132
|
)
|
|||||||
Common stock repurchased
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
(11
|
)
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
(18
|
)
|
|||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|||||||
Exchange of China equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|||||||
Comprehensive loss, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
(28
|
)
|
|
(4
|
)
|
|
|
|
|
|
|
|
—
|
|
|
(32
|
)
|
|||||||
Balance as of December 31, 2016
|
|
136
|
|
|
$
|
14
|
|
|
$
|
807
|
|
|
$
|
(62
|
)
|
|
$
|
(289
|
)
|
|
6
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
469
|
|
|
|
As of December 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||
|
|
Current
|
|
Noncurrent
|
|
Current
|
|
Noncurrent
|
||||||||
Debt service funds - principal
|
|
$
|
10
|
|
|
$
|
7
|
|
|
$
|
9
|
|
|
$
|
8
|
|
Debt service funds - interest
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total debt service funds
|
|
11
|
|
|
7
|
|
|
10
|
|
|
8
|
|
||||
Revenue funds
|
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Other funds
|
|
42
|
|
|
47
|
|
|
63
|
|
|
75
|
|
||||
Total
|
|
$
|
56
|
|
|
$
|
54
|
|
|
$
|
77
|
|
|
$
|
83
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Advance billings to municipalities
|
|
$
|
5
|
|
|
$
|
6
|
|
Other
|
|
11
|
|
|
7
|
|
||
Total
|
|
$
|
16
|
|
|
$
|
13
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Land
|
|
$
|
29
|
|
|
$
|
22
|
|
Facilities and equipment
|
|
4,188
|
|
|
3,885
|
|
||
Landfills (primarily for ash disposal)
|
|
63
|
|
|
64
|
|
||
Construction in progress
|
|
433
|
|
|
266
|
|
||
Total
|
|
4,713
|
|
|
4,237
|
|
||
Less: accumulated depreciation and amortization
|
|
(1,689
|
)
|
|
(1,547
|
)
|
||
Property, plant, and equipment — net
|
|
$
|
3,024
|
|
|
$
|
2,690
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Beginning of period asset retirement obligation
|
|
$
|
30
|
|
|
$
|
28
|
|
Accretion expense
|
|
2
|
|
|
2
|
|
||
Net change
(1)
|
|
(7
|
)
|
|
—
|
|
||
End of period asset retirement obligation
|
|
25
|
|
|
30
|
|
||
Less: current portion
|
|
—
|
|
|
(3
|
)
|
||
Noncurrent asset retirement obligation
|
|
$
|
25
|
|
|
$
|
27
|
|
(1)
|
Comprised primarily of expenditures and settlements of the asset retirement obligation liability, net revisions based on current estimates of the liability and revised expected cash flows and life of the liability.
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Foreign currency translation
|
|
$
|
(41
|
)
|
|
$
|
(34
|
)
|
Pension and other postretirement plan unrecognized net gain
|
|
2
|
|
|
2
|
|
||
Net unrealized loss on derivatives
|
|
(23
|
)
|
|
(2
|
)
|
||
Accumulated other comprehensive loss
|
|
$
|
(62
|
)
|
|
$
|
(34
|
)
|
|
Foreign Currency Translation
|
|
Pension and Other Postretirement Plan Unrecognized Net Gain
|
|
Net Unrealized Loss on Derivatives
|
|
Total
|
||||||||
Balance December 31, 2014
|
$
|
(12
|
)
|
|
$
|
2
|
|
|
$
|
(12
|
)
|
|
$
|
(22
|
)
|
Other comprehensive (loss) income before reclassifications
|
(22
|
)
|
|
—
|
|
|
10
|
|
|
(12
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net current period comprehensive (loss) income
|
(22
|
)
|
|
—
|
|
|
10
|
|
|
(12
|
)
|
||||
Balance December 31, 2015
|
$
|
(34
|
)
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
(34
|
)
|
Other comprehensive loss before reclassifications
|
(2
|
)
|
|
—
|
|
|
(21
|
)
|
|
(23
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||
Net current period comprehensive loss
|
(7
|
)
|
|
—
|
|
|
(21
|
)
|
|
(28
|
)
|
||||
Balance December 31, 2016
|
$
|
(41
|
)
|
|
$
|
2
|
|
|
$
|
(23
|
)
|
|
$
|
(62
|
)
|
Amount Reclassified from Accumulated Other Comprehensive Income
|
||||||
Accumulated Other Comprehensive Income Component
|
|
Year Ended December 31, 2016
|
|
Affected Line Item in the Consolidated Statement of Operations
|
||
|
|
|
|
|
||
Foreign currency translation
|
|
$
|
5
|
|
|
Gain on asset sales
(1)
|
|
|
5
|
|
|
Total before tax
|
|
|
|
—
|
|
|
Tax benefit
|
|
Total reclassifications
|
|
$
|
5
|
|
|
Net of tax
|
|
|
Increase (Decrease)
|
||
Plant operating expense
|
|
$
|
31
|
|
Depreciation and amortization
|
|
$
|
(22
|
)
|
Income tax expense
|
|
$
|
(4
|
)
|
Net income attributable to Covanta Holding Corporation
|
|
$
|
(5
|
)
|
Basic and Diluted income per share
|
|
$
|
(0.04
|
)
|
|
||||||||
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
2
|
|
Receivables
|
|
—
|
|
|
3
|
|
||
Prepaid expenses and other current assets
|
|
—
|
|
|
1
|
|
||
Property, plant and equipment, net
|
|
—
|
|
|
49
|
|
||
Other noncurrent assets
|
|
—
|
|
|
42
|
|
||
Assets held for sale
|
|
$
|
—
|
|
|
$
|
97
|
|
|
|
|
|
|
||||
Current portion of project debt
|
|
$
|
—
|
|
|
$
|
3
|
|
Accounts payable
|
|
—
|
|
|
3
|
|
||
Accrued expenses and other current liabilities
|
|
—
|
|
|
5
|
|
||
Project debt
|
|
—
|
|
|
12
|
|
||
Liabilities held for sale
|
|
$
|
—
|
|
|
$
|
23
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Total repurchases
|
$
|
18
|
|
|
$
|
32
|
|
|
$
|
—
|
|
Shares repurchased
|
1.2
|
|
|
2.1
|
|
|
—
|
|
|||
Weighted average cost per share
|
$
|
15.29
|
|
|
$
|
15.33
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Dividends declared
|
$
|
132
|
|
|
$
|
133
|
|
|
$
|
114
|
|
Per share
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
0.86
|
|
|
For the Years Ended
December 31, |
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Basic weighted average common shares outstanding
|
129
|
|
|
132
|
|
|
130
|
|
Dilutive effect of restricted stock and restricted stock units
(1)
|
—
|
|
|
1
|
|
|
—
|
|
Diluted weighted average common shares outstanding
|
129
|
|
|
133
|
|
|
130
|
|
|
For the Years Ended
December 31, |
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Stock options
|
1
|
|
|
1
|
|
|
1
|
|
Restricted stock
|
1
|
|
|
—
|
|
|
1
|
|
Restricted stock units
|
1
|
|
|
—
|
|
|
—
|
|
Warrants
|
—
|
|
|
—
|
|
|
25
|
|
|
|
|
|
|
|
|
North America
|
|
All Other
(1)
|
|
Total
|
||||||
Year Ended December 31, 2016:
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
1,692
|
|
|
$
|
7
|
|
|
$
|
1,699
|
|
Depreciation and amortization expense
|
$
|
207
|
|
|
$
|
—
|
|
|
$
|
207
|
|
Impairment charges
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
20
|
|
Operating income (loss)
|
$
|
116
|
|
|
$
|
(7
|
)
|
|
$
|
109
|
|
Interest expense, net
|
$
|
66
|
|
|
$
|
72
|
|
|
$
|
138
|
|
Gain on asset sales
|
$
|
3
|
|
|
$
|
41
|
|
|
$
|
44
|
|
Equity in net income from unconsolidated investments
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
|
|
|
|
|
||||||
As of December 31, 2016:
|
|
|
|
|
|
||||||
Total assets
|
$
|
3,794
|
|
|
$
|
490
|
|
|
$
|
4,284
|
|
Capital additions
|
$
|
188
|
|
|
$
|
171
|
|
|
$
|
359
|
|
Year Ended December 31, 2015:
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
1,607
|
|
|
$
|
38
|
|
|
$
|
1,645
|
|
Depreciation and amortization expense
|
$
|
197
|
|
|
$
|
1
|
|
|
$
|
198
|
|
Impairment charges
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
43
|
|
Operating income
|
$
|
108
|
|
|
$
|
1
|
|
|
$
|
109
|
|
Interest expense, net
|
$
|
60
|
|
|
$
|
74
|
|
|
$
|
134
|
|
Equity in net income from unconsolidated investments
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
|
|
|
|
|
||||||
As of December 31, 2015:
|
|
|
|
|
|
||||||
Total assets
|
$
|
3,838
|
|
|
$
|
396
|
|
|
$
|
4,234
|
|
Capital additions
|
$
|
175
|
|
|
$
|
201
|
|
|
$
|
376
|
|
Year Ended December 31, 2014:
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
1,641
|
|
|
$
|
41
|
|
|
$
|
1,682
|
|
Depreciation and amortization expense
|
$
|
208
|
|
|
$
|
3
|
|
|
$
|
211
|
|
Impairment charges
|
$
|
50
|
|
|
$
|
14
|
|
|
$
|
64
|
|
Operating income (loss)
|
$
|
168
|
|
|
$
|
(14
|
)
|
|
$
|
154
|
|
Interest expense, net
|
$
|
63
|
|
|
$
|
84
|
|
|
$
|
147
|
|
Equity in net income from unconsolidated investments
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
10
|
|
|
|
|
|
|
|
||||||
As of December 31, 2014:
|
|
|
|
|
|
||||||
Total assets
|
$
|
3,882
|
|
|
$
|
297
|
|
|
$
|
4,179
|
|
Capital additions
|
$
|
188
|
|
|
$
|
28
|
|
|
$
|
216
|
|
(1)
|
All other is comprised of the financial results of our insurance subsidiaries’ operations through the date of disposal and our international assets.
|
|
|
United States
|
|
Other
|
|
Total
|
||||||
Operating Revenue:
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2016
|
|
$
|
1,677
|
|
|
$
|
22
|
|
|
$
|
1,699
|
|
Year Ended December 31, 2015
|
|
$
|
1,589
|
|
|
$
|
56
|
|
|
$
|
1,645
|
|
Year Ended December 31, 2014
|
|
$
|
1,567
|
|
|
$
|
115
|
|
|
$
|
1,682
|
|
|
|
United States
|
|
Assets Held
for Sale
|
|
Other
|
|
Total
|
||||||||
Total Assets:
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2016
|
|
$
|
3,763
|
|
|
$
|
—
|
|
|
$
|
521
|
|
|
$
|
4,284
|
|
As of December 31, 2015
|
|
$
|
3,847
|
|
|
$
|
97
|
|
|
$
|
290
|
|
|
$
|
4,234
|
|
As of December 31, 2014
|
|
$
|
3,802
|
|
|
$
|
96
|
|
|
$
|
281
|
|
|
$
|
4,179
|
|
|
|
|
|
As of December 31, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||
|
|
Remaining Weighted Average Useful
Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Waste, service and energy contracts (asset)
|
|
22 years
|
|
$
|
526
|
|
|
$
|
263
|
|
|
$
|
263
|
|
|
$
|
531
|
|
|
$
|
247
|
|
|
$
|
284
|
|
Waste and service contracts (liability)
|
|
3 years
|
|
$
|
(131
|
)
|
|
$
|
(124
|
)
|
|
$
|
(7
|
)
|
|
$
|
(131
|
)
|
|
$
|
(118
|
)
|
|
$
|
(13
|
)
|
|
|
As of December 31, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||
|
Remaining Weighted Average Useful
Life
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Customer relationships and other
|
8 years
|
$
|
43
|
|
|
$
|
13
|
|
|
$
|
30
|
|
|
$
|
40
|
|
|
$
|
6
|
|
|
$
|
34
|
|
Other intangibles
|
Indefinite
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Other intangible assets, net
|
|
$
|
47
|
|
|
$
|
13
|
|
|
$
|
34
|
|
|
$
|
44
|
|
|
$
|
6
|
|
|
$
|
38
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Annual remaining amortization
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
30
|
|
|
Total
|
||
Balance as of December 31, 2014
|
$
|
274
|
|
Goodwill related to acquisitions
|
27
|
|
|
Balance as of December 31, 2015
|
301
|
|
|
Goodwill related to acquisitions
|
1
|
|
|
Balance as of December 31, 2016
|
$
|
302
|
|
|
|
Ownership Interest as of
December 31, 2016
|
|
2016
|
|
Ownership Interest as of
December 31, 2015
|
|
2015
|
||||
South Fork Plant (U.S.)
|
|
50%
|
|
$
|
—
|
|
|
50%
|
|
$
|
—
|
|
Koma Kulshan Plant (U.S.)
|
|
50%
|
|
4
|
|
|
50%
|
|
5
|
|
||
TARTECH (U.S.)
(1)
|
|
50%
|
|
1
|
|
|
50%
|
|
5
|
|
||
Ambiente 2000 (Italy)
|
|
40%
|
|
—
|
|
|
40%
|
|
—
|
|
||
Total investments in investees and joint ventures
|
|
|
|
$
|
5
|
|
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
||||
Investments in investees and joint ventures classified as held for sale:
(2)
|
|
|
|
|
|
|
|
|
||||
Sanfeng (China)
|
|
—%
|
|
—
|
|
|
40%
|
|
$
|
17
|
|
|
Chengdu (China)
|
|
—%
|
|
—
|
|
|
49%
|
|
22
|
|
||
Total investments in investees and joint ventures classified as held for sale
|
|
|
|
$
|
—
|
|
|
|
|
$
|
39
|
|
(1)
|
During 2016, we recorded a net impairment of our investment in this joint venture, see
Note 14.
Supplementary Information
for additional information.
|
(2)
|
During 2016, we divested the majority of our investments in China, see
Note 4.
Dispositions, Assets Held for Sale and Discontinued Operations
for additional information.
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Future Minimum Rental Payments
|
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
24
|
|
|
$
|
57
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
LONG-TERM DEBT:
|
|
|
|
|
||||
Revolving Credit Facility (2.98% - 3.23%)
(1)
|
|
$
|
343
|
|
|
$
|
348
|
|
Term Loan, net (2.48%)
(1)
|
|
195
|
|
|
200
|
|
||
Credit Facilities Sub-total
|
|
$
|
538
|
|
|
$
|
548
|
|
7.25% Senior Notes due 2020
|
|
$
|
400
|
|
|
$
|
400
|
|
6.375% Senior Notes due 2022
|
|
400
|
|
|
400
|
|
||
5.875% Senior Notes due 2024
|
|
400
|
|
|
400
|
|
||
Less: deferred financing costs related to senior notes
|
|
(14
|
)
|
|
(16
|
)
|
||
Senior Notes Sub-total
|
|
$
|
1,186
|
|
|
$
|
1,184
|
|
4.00% - 5.25% Tax-Exempt Bonds due from 2024 to 2045
|
|
$
|
464
|
|
|
$
|
464
|
|
Less: deferred financing costs related to tax-exempt bonds
|
|
(5
|
)
|
|
(6
|
)
|
||
Tax-Exempt Bonds Sub-total
|
|
$
|
459
|
|
|
$
|
458
|
|
3.48% - 4.52% Equipment financing capital leases due 2020 through 2027
|
|
$
|
69
|
|
|
$
|
73
|
|
Total long-term debt
|
|
$
|
2,252
|
|
|
$
|
2,263
|
|
Less: current portion
|
|
(9
|
)
|
|
(8
|
)
|
||
Noncurrent long-term debt
|
|
$
|
2,243
|
|
|
$
|
2,255
|
|
PROJECT DEBT:
|
|
|
|
|
||||
North America project debt
|
|
|
|
|
||||
4.00 - 5.00% North America Project Debt related to Service Fee structures due 2017 through 2035
|
|
$
|
78
|
|
|
$
|
117
|
|
Union capital lease due 2017 through 2053
|
|
99
|
|
|
—
|
|
||
5.248% - 6.20% North America Project Debt related to Tip Fee structures due 2017 through 2020
|
|
16
|
|
|
23
|
|
||
Unamortized debt premium, net
|
|
4
|
|
|
5
|
|
||
Less: deferred financing costs related to North America project debt
|
|
(1
|
)
|
|
(1
|
)
|
||
Total North America project debt
|
|
$
|
196
|
|
|
$
|
144
|
|
Other project debt:
|
|
|
|
|
||||
Dublin senior loan due 2021 (5.72% - 6.41%)
(2)
|
|
$
|
155
|
|
|
$
|
—
|
|
Debt discount related to Dublin senior loan
|
|
(6
|
)
|
|
—
|
|
||
Less: deferred financing costs related to Dublin senior loan
|
|
(18
|
)
|
|
—
|
|
||
Dublin senior loan, net
|
|
$
|
131
|
|
|
$
|
—
|
|
Dublin junior loan due 2022 (9.23% - 9.73%)
|
|
$
|
58
|
|
|
$
|
57
|
|
Debt discount related to Dublin junior loan
|
|
(1
|
)
|
|
(1
|
)
|
||
Less: deferred financing costs related to Dublin junior loan
|
|
(1
|
)
|
|
(2
|
)
|
||
Dublin junior loan, net
|
|
$
|
56
|
|
|
$
|
54
|
|
Total other project debt, net
|
|
187
|
|
|
54
|
|
||
Total project debt
|
|
383
|
|
|
198
|
|
||
Less: Current portion, includes $1 and $1 of net unamortized premium
|
|
(22
|
)
|
|
(16
|
)
|
||
Noncurrent project debt
|
|
$
|
361
|
|
|
$
|
182
|
|
TOTAL CONSOLIDATED DEBT
|
|
$
|
2,635
|
|
|
$
|
2,461
|
|
Less: Current debt
|
|
(31
|
)
|
|
(24
|
)
|
||
TOTAL NONCURRENT CONSOLIDATED DEBT
|
|
$
|
2,604
|
|
|
$
|
2,437
|
|
(1)
Eurodollar rates only; excludes base rate borrowings.
|
|
|
|
|
||||
(2)
Reflects hedged fixed rates.
|
|
|
|
|
|
Total
Facility Commitment
|
|
Expiring
(1)
|
|
Direct Borrowings as of
December 31, 2016 |
|
Outstanding Letters of Credit as of
December 31, 2016 |
|
Availability as of
December 31, 2016 |
||||||||
Revolving Credit Facility
|
$
|
1,000
|
|
|
2020
|
|
$
|
343
|
|
|
$
|
156
|
|
|
$
|
501
|
|
•
|
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.
|
•
|
incur additional indebtedness;
|
•
|
pay dividends or make other distributions or repurchase or redeem their capital stock;
|
•
|
prepay, redeem or repurchase certain debt;
|
•
|
make loans and investments;
|
•
|
sell restricted assets;
|
•
|
incur liens;
|
•
|
enter into transactions with affiliates;
|
•
|
alter the businesses they conduct;
|
•
|
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
|
•
|
consolidate, merge or sell all or substantially all of their assets.
|
Series
|
|
Amount
|
|
Maturity
|
|
Coupon
|
|
Use of Proceeds
|
||
Massachusetts Series 2012A
|
|
$
|
20
|
|
|
2027
|
|
4.875%
|
|
New proceeds for qualifying capital expenditures in Massachusetts
|
Massachusetts Series 2012B
|
|
67
|
|
|
2042
|
|
4.875%
|
|
Redeem SEMASS project debt
|
|
Massachusetts Series 2012C
|
|
82
|
|
|
2042
|
|
5.25%
|
|
Redeem Haverhill project debt
|
|
Niagara Series 2012A
|
|
130
|
|
|
2042
|
|
5.25%
|
|
Redeem Niagara project debt
|
|
Niagara Series 2012B
|
|
35
|
|
|
2024
|
|
4.00%
|
|
Redeem Niagara project debt
|
|
New Jersey Series 2015A
|
|
90
|
|
|
2045
|
|
5.25%
|
|
Finance qualifying expenditures at Essex County facility
|
|
Pennsylvania Series 2015A
|
|
40
|
|
|
2043
|
|
5.00%
|
|
Refinance outstanding tax-exempt debt
|
|
|
|
$
|
464
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||||||
Annual Remaining Amortization
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
72
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||||||
Annual Remaining Amortization
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
44
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
|
Less:
Current
Portion
|
|
Total
Noncurrent
Project Debt
|
||||||||||||||||||
Debt
|
|
$
|
22
|
|
|
$
|
31
|
|
|
$
|
26
|
|
|
$
|
17
|
|
|
$
|
144
|
|
|
$
|
166
|
|
|
$
|
406
|
|
|
$
|
(22
|
)
|
|
$
|
384
|
|
Premium and deferred financing costs
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
1
|
|
|
(23
|
)
|
|
—
|
|
|
(23
|
)
|
|||||||||
Total
|
|
$
|
17
|
|
|
$
|
26
|
|
|
$
|
21
|
|
|
$
|
12
|
|
|
$
|
140
|
|
|
$
|
167
|
|
|
$
|
383
|
|
|
$
|
(22
|
)
|
|
$
|
361
|
|
•
|
Final maturity on
September 30, 2021
(approximately four years after the anticipated operational commencement date of the facility).
|
•
|
Scheduled repayments will be made semi-annually according to a 15-year amortization profile, beginning in 2018. The loan is pre-payable at our option following operational commencement.
|
•
|
Borrowings will bear interest at the Euro Interbank Offered Rate ("EURIBOR") plus an applicable margin, which will range from
4.00%
to
4.50%
according to a pre-determined schedule. Interest on outstanding borrowings will be payable in cash monthly prior to the operational commencement date of the facility, and payable in cash semi-annually after the operational commencement date, based on the prevailing one and six month EURIBOR rates, respectively. Undrawn commitments will accrue commitment fees at a rate of
2.25%
per annum. We entered into interest rate swap agreements in order to hedge our exposure to adverse variable interest rate fluctuations under the Dublin Senior Term Loan. For additional information, see
Note 13.
Derivative Instruments
.
|
•
|
The Dublin Senior Term Loan is a senior obligation of the project company and certain other related subsidiaries, all of which are wholly-owned by us, and is secured by a first priority lien on substantially all of the project-related assets. The Dublin Senior Term Loan is non-recourse to us and our subsidiary Covanta Energy. See
Note 18.
Commitments and Contingencies
for a description of the commitments of Covanta Energy related to the Dublin project financing.
|
•
|
The Dublin Credit Agreement contains positive, negative and financial maintenance covenants that are customary for a project financing of this type. Our ability to service the Dublin Junior Term Loan and the Dublin Convertible Preferred and to make cash distributions to common equity following the operational commencement date is subject to ongoing compliance with these covenants, including maintaining a minimum debt service coverage ratio and loan life coverage ratio on the Dublin Senior Term Loan.
|
•
|
Final maturity on
March 31, 2022
(six months after the maturity of the Dublin Senior Term Loan).
|
•
|
Scheduled repayments will be made semi-annually according to a 15-year amortization profile, beginning in 2018. The loan is pre-payable at our option following operational commencement.
|
•
|
Borrowings bear interest at a fixed rate of
5.23%
during the first six months of the loan, and thereafter at fixed rates ranging from
9.23%
to
9.73%
according to a pre-determined schedule. Interest on outstanding borrowings is payable semi-annually and will be payable 50% in cash and 50% accrued to the balance of the loan prior to the operational commencement date of the facility, and payable 100% in cash after the operational commencement date.
|
•
|
The Dublin Junior Term Loan is a junior obligation of the project company and certain other related subsidiaries, all of which are wholly-owned by us, and is secured by a second priority lien on substantially all of the project-related assets and a first priority lien on the assets of the top tier project holding company. The Dublin Junior Term Loan is non-recourse to us and our subsidiary Covanta Energy.
|
•
|
Under the Dublin Credit Agreement, our ability to service the Dublin Convertible Preferred and to make cash distributions to common equity is subject to ongoing compliance with the covenants under the agreement, including maintaining a minimum debt service coverage ratio and loan life coverage ratio on the Dublin Junior Term Loan.
|
•
|
The Stakeholder Loan will accrue dividends at a fixed rate of
13.50%
per annum. The dividends are payable 50% in cash and 50% accrued to the principal balance on a monthly basis prior to the operational commencement date, and payable 100% in cash semi-annually thereafter, subject to available project cash flows after debt service.
|
•
|
Scheduled repayments of principal of the Stakeholder Loan will be made semi-annually according to a 13-year amortization profile beginning in 2020 (two years after the operational commencement date), with a final repayment date of
September 30, 2032
, all subject to available project cash flows after debt service.
|
•
|
Voluntary prepayments are not permitted during the first five years of the Stakeholder Loan, after which the principal is pre-payable at our option in increments of 33% of the aggregate outstanding principal balance per year.
|
•
|
The Stakeholder Loan is mandatorily pre-payable at the option of the Stakeholder Loan holder(s) under certain circumstances in the event of a refinancing of the Dublin Senior Term Loan and/or the Dublin Junior Term Loan.
|
•
|
The Stakeholder Warrants are exercisable into ordinary shares of our subsidiary holding company that owns 100% of the project company on five conversion dates, scheduled at six month intervals, beginning on the operational commencement date, or upon a refinancing of the Dublin Credit Agreement. The warrants contain customary anti-dilution protection and are exercisable on a cashless basis at a specified conversion price on each conversion date, representing a set premium to the original subscription price for common shares (i.e., Covanta’s subscription price) that increases over time. The number of shares that can potentially be issued upon exercise is limited to a maximum of
24.99%
of the outstanding shares.
|
•
|
The Dublin Convertible Preferred holder(s) is entitled to nominate two out of five voting board members of the project subsidiary holding company. The right to nominate board members will be reduced with future reductions in the outstanding principal amount of the Stakeholder Loan and/or number of common shares held following conversion of the Stakeholder Warrants.
|
•
|
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 for interest rate swaps were determined by obtaining quotes from two counterparties (one is a holder of the long position and the other is in the short) and extrapolating those across the long and short notional amounts. The fair value of the interest rate swaps was adjusted to reflect counterparty risk of non-performance, and was based on the counterparty’s credit spread in the credit derivatives market.
|
•
|
The fair values of our energy hedges were determined using the spread between our fixed price and the forward curve information available within the market.
|
•
|
The fair value of our foreign currency hedge was determined by obtaining quotes from two counterparties and is based on market accepted option pricing methodology which utilizes inputs such as the currency spot rate as of the balance sheet date, the strike price of the options and volatility.
|
|
|
|
|
As of December 31,
|
||||||
Financial Instruments Recorded at Fair Value on a Recurring Basis:
|
|
Fair Value Measurement Level
|
|
2016
|
|
2015
|
||||
|
|
|
|
(In millions)
|
||||||
Assets:
|
|
|
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
|
|
1
|
|
$
|
79
|
|
|
$
|
89
|
|
Money market funds
|
|
1
|
|
5
|
|
|
5
|
|
||
Total cash and cash equivalents:
|
|
|
|
84
|
|
|
94
|
|
||
Restricted funds held in trust:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
|
|
1
|
|
12
|
|
|
9
|
|
||
Money market funds
|
|
1
|
|
36
|
|
|
66
|
|
||
U.S. Treasury/agency obligations
(1)
|
|
1
|
|
14
|
|
|
18
|
|
||
State and municipal obligations
|
|
1
|
|
46
|
|
|
59
|
|
||
Commercial paper/guaranteed investment contracts/repurchase agreements
|
|
1
|
|
2
|
|
|
8
|
|
||
Total restricted funds held in trust:
|
|
|
|
110
|
|
|
160
|
|
||
Investments:
|
|
|
|
|
|
|
||||
Mutual and bond funds
(2)
|
|
1
|
|
2
|
|
|
2
|
|
||
Derivative asset — energy hedges
(3)
|
|
2
|
|
3
|
|
|
21
|
|
||
Total assets:
|
|
|
|
$
|
199
|
|
|
$
|
277
|
|
Liabilities:
|
|
|
|
|
|
|
||||
Derivative liability — energy hedges
(4)
|
|
2
|
|
$
|
1
|
|
|
$
|
—
|
|
Derivative liability — interest rate swaps
(4) (5)
|
|
2
|
|
20
|
|
|
14
|
|
||
Total liabilities:
|
|
|
|
$
|
21
|
|
|
$
|
14
|
|
|
|
As of December 31, 2016
|
|
As of December 31, 2015
|
||||||||||||
Financial Instruments Recorded at Carrying Amount:
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivables
(6)
|
|
$
|
333
|
|
|
$
|
333
|
|
|
$
|
314
|
|
|
$
|
314
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
2,252
|
|
|
$
|
2,237
|
|
|
$
|
2,263
|
|
|
$
|
2,244
|
|
Project debt
|
|
$
|
383
|
|
|
$
|
387
|
|
|
$
|
198
|
|
|
$
|
206
|
|
(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 consolidated balance sheets.
|
(3)
|
Included in prepaid expenses and other current assets in the consolidated balance sheets.
|
(4)
|
Included in accrued expenses and other current liabilities in the consolidated balance sheets.
|
(5)
|
Included in other noncurrent liabilities in the consolidated balance sheets.
|
(6)
|
Includes
$1 million
and
$2 million
of noncurrent receivables in other noncurrent assets in the consolidated balance sheets as of
December 31, 2016 and 2015
.
|
Derivative Instruments Not Designated
As Hedging Instruments
|
|
|
|
Fair Value as of December 31,
|
||||||
Balance Sheet Location
|
|
2016
|
|
2015
|
||||||
Asset Derivatives:
|
|
|
|
|
|
|
||||
Foreign currency hedges
|
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
6
|
|
|
|
|
|
Amount of Gain (Loss) Recognized In Income on Derivatives
|
||||||||||
Effect on Income of Derivative Instruments Not Designated As Hedging Instruments
|
|
Location of Gain or (Loss) Recognized
in Income on Derivatives
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||||
Foreign currency hedge
|
|
Other expense, net
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
—
|
|
Note hedge
|
|
Non-cash convertible debt related expense
|
|
—
|
|
|
—
|
|
|
5
|
|
|||
Cash conversion option
|
|
Non-cash convertible debt related expense
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
Effect on income of derivative instruments not designated as hedging instruments
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
—
|
|
Calendar Year
|
|
Hedged MWh
|
2017
|
|
2.4
|
2018
|
|
1.0
|
Total
|
|
3.4
|
Insurance recoveries for repair and reconstruction costs (net of write-down of assets, reduction to Other operating expense, net)
|
$
|
5
|
|
Insurance recoveries for business interruption and clean-up costs, net of costs incurred (reduction to Plant operating expense)
|
$
|
3
|
|
|
For the Years Ended
December 31, |
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
North America segment:
|
|
|
|
|
|
||||||
Impairment charges related to tangible and intangible assets
(1)
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Impairment charges related to biomass facilities and biomass equity investment
(2)
|
—
|
|
|
43
|
|
|
34
|
|
|||
Impairment charges - other
|
4
|
|
|
—
|
|
|
—
|
|
|||
North America segment sub-total:
|
20
|
|
|
43
|
|
|
50
|
|
|||
Other:
|
|
|
|
|
|
||||||
Impairment charge related to insurance business
(3)
|
—
|
|
|
—
|
|
|
14
|
|
|||
Total impairment charges
|
$
|
20
|
|
|
$
|
43
|
|
|
$
|
64
|
|
(1)
|
Impairment charges related to tangible and intangible assets are related to the following:
|
•
|
During the year ended December 31, 2016, we recorded a non-cash impairment charge of
$13 million
, pre-tax, related to the previously planned closure of our Pittsfield EfW facility which is now expected to continue operating. For additional information see
Note 3.
New Business and Asset Management
. We also recorded a non-cash impairment charge of
$3 million
, pre-tax, related to a joint-venture project, see
Tartech Investment
discussion below.
|
•
|
On June 30, 2014, our service agreement with the Dutchess County Resource Recovery Agency under which we operated the Hudson Valley EfW facility expired. In 2014, we recorded a
$9 million
non-cash impairment charge of the intangible asset that was recorded upon acquisition in 2009 based on the expected cash flows over the remaining life of the contract utilizing Level 3 inputs.
|
•
|
On April 3, 2014, the Montgomery County (PA) Commissioners (the “County”) unanimously voted to dissolve the Waste System Authority of Eastern Montgomery County (the “WSA”). The Abington transfer station was constructed by the County and subsequently deeded to the WSA, which was responsible for its operation. We operated the transfer station through the end of the current contract, which expired on December 31, 2014. However, due to the dissolution of the WSA, it was not able to renew our current contract to operate the Abington transfer station. During the year ended December 31, 2014, we recorded a non-cash impairment charge of
$7 million
of the service contract intangible with the WSA that was recorded upon acquisition in 2009 based on the expected cash flows over the remaining life of the contract utilizing Level 3 inputs.
|
(2)
|
Impairments related to our biomass assets are as follows:
|
•
|
During the year ended 2015, we identified indicators of impairment associated with our biomass facilities, primarily due to a decline in energy market pricing. As a result of these developments, we recorded a non-cash impairment charge of
$43 million
, pre-tax, which was calculated based on a range of potential outcomes utilizing various estimated cash flows for these facilities utilizing Level 3 inputs.
|
•
|
During year ended December 31, 2014, we identified indicators of impairment associated with our California Biomass facilities, primarily that we were unsuccessful in securing new long-term power purchase agreements to replace the current power purchase agreements, which were approaching the end of their terms. Based on expected cash flows utilizing Level 3 inputs, we recorded a non-cash impairment charge of
$34 million
to reduce the carrying value of the California Biomass assets to their estimated fair value.
|
(3)
|
During 2014, we sold our insurance subsidiaries and recorded a non-cash impairment of
$14 million
comprised of the write-down of the carrying amount in excess of the realizable fair value of
$12 million
, plus
$2 million
in disposal costs.
|
|
For the Years Ended
December 31, |
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Debt discount accretion related to the 3.25% Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Fair value changes related to the cash convertible note hedge
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
Fair value changes related to the cash conversion option derivative
|
—
|
|
|
—
|
|
|
5
|
|
|||
Total non-cash convertible debt related expense
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Prepaid expenses
|
$
|
28
|
|
|
$
|
37
|
|
Hedge receivables
|
3
|
|
|
25
|
|
||
Spare parts
|
21
|
|
|
17
|
|
||
Renewable energy credits
|
3
|
|
|
15
|
|
||
Other
|
17
|
|
|
23
|
|
||
Total prepaid expenses and other current assets
|
$
|
72
|
|
|
$
|
117
|
|
Operating expenses, payroll and related expenses
|
$
|
164
|
|
|
$
|
114
|
|
Deferred revenue
|
16
|
|
|
13
|
|
||
Accrued liabilities to client communities
|
19
|
|
|
22
|
|
||
Interest payable
|
30
|
|
|
24
|
|
||
Dividends payable
|
35
|
|
|
34
|
|
||
Other
|
25
|
|
|
27
|
|
||
Total accrued expenses and other current liabilities
|
$
|
289
|
|
|
$
|
234
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
(2
|
)
|
|
$
|
(91
|
)
|
|
$
|
(1
|
)
|
State
|
|
6
|
|
|
16
|
|
|
4
|
|
|||
Foreign
|
|
(2
|
)
|
|
2
|
|
|
3
|
|
|||
Total current
|
|
2
|
|
|
(73
|
)
|
|
6
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
28
|
|
|
7
|
|
|
(4
|
)
|
|||
State
|
|
(9
|
)
|
|
(11
|
)
|
|
16
|
|
|||
Foreign
|
|
1
|
|
|
(7
|
)
|
|
(3
|
)
|
|||
Total deferred
|
|
20
|
|
|
(11
|
)
|
|
9
|
|
|||
Total income tax expense (benefit)
|
|
$
|
22
|
|
|
$
|
(84
|
)
|
|
$
|
15
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic
|
|
$
|
26
|
|
|
$
|
6
|
|
|
$
|
14
|
|
Foreign
|
|
(12
|
)
|
|
(34
|
)
|
|
(10
|
)
|
|||
Total
|
|
$
|
14
|
|
|
$
|
(28
|
)
|
|
$
|
4
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Income tax expense (benefit) at the federal statutory rate
|
|
$
|
5
|
|
|
$
|
(10
|
)
|
|
$
|
1
|
|
State and other tax expense
|
|
1
|
|
|
1
|
|
|
8
|
|
|||
Tax rate differential on foreign earnings
|
|
4
|
|
|
8
|
|
|
5
|
|
|||
Permanent differences
|
|
4
|
|
|
4
|
|
|
4
|
|
|||
Production tax credits/R&E tax credits
|
|
—
|
|
|
(3
|
)
|
|
(4
|
)
|
|||
State ITC credit
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Change in valuation allowance
|
|
2
|
|
|
(7
|
)
|
|
3
|
|
|||
Liability for uncertain tax positions
|
|
16
|
|
|
(82
|
)
|
|
5
|
|
|||
Adjustment to deferred tax
|
|
(5
|
)
|
|
4
|
|
|
(9
|
)
|
|||
Other
|
|
(1
|
)
|
|
1
|
|
|
2
|
|
|||
Total income tax expense (benefit)
|
|
$
|
22
|
|
|
$
|
(84
|
)
|
|
$
|
15
|
|
|
|
||
|
Amount of
Carryforward
Expiring
|
||
2028
|
$
|
64
|
|
2030
|
29
|
|
|
2031
|
1
|
|
|
2032
|
1
|
|
|
2033
|
193
|
|
|
|
$
|
288
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Capital loss carryforward
|
|
$
|
—
|
|
|
$
|
3
|
|
Net operating loss carryforwards
|
|
143
|
|
|
157
|
|
||
Accrued expenses
|
|
20
|
|
|
24
|
|
||
Prepaid and other costs
|
|
71
|
|
|
36
|
|
||
Deferred tax assets attributable to pass-through entities
|
|
17
|
|
|
17
|
|
||
Retirement benefits
|
|
3
|
|
|
—
|
|
||
Other
|
|
4
|
|
|
4
|
|
||
AMT and other credit carryforwards
|
|
55
|
|
|
67
|
|
||
Total gross deferred tax asset
|
|
313
|
|
|
308
|
|
||
Less: valuation allowance
|
|
(71
|
)
|
|
(73
|
)
|
||
Total deferred tax asset
|
|
242
|
|
|
235
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Unbilled accounts receivable
|
|
3
|
|
|
4
|
|
||
Property, plant and equipment
|
|
780
|
|
|
725
|
|
||
Intangible assets
|
|
36
|
|
|
18
|
|
||
Deferred tax liabilities attributable to pass-through entities
|
|
22
|
|
|
26
|
|
||
Deferred gain on convertible debt
|
|
13
|
|
|
20
|
|
||
Swap income
|
|
—
|
|
|
2
|
|
||
Prepaid expenses
|
|
—
|
|
|
23
|
|
||
Other, net
|
|
5
|
|
|
11
|
|
||
Total gross deferred tax liability
|
|
859
|
|
|
829
|
|
||
Net deferred tax liability
|
|
$
|
617
|
|
|
$
|
594
|
|
Balance at December 31, 2013
|
$
|
128
|
|
Additions based on tax positions related to the current year
|
8
|
|
|
Additions for tax positions of prior years
|
—
|
|
|
Reductions for lapse in applicable statute of limitations
|
(3
|
)
|
|
Reductions for tax positions of prior years
|
—
|
|
|
Balance at December 31, 2014
|
133
|
|
|
Additions based on tax positions related to the current year
|
12
|
|
|
Additions for tax positions of prior years
|
—
|
|
|
Reductions for lapse in applicable statute of limitations
|
—
|
|
|
Reductions for tax positions of prior years
|
(109
|
)
|
|
Balance at December 31, 2015
|
36
|
|
|
Additions based on tax positions related to the current year
|
16
|
|
|
Additions for tax positions of prior years
|
4
|
|
|
Reductions for lapse in applicable statute of limitations
|
(3
|
)
|
|
Reductions for tax positions of prior years
|
(4
|
)
|
|
Payment
|
(6
|
)
|
|
Balance at December 31, 2016
|
$
|
43
|
|
|
|
Non-qualified Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
|
For the Years Ended
December 31,
|
|
For the Years Ended
December 31,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
5
|
|
Actuarial gain
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Benefits paid
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Benefit obligation at end of year
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
4
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
||||||||
Plan assets at fair value at beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contributions
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Plan assets at fair value at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reconciliation of accrued benefit liability and net amount recognized:
|
|
|
|
|
|
|
|
|
||||||||
Funded status of the plan
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
Unrecognized net gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net amount recognized
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
Accumulated other comprehensive income recognized:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial gain
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
Net prior service cost
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Total as of December 31,
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
Weighted average assumptions used to determine net periodic benefit expense for years ending December 31:
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
|
4.35
|
%
|
|
4.05
|
%
|
|
3.75
|
%
|
|
3.50
|
%
|
||||
Weighted average assumptions used to determine projected benefit obligations as of December 31:
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
|
4.10
|
%
|
|
4.35
|
%
|
|
3.55
|
%
|
|
3.75
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016
|
||||||||||
|
|
Total Compensation Expense
for the Years Ended December 31,
|
Unrecognized
stock-based
compensation expense
|
|
Weighted-average years to be recognized
|
|||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
|||||||||||
Restricted Stock Awards
|
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
7
|
|
|
1.4
|
Restricted Stock Units
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
8
|
|
|
2.1
|
|
|
As of December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||
Nonvested at the beginning of the year
|
|
1,060
|
|
|
$
|
19.79
|
|
|
1,240
|
|
|
$
|
17.67
|
|
|
1,166
|
|
|
$
|
17.85
|
|
Granted
|
|
761
|
|
|
$
|
15.14
|
|
|
573
|
|
|
$
|
21.88
|
|
|
721
|
|
|
$
|
17.20
|
|
Vested
|
|
(532
|
)
|
|
$
|
19.36
|
|
|
(661
|
)
|
|
$
|
17.69
|
|
|
(608
|
)
|
|
$
|
17.27
|
|
Forfeited
|
|
(69
|
)
|
|
$
|
17.51
|
|
|
(92
|
)
|
|
$
|
19.36
|
|
|
(39
|
)
|
|
$
|
17.80
|
|
Nonvested at the end of the year
|
|
1,220
|
|
|
$
|
17.20
|
|
|
1,060
|
|
|
$
|
19.79
|
|
|
1,240
|
|
|
$
|
17.67
|
|
|
|
As of December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||
Nonvested at the beginning of the year
|
|
1,189
|
|
|
$
|
17.60
|
|
|
894
|
|
|
$
|
15.93
|
|
|
691
|
|
|
$
|
16.66
|
|
Granted
|
|
888
|
|
|
$
|
14.65
|
|
|
322
|
|
|
$
|
21.95
|
|
|
247
|
|
|
$
|
14.60
|
|
Vested
|
|
(51
|
)
|
|
$
|
20.24
|
|
|
(21
|
)
|
|
$
|
17.94
|
|
|
(44
|
)
|
|
$
|
16.51
|
|
Forfeited
|
|
(223
|
)
|
|
$
|
16.29
|
|
|
(6
|
)
|
|
$
|
21.99
|
|
|
—
|
|
|
$
|
—
|
|
Nonvested at the end of the year
|
|
1,803
|
|
|
$
|
16.25
|
|
|
1,189
|
|
|
$
|
17.60
|
|
|
894
|
|
|
$
|
15.93
|
|
|
|
As of December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|||||||||
2014 Stock Option Plan
|
|
(in thousands, except per share amounts)
|
|||||||||||||||||||
Outstanding at the beginning of the year
|
|
1,100
|
|
|
$
|
21.37
|
|
|
1,113
|
|
|
$
|
21.25
|
|
|
1,686
|
|
|
$
|
20.42
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
25
|
|
|
$
|
20.58
|
|
Exercised
|
|
—
|
|
|
$
|
—
|
|
|
(13
|
)
|
|
$
|
11.40
|
|
|
(532
|
)
|
|
$
|
18.53
|
|
Expired
|
|
(20
|
)
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
(66
|
)
|
|
$
|
20.52
|
|
Forfeited
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding at the end of the year
|
|
1,080
|
|
|
$
|
21.38
|
|
|
1,100
|
|
|
$
|
21.37
|
|
|
1,113
|
|
|
$
|
21.25
|
|
Options exercisable at year end
|
|
1,080
|
|
|
$
|
21.38
|
|
|
1,100
|
|
|
$
|
21.37
|
|
|
1,100
|
|
|
$
|
21.26
|
|
Options available for future grant
|
|
4,003
|
|
|
|
|
5,652
|
|
|
|
|
6,548
|
|
|
|
|
|
Commitments Expiring by Period
|
||||||||||
|
|
Total
|
|
Less Than
One Year
|
|
More Than
One Year
|
||||||
Letters of credit issued under the Revolving Credit Facility
|
|
$
|
156
|
|
|
$
|
—
|
|
|
$
|
156
|
|
Letters of credit - other
|
|
61
|
|
|
—
|
|
|
61
|
|
|||
Surety bonds
|
|
158
|
|
|
—
|
|
|
158
|
|
|||
Total other commitments — net
|
|
$
|
375
|
|
|
$
|
—
|
|
|
$
|
375
|
|
|
|
Calendar Quarter Ended
|
||||||||||||||||||||||||||||||
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Operating revenue
|
|
$
|
403
|
|
|
$
|
383
|
|
|
$
|
418
|
|
|
$
|
408
|
|
|
$
|
421
|
|
|
$
|
422
|
|
|
$
|
457
|
|
|
$
|
432
|
|
Operating (loss) income
(1)
|
|
$
|
(14
|
)
|
|
$
|
7
|
|
|
$
|
5
|
|
|
$
|
(15
|
)
|
|
$
|
60
|
|
|
$
|
74
|
|
|
$
|
58
|
|
|
$
|
43
|
|
Net (loss) income
|
|
$
|
(37
|
)
|
|
$
|
(37
|
)
|
|
$
|
(29
|
)
|
|
$
|
(6
|
)
|
|
$
|
54
|
|
|
$
|
34
|
|
|
$
|
8
|
|
|
$
|
78
|
|
Net (loss) income attributable to Covanta Holding Corporation
|
|
$
|
(37
|
)
|
|
$
|
(37
|
)
|
|
$
|
(29
|
)
|
|
$
|
(6
|
)
|
|
$
|
54
|
|
|
$
|
34
|
|
|
$
|
8
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Loss) Earnings per share attributable to Covanta Holding Corporation stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
$
|
(0.29
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
0.42
|
|
|
$
|
0.26
|
|
|
$
|
0.06
|
|
|
$
|
0.59
|
|
Diluted
|
|
$
|
(0.29
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
0.42
|
|
|
$
|
0.25
|
|
|
$
|
0.06
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash dividend declared per share:
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
|
|
Balance
Beginning
of Year
|
|
Charged to
Costs and
Expense
|
|
Charged to
Other
Accounts
|
|
Deductions
|
|
Balance at
End of
Period
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
2016 – Reserves for doubtful accounts
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
9
|
|
2015 – Reserves for doubtful accounts
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
2014 – Reserves for doubtful accounts
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
6
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
•
|
Improved coordination among the management of several functions (operations, project management and accounting) to ensure that the information required for proper financial reporting is identified, evaluated, refined and reported on a timely basis;
|
•
|
Implemented controls to improve the precision of the estimates of costs which are to be factored into the overall profitability or loss of a project involving public-owned facilities and to ensure that such precision levels are appropriately factored into our profit or loss recognition;
|
•
|
Implemented enhanced reviews by the accounting and finance department to ensure that project cost reports which are used as a tool to track such outage and start-up expenditures are accurately stated and include all expenditures and accruals;
|
•
|
Consolidated forecasting and overall financial oversight responsibility with financial controllers at ongoing facility construction projects to provide a single point of coordination between the construction, operations, client management, and finance and accounting functions, and to provide oversight of the financial reporting of construction activities; and
|
•
|
Engaged additional personnel to assist with the review of change orders, claims events and other interactions between the company and its contractors and subcontractors on all major construction contracts.
|
•
|
Revised task assignments to ensure that discrete items impacting the blended state tax rate are subject to a more comprehensive review process by successive levels of management;
|
•
|
Enhanced the review of the application of the state tax rate to cumulative deferred income tax balances;
|
•
|
Implemented specific technologies minimizing our reliance on supplementary spreadsheets to perform tax calculations, reducing the risk of manual computational error and allowing for a more effective and timely review of tax accounting results; and
|
•
|
Implemented analytical procedures to validate actual tax accounting results to supplement internal control reviews using the expected impact of discrete items as a basis.
|
•
|
Enhance the analysis of tax-sensitive aspects of a business transaction;
|
•
|
Formalize the documentation of the above referenced tax analysis; and
|
•
|
Implement a review, by the Vice President of Tax, of the above referenced tax analysis prior to finalizing.
|
|
|
|
/s/ Stephen J. Jones
|
|
Stephen J. Jones
|
|
President and Chief Executive Officer
|
|
|
|
/s/ Bradford J. Helgeson
|
|
Bradford J. Helgeson
|
|
Executive Vice President and Chief Financial Officer
|
Plan Category
|
|
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(A)
|
|
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(B)
|
|
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column A)
(C)
|
||||
Equity Compensation Plans Approved By Security Holders
|
|
1,079,809
|
|
|
$
|
21.38
|
|
|
4,369,327
|
|
Equity Compensation Plans Not Approved By Security Holders
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total
|
|
1,079,809
|
|
|
$
|
21.38
|
|
|
4,369,327
|
|
(1)
|
Of the 4,369,327 shares that remain available for future issuance, 366,451 have been forfeited, therefore, 4,002,876 shares are currently available for issuance under the equity compensation plans.
|
(a)
|
Documents filed as part of this report:
|
(1)
|
Consolidated Financial Statements of Covanta Holding Corporation:
|
(2)
|
Financial Statement Schedules of Covanta Holding Corporation:
|
(3)
|
Exhibits:
|
|
|
|
Exhibit No.
|
|
Description
|
|
||
|
|
|
Articles of Incorporation and By-Laws.
|
||
|
|
|
3.1†
|
|
Restated Certificate of Incorporation of Covanta Holding Corporation (incorporated herein by reference to Exhibit 3.1 of Covanta Holding Corporation’s Current Report on Form 8-K dated January 19, 2007 and filed with the SEC on January 19, 2007).
|
|
|
|
3.2†
|
|
Amended and Restated Bylaws of Covanta Holding Corporation, effective December 8, 2011 (incorporated herein by reference to Exhibit 3.1(ii) of Covanta Holding Corporation’s Current Report on Form 8-K dated September 19, 2013 filed with the SEC on September 20, 2013).
|
|
|
|
Instruments Defining Rights of Security Holders, Including Indentures.
|
||
|
|
|
4.1†
|
|
Registration Rights Agreement dated November 8, 2002 among Covanta Holding Corporation and SZ Investments, L.L.C. (incorporated herein by reference to Exhibit 10.6 of Covanta Holding Corporation’s Annual Report on Form 10-K for the year ended December 27, 2002 and filed with the SEC on March 27, 2003).
|
|
|
|
4.2†
|
|
Registration Rights Agreement between Covanta Holding Corporation, D.E. Shaw Laminar Portfolios, L.L.C., SZ Investments, L.L.C., and Third Avenue Trust, on behalf of The Third Avenue Value Fund Series, dated December 2, 2003 (incorporated herein by reference to Exhibit 4.1 of Covanta Holding Corporation’s Current Report on Form 8-K dated December 2, 2003 and filed with the SEC on December 5, 2003).
|
|
|
|
4.3†
|
|
Indenture dated as of January 18, 2007 between Covanta Holding Corporation and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 of Covanta Holding Corporation’s Registration Statement on Form S-3 (Reg. No. 333-140082) filed with the SEC on January 19, 2007).
|
|
|
|
4.4†
|
|
Second Supplemental Indenture dated as of December 1, 2010 between Covanta Holding Corporation and Wells Fargo Bank, National Association, as trustee (including the Form of Note) (incorporated herein by reference to Exhibit 4.3 of Covanta Holding Corporation’s Current Report on Form 8-K dated December 1, 2010 and filed with the SEC on December 1, 2010).
|
|
|
|
4.5†
|
|
Third Supplemental Indenture dated as of March 19, 2012 between Covanta Holding Corporation and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 4.2 of Covanta Holding Corporation’s Current Report on Form 8-K dated March 19, 2012 and filed with the SEC on March 19, 2012).
|
|
|
|
4.6†
|
|
Fourth Supplemental Indenture dated as of March 6, 2014 between Covanta Holding Corporation and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 4.2 of Covanta Holding Corporation’s Current Report on Form 8-K dated March 6, 2014 and filled with the SEC on March 6, 2014).
|
|
|
|
Material Contracts.
|
||
|
|
|
10.1†
|
|
Tax Sharing Agreement, dated as of March 10, 2004, by and between Covanta Holding Corporation, Covanta Energy Corporation, and Covanta Power International Holdings, Inc. (incorporated herein by reference to Exhibit 10.25 of Covanta Holding Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003 and filed with the SEC on March 15, 2004).
|
|
|
|
10.2†
|
|
Amendment No. 1 to Tax Sharing Agreement, dated as of June 24, 2005, by and between Covanta Holding Corporation, Covanta Energy Corporation and Covanta Power International Holdings, Inc., amending Tax Sharing Agreement between Covanta Holding Corporation, Covanta Energy Corporation and Covanta Power International Holdings, Inc. dated as of March 10, 2004 (incorporated herein by reference to Exhibit 10.8 of Covanta Holding Corporation’s Current Report on Form 8-K dated June 24, 2005 and filed with the SEC on June 30, 2005).
|
|
|
|
10.3†*
|
|
Covanta Energy Savings Plan, as amended by December 2003 amendment (incorporated herein by reference to Exhibit 10.25 of Covanta Holding Corporation’s Annual Report on Form 10-K for the year ended December 31, 2004 and filed with the SEC on March 16, 2005).
|
|
|
|
10.4†
|
|
Rehabilitation Plan Implementation Agreement, dated January 11, 2006, by and between John Garamendi, Insurance Commissioner of the State of California, in his capacity as Trustee of the Mission Insurance Company Trust, the Mission National Insurance Company Trust and the Enterprise Insurance Company Trust, on the one hand, and Covanta Holding Corporation, on the other hand (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation’s Current Report on Form 8-K dated March 2, 2006 and filed with the SEC on March 6, 2006).
|
|
|
|
10.5†
|
|
Amendment to Rehabilitation Plan Implementation Agreement, accepted and agreed to on March 17, 2006 (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation’s Current Report on Form 8-K dated March 17, 2006 and filed with the SEC on March 20, 2006).
|
|
|
|
10.6†
|
|
Amendment to Agreement Regarding Closing (Exhibit A to the Rehabilitation Plan Implementation Agreement), dated January 10, 2006, by and between John Garamendi, Insurance Commissioner of the State of California, in his capacity as Trustee of the Mission Insurance Company Trust, the Mission National Insurance Company Trust, and the Enterprise Insurance Company Trust, on the one hand, and Covanta Holding Corporation, on the other hand (incorporated herein by reference to Exhibit 10.2 of Covanta Holding Corporation’s Current Report on Form 8-K dated March 2, 2006 and filed with the SEC on March 6, 2006).
|
|
|
|
10.7†
|
|
Pledge and Security Agreement, dated as of March 28, 2012, between each of Covanta Energy Corporation and the other grantors party thereto, and Bank of America, N.A., as Collateral Agent (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated March 28, 2012 and filed with the SEC on March 30, 2012).
|
|
|
|
10.8†
|
|
Pledge Agreement, dated as of March 28, 2012, between Covanta Holding Corporation and Bank of America, N.A., as Collateral Agent (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated March 28, 2012 and filed with the SEC on March 30, 2012).
|
|
|
|
10.9†
|
|
Intercompany Subordination Agreement, dated as of March 28, 2012, among Covanta Energy Corporation, Covanta Holding Corporation, certain subsidiaries of Covanta Energy Corporation, as Guarantor Subsidiaries, certain other subsidiaries of Covanta Energy Company, as non-guarantor subsidiaries, and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated March 28, 2012 and filed with the SEC on March 30, 2012).
|
|
|
|
10.10†
|
|
Form of Covanta Holding Corporation Indemnification Agreement, entered into with each Director and Officer (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation’s Current Report on Form 8-K dated December 6, 2007 and filed with the SEC on December 12, 2007.
|
|
|
10.11†
|
|
Equity Commitment for Rights Offering between Covanta Holding Corporation and SZ Investments L.L.C. dated February 1, 2005 (incorporated herein by reference to Exhibit 10.2 of Covanta Holding Corporation’s Current Report on Form 8-K dated January 31, 2005 and filed with the SEC on February 2, 2005).
|
|
|
|
10.12†
|
|
Equity Commitment for Rights Offering between Covanta Holding Corporation and EGI-Fund (05-07) Investors, L.L.C. dated February 1, 2005 (incorporated herein by reference to Exhibit 10.3 of Covanta Holding Corporation’s Current Report on Form 8-K dated January 31, 2005 and filed with the SEC on February 2, 2005).
|
|
|
|
10.13†
|
|
Equity Commitment for Rights Offering between Covanta Holding Corporation and Third Avenue Trust, on behalf of The Third Avenue Value Fund Series dated February 1, 2005 (incorporated herein by reference to Exhibit 10.4 of Covanta Holding Corporation’s Current Report on Form 8-K dated January 31, 2005 and filed with the SEC on February 2, 2005).
|
|
|
|
10.14†
|
|
Loan Agreement, dated as of November 1, 2012, by and between Covanta Holding Corporation and the Massachusetts Development Finance Agency (incorporated by reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated November 15, 2012 and filed with the SEC on November 19, 2012).
|
|
|
|
10.15†
|
|
Loan Agreement, dated as of November 1, 2012, by and between Covanta Holding Corporation and the Niagara Area Development Corporation Agency (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated November 15, 2012 and filed with the SEC on November 19, 2012).
|
|
|
|
10.16†
|
|
Guaranty Agreement, dated as of November 1, 2012, by and between Covanta Energy Corporation and Wells Fargo Bank, National Association, pursuant to the Loan Agreement, dated as of November 1, 2012, by and between Covanta Holding Corporation and the Massachusetts Development Finance Agency (incorporated herein by reference to Exhibit 10.3 of Covanta Holding Corporation's Current Report on Form 8-K dated November 15, 2012 and filed with the SEC on November 19, 2012).
|
|
|
|
10.17†
|
|
Guaranty Agreement, dated as of November 1, 2012, by and between Covanta Energy Corporation and Wells Fargo Bank, National Association, pursuant to the Loan Agreement, dated as of November 1, 2012, by and between Covanta Holding Corporation and the Niagara Area Development Corporation Agency (incorporated herein by reference to Exhibit 10.4 of Covanta Holding Corporation's Current Report on Form 8-K dated November 15, 2012 and filed with the SEC on November 19, 2012).
|
|
|
|
10.18†
|
|
Agreement, dated as of August 22, 2013, by and among Covanta Holding Corporation and John M. Huff, as Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration (the "Trustee") solely in his capacity as trustee and statutory receiver of the Mission Reinsurance Corporation Trust and the Holland-America Insurance Company Trust (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation's Quarterly Report on Form 10-Q dated October 24, 2013 and filed with the SEC on October 24, 2013).
|
|
|
|
10.19†*
|
|
Covanta Holding Corporation 2014 Equity Award Plan (incorporated herein by reference to Exhibit 4.1 of Covanta Holding Corporation’s Registration Statement on Form S-8 filed with the SEC on May 8, 2014).
|
|
|
|
10.20†*
|
|
Form of Covanta Holding Corporation Stock Option Agreement for Employees and Officers (incorporated herein by reference to Exhibit 4.3 of Covanta Holding Corporation’s Registration Statement on Form S-8 filed with the SEC on May 7, 2008).
|
|
|
|
10.21†*
|
|
Form of Growth Equity Award Agreement (incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation’s Current Report on Form 8-K dated February 24, 2010 and filed with the SEC on March 2, 2010).
|
|
|
|
10.22†*
|
|
Covanta Energy Corporation Senior Officers Severance Plan (incorporated herein by reference to Exhibit 10.2 of Covanta Holding Corporation’s Current Report on Form 8-K dated February 24, 2010 and filed with the SEC on March 2, 2010).
|
|
|
|
10.25†*
|
|
Form of Covanta Holding Corporation Restricted Stock Award Agreement for Directors (incorporated herein by reference to Exhibit 10.3 of Covanta Holding Corporation's Quarterly Report on Form 10-QA dated August 11, 2014 and filed with the SEC on August 11, 2014).
|
|
|
|
10.26†*
|
|
Form of Covanta Holding Corporation TSR Award Agreement for Employees and Officers (incorporated herein by reference to Exhibit 10.4 of Covanta Holding Corporation's Quarterly Report on Form 10-QA dated August 11, 2014 and filed with the SEC on August 11, 2014).
|
|
|
|
10.27†*
|
|
Form of Covanta Holding Corporation Stock Option Award Agreement for Directors (incorporated herein by reference to Exhibit 10.5 of Covanta Holding Corporation's Quarterly Report on Form 10-QA dated August 11, 2014 and filed with the SEC on August 11, 2014).
|
|
|
|
Other.
|
||
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
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.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Document
|
†
|
Not filed herewith, but incorporated herein by reference.
|
*
|
Management contract or compensatory plan or arrangement.
|
|
(b) Exhibits: See list of Exhibits in this Part IV, Item 15(a)(3) above.
|
|
|
|
|
|
(c) Financial Statement Schedules: See Part IV, Item 15(a)(2) above.
|
|
COVANTA HOLDING CORPORATION
(Registrant)
|
|
|
|
|
|
By:
|
/
S
/ S
TEPHEN
J. J
ONES
|
|
|
Stephen J. Jones
|
|
|
President and Chief Executive Officer
|
Name
|
|
Title
|
|
Date
|
|
|
|
||
/S/
S
TEPHEN J. JONES
Stephen J. Jones
|
|
President and Chief Executive Officer and Director (Principal Executive Officer)
|
|
February 28, 2017
|
|
|
|
||
/
S/
B
RADFORD
J. H
ELGESON
Bradford J. Helgeson
|
|
Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 28, 2017
|
|
|
|
||
/
S
/ S
AMUEL
Z
ELL
Samuel Zell
|
|
Chairman of the Board
|
|
February 28, 2017
|
|
|
|
||
/
S
/ D
AVID
M. B
ARSE
David M. Barse
|
|
Director
|
|
February 28, 2017
|
|
|
|
||
/
S
/ R
ONALD
J. B
ROGLIO
Ronald J. Broglio
|
|
Director
|
|
February 28, 2017
|
|
|
|
||
/
S
/ P
ETER
C. B. B
YNOE
Peter C. B. Bynoe
|
|
Director
|
|
February 28, 2017
|
|
|
|
||
/
S
/ L
INDA
J. F
ISHER
Linda J. Fisher
|
|
Director
|
|
February 28, 2017
|
|
|
|
||
/
S
/ J
OSEPH
M. H
OLSTEN
Joseph M. Holsten
|
|
Director
|
|
February 28, 2017
|
|
|
|
||
/S/
A
NTHONY
J. O
RLANDO
Anthony J. Orlando |
|
Director
|
|
February 28, 2017
|
|
|
|
||
/S/
D
ANIELLE
P
LETKA
Danielle Pletka |
|
Director
|
|
February 28, 2017
|
|
|
|
|
|
/
S
/ M
ICHAEL
W. R
ANGER
Michael W. Ranger
|
|
Director
|
|
February 28, 2017
|
|
|
|
|
|
/
S
/ R
OBERT
S. S
ILBERMAN
Robert S. Silberman
|
|
Director
|
|
February 28, 2017
|
|
|
|
|
|
/
S
/ J
EAN
S
MITH
Jean Smith
|
|
Director
|
|
February 28, 2017
|
Scheduled Vesting Date
|
Number of RSUs
|
Conversion Date
|
___ __, 20__
|
|
|
|
|
|
___ __, 20__
|
|
|
|
|
|
___ __, 20__
|
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
|
(In millions, except ratios)
|
||||||||||||||||
Earnings as defined in Regulation S-K (1):
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations before income tax expense, equity in net income from unconsolidated investments
|
$
|
14
|
|
|
$
|
(28
|
)
|
|
$
|
4
|
|
|
$
|
79
|
|
|
$
|
159
|
|
Capitalized interest
|
(26
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Dividends from unconsolidated investments
|
2
|
|
|
5
|
|
|
11
|
|
|
7
|
|
|
8
|
|
|||||
Fixed Charges
|
168
|
|
|
151
|
|
|
157
|
|
|
168
|
|
|
158
|
|
|||||
Total Earnings
|
$
|
158
|
|
|
$
|
119
|
|
|
$
|
170
|
|
|
$
|
253
|
|
|
$
|
324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fixed Charges as defined in Regulation S-K (2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense
|
$
|
138
|
|
|
$
|
134
|
|
|
$
|
147
|
|
|
$
|
159
|
|
|
$
|
146
|
|
Capitalized interest
|
26
|
|
|
9
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|||||
Imputed interest on operating leases
|
4
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
11
|
|
|||||
Total Fixed Charges
|
$
|
168
|
|
|
$
|
151
|
|
|
$
|
157
|
|
|
$
|
168
|
|
|
$
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ratio of Earnings to Fixed Charges
|
.94x
|
|
|
0.79x
|
|
|
1.08x
|
|
|
1.51x
|
|
|
2.05x
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For purposes of computing the ratio of earnings to fixed charges, the term “earnings” shall be defined as income from continuing operations before income tax expense and equity in net income from unconsolidated investments plus dividends from unconsolidated investments and fixed charges less capitalized interest.
|
(2)
|
For purposes of computing the ratio of earnings to fixed charges, the term “fixed charges” shall be defined as interest expense, capitalized interest and imputed interest for operating leases.
|
Company Name
|
|
Jurisdiction of
Incorporation
|
Advanced Waste Carriers, Inc.
|
|
Wisconsin
|
Advanced Waste Services of Illinois, LLC
|
|
Illinois
|
Advanced Waste Services of Indiana, Inc.
|
|
Wisconsin
|
Advanced Waste Services of Iowa, LLC
|
|
Iowa
|
Advanced Waste Services of Ohio, LLC
|
|
Ohio
|
Advanced Waste Services of Pennsylvania, LLC
|
|
Pennsylvania
|
Advanced Waste Services, Inc.
|
|
Illinois
|
Burney Mountain Power
|
|
California
|
Camden County Energy Recovery Associates, L.P.
|
|
New Jersey
|
Chesapeake Waste Solutions, Inc.
|
|
Delaware
|
Covanta 4Recovery Philadelphia LLC
|
|
Delaware
|
Covanta 4Recovery Transfer Systems LLC
|
|
Delaware
|
Covanta Abington Transfer Solutions LLC
|
|
Delaware
|
Covanta Alexandria/Arlington, Inc.
|
|
Virginia
|
Covanta ARC LLC
|
|
Delaware
|
Covanta B-3, LLC
|
|
New York
|
Covanta Babylon, Inc.
|
|
New York
|
Covanta Bristol, Inc.
|
|
Connecticut
|
Covanta Burnaby Renewable Energy ULC
|
|
Quebec
|
Covanta Camden GP, LLC
|
|
Delaware
|
Covanta Company of SEMASS, LLC
|
|
Delaware
|
Covanta Connecticut (S.E.), LLC
|
|
Delaware
|
Covanta Dade Metals Recovery LLC
|
|
Florida
|
Covanta Dade Renewable Energy, LLC
|
|
Florida
|
Covanta Delano, Inc.
|
|
Delaware
|
Covanta Delaware Valley II, LLC
|
|
Delaware
|
Covanta Delaware Valley OP, LLC
|
|
Delaware
|
Covanta Delaware Valley, L.P.
|
|
Delaware
|
Covanta Durham York Renewable Energy Limited Partnership
|
|
Nova Scotia
|
Covanta Energy (Ireland) Limited
|
|
Ireland
|
Covanta Energy Americas, Inc.
|
|
Delaware
|
Covanta Energy Asia Holdings Ltd.
|
|
Mauritius
|
Covanta Energy Asia Pacific Holdings Limited
|
|
China
|
Covanta Energy Asia Pacific Limited
|
|
Hong Kong
|
Covanta Energy China (Delta) Ltd.
|
|
Mauritius
|
Covanta Energy China (Gamma) Ltd.
|
|
Mauritius
|
Covanta Energy Group, LLC
|
|
Delaware
|
Covanta Energy India (Balaji) Ltd.
|
|
Mauritius
|
Covanta Energy International Investments Limited
|
|
Mauritius
|
Covanta Energy Limited
|
|
United Kingdom
|
Covanta Energy, LLC
|
|
Delaware
|
Covanta Energy Marketing LLC
|
|
Delaware
|
Covanta Environmental Solutions, Inc.
|
|
Delaware
|
Covanta Energy Philippine Holdings, Inc.
|
|
Philippines
|
Covanta Essex Company
|
|
New Jersey
|
Covanta Essex II, LLC
|
|
Delaware
|
Covanta Essex LLC
|
|
Delaware
|
Covanta Europe Engineering Limited
|
|
Ireland
|
Covanta Europe Holdings S.a.r.l.
|
|
Luxembourg
|
Covanta Europe Operations Limited
|
|
Ireland
|
Covanta Fairfax, Inc.
|
|
Virginia
|
Covanta Five Ltd.
|
|
Mauritius
|
Covanta Gold River Renewable Energy Limited Partnership
|
|
Nova Scotia
|
Covanta Harrisburg, Inc.
|
|
Delaware
|
Covanta Haverhill Associates, LLC
|
|
Massachusetts
|
Covanta Haverhill, Inc.
|
|
Massachusetts
|
Covanta Hempstead Company
|
|
New York
|
Covanta Hempstead II, LLC
|
|
Delaware
|
Covanta Hennepin Energy Resource Co., LLC
|
|
Delaware
|
Covanta Hillsborough, Inc.
|
|
Florida
|
Covanta Holding Corporation
|
|
Delaware
|
Covanta Honolulu Resource Recovery Venture, LLC
|
|
Hawaii
|
Covanta Hudson Valley Renewable Energy LLC
|
|
Delaware
|
Covanta Huntington, LLC
|
|
Delaware
|
Covanta Huntsville, Inc.
|
|
Alabama
|
Covanta Hydro Operations West, Inc.
|
|
Delaware
|
Covanta Ince Park Limited
|
|
United Kingdom
|
Covanta Indianapolis, Inc.
|
|
Indiana
|
Covanta Kent, Inc.
|
|
Michigan
|
Covanta Lake II, Inc.
|
|
Florida
|
Covanta Lancaster, Inc.
|
|
Pennsylvania
|
Covanta Lee, Inc.
|
|
Florida
|
Covanta Long Beach Renewable Energy Corp.
|
|
Delaware
|
Covanta MacArthur Renewable Energy, Inc.
|
|
New York
|
Covanta Maine, LLC
|
|
Illinois
|
Covanta Marion Land Corp.
|
|
Oregon
|
Covanta Marion, Inc.
|
|
Oregon
|
Covanta Mendota, LLC
|
|
California
|
Covanta Metals Marketing LLC
|
|
Delaware
|
Covanta Montgomery, Inc.
|
|
Maryland
|
Covanta Niagara I, LLC
|
|
Delaware
|
Covanta Onondaga Limited Partnership
|
|
Delaware
|
Covanta Onondaga Two, LLC
|
|
Delaware
|
Covanta Operations of Union LLC
|
|
New Jersey
|
Covanta OPW Associates, Inc.
|
|
Connecticut
|
Covanta Pasco, Inc.
|
|
Florida
|
Covanta Pittsfield, LLC
|
|
New York
|
Covanta Plymouth Renewable Energy, LLC
|
|
Delaware
|
Covanta Power International Holdings, Inc.
|
|
Delaware
|
Covanta Projects of Wallingford, LLC
|
|
Delaware
|
Covanta Projects, LLC
|
|
Delaware
|
Covanta Rookery South Limited
|
|
United Kingdom
|
Covanta SECONN LLC
|
|
Delaware
|
Covanta SEMASS, LLC
|
|
Delaware
|
Covanta Southeastern Connecticut Company
|
|
Connecticut
|
Covanta Southeastern Connecticut, L.P.
|
|
Delaware
|
Covanta Springfield, LLC
|
|
New York
|
Covanta Stanislaus, Inc.
|
|
California
|
Covanta Sustainable Solutions, LLC
|
|
Delaware
|
Covanta TARTECH LLC
|
|
Delaware
|
Covanta Tulsa Renewable Energy LLC f/k/ Covanta WBH, LLC
|
|
Delaware
|
Covanta Union, LLC
|
|
New Jersey
|
Covanta Wallingford Associates, Inc.
|
|
Connecticut
|
Covanta Warren Energy Resource Co., LLC
|
|
Delaware
|
Covanta Waste to Energy Asia Limited
|
|
Hong Kong
|
Covanta Waste to Energy Asia Ltd.
|
|
Mauritius
|
Covanta Waste to Energy of Italy, Inc.
|
|
Delaware
|
Covanta York Renewable Energy LLC
|
|
Delaware
|
DSS Environmental, Inc.
|
|
New York
|
Dublin Waste to Energy (Holdings) Limited
|
|
Ireland
|
Dublin Waste to Energy Group (Holdings) Limited
|
|
Ireland
|
Dublin Waste to Energy Limited
|
|
Ireland
|
Dublin Waste to Energy Supply Limited
|
|
Ireland
|
ECOvanta, LLC
|
|
Delaware
|
Edison (Bataan) Cogeneration Corporation
|
|
Philippines
|
Enereurope Holdings III, B.V
|
|
Netherlands
|
Environmental Compliance Management, Inc.
|
|
Florida
|
GARCO, Inc.
|
|
North Carolina
|
Hidro Operaciones Don Pedro S.A.
|
|
Costa Rica
|
Ince Park, LLP
|
|
United Kingdom
|
Koma Kulshan Associates L.P.
|
|
California
|
Mount Kisco Transfer Station, Inc.
|
|
New York
|
MSW Energy Finance Co. II, Inc.
|
|
Delaware
|
Mt. Lassen Power
|
|
California
|
OLMEC Insurance Ltd.
|
|
Bermuda
|
Pacific Oroville Power, Inc.
|
|
California
|
Peabody Monofill Associates, Inc.
|
|
Massachusetts
|
Recoil, Inc.
|
|
Pennsylvania
|
Recycling Industries Transfer Station, LLC
|
|
New York
|
SEMASS Partnership
|
|
Massachusetts
|
South Fork II Associates Limited Partnership
|
|
Washington
|
Taixing Covanta Yanjiang Cogeneration Co Ltd.
|
|
China
|
TransRiver Canada Incorporated
|
|
Nova Scotia
|
Waste Recovery Solutions, Inc.
|
|
Florida
|
(1)
|
Registration Statement (Form S-8 No. 333-119609) pertaining to the Covanta Holding Corporation (formerly Danielson Holding Corporation) Equity Award Plan for Employees and Officers and the Covanta Holding Corporation Equity Award Plan for Directors of Covanta Holding Corporation,
|
(2)
|
Registration Statement (Form S-8 No. 333-130046) pertaining to the registration of an additional 2,000,000 shares of common stock as a result of an increase in the number of shares of common stock issuable under the Covanta Holding Corporation Equity Award Plan for Employees and Officers,
|
(3)
|
Registration Statement (Form S-8 No. 333-150705) pertaining to the registration of an additional 6,300,000 shares of common stock as a result of an increase in the number of shares of common stock issuable under the Covanta Holding Corporation Equity Award Plan for Employees and Officers and the Covanta Holding Corporation Equity Award Plan for Directors of Covanta Holding Corporation,
|
(4)
|
Registration Statement (Form S-8 No. 333-195793) pertaining to the Covanta Holding Corporation 2014 Equity Award, and
|
(5)
|
Registration Statement (Form S-3 No. 333-199593) pertaining to the registration of common stock, preferred stock, warrants, and debt securities
|
1.
|
I have reviewed this Annual Report on Form 10-K 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
/ S
TEPHEN
J. J
ONES
|
|
Stephen J. Jones
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K 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
/ B
RADFORD
J. H
ELGESON
|
|
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
/ S
TEPHEN
J. J
ONES
|
|
Stephen J. Jones
|
|
President and Chief Executive Officer
|
|
|
|
/
S
/ B
RADFORD
J. H
ELGESON
|
|
Bradford J. Helgeson
|
|
Executive Vice President and Chief Financial Officer
|
|
|