##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C. 20549
    Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 1-06732
 COVANTA HOLDING
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

95-6021257(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employee
    Identification No.)40 Lane Road, Fairfield, N.J.

07004(Address of Principal Executive
    Offices)

(Zip Code)   Registrants telephone number, including area code:
 (973) 882-9000
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.10 par value per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o
      (Do not check if a smaller reporting company)

Smaller reporting
    Company o   Rule 12b-2 o þ
      Class

February 17, 2010Common Stock, $0.10 par value per share

154,936,092 shares   Documents
    Incorporated By Reference:
  Part of Form 10-K of Covanta
    Holding Corporation

Documents Incorporated by
    ReferencePart III

Portions of the Proxy Statement to be filed with the Securities
    and Exchange Commission in connection with the 2010 Annual
    Meeting of Stockholders.




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##### 





TABLE OF
    CONTENTS
  PageCautionary Note Regarding Forward- Looking
    Statements


3Availability Of Information


3PART IItem 1.


Business


4About Covanta Holding Corporation


4Business Segments


4The Energy-From-Waste Solution


4Growth And Development


5Americas Segment


6International Segment


11Markets, Competition And Business Conditions


16Regulation Of Business


18Employees


23Executive Officers Of The Registrant


24Item 1A.


Risk Factors


25Item 1B.


Unresolved Staff Comments


35Item 2.


Properties


35Item 3.


Legal Proceedings


36Item 4.


Submission Of Matters To A Vote Of Security
    Holders


36PART IIItem 5.


Market For Registrants Common Equity,
    Related Stockholder Matters, And Issuer Purchases Of Equity
    Securities


37Item 6.


Selected Financial Data


37Item 7.


Managements Discussion And Analysis Of
    Financial Condition And Results Of Operations


38Overview


38Results Of Operations


47Year Ended December 31, 2009 vs.
    Year Ended December 31, 2008


48Year Ended December 31, 2008 vs.
    Year Ended December 31, 2007


51Liquidity And Capital Resources


56Item 7A.


Quantitative And Qualitative Disclosures About
    Market Risk


69Item 8.


Financial Statements And Supplementary Data


73Item 9.


Changes In And Disagreements With Accountants On
    Accounting And Financial Disclosure


126Item 9A.


Controls And Procedures


126Item 9B.


Other Information


130PART IIIItem 10.


Directors, Executive Officers And Corporate
    Governance


130Item 11.


Executive Compensation


130Item 12.


Security Ownership Of Certain Beneficial Owners
    And Management And Related Stockholder Matters


130Item 13.


Certain Relationships And Related Transactions,
    And Director Independence


130Item 14.


Principal Accountant Fees And Services


131PART IVItem 15.


Exhibits And Financial Statement
    Schedules


131OTHERSignatures


136EX-12.1EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1   2




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CAUTIONARY
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  Form 10-K Form 10-K
  Form 10-K
  AVAILABILITY
    OF INFORMATION  www.sec.gov, 1-800-SEC-0330 www.covantaholding.com
 3




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PART I  Item 1.
    BUSINESS    About
    Covanta Holding Corporation    and/or
  Business
    Segments    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Overview  Business Segments Item 8. Financial Statements And Supplementary
    Data  Note 5. Financial Information by Business
    Segments
 The
    Energy-From-Waste Solution    
    providing customers with superior service and effectively
    managing our existing business;
    generating sufficient cash to meet our liquidity needs and
    invest in our business;
    advancing our Clean World Initiative in order to enhance the
    value of our existing business and create new
    opportunities; and
    developing new projects and making acquisitions to grow our
    business in the Americas, Europe and Asia.      
    investing in research and development of new technologies to
    enhance existing operations and create new business
    opportunities in renewable energy and waste management; 4




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
    exploring and implementing processes and technologies at our
    facilities to improve energy efficiency and lessen environmental
    impacts; and
    partnering with governments and non-governmental organizations
    to pursue sustainable programs, reduce the use of
    environmentally harmful materials in commerce, and communicate
    the benefits of energy-from-waste.      cap-and-trade
 Growth
    and Development  and/or
  and/or
  and/or
   5




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Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Overview  Growth and Development
 AMERICAS
    SEGMENT  Energy-From-Waste
    Projects
    and/or
  Contract
    Structures
    
    We design the facility, help to arrange for financing and then
    we either construct and equip the facility on a fixed price and
    schedule basis, or we undertake an alternative role, such as
    construction management, if that better meets the goals of our
    municipal client.
    For the energy-from-waste projects we own, financing is
    generally accomplished through tax-exempt and taxable revenue
    bonds issued by or on behalf of the client community. For these
    facilities, the bond proceeds are loaned to us to pay for
    facility construction and to fund a debt service reserve for the
    project, which is generally sufficient to pay principal and
    interest for one year. Project-related debt is included as
    project debt and the debt service reserves are
    included as restricted funds held in trust in our
    consolidated financial statements. Generally, project debt is
    secured by the projects revenue, contracts and other
    assets of our project subsidiary. 6




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
    Following construction and during operations, we receive revenue
    from two primary sources: fees we receive for operating projects
    or for processing waste received, and payments we receive for
    electricity
    and/or steam
    we sell. Typical features of these agreements are as follows:  Currentnumber of

Fees for operating projects or for

Payments for electricityContract types

projects

processing waste received

and/or steam we sellService Fee

28

We charge a fixed fee (which escalates over time pursuant to
    contractual indices that we believe are appropriate to reflect
    price inflation) for operation and maintenance services provided
    to these energy-from-waste projects. At projects that we own and
    where project debt is in place, a portion of our fee is
    dedicated to project debt service. Our contracts at Service Fee
    projects provide revenue that does not materially vary based on
    the amount of waste processed or energy generated and as such is
    relatively stable for the contract term.

At most of our Service Fee projects, the operating subsidiary
    retains only a fraction of the energy revenues generated, with
    the balance (generally 90%) used to provide a credit to the
    municipal client against its disposal costs. Therefore, in these
    projects, the municipal client derives most of the benefit and
    risk of energy production and changing energy prices.Tip Fee

13

We receive a per-ton fee under contracts for processing waste at
    Tip Fee projects. We generally enter into long-term waste
    disposal contracts for a substantial portion of the
    projects disposal capacity. These Tip Fee service
    agreements include stated fixed fees earned by us for processing
    waste up to certain base contractual amounts during specified
    periods. These Tip Fee service agreements also set forth the
    per-ton fees that are payable if we accept waste in excess of
    the base contractual amounts. The waste disposal and energy
    revenue from these projects is more dependent upon operating
    performance and, as such, is subject to greater revenue
    fluctuation to the extent performance levels fluctuate.

Where Tip Fee structures exist, we generally retain 100% of the
    energy revenues, as well as risk associated with energy
    production and changing energy pricing.  The majority of Tip Fee
    structures are under long-term fixed-price energy contracts.   
    We agree to operate the facility and meet minimum waste
    processing capacity and efficiency standards, energy production
    levels and environmental standards. Failure to meet these
    requirements or satisfy the other material terms of our
    agreement (unless the failure is caused by our client community
    or by events beyond our control), may result in damages charged
    to us or, if the breach is substantial, continuing and
    unremedied, termination of the applicable agreement. These
    damages could include amounts sufficient to repay project debt
    (as reduced by amounts held in trust
    and/or
    proceeds from sales of facilities securing project debt) and as
    such, these contingent obligations cannot readily be quantified.
    We have issued performance guarantees to our client communities
    and, in some cases other parties, which guarantee that our
    project subsidiaries will perform in accordance with contractual
    terms including, where required, the payment of such damages. If
    one or more contracts were terminated for our default, these
    contractual damages may be material to our cash flow and
    financial condition. To date, we have not incurred material
    liabilities under such performance guarantees.
    The client community generally must deliver minimum quantities
    of municipal solid waste to the facility on a
    put-or-pay
    basis and is obligated to pay a fee for its disposal. A
    put-or-pay
    commitment means that the client community promises to deliver a
    stated quantity of waste and pay an agreed amount for its
    disposal, regardless of whether the full amount of waste is
    actually delivered. Where a Service Fee structure exists,
    portions of the service fee escalate to reflect indices for
    inflation, and in many cases, the client community must also pay
    for other costs, such as insurance, taxes, and transportation
    and disposal of the ash residue to the disposal site. Generally,
    expenses resulting from the delivery of unacceptable and
    hazardous waste on the site are also borne by the client
    community. In addition, the contracts generally require the
    client community to pay increased expenses and capital costs
    resulting from unforeseen circumstances, subject to specified
    limits. At three publicly-owned facilities we operate, our
    client community may terminate the operating contract under
    limited circumstances without cause.
    Our returns are expected to be stable if we do not incur
    material unexpected operation and maintenance costs or other
    expenses. In addition, most of our energy-from-waste project
    contracts are structured so that contract counterparties
    generally bear, or share in, the costs associated with events or
    circumstances not within our control, such as uninsured force
    majeure events and changes in legal requirements. The stability
    of our revenues and returns could be affected by our ability to
    continue to enforce these obligations. Also, at some of our
    energy-from-waste facilities, commodity price risk is mitigated
    by passing through commodity costs to contract counterparties.
    With respect to our other renewable energy projects, such
    structural features generally do not exist because either we
    operate and maintain such facilities for our own account. 7




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
    We receive the majority of our revenue under short- and
    long-term contracts, with little or no exposure to price
    volatility, but with adjustments intended to reflect changes in
    our costs. Where our revenue is received under other
    arrangements and depending upon the revenue source, we have
    varying amounts of exposure to price volatility. The largest
    component of our revenue is waste revenue, which has generally
    been subject to less price volatility than our revenue derived
    from the sale of energy and metals. During the second and third
    quarters of 2008, pricing for energy and recycled metals reached
    historically high levels and has subsequently declined
    materially. At some of our renewable energy projects, our
    operating subsidiaries purchase fuel in the open markets which
    exposes us to fuel price risk.
    We generally sell the energy output from our projects to local
    utilities pursuant to long-term contracts. At several of our
    energy-from-waste projects, we sell energy output under
    short-term contracts or on a spot-basis to our customers.  Contracted
    and Merchant Capacity
    Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview  Growth and
    Development Item 1A. Risk Factors  We
    may face increased risk of market influences on our revenues
    after our contracts expire.
    and/or
  Biomass
    Projects
     8




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Other
    Renewable Energy Projects
  and/or
  Hydroelectric run-of-river
  Landfill Gas
    ContractDesign Capacity



Expiration DatesWaste

Gross



Service/Disposal

Electric



WasteLocation

(TPD)

(MW)

Nature of Interest

Disposal

EnergyA.

ENERGY-FROM-WASTE PROJECTSTIP FEE STRUCTURES1.

Southeast Massachusetts(1)

Massachusetts

2,700

78.0

Owner/Operator

N/A

20152.

Delaware Valley

Pennsylvania

2,688

87.0

Lessee/Operator

2017

20163.

Hempstead(2)

New York

2,505

72.0

Owner/Operator

2034

N/A4.

Indianapolis(3)

Indiana

2,362

6.5

Owner/Operator

2018

20285.

Niagara(3)

New York

2,250

50.0

Owner/Operator

N/A

2010-20186.

Haverhill

Massachusetts

1,650

44.6

Owner/Operator

N/A

20197.

Union County(2)

New Jersey

1,440

42.1

Lessee/Operator

2023

N/A8.

Tulsa(3)

Oklahoma

1,125

16.5

Owner/Operator

2012

20199.

Alexandria/Arlington

Virginia

975

22.0

Owner/Operator

2013

202310.

Kent County(3)

Michigan

625

16.8

Operator

2023

202311.

Warren County

New Jersey

450

13.5

Owner/Operator

N/A

201312.

Springfield

Massachusetts

400

9.4

Owner/Operator

2014

201013.

Pittsfield

Massachusetts

240

8.6

Owner/Operator

2015

2015SERVICE FEE STRUCTURES14.

Fairfax County

Virginia

3,000

93.0

Owner/Operator

2011

201515.

Detroit(1)(3)(4)

Michigan

2,832

68.0

Part Owner/Operator

2010

202416.

Essex County

New Jersey

2,277

66.0

Owner/Operator

2020

202017.

Honolulu(1)(5)

Hawaii

2,160

90.0

Operator

2032

201518.

Hartford(1)(6)

Connecticut

2,000

68.5

Operator

2012

201219.

Lee County

Florida

1,836

57.3

Operator

2024

201520.

Montgomery County

Maryland

1,800

63.4

Operator

2016

201021.

Hillsborough County

Florida

1,800

46.5

Operator

2027

201022.

Long Beach

California

1,380

36.0

Operator

2018

201823.

York

Pennsylvania

1,344

42.0

Operator

2015

201624.

Plymouth

Pennsylvania

1,216

32.0

Owner/Operator

2014

201225.

Hennepin County

Minnesota

1,212

38.7

Operator

2018

201826.

Lancaster County

Pennsylvania

1,200

33.1

Operator

2016

201627.

Pasco County

Florida

1,050

29.7

Operator

2016

202428.

Onondaga County

New York

990

39.2

Owner/Operator

2015

202529.

Stanislaus County

California

800

22.4

Owner/Operator

2016

2010 9




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ContractDesign Capacity



Expiration DatesWaste

Gross



Service/Disposal

Electric



WasteLocation

(TPD)

(MW)

Nature of Interest

Disposal

Energy30.

Harrisburg(2)

Pennsylvania

800

20.8

Operator

2018

N/A31.

Huntington(7)

New York

750

24.3

Owner/Operator

2012

201232.

Babylon

New York

750

16.8

Owner/Operator

2019

201833.

Burnaby

British Columbia

720

25.0

Operator

2025

201334.

Huntsville(3)

Alabama

690



Operator

2016

201435.

Southeast Connecticut

Connecticut

689

17.0

Owner/Operator

2015

201736.

Bristol

Connecticut

650

16.3

Owner/Operator

2014

201437.

Marion County

Oregon

550

13.1

Owner/Operator

2014

201438.

Lake County

Florida

528

14.5

Owner/Operator

2014

201439.

MacArthur

New York

486

12.0

Operator

2015

201040.

Hudson Valley

New York

450

9.8

Operator

2014

201441.

Wallingford

Connecticut

420

11.0

Owner/Operator

2020

2010SUBTOTAL

53,790

1,473.4B.

ANCILLARY WASTE PROJECTSASH and LANDFILLS42.

CMW  Semass

Massachusetts

1,700

N/A

Operator

2016

N/A43.

Peabody (ash only)

Massachusetts

700

N/A

Owner/Operator

N/A

N/A44.

Haverhill

Massachusetts

555

N/A

Lessee/Operator

N/A

N/A45.

Springfield (ash only)

Massachusetts

175

N/A

Owner/Operator

N/A

N/ASUBTOTAL

3,130TRANSFER STATIONS46.

Derwood

Maryland

2,500

N/A

Operator

2015

N/A47.

Girard Point

Pennsylvania

2,500

N/A

Owner/Operator

2012

N/A48.

58th

    Street

Pennsylvania

2,000

N/A

Owner/Operator

2012

N/A49.

Braintree

Massachusetts

1,200

N/A

Owner/Operator

2015

N/A50.

Abington

Pennsylvania

940

N/A

Operator

2014

N/A51.

Lynn

Massachusetts

885

N/A

Owner/Operator

N/A

N/A52.

Mamaroneck

New York

800

N/A

Owner/Operator

2015

N/A53.

Holliston

Massachusetts

700

N/A

Owner/Operator

N/A

N/A54.

Canaan

New York

600

N/A

Owner/Operator

N/A

N/A55.

Springfield

Massachusetts

500

N/A

Owner/Operator

N/A

N/A56.

Mt. Kisco

New York

350

N/A

Owner/Operator

2016

N/A57.

Danvers

Massachusetts

250

N/A

Operator

2011

N/A58.

Essex

Massachusetts

6

N/A

Operator

2015

N/ASUBTOTAL

13,231C.

OTHER RENEWABLE ENERGY PROJECTSBIOMASS59.

Delano

California

N/A

49.5

Owner/Operator

N/A

201760.

Pacific Ultrapower Chinese Station(8)

California

N/A

25.6

Part Owner

N/A

201761.

Mendota

California

N/A

25.0

Owner/Operator

N/A

201462.

Jonesboro(2)

Maine

N/A

24.5

Owner/Operator

N/A

N/A63.

West Enfield(2)

Maine

N/A

24.5

Owner/Operator

N/A

N/A64.

Pacific Oroville

California

N/A

18.7

Owner/Operator

N/A

201665.

Burney Mountain

California

N/A

11.4

Owner/Operator

N/A

201566.

Mount Lassen

California

N/A

11.4

Owner/Operator

N/A

2015SUBTOTAL



190.6HYDROELECTRIC67.

Rio Volcan(9)

Costa Rica

N/A

17.0

Part Owner/Operator

N/A

201068.

Don Pedro(9)

Costa Rica

N/A

14.0

Part Owner/Operator

N/A

201069.

Koma Kulshan(10)

Washington

N/A

12.0

Part Owner/Operator

N/A

203770.

South Fork(10)

Washington

N/A

5.0

Part Owner

N/A

2022SUBTOTAL



48.0LANDFILL GAS71.

Otay

California

N/A

7.4

Owner/Operator

N/A

2011-201972.

Haverhill

Massachusetts

N/A

1.6

Lessee/Operator

N/A

N/A73.

Stockton

California

N/A

0.8

Owner/Operator

N/A

2012SUBTOTAL



9.8  10




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(1)
    
    These facilities use a refuse-derived fuel technology.(2)
    
    These facilities sell electricity into the regional power pool
    at prevailing rates.(3)
    
    These facilities have been designed to export steam for sale.(4)
    
    The project receives waste under an agreement with the Greater
    Detroit Resource Recovery Authority (GDRRA) with a
    term of one year, which renews automatically for successive one
    year terms unless either party terminates. In addition, the
    project may call upon GDRRA to deliver the waste of the City of
    Detroit to the Detroit facility at market-based rates through
    2035.(5)
    
    With respect to this project, we have entered into agreements to
    expand waste processing capacity from 2,160 tpd to 3,060 tpd and
    to increase gross electricity capacity from 57 MW to
    90 MW. The agreements also extend the service contract term
    by 20 years. Environmental and other project related
    permits have been received and expansion construction has
    commenced.(6)
    
    Under contracts with the Connecticut Resource Recovery
    Authority, we operate only the boilers and turbines for this
    facility.(7)
    
    Owned by a limited partnership in which the limited partners are
    not affiliated with us.(8)
    
    We have a 55% ownership interest in this project.(9)
    
    We have nominal ownership interests in these projects.(10)
    
    We have a 50% ownership interest in these projects. INTERNATIONAL
    SEGMENT  General
    Approach to International Projects
  and/or
  Item 1A. Risk Factors.
  
    Some of the countries in which we currently operate are lesser
    developed countries or developing countries where the political,
    social and economic conditions are quite different, and are
    often less stable than those conditions prevailing in the United
    States or other developed countries. In order to mitigate these
    risks both at the outset of project development and over time,
    we often develop projects jointly with experienced and respected
    local companies.
    When a project is developed, we undertake a credit analysis of
    the proposed power purchaser
    and/or fuel
    suppliers (which for energy-from-waste projects are often
    municipal governments).
    We have typically sought to negotiate long-term contracts for
    the supply of fuel with reliable suppliers. For our projects
    that are not energy-from-waste facilities, we have sought, to
    the extent practicable, to shift the consequences of
    interruptions in the delivery of fuel (whether due to the fault
    of the fuel supplier or due to reasons beyond the fuel
    suppliers control) to the electricity purchaser or service
    recipient by securing a suspension of the projects
    operating responsibilities under the applicable agreements and
    an extension of our operating concession under such agreements.
    In some instances, we require the energy purchaser or service
    recipient to continue to make payments of fixed costs if such
    interruptions occur. In order to mitigate the effect of
    short-term interruptions in the supply of fuel, we have also
    endeavored to provide
    on-site
    storage of fuel in sufficient quantities to address such
    interruptions.
    At some of our international independent power projects, our
    operating subsidiaries purchase fuel in the open market.
    However, in most cases, the fuel price risk is borne by the
    energy purchaser because such risk from changes in fuel prices
    is passed through under the contract. In some of our
    international projects, the project entity has entered into
    long-term fuel purchase contracts that protect the project from
    changes in fuel prices, provided counterparties to such
    contracts perform their commitments. 11




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
    For our energy-from-waste projects in international markets,
    typically a significant portion of each projects waste
    supply is under long-term contracts with sponsoring
    municipalities, thus reducing the risk of fuel supply
    interruptions or price instability. Where market conditions are
    favorable and we have the contractual right to do so, we may
    also reserve a portion of a facilitys capacity for shorter
    term contracts or receive waste on a spot basis. For these
    energy-from-waste projects, long-term contracts for energy
    output are generally not available, and we expect to sell such
    output directly into the power pool at market rates, which may
    fluctuate.
    Payment for services that we provide will often be made in whole
    or in part in the domestic currencies of the host countries. In
    some of our independent power projects, components of project
    costs incurred or funded in U.S. dollars are recovered
    without risk of currency fluctuation through negotiated
    contractual adjustments to the price charged for electricity or
    service provided. This contractual structure may cause the cost
    in local currency to the projects power purchaser or
    service recipient to rise from time to time in excess of local
    inflation, and consequently there is risk in such situations
    that such power purchaser or service recipient will, at least in
    the near-term, be less able or willing to pay for the
    projects power or service.
    We expect to fund the energy-from-waste projects that we will
    develop and own in international markets through a combination
    of local financings and direct equity investment. To the extent
    that the equity investment is made in currencies other than
    local currency, both the amount of our investment and the
    returns we receive on that investment may be affected by
    currency fluctuations.    
    developing projects jointly with experienced local partners,
    where such relationships add value;
    political and financial analysis of the host countries and the
    key participants in each project;
    guarantees of relevant agreements with creditworthy entities;
    political risk and other forms of insurance; and/or
    participation by United States
    and/or
    international development finance institutions in the financing
    of projects.        International
    Projects
    Energy-From-Waste
  In
    Operation
   12




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Under
    Construction
  Ireland
    China
      Independent
    Power Projects
  
    A partnership, in which we hold a 26% equity interest, owns a
    510 MW (gross) coal-fired electric power generation
    facility located in Mauban, Quezon Province, the Philippines
    (Quezon). The remaining equity interests are held by
    an affiliate of International Generating Company, an affiliate
    of Electricity Generating Public Company Limited (a company
    listed on the Stock Exchange of Thailand) and an entity owned by
    the original project developer. The Quezon project sells
    electricity to the Manila Electric Company
    (Meralco), the largest electric distribution company
    in the Philippines, which serves the area surrounding and
    including metropolitan Manila.  Under an energy contract expiring in 2025, Meralco is obligated
    to
    take-or-pay
    for stated minimum annual quantities of electricity at an all-in
    price which consists of capacity, operating, energy,
    transmission and other fees adjusted for inflation, fuel cost
    and foreign exchange fluctuations. The Quezon project has
    entered into two coal supply contracts expiring in 2015 and
    2022. Under these supply contracts, the cost of coal is
    determined using a base energy price adjusted to fluctuations of
    specified international benchmark prices. Our wholly-owned
    subsidiary, Covanta Philippines Operating, Inc., operates the
    project under a long-term agreement with the Quezon project, and
    we have obtained political risk insurance for our equity
    investment in this project.  
    We also have a majority equity interest in a 24 MW (gross)
    coal-fired cogeneration facility in the Peoples Republic
    of China. The project entity, in which we hold a majority
    interest, operates this project. The party holding a minority
    position in the project is an affiliate of the local municipal
    government. While the steam produced at this project is 13




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##### Table of Contents



intended to be sold under a long-term contract to its industrial
    host, in practice, steam has been sold on either a short-term
    basis to local industries or the industrial host, in each case
    at varying rates and quantities. The electric power is sold at
    an average grid rate to a subsidiary of the
    provincial power bureau.  
    We hold a 45% equity interest in a barge-mounted 126 MW
    (gross) diesel/natural gas-fired electric power generation
    facility located near Haripur, Bangladesh. The remaining equity
    interests are held by Pendekar Energy (L) Ltd (a consortium
    of Tanjong Energy Holdings Sdn Bhd (Malaysia) and Al-Jomaih
    Group (Saudi Arabia)) and an affiliate of Wartsila North
    America, Inc. The electrical output of the project is sold to
    the Bangladesh Power Development Board (BPDB)
    pursuant to an energy contract with minimum energy off-take
    provisions at an all-in price divided into a fuel component and
    an other component. The fuel component reimburses
    the fuel cost incurred by the project up to a specified heat
    rate. The other component consists of a
    pre-determined base rate which is adjusted for the actual load
    factor and foreign exchange fluctuations. The BPDB also supplies
    all of the projects natural gas requirements at a
    pre-determined base cost adjusted for fluctuations on actual
    landed cost of the fuel in Bangladesh. The Government of
    Bangladesh guarantees the BPDBs contractual obligations.
    We operate the project under a long-term agreement with the
    project company and we have obtained political risk insurance
    for our equity interest in this project.
    We hold majority equity interests in two 106 MW (gross)
    heavy fuel-oil fired electric power generation facilities in
    India. We hold a 60% equity interest in the first project (the
    Samalpatti project), which is located near
    Samalpatti, in the state of Tamil Nadu. The remaining equity
    interests in the Samalpatti project are held by affiliates of
    Shapoorji Pallonji Infrastructure Capital Co. Ltd. and by
    Wartsila India Power Investment, LLC. We hold a 77% equity
    interest in the second project (the Madurai
    project), which is located in Samayanallur, also in the
    state of Tamil Nadu. The remaining equity interest in the
    Madurai project is held by an Indian company controlled by the
    original project developer. Both projects sell their electrical
    output to the Tamil Nadu Electricity Board (TNEB)
    pursuant to long-term agreements with a full pass-through all-in
    pricing structure that takes into account specified heat rates,
    operation and maintenance costs, and equity returns. TNEBs
    obligations are guaranteed by the government of the state of
    Tamil Nadu. Indian oil companies supply the oil requirements of
    both projects through 15 year fuel supply agreements based
    on market prices. We operate both projects through subsidiaries
    under long-term agreements with the project companies.  Disputing several contractual provisions, TNEB has, since 2001,
    failed to pay the full amount due under the energy contracts for
    both the Samalpatti and Madurai projects. To date, TNEB has paid
    the undisputed portion of its payment obligations (approximately
    95% of total billings) representing each projects
    operating costs, fuel costs, debt service and some equity
    return. Similar to many Indian state electricity boards, TNEB
    has also failed to fund an escrow account or post a letter of
    credit required under the project energy contracts, which
    failure constitutes a default under the project finance
    documents. Project lenders for both projects have either granted
    periodic waivers of such default or potential default
    and/or
    otherwise approved scheduled equity distributions. Neither such
    default nor potential default in the project financing
    arrangements constitutes a default under our financing
    arrangements. It is possible that the issue of the escrow
    account
    and/or
    letter of credit requirement will be resolved as part of the
    overall negotiation with TNEB with respect to the disputed
    receivables in both projects. 14




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Summary information with respect to our international projects
    that are currently operating is provided in the following table:  Design Capacity



ContractWaste





Expiration DatesDisposal

Gross



Service/(Metric

Electric



WasteLocation

TPD)

(MW)

Nature of Interest

Disposal

EnergyA.

ENERGY-FROM-WASTETIP FEE STRUCTURES1.

Fuzhou(1)

China

1,200

24

Part Owner

2032

N/A2.

Tongqing(1)

China

1,200

24

Part Owner

2027

N/A3.

Trezzo

Italy

500

18

Part Owner

2023

2023SUBTOTAL

2,900

66B.

ENERGY-FROM-WASTE  UNDER CONSTRUCTION4.

Chengdu

China

1,800

36

Part Owner5.

Dublin

Ireland

1,700

68

Part Owner/Operator6.

Taixing

China

350

30

Part Owner/OperatorSUBTOTAL

3,850

134C.

INDEPENDENT POWER PROJECTSCOAL7.

Quezon(2)

Philippines

N/A

510

Part Owner/Operator

N/A

20258.

Yanjiang (Taixing)(3)

China

N/A

24

Part Owner/Operator

N/A

N/ASUBTOTAL



534NATURAL GAS9.

Haripur(4)

Bangladesh

N/A

126

Part Owner/Operator

N/A

2014HEAVY FUEL-OIL10.

Madurai(5)

India

N/A

106

Part Owner/Operator

N/A

201611.

Samalpatti(6)

India

N/A

106

Part Owner/Operator

N/A

2016SUBTOTAL



212   (1)
    
    We have a 40% equity interest in Sanfeng, which owns equity
    interests of approximately 32% and 25% in the Fuzhou and
    Tongqing projects, respectively. Sanfeng operates the Tongqing
    project. The Fuzhou project company, in which Sanfeng has a 32%
    interest, operates the Fuzhou project. Ownership of these
    projects transfers to the applicable municipality at the
    expiration of the applicable concession agreement.(2)
    
    We have a 26% ownership interest in this project.(3)
    
    We have an 85% ownership interest in this project. Assets of
    this project revert back to the local Chinese partner at the
    expiration of the joint venture contract in 2034.(4)
    
    We have a 45% ownership interest in this project. This project
    is capable of operating through combustion of diesel oil in
    addition to natural gas.(5)
    
    We have a 77% ownership interest in this project.(6)
    
    We have a 60% ownership interest in this project. 15




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MARKETS,
    COMPETITION AND BUSINESS CONDITIONS  General
    Business Conditions
    Economic
    Conditions Affecting Business Conditions and Financial
    Results
      Additional
    Conditions Affecting Our Existing Business
    
    regional population and overall waste production rates;
    the number of other waste disposal sites (including principally
    landfills 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; 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 shed
    itself.  Item 1A. Risk
    Factors  Our waste operations are concentrated in one
    region, and expose us to regional economic or market
    declines
 16




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##### Table of Contents



Americas
    Segment  Contract Duration
    Item 1A. Risk Factors  We
    may face increased risk of market influences on our revenues
    after our contracts expire
    Additional
    Conditions Affecting Our Growth
    Regulation of
    Business  Regulations Affecting our Americas
    Segment  Recent Policy Debate Regarding Climate
    Change and Renewable Energy.
    and/or and/or
   17




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Item 1A. Risk
    Factors
  Technology,
    Research and Development
      and/or and/or
  x and/or
 REGULATION OF
    BUSINESS  Regulations
    Affecting Our Americas Segment
  Environmental
    Regulations  General
     18




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Item 1A. Risk Factors  Compliance with
    environmental laws could adversely affect our results of
    operations.
  and/or
    Environmental
    Regulations  Recent Developments
  Greenhouse Gas Reporting 2
  MACT Rule
    Revised PM2.5 Rule
 19




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Energy
    Regulations
    Federal Power Act 
  and/or
    Public Utility Holding Company Act of 2005 
 20




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##### Table of Contents



Public Utility Regulatory Policies Act 
    Recent
    Policy Debate Regarding Climate Change and Renewable
    Energy
  2 2
  
    Avoids
    CO2
    emissions from fossil fuel power plants,
    Avoids methane emissions from landfills,
    Avoids habitat destruction and contamination from
    landfilling, and
    Avoids GHG emissions from mining and processing metal because it
    recovers and recycles scrap metals from waste.      cap-and-trade 2
     21




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##### Table of Contents



2
  cap-and-trade
  cap-and-trade
  Regulations
    Affecting Our International Segment
    Item 1A. Risk Factors 
    Exposure to international economic and political factors may
    materially and adversely affect our international businesses  Compliance with environmental laws could
    adversely affect our results of operations.
  Climate
    Change Policies
    The European Union
   22




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##### Table of Contents



2008 09 cap-and-trade
  Feed-in-Tariff
  China
   EMPLOYEES       23




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##### Table of Contents



EXECUTIVE
    OFFICERS OF THE REGISTRANT    Anthony J. Orlando Waste-to-Energy.
  Mark A. Pytosh
  John M. Klett
  Seth Myones Waste-to-Energy
  Timothy J. Simpson
  Thomas E. Bucks
 24




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##### Table of Contents



Item 1A.
    RISK
    FACTORS    Changes
    in public policies and legislative initiatives could materially
    affect our business and prospects.
  cap-and-trade. cap-and-trade and/or
  Weakness
    in the economy may have an adverse effect on our revenue and
    cash flow.
    Weakness
    in the economy may have an adverse effect on our ability to grow
    our business.
    We may
    face increased risk of market influences on our revenues after
    our contracts expire.
    We may
    face risk of revenue and cash flow loss if we are not successful
    in extending or renewing our contracts to operate facilities
    which we do not own.
   25




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##### Table of Contents



Recent
    dislocations in credit and capital markets may make it more
    difficult for us to borrow money or raise capital needed to
    finance the construction of new projects, the expansion of our
    existing projects, and the acquisitions of certain
    businesses.
  and/or and/or and/or
    Recent
    dislocations in the credit and capital markets, if prolonged and
    severe, could make it more difficult or costly for us to
    refinance our corporate debt when it matures.
  and/or
  Our
    reputation could be adversely affected if opposition to our
    efforts to grow our business results in adverse
    publicity.
    Changes
    in technology may have a material adverse effect on our
    profitability.
  and/or
  Operation
    of our facilities involves significant risks.
    
    the inaccuracy of our assumptions with respect to the timing and
    amount of anticipated revenues;
    supply interruptions;
    the breakdown or failure of equipment or processes;
    difficulty or inability to find suitable replacement parts for
    equipment;
    increases in the prices of commodities we need to continue
    operating our facilities;
    the unavailability of sufficient quantities of waste or fuel;
    fluctuations in the heating value of the waste we use for fuel
    at our energy-from-waste facilities;
    decreases in the fees for solid waste disposal and electricity
    generated;
    decreases in the demand or market prices for recovered ferrous
    or non-ferrous metal;
    disruption in the transmission of electricity generated;
    permitting and other regulatory issues, license revocation and
    changes in legal requirements;
    labor disputes and work stoppages;
    unforeseen engineering and environmental problems;
    unanticipated cost overruns; 26




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##### Table of Contents




    weather interferences, catastrophic events including fires,
    explosions, earthquakes, droughts and acts of terrorism;
    the exercise of the power of eminent domain; and
    performance below expected levels of output or efficiency.    Development
    and construction of new projects and expansions may not commence
    as anticipated, or at all.
    
    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;
    unanticipated cost overruns; and
    weather interferences, catastrophic events including fires,
    explosions, earthquakes, droughts and acts of terrorism.    Construction
    activities may cost more and take longer than we
    estimate.
    Exposure
    to foreign currency fluctuations may affect our results from
    operations or construction costs of facilities we develop in
    international markets.
      Changes
    in labor laws could adversely affect our relationship with our
    employees and cause disruptions to our business.
   27




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##### Table of Contents



The
    rapid growth of our operations could strain our resources and
    cause our business to suffer.
    Our
    efforts to grow our business will require us to incur
    significant costs in business development, often over extended
    periods of time, with no guarantee of success.
    Our
    insurance and contractual protections may not always cover lost
    revenues, increased expenses or liquidated damages
    payments.
    Performance
    reductions could materially and adversely affect us and our
    projects may operate at lower levels than
    expected.
     28




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##### Table of Contents



Our
    businesses generate their revenue primarily under long-term
    contracts and must avoid defaults under those contracts in order
    to service their debt and avoid material liability to contract
    counterparties.
    We
    have provided guarantees and financial support in connection
    with our projects.
    
    support agreements in connection with 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.    Our
    businesses depend on performance by third parties under
    contractual arrangements.
    We are
    subject to counterparty and market risk with respect to
    transactions with financial and other
    institutions.
     29




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##### Table of Contents



Concentration
    of suppliers and customers may expose us to heightened financial
    exposure.
        Our
    waste operations are concentrated in one region, and expose us
    to regional economic or market declines.
    Some
    of our energy contracts involve greater risk of exposure to
    performance levels which could result in materially lower
    revenues.
    Exposure
    to international economic and political factors may materially
    and adversely affect our international businesses.
      
    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; 30




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##### Table of Contents




    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.      Our
    reputation could be adversely affected if our businesses, or
    third parties with whom we have a relationship, were to fail to
    comply with United States or foreign laws or
    regulations.
    Exposure
    to fuel supply prices may affect our costs and results of
    operations.
      Our
    inability to obtain resources for operations may adversely
    affect our ability to effectively compete.
    Compliance
    with environmental laws could adversely affect our results of
    operations.
   31




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##### Table of Contents



and/or
    Energy
    regulation could adversely affect our revenues and costs of
    operations.
          Failure
    to obtain regulatory approvals could adversely affect our
    operations.
    The
    energy industry is becoming increasingly competitive, and we
    might not successfully respond to these changes.
   32




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##### Table of Contents



Our
    substantial indebtedness could adversely affect our business,
    financial condition and results of operations and our ability to
    meet our payment obligations under our
    indebtedness.
    
    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, 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.    We
    cannot assure you that our cash flow from operations will be
    sufficient to service our indebtedness.
    
    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; and
    general economic, financial, competitive, legislative,
    regulatory and other factors.    Our
    credit facilities contain covenant restrictions that may limit
    our ability to operate our business.
    
    incurring additional indebtedness or issuing guarantees, in
    excess of specified amounts;
    creating liens, in excess of specified amounts;
    making certain investments, in excess of specified amounts;
    entering into transactions with our affiliates;
    selling certain assets, in excess of specified amounts;
    making cash distributions or paying dividends to us, in excess
    of specified amounts;
    redeeming capital stock or making other restricted payments to
    us, in excess of specified amounts; and
    merging or consolidating with any person.   33




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##### Table of Contents



We
    cannot be certain that our NOLs will continue to be available to
    offset tax liability.
        Our
    controls and procedures may not prevent or detect all errors or
    acts of fraud.
    Failure
    to maintain an effective system of internal control over
    financial reporting may have an adverse effect on our stock
    price.
  Form 10-K
    Provisions
    of our certificate of incorporation, Debentures and Notes could
    discourage an acquisition by a third party.
   34




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##### Table of Contents



The
    market price of our common stock may fluctuate significantly,
    and this may make it difficult for holders to resell our common
    stock when they want or at prices that they find
    attractive.
      
    changes in the waste and energy market conditions;
    quarterly variations in our operating results;
    our operating results that vary from the expectations of
    management, securities analysts and investors;
    changes in expectations as to our future financial performance;
    announcements of strategic developments, significant contracts,
    acquisitions and other material events by us or our competitors;
    the operating and securities price performance of other
    companies that investors believe are comparable to us;
    future sales of our equity or equity-related securities;
    changes in the economy and the financial markets;
    purchases or sales of large blocks of our stock by existing or
    new holders of our common stock;
    departures of key personnel;
    changes in governmental regulations; and
    geopolitical conditions, such as acts or threats of terrorism or
    military conflicts.    Future
    issuances of our common stock will dilute the ownership
    interests of stockholders and may adversely affect the trading
    price of our common stock.
    Item 1B.
    UNRESOLVED
    STAFF COMMENTS  None.
  Item 2.
    PROPERTIES   35




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##### Table of Contents



and/or Item 1. Business  Americas Segment
  Item 1. Business  International
    Segment
  Item 3.
    LEGAL
    PROCEEDINGS  Item 8.
    Financial Statements And Supplementary Data 
    Note 21. Commitments and Contingencies
  Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   36




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##### Table of Contents



PART II  Item 5.
    MARKET
    FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES    2009

2008High

Low

High

LowFirst Quarter

$
22.92


$
12.47


$
29.50


$
22.89Second Quarter

$
17.63


$
12.61


$
30.37


$
26.03Third Quarter

$
19.22


$
16.12


$
29.86


$
20.40Fourth Quarter

$
18.58


$
16.50


$
23.78


$
15.46   Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Liquidity and Capital Resources Item 8. Financial Statements And Supplementary
    Data  Note 11. Long-Term Debt.
  Item 8. Financial Statements And Supplementary
    Data  Note 4. Earnings Per Share and Equity Item 12. Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters
  Item 6.
    SELECTED
    FINANCIAL DATA  For the Years Ended December 31,2009

2008

2007

2006

2005(1)(In thousands, except per share amounts)Statements of Operations DataOperating revenues

$
1,550,467


$
1,664,253


$
1,433,087


$
1,268,536


$
978,763Equity in net income from unconsolidated investments

$
23,036


$
23,583


$
22,196


$
28,636


$
25,609Net income attributable to Covanta Holding Corporation

$
101,645


$
128,960


$
121,693


$
105,789


$
59,326Income per share:Basic

$
0.66


$
0.84


$
0.80


$
0.73


$
0.49Diluted

$
0.66


$
0.83


$
0.79


$
0.72


$
0.46Weighted average common shares outstanding:Basic


153,694



153,345



152,653



145,663



122,209Diluted


154,994



154,732



153,997



147,030



127,910   As of December 31,2009

2008

2007

2006

2005(1)(In thousands, except per share amounts)Balance Sheet DataCash and cash equivalents

$
433,683


$
192,393


$
149,406


$
233,442


$
128,556Restricted funds held in trust

$
277,752


$
324,911


$
379,864


$
407,921


$
447,432Property, plant and equipment, net

$
2,582,841


$
2,530,035


$
2,620,507


$
2,637,923


$
2,724,843Total assets

$
4,934,282


$
4,279,989


$
4,368,499


$
4,437,820


$
4,702,165Long-term debt

$
1,437,706


$
948,518


$
937,084


$
1,260,123


$
1,308,119Project debt

$
959,364


$
1,078,370


$
1,280,275


$
1,435,947


$
1,598,284Total Covanta Holding Corporation stockholders equity

$
1,383,006


$
1,189,037


$
1,073,293


$
739,152


$
599,241Book value per share of common stock(2)

$
8.93


$
7.71


$
6.97


$
5.01


$
4.24Shares of common stock outstanding


154,936



154,280



153,922



147,500



141,166   (1)
    
    For the year ended December 31, 2005, Covanta ARC Holdings,
    Inc.s results of operations were included in our
    consolidated results subsequent to June 24, 2005.(2)
    
    Book value per share of common stock is calculated by dividing
    total Covanta Holding Corporation stockholders equity by
    the number of shares of common stock outstanding. 37




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##### Table of Contents



Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS   OVERVIEW    and/or
  and/or
  and/or
  Growth and Development
  The
    Energy-From-Waste Solution
    
    providing customers with superior service and effectively
    managing our existing business;
    generating sufficient cash to meet our liquidity needs and
    invest in our business;
    advancing our Clean World Initiative in order to enhance the
    value of our existing business and create new
    opportunities; and
    developing new projects and making acquisitions to grow our
    business in the Americas, Europe and Asia. 38




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
    investing in research and development of new technologies to
    enhance existing operations and create new business
    opportunities in renewable energy and waste management;
    exploring and implementing processes and technologies at our
    facilities to improve energy efficiency and lessen environmental
    impacts; and
    partnering with governments and non-governmental organizations
    to pursue sustainable programs, reduce the use of
    environmentally harmful materials in commerce and communicate
    the benefits of energy-from-waste.      cap-and-trade
  2009
    Financial Summary
    Results of Operations
  
    Americas segment revenue declined $25.2 million or 1.8% to
    $1,346 million. New business revenue was
    $72.5 million, related primarily to the Veolia EfW
    Acquisition. Existing business revenues declined by
    $97.7 million, of which $55.7 million was largely due
    to the impact of the slow economy which caused lower recycled
    metal, energy and waste prices. In addition, lower debt service
    revenue, a decline in construction activity, and net contract
    changes at various facilities contributed approximately
    $32.3 million to the decline. 39




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##### Table of Contents




    Americas segment operating expenses during the year increased by
    $35.0 million. New business operating expenses were
    $77.8 million and we also incurred acquisition-related
    transaction costs of $6.8 million, both of which were
    primarily associated with the Veolia EfW Acquisition. Existing
    business operating expenses decreased by $49.6 million
    primarily attributable to a $12.7 million decline in energy
    related expenses and greater internalization of waste disposal.
    In addition, lower levels of construction activity and the
    contract changes at various facilities contributed
    $36.8 million to the expense reduction. Reductions in
    existing business expenses were also attributable to lower
    depreciation expense, lower interest expense and reduced plant
    operating expense for renewable energy credits sold totaling
    $13.3 million. In 2008, operating expenses were lower by
    $13.5 million due to insurance recoveries recorded for the
    settlement of property damages and business interruption losses
    related to the SEMASS energy-from-waste facility.
    International segment revenue decreased $95.2 million
    during the year while operating expenses declined by
    $97.4 million, resulting in operating income that was
    essentially flat with the prior year comparable period. The
    decreases in revenues and operating expenses resulted primarily
    from lower fuel costs at our Indian facilities.    For the Years Ended December 31,2009


2008Net tax impact from Grantor Trust activity(A)

$
(0.01
)

$
(0.10
)Veolia EfW acquisition-related costs, net of tax(B)


(0.02
)


Impact of SEMASS fire and insurance recoveries, net of
    write-down of assets and tax(C)






0.05All other


0.69



0.88Diluted Earnings Per Share

$
0.66


$
0.83   (A)
    
    During 2009 and 2008, we recognized additional tax liabilities
    associated with the activity from the wind-down of the grantor
    trusts that arose from our predecessor insurance entities.(B)
    
    This amount relates primarily to acquisition-related costs
    incurred associated with the acquisition of six
    energy-from-waste businesses and one transfer station business
    from Veolia Environmental Services North America Corp. (the
    Veolia EfW Acquisition) in 2009. Acquisition-related
    costs are no longer capitalized as a cost of the business
    acquired. Instead, these costs are expensed as they are incurred
    as a result of a recent accounting pronouncement which was
    effective January 1, 2009.(C)
    
    This amount primarily includes insurance recoveries for business
    interruption losses related to the SEMASS energy-from-waste
    facility fire on March 31, 2007.  Liquidity and Capital Resources
  Liquidity and Capital
    Resources  Available Sources of Liquidity
  Factors
    Affecting Business Conditions and Financial
    Results
  Economic 
   40




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##### Table of Contents



Seasonal 
    Other Factors Affecting Performance  Item 1A. Risk
    Factors.
    
    Seasonal or long-term changes in market prices for waste,
    energy, or ferrous and non-ferrous metals for projects where we
    sell into those markets;
    Seasonal geographic changes in the price and availability of
    wood waste as fuel for our biomass facilities;
    Seasonal, geographic and other variations in the heat content of
    waste processed, and thereby the amount of waste that can be
    processed by an energy-from-waste facility;
    Our ability to avoid unexpected increases in operating and
    maintenance costs while ensuring that adequate facility
    maintenance is conducted so that historic levels of operating
    performance can be sustained;
    Contract counterparties ability to fulfill their
    obligations, including the ability of our various municipal
    customers to supply waste in contractually committed amounts,
    and the availability of alternate or additional sources of waste
    if excess processing capacity exists at our facilities; and
    The availability and adequacy of insurance to cover losses from
    business interruption in the event of casualty or other insured
    events.    
    Changes in fuel price for projects in which such costs are not
    completely passed through to the electricity purchaser through
    revenue adjustments, or delays in the effectiveness of revenue
    adjustments;
    The amounts of electricity actually requested by purchasers of
    electricity, and whether or when such requests are made, our
    facilities are then available to deliver such electricity;
    The financial condition and creditworthiness of purchasers of
    power and services provided by us;
    Fluctuations in the value of the domestic currency against the
    value of the U.S. dollar for projects in which we are paid
    in whole or in part in the domestic currency of the host
    country; and
    Political risks inherent to the international business which
    could affect both the ability to operate the project in
    conformance with existing agreements and the repatriation of
    dividends from the host country.  Business
    Segments
    41




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##### Table of Contents



Segment

DescriptionAmericas

For all energy-from-waste projects, we receive revenue from two
    primary sources: fees charged for operating projects or
    processing waste received and payments for electricity and steam
    sales. We also operate, and in some cases have ownership
    interests in, transfer stations and landfills which generate
    revenue from waste and ash disposal fees or operating fees. In
    addition, we own and in some cases operate, other renewable
    energy projects primarily in the United States which generate
    electricity from wood waste (biomass), landfill gas, and
    hydroelectric resources. The electricity from these other
    renewable energy projects is sold to utilities. For these
    projects, we receive revenue from electricity sales, and in some
    cases cash from equity distributions. We may receive additional
    revenue from construction activity during periods when we are
    constructing new facilities or expanding existing facilities.International

We have ownership interests in and/or operate facilities
    internationally, including independent power production
    facilities in the Philippines, Bangladesh, China and India where
    we generate electricity by combusting coal, natural gas and
    heavy fuel-oil, and energy-from-waste facilities in China and
    Italy. We are constructing energy-from-waste facilities in
    Ireland and China.  We receive revenue from operating fees,
    waste processing fees, electricity and steam sales, construction
    activities, and in some cases receive cash from equity
    distributions.   Contract
    Structures
  and/or
  Currentnumber of

Fees for operating projects or for

Payments for electricityContract types

projects

processing waste received

and/or steam we sellService Fee

28

We charge a fixed fee (which escalates over time pursuant to
    contractual indices that we believe are appropriate to reflect
    price inflation) for operation and maintenance services provided
    to these energy-from-waste projects. At projects that we own and
    where project debt is in place, a portion of our fee is
    dedicated to project debt service. Our contracts at Service Fee
    projects provide revenue that does not materially vary based on
    the amount of waste processed or energy generated and as such is
    relatively stable for the contract term. (28 Americas
    segment Service Fee projects).

At most of our Service Fee projects, the operating subsidiary
    retains only a fraction of the energy revenues generated, with
    the balance (generally 90%) used to provide a credit to the
    municipal client against its disposal costs. Therefore, in these
    projects, the municipal client derives most of the benefit and
    risk of energy production and changing energy prices.Tip Fee

16

We receive a per-ton fee under contracts for processing waste at
    Tip Fee projects. We generally enter into long-term waste
    disposal contracts for a substantial portion of the
    projects disposal capacity. These Tip Fee service
    agreements include stated fixed fees earned by us for processing
    waste up to certain base contractual amounts during specified
    periods. These Tip Fee service agreements also set forth the
    per-ton fees that are payable if we accept waste in excess of
    the base contractual amounts. The waste disposal and energy
    revenue from these projects is more dependent upon operating
    performance and, as such, is subject to greater revenue
    fluctuation to the extent performance levels fluctuate.
    (13 Americas segment Tip Fee projects and
    3 International segment Tip Fee projects).

Where Tip Fee structures exist, we generally retain 100% of the
    energy revenues as well as risk associated with energy
    production and changing energy pricing.  The majority of Tip Fee
    structures are under long-term fixed-price energy contracts.  42




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##### Table of Contents



Contracted
    and Merchant Capacity
    Growth
    and Development
    and/or
  Item 8.
    Financial Statements And Supplementary Data 
    Note 3. Acquisitions, Business Development and Dispositions
 43




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##### Table of Contents



ACQUISITIONS
    AND BUSINESS DEVELOPMENT
  Facility/OperatingContract

Location

Year


Transaction

Type

SummaryLong Beach
    Hudson Valley
    MacArthur
    Plymouth
    York
    Burnaby
    Abington

CA
    NY
    NY
    PA
    PA
    Canada
    PA


2009


Acquisition

EfW
    EfW
    EfW
    EfW
    EfW
    EfW
    Trans.St.

We acquired six energy-from-waste businesses and one transfer
    station business from Veolia Environmental Services North
    America Corp. (the Veolia EfW Acquisition). The
    acquired businesses have a combined capacity of 6,600 tpd. Each
    of the operations acquired includes a long-term operating
    contract with the respective municipal client. Five of the
    energy-from-waste facilities and the transfer station are
    publicly-owned facilities. We acquired a majority ownership
    stake in one of the energy-from-waste facilities and
    subsequently purchased the remaining ownership stake in this
    facility. We completed the Veolia EfW Acquisition by acquiring a
    3,000 tpd energy-from-waste business in Miami-Dade, Florida in
    February 2010. See Item 8. Financial Statements And
    Supplementary Data  Note 23. Subsequent Events.Detroit

MI


2009


Contract

EfW

We entered into an operating and maintenance agreement with
    owners of the Detroit energy-from-waste facility (2,832 tpd, 952
    pounds of steam generated per day), pursuant to which we will
    operate, maintain and provide certain other services for a term
    of one year. Under this agreement, we will earn a fixed fee and
    pass through to the owners of the Detroit facility (or pay from
    the project revenues) all expenses associated with operations
    and maintenance of the facility. After paying all expenses,
    excess net revenues flow to the owners (see discussion below
    regarding our acquisition of an ownership interest in the
    facility). We entered into a waste disposal agreement with the
    Greater Detroit Resource Recovery Authority (GDRRA)
    pursuant to which we will dispose of the waste of the City of
    Detroit for a term of at least one year. The term of the waste
    disposal agreement will automatically renew for successive one
    year terms unless and until either party provides advance
    written notice of termination in accordance with the provisions
    of the agreement. We entered into a new short-term steam
    agreement for the Detroit energy-from-waste facility which
    expires in February 2010 while negotiations continue regarding a
    long-term steam agreement. Securing a long-term steam agreement
    with appropriate pricing is important for the long-term economic
    viability of the Detroit energy-from-waste facility.Detroit

MI


2009


Acquisition

EfW

A newly-formed Covanta subsidiary purchased an undivided 30%
    owner-participant interest in the Detroit energy-from-waste
    facility. In addition, as an owner-participant, we have the
    right, on one or more occasions, to call upon GDRRA to deliver
    the waste of the City of Detroit to the Detroit
    energy-from-waste facility at market-based rates. The call right
    continues for the duration of the agreements expiring in 2035,
    and is supported by the undertaking of the City of Detroit until
    2021.Stanislaus
    County

CA


2009


Contract

EfW

We extended our service fee contract with Stanislaus County from
    2010 to 2016.Philadelphia
    Transfer
    Stations

PA


2009


Acquisition

Transfer
    Stations

We acquired two waste transfer stations with combined capacity
    of 4,500 tpd in Philadelphia, Pennsylvania.Maine
    Biomass
    Energy
    Facilities

ME


2008


Acquisition

Biomass

We acquired Indeck Maine Energy, LLC which owned and operated
    two biomass energy facilities. The two nearly identical
    facilities, located in West Enfield and Jonesboro, Maine, added
    a total of 49 megawatts (MW) to our renewable energy
    portfolio. We sell the electric output and renewable energy
    credits from these facilities into the New England electricity
    market. 44




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##### Table of Contents



Facility/OperatingContract

Location

Year


Transaction

Type

SummaryTulsa

OK


2008


Acquisition/
    Contract

EfW

The design capacity of the facility is 1,125 tpd of waste and
    gross electric capacity of 16.5 MW (231 pounds of steam
    generated per day). This facility was shut down by the prior
    owner in the summer of 2007 and we returned two of the
    facilitys three boilers to service in 2008.  In 2009, we
    entered into a new tip fee agreement with the City of Tulsa
    which expires in 2012 and a new steam contract for a term of
    10 years expiring in 2019.Peabody

MA


2008


Acquisition

Ash
    Landfill

We acquired a landfill for the disposal of ash.Harrisburg

PA


2008


Contract

EfW

We entered into a ten year agreement to maintain and operate an
    800 tpd energy-from-waste facility located in Harrisburg,
    Pennsylvania and obtained a right of first refusal to purchase
    the facility. See Energy-From-Waste Under Advanced
    Development or Constructiondiscussion below related to this
    facility.Indianapolis

IN


2008


Contract

EfW

We entered into a new tip fee contract for a term of
    10 years which commenced upon expiration of the existing
    service fee contract in December 2008. This contract represents
    approximately 50% of the facilitys capacity. (91 pounds of
    steam generated per day).Kent County

MI


2008


Contract

EfW

We entered into a new tip fee contract which commenced on
    January 1, 2009 and extended the existing operating contract
    from 2010 to 2023. This contract is expected to supply waste
    utilizing most or all of the facilitys capacity.
    Previously this was a service fee contract.Pasco County

FL


2008


Contract

EfW

We entered into a new service fee contract which commenced on
    January 1, 2009 and extended the existing contract from
    2011 to 2016.Wallingford

CT


2008


Contract

EfW

We entered into new tip fee contracts to supply waste to the
    facility upon expiration of the existing service fee contract in
    2010. These contracts in total are expected to supply waste
    utilizing most or all of the facilitys capacity through
    2020.Holliston

MA


2007


Acquisition

Transfer
    Station

We acquired a waste transfer station with  total waste capacity
    of 700 tpd. In addition, we invested a total of
    $5.2 million in 2007 and 2008 in capital improvements to
    enhance the environmental and operational performance of the
    transfer station.Massachusetts
    EfW Facilities
    and Transfer
    Stations

MA
    NY


2007


Acquisition

EfW /
    Ash
    Landfill /
    Transfer
    Stations

We acquired the operating businesses of EnergyAnswers
    Corporation. These businesses include a 400 tpd
    energy-from-waste facility in Springfield, Massachusetts and a
    240 tpd energy-from-waste facility in Pittsfield, Massachusetts.
    Both energy-from-waste projects have tip fee type contracts.
    Approximately 75% of waste revenues are contracted for at these
    facilities. In addition, we acquired businesses that include a
    landfill operation for ash disposal in Springfield,
    Massachusetts and two transfer stations, one in Canaan, New
    York, permitted to transfer 600 tpd of waste, and the other
    located at the Springfield energy-from-waste facility, permitted
    to transfer 500 tpd of waste.California
    Biomass
    Energy
    Facilities

CA


2007


Acquisition

Biomass

We acquired Central Valley Biomass Holdings, LLC which owned two
    biomass energy facilities and a biomass energy fuel management
    business, all located in Californias Central Valley. These
    facilities added 75 MW to our portfolio of renewable energy
    projects. In addition, we invested a total of $19 million
    in 2007 and 2008 in capital improvements to increase the
    facilities productivity and improve environmental
    performance.Westchester
    Transfer
    Stations

NY


2007


Acquisition

Transfer
    Stations

We acquired two waste transfer stations with combined capacity
    of 1,150 tpd in Westchester County, New York. 45




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##### Table of Contents



Facility/OperatingContract

Location

Year


Transaction

Type

SummaryHempstead

NY


2007


Contract

EfW

We entered into a new tip fee contract for a term of
    25 years which commenced upon expiration of the previous
    contract in August 2009. This contract provides approximately
    50% of the facilitys capacity. We also entered into new
    tip fee contracts with other customers that expire between
    February 2011 and December 2014. These contracts provide an
    additional 40% of the facilitys capacity.   ENERGY-FROM-WASTE
    PROJECTS UNDER ADVANCED DEVELOPMENT OR
    CONSTRUCTION
  Project/Facility

Location

SummaryTechnology Development



We entered into various agreements with multiple partners to
    invest in the development, testing or licensing of new
    technologies related to the transformation of waste materials
    into renewable fuels or the generation of energy. Licensing fees
    and demonstration unit cumulative purchases totaled
    approximately $11.2 million in 2008 and 2009.AMERICASHonolulu

HI

We operate and maintain the energy-from-waste facility located
    in and owned by the City and County of Honolulu, Hawaii. In
    December 2009, we entered into agreements with the City and
    County of Honolulu to expand the facilitys waste
    processing capacity from 2,160 tpd to 3,060 tpd and to increase
    the gross electricity capacity from 57 MW to 90 MW.
    The agreements also extend the service contract term by
    20 years. The $302 million expansion project is a
    fixed-price construction project which will be funded and owned
    by the City and County of Honolulu.  Environmental and other
    project related permits have been received and expansion
    construction has commenced.Harrisburg

PA

See operating contract discussion above. We have an agreement to
    provide construction management services and advance up to $25.5
    million (of which $20.7 million has been advanced and $19.4
    million is outstanding as of December 31, 2009) in funding for
    certain facility improvements required to enhance facility
    performance, which are expected to be completed during 2010.
    The repayment of this funding is guaranteed by the City of
    Harrisburg, but is otherwise unsecured, and is junior to project
    bondholders rights. Current installment repayments of the
    advance have been received. However, due to the precarious
    financial condition of the City of Harrisburg, its substantial
    obligations, and its reported consideration of various future
    options (including seeking bankruptcy protection), we intend to
    closely monitor this situation and work with the City of
    Harrisburg and other stakeholders, to maintain our position in
    the project and recover our advance.Hillsborough

FL

During the third quarter of 2009, we completed the expansion and
    commenced the operations of the expanded energy-from-waste
    located in Hillsborough County, Florida. We expanded waste
    processing capacity from 1,200 tpd to 1,800 tpd and increased
    gross electricity capacity from 29.0 MW to 46.5 MW. As
    part of the agreement to implement this expansion, we received a
    long-term operating contract extension to 2027.Lee

FL

In December 2007, we completed the expansion and commenced the
    operation of the expanded energy-from-waste facility located in
    and owned by Lee County, Florida. We expanded waste processing
    capacity from 1,200 tpd to 1,836 tpd and increased gross
    electricity capacity from 36.9 MW to 57.3 MW. As part
    of the agreement to implement this expansion, we received a
    long-term operating contract extension expiring in 2024. 46




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##### Table of Contents



Project/Facility

Location

SummaryINTERNATIONALDublin

Ireland

We are developing a 1,700 metric tpd energy-from-waste project
    serving the City of Dublin, Ireland and surrounding communities
    at an estimated cost of approximately 350 million. The
    Dublin project is being developed and will be owned by Dublin
    Waste to Energy Limited, which we control and co-own with DONG
    Energy Generation A/S. We are responsible for the design and
    construction of the project. We will operate and maintain the
    project for Dublin Waste to Energy Limited, which has a
    25 year tip fee type contract with Dublin to provide
    disposal service for approximately 320,000 metric tons of waste
    annually. The project is structured on a
    build-own-operate-transfer model, where ownership will transfer
    to Dublin after the 25 year term, unless extended. The
    project is expected to sell electricity into the local grid. A
    portion of the electricity is expected to be eligible for a
    preferential renewable tariff. We and DONG Energy Generation A/S
    have committed to provide financing for all phases of the
    project. We expect to fund construction through existing sources
    of liquidity and effect project financing as the project
    progresses.  The primary approvals and licenses for the project
    have been obtained and construction commenced in December 2009.Taixing

China

Taixing Covanta Yanjiang Cogeneration Co., Ltd., of which we own
    85%, entered into a 25 year concession agreement and waste
    supply agreements to build, own and operate a 350 metric tpd
    energy-from-waste facility for Taixing Municipality, in Jiangsu
    Province, Peoples Republic of China. The project, which
    will be built on the site of our existing coal-fired facility in
    Taixing, will supply steam to an adjacent industrial park under
    short-term arrangements. We will continue to operate our
    existing coal-fired facility. The project company has obtained
    Rmb 165 million in project financing which, together with
    available cash from existing operations will fund construction
    costs. The Taixing project commenced construction in late 2009.Chengdu

China

We and Chongqing Iron & Steel Company (Group) Limited have
    entered into a 25 year contract to build, own, and operate
    an 1,800 metric tpd energy-from-waste facility for Chengdu
    Municipality in Sichuan Province, Peoples Republic of
    China. In connection with this award, we acquired a 49% equity
    interest in the project company. Construction of the facility
    has commenced and operation is expected to begin in 2011. The
    project company has obtained Rmb 480 million in project
    financing, of which 49% is guaranteed by us and 51% is
    guaranteed by Chongqing Iron & Steel Company (Group)
    Limited until the project has been constructed and for one year
    after operations commence.Sanfeng

China

We purchased a 40% equity interest in Chongqing Sanfeng Covanta
    Environmental Industry Co., Ltd. (Sanfeng), a
    company located in Chongqing Municipality, Peoples
    Republic of China. Sanfeng is engaged in the business of owning
    and operating energy-from-waste projects and providing design
    and engineering, procurement and construction services for
    energy-from-waste facilities in China. Sanfeng currently owns
    minority equity interests in two 1,200 metric tpd 24 MW
    mass-burn energy-from-waste projects. Chongqing Iron &
    Steel Company (Group) Limited holds the remaining 60% equity
    interest in Sanfeng.  RESULTS
    OF OPERATIONS  Overview  Growth and Development,
 47




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##### Table of Contents



RESULTS
    OF OPERATIONS  Year Ended December 31, 2009 vs.
    Year Ended December 31, 2008    For the Years Ended


IncreaseDecember 31,


(Decrease)2009


2008


2009 vs 2008CONSOLIDATED RESULTS OF OPERATIONS:Total operating revenues

$
1,550,467


$
1,664,253


$
(113,786
)Total operating expenses


1,354,632



1,408,288



(53,656
)Operating income


195,835



255,965



(60,130
)Other income (expense):Investment income


4,007



5,717



(1,710
)Interest expense


(38,116
)


(46,804
)


(8,688
)Non-cash convertible debt related expense


(24,290
)


(17,979
)


6,311Total other expenses


(58,399
)


(59,066
)


(667
)Income before income tax expense and equity in net income from
    unconsolidated investments


137,436



196,899



(59,463
)Income tax expense


(50,044
)


(84,561
)


(34,517
)Equity in net income from unconsolidated investments


23,036



23,583



(547
)NET INCOME


110,428



135,921



(25,493
)Less: Net income attributable to noncontrolling interests in
    subsidiaries


(8,783
)


(6,961
)


1,822NET INCOME ATTRIBUTABLE TO COVANTA HOLDING CORPORATION

$
101,645


$
128,960



(27,315
)Weighted Average Common Shares Outstanding:Basic


153,694



153,345



349Diluted


154,994



154,732



262Earnings Per Share:Basic

$
0.66


$
0.84


$
(0.18
)Diluted

$
0.66


$
0.83


$
(0.17
)     Consolidated
    Results of Operations  Comparison of Results for the
    Year Ended December 31, 2009 vs. Results for the Year Ended
    December 31, 2008
    
    decreased electricity and steam sales revenue due to lower fuel
    pass through costs at our Indian facilities and foreign exchange
    impacts in 2009, and
    decreased waste and service revenues and decreased recycled
    metal revenues at our existing energy-from-waste facilities in
    our Americas segment, offset by
    increased waste and services revenues at our new businesses in
    our Americas segment, primarily due to the Veolia EfW
    Acquisition, and
    increased electricity and steam sales in our Americas segment
    due to the Veolia EfW Acquisition, other acquired businesses and
    new contracts at our Indianapolis and Kent facilities.   
    decreased plant operating expenses at our Indian facilities
    resulting primarily from lower fuel costs and foreign exchange
    impacts in 2009, and
    decreased plant operating expenses at our existing
    energy-from-waste facilities resulting primarily from lower
    energy costs, greater internalization of waste disposal and
    reduced maintenance expense due to less unscheduled down time,
    offset by
    increased plant operating expenses at our existing
    energy-from-waste facilities resulting from cost
    escalations, and
    increased operating costs resulting from the Veolia EfW
    Acquisition, and
    $6.3 million of acquisition-related transaction costs
    primarily related to the Veolia EfW Acquisition, and 48




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
    $13.5 million of insurance recoveries recorded in 2008 for
    the settlement of property damages and business interruption
    losses related to the SEMASS energy-from-waste facility, and
    higher costs resulting from the transition of the Indianapolis
    and Kent facilities from Service Fee to Tip Fee
    contracts, and
    additional operating costs, net of contra expenses recorded
    related to the generation of renewable energy credits, from new
    businesses acquired in the Americas segment.  Liquidity
  Item 8. Financial Statements And
    Supplementary Data  Note 16. Income Taxes
  Americas
    Segment Results of Operations  Comparison of Results
    for the Year Ended December 31, 2009 vs. Results for the
    Year Ended December 31, 2008
    For the Years Ended December 31,


Increase (Decrease)2009


2008


2009 vs 2008Waste and service revenues

$
915,364


$
930,537


$
(15,173
)Electricity and steam sales


399,715



384,640



15,075Other operating revenues


31,138



56,254



(25,116
)Total operating revenues


1,346,217



1,371,431



(25,214
)Plant operating expenses


802,638



753,848



48,790Depreciation and amortization expense


194,925



190,659



4,266Net interest expense on project debt


44,536



47,816



(3,280
)General and administrative expenses


82,580



76,090



6,490Insurance recoveries, net of write-down of assets






(8,325
)


8,325Other operating expenses


26,785



56,336



(29,551
)Total operating expenses


1,151,464



1,116,424



35,040Operating income

$
194,753


$
255,007



(60,254
)   Operating
    Revenues
    Americas SegmentOperating Revenue VariancesExisting


NewBusiness


Business(A)


TotalWaste and service revenuesService fee

$
(60.5
)

$
38.9


$
(21.6
)Tip fee


17.7



13.1



30.8Recycled metal


(25.0
)


0.6



(24.4
)Total waste and service revenues


(67.8
)


52.6



(15.2
)Electricity and steam sales


(4.0
)


19.1



15.1Other operating revenues


(25.9
)


0.8



(25.1
)Total operating revenues

$
(97.7
)

$
72.5


$
(25.2
)
   (A)
    The results of acquisitions are included in the new business
    variance through four quarters after acquisition or commencement
    of operation.  
    Revenues from Service Fee arrangements for existing business
    decreased primarily due to the cessation of contracts at our
    Indianapolis, Kent, and Detroit facilities and lower revenues
    earned explicitly to service project debt of 49




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##### Table of Contents



$22.5 million, of which $9.7 million was related to
    our Stanislaus clients decision to repay project debt
    ahead of schedule in 2008, partially offset by contractual
    escalations. 
    Revenues from Tip Fee arrangements for existing business
    increased primarily due to the new contracts at our Indianapolis
    and Kent facilities, offset by lower waste prices and increased
    levels of waste disposal internalization.
    Recycled metal revenues were $29.2 million which decreased
    compared to the same prior year period due to lower pricing,
    partially offset by increased recovered metal volume. During the
    second and third quarters of 2008, we experienced historically
    high prices for recycled metal which declined significantly
    during the fourth quarter of 2008. The impact these changes had
    on revenue is reflected in the table below (in millions):  For theQuarters EndedTotal Recycled Metal Revenues

2009


2008


2007March 31,

$
5.2


$
11.4


$
7.0June 30,


5.8



19.0



7.5September 30,


9.1



17.3



7.9December 31,


9.1



5.9



9.1Total for the Year Ended December 31,

$
29.2


$
53.6


$
31.5
   
    Electricity and steam sales for existing business decreased by
    $4.0 million due to lower energy pricing, lower production
    and the contract change at the Detroit facility, offset by
    increased revenues of $20.4 million related to contract
    changes at our Indianapolis and Kent facilities.
    Other operating revenues for existing business decreased
    primarily due to the timing of construction activity.  Operating
    Expenses
    Americas SegmentPlant Operating Expense VariancesExisting


NewBusiness


Business(A)


TotalTotal plant operating expenses

$
(17.7
)

$
66.5


$
48.8
     (A)
    The results of acquisitions are included in the new business
    variance through four quarters after acquisition or commencement
    of operation.        Americas Segment Results of
    Operations  Comparison of Results for the Year Ended
    December 31, 2008 vs. Results for the Year Ended
    December 31, 2007
  Item 8. Financial
    Statements And Supplementary Data  Note 15.
    Supplementary Financial Information
 50




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##### Table of Contents



International
    Segment Results of Operations  Comparison of Results
    for the Year Ended December 31, 2009 vs. Results for the
    Year Ended December 31, 2008
    For the Years Ended


IncreaseDecember 31,


(Decrease)2009


2008


2009 vs 2008Waste and service revenues

$
4,240


$
3,990


$
250Electricity and steam sales


180,533



275,976



(95,443
)Total operating revenues


184,773



279,966



(95,193
)Plant operating expenses


143,528



245,826



(102,298
)Depreciation and amortization expense


7,834



8,751



(917
)Net interest expense on project debt


3,855



5,918



(2,063
)General and administrative expenses


24,325



18,684



5,641Other operating income


(74
)


(2,274
)


(2,200
)Total operating expenses


179,468



276,905



(97,437
)Operating income

$
5,305


$
3,061



2,244          RESULTS
    OF OPERATIONS  Year Ended December 31, 2008 vs.
    Year Ended December 31, 2007    For the Years Ended


IncreaseDecember 31,


(Decrease)2008


2007


2008 vs 2007CONSOLIDATED RESULTS OF OPERATIONS:Total operating revenues

$
1,664,253


$
1,433,087


$
231,166Total operating expenses


1,408,288



1,196,477



211,811Operating income


255,965



236,610



19,355Other income (expense):Investment income


5,717



10,578



(4,861
)Interest expense


(46,804
)


(67,104
)


(20,300
)Non-cash convertible debt related expense


(17,979
)


(15,377
)


2,602Loss on extinguishment of debt






(32,071
)


(32,071
)Total other expenses


(59,066
)


(103,974
)


(44,908
)Income before income tax expense and equity in net income from
    unconsolidated investments


196,899



132,636



64,263Income tax expense


(84,561
)


(24,483
)


60,078Equity in net income from unconsolidated investments


23,583



22,196



1,387NET INCOME


135,921



130,349



5,572Less: Net income attributable to noncontrolling interests in
    subsidiaries


(6,961
)


(8,656
)


(1,695
)NET INCOME ATTRIBUTABLE TO COVANTA HOLDING CORPORATION

$
128,960


$
121,693



7,267Weighted Average Common Shares Outstanding:Basic


153,345



152,653



692Diluted


154,732



153,997



735Earnings Per Share:Basic

$
0.84


$
0.80


$
0.04Diluted

$
0.83


$
0.79


$
0.04  51




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##### Table of Contents



Consolidated
    Results of Operations  Comparison of Results for the
    Year Ended December 31, 2008 vs. Results for the Year Ended
    December 31, 2007
    
    increased waste and energy revenues at our existing
    energy-from-waste facilities, and
    additional revenues from new businesses acquired in the Americas
    segment, and
    increased demand from the electricity offtaker and resulting
    higher electricity generation at our Indian facilities in the
    International segment.    
    increased plant operating expenses at our existing
    energy-from-waste facilities resulting from increased plant
    maintenance and cost escalations in the Americas
    segment, and
    increased plant operating expenses resulting from additional
    operating and maintenance costs from new businesses acquired in
    the Americas segment, and
    higher fuel costs, resulting from increased demand from the
    electricity offtaker and resulting higher electricity
    generation, at our Indian facilities in the International
    segment, and
    higher general and administrative expenses primarily due to
    increased efforts to grow the business and normal wage and
    benefit escalations.  Liquidity and Capital Resources Item 8. Financial Statements And Supplementary
    Data  Note 11. Long-Term Debt
  Item 8. Financial Statements And Supplementary
    Data  Note 16. Income Taxes
  Item 8. Financial Statements And
    Supplementary Data  Note 8. Equity Method
    Investments
  Americas
    Segment Results of Operations  Comparison of Results
    for the Year Ended December 31, 2008 vs. Results for the
    Year Ended December 31, 2007
    For the Years Ended December 31,


Increase (Decrease)2008


2007


2008 vs 2007Waste and service revenues

$
930,537


$
860,252


$
70,285Electricity and steam sales


384,640



325,804



58,836Other operating revenues


56,254



59,561



(3,307
)Total operating revenues


1,371,431



1,245,617



125,814Plant operating expenses


753,848



664,641



89,207Depreciation and amortization expense


190,659



187,875



2,784Net interest expense on project debt


47,816



48,198



(382
)General and administrative expenses


76,090



71,022



5,068Insurance recoveries, net of write-down of assets


(8,325
)






(8,325
)Other operating expenses


56,336



53,789



2,547Total operating expenses


1,116,424



1,025,525



90,899Operating income

$
255,007


$
220,092



34,915  52




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##### Table of Contents



Operating
    Revenues
    Americas SegmentOperating Revenue VariancesExisting


NewBusiness


Business(A)


TotalWaste and service revenuesService fee

$
13.3


$
0.6


$
13.9Tip fee


3.9



30.4



34.3Recycled metal


21.1



1.0



22.1Total waste and service revenues


38.3



32.0



70.3Electricity and steam sales


36.7



22.1



58.8Other operating revenues


(3.3
)






(3.3
)Total operating revenues

$
71.7


$
54.1


$
125.8
     (A)
    The results of acquisitions are included in the new business
    variance through four quarters after acquisition or commencement
    of operation.  
    Revenues from Service Fee arrangements for existing business
    increased primarily due to contractual escalations, partially
    offset by lower revenues earned explicitly to service project
    debt of $1.4 million.
    Revenues from Tip Fee arrangements for existing business
    increased due to increased waste volume handled in part due to
    the impact of a fire in 2007 at our SEMASS energy-from-waste
    facility, partially offset by slightly lower pricing.
    Recycled metal revenues for existing business increased
    primarily due to higher pricing on average for the year. In
    addition, recovered metal volume increased due to the
    installation of new metal recovery systems, as well as due to
    enhancements made to existing systems.
    Electricity and steam sales for existing business increased
    primarily due to higher energy rates, and increased production
    primarily resulting from capital improvements to increase
    productivity and improve environmental performance at the
    biomass facilities.    For theQuarters EndedTotal Recycled Metal Revenues

2008


2007March 31,

$
11.4


$
7.0June 30,


19.0



7.5September 30,


17.3



7.9December 31,


5.9



9.1Total for the Year Ended December 31,

$
53.6


$
31.5
     Operating
    Expenses
    Americas SegmentPlant Operating Expense VariancesExisting


NewBusiness


Business(A)


TotalTotal plant operating expenses

$
36.8


$
52.4


$
89.2
     (A)
    The results of acquisitions are included in the new business
    variance through four quarters after acquisition or commencement
    of operation.   53




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##### Table of Contents



Insurance Recoveries Recorded


Cash Proceeds ReceivedFor the Years Ended December 31,2008


2007


2008


2007Repair and reconstruction costs (Insurance recoveries, net of
    write-down of assets)

$
8.3


$
17.3


$
16.2


$
9.4Clean-up
    costs (reduction to plant operating expenses)

$



$
2.7


$



$
2.7Business interruption losses (reduction to plant operating
    expenses)

$
5.2


$
2.0


$
7.2


$
   Item 8. Financial
    Statements And Supplementary Data  Note 15.
    Supplementary Financial Information
  International
    Segment Results of Operations  Comparison of Results
    for the Year Ended December 31, 2008 vs. Results for the Year
    Ended December 31, 2007
    For the Years Ended


IncreaseDecember 31,


(Decrease)2008


2007


2008 vs 2007Waste and service revenues

$
3,990


$
4,144


$
(154
)Electricity and steam sales


275,976



173,073



102,903Total operating revenues


279,966



177,217



102,749Plant operating expenses


245,826



136,919



108,907Depreciation and amortization expense


8,751



8,998



(247
)Net interest expense on project debt


5,918



6,381



(463
)General and administrative expenses


18,684



8,584



10,100Other operating income


(2,274
)


(3,848
)


(1,574
)Total operating expenses


276,905



157,034



119,871Operating income

$
3,061


$
20,183



(17,122
)        54




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##### Table of Contents



2009
    Supplementary Financial Information  Adjusted EBITDA
    (Non-GAAP Discussion)
    Liquidity and Capital Resources
        For the Years EndedDecember 31,2009


2008Net Income Attributable to Covanta Holding Corporation

$
101,645


$
128,960Depreciation and amortization expense


202,872



199,488Debt service:Net interest expense on project debt


48,391



53,734Interest expense


38,116



46,804Non-cash convertible debt related expense


24,290



17,979Investment income


(4,007
)


(5,717
)Subtotal debt service


106,790



112,800Income tax expense


50,044



84,561Acquisition-related costs(A)


6,289



Other adjustments:Change in unbilled service receivables


18,620



14,020Non-cash compensation expense


14,220



14,750Other(B)


5,835



12,249Subtotal other adjustments


38,675



41,019Net income attributable to noncontrolling interests in
    subsidiaries


8,783



6,961Total adjustments


413,453



444,829Adjusted EBITDA(C)

$
515,098


$
573,789  55




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##### Table of Contents



(A)
    
    This amount relates primarily to acquisition-related costs
    associated with the Veolia EfW Acquisition in 2009.
    Acquisition-related costs are no longer capitalized as a cost of
    the business acquired. Instead, these costs are expensed as they
    are incurred as a result of a recent accounting pronouncement
    which was effective January 1, 2009.(B)
    
    These items represent amounts that are non-cash in nature.(C)
    
    Adjusted EBITDA for 2008 includes the impact of
    $13.5 million related to insurance recoveries for repair,
    reconstruction and business interruption losses related to the
    SEMASS energy-from-waste facility fire on March 31, 2007.      For the Years EndedDecember 31,2009


2008Cash flow provided by operating activities

$
397,238


$
402,607Acquisition-related costs


4,619



Debt service


106,790



112,800Amortization of debt premium and deferred financing costs


3,265



7,023Other


3,186



51,359Adjusted EBITDA

$
515,098


$
573,789  LIQUIDITY
    AND CAPITAL RESOURCES  Available Sources of Liquidity
    Managements Discussion and Analysis of Financial
    Condition  Overview  Growth and
    Development
  Sources
    and Uses of Cash Flow
  For the Years Ended December 31,


Increase (Decrease)2009


2008


2007


2009 vs 2008


2008 vs 2007(In thousands)Net cash provided by operating activities

$
397,238


$
402,607


$
363,591


$
(5,369
)

$
39,016Net cash used in investing activities


(387,240
)


(189,308
)


(179,910
)


197,932



9,398Net cash provided by (used in) financing activities


230,950



(170,242
)


(268,335
)


401,192



(98,093
)Effect of exchange rate changes on cash and cash equivalents


342



(70
)


618



412



(688
)Net increase (decrease) in cash and cash equivalents

$
241,290


$
42,987


$
(84,036
)


198,303



127,023  56




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##### Table of Contents



Year
    Ended December 31, 2009 vs. Year Ended December 31,
    2008
      
    $192.3 million related to higher acquisition of businesses
    in 2009, primarily the Veolia EfW Acquisition;
    $23.7 million to acquire the non-controlling interests of
    one of the subsidiaries acquired in the Veolia EfW Acquisition;
    $16.2 million of property insurance proceeds received in
    2008;
    $3.0 million related to a loan issued for the Harrisburg
    energy-from-waste facility; and
    net $2.9 million of outflows relating to investing activity
    at our insurance subsidiary, comprising of $13.5 million
    lower proceeds from sales of investments in fixed maturities
    offset by $10.6 million lower outflows for purchase of
    investments in fixed maturities.    
    $14.3 million in capital expenditures primarily due to
    lower maintenance capital expenditures;
    $16.7 million in purchases to acquire land use rights in
    the United Kingdom and United States in connection with
    development activities in 2008; and
    $9.6 million related to lower purchases of equity interests
    in 2009.      
    proceeds of $460.0 million from the sale of the Notes;
    proceeds of $54.0 million from the sale of Warrants;
    use of cash of $112.4 million to purchase the Note
    Hedge; and
    use of cash of $14.3 million for transaction related costs.    
    release of $33.0 million from restricted funds; offset by a
    payment of $9.8 million of interest rate swap termination
    costs;
    net increase in project debt payments of
    $3.6 million; and
    payment of $3.9 million in higher distributions to partners
    of noncontrolling interests in subsidiaries.  Year
    Ended December 31, 2008 vs. Year Ended December 31,
    2007
    
    $29.8 million from a combination of improved operating
    performance and lower net interest expense; and
    an increase in non-property insurance proceeds of
    $9.2 million (including $7.2 million of business
    interruption recoveries related to the SEMASS energy-from-waste
    facility).    
    $16.7 million to acquire land use rights in the United
    Kingdom and United States in connection with development
    activities;
    an increase of $18.0 million related to investments in
    fixed maturities at our insurance subsidiary, partially offset
    by an increase of $5.2 million in proceeds from the sale of
    investments in fixed maturities at our insurance subsidiary;
    $7.3 million of equity investments, of which
    $17.1 million related to the Chengdu project, offset by the
    $10.3 million equity investment in Sanfeng during the
    comparative period;
    an increase in capital expenditures of $2.2 million; 57




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##### Table of Contents




    $8.2 million related to a loan issued for the Harrisburg
    energy-from-waste facility; and
    $6.1 million of cash outflows comprised primarily of
    business development activities.    Available
    Sources of Liquidity
  Cash
    and Cash Equivalents
    Short-Term
    Liquidity
    Total





Outstanding LettersAvailable





of Credit as of


Available as ofUnder Facility


Maturing


December 31, 2009


December 31, 2009Revolving Loan Facility(1)

$
300,000



2013


$



$
300,000Funded L/C Facility

$
320,000



2014


$
272,469


$
47,531   (1)
    
    Up to $200 million of which may be utilized for letters of
    credit.  2009
    Supplementary Financial Information  Free Cash Flow
    (Non-GAAP Discussion)
    Results of
    Operations  2009 Supplementary Financial
    Information  Adjusted EBITDA
    (Non-GAAP Discussion)
   58




---



##### Table of Contents



For the Years EndedDecember 31,2009


2008Cash flow provided by operating activities(A)

$
397,238


$
402,607Less: Maintenance capital expenditures(B)


(51,937
)


(60,639
)Free cash flow

$
345,301


$
341,968Selected Uses of Free Cash Flow:Principal payments on long-term debt

$
(6,591
)

$
(6,877
)Principal payments on project debt, net of restricted funds
    used(C)

$
(129,183
)

$
(166,225
)Distributions to partners of noncontrolling interests in
    subsidiaries

$
(11,004
)

$
(7,061
)Non-maintenance capital expenditures(D)

$
(21,682
)

$
(27,281
)Acquisition of businesses, net of cash acquired

$
(265,644
)

$
(73,393
)Acquisition of noncontrolling interests in subsidiary

$
(23,700
)

$
Purchase of equity interests

$
(8,938
)

$
(18,503
)Other investment activities, net

$
(15,339
)

$
(9,492
)Purchases of Property, Plant and Equipment:Maintenance capital expenditures(B)

$
(51,937
)

$
(60,639
)Pre-construction development projects(E)


(13,233
)


(1,208
)Capital expenditures associated with technology development(F)


(5,008
)


(5,882
)Capital expenditures associated with certain acquisitions(G)


(1,353
)


(17,126
)Capital expenditures associated with SEMASS fire(H)


(2,088
)


(3,065
)Total purchases of property, plant and equipment

$
(73,619
)

$
(87,920
)   (A)
    
    Cash flow provided by operating activities was negatively
    affected by $4.6 million of payments made for
    acquisition-related costs related to acquisitions, primarily the
    Veolia EfW Acquisition, for the year ended December 31,
    2009.(B)
    
    Capital Expenditures primarily to maintain existing facilities.
    Purchase of property, plant and equipment is also referred to as
    Capital Expenditures.(C)
    
    Principal payments on project debt are net of restricted funds
    held in trust used to pay debt principal of $54.6 million
    and $21.6 million for the years ended December 31,
    2009 and 2008, respectively. Principal payments on project debt
    excludes a project debt refinancing transaction related to a
    domestic energy-from-waste facility in 2009 (63.7 million)
    and excludes principal repayments on working capital borrowings
    relating to the operations of our Indian facilities
    ($9.8 million).(D)
    
    Non-maintenance capital expenditures include certain capital
    expenditures made at our facilities described in notes E
    through H below.(E)
    
    Covanta has entered into definitive agreements for the
    development of a 1,700 metric tpd energy-from-waste project
    serving the City of Dublin, Ireland and surrounding communities.
    Construction commenced in the fourth quarter of 2009. Covanta
    incurred capital expenditures related to pre-construction
    activities, such as site preparation costs, for this project.(F)
    
    Capital Expenditures related to internal development efforts
    and/or agreements with multiple partners for the development,
    testing or licensing of new technologies related to the
    transformation of waste materials into renewable fuels, methods
    for the generation of alternative energy, and other development
    activity.(G)
    
    Capital Expenditures were incurred at four facilities that we
    acquired in 2008 and 2007 primarily to improve the productivity
    or environmental performance of those facilities.(H)
    
    Capital Expenditures were incurred that related to the repair
    and replacement of assets at the SEMASS energy-from-waste
    facility that were damaged by a fire on March 31, 2007. The
    cost of repair or replacement was insured under the terms of the
    applicable insurance policy, subject to deductibles. Settlement
    of the property damage insurance claim occurred in December 2008.  Credit
    Agreement Financial Covenants
  in Item 8. Financial Statements
    And Supplementary Data  Note 11. Long-Term
    Debt
    
    maximum Covanta Energy leverage ratio of 3.75 to 1.00 for the
    four quarter period ended December 31, 2009, which measures
    Covanta Energys principal amount of consolidated debt less
    certain restricted funds dedicated to 59




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##### Table of Contents



repayment of project debt principal and construction costs
    (Consolidated Adjusted Debt) to its adjusted
    earnings before interest, taxes, depreciation and amortization,
    as calculated under the Credit Facilities (Adjusted
    EBITDA). The definition of Adjusted EBITDA in the Credit
    Facilities excludes certain non-cash charges, and for purposes
    of calculating the leverage ratio and interest coverage ratios
    is adjusted on a pro forma basis for acquisitions and
    dispositions made during the relevant period. The maximum
    Covanta Energy leverage ratio allowed under the Credit
    Facilities adjusts in future periods as follows: 
    3.75 to 1.00 for each of the four quarter periods ended
    March 31, June 30 and September 30, 2010;
    3.50 to 1.00 for each four quarter period thereafter; 
    maximum Covanta Energy capital expenditures incurred to maintain
    existing operating businesses of $100 million per fiscal
    year, subject to adjustment due to an acquisition by Covanta
    Energy; and
    minimum Covanta Energy interest coverage ratio of 3.00 to 1.00,
    which measures Covanta Energys Adjusted EBITDA to its
    consolidated interest expense plus certain interest expense of
    ours, to the extent paid by Covanta Energy.  Results of Operations  2009
    Supplementary Financial Information  Adjusted EBITDA
    (Non-GAAP Discussion)
  Long-Term
    Debt
    As of December 31,2009


20083.25% Cash Convertible Senior Notes due 2014

$
460,000


$
Debt discount related to Cash Convertible Senior Notes


(112,475
)


Cash conversion option derivative at fair value


128,603



3.25% Cash Convertible Senior Notes, net


476,128



1.00% Senior Convertible Debentures due 2027


373,750



373,750Debt discount related to Convertible Debentures


(45,042
)


(64,369
)1.00% Senior Convertible Debentures, net


328,708



309,381Term Loan Facility due 2014


632,125



638,625Other long-term debt


745



512Total


1,437,706



948,518Less: current portion


(7,027
)


(6,922
)Total long-term debt

$
1,430,679


$
941,596   3.25%
    Cash Convertible Senior Notes due 2014
      
    We purchased, for $112.4 million, cash-settled call options
    on our common stock (the Note Hedge) initially
    correlating to the same number of shares as those initially
    underlying the Notes subject to generally similar customary
    adjustments, which have economic characteristics similar to
    those of the Cash Conversion Option embedded in the Notes. The
    Note Hedge is a derivative which is recorded at fair value
    quarterly and is recorded in other noncurrent assets in our
    consolidated balance sheets.
    We sold, for $54.0 million, warrants (the
    Warrants) correlating to the same number of shares
    as those initially underlying the Notes, which are net share
    settled and could have a dilutive effect to the extent that the
    market price of our common stock exceeds the then effective
    strike price of the Warrants. The strike price of the Warrants
    is approximately $25.74 per share and is subject to customary
    adjustments. The Warrants are recorded at the amounts received
    net of expenses within additional paid-in capital in our
    consolidated balance sheets. 60




---



##### Table of Contents



Item 8. Financial Statements And Supplementary
    Data  Note 11. Long-Term Debt, Note 13.
    Financial Instruments and Note 14. Derivative
    Instruments
  1.00% Senior
    Convertible Debentures due 2027
    Capital
    Requirements Item 8. Financial Statements
    And Supplementary Data  Note 11. Long-Term Debt,
    Note 13. Financial Instruments Note 14.
    Derivative Instruments
  Project
    Debt
  Americas
    Project Debt
  Other Commitments.
    Covanta Niagara, L.P. Series 2001 Bonds

$
165,010Covanta Southeastern Connecticut Company Corporate Credit Bonds


43,500Covanta Hempstead Company Corporate Credit Bonds


42,670Total

$
251,180   Item 8. Financial Statements
    And Supplementary Data  Note 14. Derivative
    Instruments
  International
    Project Debt
   61




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##### Table of Contents



Restricted
    Funds Held in Trust
    As of December 31,2009


2008Current


Noncurrent


Current


NoncurrentDebt service funds

$
73,406


$
101,376


$
103,371


$
97,761Revenue funds


13,061







25,105



Other funds


44,756



45,153



46,617



52,057Total

$
131,223


$
146,529


$
175,093


$
149,818     Investments
  and/or
  available-for-sale See
    Item 8. Financial Statements And Supplementary
    Data  Note 13. Financial Instruments
    Amortized Cost


Fair ValueInvestments by grade:Fixed maturities:U.S. government obligations and agencies

$
13,472


$
13,726Residential mortgage-backed


5,150



5,203Corporate (AAA to A)


8,878



9,213Total fixed maturities


27,500



28,142Equity securities


732



871Total

$
28,232


$
29,013  62




---



##### Table of Contents



Capital
    Requirements
  Item 8. Financial
    Statements And Supplementary Data
  Payments Due by Period2011 and


2013 and


2015 andTotal


2010


2012


2014


BeyondAmericas project debt

$
909,477


$
157,143


$
260,805


$
236,614


$
254,915International project debt


31,150



27,827



3,323







Total project debt (Note 12)


940,627



184,970



264,128



236,614



254,915Term Loan Facility (Note 11)


632,125



6,500



13,000



612,625



3.25% Cash Convertible Senior Notes (Note 11)(1)


460,000











460,000



1.00% Senior Convertible Debentures (Note 11)(2)


373,750







373,750







Other long-term debt


745



527



196



22



Total debt obligations(3)


2,407,247



191,997



651,074



1,309,261



254,915Less: Non-recourse debt(4)


(941,372
)


(185,497
)


(264,324
)


(236,636
)


(254,915
)Total recourse debt

$
1,465,875


$
6,500


$
386,750


$
1,072,625


$
Operating leases


350,365



42,640



82,757



59,618



165,350Less: Non-recourse rental payments


(190,657
)


(23,362
)


(47,182
)


(30,429
)


(89,684
)Total recourse rental payments

$
159,708


$
19,278


$
35,575


$
29,189


$
75,666Interest payments(5)


443,522



87,775



171,685



113,302



70,760Less: Non-recourse interest payments


(223,843
)


(50,348
)


(73,437
)


(47,622
)


(52,436
)Total recourse interest payments

$
219,679


$
37,427


$
98,248


$
65,680


$
18,324Retirement plan obligations(6)

$
22,360


$
6,110


$
9,070


$
2,060


$
5,120Uncertainty in income tax obligations(7)

$
139,552


$
21,769


$
7,002


$
3,513


$
107,268Total obligations

$
2,007,174


$
91,084


$
536,645


$
1,173,067


$
206,378   (1)
    
    The Notes bear interest at a rate of 3.25% per year, payable
    semi-annually in arrears, on June 1 and December 1 of each year,
    commencing on December 1, 2009, and will mature on
    June 1, 2014. Under limited circumstances, the Notes are
    convertible by the holders thereof, at any time prior to
    March 1, 2014, into cash only, based on an initial
    conversion rate of 53.9185 shares of our common stock per
    $1,000 principal amount of Notes (which represents an initial
    conversion price of approximately $18.55 per share). See
    Item 8. Financial Statements And Supplementary
    Data  Note 11.
    Long-Term
    Debt.(2)
    
    The Debentures bear interest at a rate of 1.00% per year,
    payable semi-annually in arrears, on February 1 and August 1 of
    each year, commencing on August 1, 2007 and will mature on
    February 1, 2027. At our option, the Debentures are subject
    to redemption at any time on or after February 1, 2012, in
    whole or in part, at a redemption price equal to 100% of the
    principal amount of the Debentures being redeemed, plus accrued
    and unpaid interest. In addition, holders may require us to
    repurchase their Debentures on February 1, 2012,
    February 1, 2017, and February 1, 2022, in whole or in
    part, for cash at a repurchase price equal to 100% of the
    principal amount of the Debentures being repurchased, plus
    accrued and unpaid interest. For purposes of this Capital
    Requirements chart, we have assumed that the Debentures will be
    repurchased pursuant to the holders option on
    February 1, 2012. For information detailing the contingent
    interest, conversion or redemption features of the Debentures,
    see Item 8. Financial Statements And Supplementary
    Data  Note 11. Long-Term Debt.(3)
    
    Excludes $18.7 million of unamortized debt premium.(4)
    
    Payment obligations for the project debt 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.(5)
    
    Interest payments on the Term Loan Facility and letter of credit
    fees are estimated based on current LIBOR rates and are
    estimated assuming contractual principal repayments. Interest
    payments represent accruals for cash interest payments.(6)
    
    Retirement plan obligations are based on actuarial estimates for
    the pension plan obligations and post-retirement plan
    obligations as of December 31, 2009.(7)
    
    Accounting for uncertainty in income tax obligations are based
    upon the expected date of settlement taking into account all of
    our administrative rights including possible litigation. 63




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##### Table of Contents



Other
    Commitments
    Commitments Expiring by PeriodLess Than


More ThanTotal


One Year


One YearLetters of credit

$
278,191


$
6,550


$
271,641Surety bonds


111,032







111,032Total other commitments  net

$
389,223


$
6,550


$
382,673           
    holders may require us to repurchase their Debentures on
    February 1, 2012, February 1, 2017 and
    February 1, 2022;
    holders may require us to repurchase their Debentures if a
    fundamental change occurs; and
    holders may exercise their conversion rights upon the occurrence
    of certain events, which would require us to pay the conversion
    settlement amount in cash
    and/or our
    common stock.    
    holders may require us to repurchase their Notes if a
    fundamental change occurs; and
    holders may exercise their conversion rights upon the occurrence
    of certain events, which would require us to pay the conversion
    settlement amount in cash.  Item 8. Financial Statements And Supplementary
    Data  Note 11. Long-Term Debt
  Overview  Growth and
    Development
  Item 1A. Risk Factors  We have provided
    guarantees and financial support in connection with our
    projects.
 64




---



##### Table of Contents



Insurance
    Coverage
    Off-Balance
    Sheet Arrangements
        Item 8.
    Financial Statements And Supplementary Data 
    Note 10. Leases
  Other Commitments,
  Item 8. Financial Statements And
    Supplementary Data  Note 8. Equity Method
    Investments
  Discussion
    of Critical Accounting Policies
    Stock-Based
    Compensation
   65




---



##### Table of Contents



Purchase
    Accounting
    Depreciation
    and Amortization
    Goodwill
    and Intangible Assets
      Net
    Operating Loss Carryforwards  Deferred Tax
    Assets
  Item 8. Financial Statements And
    Supplementary Data  Note 16. Income Taxes
   66




---



##### Table of Contents



Loss
    Contingencies
  Item 8. Financial Statements And
    Supplementary Data  Note 21. Commitments and
    Contingencies
  Financial
    Instruments
  Item 8. Financial Statements And
    Supplementary Data  Note 13. Financial
    Instruments
  available-for-sale
    Debentures
    Revenue
    Recognition
  percentage-of-completion
 67




---



##### Table of Contents



Pensions
      Net Gain (Loss)

Net Gain (Loss),Discount Rate

Recognized in AOCI

Net of Tax, Recognized in AOCI(dollars in millions)Year Ended December 31, 2009


6.00
%

$
14.6


$
8.8Year Ended December 31, 2008


6.25
%

$
(20.0
)

$
(13.2
)Year Ended December 31, 2007


6.50
%

$
14.5


$
9.4   Item 8. Financial Statements And Supplementary
    Data  Note 17. Employee Benefit Plans
  Unpaid
    Losses and Loss Adjustment Expenses
        Recent
    Accounting Pronouncements
  Item 8. Financial Statements And Supplementary
    Data  Note 1. Organization and Summary of
    Significant Accounting Policies Note 2. Recent
    Accounting Pronouncements
  Related-Party
    Transactions
  Affiliate
    Agreements
   68




---



##### Table of Contents



Item 8.
    Financial Statements And Supplementary Data 
    Note 3. Acquisitions, Business Development and
    Dispositions
    Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Item 8. Financial
    Statements And Supplementary Data  Note 13.
    Financial Instruments Note 14. Derivative
    Instruments
  Commodity
    Price Risk and Contract Revenue Risk
  Fuel
    Price Risk
           69




---



##### Table of Contents



Energy
    Price Risk
        Interest
    Rate Risk
  Item 8. Financial Statements And
    Supplementary Data  Note 11. Long-Term Debt
    Cash
    Conversion Option, Note Hedge and Contingent Interest related to
    the 3.25% Cash Convertible Senior Notes
       70




---



##### Table of Contents



Item 8. Financial Statements
    And Supplementary Data  Note 11. Long-Term Debt Note 14. Derivative Instruments
  Contingent
    Interest related to the 1.00% Debentures
  Item 8. Financial
    Statements And Supplementary Data  Note 11.
    Long-Term Debt Note 14. Derivative
    Instruments
  Foreign
    Currency Exchange Rate Risk
        Item 8. Financial
    Statements And Supplementary Data  Note 8.
    Equity Method Investments
  Risk
    Related to the Investment Portfolio
   71




---



##### Table of Contents



Fixed
    Maturities
        Equity
    Securities
   72




---



##### 



Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA   
 PageReport of Independent Public Accounting Firm


74Consolidated Statements of Income for the Years
    Ended December 31, 2009, 2008 and 2007


75Consolidated Balance Sheets as of
    December 31, 2009 and 2008


76Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2009, 2008 and 2007


77Consolidated Statements of Equity for the Years
    Ended December 31, 2009, 2008 and 2007


78Notes to Consolidated Financial Statements


79Note 1.  Organization and Summary
    of Significant Accounting Policies


79Note 2.  Recent Accounting
    Pronouncements


85Note 3.  Acquisitions, Business
    Development and Dispositions


86Note 4.  Earnings Per Share and
    Equity


90Note 5.  Financial Information by
    Business Segments


92Note 6.  Amortization of Waste,
    Service and Energy Contracts


93Note 7.  Other Intangible Assets
    and Goodwill


93Note 8.  Equity Method
    Investments


94Note 9.  Property, Plant and
    Equipment, net


95Note 10. Leases


95Note 11. Long-Term Debt


96Note 12. Project Debt


102Note 13. Financial Instruments


103Note 14. Derivative Instruments


108Note 15. Supplementary Financial
    Information


109Note 16. Income Taxes


111Note 17. Employee Benefit Plans


115Note 18. Stock-Based Award Plans


120Note 19. Accumulated Other
    Comprehensive Income (Loss)


123Note 20. Related-Party Transactions


123Note 21. Commitments and
    Contingencies


123Note 22. Quarterly Data (Unaudited)


125Note 23. Subsequent Events


125Financial Statement Schedule:Schedule II Valuation and Qualifying
    Accounts


126   73




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm              
    74




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    CONSOLIDATED STATEMENTS OF INCOME  For the Years Ended December 31,2009


2008


2007(In thousands, except per share amounts)OPERATING REVENUES:Waste and service revenues

$
919,604


$
934,527


$
864,396Electricity and steam sales


580,248



660,616



498,877Other operating revenues


50,615



69,110



69,814Total operating revenues


1,550,467



1,664,253



1,433,087OPERATING EXPENSES:Plant operating expenses


946,166



999,674



801,560Depreciation and amortization expense


202,872



199,488



196,970Net interest expense on project debt


48,391



53,734



54,579General and administrative expenses


109,235



97,016



82,729Insurance recoveries, net of write-down of assets






(8,325
)


Other operating expenses


47,968



66,701



60,639Total operating expenses


1,354,632



1,408,288



1,196,477Operating income


195,835



255,965



236,610Other income (expense):Investment income


4,007



5,717



10,578Interest expense


(38,116
)


(46,804
)


(67,104
)Non-cash convertible debt related expense


(24,290
)


(17,979
)


(15,377
)Loss on extinguishment of debt










(32,071
)Total other expenses


(58,399
)


(59,066
)


(103,974
)Income before income tax expense and equity in net income from
    unconsolidated investments


137,436



196,899



132,636Income tax expense


(50,044
)


(84,561
)


(24,483
)Equity in net income from unconsolidated investments


23,036



23,583



22,196NET INCOME


110,428



135,921



130,349Less: Net income attributable to noncontrolling interests in
    subsidiaries


(8,783
)


(6,961
)


(8,656
)NET INCOME ATTRIBUTABLE TO COVANTA HOLDING CORPORATION

$
101,645


$
128,960


$
121,693Weighted Average Common Shares Outstanding:Basic


153,694



153,345



152,653Diluted


154,994



154,732



153,997Earnings Per Share:Basic

$
0.66


$
0.84


$
0.80Diluted

$
0.66


$
0.83


$
0.79    75




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    CONSOLIDATED BALANCE SHEETS  As of December 31,2009


2008(In thousands, except per share amounts)ASSETSCurrent:Cash and cash equivalents

$
433,683


$
192,393Restricted funds held in trust


131,223



175,093Receivables (less allowances of $2,978 and $3,437)


306,631



243,791Unbilled service receivables


37,692



49,468Deferred income taxes


9,509



Prepaid expenses and other current assets


126,139



123,514Total Current Assets


1,044,877



784,259Property, plant and equipment, net


2,582,841



2,530,035Investments in fixed maturities at market (cost: $27,500 and
    $26,620, respectively)


28,142



26,737Restricted funds held in trust


146,529



149,818Unbilled service receivables


37,389



44,298Waste, service and energy contracts, net


380,359



223,397Other intangible assets, net


84,610



83,331Goodwill


202,996



195,617Investments in investees and joint ventures


120,173



102,953Other assets


306,366



139,544Total Assets

$
4,934,282


$
4,279,989LIABILITIES AND EQUITYCurrent:Current portion of long-term debt

$
7,027


$
6,922Current portion of project debt


191,993



198,034Accounts payable


27,831



24,470Deferred revenue


60,256



15,202Accrued expenses and other current liabilities


217,721



215,046Total Current Liabilities


504,828



459,674Long-term debt


1,430,679



941,596Project debt


767,371



880,336Deferred income taxes


571,122



493,919Waste and service contracts


101,353



114,532Other liabilities


141,760



165,881Total Liabilities


3,517,113



3,055,938Commitments and Contingencies (Note 21)Equity:Covanta Holding Corporation stockholders equity:Preferred stock ($0.10 par value; authorized
    10,000 shares; none issued and outstanding)






Common stock ($0.10 par value; authorized
    250,000 shares; issued 155,615 and 154,797 shares;
    outstanding 154,936 and 154,280 shares)


15,562



15,480Additional paid-in capital


909,205



832,595Accumulated other comprehensive income (loss)


7,443



(8,205
)Accumulated earnings


450,864



349,219Treasury stock, at par


(68
)


(52
)Total Covanta Holding Corporation stockholders equity


1,383,006



1,189,037Noncontrolling interests in subsidiaries


34,163



35,014Total Equity


1,417,169



1,224,051Total Liabilities and Equity

$
4,934,282


$
4,279,989    76




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS  For the Years Ended December 31,2009


2008


2007(In thousands)OPERATING ACTIVITIES:Net income

$
110,428


$
135,921


$
130,349Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


202,872



199,488



196,970Revenue contract levelization


(664
)


(586
)


(555
)Amortization of long-term debt deferred financing costs


5,272



3,684



3,841Amortization of debt premium


(8,537
)


(10,707
)


(14,857
)Non-cash convertible debt related expense


24,290



17,979



15,377Loss on extinguishment of debt










32,071Provision for doubtful accounts


2,249



1,839



1,184Stock-based compensation expense


14,220



14,750



13,448Equity in net income from unconsolidated investments


(23,036
)


(23,583
)


(22,196
)Dividends from unconsolidated investments


11,310



19,459



24,250Deferred income taxes


32,126



63,160



(688
)Other, net


6,859



3,809



(1,801
)Change in operating assets and liabilities, net of effects of
    acquisitions:Change in restricted funds held in trust


17,823



29,481



5,493Receivables


(2,922
)


4,138



(36,084
)Unbilled service receivables


18,620



14,020



19,403Accounts payable and accrued expenses


3,974



(38,450
)


22,880Other, net


(17,646
)


(31,795
)


(25,494
)Net cash provided by operating activities


397,238



402,607



363,591INVESTING ACTIVITIES:Acquisition of businesses, net of cash acquired


(265,644
)


(73,393
)


(110,465
)Proceeds from the sale of investment securities


6,838



20,295



15,057Purchase of investment securities


(8,008
)


(18,577
)


(622
)Acquisition of noncontrolling interest in subsidiary


(23,700
)






Purchase of equity interests


(8,938
)


(18,503
)


(11,199
)Purchase of property, plant and equipment


(73,619
)


(87,920
)


(85,748
)Property insurance proceeds






16,215



9,441Acquisition of land use rights






(16,727
)


Loans issued to client community to fund certain facility
    improvements, net of repayments


(11,191
)


(8,233
)


Other, net


(2,978
)


(2,465
)


3,626Net cash used in investing activities


(387,240
)


(189,308
)


(179,910
)FINANCING ACTIVITIES:Proceeds from borrowings on long-term debt


460,000







949,907Proceeds from issuance of warrants


53,958







Proceeds from borrowings on project debt


74,194



8,278



3,506Proceeds from borrowings on revolving credit facility










30,000Proceeds from the issuance of common stock, net










135,757Principal payments on long-term debt


(6,591
)


(6,877
)


(1,181,130
)Principal payments on project debt


(257,331
)


(187,800
)


(164,167
)Payments of borrowings on revolving credit facility










(30,000
)Payments of long-term debt deferred financing costs


(14,275
)






(18,324
)Purchase of convertible note hedge


(112,378
)






Payment of interest rate swap termination costs


(11,144
)






Payments of tender premiums on debt extinguishment










(33,016
)Increase in holding company restricted funds










6,660Decrease in restricted funds held in trust


54,616



21,575



31,432Proceeds from the exercise of options for common stock, net


560



262



812Financings of insurance premiums, net


345



1,381



7,927Distributions to partners of noncontrolling interests in
    subsidiaries


(11,004
)


(7,061
)


(7,699
)Net cash provided by (used in) financing activities


230,950



(170,242
)


(268,335
)Effect of exchange rate changes on cash and cash equivalents


342



(70
)


618Net increase (decrease) in cash and cash equivalents


241,290



42,987



(84,036
)Cash and cash equivalents at beginning of period


192,393



149,406



233,442Cash and cash equivalents at end of period

$
433,683


$
192,393


$
149,406Cash Paid for Interest and Income Taxes:Interest

$
90,559


$
114,207


$
146,677Income taxes, net of refunds

$
8,737


$
20,934


$
19,856    77




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    CONSOLIDATED STATEMENTS OF EQUITY  AccumulatedAdditional


Other











NoncontrollingCommon Stock


Paid-In


Comprehensive


Accumulated


Treasury Stock


Interests inShares


Amount


Capital


Income (Loss)


Earnings


Shares


Amount


Subsidiaries


Total(In thousands)Balance as of December 31, 2006


147,657


$
14,766


$
619,685


$
3,942


$
100,775



157


$
(16
)

$
42,681


$
781,833Shares issued in equity offering, net of costs


6,118



612



135,143























135,755Stock-based compensation expense










13,448























13,448Effect of adoption of accounting standard related to tax
    liabilities for uncertain tax positions


















(2,209
)














(2,209
)Effect of adoption of accounting standard related to convertible
    debt instruments that may be settled in cash upon conversion










56,051























56,051Tax benefit related to exercise of stock options and vesting of
    restricted stock










200























200Shares forfeited for terminated employees










3











27



(3
)






Shares repurchased for tax withholdings for vested stock awards










(3,954
)










175



(17
)






(3,971
)Exercise of options to purchase common stock


113



11



801























812Shares issued in non-vested stock award


393



39



(39
)






















Sale of noncontrolling interests in subsidiaries






























(5,656
)


(5,656
)Distributions to partners of noncontrolling interests in
    subsidiaries






























(7,704
)


(7,704
)Comprehensive income, net of income taxes:Net income


















121,693











8,656



130,349Foreign currency translation














4,388















2,796



7,184Pension and other postretirement plan unrecognized net gain, net
    of income tax expense of $5,100














9,446



















9,446Minimum pension liability adjustment, net of income tax benefit
    of $32














(59
)


















(59
)Net unrealized gain on
    available-for-sale
    securities, net of income tax expense of $383














712



















712Net unrealized loss on derivative instruments, net of income tax
    benefit of $1,144














(2,125
)


















(2,125
)Total comprehensive income














12,362



121,693











11,452



145,507Balance as of December 31, 2007


154,281



15,428



821,338



16,304



220,259



359



(36
)


40,773



1,114,066Stock-based compensation expense










14,750























14,750Shares forfeited for terminated employees










2











21



(2
)






Shares repurchased for tax withholdings for vested stock awards










(3,705
)










137



(14
)






(3,719
)Exercise of options to purchase common stock


22



2



260























262Shares issued in non-vested stock award


494



50



(50
)






















Deferred tax for noncontrolling interests in subsidiaries






























374



374Distributions to partners of noncontrolling interests in
    subsidiaries






























(7,062
)


(7,062
)Comprehensive income, net of income taxes:Net income


















128,960











6,961



135,921Foreign currency translation














(10,481
)














(6,032
)


(16,513
)Pension and other postretirement plan unrecognized net loss, net
    of income tax benefit of $6,800














(13,218
)


















(13,218
)Minimum pension liability adjustment, net of income tax benefit
    of $217














(403
)


















(403
)Net unrealized loss on
    available-for-sale
    securities, net of income tax benefit of $219














(407
)


















(407
)Total comprehensive (loss) income














(24,509
)


128,960











929



105,380Balance as of December 31, 2008


154,797



15,480



832,595



(8,205
)


349,219



517



(52
)


35,014



1,224,051Stock-based compensation expense










14,220























14,220Issuance of Warrants










53,846























53,846Shares forfeited for terminated employees










2











22



(2
)






Shares repurchased for tax withholdings for vested stock awards










(1,909
)










140



(14
)






(1,923
)Exercise of options to purchase common stock


76



8



552























560Shares issued in non-vested stock award


742



74



(74
)






















Purchase price allocation for noncontrolling interests






























33,428



33,428Acquisition of noncontrolling interests in subsidiaries










9,973



















(33,492
)


(23,519
)Distributions to partners of noncontrolling interests in
    subsidiaries






























(11,004
)


(11,004
)Comprehensive income, net of income taxes:Net income


















101,645











8,783



110,428Foreign currency translation














5,892















1,434



7,326Pension and other postretirement plan unrecognized net gain, net
    of income tax expense of $5,800














8,754



















8,754Minimum pension liability adjustment, net of income tax expense
    of $96














178



















178Net unrealized gain on
    available-for-sale
    securities, net of income tax expense of $444














824



















824Total comprehensive income














15,648



101,645











10,217



127,510Balance as of December 31, 2009


155,615


$
15,562


$
909,205


$
7,443


$
450,864



679


$
(68
)

$
34,163


$
1,417,169    78




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1.
    ORGANIZATION
    AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    Organization
    and/or
  Summary
    of Significant Accounting Policies
  Principles of Consolidation
    Equity Method of Investments
  other-than-temporary
  Revenue Recognition
  Waste and Service Revenues
  1)
    Fees earned under contract to operate and maintain
    energy-from-waste and independent power facilities are
    recognized as revenue when services are rendered, regardless of
    the period they are billed;2)
    Fees earned to service project debt (principal and interest)
    where such fees are expressly included as a component on the
    service fee paid by the client community pursuant to applicable
    energy-from-waste service agreements. Regardless of the timing
    of amounts paid by client communities relating to project debt
    principal, we record service revenue with respect to this
    principal component on a levelized basis over the term of the
    agreement. Unbilled service receivables related to
    energy-from-waste operations are discounted in recognizing the
    present value for services performed currently in order to
    service the principal component of the project debt;3)
    Fees earned for processing waste in excess of contractual
    requirements are recognized as revenue beginning in the period
    when we process the excess waste. Some of our contracts include
    stated fixed fees earned by us for processing waste up to
    certain base contractual amounts during specified periods. These
    contracts also set forth the per-ton fees that are payable if we
    accept waste in excess of the base contractual amounts;4)
    Tipping fees earned under waste disposal agreements are
    recognized as revenue in the period the waste is
    received; and5)
    Other miscellaneous fees, such as revenue for ferrous and
    non-ferrous metal recovered and recycled, are generally
    recognized as revenue when ferrous and non-ferrous metal is sold. 79




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Electricity and Steam Sales 
  Construction Revenues  percentage-of-completion cost-to-cost percentage-of-completion.
  Renewable Energy Credits
    Pass Through Costs
    Income Taxes
     80




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock-Based Compensation
    Cash and Cash Equivalents
    Investments
  available-for-sale other-than-temporary
  Restricted Funds Held in Trust
    As of December 31,2009


2008Current


Noncurrent


Current


NoncurrentDebt service funds

$
73,406


$
101,376


$
103,371


$
97,761Revenue funds


13,061







25,105



Other funds


44,756



45,153



46,617



52,057Total

$
131,223


$
146,529


$
175,093


$
149,818   Restricted Funds  Other
    Deferred Financing Costs
   81




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Deferred Revenue
    As of December 31,2009


2008Current


Noncurrent


Current


NoncurrentAdvance billings to municipalities

$
10,265


$



$
8,333


$
Unearned insurance premiums


2,105







1,587



Other


47,886



3,681



5,282



4,345Total

$
60,256


$
3,681


$
15,202


$
4,345     Property, Plant and Equipment
    Asset Retirement Obligations
  period-to-period
  As of December 31,2009


2008Beginning of period asset retirement obligation

$
27,529


$
25,520Accretion expense


2,184



1,998Deductions(1)


(595
)


(1,565
)Additions(2)


212



1,576End of period asset retirement obligation

$
29,330


$
27,529Less: current portion


(3,254
)


(1,618
)Asset retirement obligation

$
26,076


$
25,911   (1)
    
    Deductions in 2009 and 2008 related to 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.(2)
    
    Additions in 2009 related primarily to foreign currency
    translation adjustments for asset retirement obligations for one
    of our Indian facilities and purchase price allocations for
    asset retirement obligations for an energy-from-waste facility
    acquired in Pennsylvania in 2009. Additions in 2008 related
    primarily to purchase price allocations for asset retirement 82




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  obligations for the ash landfill acquired in Massachusetts in
    2008, offset by purchase price allocation adjustments for the
    two biomass energy facilities acquired in California in 2007.
    See Note 3. Acquisitions, Business Development and
    Dispositions.  Amortization of Waste, Service and Energy Contracts and
    Intangible Assets
    Impairment of Goodwill, Other Intangibles and Long-Lived
    Assets
            Business Combinations
     83




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accumulated Other Comprehensive Income
  available-for-sale,
  Derivative Instruments
    Foreign Currency Translation
    Pension and Postretirement Benefit Obligations
    Unpaid Losses and Loss Adjustment Expenses
      As of December 31,2009


2008


2007Net unpaid losses and LAE at beginning of year

$
20,207


$
22,400


$
25,712Incurred, net, related to:Current year


12,364



7,272



6,398Prior years


3,271



1,818



1,492Total net incurred


15,635



9,090



7,890Paid, net, related to:Current year


(6,996
)


(4,361
)


(3,905
)Prior years


(5,370
)


(6,982
)


(7,357
)Total net paid


(12,366
)


(11,343
)


(11,262
)Plus: Increase in allowance for reinsurance recoverable on
    unpaid losses


60



60



60Less: Effect of deconsolidation of subsidiary


(1,169
)






Net unpaid losses and LAE at end of year


22,367



20,207



22,400Plus: Reinsurance recoverable on unpaid losses


12,325



9,155



10,036Gross unpaid losses and LAE at end of year

$
34,692


$
29,362


$
32,436  84




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of
    Estimates
    Reclassifications
    NOTE 2.
    RECENT
    ACCOUNTING PRONOUNCEMENTS    Subject

Summary

Effect of AdoptionMultiple Deliverable Element Arrangements  effective
    January 1, 2011

Provides amendments to criteria for separating consideration in
    multiple element arrangements. As a result, multiple deliverable
    arrangements will be separate in more circumstances than in
    existing U.S. GAAP.

We are currently evaluating the potential effects of this
    standard on our consolidated financial statements.Redeemable Equity Instruments  effective January 1,
    2010

Preferred securities that are redeemable for cash or other
    assets are to be classified outside of permanent equity if they
    are redeemable at a fixed or determinable price on a fixed or
    determinable date, at the option of the holder, or upon the
    occurrence of an event that is not solely within the control of
    the issuer.

No expected impact.Consolidation of Variable Interest Entities 
    effective January 1, 2010

Requires an analysis to determine whether a variable interest
    gives the entity a controlling financial interest in a variable
    interest entity. This standard also requires an ongoing
    reassessment of the primary beneficiary of the variable interest
    entity and eliminates the quantitative approach previously
    required for determining whether an entity is the primary
    beneficiary.

No expected impact.        85




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years EndedDecember 31, 2008


December 31, 2007As Reported


As Adjusted


As Reported


As AdjustedNon-cash convertible debt interest expense

$



$
(17,979
)

$



$
(15,377
)Total other expenses

$
(41,087
)

$
(59,066
)

$
(88,597
)

$
(103,974
)Income before income tax expense and equity in net income from
    unconsolidated investments

$
214,878


$
196,899


$
148,013


$
132,636Income tax expense

$
(92,227
)

$
(84,561
)

$
(31,040
)

$
(24,483
)NET INCOME

$
139,273


$
135,921


$
130,513


$
130,349NET INCOME ATTRIBUTABLE TO COVANTA HOLDING CORPORATION


N/A


$
128,960



N/A


$
121,693Earnings Per Share:Basic

$
0.91


$
0.84


$
0.85


$
0.80Diluted

$
0.90


$
0.83


$
0.85


$
0.79   As of December 31, 2008As Reported


As AdjustedLong-term debt  noncurrent

$
1,005,965


$
941,596Deferred income taxes

$
466,468


$
493,919Total Liabilities

$
3,092,856


$
3,055,938Additional paid-in capital

$
776,544


$
832,595Accumulated earnings

$
368,352


$
349,219Total Stockholders Equity

$
1,152,119



N/ATotal Covanta Holding Corporation stockholders equity


N/A


$
1,189,037Total Equity


N/A


$
1,224,051   NOTE 3.
    ACQUISITIONS,
    BUSINESS DEVELOPMENT AND DISPOSITIONS    Acquisitions
    and Business Development
  Americas
  Honolulu Energy-from-Waste Facility
    Veolia Energy-from-Waste Businesses
   86




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Detroit Michigan Energy-from-Waste Facility
    
    A newly-formed Covanta subsidiary purchased an undivided 30%
    owner-participant interest in the Detroit Facility and final
    working capital for total cash consideration of
    $7.9 million.
    We entered into an operating and maintenance agreement with
    owners of the Detroit Facility, pursuant to which we will
    operate, maintain and provide certain other services for a term
    of one year. Under this agreement, we will earn a fixed fee and
    pass through to the owners of the Detroit Facility (or pay from
    the project revenues) all expenses associated with operations
    and maintenance of the facility. After paying all expenses,
    excess net revenues flow to the owners.
    The project company entered into a waste disposal agreement with
    GDRRA pursuant to which we will dispose of the waste of the City
    of Detroit for a term of at least one year. The term of the
    waste disposal agreement will automatically renew for successive
    one year terms unless either party provides advance written
    notice of termination in accordance with the provisions thereof.
    In addition, as an owner-participant we have the right, on one
    or more occasions, to call upon GDRRA to deliver the waste of
    the City of Detroit to the Detroit Facility at market-based
    rates. The call right continues for the duration of the
    agreements which expire in 2035.    Stanislaus County, California Energy-from-Waste
    Facility
    Philadelphia Transfer Stations
    Maine Biomass Energy Facilities
   87




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Wallingford, Connecticut Energy-from-Waste Facility
    Kent County, Michigan Energy-from-Waste Facility
    Pasco County, Florida Energy-from-Waste Facility
    Indianapolis Energy-from-Waste Facility
    Tulsa Energy-from-Waste Facility
    Peabody Landfill
    Alternative Energy Technology Development
    Harrisburg Energy-from-Waste Facility
   88




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Lee County Energy-from-Waste Facility
    Pacific Ultrapower Chinese Station, California
    Massachusetts Energy-from-Waste Facilities and Transfer
    Stations
    Westchester Transfer Stations
    California Biomass Energy Facilities
    Holliston Transfer Station
    Hempstead Energy-from-Waste Facility
    Hillsborough County Energy-from-Waste Facility
   89




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    International
  China Joint Ventures and Energy-from-Waste
    Facilities
        Dublin Joint Venture
    Dispositions
      NOTE 4.
    EARNINGS
    PER SHARE AND EQUITY  Earnings
    Per Share
   90




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years Ended December 31,2009


2008


2007Net income attributable to Covanta Holding Corporation

$
101,645


$
128,960


$
121,693Basic earnings per share:Weighted average basic common shares outstanding


153,694



153,345



152,653Basic earnings per share

$
0.66


$
0.84


$
0.80Diluted earnings per share:Weighted average basic common shares outstanding


153,694



153,345



152,653Dilutive effect of stock options


433



649



620Dilutive effect of restricted stock


867



738



724Dilutive effect of convertible debentures










Dilutive effect of warrants










Weighted average diluted common shares outstanding


154,994



154,732



153,997Diluted earnings per share

$
0.66


$
0.83


$
0.79Stock options excluded from the weighted average dilutive common
    shares outstanding because their inclusion would have been
    antidilutive


1,975



1,983



1,745Restricted stock awards excluded from the weighted average
    dilutive common shares outstanding because their inclusion would
    have been antidilutive










Warrants excluded from the weighted average dilutive common
    shares outstanding because their inclusion would have been
    antidilutive


24,803







       Equity
          As of December 31,2009Shares available for issuance under equity plans


9,082,570    91




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 5.
    FINANCIAL
    INFORMATION BY BUSINESS SEGMENTS    Reportable SegmentsAmericas

International

All Other(1)

TotalYear Ended December 31, 2009:Operating revenues

$
1,346,217


$
184,773


$
19,477


$
1,550,467Depreciation and amortization


194,925



7,834



113



202,872Operating income (loss)


194,753



5,305



(4,223
)


195,835As of December 31, 2009:Total assets (includes goodwill of $203.0 million in the
    Americas segment)

$
4,480,484


$
249,143


$
204,655


$
4,934,282Capital additions


59,958



13,483



178



73,619Year Ended December 31, 2008:Operating revenues

$
1,371,431


$
279,966


$
12,856


$
1,664,253Depreciation and amortization


190,659



8,751



78



199,488Operating income (loss)


255,007



3,061



(2,103
)


255,965As of December 31, 2008:Total assets (includes goodwill of $195.6 million in the
    Americas segment)

$
3,975,740


$
239,582


$
64,667


$
4,279,989Capital additions


85,770



2,082



68



87,920Year Ended December 31, 2007:Operating revenues

$
1,245,617


$
177,217


$
10,253


$
1,433,087Depreciation and amortization


187,875



8,998



97



196,970Operating income (loss)


220,092



20,183



(3,665
)


236,610As of December 31, 2007:Total assets (includes goodwill of $127.0 million in the
    Americas segment)

$
4,007,621


$
257,481


$
103,397


$
4,368,499Capital additions


84,983



528



237



85,748   (1)
    
    All other is comprised of our insurance subsidiaries
    operations and the financial results of the holding company.  Item 1. Business.
  Americas

India

Other International

TotalOperating Revenues:Year Ended December 31, 2009

$
1,365,694


$
163,403


$
21,370


$
1,550,467Year Ended December 31, 2008

$
1,384,287


$
259,923


$
20,043


$
1,664,253Year Ended December 31, 2007

$
1,255,870


$
157,405


$
19,812


$
1,433,087Total Assets:As of December 31, 2009

$
4,596,531


$
60,352


$
277,399


$
4,934,282As of December 31, 2008

$
3,975,365


$
65,766


$
238,858


$
4,279,989  92




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 6.
    AMORTIZATION
    OF WASTE, SERVICE AND ENERGY CONTRACTS  Waste,
    Service and Energy Contracts
      As of December 31, 2009


As of December 31, 2008Gross








GrossUseful


Carrying


Accumulated





Carrying


AccumulatedLife


Amount


Amortization


Net


Amount


Amortization


NetWaste, service and energy contracts (asset)


1  38 years


$
608,122


$
227,763


$
380,359


$
406,556


$
183,159


$
223,397Waste and service contracts (liability)


1  13 years


$
(156,705
)

$
(55,352
)

$
(101,353
)

$
(156,705
)

$
(42,173
)

$
(114,532
)     Waste, Service and


Waste and ServiceEnergy Contracts


Contracts(Amortization Expense)


(Contra-Expense)Year ended December 31, 2009

$
44,604


$
(13,179
)2010

$
36,870


$
(12,721
)2011


33,747



(12,408
)2012


31,654



(12,412
)2013


28,043



(12,390
)2014


25,479



(12,500
)Thereafter


224,566



(38,922
)Total

$
380,359


$
(101,353
)
   NOTE 7.
    OTHER
    INTANGIBLE ASSETS AND GOODWILL  Other
    Intangible Assets
    As of December 31, 2009


As of December 31, 2008Gross








GrossCarrying


Accumulated





Carrying


AccumulatedUseful Life

Amount


Amortization


Net


Amount


Amortization


NetLease interest and other

9  20 years

$
79,338


$
13,994


$
65,344


$
73,848


$
10,739


$
63,109Landfill

4 years


17,985



9,460



8,525



17,985



7,329



10,656Total amortizable intangible assets




97,323



23,454



73,869



91,833



18,068



73,765Other intangibles

Indefinite


10,741







10,741



9,566







9,566Intangible assets, net



$
108,064


$
23,454


$
84,610


$
101,399


$
18,068


$
83,331     2010


2011


2012


2013


2014


Thereafter


TotalAnnual Remaining Amortization

$
5,484


$
5,484


$
5,484


$
5,484


$
3,353


$
48,580


$
73,869  93




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
      TotalBalance as of December 31, 2007

$
127,027Increase to net deferred tax liabilities related to the deferred
    tax impact recognized on tax liquidation of ARC Holdings
    partnerships (Note 16)


67,929Purchase price adjustment related to the Central Valley
    acquisition


269Purchase price adjustment related to the Westchester County
    transfer stations acquired


578Purchase price adjustment related to the EnergyAnswers
    acquisition


(186
)Balance as of December 31, 2008

$
195,617Purchase price adjustment related to the ARC Holdings acquisition


6,060Goodwill related to the Pennsylvania transfer stations
    acquisition (See Note 3)


1,319Balance as of December 31, 2009

$
202,996       NOTE 8.
    EQUITY
    METHOD INVESTMENTS   94




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Ownership




OwnershipInterest as of




Interest as ofDecember 31,




December 31,2009

2009


2008

2008Pacific Ultrapower Chinese Station Plant (U.S.)(1)

55%

$
3,685


55%

$
4,446South Fork Plant (U.S.)

50%


1,017


50%


1,098Koma Kulshan Plant (U.S.)

50%


5,883


50%


5,976Detroit EfW Facility (U.S.)(1)

30%


4,973





Ambiente 2000 (Italy)

40%


1,025


40%


658Haripur Barge Plant (Bangladesh)

45%


16,741


45%


16,061Quezon Power (Philippines)

26%


53,498


26%


45,439Sanfeng (China)

40%


13,786


40%


12,217Guangzhou (China)(1)







40%


1,328Chengdu (China)(1)

49%


19,004


49%


15,730Mauritius (Africa)

35%


561





Total investments



$
120,173




$
102,953   (1)
    See Note 3. Acquisitions, Business Development and
    Dispositions for a discussion related to these equity
    investments.    2009

2008

2007Condensed Statements of Operations for the Years Ended
    December 31:Revenues

$
387,817


$
376,780


$
331,230Operating income


161,417



150,296



153,981Net income


77,064



68,940



57,472Companys share of net income


23,036



23,583



22,196Condensed Balance Sheets as of December 31:Current assets

$
218,458


$
214,295Noncurrent assets


776,389



790,157Total assets


994,847



1,004,452Current liabilities


130,671



119,551Noncurrent liabilities


331,810



432,658Total liabilities


462,481



552,209   NOTE 9.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    As of December 31,Useful Lives


2009


2008Land





$
27,113


$
22,999Facilities and equipment


3-36 years



3,263,144



3,043,124Landfills


3-39 years



42,957



42,091Construction in progress






31,455



36,858Total






3,364,669



3,145,072Less: accumulated depreciation and amortization






(781,828
)


(615,037
)Property, plant, and equipment  net





$
2,582,841


$
2,530,035     NOTE 10.
    LEASES   95




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010


2011


2012


2013


2014


Thereafter


TotalFuture Minimum Rental Payments

$
42,640


$
44,088


$
38,669


$
32,665


$
26,953


$
165,350


$
350,365Non-Recourse Portion of Future Minimum Rental Payments

$
23,362


$
23,571


$
23,611


$
18,005


$
12,424


$
89,684


$
190,657           As of December 31,2009


2008Land

$
29


$
24Energy facilities


64,510



61,077Buildings, machinery and improvements


6,397



5,961Total


70,936



67,062Less: accumulated depreciation and amortization


(34,961
)


(23,222
)Property, plant, and equipment  net

$
35,975


$
43,840   NOTE 11.
    LONG-TERM
    DEBT  Credit
    Facilities
    
    a $300 million revolving loan facility due 2013, which
    includes a $200 million
    sub-facility
    for the issuance of letters of credit (the Revolving Loan
    Facility);
    a $320 million funded letter of credit facility due 2014
    (the Funded L/C Facility); and
    a term loan facility, due 2014, in the initial amount of
    $650 million and of which $632 million was outstanding
    as of December 31, 2009 (the Term Loan
    Facility).    Total





Outstanding LettersAvailable





of Credit as of


Available as ofUnder Facility


Maturing


December 31, 2009


December 31, 2009Revolving Loan Facility(1)

$
300,000



2013


$



$
300,000Funded L/C Facility

$
320,000



2014


$
272,469


$
47,531   (1)
    Up to $200 million of which may be utilized for letters of
    credit. 96




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Amortization
    Terms
    2010


2011


2012


2013


2014


TotalAnnual Remaining Amortization

$
6,500


$
6,500


$
6,500


$
6,500


$
606,125


$
632,125     Interest
    and Fee Terms
        Borrowing Margin

Borrowing Marginfor Term Loans,

for Term Loans,Funded Letters of

Funded Letters ofCredit and

Credit andBorrowing Margin

Borrowing Margin

Credit-Linked

Credit-Linkedfor Revolving Loans

for Revolving Loans

Deposits

DepositsLeverage Ratio

(Eurodollar Loans)

(Base Rate Loans)

(Eurodollar Loans)

(Base Rate Loans)3
    4.00:1.00


2.00
%


1.00
%


1.75
%


0.75
%< 4.00:1.00 and
    3
    3.25:1.00


1.75
%


0.75
%


1.50
%


0.50
%< 3.25:1.00 and
    3
    2.75:1.00


1.50
%


0.50
%


1.50
%


0.50
%< 2.75:1.00


1.25
%


0.25
%


1.50
%


0.50
%   Guarantees
    and Securitization
    Credit
    Facilities Financial Covenants
      
    financial statements and other reports;
    continued existence;
    payment of taxes and claims; 97




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  
    maintenance of properties;
    insurance coverage;
    inspections by lenders (subject to frequency and cost
    reimbursement limitations);
    lenders meetings;
    compliance with laws;
    environmental matters;
    additional material real estate assets;
    designation of subsidiaries; and
    post-closing matters.    
    indebtedness (including guarantee obligations);
    liens;
    negative pledge clauses;
    restricted junior payments;
    clauses restricting subsidiary distributions;
    investments;
    fundamental changes;
    disposition of assets;
    acquisitions;
    conduct of business;
    amendments or waivers of certain agreements;
    changes in fiscal year; and
    hedge agreements.    
    maximum Covanta Energy leverage ratio of 3.75 to 1.00 for the
    four quarter period ended December 31, 2009, which measures
    Covanta Energys principal amount of consolidated debt less
    certain restricted funds dedicated to repayment of project debt
    principal and construction costs (Consolidated Adjusted
    Debt) to its adjusted earnings before interest, taxes,
    depreciation and amortization, as calculated under the Credit
    Facilities (Adjusted EBITDA). The definition of
    Adjusted EBITDA in the Credit Facilities excludes certain
    non-cash charges, and for purposes of calculating the leverage
    ratio and interest coverage ratios is adjusted on a pro forma
    basis for acquisitions and dispositions made during the relevant
    period. The maximum Covanta Energy leverage ratio allowed under
    the Credit Facilities adjusts in future periods as follows: 
    3.75 to 1.00 for each of the four quarter periods ended
    March 31, June 30 and September 30, 2010;
    3.50 to 1.00 for each four quarter period thereafter; 
    maximum Covanta Energy capital expenditures incurred to maintain
    existing operating businesses of $100 million per fiscal
    year, subject to adjustment due to an acquisition by Covanta
    Energy; and
    minimum Covanta Energy interest coverage ratio of 3.00 to 1.00,
    which measures Covanta Energys Adjusted EBITDA to its
    consolidated interest expense plus certain interest expense of
    ours, to the extent paid by Covanta Energy.    
    non-payment of principal when due;
    non-payment of any amount payable to an issuing bank in
    reimbursement of any drawing under a letter of credit when due;
    non-payment of interest, fees or other amounts after a grace
    period of five days;
    cross-default to material indebtedness;
    violation of a covenant (subject, in the case of certain
    affirmative covenants, to a grace period of thirty days);
    material inaccuracy of a representation or warranty when made;
    bankruptcy events with respect to us, Covanta Energy or any
    material subsidiary or group of subsidiaries of Covanta Energy;
    material judgments;
    certain material ERISA events;
    change of control (subject to exceptions for certain of our
    existing owners);
    failure of subordination; and
    actual or asserted invalidity of any guarantee or security
    document. 98




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Long-Term
    Debt
    As of December 31,2009


20083.25% Cash Convertible Senior Notes due 2014

$
460,000


$
Debt discount related to Cash Convertible Senior Notes


(112,475
)


Cash conversion option derivative at fair value


128,603



3.25% Cash Convertible Senior Notes, net


476,128



1.00% Senior Convertible Debentures due 2027


373,750



373,750Debt discount related to Convertible Debentures


(45,042
)


(64,369
)1.00% Senior Convertible Debentures, net


328,708



309,381Term Loan Facility due 2014


632,125



638,625Other long-term debt


745



512Total


1,437,706



948,518Less: current portion


(7,027
)


(6,922
)Total long-term debt

$
1,430,679


$
941,596   3.25%
    Cash Convertible Senior Notes due 2014
          
    prior to March 1, 2014, on any date during any fiscal
    quarter commencing at any time after June 30, 2009 and only
    during such fiscal quarter if the closing sale price of our
    common stock for at least 20 trading days during the period of
    30 consecutive trading days ending on the last trading day of
    the immediately preceding fiscal quarter is greater than or
    equal to 130% of the then effective conversion price; or
    upon the occurrence of specified corporate transactions (as
    provided in the indenture for the Notes); or
    upon certain fundamental changes (as defined in the indenture
    for the Notes in which case the conversion rate will be
    increased as provided in the indenture); or
    during the five consecutive business day period following any
    five consecutive trading day period in which the trading price
    for the Notes for each day during such five day period was less
    than 95% of the product of the closing sale price of our common
    stock on such day multiplied by the then effective conversion
    rate; or
    at any time on or after March 1, 2014. 99




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                  100




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1.00% Senior
    Convertible Debentures due 2027
           101




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Debt
    Discount for the Debentures and the Notes
    For the Years Ended2010


2011


2012


2013


2014Non-cash convertible debt discount expense for the Debentures

$
20.8


$
22.3


$
1.9


$



$
Non-cash convertible debt discount expense for the Notes

$
21.3


$
23.5


$
26.0


$
28.8


$
12.9   Loss on
    Extinguishment of Debt
    Financing
    Costs
    NOTE 12.
    PROJECT
    DEBT    As of December 31,2009


2008Project debt related to Service Fee structures3.00-6.25% serial revenue bonds due 2010 through 2019

$
249,205


$
173,2523.0-7.0% term revenue bonds due 2010 through 2022


181,973



186,413Adjustable-rate revenue bonds due 2010 through 2019






68,2207.322% other debt obligations due 2010 through 2022


20,619



38,053Subtotal


451,797



465,938Unamortized debt premium, net


10,332



8,168Total Service Fee structure related project debt


462,129



474,106Project debt related to Tip Fee structures4.875-6.70% serial revenue bonds due 2010 through 2016


191,055



272,2505.00-8.375% term revenue bonds due 2010 through 2019


266,625



267,900Subtotal


457,680



540,150Unamortized debt premium, net


8,405



12,078Total Tip Fee structure related project debt


466,085



552,228International project debt


31,150



52,036Total project debt


959,364



1,078,370Less current project debt (includes $7,024 and $7,887 of
    unamortized premium)


(191,993
)


(198,034
)Noncurrent project debt

$
767,371


$
880,336    102




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      TotalLess:


Noncurrent2010


2011


2012


2013


2014


Thereafter


Total


Current Portion


Project DebtDebt

$
184,969


$
130,775


$
133,353


$
118,505


$
118,110


$
254,915


$
940,627


$
(184,969
)

$
755,658Premium


7,024



4,360



3,163



2,035



1,241



914



18,737



(7,024
)


11,713Total

$
191,993


$
135,135


$
136,516


$
120,540


$
119,351


$
255,829


$
959,364


$
(191,993
)

$
767,371         
    $18.5 million due to financial institutions, of which
    $3.2 million is denominated in U.S. dollars and
    $15.3 million is denominated in Indian rupees, relating to
    the construction of a heavy fuel-oil fired diesel engine power
    plant in India and working capital debt relating to the
    operations of the project. The U.S. dollar debt bears a
    coupon rate at the three-month LIBOR, plus 4.5% (4.79% as of
    December 31, 2009). The outstanding Indian rupee debt
    borrowed for construction of the power plant is serviced at a
    floating rate of 9.75% as of December 31, 2009. The average
    coupon rate on the working capital debt was 11.88% in 2009. The
    construction related debt extends through 2011. The entire debt
    is non-recourse to the project, and is secured by the project
    assets. The power off-taker failed to fund the escrow account or
    post the letter of credit required under the energy contract
    which failure constitutes a technical default under the project
    finance documents. The project lenders have not declared an
    event of default due to this matter and have permitted continued
    distributions of project dividends.
    $12.7 million due to financial institutions relating to the
    construction of a second heavy fuel-oil fired diesel engine
    power plant in India and working capital debt relating to the
    operations of the project. The entire debt is denominated in
    Indian rupees. The construction related debt bears coupon rates
    ranging from 8.5% to 12.5% in 2009 and the average coupon rate
    on the working capital debt was 12.6% in 2009. The construction
    related debt extends through 2010. The entire debt is
    non-recourse to the project and is secured by the project
    assets. The power off-taker failed to fund the escrow account or
    post the letter of credit required under the energy contract
    which failure constitutes a technical default under the project
    finance documents. The project lenders have not declared an
    event of default due to this matter and have permitted continued
    distributions of project dividends.  NOTE 13.
    FINANCIAL
    INSTRUMENTS  Fair
    Value Measurements
    
    For cash and cash equivalents, restricted funds, and marketable
    securities, the carrying value of these amounts is a reasonable
    estimate of their fair value. The fair value of restricted funds
    held in trust is based on quoted market prices of the
    investments held by the trustee.
    Fair values for long-term debt and project debt are determined
    using quoted market prices.
    The fair value of the Note Hedge and the Cash Conversion Option
    are determined using an option pricing model based on observable
    inputs such as implied volatility, risk free rate, and other
    factors. The fair value of the Note 103




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Hedge is adjusted to reflect counterparty risk of
    non-performance, and is based on the counterpartys credit
    spread in the credit derivatives market. The contingent interest
    features related to the Debentures and the Notes are valued
    quarterly using the present value of expected cash flow models
    incorporating the probabilities of the contingent events
    occurring.      Fair Value Measurements at Reporting Date UsingQuoted Prices in





SignificantAs of December 31, 2009


Active Markets for


Significant Other


UnobservableFinancial Instruments Recorded at Fair Value

Carrying


Estimated


Identical Assets


Observable Inputs


Inputson a Recurring Basis:

Amount


Fair Value


(Level 1)


(Level 2)


(Level 3)(In thousands)Assets:Cash and cash equivalents:Bank deposits and certificates of deposit

$
81,458


$
81,458


$
81,458


$



$
Money market funds


352,225



352,225



352,225







Total cash and cash equivalents:


433,683



433,683



433,683







Restricted funds held in trust:Bank deposits and certificates of deposit


32,765



32,765



32,765







Money market funds


152,571



152,569



152,569







U.S. Treasury/Agency obligations(a)


35,382



35,388



35,388







State and municipal obligations


8,582



8,582



8,582







Commercial paper/Guaranteed investment contracts/Repurchase
    agreements


48,452



48,469



48,469







Total restricted funds held in trust:


277,752



277,773



277,773







Restricted funds  other:Bank deposits and certificates of deposit


20,243



20,243



20,243







Money market funds


6,106



6,106



6,106







Total restricted funds other:


26,349



26,349



26,349







Investments:Marketable securities available for sale


300



300



300







Mutual and bond funds


1,802



2,105



2,105







Investments available for sale:U.S. Treasury/Agency obligations


13,726



13,726



13,726







Residential mortgage-backed securities


5,203



5,203



5,203







Corporate investments


9,213



9,213



9,213







Equity securities


871



871



871







Total investments:


31,115



31,418



31,418







Derivative Asset  Note Hedge


123,543



123,543







123,543



Total assets:

$
892,442


$
892,766


$
769,223


$
123,543


$
 104




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Measurements at Reporting Date UsingQuoted Prices in





SignificantAs of December 31, 2009


Active Markets for


Significant Other


UnobservableFinancial Instruments Recorded at Fair Value

Carrying


Estimated


Identical Assets


Observable Inputs


Inputson a Recurring Basis:

Amount


Fair Value


(Level 1)


(Level 2)


(Level 3)(In thousands)Liabilities:Derivative Liability  Cash Conversion Option

$
128,603


$
128,603


$



$
128,603


$
Derivative Liabilities  Contingent interest features
    of the Debentures and Notes


0



0







0



Total liabilities:

$
128,603


$
128,603


$



$
128,603


$
Financial Instruments
    Recorded at Carrying Amount:Assets:Accounts receivables

$
336,876


$
336,876Liabilities:Long-term debt (excluding Cash Conversion Option)

$
1,309,103


$
1,314,264Project debt

$
959,364


$
983,474   (a)
    
    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.  Investments
  available-for-sale other-than-temporary Other-than-temporary other-than-temporary:
  
    the significance of the decline in fair value compared to the
    cost basis;
    the time period during which there has been a significant
    decline in fair value;
    whether the unrealized loss is credit-driven or a result of
    changes in market interest rates;
    a fundamental analysis of the business prospects and financial
    condition of the issuer; and
    our ability and intent to hold the investment for a period of
    time sufficient to allow for any anticipated recovery in fair
    value.   105




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31, 2009Cost or


Unrealized


Unrealized


FairAmortized Cost


Gain


Loss


ValueCurrent investments:Fixed maturities

$
300


$



$



$
300Equity securities  insurance business


732



150



11



871Total current investments

$
1,032


$
150


$
11


$
1,171Noncurrent investments:Fixed maturities  insurance business:U.S. government obligations

$
315


$
6


$



$
321U.S. government agencies


13,157



257



9



13,405Residential mortgage-backed


5,150



74



21



5,203Corporate


8,878



337



2



9,213Total fixed maturities  insurance business


27,500



674



32



28,142Mutual and bond funds


1,802



303







2,105Total noncurrent investments

$
29,302


$
977


$
32


$
30,247   As of December 31, 2008Cost or


Unrealized


Unrealized


FairAmortized Cost


Gain


Loss


ValueCurrent investments:Fixed maturities

$
300


$



$



$
300Equity securities  insurance business


760



62



30



792Total current investments

$
1,060


$
62


$
30


$
1,092Noncurrent investments:Fixed maturities  insurance business:U.S. government obligations

$
565


$
22


$



$
587U.S. government agencies


17,332



307



19



17,620Residential mortgage-backed


4,183



27



26



4,184Corporate


4,540







194



4,346Total fixed maturities  insurance business


26,620



356



239



26,737Mutual and bond funds


1,404







433



971Total noncurrent investments

$
28,024


$
356


$
672


$
27,708     As of December 31, 2009


As of December 31, 2008Fair


Unrealized


Fair


UnrealizedDescription of Investments

Value


Losses


Value


LossesU.S. Treasury and other direct U.S. Government obligations

$
341


$
9


$
2,841


$
19Federal agency mortgage-backed securities


1,503



21



1,547



26Corporate bonds


100



2



3,996



194Total fixed maturities


1,944



32



8,384



239Equity securities


94



11



307



30Total temporarily impaired investments

$
2,038


$
43


$
8,691


$
269      106




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      As of December 31, 2009Amortized Cost


Fair ValueAvailable-for-sale:One year or less

$
9,461


$
9,627Over one year to five years


15,734



16,232Over five years to ten years


1,955



1,942More than ten years


350



341Total fixed maturities

$
27,500


$
28,142   available-for-sale
  For the Years Ended December 31,2009


2008


2007Fixed maturities, net

$
414


$
195


$
747Equity securities, net


107



(169
)


(59
)Mutual and bond funds


303



(433
)


24Change in net unrealized gain (loss) on investments

$
824


$
(407
)

$
712   available-for-sale
  For the Years EndedDecember 31,2009


2008


2007Net unrealized holding gain (loss) on
    available-for-sale
    securities arising during the period

$
797


$
(543
)

$
698Reclassification adjustment for net realized losses (gains) on
    available-for-sale
    securities included in net income


27



136



14Net unrealized gain (loss) on
    available-for-sale
    securities

$
824


$
(407
)

$
712     For the Years EndedDecember 31,2009


2008


2007Fixed maturities

$
2


$
22


$
(75
)Equity securities


(29
)


(158
)


61Net realized investment loss

$
(27
)

$
(136
)

$
(14
)  107




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years EndedDecember 31,2009


2008


2007Holding Company:Fixed maturities

$



$



$
Short-term investments


301



481



4,360Net investment income  holding company

$
301


$
481


$
4,360Insurance business:Fixed maturities

$
1,040


$
936


$
1,196Dividend income


41



46



61Other, net


24



196



371Total investment income


1,105



1,178



1,628Less: investment expense


162



177



172Net investment income  insurance business

$
943


$
1,001


$
1,456   NOTE 14.
    DERIVATIVE
    INSTRUMENTS    Derivative Instruments Not Designated



Fair Value as of December 31,As Hedging Instruments

Balance Sheet Location

2009


2008(In thousands)Asset Derivatives:Interest rate swap receivable

Other noncurrent assets

$



$
13,984Note Hedge

Other noncurrent assets

$
123,543


$
Liability Derivatives:Cash Conversion Option

Long-term debt

$
128,603


$
Contingent interest features of the Debentures and Notes

Other noncurrent liabilities

$
0


$
0Interest rate swap payable

Other noncurrent liabilities

$



$
13,984   Amount of Gain or (Loss) Recognized In IncomeEffect on Income of

Location of Gain or (Loss)

on DerivativeDerivative Instruments Not Designated

Recognized in Income on

For the Years Ended December 31,As Hedging Instruments

Derivatives

2009


2008(In thousands)Note Hedge

Non-cash convertible debt related expense

$
11,165


$
Cash Conversion Option

Non-cash convertible debt related expense


(4,172
)


Contingent interest features of the Debentures and Notes

Non-cash convertible debt related expense






Interest rate swap

Non-cash convertible debt related expense






Effect on income of derivative instruments not designated as
    hedging instruments



$
6,993


$
   Cash
    Conversion Option, Note Hedge and Contingent Interest features
    related to the 3.25% Cash Convertible Senior Notes
   108




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Contingent
    Interest feature of the 1.00% Senior Convertible
    Debentures
    Interest
    Rate Swaps
      NOTE 15.
    SUPPLEMENTARY
    FINANCIAL INFORMATION  Revenues
    and Unbilled Service Receivables
    For the Years Ended December 31,2009


2008


2007Waste and service revenues unrelated to project debt

$
840,352


$
836,115


$
764,560Revenue earned explicitly to service project debt-principal


56,986



72,229



69,163Revenue earned explicitly to service project debt-interest


22,266



26,183



30,673Total waste and service revenues

$
919,604


$
934,527


$
864,396      109




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    Operating Expenses
    For the Years Ended December 31,2009


2008


2007Construction costs

$
26,707


$
50,611


$
55,675Insurance subsidiary operating expenses(1)


21,258



12,641



10,699Insurance recoveries


(276
)


(3,934
)


(1,909
)Loss on the retirement of fixed assets


1,040



7,475



1,940Foreign exchange (gain) loss


(9
)


1,899



(1,719
)Other


(752
)


(1,991
)


(4,047
)Total other operating expenses

$
47,968


$
66,701


$
60,639   (1)
    Insurance subsidiary operating expenses are primarily comprised
    of increased incurred but not reported loss reserves, loss
    adjustment expenses and policy acquisition costs.  Semass
    Fire
      Insurance RecoveriesRecorded


Cash Proceeds ReceivedFor the Years Ended December 31,2008


2007


2008


2007Repair and reconstruction costs (Insurance recoveries, net of
    write-down of assets)

$
8.3


$
17.3


$
16.2


$
9.4Clean-up
    costs (reduction to Plant operating expenses)

$



$
2.7


$



$
2.7Business interruption losses (reduction to Plant operating
    expenses)

$
5.2


$
2.0


$
7.2


$
   Non-cash
    convertible debt related expense
    For the Years Ended December 31,2009


2008


2007Debt discount accretion related to the Debentures

$
19,327


$
17,979


$
15,377Debt discount accretion related to the Notes


11,956







Fair value changes related to the Note Hedge


(11,165
)






Fair value changes related to the Cash Conversion Option


4,172







Total non-cash convertible debt related expense

$
24,290


$
17,979


$
15,377  110




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Selected
    Supplementary Balance Sheet Information
    As of December 31,2009


2008Interest rate swap (Note 14)

$



$
13,984Contract acquisition costs


13,762



10,351Reinsurance recoverable on unpaid losses (Note 1)


12,325



9,155Deferred financing costs


17,737



10,191Note Hedge (Note 11)


123,543



Spare parts


16,490



16,631Other noncurrent receivables


32,705



21,121Restricted funds for pre-petition tax liabilities (Note 1)


20,243



20,419Prepaid expenses


58,745



27,655Other


10,816



10,037Total Other Noncurrent Assets

$
306,366


$
139,544Interest payable

$
15,783


$
16,328Deferred income taxes






17,752Payroll and payroll taxes


37,758



33,840Accrued liabilities to client communities


35,836



46,245Operating expenses


86,011



68,420Other


42,333



32,461Total Accrued Expenses and Other Current Liabilities

$
217,721


$
215,046Deferred revenue

$
3,681


$
4,345Interest rate swap (Note 14)






13,984Benefit obligations (Note 17)


16,014



35,110Asset retirement obligations (Note 1)


26,076



25,911Tax liabilities for uncertain tax positions (Note 16)


32,991



33,965Insurance loss and loss adjustment reserves (Note 1)


34,692



29,362Other


28,306



23,204Total Other Noncurrent Liabilities

$
141,760


$
165,881   NOTE 16.
    INCOME
    TAXES      For the Years Ended December 31,2009


2008


2007Current:Federal

$
(1,221
)

$
(1,445
)

$
3,373State


10,204



17,189



15,186Foreign


8,935



5,657



6,612Total current


17,918



21,401



25,171Deferred:Federal


18,789



67,282



3,411State


14,303



(3,998
)


(4,213
)Foreign


(966
)


(124
)


114Total deferred


32,126



63,160



(688
)Total income tax expense

$
50,044


$
84,561


$
24,483  111




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years Ended December 31,2009


2008


2007Domestic

$
116,486


$
179,617


$
110,513Foreign


20,950



17,282



22,123Total

$
137,436


$
196,899


$
132,636         For the Years Ended December 31,2009


2008


2007Aggregate benefit

$
2,954


$
3,257


$
4,433Affect on diluted EPS

$
0.02


$
0.02


$
0.03     For the Years Ended December 31,2009


2008


2007Income tax expense at the federal statutory rate

$
48,103


$
68,915


$
46,423State and other tax expense


16,818



9,926



7,797Change in valuation allowance


(4,780
)


10,610



(34,968
)Grantor trust income(loss)


896



(104,443
)


5,580Subpart F income and foreign dividends


2,204



1,491



90Taxes on foreign earnings


526



(524
)


(1,132
)Production tax credits


(13,389
)


(8,529
)


(4,525
)Expiration of tax attributes










5,977Liability for uncertain tax positions


(1,361
)


107,156



898Other, net


1,027



(41
)


(1,657
)Total income tax expense

$
50,044


$
84,561


$
24,483  112




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amount ofCarryforwardExpiring2010

$
2011


3,3302012


38,2552019


33,6352022


26,9312023


108,3312024


2122025


2032026


2602027


3912028


333,372$
544,920
         As of December 31,2009


2008Deferred Tax Assets:Loss reserve discounting

$
1,082


$
(1,568
)Capital loss carryforward


90



24,149Net operating loss carryforwards


97,337



109,989Accrued expenses


19,294



30,601Tax basis in bond and other costs


21,470



16,725Deferred tax assets attributable to pass-through entities


9,869



9,869Other


866



5,535AMT and other credit carryforwards


47,462



32,750Total gross deferred tax asset


197,470



228,050Less: valuation allowance


(20,461
)


(44,089
)Total deferred tax asset


177,009



183,961Deferred Tax Liabilities:Unbilled accounts receivable


33,833



5,713Property, plant and equipment


486,414



465,027Intangible assets


87,802



68,593Deferred tax liabilities attributable to pass-through entities


57,996



93,346Capitalized interest


52,566



43,953Prepaid expenses


13,281



11,218Other, net


6,729



7,782Total gross deferred tax liability


738,621



695,632Net deferred tax liability

$
(561,612
)

$
(511,671
)  113




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Balance as of January 1, 2007

$
24,483Additions based on tax positions related to the current year


500Additions for tax positions of prior years


398Reductions for tax positions of prior years


Settlements


Balance at December 31, 2007

$
25,381Additions based on tax positions related to the current year


109,956Additions for tax positions of prior years


717Reductions for lapse in applicable statute of limitations


(280
)Reductions for tax positions of prior years


(3,237
)Balance at December 31, 2008

$
132,537Additions based on tax positions related to the current year

$
Additions for tax positions of prior years


976Reductions for lapse in applicable statute of limitations


(2,337
)Reductions for tax positions of prior years


Balance at December 31, 2009

$
131,176        114




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              NOTE 17.
    EMPLOYEE
    BENEFIT PLANS    Defined
    Contribution Plans
   115




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pension
    and Postretirement Benefit Obligations
    Assumptions
      Net Gain (Loss)

Net Gain (Loss),Discount Rate

Recognized in AOCI

Net of Tax, Recognized in AOCI(dollars in millions)Year Ended December 31, 2009


6.00
%

$
14.6


$
8.8Year Ended December 31, 2008


6.25
%

$
(20.0
)

$
(13.2
)Year Ended December 31, 2007


6.50
%

$
14.5


$
9.4     One-Percentage

One-PercentagePoint Increase

Point DecreaseEffect on total service and interest cost components

$
28


$
(25
)Effect on postretirement benefit obligation

$
466


$
(411
)  116




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Obligation and Funded Status
    Pension Benefits

Other BenefitsFor the Year

For the Year

For the Year

For the YearEnded

Ended

Ended

EndedDecember 31,

December 31,

December 31,

December 31,2009

2008

2009

2008Change in benefit obligation:Benefit obligation at beginning of year

$
77,352


$
72,895


$
8,161


$
8,810Service cost














Interest cost


4,786



4,705



490



549Amendments


(11,066
)


663







Actuarial loss (gain)


1,532



541



403



(143
)Benefits paid


(1,371
)


(1,452
)


(809
)


(1,055
)Benefit obligation at end of year

$
71,233


$
77,352


$
8,245


$
8,161Change in plan assets:Plan assets at fair value at beginning of year

$
50,756


$
61,639


$



$
Actual return on plan assets


9,641



(13,596
)






Contributions


5,226



4,165



809



1,055Benefits paid


(1,371
)


(1,452
)


(809
)


(1,055
)Plan assets at fair value at end of year

$
64,252


$
50,756


$



$
Reconciliation of accrued benefit liability and net amount
    recognized:Funded status of the plan

$
(6,981
)

$
(26,596
)

$
(8,245
)

$
(8,161
)Unrecognized net gain














Net amount recognized

$
(6,981
)

$
(26,596
)

$
(8,245
)

$
(8,161
)Accumulated other comprehensive (income) loss recognized:Net actuarial loss (gain)

$
634


$
4,681


$
(1,807
)

$
(2,360
)Net prior service (credit) cost


(10,478
)


663







Total as of December 31, 2009

$
(9,844
)

$
5,344


$
(1,807
)

$
(2,360
)Weighted average assumptions used to determine net periodic
    benefit expense for years ending December 31:Discount rate


6.25
%


6.50
%


6.25
%


6.50
%Expected return on plan assets


7.50
%


7.50
%


N/A



N/ARate of compensation increase


4.00
%


4.00
%


N/A



N/AWeighted average assumptions used to determine projected
    benefit obligations as of December 31:Discount rate


6.00
%


6.25
%


6.00
%


6.25
%Rate of compensation increase


N/A



4.00
%


N/A



N/A       As of December 31,2010


2011


2012


2013


2014


2015 - 2019Pension Benefits

$
1,715


$
1,988


$
2,611


$
2,923


$
3,059


$
17,723Other Benefits (Net of Medicare Part D Subsidy)

$
667


$
695


$
700


$
715


$
725


$
2,992Attributable to Medicare Part D Subsidy

$
(37
)

$
(38
)

$
(40
)

$
(40
)

$
(41
)

$
(166
)  117




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pension Benefits


Other BenefitsFor the Year


For the Year


For the Year


For the YearEnded


Ended


Ended


EndedDecember 31,


December 31,


December 31,


December 31,2009


2008


2009


2008Components of Net Periodic Benefit Cost:Service cost

$



$



$



$
Interest cost


4,786



4,705



490



549Expected return on plan assets


(3,900
)


(4,728
)






Amortization of net prior service cost


76











Amortization of net actuarial gain


(184
)


(524
)


(150
)


(154
)Net periodic benefit cost


778



(547
)


340



395Settlement cost


21



65







Final net periodic benefit cost

$
799


$
(482
)

$
340


$
395   Plan Assets
    As of December 31,2009

2008Total Equities


61
%


45
%Total Debt Securities


36
%


49
%Other


3
%


6
%Total


100
%


100
%
     Total Equities


40  75
%Total Debt Securities


20  60
%Other


0  10
%
    118




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Type of Fund

Types of Investments

Valuation TechniqueU.S. Stock 
    Funds

Funds comprised of domestic equity securities.

Securities are typically priced using the closing price from the
    applicable exchange, such as the NYSE, NASDAQ, etc.U.S. Bond 
    Funds

Funds comprised of domestic fixed income securities.

Securities are priced by a third-party evaluation service using
    inputs such as benchmark yields, reported trades, broker/dealer
    quotes, issuer spreads.International 
    Stock Funds

Funds comprised of international equity securities.

Securities are priced using the closing price from the local
    international stock exchange, such as the International Stock
    Index.Real Estate 
    Funds

Comprised of real estate investments either directly owned or
    through partnership interests and mortgage and other loans on
    income producing real estate.

The fair value of real estate properties is determined quarterly
    through an independent appraisal process  utilizing traditional
    real estate valuation methodologies.Short-Term 
    Funds

Portfolios comprised of short-term securities.

Securities are valued initially at cost and thereafter adjusted
    for amortization of any discount or premium, i.e. amortized
    cost, which approximates fair value.     Fair Value Measurements as of December 31, 2009Quoted MarketPrices in Active





SignificantMarkets for


Significant Other


UnobservableIdentical Assets


Observable Inputs


InputsTotal


(Level 1)


(Level 2)


(Level 3)Equity securities:U.S.
    companies(a)

$
32,226


$



$
32,226


$
International
    companies(b)


6,859







6,859



U.S.
    Bonds(c)


23,179







23,179



Real
    estate(d)


1,736







1,736



Short-term securities


252







252



Total pension plan assets, at fair value

$
64,252


$



$
64,252


$
   (a)
    
    Approximately 50% of the pension plan assets are in U.S. Stock
    Funds held in trusts, which are comprised of a well diversified
    portfolio of U.S. large-cap and mid-cap companies.(b)
    
    Approximately 11% of the pension plan assets are in
    International Equity Funds held in trusts, of which
    approximately 55% is invested in equity securities of foreign
    companies primarily located in the United Kingdom and Europe.
    The remaining 45% is invested in equity securities of foreign
    companies primarily in growth markets located in the United
    Kingdom and Europe or emerging markets in Asia and Latin America.(c)
    
    Approximately 36% of the pension plan assets are in U.S. Bond
    Funds held in trusts, which are primarily invested in U.S.
    Government obligations, U.S. Agency securities and corporate
    debt securities with an investment grade of A or better.(d)
    
    Approximately 3% of the pension plan assets are in Real Estate
    Funds held in trusts, which are comprised primarily of real
    estate investments either directly owned or through partnership
    interests and mortgage and other loans on income producing real
    estate. 119




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 18.
    STOCK-BASED
    AWARD PLANS  Stock-Based
    Compensation
        Stock-Based
    Award Plans
      Restricted
    Stock Awards
     120




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          As of December 31,2009


2008


2007Weighted-





Weighted-





Weighted-Average





Average





AverageNumber of


Grant Date


Number of


Grant Date


Number of


Grant DateShares


Fair Value


Shares


Fair Value


Shares


Fair ValueNonvested at the beginning of the year


857,246


$
23.61



812,826


$
18.77



935,533


$
13.85Granted


742,003



16.59



494,105



26.37



393,495



22.35Vested


(446,866
)


21.86



(428,656
)


17.64



(491,508
)


12.43Forfeited


(22,016
)


22.05



(21,029
)


23.17



(24,694
)


16.91Nonvested at the end of the year


1,130,367


$
19.72



857,246


$
23.61



812,826


$
18.77     Stock
    Options
    Stock

Exercise

Risk-Free

Dividend

Volatility

ExpectedGrant Date

Options

Price

Interest Rate

Yield

Expected(A)

Life(B)February 21, 2008


200,000


$
26.26



3.4
%


0
%


28
%

6.5 yearsMarch 31, 2008


50,000


$
27.50



3.0
%


0
%


31
%

6.5 years   (A)
    
    Expected volatility is based on implied volatility.(B)
    
    Simplified method per SAB 107 and 110. 121




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     As of December 31,2009


2008


2007Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseShares


Price


Shares


Price


Shares


Price1995 Stock Option PlanOutstanding at the beginning of the year


108,426


$
3.86



108,426


$
3.86



178,426


$
5.11Granted






















Exercised


(38,425
)


5.31











(70,000
)


7.06Forfeited






















Outstanding at the end of the year


70,001


$
3.06



108,426


$
3.86



108,426


$
3.86Options exercisable at year end


70,001


$
3.06



108,426


$
3.86



108,426


$
3.86Options available for future grant






















2004 Stock Option PlanOutstanding at the beginning of the year


2,769,943


$
18.76



2,553,443


$
17.96



851,238


$
8.87Granted










250,000



26.51



1,805,000



22.14Exercised


(38,121
)


9.34



(21,500
)


12.18



(42,795
)


7.43Expired


(6,214
)


22.02















Forfeited


(45,000
)


22.02



(12,000
)


22.02



(60,000
)


22.02Outstanding at the end of the year


2,680,608


$
18.83



2,769,943


$
18.76



2,553,443


$
17.96Options exercisable at year end


1,475,613


$
15.54



1,126,543


$
12.87



500,617


$
9.24Options available for future grant


6,109,627







6,851,630







1,295,735     WeightedAverageOptions Outstanding

Remaining

Options ExercisableNumber of

Weighted Average

Contractual Life

Number of

Weighted AverageExercise Price Range

Shares

Exercise Price

(Years)

Shares

Exercise Price$1.45  $5.31


70,001


$
3.06



3.46



70,001


$
3.06$7.43


612,484



7.43



4.80



612,484



7.43$12.90


93,338



12.90



5.70



93,338



12.90$20.35  $22.02


1,674,786



21.97



7.20



699,600



21.80$24.80  $28.34


300,000



26.46



8.50



70,191



26.422,750,609











1,545,614   in-the-money
   122




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##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 19.
    ACCUMULATED
    OTHER COMPREHENSIVE INCOME (LOSS)    As of December 31,2009


2008Foreign currency translation

$
659


$
(5,233
)Minimum pension liability


(587
)


(765
)Pension and other postretirement plan unrecognized net actuarial
    gain (loss)


6,632



(2,122
)Net unrealized gain (loss) on
    available-for-sale
    securities


739



(85
)Accumulated other comprehensive income (loss)

$
7,443


$
(8,205
)   NOTE 20.
    RELATED-PARTY
    TRANSACTIONS        NOTE 21.
    COMMITMENTS
    AND CONTINGENCIES    Environmental
    Matters
    and/or
 123




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or and/or and/or
  Other
    Commitments
    Commitments Expiring by PeriodLess Than


More ThanTotal


One Year


One YearLetters of credit

$
278,191


$
6,550


$
271,641Surety bonds


111,032







111,032Total other commitments  net

$
389,223


$
6,550


$
382,673           
    holders may require us to repurchase their Debentures on
    February 1, 2012, February 1, 2017 and
    February 1, 2022;
    holders may require us to repurchase their Debentures, if a
    fundamental change occurs; and
    holders may exercise their conversion rights upon the occurrence
    of certain events, which would require us to pay the conversion
    settlement amount in cash
    and/or our
    common stock. 124




---



##### Table of Contents



COVANTA
    HOLDING CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Concluded)
     
    holders may require us to repurchase their Notes, if a
    fundamental change occurs; and
    holders may exercise their conversion rights upon the occurrence
    of certain events, which would require us to pay the conversion
    settlement amount in cash.      NOTE 22.
    QUARTERLY
    DATA (UNAUDITED)    Calendar Quarter EndedMarch 31,


June 30,


September 30,


December 31,Fiscal Quarter

2009


2008


2009


2008


2009


2008


2009


2008Operating revenue

$
358,760


$
388,766


$
375,786


$
422,996


$
408,709


$
438,671


$
407,212


$
413,820Operating income


3,192



30,765



61,332



76,529



70,979



88,083



60,332



60,588Net (loss) income attributable to Covanta Holding Corporation


(651
)


12,263



33,167



42,299



40,852



47,099



28,277



27,299Earnings per share:Basic






0.08



0.22



0.28



0.27



0.31



0.18



0.18Diluted






0.08



0.21



0.27



0.26



0.30



0.18



0.18   NOTE 23.
    SUBSEQUENT
    EVENTS     125




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##### Table of Contents



Schedule II 
    Valuation and Qualifying Accounts
    Receivables Valuation and Qualifying Accounts  AdditionsBalance at


Charged to


Charged to





Balance atBeginning


Costs and


Other





End ofof Period


Expense


Accounts


Deductions


Period(In thousands)For the year ended December 31, 2009Allowances deducted in the balance sheet from the assets to
    which they apply:Doubtful receivables  current

$
3,437


$
2,240



$         


$
2,699


$
2,978Doubtful receivables  noncurrent


307



9







30



286Total

$
3,744


$
2,249



$         


$
2,729


$
3,264For the year ended December 31, 2008Allowances deducted in the balance sheet from the assets to
    which they apply:Doubtful receivables  current

$
4,353


$
1,821



$         


$
2,737


$
3,437Doubtful receivables  noncurrent


409



18







120



307Total

$
4,762


$
1,839



$         


$
2,857


$
3,744For the year ended December 31, 2007Allowances deducted in the balance sheet from the assets to
    which they apply:Doubtful receivables  current

$
4,469


$
1,270



$         19


$
1,405


$
4,353Doubtful receivables  noncurrent


382



(80
)






(107
)


409Total

$
4,851


$
1,190



$         19


$
1,298


$
4,762   Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Disclosure Controls and Procedures.
  Rule 13a-15(b) 15d-15(b)
       126




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
     127




---



##### Table of Contents



Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f).
    Internal Control  Integrated Framework. Internal
    Control  Integrated Framework
    Form 10-K
     President and Chief Executive Officer
     Executive Vice President and Chief
 Financial Officer
   128




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                  
    129




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##### Table of Contents



Item 9B.
    OTHER
    INFORMATION    PART III  Item 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Item 1.
    Business  Executive Officers Form 10-K. www.covantaholding.com
  Item 11.
    EXECUTIVE
    COMPENSATION  Form 10-K
  Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K
  Equity
    Compensation Plans
    Weighted Average


Number of Securities RemainingNumber of Securities to


Exercise Price of


Available for Future Issuancebe Issued Upon Exercise


Outstanding


Under Equity Compensationof Outstanding Options,


Options, Warrants


Plans (Excluding SecuritiesWarrants and Rights


and Rights


Reflected in Column A)Plan Category

(A)


(B)


(C)Equity Compensation Plans Approved By Security Holders


2,750,609


$
18.43



6,331,961
(1)Equity Compensation Plans Not Approved By Security Holders


N/A



N/A



N/ATOTAL


2,750,609


$
18.43



6,331,961     (1)
    
    Of the 6,331,961 shares that remain available for future
    issuance, 6,109,627 shares are currently reserved for
    issuance under the equity compensation plans.  Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Form 10-K
 130




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##### Table of Contents



Item 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K
  PART IV  Item 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Consolidated Financial Statements of Covanta Holding
    Corporation:
    Consolidated Statements of Income for the years ended
    December 31, 2009, 2008 and 2007Consolidated Balance Sheets as of December 31, 2009 and 2008Consolidated Statements of Cash Flows for the years ended
    December 31, 2009, 2008 and 2007Consolidated Statements of Equity for the years ended
    December 31, 2009, 2008 and 2007Notes to Consolidated Financial Statements, for the years ended
    December 31, 2009, 2008 and 2007Report of Ernst & Young LLP, Independent Auditors, on
    the consolidated financial statements of Covanta Holding
    Corporation for the years ended December 31, 2009, 2008 and
    2007   Financial Statement Schedules of Covanta Holding
    Corporation:
      Exhibits:
  EXHIBIT INDEX
  Exhibit No.

DescriptionPlan of Acquisition, Reorganization, Arrangement, Liquidation
    or Succession.2
.1

Share Purchase Agreement by and among Covanta Holding
    Corporation and Veolia Environmental Services North America
    Corp. (incorporated herein by reference to Exhibit 2.1 of
    Covanta Holding Corporations Current Report on
    Form 8-K
    dated July 3, 2009 and filed with the SEC on July 6,
    2009).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 May 7, 2009 (incorporated herein by reference to
    Exhibit 3.1(ii) of Covanta Holding Corporations
    Current Report on
    Form 8-K
    dated March 31, 2009 filed with the SEC on April 1,
    2009).Instruments Defining Rights of Security Holders, Including
    Indentures.4
.1

Specimen certificate representing shares of Covanta Holding
    Corporations common stock (incorporated herein by
    reference to Exhibit 4.1 of Covanta Holding
    Corporations Amendment No. 3 to Registration
    Statement on
    Form S-1
    filed with the SEC on December 19, 2005).4
.2

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
.3

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
.4

Form of Warrant Offering Agreement between Wells Fargo Bank,
    National Association and Covanta Holding Corporation
    (incorporated herein by reference to Exhibit 4.11 of
    Covanta Holding Corporations Amendment No. 3 to
    Registration Statement on
    Form S-1
    filed with the SEC on December 19, 2005). 131




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Exhibit No.

Description4
.5

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
.6

First Supplemental Indenture dated as of January 31, 2007
    between Covanta Holding Corporation and Wells Fargo Bank,
    National Association, as trustee (including the Form of Global
    Debenture) (incorporated herein by reference to Exhibit 4.2
    of Covanta Holding Corporations Current Report on
    Form 8-K
    dated January 31, 2007 and filed with the SEC on
    February 6, 2007).4
.7

Indenture dated May 22, 2009 by and among Covanta Holding
    Corporation and Wells Fargo Bank, National Association
    (incorporated herein by reference to Exhibit 4.1 of Covanta
    Holding Corporations Current Report on
    Form 8-K
    dated May 22, 2009 and filed with the SEC on May 22,
    2009).4
.8

First Supplemental Indenture dated as of June 10, 2009
    between Covanta Holding Corporation and Wells Fargo Bank,
    National Association (incorporated herein by reference to
    Exhibit 4.1 of Covanta Holding Corporations Current
    Report on
    Form 8-K
    dated June 15, 2009 and filed with the SEC on June 15,
    2009).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

Corporate Services and Expenses Reimbursement Agreement, dated
    as of March 10, 2004, by and between Covanta Holding
    Corporation and Covanta Energy Corporation (incorporated herein
    by reference to Exhibit 10.26 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
.3

Management Services and Reimbursement Agreement, dated
    March 10, 2004, among Covanta Energy Corporation, Covanta
    Energy Group, Inc., Covanta Projects, Inc., Covanta Power
    International Holdings, Inc., and certain Subsidiaries listed
    therein (incorporated herein by reference to Exhibit 10.30
    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
.4*

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
.5*

Covanta Holding Corporation Equity Award Plan for Directors, as
    amended (incorporated herein by reference to Exhibit B of
    Covanta Holding Corporations 2008 Definitive Proxy
    Statement on Form DEF 14A filed with the SEC on
    April 1, 2008).10
.6*

Covanta Holding Corporation Equity Award Plan for Employees and
    Officers, as amended by the Board of Directors through
    February 26, 2009 (incorporated herein by reference to
    Exhibit 10.1 of Covanta Holding Corporations Current
    Report on
    Form 8-K
    dated May 12, 2009 and filed with the SEC on May 12,
    2009).10
.7*

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
.8*

Form of Covanta Holding Corporation Restricted Stock Award
    Agreement (incorporated herein by reference to Exhibit 4.4
    of Covanta Holding Corporations Registration Statement on
    Form S-8
    filed with the SEC on May 7, 2008).10
.9*

Covanta Holding Corporation 1995 Stock and Incentive Plan (as
    amended effective December 12, 2000 and as further amended
    effective July 24, 2002) (incorporated herein by reference
    to Appendix A to Covanta Holding Corporations Proxy
    Statement filed with the SEC on June 24, 2002).10
.10*

Employment Agreement, dated October 5, 2004, by and between
    Anthony J. Orlando and Covanta Projects, Inc., Covanta Energy
    Corporation and Covanta Holding Corporation (incorporated herein
    by reference to Exhibit 10.1 of Covanta Holding
    Corporations Current Report on
    Form 8-K
    dated October 5, 2004 and filed with the SEC on
    October 7, 2004).10
.11*

Employment Agreement, dated October 5, 2004, by and between
    Timothy J. Simpson and Covanta Projects, Inc., Covanta Energy
    Corporation and Covanta Holding Corporation (incorporated herein
    by reference to Exhibit 10.3 of Covanta Holding
    Corporations Current Report on
    Form 8-K
    dated October 5, 2004 filed with the SEC on October 7,
    2004). 132




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##### Table of Contents



Exhibit No.

Description10
.12*

Form of Covanta Holding Corporation Amendment to Stock Option
    Agreement for Employees and Officers (incorporated herein by
    reference to Exhibit 10.1 of Covanta Holding
    Corporations Current Report on
    Form 8-K
    dated March 18, 2005 and filed with the SEC on
    March 24, 2005).10
.13

Summary Description of Covanta Holding Corporation Cash Bonus
    Program, dated February 2008 (incorporated herein by reference
    to Exhibit 10.14 of Covanta Holding Corporations
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007).10
.14

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
.15*

Employment Agreement, dated October 5, 2004, by and between
    John Klett and Covanta Energy Corporation (incorporated herein
    by reference to Exhibit 10.7 of Covanta Energy
    Corporations Current Report on
    Form 8-K
    dated October 5, 2004 and filed with the SEC on
    October 7, 2004)10
.16*

Employment Agreement, dated October 5, 2004, by and between
    Seth Myones and Covanta Energy Corporation (incorporated herein
    by reference to Exhibit 10.9 of Covanta Energy
    Corporations Current Report on
    Form 8-K
    dated October 5, 2004 and filed with the SEC on
    October 7, 2004).10
.17*

Form of Amendment to Employment Agreement witha. Anthony J. Orlando, President
    and Chief Executive Officer;b. Mark A. Pytosh, Executive Vice
    President and Chief Financial Officer;c. John M. Klett, Executive Vice
    President and Chief Operating Officer;d. Timothy J. Simpson, Executive
    Vice President, General Counsel and Secretary;e. Seth Myones, President,
    Americas Covanta Energyand certain subsidiaries, dated
    October 22, 2008, and effective as of January 1, 
         2009 (incorporated herein by
    reference to Exhibit 10.1 of Covanta Holding
    Corporations 
         Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2008 and filed with the
    
         SEC on October 22, 2008).10
.18

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
.19

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
.20

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
.21

Latent Deficiency Claims Administration Procedures Agreement
    (Exhibit B to the 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 10.3 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
.22*

Form of Covanta Holding Corporation Restricted Stock Award
    Agreement for Directors (incorporated herein by reference to
    Exhibit 10.1 of Covanta Holding Corporations Current
    Report on
    Form 8-K
    dated May 31, 2006 and filed with the SEC on June 2,
    2006). 133




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##### Table of Contents



Exhibit No.

Description10
.23*

Employment Agreement, dated as of August 17, 2006, among
    Covanta Holding Corporation, Covanta Energy Corporation and Mark
    A. Pytosh (incorporated herein by reference to Exhibit 10.1
    of Covanta Holding Corporations Current Report on
    Form 8-K
    dated August 17, 2006 and filed with the SEC on
    August 17, 2006).10
.24

Credit and Guaranty Agreement, dated as of February 9,
    2007, among Covanta Energy Corporation, Covanta Holding
    Corporation, certain subsidiaries of Covanta Energy Corporation,
    as guarantors, the lenders party thereto, JPMorgan Chase Bank,
    N.A., as Administrative Agent, Collateral Agent, Revolving
    Issuing Bank and a Funded LC Issuing Bank, UBS AG, Stamford
    Branch, as a Funded LC Issuing Bank, Lehman Commercial Paper
    Inc. and Merrill Lynch, Pierce, Fenner & Smith
    Incorporated, as Syndication Agents, and Bank of America, N.A.
    and Barclays Bank PLC, as Documentation Agents (incorporated
    herein by reference to Exhibit 10.1 of Covanta Holding
    Corporations Current Report on
    Form 8-K
    dated February 9, 2007 and filed with the SEC on
    February 15, 2007).10
.25

Pledge and Security Agreement, dated as of February 9,
    2007, between each of Covanta Energy Corporation and the other
    grantors party thereto, and JPMorgan Chase Bank, N.A., as
    Collateral Agent (incorporated herein by reference to
    Exhibit 10.2 of Covanta Holding Corporations Current
    Report on
    Form 8-K
    dated February 9, 2007 and filed with the SEC on
    February 15, 2007).10
.26

Pledge Agreement, dated as of February 9, 2007, between
    Covanta Holding Corporation and JPMorgan Chase Bank, N.A., as
    Collateral Agent (incorporated herein by reference to
    Exhibit 10.3 of Covanta Holding Corporations Current
    Report on
    Form 8-K
    dated February 9, 2007 and filed with the SEC on
    February 15, 2007).10
.27

Intercompany Subordination Agreement, dated as of
    February 9, 2007, among Covanta Energy Corporation, Covanta
    Holding Corporation, certain subsidiaries of Covanta Energy
    Corporation, as Guarantor Subsidiaries, certain other
    subsidiaries of Covanta Energy Company, as Excluded Subsidiaries
    or Unrestricted Subsidiaries, and JPMorgan Chase Bank, N.A., as
    Administrative Agent (incorporated herein by reference to
    Exhibit 10.4 of Covanta Holding Corporations Current
    Report on
    Form 8-K
    dated February 9, 2007 and filed with the SEC on
    February 15, 2007).10
.28

Form of Covanta Holding Corporation Indemnification Agreement,
    entered into with each of the following: David M. Barse, Ronald
    J. Broglio, Peter C.B. Bynoe, Linda J. Fisher, Joseph M.
    Holsten, Richard L. Huber, Anthony J. Orlando, William C. Pate,
    Robert S. Silberman, Jean Smith, Clayton Yeutter, Samuel Zell,
    Mark A. Pytosh, Timothy J. Simpson, Thomas E. Bucks, John M.
    Klett and Seth Myones (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
.29

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
.30

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
.31

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
.32

Purchase Agreement dated May 18, 2009 by and among Covanta
    Holding Corporation and Barclays Capital Inc., Citigroup Global
    Markets Inc. and J.P. Morgan Securities Inc., as
    representatives of the several initial purchasers named therein
    (incorporated herein by reference to Exhibit 10.1 of
    Covanta Holding Corporations Current Report on
    Form 8-K
    dated May 22, 2009 and filed with the SEC on May 22,
    2009).10
.33

Form of Confirmation of Cash Convertible Note Hedge Transaction
    (incorporated herein by reference to Exhibit 10.1 of
    Covanta Holding Corporations Current Report on
    Form 8-K
    dated May 22, 2009 and filed with the SEC on May 22,
    2009).10
.34

Form of Confirmation of Warrant (incorporated herein by
    reference to Exhibit 10.1 of Covanta Holding
    Corporations Current Report on
    Form 8-K
    dated May 22, 2009 and filed with the SEC on May 22,
    2009).12
.1

Computation of Ratio of Earnings to Fixed Charges.21
.1

List of Subsidiaries.23
.1

Consent of Independent Registered Public Accounting Firm of
    Covanta Holding Corporation and Subsidiaries: Ernst &
    Young LLP.31
.1

Certification of the Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (pursuant to
    Rule 13a-14(a)
    and
    Rule 15d-14(a)
    of the Securities Exchange Act, as amended). 134




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Exhibit No.

Description31
.2

Certification of the Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (pursuant to
    Rule 13a-14(a)
    and
    Rule 15d-14(a)
    of the Securities Exchange Act, as amended).32
.1

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 from the Chief Executive Officer and the Chief Financial
    Officer of Covanta Holding Corporation.     
    
    Not filed herewith, but incorporated herein by reference.*
    
    Management contract or compensatory plan or arrangement.  Regulation S-K,
     135




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OTHER
  SIGNATURES
       By:
    /s/  Anthony
    J. Orlando   President and Chief Executive Officer
      Name

Title

Date/s/  Anthony
    J. OrlandoAnthony
    J. Orlando

President and Chief Executive Officer and Director 
    (Principal Executive Officer)

February 22, 2010/s/  Mark
    A. PytoshMark
    A. Pytosh

Executive Vice President and Chief Financial Officer 
    (Principal Financial Officer)

February 22, 2010/s/  Thomas
    E. BucksThomas
    E. Bucks

Vice President and Chief Accounting Officer 
    (Principal Accounting Officer)

February 22, 2010/s/  Samuel
    ZellSamuel
    Zell

Chairman of the Board

February 22, 2010/s/  David
    M. BarseDavid
    M. Barse

Director

February 22, 2010/s/  Ronald
    J. BroglioRonald
    J. Broglio

Director

February 22, 2010/s/  Peter
    C. B. BynoePeter
    C. B. Bynoe

Director

February 22, 2010/s/  Linda
    J. FisherLinda
    J. Fisher

Director

February 22, 2010/s/  Joseph
    M. HolstenJoseph
    M. Holsten

Director

February 22, 2010/s/  Richard
    L. HuberRichard
    L. Huber

Director

February 22, 2010/s/  William
    C. PateWilliam
    C. Pate

Director

February 22, 2010/s/  Robert
    S. SilbermanRobert
    S. Silberman

Director

February 22, 2010/s/  Jean
    SmithJean
    Smith

Director

February 22, 2010/s/  Clayton
    YeutterClayton
    Yeutter

Director

February 22, 2010  136