HomeMy WebLinkAboutSolid Waste Haul-disposal ServicesELIZABETH A. NEVILLE, RMC, CMC
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southoid, New York 11971
Fax (631) 765-6145
Telephone (631) 765-1800
southoldtown~north fork.net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
August 31,2010
Trinity Transportation Corporation
214 Blydenburgh Road
Islandia, NY 11749
[)ear Sirs:
This office has been informed that the following project has been completed and
your bid bond/check can be released:
Hauling of Construction & Demolition material
Enclosed please find your bid bond dated June 12, 2007. Thank you fo? your bid.
Very truly yours,
Lynda M Rudder
Deputy Town Clerk
Encs.
ELIZABETH A. NEVILLE, RMC, CMC
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southold, New York 11971
Fax (631) 765-6145
Telephone (631) 765-1800
southoldtown.northfork, net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
August 31, 2010
Mark Troiano
Winter Brothers Recycling Corp.
1198 Prospect Avenue
Westbury, NY 11590
Dear Mr Troiano:
This office has been informed that the following project has been completed and
your bid bond/check can be released:
Hauling of Construction & Demolition material
Enclosed please find your bid bond dated March 26, 2009. Thank you for your
bid.
Very truly yours,
Lynda M Rudder
Deputy Town Clerk
Encs.
C AL USE
Post~ge
Postmark
· Complete items 1,2, and 3. Also comp~te
item 4 if Restricted Delivery is desired.
· Print your name and address on the reverse
so that we can return the card to you.
· Attach this card to the back of the mailpiece,
or on the front if space permits.
Article Addressed to:
X h "~.~ rn^gent
[] Addressee
B. Receive~. by(pdt) C. Dafo of Delivery
D. Is del!very addn~ ~iffereflt ~'1 item 1 ? i-1 Yes
If YES, enter delivery addr~s ~below: f'l No
3. Service Type
E~Certifled Mall [] E~mes M~I
[] Registered [] Return Receipt for Memhandlse
[] Insured Mail [] C.O.D,
4. Restricted De[i~ (ExtraFee) [] Yes
7009 0820 0001 7820 5951
PS Form 3811, February 2004 Domestic Retum Receipt 102595-02-M-1540
Postage
Certified Fee
Return Receipt Fee
(Endorsement Required)
Restricted DelivePy Fee
(Endorsement Required)
Total Postage & Fees
· Complete items 1,2, and 3. Also complete
item 4 if Restricted Delivery is desired.
· Print your name-and address on the reveres
so that we can return the card to you.
· Attach this card to the back of the mailpiece,
or on the front if space permits.
1. Article Addmssed to:
2. Article Number
(Transfer from service ~bel)
Agent
Is detive~J address different []
if YES, e~ter delivery address below: i-1 No
[] Registered
[] Insured Mall
[] Express Me]I
[] Return Receipt for Merchandise
[] C.O.D.
4. ResUtcted Delh/e~r~ (Extra Fee) [] Yes
7009 0820 0001 7820 5944
PS Form 3811, February 2004 Domeaac Reezn Receipt
Derek Veenhof
Vice President
TransRiver Marketing Company, L.P.
40 Lane Rd
Fairfield, NJ 07004
Tel 973 882 2445
Fax 973 882 7034
Email dveenhof@covantaenergF corn
oCOVAfiTA
ORIGIiVliL
June 12, 2007
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, NY 11971
Subject: Bid for Solid Waste Haul and Disposal Services
Dear Sir or Madam:
In response to the Town of Southold's Bidder's Solicitation Solid Waste Haul and Disposal
Services (the "Bid), TransRiver Marketing Company, L.P. ("TransRiver"), a subsidiary of
Covanta Energy Corporation ("Covanta"), hereby submits the following proposal.
TransRiver plays a vital role within the Covanta operating entity structure by ensuring the
optimization of merchant waste flows between operating facilities, thus ensuring feedstock for
various energy-from-waste ("EFW") plants at all times while assuring safe, reliable and
environmental sound disposal for our many customers. TransRiver currently manages over
three million tons per year and has annual revenues in excess of $175 million.
TransRiver is interested in negotiating an agreement by which TransRiver would provide
transportation and disposal services to the Town of Southold at the Covanta Delaware Valley
EFW facility located in Chester, PA. TransRiver is interested in negotiating some of the
provisions of the agreement contained in the Bid, including but not limited to, the insurance and
indemnity provisions. TrensRiver's proposal is limited to its terms and is subject to negotiation
and execution of a definitive agreement approved by TransRiver's appropriate organizational
authority. If you have any questions, please contact Robert Balbierz at 732-499-0101 x-238..
Thank you.
Sincerely,
Printed on recycled paper
INFORMATION SCHEDULE C
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
This is idenfifieafion that Travelers Casualty and Surety Company of America
willbe the Surety Company for TransRiver Marketing Company, L.P.
the Bidder, on this project and that the named Surety Company herein provides written
certification that the named Surety Company will provide the Performance Bond, specified in the
Con~'acl Documents~in the event the Bidder enters into an agreement with the Town. The Surety
Company herein certifies that such Company is licensed to do business in the State of New York.
TransRiver Market. lng Company, L.P.
J ' Principal - /~ y
(SEAL) Travelers Casualty and Surety Company of America
Surety Company
Harold Miller Jr., Att~yy-In-Fact
*on the attached Annual Performance Bond form,
Surety Verification
BID (PROPOSAL) FORM
Schedule 5.0.C
48
PERFORMANCE BOND
(Annual Form)
Travelers Casualty and Surer"Ii'Company of America
One Tower Square, Hartford, CT 06183
Bond No.
KNOW ALL MEN BY THESE PRESENTS, that we, , as Principal, and Travelers Casualty and Surety Company
of America, licensed to do business in the State of , as Surety, are held and firmly bound unto __ (Obligee), in
the penal sum of __ Dollars ($ ), lawful money of the United States of America, for the payment of which sum,
well and truly to be made, the Principal and Surety do bind themselves, their heirs, executors, administrators, and
successors and assigns, jointly and severally, firmly by these presents.
THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the above bounden Principal has entered into a certain
written Contract with the above named Obligee, effective the __ day of , , and terminating the day of
, for __ and more fully described in said Contract, a copy of which is attached, which Agreement is made
a part hereof and incorporated herein by reference, except that nothing said therein shall alter, enlarge, expand or
otherwise modify the term of the bond as set out below.
NOW, THEREFORE, if Principal, its executors, administrators, successors and assigns shall promptly and faithfully
perform the Contract, according to the terms, stipulations or conditions thereof, then this obligation shall become null and
void, otherwise to remain in full force and effect. This bond is executed by the Surety and accepted by the Obligee
subject to the following express condition:
Notwithstanding the provisions of the Contract, the term of this bond shall apply from , until , and may be
extended by the Surety by Continuation Certificate. However, neither nonrenewal by the Surety, nor the failure or inability
of the Principal to file a replacement bond in the event of nonrenewal, shall itself constitute a loss to the Obligee
recoverable under this bond or any renewal or continuation thereof. The liability of the Surety under this bond and all
continuation certificates issued in connection therewith shall not be cumulative and shall in no event exceed the amount
as set forth in this bond or in any additions, riders, or endorsements properly issued by the Surety as supplements
thereto.
Sealed with our seals and dated this __ day of , .
Witness
, Principal
Travelers Casualty and Surety Company of America
Witness
Agreed and acknowledged this
day of
By:
, Attorney-in-Fact
Obligee
S-5025 (08-99)
I.-
Z
LU
UJ
.-I
I--
UJ
State of Illi__noi~s
SS:
County of Du Page
On this 14th day of June in the year two thousand seven, before me, Joanne C. Wagner, a
Notary Public in and for said County and State, residing therein, duly commissioned and
sworn, personally appeared Harold Miller Jr., known to me to be the duly authorized Attorney-
in-fact of the Travelers Casualty and Surety Company of America and the same person whose
name is subscribed to the within instrument as the Attorney-in-fact of said Company, and the
said Harold Miller Jr. duly acknowledged to me that he subscribed the name of the Travelers
Casualty and Surety Company of America thereto as Surety and his own name as Attorney-
in-fact.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year in this Certificate first above written.
My Commission Expires
2/5/2011
Notary Public in and for . Wagner
County, State of Du Page, Illinois
JOANNE C WAGNER
NO~TARY "UB4,IC - STATE OF ILLINOIS
TRAVELERS
Farmington Casualty Company St. Paul Guardian Insurance Company
Fidelity and Guaranty Insurance Company St. Paul Mercury Insurance Company
Fidelity and Guaranty Insurance Underwriters, Inc. Travelers Cosualty and Surety Company
Seaboard Surety Company Travelers Casualty and Surety Company of America
St. Paul Fire and Marine Insurance Company United States Fidelity and Guaranty Company
Attorney-In Fact No. 218139 Certificate No. 00~5135~1
KNOW ALL MEN BY THESE PRESENTS: That Seaboard Surely Company is a corporation duly organized under the laws of the State of New York, that St. Paut
Fire and Marine insurance Company, St. Paul Guardian Insurance Company and St. Paul Mercury Insurance Company are corporations duly organized under the laws
of the State of Minnesota, that Farmington Casualty Company, Travelers Casualty and Surety Company. and Travelers Casualty and Surety Company of America are
corporations duly organized under the laws of the State of Connecticut, that United States Fidelity and Guaranty Company is a corporation duly organized under the
laws of the State of Maryland, that Fidelity and Guaranty Insurance Company is a corporation duly organized under the laws of the State of Iowa, and that Fidelity and
Guaranty Insurance Underwriters, Inc. is a corporation duly organized under the laws of the State of Wisconsin (herein collectively called ~he "Companies"), and that
the Companies do hereby make, constitute and appoinl
Sharon A. Sonderman, Harold Miller Jr., Sharon L. Sinople, Karen E. Socha, William T. Krumm, Theresa M. Adams, Jon A. Schroeder,
Arlene M. Filipski, Mark R. Malley, Randall K. Moon Jr., Patricia A. Joseph, Nelson C. Cannon, and Joanne C. Wagner
of the City of Itasca State ol Illinois their true and lawful Attorney(s)-in-Fact,
each in their separate capacity if more than one is named above, to sign, execute, seal and acknowledge any and all bonds, recognizances, conditional undertakings and
other writings obligatory in the nature thereof on behalf of the Companies in their business of guaranteeing the fidelity of persons, guaranteeing the performance of
contracts and executing or guaranteeing bonds and undertakings required or permitted in any actiuns or proceedings allowed by law.
IN WITNESS WHEREOF, the Companies have caused this instrument to be signed and their corporate seals to be hereto affixed, this
day of January 2007
3rd
Farmington Casualty Company
Fidelity and Guaranty Insurance Company
Fidelity and Guaranty Insurance Underwriters, Inc.
Seaboard Surety Company
St. Paul Fire and Marine Insurance Company
St. Paul Guardian Insurance Company
St. Paul Mercury Insurance Company
Travelers Casualty and Surety Company
Travelers Casualty and Surety Company of America
United States Fidelity and Guaranty Company
State of Connecticut By:
City of Hartt~rd
On this the 3rd day of J~u~ 2007 before me personally appeared George W. Thompson. who acknowledged
himself to be the Senior Vice President of Farmington Casualty Company, Fidelity and Guaranty Insurance Company, Fidelity and Guaranty lnsurm~ce Unde~riters.
Inc., Seaboard Surety Company. St, Paul Fire and Marine Insurance Company, St. Paul Guardian insurance Company. St. Paul Mercuu Insurance Company, Travelers
Casuahy and Surety Company, Travelers Casualty and Suret~ Company of America, and United Slates Fidelity and Guaranty Company. md that he. as such. being
authorized so to do, executed the foregoing instrument for the pu~oses therein contained by s~gning on behalf of the curporations by himself as a duly authorized officer.
In Witness Whereof, [ hereunto set my hand and official seal,
Mv Commission expires the 30th day of June 201 I.
Mane C Tetreault, Notary Public
58440-8-06 Printed in U.S.A.
WARNING: THIS POWER OF A~FORNEY IS iNVALID WITHOUT THE RED BORDER
and Guaranty Insurance Company, Fidelity and Guaranty Insurance Underwriters, Inc., Seaboard Surety Company, St. Paul Fire and Marine Insurance Company,
St. Paul Guardian lnsurm~ce Company, St. Paul Mercury Insurance Company, Travelers Casualty and Surety Company, Travelers Casually and Surety Company of
America, and United States Fidelity and Guaranty Company, which resolutions are now in full force and effect, reading as follows:
RESOLVED, Ihat the Chairalan, the President, any Vice Chairman, any Executive Vice President, any Senior Vice President, any Vice President, any Second Vice
President, the Treasurer, any Assistant Treasurer, the Corporate Secretary or any Assistant Secretary may appoint Attorneys-in-Fact and Agents to act for and on behalf'
of the Company and may give such appointee such authority as his or her certificate of authority may prescribe to sign with the Company's natne and seal with the
Company's seal bonds, recognizances, contracts of indemnity, and other writings obligatory in Ihe nature of a bond, recognizance, or conditional undertaking, and any
of said officers or the Board of Directors at any time may remove any such appointee and revoke the power given him or her; and it is
FURTHER RESOLVED, that the Chairman, the President, any Vice Chairman, any Executive Vice President, any Senior Vice President or any Vice President may
delegate all or any part of the foregoing authority to one or more officers or employees of this Company, provided that each such delegation is in writing and a copy
thereof is filed in the office of the Secretary: and it is
FURTHER RESOLVED, that any bond, recognizance, contract of indemnity, or writing obligatory in the nature of a bond, recognizance· or conditional undertaking
shall be valid and binding upon the Company when (a) signed by the President, any Vice Chairman, any Executive Vice President, any Senior Vice President or any Vice
President, any Second Vice President, the Treasurer, any Assistant Treasurer, the Corporate Secretary or any Assistant Secretary and duly attested and sealed with the
Company's seal by a Secretary or Assistant Secretary; or (b) duly executed (under seal, if required) by one or more Attorneys-in Fact and Agents pursuant to the power
prescribed in his or her certificate or their certificates of authority or by one or more Company officers pursuant to a written delegation of authority; and it is
FURTHER RESOLVED, that the signature of each of the following officers: President, any Executive Vice President, any Senior Vice President, any Vice President.
any Assistant Vice President, any Secretary, any Assistam Secretary, and the seal of the Company may be affixed by facsimile to any power of attorney or to any
certificate relating thereto appointing Resident Vice Presidents, Resident Assistant Secretaries or Attorneys-in-Fact for purposes only of executing and attesting bonds
and undertakings and other writings obligatory in the nature thereof, and any such power of attorney or certificate bearing such facsimile signature or facsimile seal shall
be valid and binding upon the Company and any such power so executed and certified by such facsinfile signature and facsimile seal shall be valid and binding on the
Company in the future with respect to any bond or understanding to which it is attached.
I, Kori M. Johanson, the undersigned, Assistant Secretary, of Farmington Casualty Company, Fidelity and Guaranty Insurance Company, Fidelity and Guaranty Insurance
Underwriters, Inc., Seaboard Surety Company, St. Paul Fire and Marine Insurance Company, St. Paul Guardian Insurance Company, St. Paul Mercury Insurance
Company, Travelers Casualt~ and Surety Company, Travelers Casualty and Surety Company of America, and United States Fidelity and Guaranty Company do hereby
certify that the above and foregoing is a tree and correct copy of the Power of Attorney executed by said Companies, which is in full force and effect and has not been
revoked.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed the seals of said Companies this J ~'~ day of ~ ~
· 200~.
To verify the authenticity of this Power of Attorney, call 1 800-421-3880 or contacl us at www.stpaultravelersboed.com. Please refer to the Attorney In Fact number,
the above named individuals and the details of the bond to which the power is attached.
WARNING: THIS POWER OF A~FORNEY IS INVALID WITHOUT THE RED BORDER
SECTION C
TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES
CONTRACTOR BID FORM
1.0 INTENT
The undersigned hereby recognizes that these documents are complementary and are
intended to provide for uniformity in bid evaluations. The formal Agreements resulting
fi:om this Bid Solicitation shall be in a form provided by the Town.
These documents are intended to depict complete Solid Waste Haul-Disposal Services
Agreement and therefore any discrepancies contained in the documents, of the omission
from the documents of express reference to any work which obviously was intended
under the Agreement, shall not excuse or relieve the Bidder from furnishing the same. No
oral statement shall in any manner or degree modify of otherwise affect the terms of the
Agreement. Work or materials described in words which have a well known technical or
trade meaning, shall be interpreted by such meaning.
2.0 GENERAL BID. STATEMENT
TO:
TOWN OF SOUTHOLD
STATE OF NEW YORK
53095 MAIN ROAD
SOUTHOLD, NEW YORK 11971
Gentlemen:
The undersigned Bidder has carefully examined the forms and content of the Bid
Solicitation, including notice to bidders, bid bond, sample operating agreement, performance
bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has
familiarized itself with the sites of work, and hereby proposes to furnish all necessary services,
permits, labor, materials, equipment, vehicles, and tools required to perform and complete the
work in strict accordance with all of the bid documents written by or on behalf of the Town of
Southold for this project.
37
~llae undersigned Bidder agrees to abide by all conditions stated, intended, or implied both
particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by
the Town, and the unit price Bid herein stated.
1. The Undersigned Bidder also agrees as follows:
FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a
satisfactory performance bond, and insurance all within ten (10) calendar days.
SECOND: To begin Solid Waste Haul-Disposal services operations on the
commencement date of any Agreement awarded hereunder, having completed all
necessary prior preparations of operational planning, personnel hiring, equipment
procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure
a smooth and orderly acceptance of these duties.
THIRD: To pay the Town any and all damages it may incur as a result of the
Contractor's failure to 'perform all acts necessary to the execution of the Agreement as
provided in the Bid Solicitation.
It is recognized and agreed that the Town has the unconditional right to utilize the funds
provided by the bid bond posted by the Bidder as a means of obtaining indemnification
or, payment of such damages.
FOURTH:
as follows:
During the performance of this Agreement, the Contractor hereby agrees
ao
The Contractor shall not discriminate against any employee or applicant for
employment because of age, race, creed, color, sex, marital status, national origin,
physical disability, and shall take affnmative action to ensure that they are
afforded equal employment opportunities without discrimination because of age,
race, creed, color, sex, marital status, national origin or physical disability. Such
action shall be taken with reference, but not be limited to: recruitment,
employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or
termination, rates of pay, or other forms of compensation, and selection for
training or retraining, including apprenticeship and on-the-job training.
The Contractor shall comply with the provisions of Sections 290 through 301 of
the Executive Law, Shall furnish all information and reports deemed necessary by
the State Commission for Human Rights under these nondiscrimination clauses
and such sections of the Executive Law, and shall permit access to his books,
records, and accounts by the State Commission for Human Rights, the Attorney
General. and the Industrial Commissioner for purposes of investigation to
ascertain compliance with these nondiscrimination clauses and such sections of
the Executive Law and Civil Rights Law.
This Agreement may be forthwith cancelled, terminated, or suspended, in whole
or in part, by the Town upon the basis of a finding made by the State Commission
38
for Human Rights that the Contractor has not complied with these
nondiscrimination clauses, and the Contractor may be declared ineligible for
future Agreements made by or on behalf of the state or public authority or agency
of the state, until he satisfies to the State Commission for Human Rights that he
has established and is carrying out a program in conformity with the provisions of
these nondiscrimination clauses. Such findings shall be made by the State
Commission for Human Rights after conciliation efforts by the Commission have
failed to achieve compliance with these nondiscrimination clauses and after
verified complaint has been filed with the Commission, notice thereof has been
given to the Contractor, and an opportunity has been afforded to him to be heard
publicly before three members of the Commission. Such sanctions may be
imposed and remedies invoked independently or in addition to sanctions and
remedies otherwise provided by law.
No laborer, workman or mechanic in the employ of the Contractor or
subcontractor shall be permitted or required to work more than eight hours in any
one calendar day, or more than five days in any one week except as otherwise
provided in Labor Code Section 220.
eo
The Contractor shall include the provisions of clauses (a) through (e) in every
subcontract or purchase order in such a manner that such provisions will be
binding upon each subcontractor or vendor as to operations to be performed
within the State of New York. The Contractor will take such action in enforcing
such provisions of such subcontract or purchase order as the Town may direct,
including sanctions and remedies.
FIFTH: By submission of this bid, the Bidder and each person signing on behalf of
any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own
organization, under penalty of perjury that to the best of his knowledge and belief:
The prices in this bid have been an/ved at independently without collusion,
consultation, communication, or agreement for the purpose of restricting
competition, as to any matter relating to such prices with any other Bidder or with
any competitor.
Unless otherwise required by law, the prices which have been quoted in this bid
have not been knowingly disclosed by the Bidder and will not knowingly be
disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder
or to any competitor.
No attempt has been made nor will be made by the Bidder to induce any other
person, partnership, or corporation to submit or not to submit a bid for the purpose
of restricting competition.
The undersigned also declares that it has or they have carefully examined the Bid
Solicitation requirements and sample operating agreement and that it has or they have
personally inspected the actual location of work, together with the local sources of
39
supply, has or have satisfied itself or themselves as to all the quantifies and conditions,
and waives all rights to claim any misunderstanding, omissions or errors regarding the
same which such inspection and observation would have disclosed.
The undersigned further understands and agrees that it is or they are to furnish and
provide in return for the respective Evaluation Unit Bid Price, all the necessary materials,
machinery, vehicles, implements, tools, labor services, and other items of whatever
nature, and to do and perform all work necessary under the aforesaid conditions, to
complete operations of the aforementioned Solid' Waste Haul-Disposal Services
operations in accordance with the Bid Solicitation requirements, which requirements are
a part of this response, and that it or they will accept in full compensation therefore, the
compensation provided for in Section C~3.
The undersigned submits herewith a bid guaranty within the form provided by the
applicable bid documents in the amount of $100,000.00 for any option or combination
thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10)
calendar days after date of receipt of Notice Of Award from the Town to execute and
deliver an Agreement in the form provided by the Town or fails to execute and deliver
evidence of proper insurance coverage and performance bond in the amounts required
and in the prescribed form within ten (10) days after Notice of A'~ard, the bid guaranty
Shall be forfeited and be retained by the Town toward the satisfaction of liquidated
damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will
be returned to the Bidder.
The undersigned acknowledges the receipt of the following addenda, but it agrees that it
is bound by all addenda whether or not listed herein and whether or not actually received,
it being the Bidder's responsibility to receive and have knowledge of all addenda.
ADDENDUM NUMBER AND DATES
Number 1 - Dated:
Number 2 - Dated:
Number 3 - Dated:
Number 4 - Dated:
Number 5 - Dated:
The Bidder has completed the Contract Bid Form and Unit Price Schedules in both
words and numerals in accordance with these bid requirements.
40
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
(C1)10,000+(C2)10,000+.5(C3)10,000+.5(C4)10,000+.5(C5)10,000
35,000 tons
Evaluation Unit Bid Price = $
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
Finn-Gorpora~nf~t~/~O" Address ' ' .,
By: ~ ~1~ /~, ~7
Au~ofiz~ Representative Date '
4.0
5.0
BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the main office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the firm (Schedule D, attached
hereto).
42
3.0
UNIT PRICE BID SCHEDULE
SOLD WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1 COMPENSATION
The undersigned hereby submits the following price bid to furnis~ Si>lid Waste
Disposal Servicesf to Sguthold Town, New York for the terms 7 []
ough 153}t; .
HAUL-DISPOSAL SERVICES
Haul-
The Haul-Disposal Service applicable unit price per ton for agreement year ONE
The Hauq-Disposal Service applicable unit price per ton for agreement year TWO
is '
(J The/Haul-Disposal Service.applicable unit price per ton for agreement OPTION year
ONE is ~ ~ ,//]~t~7/~4 dollarsand
cents ($W ). (C3)
dollars and
dollars and
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
__TWO_is ~ ~ fi~(~/559 dollars and
cents ($. ). (C4)
The Haul-Disposal Seryice applicable trait price per ton for agreement OPTION year
THREE_is ~]~ ~ /~0h47/~'~( dollars and
cents ($. ). (C5)
41
Detailed financial statement for the Bidder, and if applicable, for parent
companies (Schedule E, attached hereto).
Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
Major Subcontractors - (Schedule G, attached hereto).
Equipment- (Schedule H, attached hereto).
Maximum Specified Capacity- (Schedule I, attached hereto).
Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
Form of Bid Bond (Schedule K, attached hereto).
Performance Bond (Schedule L, attached hereto).
Operation Plan (Schedule M, attached hereto).
19./
H.
I.
J.
Dated:
Name of Bidder:
Address of Bidder:
By:
Signature Title
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of
Names and addresses of officers of the corporation:
(President) Name Address
(Secretary) Name Address
43
(Treasurer) Name Address
(If an individual or partnership)
Names and addresses of all principals or partners
q~ccsT<~r ucc ~o ~
44
INFORMATION SCHEDULE A
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
This Bidder '/[ Y't~%~i~)6( /~bq~F'~t (qt)Wd3R/~V.~,~herein certifies that as a (Bidder's legal name) ' J
Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending
or currently involved in any litigation involving the Town of Southold, State of New York.
Name of, Bidder: '"'~If£.,.Jq,S~l' ~ ~/"~/..~-'~
. 4 Xutho izTr i n t ) t '
NOTE:
(1) If blank not applicable, fill in with N/A
(2) If bidder owes the Town taxes or is involved in any litigation, a statement
of explanation will be attached hereto.
Tax/Litigation Certification
BID (PROPOSAL) FORM
Schedule 5.0.A
Page 1 of 1
45
INFORMATION SCHEDULE B
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The following is information on the undersigned Bidder's office locations:
Bidder's Main Office
Manager's Name (Contact)
Firm's Legal Name
Street Address (Box Numbers)
City State Zip
q SSa- qooo
Telephone Number
Bidder's Parent
Corporation Main Office
Manager's Name (Contact)
Parent Firm s Legal NameJ
Street Address (Box Numbers)
City State Zip
Telephone Number
The Bidder herein certifies thatfl~e ~[~WtRq~i~ ~~
Firm
is partially/wholly owned subsidiary of Od)\JO,~t,~ 4(~6~Lr~, CZVYYo~'t'~x./, R ~,fC
This is owned %
Parent Firm
By
or is a public/private stock corporation.
Bidder Office Locations/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 1 of 2
46
INFORMATION SCHEDULE B - (Continued)
By:~~/~ Date:
Note: (1)
Any attachments or modifications to this form shall be labeled Schedule 5.0.B,
and properly integrated into the Bid Form,
(2) If blank not applicable, fill in with N/A.
Bidder Office Location/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 2 of 2
47
INFORMATION SCHEDULE D
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
/
The Bidder herein certifies that the below named individuals are the current registered corpor/tte
officers, along current permanent addresses, and designates their authority to execute an
Agreement on behalf of the firm
Subsidiary
Corporate Title
Address
City
State, Zip ~)~
Parent
Corporate Title
Address L/~)
City
zip
Officer's Name
Subsidiary
Corporate Title
Address
city
State, Zip.
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Officer's Name
Subsidiary
Corporate Tire
Address
City
State, Zip
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Current Corporate Officers
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 1 of 2
49
INFORMATION SCHEDULE D - (Continued)
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Corporate
Seal
NOTE:
If blank not applicable, fill in with N/A
Current Corporate Officer
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 2 of 2
50
INFORMATION SCHEDULE E
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
STATEMENT OF BIDDER'S FINANCIAL CONDITION
This Bidder agrees to provide for any subsidiary and parent firm, and hereto attaches a
current or the most recent audited financial Statement(s) including as a minimum the
firms opinions, notes, revenue/expense statements, conditions of cash, etc. The attached
statement provided includes:
Accounting Finn mame ~9{~ ~b~C~t~A l0~ ~
Address
Financial Period
Statement Date
To
The bidder certifies that he currently has an available line of credit in the mount of
$ . A supporting documentary evidence attached to this
form is supplied by:
Nalne
Address
Date
The undersigned Bidder certifies to the validity of statement and agrees to furnish any
otherqinformation upon request that may be required by the Town of Southold, New
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 1 of 2
51
INFORMATION SCHEDULE E - (continued)
The undersigned hereby authorizes and requests any person, firm or corporation to furnish any
information requested by Town of Southold, New York in verification of the firms financial
condition.
Dated at
State of New Yq~, County of
This 1244'2` day of 7~'ILA~ , 20 OrI
~ N~ ofBidd~ _ ~ ~ I /
/
~). ~lCg ~/ ~0I$l,~d)f being duly sworn deposes and saws that he
Nme of ~g~afion ~
'tie ' L ~
~ ~at ~e ~sw~s to ~e forego~g questions ~all statemen~ein ~nt~ned ~e ~e ~d
m=ect.
Sworn to me this /c~ ~c~ day of
MARIA ST~PHENSON
NOTARY PUBLIC OF NEW JERSEY
My ComI:~sP-~/I~I~,EXPIRES NOV 26, 2007
,200
/Nota~ Public
NOTE:
(1)
(2)
(Bidder may submit additional information desired as Schedule E
attachments.)
If blank not applicable, fill in with N/A
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 2 of 2
52
INFORMATION SCHEDULE F
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and
that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the
Bidder offers the following related information and references in order that the Town may
evaluate the Bidder's qualifications and experience.
1, Bidder'sLegalName: "~C0.4q.5'~iUf_ff~ m&A~'}q5 CO~i ~/L.'~,
2. Business Address: (~C) ~ ~Ot2_c~
Street
City(''" i. f~LA,/~0, i(X}
O OOC
State Zip
State incc:Terat~xl: T)~'- Year. inoot~.: ~ ~%
New York State; Business License No.: ~D//Sz
No. Years in contracting business under above name: [c7~ years.
Has finn ever defaulted on a contract? Yes No ~
Gross Value-workundercurrentcontract: $ ~Bi~'_Ff/,ay( C~,L~ti'{<o ~t~C~t~
Number of Current Contracts:
Brief description general work performed by firm: lb)0,c~ [VkC, uL~'~
4.
5.
6.
7.
8.
9.
10. Has Firm ever failed to complete work awarded? Yes No l//
If yes, attach supporting statement as to circumstances.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 1 of 3
53
COVANTA
ENERGY
TransRiver Marketing LP
Municipality Length of Contract _ _ F~ac~ili~ Expiry Date Annual Tonnage Annual Revenue Descdptlon
New York, NY City of, 5 yrs Essex, NJ Nov-2O09 405,000 $ 30,375,000 Disposal of MSW
NewYork, NYCityof, 5yrs Hempstead, NY Feb-2011 75,000 $ 6,750,000 DlsposalofMSW
Philadelphia, PA City of, 7 yrs Delaware Valley, PA Jun-2012 100,000 $ 4,800,000 Disposal of MSW
Boston, MACItyof, 5yrs Semoss, MA Jun-2009 110,000 $ 9,130,000 Disposal of MSW
Cheektowaga, NY Town of, 7 ,/rs Niagara, NY Dec-2012 33,5(X3 $ 1,400,000 Disposal of MSW
11.
11.1
INFORMATION SCHEDULE F - (continued)
Related Experience Reference (within previous 5 years)
Project Title: .~
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
11.2 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 2 of 3
54
ll.3
Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Proj eot Description:
12.
Principal Firm Members' Background/Experience (3 members minimum). Attach current
resumes as Schedule 5.0.F supplement or give concise description by individual.
Name of Bidder: "ffF~a,4~tJe.~ ~lt~'tv~
By:?'/~~,~ .~_.~. Date:
NOTE:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.F, and shall be properly integrated into this Bid Form.
If blank not applicable, fill in with N/A.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 3 of 3
55
iNFORMATION SCHDULE G
Town of Southold Bid Project
Solid Waste Haul-Disposal Se~rices
The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul
sub-contractors on this project.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Sub-Contractor/
Contract Trade/
Individual Address Phone # Specialties
NOTE:
Name of Bidder: ~(/ct~q~{~/ [V[(x/C~thgg ~qg/m~lt ).
J ( ithori s, ''
If blank not applicable, fill in with N/A
Subcontractors
BID (PROPOSAL) FORM
Schedule 5.0.G
56
IFORMATION SCHEDULE H
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder states that it owns the following pieces of equipment that are available for use on the
project, if awarded the agreement.
Equipment Item
Proposed
Project Use
Current
Equipment Location
NOTE:
Name of Bidder:
By~~~/ Date: ~l,alo~
~y supplemental a~ac~ents or modifications to ~is fd~ sh~l be label~
Schedule 5.0.H ~d shall be properly inte~at~ into ~e Bid Fo~.
If blank not applicable, fill in with N/A
Construction Equipment
BID (PROPOSAL) FORM
Schedule 5.0.H
57
INFORMATION SCHEDULE I
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it will be prepared to dispose of up to the following Maximum
Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement
Contract Year
1 -
Maximum Tons per Contract Year
Maximum Specified Capacity
BID (PROPOSAL) FORM
Schedule 5.0.I
58
INFORMATION SCHEDULE J
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
NOTE: IF A BIDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE
DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE
COMPLETED FOR EACH DISPOSAL SITE.
The following is information on the undersigned Bidder's Solid Waste Disposal Site:
GENERAL
A.
Bo
Disposal Site Location
Address: 10 ~ ( 6~X-~l ~
/
Disposal Site mailing address (if different than 1)
Address: ~
II.
CURRENT OPERATIONS
A. Operations Permit
1. Permittee:
2. No.:
3. State:
4. Date of Issue:
5. Date of Expiration:
6. Copy Enclosed:
Yes: v~ No:
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 1 of 7
59
516~83-1413
10:26~,m.
(') O
12-06-2007
INFORMATION SCHEDULE J - (continued)
B, Hcmrs of Operations ...........
1. What arc the PBPJvIITTBD operating hours?
DAY A.M.
Monday ~ to
Tuesday to
Wednesday to
Thursday to
Friday to
Saturday to
Sunday C~c~'O to ~--io~--~
2. Are there any PBRMrrTED closure periods stipulated?
What are thc ACTUAL operating hours?
DAY A.M.
Monday ~
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
to
to __
to _
to _
to
to
to
What holiday or other period is the Disposal Site typically closed?
DAY
New Year's
Momorial
Independence
Labor
Thanksgiving
Other (specify)
YES
__ to
to
_~ ---~/ to
!
NO
to
to
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0,J
Page 2 of 7
6O
516-683-1413 Line 1 12-06-2007 12134
INFORMATION SCHEDULE ~' - (continued)
Will thc ACTUAL operating hours be extended up to thc PERMITrED
operating hours in Question II.B.t in order to accommodate Town of
Southold solid waste?
Yes ~ No
Are there any local agreements, ordinances, etc. which would prohibit
extending the ACTUAL operating hours in Question H.B.3 up to the
PERlvHTI'~D operating hours in Question II.B.1 ?
Yes No X
What is the PERMITTED annual capacity in tons?
At the PERMITTED levels in Question II.C. what is the projected useful life in
!
go
What is the annual RECEIVING6 level today?
At the RECEIVING levels in Question II.E, what is the projected useful life in
Years?
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0,J
Page 3 of 7
61
2.
3.
Fee ($)-~. -
I{ertr- .: ::-~ ....
- t.-
state coeds and site ' -
....... 3: ........ Number of vehicles
4. Vehicle size
outsid~ jurisdictional-area ....
6. HoSt Community Benefits~
Bidder Solid Waste Disposal Site(s)
BID.(PROPOSAL)~ORM=
Sohedule 5.0.J
Page. 4--of?
62- '
516-~83-1413 Lioel ~ ) 10:28: m. 12-08-2007 13/34
INFORMATION SCHEDULE J - (continued)
How much of the RECEIVING level in Question II.E is committed to under
contract in tons?
Does the Disposal Site have special waste restrictions?
Yes No
1. Construction/Demolition x~
2. Asbestos ',~
3. Wastewater Treatment 'J(
Sludge
4. Hazardous Waste x~
Gate
Fee ($)
t
Are there any existing agreements with local municipalities which prohibit:
Item Yes
1. Routing to site
2. Weight limits between
state coeds and site
Nu2mbes of vehicles
Vehicle size
Solid waste importation
outside jurisdictional area
Host Community Benefits
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5,0.J
Page 4 of 7
62
III.
INFORMATION SCHEDULE J - (Continued)
EXPANSION PLANS ~k)/~
A. Application Permit
1. Permitee:
2. No.:
3. State:
4. Date of Submission:
5. Copy Enclosed:
6. Submission Status:
a.
Yes No
Expansion of current site or new site
Local Citizemy Reaction
Regulatory agency
d. Litigation
Likelihood to succeed
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 5 of 7
63
INFORMATION SCHEDULE J - (Continued)
If you are successful in Question III.A., what is the additional annual DESIGN
capacity in tons (do not include figures from Question II.C0?
20
20
20
20
20
At the annual DESIGN levels in Question III.B., what would be the projected
useful life in years?
Would you be willing to share with the Town of Southold engineering reports
utilized for the preparation of the Operating Permits on Expansion Application?
Yes No
Bidder's Disposal Site(s) Engineer of Record
Firm's Name
Firm's Address
Project Engineer
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 6 of 7
64
INFORMATION SCHEDULE J - (Continued)
Are you willing to meet with the Town of Southold to discuss your short and long term
disposal capabilities? Yes \}~'S No
The undersigned hereby certifies that services, material, equipment to be furnished as a
result of this bid will be in accordance with Town of Southold specifications applying thereto
unless exceptions are indicated above and an explanation attached.
Bidding Company /ff~U4%~i~ ~/~'~ ~a///9~coTp/~-~.
Address ff~) /~4~/~ r~EP~t~r
C~ty ~/- / ' State ' Zip
By
Signature
Phone No.
Date
(~lea~e Print or Type) U~xlAME AND TITLE
CORPORATE SEAL
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 7 of 7
65
516-683-1413 Line 1
.Pennsylvania Department of Environmental Protectiofl
2 East Main Street
Norristowa, PA 19401
June 1, 2006
Southeast Regional Office
'- Phone: 484-250-5960
Fax: 484-250-5961
CERTIFI~.B MATI,'NOr 700'1 2510 0005 8144 9452
Mr. Gene B0rmer, P.E.
Covanta Delaware Valley,
10 Highland Avefiue '
Chester, pA. 19013
Dent Mr: Bonner:
Re:
Permit Amendment
Deiaware Valley R'esource.Recov,ery Facility
City of Ch6ster
DelaWare. County
ID No. 400593
APS No. 566646, 'AUTH No. 610232
The Departm~t has reviewed ~he above mfereneeJappiieation for a modificat}on to"~he above
'referenoed permit to.reflect a'hame change from Americaa Ref-Fuel of Delaware Valloy, L.P., to
Covanta Delaware Valley, L;P.; and to update the Form R to have it more closely reflect the terms and
'conditions contaiaed-.m the September 7, 1999, permit fenewal, and has detarmLned that you have
satisfied all applleable requirements qecessary to perform,this activity. Therefore, we have issued the
enclosed perrrdt ia a. ccordance with Act 97, the Penmylvmia Solid :q¢~te Management Act.
Compliance with the ~imitations and stipulations that have been set forth on your pemait is .
mandatory..
Any person aggrieved by this action may'appeal, pursuant'to Section 4 of the Envirormaental
Hearing Board Act, 35 P.8. Section 7514, and the Administrative Agency Law, 2 Pa.C.8. Chapter SA, lo
the Envkomantal Hearing Bo ,ard, Second Floor, Rachel Carson State Office Building, 400 Market
Street, P.O. Bo~ 8457; Harrisburg, PA 17105-8457, 717-787-3483. ;TDD user~ may contact the Board
through the Pennsylvania Relay Service, 800-654-5984. Appe. als must be filed with the Environmental
Hearing Board within 30 days of receipt of written notice of th/s action unless the appropriate statute
provides.a different ti~eperiod. Copies of the appeal form and the Board's roles ofpmcfice and
procedure may be obtained from the Board. The appeal 'form and.the Boa~d's roles of practice and
procedure are also available in braille, or on audiotape fi'om the Secretary to the Board at 717-78%3483.
This paragraph doe~ not, hi mad of itself, create any fight of appeal beyond that permitted'by applicable
~ YOU WANT TO CHALLENGE THIS ACTION, YOUR APPEAL MUST REACH THE
BOARD WITHIN 30 DAYS. YOU DO NOT NEED A LAWYER TO FILE AN APPEAL WITH TIlE
BOA.RD.
14/34
516~83-1413 Line 1
a.m. 12-06-2007
15/34
Mr. Gene Bormer, P.E.
Jane 1, 2006
I~IPORTANT LEGAL RIGHTS ARE AT STAKE, HOWEVER, SO YOU SHOULD SHOW
THIS DOCUMENT TO A LAWYEK AT oNcE. l~ YOU CANNOT At'FORD A.LAWYER, YOU
MAY QUALIFY FOR'FREE PRO BONO REPRESENTATION. CAI,L THE SECKETARY TO TH]]
BOARD (71%78?-3483) FOR MORE IbIFORIvlATION. ..
Please note that we have also'cofi~olidhted this permit amendment together with the ' '
September 7, 199~, per~t and its subsequent amendments. This ~nsolidated permit now reflects all
· approved application documents and applicable terms and conditions'in a' single ~ermit document. O~ly
those terms and conditions that have actually been modified~'~ud'only to the' exte/it that they have been
mod~fi~,d, ~e the subjec~ of this action. All.qther cofidition[~ Tcmain the same and are merely combined
into ihis consolidat~,d permit document for ease of reference. ·" . ...
Attached is a brief summary of changes to permii conditions resulting from action On the
referenced application, the comolidation of the permit, or both. Tliis'summary is advisory only and is
not,n.ecossarily being qffered or represented as a comprehensive ~r ~ll-inclusive list of changes. It
remains your.responsibility,, or the responsit~ility of any other iaterested party, to review M1 per~t
documents to ascertain to your ova/satisfaction the nature and pxtent of changes.
If'you have any questions about ~e enclosed pennk-or'requiremenfs of the Solid Waste
Management Ac~, plea~e'~ontact Mr. James Wentzel, P.E., Chief, Engineering Services,.at
484~250-5960.
Ronald C. Furlan, P.E.. '
· ' Regional'Manager
Waste Management Prog, am
Enclosure:
Permit Modification/Consolidation
Modification Smnmary ·
CC:
City of Chester
~! ..a.,w.~e C~0unty P~a?~!~.De~p~nt
er. Strand ~
R~ 30 (AK06WM) 144-4
516-683-1413 Line 1 12-06-2007 16/34
Covanta Delaware Valley, L,P. Consolidated Permit
~onditions Modified Pursuant to Action on the October 20~ 2005, Appllcatio~
(See also Condition 1A'o.f Consolidated Permit)
Page 1 0£p~rmit and Conditiom 11, 18, and 35 (form~l~ 32) revised to reflect n~me change fi-om
AmmScan Ref-Fuel o£Delaware Valley, L.P. to Covanta Delaware Valley, L.P.
ondition IA added to reflect action on'the October 20, 2005, application. ·
Condition 7 - removed Mur~ipal-~ P, ealdual Wast~ re£e~ence.
· Condition ~ I - removed M/micipal-l~ke ~Eesidual Waste reference, replaced Form'S reference
with Form U, iase~ted Form P, Residual Wastes Requ~fin~ Chemfet! Anal¥~ and Form R
~m o ~v. tumclpal-n. Ke Kes~otual Wastes t6Tals, respectively. '
Conddtions 12, ! 3, and t4 - remoVed:Mun~cipaMike Residual. Waste refewe~ce.
~,~nd~.tto.n !5 7 replaced Resldual Waste reference with F.orm R Residual Wastes Requiring
?nermcal Anal es and Form R_ Residual Wastes with Chemical Analyses Waiwl terms to '
clm'ify which wastes are subject to'Fohn U submi.tlal requ/rement (LQG'¢ of previous Form K
Residunl Waste and previous Form 8 waste marked ¢~itlff an asterisk(s)) and removed Form S
reference. ' ' · ' ' . .
Con&taon 16 - added option for host municipality/county to opt out ofrece/ving copies of
Form U submiftals at their dlscr~tion. · - ..
c? th on l?- emo ,ed es, m W ,eference :emeved orm S e erenen.
Coi~dition 18 - removed Form 8 reference. "'
C(mdit/on 19 - changed reference to Form P,. Residual Wastes Re~uir/n~ Chemicai AnaIys/-~
Condition 20 - changed reference to Form R Residual Wastes with Obemle~l Analyses Waived
changed Form S to Fonn U, and added "at a mipimmn" to reflect that some generators may need
to do more :- se~ ~.nditi'ons .I 1 and 15..'
Condition 23 - changed reference t~previous Form S documents.
Condition 24 - removed Mun/cipal-like Residual Waste.reference.
Condition 26 - changed R~sidual Waste to Form R Residual Wastes Requ/rin~ C:h~i~a
Analyses. · ..
· Condition 27 - removed Mtmicipal-Iike Residual Waste referencb.
· Condition 29 - changed reference to Form R Residual Was~es Mth Chem~¢O'Analyses Waive~l
and removed Form S reference.
Line 1
am. 12-06-2007
Conditions Altered to Reflect' Consolidation of Previously Approved
~ermit Actions into a Single Permit Documer.'i
(See also Condition lB and lC of Consolidated Permit)
Condition IB and lC added to reflect the eomolidation of the September 7, 1999, permit and its
subsequent modifications. Condition lB incorporates all previous permit actions since ]999 up
to, but not ~ncluding, the action approved in Condition lA. Condition 1C indicates that this
consolidated permit replaces all previous permit terms and bonditions in their entirety and
explains that only those Conditions modified pursuant t6 Condition IA, 'and only to'the extent that
those condi'do~s are.actually modified, co.nstatute a new action by the Deparb~ent..
Conthtion 7 rT,~sed to change the AQ reference from the 1999 vintage'plan approval to the
_current Title. V permit that gO,ems facility Operations..
Condition 8B re;vised to reflect the l~ngt~age e6ntained/n the April 11, 2003,'modification - '
· regarding normal and waste cgmpecfion operations modes.
Condition IgC xemsed to etadfy that the'original he~gl~_t reference requ/rement n~w pertains to both
the 1'4' and the 20 foorheights, thereby incorporating condition 6of the April 11~ 2003,
modification. · .. · ·
,~,~v~,~ ~ut, uguauconsu, ucnon reqmrements accordingly as they are now: outdated
Condition 30 moved since the traffic maprovcme~t work has been completed and condition no
longer relevant and previous Condition 31 renumbered lo Condition 30, accordingly..
Conditions 31 and 32 added to reflect Conditions 7 and 8 of the April 1 I, 2003; modification,
respectively.
CondRion 33 added to }effect'thc April 1~i ' '" ' ' ' ' ' '
2004, rediauon protection action plan modification.
Premous Condition 32 muumbered to Condition 34 and languagb sir~lified since bond details
(type and date of bond instruments), change, th~eby ollmlnaiSjlg the need to nlodify the permit .
c°ndition every time the perm/tree replaces or updates a bond instnsme~t Also changed name of
permlttee ~s previously noted. ' ' ·
BUR~&U OF WASTE MANAGEMENT
Permit
For
Solid Waste Disposal and/o~r Processing Facility
FORM NO. 8
Permit No.
Date }ssued
irea
400593
June. ~, 2006
September7,2009
U~der the provisions of the Pennsyl7an/a Solid Waste Management A6t of July 7, 1980, Act 97, a. Psnmit !or a
solid waste disposal and/or.prgcessing facili~ at the ~ity of Chester in the County of Delaware:
is granied to Covanta Delawaxe Valley, L.P.
10 Highland'Avenue, Chester, PA · 19013
Thi~ .pemfit is applicable to Delaware Valley P,~asource Recgvery Facility
whole 9tin.part with the conditions.of this permit and thc'
which is made' a part hereof, or'for causing any condition inimical to the public ~ealth, safety or welfare.
Sec A~tachmeht for wast~ ]imitatioas and/or special conditions.
lrOff'l'itE .D-~PA ~T OF '
ENVIRONMENTAL PRQTECTION
THIS PERMIT IS NON - TRANSFERABLE
Page 1 of 17
Line 1
~OM~'IONWEALTH OF PENNSYLVANIA lO:4~a,m.
DEP~I~wIF~T OF ENVn~oNMENTAL PROTECTiON
BUREAU OF WASTE MANAGEIVIENT
12-06-2007
19/34
Permit
For
Solid Waste Disposal.and/or Processing Facility
FORM NO. 8
Permit No.
Date Issued
Date Expired
400593
Juua 1, 2006
Sepmmber7,2009
A. "". This wa~t~ rha-~gemen~-~ermit.amendment is issued based upon application No. ~005~3
(APS No;'566646, Auth'No. 610233), which was'received in the Southeast Regional Office of
the Department of Environmental Pro~e. etion on October 20, 2005. This permit amendment '
.appro~es:th~ £011owi~g:
· . i- !'A name gha~ge~from Ame~c~ Re, f-Fuel of Delaware Valley, L.P.'to Covanta · .
' Delaware Val/ey, L.P. based on a name change to the certificate of lirrdted ·
. but is a mo.diiicafi{?n to.thE permit to
ii.
, the
Board's
· Tiffs approved modification.?ndsts of the following documents:.
Form GIF, General Inform~tion'Form, received on October 20, 2005
Form A, Application for Municipal ~ast~ Permit', received'on October 20, 2005~ and
reyiserl on March 2,·2006
Egrm.B, Profmdonal Certification, redeivcd on October 20, 20~5 .:
Form BI~ Application Form Certification, received on October 20, 2005
Form HW-C, Cgmpliaffcc History, received on October ~0, 2005
Form E, Consent of Landowner, received on October 20, 2005
Form K, Waste Classification P]an,.received on O?tbber 20, 2005, and revised o~
March.2, 200~
PERMIT IS NON - TRANSFERABLE
Page 2 of 17
516-683-1413
Line 1
~,~v~.u.~ W~AL.'I'H OF PENNSYLVANIA
DEPAIOk~IENT OF ENV~R O. NMENTAL PROTECTION
BUREAU OF WASTE MANAGEMENT
m. 12-06-2007
Permit
For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Permit No. 400593
Date Issued June 1: 2006
Date'Expired .' Se]~tember 7, 2009
20/34
This approved permit mo0.ification includes a response to. the Department's November 4, 2005,
. deficiency letter, r6ceived on November 10, 2005, and a response to the Deparmaent's'January
30, 2006, deficiency letter (via email) received on March 2,2006.
The cont~nt~ qf all the above listed documents axe hereby incorporated in this consolidated
· permit as (:ondifions with which the permittee must comply: '
? incorporates (1) ~e Septe3~.ber 7, 1999, permit; (2) the medifieafion
for the: of a gate and sound bm'ier issue~l on March 8, 2000; '(3) the
modific the
sposa]
sites
. (5) the
into a
t April 14, 2004,
its..
'i.
b~sed up6n
93 v~hich wa: of the
Depa~ment of En~iroamental ProW~i~a an .1.997. The appl~cafion was
the continued operation of a municipal and residuaJ waste processing and incineration
fac~tylocated in the City of Chester, Delaware County. Also included in the ·
application were requests to increase waste acceptance volumes, increase waste storage
volumes, accept new residual waste streams, and modify or delete certain permit '
conditions. The approved application e0nsi~ts of the folinwing documents:
Form A ;eeeived on December 1, 1997, and revised on April 28, 1999 '
Form B received on December 1, 1997
Form Bi received on December I, 1997
Form HW-C received on December 1, 1997, and revised on Apr/1 28, 1999
Form D iv.c~ived on December 1, 1997
FormE receiged on December 1, 1997, arid reused on Ap[il 28, .I~99
Fai~Yt~e~Vo~-D~-e~5~'I, 1-~7, ah~I'rews~l bn'j~l~"~,' ~'~9~, hne 15, 1999,
and June 21, 1999
THIS PERMIT IS NON - TRANSFERABLE
Page 3 ' of 17
Line 1
~m¥~,~P~vv~&L,l'rl tOF.I'ENNSYLVAN1A 10:4.~a.m.
DEP~IIR~'MENT OF ENVIRONMENTAL PROTECTION ·
BUREAU OF WASTE MANAGE/VIENT
12-06-2007
21/34
Permit
For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Permit No~ 400593
Date Issued .June 1,.2006 '
Date Expired ·September 7, 2009
- ' .' Form L and the PPC Plan receivq, d ob'December 1, 1997 '
[. .. .Form I recedved on December 1, 1997, and revised on JUly 10, 1998
Form R received on December 1, 1997, and revised on July 10, 1998, June 16, 1999,
· :. ' and June 21, 1999 '
Form P rt~.cei~ed on December 1, 1997, and ~evised'on J{fly 10, 1998
- -Form General Information received bn Decembe3 1, 1997, a~d revise~l on April 28, 1999
Form 46 received on December 1", 1997 '
· " . '~ a_vai ~.1~. 6~,.~Efifled Permit B 6un ' and Traffic ' '
~ ~ ~ ~,'~5~oJgr-~x-~ dary Flow Plan, s~gned and sealed
· ' ' 1 19~y7 a
~ ~2~'J~:~I~99, June 2L ~.9'9~'5~d'~e2&Y4~h9 '
[. pmsumt to Condition 10 of me pe~t as ismM bfi~ber 7,. 1999. ."
fii. M~ch 22, 2~0. le~er approval to up&te ~e ap~oved ~ ~sp~fl ~te~ bgs~ on a '
.. M~ch 10, 20~, minor m~cafion
iv. Apffi 11, 2003, mo~fieafion to peff~ waste compaction on ~e tipping floor, to'mhse
au~ofized ~h ~spos~.sites, and o~er non-matefi~ revi~ons to up,re ~e Fora P.
' ~e mended w~e management pe~t was isssed based hpon app~cafion No. ~593
w~ch was r~ved at ~e Sou~east Re~onfl'Office of ~e Dep~ant of
Envkomen~ ~t~fion on October 2, 2~1. ~e ~t modification fllow~ ~e ·
hd~W ~e option to peffom wasm compaction oh its fipp~g floor oh ~ on-going b~s,
provided an operafion~ pr~edu~ to d~ ~ compactor ~oun&, re~s~ . '
· . an~ofi~d ash ~osg si~, ~d ~ovid~
Tills PERMIT IS NON - TRANSFERABLE
Page 4 of 17
Line 1
DEPA~ViENT OF ]ENVIRONMENTAL PROTECTION
BUREAU O1~ WASTE MANAGEMENT
m. 12-06-2007 22134
Permit
For
Solid Waste Disposal and/or Processing Fac'iIity
FORM NO. 8
permit No. 400593 .
Date Issued ~Tune 1, 2006
· Date Expired , Septembdr 7, 2009
Tbe approved permit modification application co~s{sts of the fo]lowingi
General Informatidn Form recclv~d dn Odober 2, 2001
Form'A received o.n Octo.ber 2, 2001 and revised March 19, 2002, and
September 20, 2002 ' '
· . . Fern2 B'rcceived orl October 2, '2001
Form B 1 received on October 2, 2001
· ~.~,.~,,:~i~e~,,~ Oct6ber 2, 200lind ievis;ed March 19, 2002 an~ ' '
. '- .' .' · .
.C...'?,~,~-;~':a *o, ,~'-';;;;.~-Y~ ':". 4 ' ,. .,,. ......
~No~ 36611 $},.wl~b_3 was rece_~_lg.~epte~Sar 24, 2001, al the '
· ~outheast Rcl~onal Office of the Deparancnt of F-K~F]t~li~ental Protect/an. The
approved application c~I~ists Of the following docl}ments:
Form Gl, received on September 24, 2001
Form A, received on September 24, 2001' and'revised October 31,2002, MaY 27, ~00B, '
September 12, 2003, and D~6ember 24, 2003
Form B, recedved on September 24, 2001
· Form B 1, received on September 24, 2001
Form HW:C, received on..geptember 24j 2~01 '
Form X, received on September 24, 2001, and revised October 31, 2002, May 27, 2003, '.
September 12, 2003, and December 24, 2003 '
'. Forth 5, receiyed on September 24, 2001, and revised drawing '.'Rad/atlon Detection and
Sort/ag Facility Plan", Sheet No. 1 of 1, revis_io~n date
re~f~ff~-D~-~-6? ~; 2-0~'3, re.~}s~ig;~-ii~i~i~n~§orfiag Area, Alternate
Radiation Soxting Area and Radiation Staging Area.
Tills PERMIT IS NON - TRANSFERABLE
Page 5' of 17
4:'
Line 1 a.m. 12-06-2007 23/34
10:4
~UR.~AU Olm WASTE MANAGEMENT
Permit
· . For
Solid Waste Disposal and/or Prpcessing Facility
FORM NO. 8
Permit No.
Datb Issued
.Date Expired
400593
--June.~,~2~6
_September7,2009
The contents of all the above listed documents (1B.i - v) axe.hereby incbrpoi'ated into this
· ~onsolidated p.erm/t as conditions with wh/ch.the permittee must comply.
Th/~ cons?hdated permit replaces ia its entirety the original permit issued on Septembe~ 7, 1999,
· and'its'~ubsequent modifications, including the modification in Condition lA being hpprbved
pUrSuant to this a~etion: W'here the terms or conditions of this permit d~ffer from the above li~ted
~is permit amendment and lB for the purposes
h/s consolidhted permit shall govern. Ti~e
of the
in this
a result, are reopened a~
tt to wh~cl! the
Nothing in th/s
any valid and ~rovision$ of
regUhtion is ordinance, or
Act 97, 35 P.8. ~ b/July 7, 1980,.
As a condiuon of this pemnt, and of the permattee's authority to conduct the acfiv/fi~ author/zed by'this
· permit, the permittee, hereby authorizes and consents to al/ow authorized employees or agents of the · '-
;Deparmaent, without advaueed notice or a search waJrant, upon pre~sentation of appropriate credent/als,
and without delay, to have access to and to inspect all areas on which solid ~vaste management activities ·
are being or will be conducted. The authorization and consent shall include consent to collect samples of
waste, water or gases, to take photographs, to peffnrm measurements,
· surveys and other tests, to inspect
any mon/toring equipment, to inspect the methods of'operation, and to inspect and/or copy detriments,
books or papers required by the Deparmaent to be maintained. This perm//cond/fion is referenced in
accordance with Section 608 and 610(7) of the Solid Waste Management Act, 35 P.S. Sections 6018.608
and 6018.610(&): This condition in no way limits any other powers granted under'the Solid Waste
Management Act. ' '
afly operabonal recbrds must be kept in a format oo~ned in Section 283.261 of the Muuicipal WaSte
Management Rules and Regulations.
THIS PERMIT IS NON - TRANSFERABLE
Page 6 of 17
Line 1
D-~PI~I~IWI~qT OF }~NVIRONMENTAL PROTECTION'~
B~U OF WASTE M~ANAGEIvlENT
12-06-2007
24/34
Permit
For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Perm/t No. 400593
Date. Issued _ ,'fi{mo 1 . ?NaR
· ' Date Expired September 7, 2009
hours during each day, that w~dte was accepted at the facility for the calendar quarter; The rep(~rt shall
be submitted da or before the 20~ day of Apr/l, July, October and January £or the ealend~r quarter ending
the last day of March, luna, September and December, respectively. The perm/tree' shall also comply
with the following: ' '
A. ' Uti~z~ the'approach route to the facilky by b~inging amck traffic into the site on Harwick Slree~
from gad Street instead of utilizing Thurlow Street from 2nd StrUt 'Thurlow Street bet,~e~n 2nd
.Street ~ ~ ~.. ~/:.o.~e l~s. ed by truck traffic only when the H~-wick Street entrance is.
. b]ocke~; ~ ~ ~ ~ ~. ~yond permi~t~,e~e.? ability to control. The Departmel~t th~ Ci 'of
-teleho ..{s~ta ~ ~ ~ ;; ' ', , *" · ~...~..-~'~'~-~ Y
~ :e~ ,. ~; . I~ ~ · · ':~'~ -~,,a · .
' -~ - ~ -~'~'~ ~.~'C~ 1 ~4~s,~z~?:~u-~,-:~,:~.~~,..~F?r a p*~l(gtiof more than the
p*rlouu 201I. lg9//l ' ~, '.' .... x-x, -. .,. "~ .',~.;, .
· . . , · . - _~ , .... ,. .~..,,,~..~.,. ...~ ,~. ,. - arwlck
. .. '.' . . . . ;,~)~¢~ , · .
B. !.. '. During operations when waste i~ ,;et being con/pacted on the tipping floor (uorrnal
operafi6as mode), waste storage, other than ash storage, shall be limited to the tipping
· floor w/thi~ the building and shall be stored in accordance w/th the configurations
shown on the drawings rifled Plan of Tipping Bay Area, sh0~t blo. ! of 4, as.revised
September 20, 2002. A 27 f~ot wid~ yah/tlc access lane and a 13 foot Mdc inspection
. ' ' ' . . aisle shall be maintained at all times and the height of the waSte shall be le~s than or
eqdal to 20 feet. ' · ·
ii. · .During operations when waste is'being compacted 6n the tipping floor (compaction
.. operations mode), waste storage, other than' ash storage, shall be as follows: .
a. Waste, ~/beth~r ia a.compacied state ~r u6t, shall not exceed a fieight of 14 fe~t
during the compaction operations mode of opemfign. Tiffs resaiction is
TftlS PERMIT IS NON - TRANSFERABLE
Page 8 of 17
Line 1
~l, ve/~zYZt~lWW,e,.~f.~'j-jl-i (JFPENNSYLVAN~IA .10:~a.m.
DE~T OF EN'V-J0~ ONIVP~A L PRO'I~CT]OI,~I~
BUREAU OF WASTE MANAGEMENT
12-06-2007
25/34
Permit
For
Solid Waste Disposal. and/or Processing Facility
FORM NO. 8
Permit No.. 400593 '
Date Issued - .1~,,,~ 1: ~nn6
Date Expired .'September 7, 2009
/ntend0:l to proyide sufficient overhead clearance for op;rati'ng equipment at all
ames and under all conditions, including a reason~le'factor bf safety in the
event of operator error in maintahfing acceptable waste pile heights. In addition
a 2.7 foot w/de velficle acces, lane and a 13 foe{ w/de'inspection'aisle shall he
mmntained at all times.
' It is the perncattee's responsibility to insure that sufficient clearance between the
t ~l/times to ~ovide
any height restriction
:floor within
! mode, the Front
· ;, where only the
8.B.ii.
C. ' Visually,identifiable reference marks, discernable at~a provided ~o demonstrate '
~ c~m~an~ewiththest~r~geaimemsi~ns(~ngth~w/dth~andheight~.in~udingthe~4and2~f~t
pile he/ghts), and the ace,s lane and inspectibn aisle widths referenced above'
D.' ' Total pcnm'tted storage capacity under this co~idition is est/mated to be 14;~00 tons, for the
. purpose of bond amount determination. Compliance with the storage capacity permitted under
th/s'condition shall be governed by compliance with fl~e configurations and dimensions'
referenced in B. and C. aheqe. Id the permittea has reason to believe that its total 'storage"
capacity, even ff in complJance w/th its permJtted configuiations and dimensiohsi exceeds
14,200 tofl~,' the perm/tree sb. all notify the Department, document the revise~ tonnhge figure, and
post additional bond for the additional tonnage
E. The Department reserves rise Hght to reduce the faeilJ~'s p__~tted stor_0g0~capac2~.~ither
~mp. or~ffil-? or permanently, ff-~e Department determines that the permitted stem. ge capacity is
causing or allqw/ng conditions harmful to the environment or pubZie health, or othemdse creating
THIS PERMIT IS NON - TRANSFERABLE
Page 9 of 17
516~83-1413 Line I D~.v~vsivlU~ WEAL!'I-] OF i~ENNSYLYANIA am. 12-06-2007
~T O~ EN~O~NTAL PROTEC~ON
BU~AU O~ WA~ ~NAG~NT
Permit
For
Solid Waste D~pos~ an~or ~ocesslng Facility
FO~ NO. 8
26/34
Permit No. ~0593
:.Date Issued __June 1~ ~2006
· · Dab/ Expired . September 7, 2009
safety hazards, odors, dust, noise, unsightliness.or other public nuisances. .
I 9. Thc permitt~,in coo efai/ .....' ' ' '" ''
· p on wire ~emwaxe county, sllall'ensure that household hazardous waste
collection programs take place aa~uall~( at a m/nimum 6f ff~re~ separate sites w/thin Delhwari County.
The programs shall c6mply with the ~rovisions Of section 1512 of Act 101, including prior approval by
the Depar~nant. .
10. ' The permittee s
through Friday.
through 12:00 n
throu~ 10:00 a
r~ceived at the f
Meanorial Day,
ora/calendar
· through 10:00 ~
'' sev~n d~ys ~ hours per day,
'Waste ~
e ~ ' ~ accordance wi~h the
£ollowing proceddre. Prior to extending epirations,ju~fification f b~ ma/led or
faxed to the Waste Management Program Manager or his'design~. Writr~l concurrence that the
'e~tension is justifiable nc~ds to be received by the lx~mi/ie~ from the manager or his designee b~ore
.extended ol~rafi~.ns may be impleminted. Ail other requests to ixtand operation hours must be
· requested in advance of need, an~ be approv~d~n writing in .ad'~an~ by the Deparanent '
The queuing area may be opched at 5:00'a:m. oh permitted waste acceptadc¢ days to ~l~ow for the
staging, of v8hiclcs p~or to acceptance of waste at the facil/~y. Vehicles already inside the queuing ama
at th~ end of the waste acceptance hours for that day may be processed. The permltte~ shall maintuh the
g/tt~ and operating'procedures for the quguing area approved by the Department/n a letter dhted '
Mar~h 8, 2000. A saltable sound barrier, consistent with the design also app~'ow.d by thc Department by
.letter dated March g, 2000,'that will prevent off-site access to the queffing area at all t/roes outside 'of.
approved waste acc~j~£ance hours may be install'ed su_bj~ t.o_ obt--ai2J-~i, nl~.an;[ all.~tecessar~.local
also submitted to the Department for approval prior to construction. Th~ need fo~ and timing of
between, the houm of 6:00 a.m. through 6:00 p.m, Monday .
:Saturday waste accept~uce to between the hours of 6:00 a.m.
accepted or
THIS PERMIT IS NON - TRANSFERABLE
Page _10 of 17
516-583-1413
Line 1
~M]VIONWEALTYrI OF PENNSYLVANIA
DEPA'3K~/'MENT OF ENV]]{ ONMENTAL PROTECTION
B1JREAU OF 'WASTE MANAGEMENT
Permit
For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Permit No.
Date /ssued
Date Expired
a.m. 12-06-2007 27/34
400593
.June i, 2006
· SeptemberT','2009 '.
constmctio;n of the so,fid barrier shall be determined by the pemfittee in.conjunction with the wishes of
local government and other interested private/public entiti~. . .-
The approved waste acceptance plan 'allows the Covaata D~laware Valley,' LP." facil/t~ to accept the
...folI~wing categories of Residual Waste fro: incineration. All'Form R Residual Wastes Requiring
Chemical Analvse~, and those Form R Residual Wastes with.'Chemical Analyses Waive~ (f/k/a Form S
wastes) that are id~ntifled by aa asterisk(s), are subjest to ~e.rexluiremeats of Condition 15. ·
Acid/c
Basic
Chemical Salts
'Surface CoaCh
~lter
'Filter Media
Detergents, Cleaning Agents CRWC 316) '
. Off-S .pe~ifieation Products, Intermediates (P, WC, 311)
Wood Wastes (treated woods (RWC 403)
Halogenated Plastics (PVC, Teflon,.CPE) (RWC 409)
Agricultural' Wastes (Fertilizers, Feed Supplbment~). (RWC'411)
· Oil-Contamifiated Waste (Spent Absoth6nt, Oily Ra~s) 0RWC 503)
' Spent Catalysts (RWC 505)
.Spill Residues (RWC.506)
On-Site Generated Used Oil .
.Empty Containers (p~:ocessed by ~ Department approved procedure)
Residual Wastes'with Chemical Analyses Waived
Leather S~r~p'VffaStes
Tex~!e Wastes (yam, fabric, fib~r, and elastic)
THIS PERIViIT IS NON - TRANSFERABLE
Page 11 of 17
Line 1
E~t TMENT OF ENVERONMENTAL PROTECTIO~F
BUREAU OF WA~STE MANAGEMENT
Permit
For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Permit No.
Date. Issued'
Date' Expired
Carbon-filters and carbon residues *
12-06-2007 28/34
400593
June 1, 2006
~eptember7,2009
Cosmetic wastes ***
Finished wood wast~ (painted, stained, non- .lTeated wood) ·
Markers and 15alnt stick shavings * .. ...
pharmaceutical waste ***
.Photographic waste **
' Spent cleaning, rags, excluding rags con~afing &olvant *
.Cured
Foan
Food waste
Fresh air intake
.Gasket waste
Labelffpacking !
.-~Ion-halo
Shingle scrip. !~{
Styrofoam waste *
Ther~ insulation waste
Personal proteefi,~e eq~pment (unused or uneontam/nated)
Untreated wood, sawdust and sha~ngs (must be from hntreated wood)
Empty containers
Linole~im waste ·
Plant Refuse
.Nylon m. ~tefial waste
Packing/Sl~ipping Material Waste
Paper, cardboard was~
· no more.than 10%-per tmeldoad unless a Form U for the generator is approYe~l
· * 'no more than 5% per true'load unless a Form U for the ~e_~gr~t~r/.~ glen~ted
THIS PERMIT IS NON. TRANSFERABLE
Page 12 of 17
Line I
12-06-2007
29/34
Permit
For
Solid Waste Disposal and/or Processing Facility
FOR NO. 8
Permit No. 400593
Date Issued June 1, 2006
Date Expir6d . September 7, 2009
12.
13.
14.
15.
16.
17.
All ReS/dual Waste accepted from new generator~ must be consistent with/equirements stated in the
Form i waste analysis and classification pl~fi..-
The permitree shall not aqcept anj;:Residual Waste where chemical constituents are not included or are ~a
excess of the maximum acceptable concentrafi~)n~ as ~elineated ia the waste a~alysls and dlassification
plan unless a permit amendment applicatio~ is submitted'and appr?ved by the'Department
de!Ened in
or Non-~
facilit
the permit,...
The
large quantity ~
Waste
prqcess or dispose of hazardous waste as
ag Wastes,
at this
a U The waste '
permittee.after fifteen
(15) Department workin~ d~ys. If at any time after the rifle, eh, determined.by
the Department that the waste accepted for incineration is not eonsistefit ~th the ~aste analysia and
dlassificatioa plan or the design of the facility, or waste reduction strategy, the permitZee shall be
subjected to al/and any applicable enforcement'action of the Solid Waste'I~lanagement Act or the'
Department's roles and regulations promulgated thereunder if waste is accepted. Absence of disapproval
by the Department before and a.~ter the waiting period does not constitute aa approval or final aetian of
the Department.
All submissions covered by Condition No. 15 must be sent to the host municipality and host county at
.the same time they are submitted to the Department, unless the host municipality or county ha~ indicated
m writing tO the permittee (with copy to the D~partmen0 that jt no longer wishes to receive copies of the
Form U submissions. ' · ·
Tl~:f~ermlt~6e ~hhlI.:~ulSmi~ quarterly by ~pr/1 '30; Y~/ly ~I, Noveitiber 30, and January 3i to the
THIS PERMIT IS NON - TRANSFERABLE
Page 13 of 17
Line 1
11:1 · a.m.
BUREAU OF WASTE MANAGEMENT
Permit
· For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Permit No. 400593
'. Date Issued Jude l? 2006
' · · ' ' Date Expired September 7, 2009
12-06-2007 30/34
18.
21.
22.
D~partrnant's Soutbe~st Re~iona~ O~fice an amen~led ai~pend/x to the permit that lists all Residual Waste
from specific generators accept~l for incineration at the facility. Tiffs amended appendix shall include
information .by gener3tors inaluding the waste type, approved quantity, quantity accepted, generator
identifiealion number and the ideoti.fieafi0n number for each Form U document for all waste, including;
residual waste from small quantity g?nerators and small quantity waste types from large quantity
generators. The appendix must include the Jpn!versary acceptance date for each generator of residual
Form 26R, the ~
facility. This is
not aceepte, d~
Facility does nc
) be kept on file f6r each Residual Waste geae~ator ai the '
Was .
Form
be documented
Any new large ~
proposes to use the Resource Recovery Facility must, at a mlnimBm, subnfit Form U and Form 25R to
the Resourcd Recovery Faci~ty.
The Resource Reeo'~ery Facqlity must keep certification documents fi.om sm01l quantity reSidual waste
generators on file indicating thaftheir v~aste streams are not. hazardous.
The annual r~port submitted by lime 30 of each year must include documentation that the analysis
cerfiI'ieation r~quimd under Section 287.54 of the Residual Waste Regulafion~ for chemical analysis of
waste for each wOste stream from each individual generator utilizing the Resource. Recovery Facility is .
Ali Form ~, and all preirious Form ~, documents,~,s.t be ~e._l!t on fi~ ~an~d each as~gp..ed t! .se~'tlgll~
'l'ldlS PERMIT IS NON - TRANSFERABLE
Page 14 of 17
Line 1
EI~TMENT O~' EN'VI~ONMENTAL PROTECTIOr~~
BURF_,AU OF WASTE MANAGEMENT
Permit
For
Solid Waste' Disposal and/or Processing Facility
FORM NO. 8
12-06-2007
31/34
Permit No. ' 400593
Date Issued June ~1. 2006
Date Expired _ September 7, 2009
27.
'28.
29.
24.
26.
· All mixed loads of Municipal Waste and Residual Waste accepted at the Res0ur~e Recovery Facility axe
subject to thc.fees re, luffed.by th~ Murficipal Waste plarafing Recycling and Waste Reduction Ac~ of
1988. '
· No ReSidual Waste is to I~e accepted from any facility ball6.ng/mix/ng diffei-ent eategOfies of Residual
AWgasteunle.ss .such facility is an~mized by the Departmeni or other State Environmental Protection
ency for this purpose. · .
'Each Form U
incincrad~r
Arsenic,
Cadmium.
.Chromium
Barium .
Lead..
· Seleninm,
Silver
The concanlxafion range of each'me~al (minimum, max/mum) for all the above Form U analyses' shall b~'
reported on a quarterly basis and shall be attached, to the Form 41 ~nbmissions required under
Condition 28.- ' ' -
The heat value for each shipment of Residual Waste received· at. the facility mus~ be at least 2400 B/u per
pound; . · . - , .
Form 41, Municipal. Incinerator Ash Residue Monitoring Report, shall'be complete~l in its entirety and
submitted on a quarterly basis by Ap~130 July 3!, O~tober 31 and Jafiuary 31 of e~ch year
The amopnt of Fohn R Residual Wastes with Chemical Analysas Waived (as listed in Cand/tion 11 6f
this permit) accepted ~er month may not exceed 10% of the total amount of wasI_e_ rew~[¥e~l p~ too. nih.
THIS PERMIT IS NON [ TRANSFERABLE
Page 15 of 17
Line I
~2OMMONW]g~LTH OFPENNSY~VANI~ 11:~a.m.
D]gI~RTMENT OF ENrVtRO~TAL PROTECT10~~'
BUILEAU OF WASTE MANAGEMENT
Permit
For
Solid Waste Disposal and/or Processing Facility
FORM NO. 8
Permit No. 400593
Date Issued June 1, 2006
· Date Expired September 7, 2009
12-06-2007 32/34
30.
31.
32.
33.'
The l~rmittee'shall r/o~ accept solid wast~ Izansported to the faci~ty in a vehicle in whi~.h the waste is not
covered or secured ~u accordance with the Department's rules and regulati6as governing the
transportation of waste. · · , .
In accordance w~th the modifications to the Form P approved pursuant to the April ! 1, 2003, pera~it' '
amendment, ash shall be disposed, at the Rollin~ Hills Landfill,. f/Ma Colebrookdal~ Landfill. Alteraafivo
authorized. ,2000, permit amendment are, therefore, no longer
When ~ is
'xe~dne (
.ipermit
pre,,qously a
Plan includes the action plan originally received September 24
27, 2003; September 12, 2003; and December 24, 2003.
the tiPPing floor.
,~ doors near'the
:area shall.be
vacuum up any
as reyised by
, that ~as
approved Action'
,2002;.May
· a~ Pursuant to Section 613 of the Solid Waste Management'Act, 35 P.S. Section 6018.613, the '
~Department may recover its costs to abate a public nuisance related to radioactive Waste
· ' including its costs of management, transport and disposal of the radioactive waste processed, '
stored, disposed, or rejected at the facility.
b. Approv~l ' ' '
of Form X does not gnarantee operatiohal effectiveness. Failure to operate
this equipment to perform as intended or designed, and implemeat the Actioa Plan for Radiation
· .'.Mo~tofing of Solid Waste (Action Plan) according to the applkation documents herein
approved, for any reasqn, shall be sufficient grounds for revocation or suspension of the
facility's waste ~t !~.part or in its eh.tire.ry. -
THIS PERMIT IS NON - TRANSFERABLE
Page 16 of 17
INFORMATION SCHEDULE M
OPERATIONAL PLAN
The Bidder hereby states that it proposes to implement the following operational plan to haul and
dispose of Municipal Solid Waste (MSW) from the Town of 8outhold Landfill if awarded an
Agreement.
. Summarize the manpower md equipment you will make available to perform under this
S-mmarize the identity and location of the primary and secondary sites you plan to use for
disposal of the solid waste. Describe the arrangements between your company and the disposal
site for use of the site. Describe any treatment the MSW will undergo during transport or upon
arrival at the disposal site. Attach copies of the permits to construct and permits to operate the
disposal site.
Site No. 1
LOCATION
ARRANGEMENTS FOR USE ([~) ~o ~ ~
TREATMENT OR UNUSUAL CONDITIONS 0 ~'
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page 1 of 2
71
516-683-1413 Lir)e 1 11:', a.m. 12-06-2007 34/34
Site No. 2
NAME
LOCATION
CONTACT PERSON AND PHONE NO.
ARRANGEMENTS FOR USE
TREATMENT OR UNUSUAL CONDITIONS
Operational Plan
BID (PROPOSAL) FORM
Schedule 5,0.M
Page 2 of 2
72
UNITED STA~I.~S SECURITIES AND EXCHA.. C.E COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2006
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For 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 .lurisd&tion (¥ (I.R.S. Employee
htcorporation or Organization) ld,,ntification No.)
40 Lane Road, Fairfield, N.J. 07004
(Address ~?f Principal Executive ()ffices) (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 Registered
Common Stock, $0.10 par value per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
N/A
Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [] No [2
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes [] No []
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [] No []
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10 K. []
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [] Accelerated filer [] Non accelerated filer []
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [] No []
As of June 30, 2006, the aggregate market value of the registrant's common stock held by non affiliates of the registrant was $1,685,252,693 based
on the closing sale price as reported on the New York Stock Exchange (the exchange upon which the registrant's common stock was listed on such date).
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class February 14, 2007
Common Stock, $0. l0 par value per share 153,616,322 shares
Documents Incorporated By Reference:
Part of Form 10-K of Covanta Holding Corporation Documents Incorporated by Reference
Part III Portions of the Proxy Statement to be filed with the Securities
and Exchange Commission in connection with the Annual
Meeting of Stockholders.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K may constitute "forward-looking" statements as
defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or in
releases made by the Securities and Exchange Commission ("SEC"), all as may be amended from time to time.
Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of Covanta Holding Corporation and its subsidiaries
("Covanta") or industry results, to differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements. Statements that are not historical fact are forward-hioking
statements. Forward-looking statements can be identified by, among other things, the use of forward-hioking
language, such as the words "plan," "believe," "expect," "anticipate," "intend," "estimate," "project," '!may," "will,"
"would," "could," "should," "seeks," or "scheduled to," or other similar words, or the negative of these terms or
other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary
statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of
obtaining the benefits of the "safe harbor" provisions of such laws. Covanta cautions investors that any forward-
looking statements made by Covanta are not guarantees nor are they indicative of future performance. Important
assumptions and other important factors that could cause actual results to differ materially from those forward-
looking statements with respect to Covanta, include, but are not limited to, the risks and uncertainties affecting their
businesses described in Item lA of this Annual Report on Form 10-K for the year ended December 31, 2006 and in
other securities filings by Covanta.
Although Covanta believes that its plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in
any of its forward-looking statements. Covanta's future f'mancial condition and results of operations, as well as any
forward-looking statements, are subject to change, inherent risks and uncertainties. The forward-looking statements
contained in this Annual Report on Form 10-K are made only as of the date hereof and Covanta does not have or
undertake any obligation to update or revise any forward-hioking statements whether as a result of new information,
subsequent events or otherwise, unless otherwise required by law.
AVAILABILITY OF INFORMATION
You may read and copy any materials Covanta files with the SEC at the SEC's Public Reference Room at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material also can be obtained at the SEC's
website, www. sec.gov or by mail from the Public Reference Room of the SEC, at prescribed rates. Please call the
SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Covanta's SEC filings are also
available to the public, free of charge, on its corporate website, www. covantaholdin~.com as soon as reasonably
practicable after Covanta electronically files such material with, or furnishes it to, the SEC. Covanta's common
stock is traded on the New York Stock Exchange. Material filed by Covanta can be inspected at the offices of the
New York Stock Exchange at 20 Broad Street, New York, N.Y. 10005.
PART I
Item 1. BUSINESS
About Covanta Holding Corporation
This report discusses the business of Covanta Holding Corporation, a holding company incorporated in
Delaware on April 16, 1992. The financial statements in this report represent the consolidation of Covanta Holding
Corporation and its wholly-owned and majority-owned subsidiaries. Covanta Holding Corporation conducts all of
its operations through subsidiaries which are engaged in the businesses of waste and energy services, and insurance
services. Covanta Holding Corpomtion's predominant business is the waste and energy services business.
The terms "we," "our," "ours," "us," "Covanta" and "Company" refer to Covanta Holding Corporation and its
subsidiaries; the term "Covanta Energy" refers to our subsidiary Covanla Energy Corporation and its subsidiaries;
the term "ARC Holdings" refers to our subsidiary Covanta ARC Holdings, Inc. and its subsidiaries; the term
"TransRiver" refers to our subsidiary TransRiver Marketing Company, L.P.; the term "CPIH" refers to our
subsidiary Covanta Power International Holdings, Inc.; the term "DIND" refers to our subsidiary Danielson
Indemnity Company; and the term "NAICC" refers to our subsidiary National American Insurance Company of
California and its subsidiaries.
We are a leading developer, owner and operator of infrastructure for the conversion of energy-from-waste,
waste disposal and renewable energy production in the United States. We also engage in the independent power
production business outside the United States. We own or operate 51 energy generation facilities, 41 of which are in
the United States and 10 of which are located outside the United States. Our energy generation facilities use a
variety of fuels, including municipal solid waste, water (hydroelectric), natural gas, coal, wood waste, landfill gas
and heavy fuel-oil. We also own or operate several businesses that are associated with our energy-from-waste
business, including a waste procurement business, two landfills, and several waste transfer stations. We also operate
one domestic water treatment facility.
We also have investments in subsidiaries engaged in insurance operations in Cahfomia primarily in property
and casualty insurance. NAICC writes non-standard private automobile insurance policies in California.
Our Business Strategy
We believe our business offers solutions to public sector leaders around the world in two related elements of
critical infrastructure: post-recycling waste disposal, and energy generation. We believe the environmental benefits
of energy-from-waste, as an alternative to landfilling, are clear and compelling: utilizing energy-from-waste
reduces greenhouse gas emissions, lowers the risk of groundwater contamination, and conserves land. At the same
time, energy-from-waste generates clean reliable energy from a renewable fuel source, thus reducing dependence
on fossil fuels. As pubhc planners address their needs for more environmentally sensitive waste disposal and energy
generation in the years ahead, we believe energy-from-waste will be an increasingly attractive alternative.
Our mission is to be the world's leading energy-from-waste company, with a complementaxy network of waste
disposal and energy generation assets. We expect to build value for our stockholders by satisfying our clients' waste
disposal and energy generation needs with safe, reliable and environmentally superior solutions. In order to
accomplish this mission, we intend to:
· leverage our core competencies and experienced management team by:
· providing outstanding client service,
· developing and utilizing world-class technologies and operational expeaise,
· applying proven asset management, construction management and cost control,
· completing and implementing transactions and acquisitions; and
· maximize long-term value of our existing portfoho by:
· continuing to execute effective maintenance programs and operate at historic production levels,
4
· extending operating contracts,
· enhancing the value of the facilities we own after expiration of existing contracts; and
· capitalize on growth opportunities by:
· expanding our existing energy-from-waste facilities, and building or acquiring new energy-from-waste
facilities,
· seeking new ownership opportunities or operating contracts for energy-from-waste and other energy
generation and waste disposal projects,
· developing or acquiring additional waste transfer, transportation, processing and landfill assets that will
compliment our existing facilities; and
· penetrating international markets with opportunities to build, own, and operate energy-from-waste
facilities.
2007 Recapitalization Plan
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed the following transactions:
· the refinancing of Covanta Energy's debt facilities with new Covanta Energy debt facilities, comprised of a
$300 million revolving credit facility, a $320 million funded letter of credit facility, and a $650 million term
loan (collectively referred to as the "New Credit Facilities");
· an underwritten public offering of 6.118 million shares of our common stock, in which we received proceeds
of approximately $136.6 million, net of underwriting discounts and commissions;
· un underwritten public offering of approximately $373.75 million aggregate principal amount of convertible
debentures (the "Debentures") issued by us, from which we received proceeds of approximately
$364.4 million, net of underwriting discounts and commissions; and
· the repayment, by means of a tender offer, of approximately $604.4 million in aggregate principal amount of
outstanding notes previously issued by Covanta Energy's intermediate subsidiaries.
We completed our pubhc offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the New Credit Facilities on
February 9, 2007. We completed our tender offer for approximately $604.4 million in aggregate principal
amount of outstanding notes on February 22, 2007. Additional information about our recapitalization plan is
provided in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources and in Note 30. Subsequent Events of the Notes to the Consolidated Financial
Statements ("Notes").
Business Segments
Our business segments are Waste and Energy Services, which is comprised of Covanta Energy's domestic and
international operations, and Other Services, which is comprised of the holding company and insurance
subsidiaries' operations. Our Waste and Energy Services segment is substantially larger than our Other
Services segment. Each of these segments is described below.
Additional information about our business segments is contained in Item Z Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview -- Our Business Segments and in Note 1.
Organization and Summary of Significant Accounting Policies and Note 27. Business Segments of the Notes.
WASTE AND ENERGY SERVICES BUSINESS
Our strategic acquisitions of Covanta Energy and ARC Holdings have made us a leader in the waste and energy
services markets.
We acquired Covanta Energy in connection with Covanta Energy's emergence from Chapter 11 proceedings.
On March 5, 2004, the Bankruptcy Court confirmed Covanta Energy's proposed plans of reorganization and on
March 10, 2004, we acquired 100% of Covanta Energy's equity for approximately $30 million. We acqnimd ARC
Holdings on June 24, 2005 by purchasing 100% of the issued and outstanding shares of ARC Holdings' capital
stock. We paid approximately $747 million in cash and transaction costs and assumed ARC Holdings' consolidated
net debt of $1.3 billion at June 24, 2005 ($1.5 billion of consolidated indebtedness net of $0.2 billion of cash and
restricted funds held in trust). We financed both acquisitions through a combination of debt and equity fmancings.
The equity component of each financing was effected through rights offerings to our shareholders.
See Note 3. Acquisitions and Dispositions of the Notes for a detailed description of the financings associated
with these acquisitions.
Energy-From-Waste Projects
The fundamental purpose of our energy-from-waste projects is to provide waste disposal services, typically to
municipal clients who sponsor the projects. The electricity or steam generated is generally sold to local utilities or
industrial customers, and most of the msuliing revenues reduce the overall cost of waste disposal services to the
municipal clients. These projects are capable of providing waste disposal services and generating electricity or
steam, if properly operated and maintained, for several decades. Generally, we provide these waste disposal services
and sell the electricity and steam generated under long-term contracts, which expire on various dates between 2008
and 2028. Many of our service contracts may be renewed for varying periods of time, at the option of the municipal
client.
We receive revenue in the form of fees pursuant to the service or waste contracts, and in some cases, energy
purchase agreements, at facilities we own or operate. TransRiver, one of our subsidiaries, markets waste disposal
services to third parties predominantly to efficiently utilize that portion of the waste disposal capacity of our energy-
from-waste projects which is not dedicated to municipal clients.
We currently operate energy-from-waste projects in 15 states, identified below under "Domestic Project
Summaries." Most of our operating energy-from-waste projects were developed and structured contractually as part
of competitive procurement processes conducted by municipal entities. As a result, many of these projects have
common features. However, each service agreement is different to reflect the specific needs and concerns of a client
community, applicable regulatory requirements and other factors. The following describes features generally
common to these agreements, as well as important distinctions among them:
· 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.
· Financing for the domestic energy-from-waste projects we own is generally accomplished through tax-
exempt and taxable revenue bonds issued by or on behalf of the client community. For these facilities, the
bond issuer loans the bond proceeds 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 revenues pledged under the
respective indentures and is collateralized by the facility and the contracts and other assets of our project
subsidiary.
· 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. We have 23 energy-from-waste projects at which we receive a fixed fee (which
escalates over time pursuant to contractual indices) which we refer to as having a "Service Fee" structure.
We also have 8 energy-from-waste projects at which we receive a per-ton fee under contracts for processing
waste, which we refer to as having a "Tip Fee" structure. At our Tip Fee projects, we contract on both a long-
term and short-term basis to utilize project disposal capacity, and as such we have a greater exposure to waste
market price fluctuation, as well as a greater exposure to project operating disruptions that may cause us to
reduce waste acceptance.
· At projects we own where fl Service Fee structure exists, a portion of the revenue we receive represents
payments by the client community of debt service on project debt, which we pass along to a bond trustee for
payment to bondholders of principal and interest when due. We record, as income on our consolidated
financial statements, the portion of these payments representing principal on our project debt. These
payments will continue until cash in project debt service reserves is sufficient to pay all remaining debt
service payments.
· We generally sell the output from our projects pursuant to long-term contracts to local utilities. Where a
Service Fee structure exists, our client community usually retains a portion (generally 90%) of the energy
revenues generated and pays the balance to us. Where Tip Fee structures exist, we retain 100% of the energy
revenues. At three of our projects, we sell energy output under short-term contracts or on a spot-basis into the
regional electricity grid. At our Tip Fee projects, we generally have a greater exposure to energy market price
fluctuation, as well as a greater exposure to project operating performance.
· 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 liquidated damages charged to us or, if the breach is substantial,
continuing and uuremedied, termination of the applicable agreement. In the case of such a termination, we
may owe material damages, including amounts necessary to discharge project indebtedness. At three
publicly-owned facilities we operate, our client community may terminate the operating contract under
limited circumstances but without cause.
· 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.
Even if the client community delivers less than the full amount of waste promised, it must pay the contractual
fee. Where a Service Fee structure exists, portions of the service fee escalate to reflect indices for inflation.
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.
· Covanta Energy and certain of its subsidiaries have issued performance guarantees to our client communities
and, in some cases other parties, which guarantee that our operating subsidiaries will perform in accordance
with contractual terms including, where required, the payment of damages. Such contractual damages could
be material, and in circumstances where one or more subsidiary's contract has been terminated for its
default, such damages could include amounts sufficient to repay project debt. For facilities owned by client
communities and operated by our subsidiaries, Covanta Energy's potential maximum liability as of
December 31, 2006 associated with the repayment of project debt on such facilities was approximately
$1 billion in aggregate. If Covanta Energy must perform under one or more of such guarantees, its liability
for damages upon contract termination would be reduced by funds held in trust and proceeds from sales of
the facilities securing the project debt and is presently not estimable. To date, Covanta Energy has not
incurred material liabilities under such performance guarantees.
7
Our service and waste disposal agreements, as well as our energy contracts, expire at various times. The extent
to which any such expiration will affect us will depend upon a variety of factors, including whether we own the
project, market conditions then prevailing, and whether the municipal client exercises options it may have to extend
the contract term. As our contracts expire we will become subject to greater market risk in maintaining and
enhancing our revenues. As service agreements at municipally-owned facilities expire, we intend to seek to enter
into renewal or replacement contracts to operate such facilities. We also will seek to bid competitively in the market
for additional contracts to operate other facilities as similar contracts of other vendors expire. As our service and
waste disposal agreements at facilities we own or lease begin to expire, we intend to seek replacement or additional
contracts, and because project debt on these facilities will be paid off at such time, we expect to be able to offer rates
that will attract sufficient quantities of waste while providing acceptable revenues to us. At facilities we own, the
expiration of existing energy contracts will require us to sell our output either into die local electricity grid at
prevailing rotes or pursuant to new contracts. We cannot provide assurance that we will be able to enter into such
renewals, mplaeement or additional contracts, or that the terms available in the market at the time will be favorable.
To date, we have been successful in extending our existing contracts to operate energy-from-waste facilities
owned by municipal clients where market conditions and other factors make it attractive for both us and our
municipal clients to do so. We have entered into extensions both in the context of expansions of facilities (see
discussion below regarding our Lee County, Florida and Hillsborough County, Florida projects), or other negotiated
extensions such as at our Lancaster County, Pennsylvania and Hennepin County, Minnesota projects. The extent to
which additional extensions will be attractive to us and to our municipal clients who own their projects will depend
upon the market and other factors noted above. However, we do not believe that either our success or lack of success
in entering into additional negotiated extensions to operate such facilities will have a material impact on our cash
flow and profitability. See Item IA. Risk Factors -- Covanta Energy may face increased risk of market influences on
its domestic revenues after its contracts expire.
Other Waste-Related Businesses
TransRiver provides waste procurement services to our waste disposal and transfer facilities which have
available capacity to receive waste. In doing so, TransRiver seeks to maximize our revenue, and ensures that our
facilities are being utilized most efficiently, taking into account maintenance schedules and opemting restrictions
that may exist from time to time at each facility. TransRiver also provides management and marketing of ferrous and
non-ferrous metals recovered from energy-from-waste operations, as well as services related to non-hazardous
special waste destruction and residue management for our energy-from-waste projects.
Our waste-related business also includes the operations of five transfer stations and two landfills in the
northeast United States, which we utilize to supplement and manage more efficiently the fuel and ash disposal
requirements at our energy-from-waste operations.
Renewable Energy Projects
We also engage domestically in developing, owning and/or operating renewable energy production facilities
utilizing a variety of energy sources including water (hydroelectric), waste wood (biomass) and landfill gas. We sell
the electrical output from each facility, with one exception, to local utilities. We derive our revenues from the
renewable energy production facilities primarily from the sale of energy and capacity under energy contracts. The
facilities and locations are identified below under "Domestic Project Summaries."
Hydroelectric
We own a 50% equity interest in two mn-of-river hydroelectric facilities which have a combined gross
generating capacity of 17 megawatts ("MW"). Both facilities are located in the State of Washington and both sell
energy and capacity to Puget Sound Energy under long-term energy contracts. We provide operation and
maintenance services at one of the facilities trader a cost plus fixed-fee agreement.
8
Waste Wood
We own three wood-fired generation facilities and a 50% interest in a partnership which owns a fourth wood-
fired generation facility, all of which are located in northern California. Fuel for the facilities is procured from local
sources, primarily through short-term supply agreements. The price of the fuel varies depending on the time of the
year, supply and price of energy. These projects have a combined gross generating capacity of 67.1 MW and sell
energy and capacity to Pacific Gas & Electric Company under energy contracts that expire between 2015 and 2017.
Landfill Gas
We own and operate four landfill gas projects located in California which produce electricity by bunting
methane gas produced in landfills. One of th6se projects, located in San Diego, was expanded in 2006, doubling its
capacity. A fifth landfill gas project located in California and a sixth landfill gas project located in Maryland were
closed in 2006. The four remaining projects have a total gross generating capacity of 15.3 MW and sell energy to
various California utilities. Upon the expiration of the energy contracts, we expect that these projects will enter into
new power off-take arrangements or will be shut down.
Water Project
We designed, built and now operate and maintain a 24 million gallon per day ("mgd") potable water treatment
facility and associated transmission and pumping equipment in Alabama. Under a long-term contract with a public
utility authority, we receive a fixed-fee plus pass-through costs for delivering processed water to a municipal water
distribution system.
Domestic Project Summaries
Summary information with respect to our domestic projects that are currently operating is provided in the
following table:
Design Capacity
Contract Expiration
Dates
A. ENERGY-FROM-WASTE
TIP FEE
STRUCTURES
1. Alexandria/Arlington ...... Virginia 975 22.0 Owner/Operator 2013 2023
2. Delaware Valley .......... Pennsylvania 2,688 87.0 Lessee/Operator 2017 2016
3. Haverhill ............... Massachusetts 1,650 44.6 Owner/Operator N/A 2019
4. Hempstead ............. New York 2,671 75.0 Owner/Operator 2009 2009
5. Niagara(l) .............. New York 2,250 50.0 Owner/Operator N/A 2014
6. Southeast Massachusetts(2).. Massachusetts 2,700 78.0 Owner/Operator N/A 2015
7. Union County ........... New Jersey 1,440 42.1 Lessee/Operator 2023 N/A
8. Warren County .......... New Jersey 400 11.8 Owner/Operator N/A 2013
SERVICE FEE
STRUCTURES
9. Babylon ............... New York 750 16.8 Owner/Operator 2019 2019
I0. Bristol ................. Connecticut 650 16.3 Owner/Operator 2014 2014
11. Detroit(I)(2)(3) .......... Michigan 2,832 68.0 Lessee/Operator 2009 2008
12. Essex County ............ New Jersey 2,700 64.0 Owner/Operator 2020 2021
13. Fairfax County ........... Virginia 3,000 93.0 Owner/Operator 2011 2015
14. Hartford(2)(4) ........... Connecticut 2,000 68.5 Operator 2012 2012
15. Hennepin County ......... Minnesota 1,212 38.7 Operator 2018 2018
16. Hillsborough County(5) .... Florida 1,800 46.5 Operator 2027 2010
Waste Gross Service/
Location
17. Honolulu(2)(3) .......... Hawaii
18. Huntington(6) ........... New York
19. Huntsville(l) ............ Alabama
20. Indianapolis(l) .......... Indiana
21. Kent County(l) .......... Michigan
22. Lake County ............ Florida
23. Lancaster County ......... Pennsylvania
24. Lee County(7) ........... Florida
25. Marion County .......... Oregon
26. Montgomery County ...... Maryland
27. Onondaga County(8) ...... New York
28. Pasco County ............ Florida
29. Southeast Connecticut ..... Connecticut
30. Stanislaus County ........ California
31. Wallingford ............. Connecticut
SUBTOTAL
B. OTHER WASTE
LANDFILLS
32. Haverhill ............... Massachusetts
33. CMW-- Semass ......... Massachusetts
TRANSFER
STATIONS
34. Braintree ............... Massachusetts
35. Lynn .................. Massachusetts
36. Derwood ............... Maryland
37. Danvers ................ Massachusetts
38. Essex ................. Massachusetts
SUBTOTAL
C. HYDROELECTRIC
39. Koma Kulshan(9) ......... Washington
40. Weeks Palls(9) ........... Washington
SUBTOTAL
D. WOOD
41. Burney Mountain ......... California
42. Mount Lassen ........... California
43. Pacific Oroville .......... California
44. Pacific Ultrapower Chinese
Station(9) .............. California
SUBTOTAL
Design Capacity
Waste Gross
Disposal Electric
(TPD) (MW) Nature of Interest
2,160 57.0 Lessee/Operator
750 24.3 Owner/Operator
690 -- Operator
2,362 6.5 Owner/Operator
625 16.8 Operator
528 14.5 Owner/Operator
1,200 33.1 Operator
1,836 5T3 Operator
550 13.1 Owner/Operator
1,800 63.4 Operator
990 36.8 Owner/Operator
1,050 29.7 Operator
689 17.0 Owner/Operator
800 22.4 Owner/Operator
420 11.0 Owner/Operator
46,168 1,225.2
Contract Expiration
Dates
Service/
Waste
Disposal Energy
2010 2015
2012 2012
2016 2016
2008 2028
2010 2022
2014 2014
2016 2016
2024 2015
2014 2014
2016 2010
2015 2025
2011 2024
2015 2017
2010 2010
2010 2010
555 N/A Lessee/Operator N/A N/A
1,700 N/A Operator 2016 N/A
1,200 N/A Owner/Operator
885 N/A Owner/Operator
2,500 N/A Operator
250 N/A Operator
6 N/A Operator
7,096 N/A
2015 N/A
N/A N/A
2015 N/A
2011 N/A
2015 N/A
N/A 12.0 Part Owner/Operator N/A 2037
N/A 5.0 Part Owner N/A 2022
N/A 17.0
N/A 11.4 Owner/Operator
N/A 11.4 Owner/Operator
N/A 18.7 Owner/Operator
N/A 25.6 Part Owner
N/A 67.1
N/A 2015
N/A 2015
N/A 2016
N/A 2017
10
E. LANDFILL GAS
45. Otay .................. California
46. Oxnard ................ California
47. Salinas ................ California .
48. Stockton ............... Califomia
SUBTOTAL
TOTAL ...................
F. WATER
49. Bessemer ............... Alabama
Contract Expiration
Design Capacity Dates
Waste Gross Serviced
Disposal Electric Waste
(TPD) (MW) Nalure of Interest Disposal Energy
N/A 7.4 Owner/Operator N/A 2009-2015
N/A 5,6 Owner/Operator N/A 2009
N/A 1.5 Owner/Operator N/A 2007
N/A 0.8 Owner/Operator N/A 2007
N/A 15.3
53,264 1,324.6
N/A 24 mgd Operator N/A N/A
(1) These facilities have been designed to export steam for sale.
(2) These facilities use a refuse-derived fuel technology.
(3) We lease these projects from third party lessors under arrangements where the lease benefits and burdens are
primarily those of the related client community.
(4) Under contracts with the Connecticut Resource Recovery Authority, we operate only the boilers and turbines
for this facility.
(5) With respect to this project, we have entered into agreements to expand waste processing capacity from
1,200 tpd to 1,800 tpd and to increase gross electricity capacity from 29.0 MW to 46.5 MW. The agreements
will also extend the contract term from 2007 to 2027. See Hillsborough County, Florida discussion below.
(6) Owned by a limited partnership in which the limited partners are not affiliated with Covanta Energy.
(7) With respect to this project, we have entered into agreements to expand waste processing capacity from
1,200 tpd to 1,836 tpd and to increase gross electricity capacity from 36.9 MW to 57.3 MW. The agreements
will also extend the contract term from 2014 to 2024. Construction of the expansion is scheduled to be complete
during 2007.
(8) On December 27, 2006, we acquired all limited parthership interests held by unaffiliated entities in our
subsidiary Covanta Onondaga Limited Partnership.
(9) We have a 50% ownership interest in these projects.
Domestic Business Development
In our domestic business development efforts, we encounter competition from other companies in pursuing
opportunities in the waste disposal and energy markets. With the New Credit Facilities, we will have greater
flexibility to pursue such opportunities by investing in the business and making acquisitions.
Our business is capital intensive because it is based upon building and operating municipal solid waste
processing and energy generating projects. In order to provide meaningful growth through development, we must be
able to invest our funds, obtain equity and/or debt financing, and provide support to our operating subsidiaries. Our
domestic project development has recently concentrated on working with our client communities to expand existing
energy-from-waste project capacities. We are pursuing additional project expansion opportunities, contract
extension opportunities, acquisition opportunities, and opportunities in businesses ancillary to our existing
business, such as additional waste transfer, transportation, processing and landfill businesses.
Our development efforts regarding project expansions, contract extensions and new contracts are described
below.
11
Hillsborough County, Florida
We designed, constructed and now operate and maintain this 1,200 tpd mass-bum energy-from-waste facility
located in and owned by Hillsborough County: Due to the growth in the amount of municipal solid waste generated
in Hillsborough County, Hillsborough County informed us of its desire to expand the facility's waste processing and
electricity generation capacities, a possibility contemplated by the original contract between Covanta Energy and
Hillsborough County. In August 2005, Covanta Energy and Hillsborough County entered into agreements to
implement this expansion, and to extend the agreement under which Covanta Energy operates the facility, which
would otherwise expire in 2007, through 2027. Environmental and other project related permits have been secured
and the expansion construction commenced on December 29, 2006.
Lee County, Florida
We designed, constructed and now operate and maintain this 1,200 tpd mass-bum energy-from-waste facility
located in and owned by Lee County. Due to the growth in the amount of municipal solid waste generated in Lee
County, Lee Cotmty informed us of its desire to engage us to manage the expansion of the facility's waste processing
and eleclxicity generation capacities, a possibility contemplated by the original contract between Covanta Energy
and Lee County. As part of the agreement to implement this expansion, Covanta Energy received a long-term
operating contract extension expiring in 2024. Contracts for construction of the expansion and contracts for
operation and maintenance of the expanded facility have been executed by the parties. The principal environmental
permit for the expansion has been received and construction of the expansion has commenced. Completion of the
expansion, and commencement of the operation of the expanded project, is expected during 2007.
Harrisburg, Pennsylvania
In December 2006, we discussed with officials of the City of Harrisburg and the Harrisburg Authority (the
"Authority") a potential transaction to purchase, lease or operate, on a long-term basis, the Authority's 800 tpd
energy-from-waste facility located in Harrisburg, Pennsylvania. The facility has been experiencing certain
operating difficulties following significant capital improvements undertaken by another company on the
Authority's behalf. A subsidiary of Covanta Energy has entered into an interim agreement to operate and
maintain the facility through March 31, 2007 as the Authority's contractor. Based upon the understanding we
will obtain in the course of operating and maintaining the facility during this period, we expect to provide the
Authority with a proposal regarding a long-term relationship.
International Waste and Energy Services Business
We conduct our international energy business through our foreign subsidiaries and affiliates. The largest
element of our intemational waste and energy services business is our 26% ownership in and operation of a 510 MW
(gross) pulverized coal-fired electric generating facility in the Philippines. We also have interests in other fossil fuel
generating projects in Bangladesh, China, India and the Philippines, an energy-from-waste project in Italy and two
small hydroelectric projects in Costa Rica. In general, these projects provide cash returns primarily from equity
distributions and, to a lesser extent, operating fees. The projects sell the electricity and steam they generate under
long-term contracts or market concessions to utilities, governmental agencies providing power distribution,
creditworthy industrial users, or local governmental units. In select cases, such sales of electricity and steam
may be provided under short-term arrangements as well.
We presently have interests in international power projects with an aggregate generating capacity of
approximately 952 MW (gross) with our portion of the ownership in these facilities representing
approximately 377 MW. In addition to our headquarters in Fairfield, New Jersey, our international business is
facilitated through field offices in Shanghai, China; Cbennai, India; Manila, Philippines; Birmingham, England;
and Bangkok, Thailand.
General Approach to International Projects
In developing our intemational business, we have employed the same general approach to projects as is
described above with respect to domestic projects. We intend to seek to develop or participate in additional
12
international projects, particularly energy-from-waste projects where the regulatory or market environment is
attractive. For information related to the revenues and identifiable assets of the international business, see Note 27.
Business Segments of the Notes.
The ownership and operation of facilities in foreign counlhes entails significant political and fmancial
uncertainties that typically are not encountered in such activities in the United States as described in Item IA. Risk
Factors -- Exposure to international economic and political factors may materially and adversely affect our
international businesses.
Many of the countries in which we currently operate are lesser developed countries or developing countries
where the political, social and economic conditions are typically less stable than in the United States. The financial
condition and creditworthiness of the potential purchasers of power and services we provide or of the suppliers of
fuel for projects in these countries may not be as strong as those of similar entities in developed countries. The
obligations of the purchasers under our energy contracts, the service recipients under our related service agreements
and the suppliers under our fuel supply agreements generally are not guaranteed by any host country or other
creditworthy governmental agency. When a project is developed, we undertake a credit analysis of the proposed
power purchaser or fuel supplier and to the extent appropriate and achievable within the commercial parameters of a
project, require such entities to provide financial instruments, such as letters of credit or arrangements regarding the
escrowing of receivables.
We have typically sought to negotiate long-term contracts for the supply of fuel with creditworthy and reliable
suppliers. However, the reliability of fuel deliveries may be compromised by one or more of several factors that may
be more acute or may occur more frequently in developing countries than in developed countries, including a lack of
sufficient infrastructure to support deliveries under all circumstances; bureaucratic delays in the import,
transportation and storage of fuel in the host country; customs and tariff disputes; and local or regional unrest
or political instability. In most of the foreign projects in which we participate, 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 sudh 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.
Payment for services that we provide will often be made in whole or in part in the domestic currencies of the
host countries. Local governments generally do not assure conversion of such currencies into U.S. dollars, which
may be subject to limitations in the currency markets, as well as restrictions of the host country. In addition,
fluctuations in the value of such currencies against the value of the U.S. dollar may cause our participation in such
projects to yield less return than expected. Transfer of earnings, capital and profits in any form beyond the borders of
the host country may be subject to special taxes or limitations imposed by host country laws. We have sought to
participate in projects where the host country has allowed the convertibility of its currency into U.S. dollars and
repatriation of earnings, capital and profits subject to compliance with local regulatory requirements. In most cases,
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 have sought to manage and mitigate these risks through all appropriate means, including: 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; participation by United States and/or
international development finance institutions in the financing of projects; and joint ventures with other companies
to pursue the development, financing and construction of these projects. We determine which mitigation measures
to apply based on our ability to balance the risks presented, the availability of such measures and their cost.
13
In addition, we have generally participated in projects which provide services that are treated as a matter of
national or key economic importance by the laws and politics of the host country. Therefore, there is a risk that the
assets constituting the facilities of these projects could be temporarily or permanently expropriated or nationalized
by a host country, made subject to local or national control or be subject to unfavorable legislative action, regulatory
decisions or changes in taxation.
In certain cases, Covanta Energy and certain of its subsidiaries have issued guarantees on behalf of our
international operating subsidiaries with respect to contractual obligations to operate certain international power
projects and one energy-from-waste project. The potential damages we may owe under such arrangements may be
material. Depending upon the circumstances giving rise to such damages, the contractual terms of the applicable
contracts, and the contract counterparty's choice of remedy at the time a claim against a guarantee is made, the
amounts owed pursuant to one or more of such guarantees could be greater than our then-available sources of funds.
To date, we have not incurred any material liabilities under such guarantees on international projects.
Our international power projects are identified below under "International Project Summaries." The following
describes the important features of these projects, by fuel type:
Energy-From- Waste
We own a 13% equity interest in an 18 MW mass-burn energy-from-waste project at Trezzo sull'Adda in the
Lombardy Region of Italy which burns up to 500 metric tons per day of municipal solid waste. The remainder of the
equity in the project is held by a subsidiary of Falck S.p.A. and the municipality of Trezzo sull' Adda. The project is
operated by Ambiente 2000 S.nl., an Italian special purpose limited liability company of which we own 40%. The
solid waste supply for the project comes from municipalities and privately-owned waste haulers under long-term
contracts. The electrical output from the Trezzo project is sold at governmentally established preferential rates
under a long-term purchase contract to Italy's state-owned grid operator, Gestore della Rete di Trasmissione
Nazionale S.p.A.
Hydroelectric
We operate two hydroelectric facilities in Costa Pica through an operating subsidiary pursuant to long-term
contracts. We also have a nominal equity investment in each project. The electric output from both of these facilities
is sold to Insfituto Costarricense de Electricidad, a Costa Pica national electric utility.
Coal
A partnership, in which we hold a 26% equity interest, owns a 510 MW (gross) coal-in:ed 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 General Electric Capital
Corporation, 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
quantifies 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.
Project management continues to negotiate with Meralco with respect to proposed amendments to the contract
to modify certain commercial terms and to resolve issues relating to the project's performance during its fa:st year of
operation. Resolution of these issues is not expected to materially adversely affect the Quezon project or the
ownership interest in it.
14
We also have majority equity interests in two coal-fired cogeneration facilities in different provinces in the
People's Republic of China. The project entity, in which we hold a majority interest, operates these projects. During
2006, we sold our interest in a third coal-fired project in China. Parties holding minority positions in the projects
include a private company, a local government enterprise and affiliates of the local municipal government. While
the steam produced at each of the projects is intended to be sold under long-term contracts to the industrial hosts, in
practice, steam has been sold on either a short-term basis to local industries or the industrial hosts, in each case at
varying rates and quantities. In both cases, the electric power is sold at an "average grid rate" to subsidiaries of the
provincial power bureaus.
Nataral Gas
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 an affiliate of
Globaleq Asia Holdings Limited and an affiliate of Wartsila North America, Inc. The electrical output of the project
is sold to the Bangladesh Power Development Board CBPDB") 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 to
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.
Diesel/Heavy Fuel-Oil
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 Salmalpatti 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 at Samayanalhir, 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 developen 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 failed to pay the full amount due under the energy
contracts for both the Samalpatti and Madmai 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 Covanta Energy's 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.
We also own a minority interest in a 7 MW heavy fuel-oil fired electric power generation facility located in the
province of Mindoro, the Philippines (the "Island Power project") that has a long-term power sales contract.
15
International Project Summaries
Summary information with respect to our international projects that are currently operating is provided in the
following table:
Electric
Capacity Operation and
Location (MYV) Nature of Interest Maintenance Energy
A ENERGY-FROM-WASTE
1. Trezzo(1) .................. Italy 18 Part Owner/Operator 2023 2023
B. HYDROELECTRIC
2. Don Pedro(2) ............... Costa Rica 14 Part Owner/Operator 2009 2009
3. Rio Volcan(2) .............. Costa Rica 17 Part Owner/Operator 2009 2009
SUBTOTAL 31
C. COAL
4. Linan(3)(4) ................ China 24 Part Owner/Operator N/A N/A
5. Quezon(5) ................. Philippines 510 Part Owner/Operator 2025 2025
6. Yanjiang(3)(6) .............. China 2~4 Part Owner/Operator N/A NA
SUBTOTAL 558
D. NATURAL GAS
7. Haripur(7) ................. Bangladesh 126 Part Owner/Operator 2014 2014
E. DIESEL/HEAVY FUEL-OIL
8. Island Power(8) ............. Philippines 7 Part Owner N/A 2010
9. Madurai(9) ................ India 106 Part Owner/Operator 2016 2016
10. Samalpatti(10) .............. India 10~6 Part Owner/Operator 2016 2016
SUBTOTAL 219
TOTAL INTERNATIONAL GROSS
MW IN OPERATION ..........
Contract Expiration Dates
952
(1) We have a 13% interest in this project and a 40% interest in the operator Ambiente 2000 S.r. 1.
(2) We have nominal ownership interests in these projects.
(3) Assets of these projects revert back to the local Chinese partner at the expiration of the Joint Venture
Agreement in 2017.
(4) We have an approximate 64% ownership interest in this project.
(5) We have an approximate 26% ownership interest in this project.
(6) We have an approximate 96% ownership interest in this project.
(7) We have an approximate 45% ownership interest in this project. This project is capable of operating through
combustion of diesel oil in addition to natural gas.
(8) We have an approximate 20% ownership interest in this project.
(9) We have an approximate 77% ownership interest in this project.
(10) We have a 60% ownership interest in this project.
16
International Business Development
As with our domestic business, the New Credit Facilities afford greater flexibility to invest in and grow our
international business. We are pursuing international waste and/or energy business opportunities, particularly in
markets where the market demand, regulatory environment or other factors encourage technologies such as energy-
from-waste in order to reduce dependence on landfilling, such as Italy, the United Kingdom, China or island nations
where landfilling is a less desirable disposal option.
China Joint Venture
On February 12, 2007, we entered into agreements relating to the subscription for a 40% equity interest in
Chongqing Sanfeng Environmental Industry Co., Ltd. CSanfeng"). Sanfeng, a company located in Chongqing
Municipality, China, 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 tons per day, 24 MW mass-bum energy-from-waste
projects. Energy-from-waste facility design and engineering services are provided by Sanfeng using technology
under license from Martin GmbH fur Umwelt and Energietechnik.
Our investment in Sanfeng is subject to various regulatory and other conditions precedent and is expected to be
completed during the second quarter of 2007. Upon completion of our investment, Sanfeng will be converted into a
Sino-fureign equity joint venture under Chinese law in which Sanfeng's current shareholder, Chongqing Iron &
Steel Company (Group) Limited, will hold the remaining 60% equity interest. We intend to expand the business of
the joint venture company through the development of additional mass-bum energy-from-waste projects in China in
which Covanta intends to co-invest with the joint venture company.
OTHER SERVICES BUSINESS
Discussion of Other Services Business
The operations of the holding company prior to the acquisition of Covanta Energy on March 10, 2004,
primarily included general and administrative expenses related to officer salaries, legal and other professional fees
and insurance. Subsequent to the acquisition of Covanta Energy, these expenses are reimbursed by Covanta Energy
under an administrative services agreement. The holding company operations also include income earned on its
investments.
Insurance Business
Following the acquisitions of Covanta Energy and ARC Holdings, the relative contribution of our insurance
business to our cash flow and its relative percentage of our financial obligations were significantly reduced.
Consequently, our insurance business neither contributes materially to our cash flow nor imposes material financial
obligations on us.
Our insurance business continues to represent an important element of our structure in that our net operating
loss carryforwards ("NOLs") were primarily generated through the operations of former subsidiaries of DIND. Our
ability to utilize that portion of the NOLs will depend upon the continued inclusion of our insurance hnsiness in our
consolidated federal income tax return. See Note 21. Income Taxes of the Notes for more information on our NOLs.
Our insurance operations are conducted through wholly-owned subsidiaries, principally NAICC. NAICC has
historically managed its business across four principal lines of business: non-standard private passenger
automobile; commercial automobile; workers' compensation; and property and casualty. As of December 31,
2006, NAICC was engaged in writing exclusively non-standard private passenger automobile primarily in
California. NAICC intends to also engage in the specialty surety business in order to expand its business
incrementally.
Our insurance businesses have succeeded in reducing their loss ratio by adjusting rate filings, tightening
underwriting criteria, exiting unprofitable lines of business and focusing on writing more profitable lines of
17
business through its arrangements with third parties providing marketing, underwriting and administration services.
Such third parties do not have rate making authority or authority to enter into reinsurance arrangements. Such third
parties are paid flat commission on new and renewal policies written and they participate in an incentive
compensation arrangement dictated solely by underwriting results.
Insurers admitted in California are required to obtain approval, from the California Department of Insurance,
of rates and/or forms prior to their use. Many of the other states in which NAICC is authorized to conduct business
have similar requirements. Rates and policy forms are developed by NAICC and filed with the regulators in each of
the relevant states, depending upon each state's requirements. NAICC relies upon its own, as well as industry,
experience in establishing rates.
Non-standard automobile liability risks relate to those segments of the driving public which generally are not
considered "preferred" business, such as drivers with a record of prior accidents or driving violations, drivers
involved in particular occupations or driving certain types of vehicles, or those drivers whose policies have not been
renewed or whose policies have been declined by another insurance company. Generally, in order to address the
associated higher Ask of non-standard private automobile insurance, premium rates are higher than standard
premium rates while policy limits are lower than typical policy limits. Policyholder selection is governed by
underwriting guidelines established by NAICC. NAICC believes that it is able to achieve underwriting success
through refinement of various risk profiles, thereby dividing the non-standard market into more defined segments
which can be adequately priced. Additionally, traditional lower policy limits lend themselves to quicker claims
processing allowing NAICC to respond more quickly to changing loss trends, by revising underlying underwriting
guidelines and class and rate filings accordingly.
NAICC maintains reserves with respect to net unpaid losses and loss adjustment expenses CLAE"),
representing the estimated indemnity cost and expense necessary to cover the ultimate net cost of investigating
and settling claims. Such estimates are based upon estimates for reported losses, historical company experience of
losses reported by reinsured companies for insurance assumed and actuarial estimates based upon historical
company and industry experience for development of reported and unreported claims (incurred but not reported).
Any changes in estimates of ultimate liability are reflected in current operating results. Inflation is assumed, along
with other factors, in estimating future claim costs and related liabilities. NAICC does not discount any of its loss
reserves. NAICC believes its provisions for unpaid losses and LAE are adequate to cover the net cost of losses and
loss expenses incurred to date, and that it satisfies all reserve-based capital requirements imposed under applicable
insurance regulatie ;.
In its normal course of business, NAICC typically reinsures a portion of its exposure with other insurance
companies so as to effectively limit its maximum loss arising out of any one occurrence. Contracts of reinsurance do
not legally discharge the original insurer from its primary liability. Estimated reinsurance receivables arising from
these contracts of reinsurance are reported separately as assets in accordance with generally accepted accounting
principles in the United States.
MARKETS, COMPETITION AND BUSINESS CONDITIONS
General Business Conditions
Our business can be adversely affected by general economic conditions, war, inflation, adverse competitive
conditions, governmental restrictions and controls, changes in laws, natural disasters, energy shortages, fuel costs,
weather, the adverse financial condition of customers and suppliers, various technological changes and other factors
over which we have no control.
We expect in the foreseeable future that competition for new contracts and projects will be intense in all
markets in which we conduct or intend to conduct businesses, and our businesses will be subject to a variety of
competitive, regulatory and market influences.
With respect to our waste-related businesses, including our energy-from-waste and TransRiver businesses, we
compete in the waste disposal market, which is highly competitive. While we currently process for disposal over 5%
18
of the municipal solid waste in the United States, the market for waste disposal is almost entirely price-driven and is
greatly influenced by economic factors within regional "waste sheds." These factors include:
· 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 (rail, intermodal, trucking) to provide access to more
distant disposal sites, thereby affecting the size of the waste shed itself.
In the waste disposal market, disposal service providers seek to obtain Waste supplies to their facilities by
competing on disposal price (usually on a per-ton basis) with other disposal service providers. At all but eight of our
energy-from-waste facilities, we typically do not compete in this market because we do not have the contractual
right to solicit waste. At these facilities, the client community is responsible for obtaining the waste, if necessary by
competing on price to obtain the tons of waste it has contractually promised to deliver to us. At eight of our energy-
from-waste facilities and at our TransRiver businesses, we are responsible for obtaining material amounts of waste
supply, and therefore, actively compete in these markets to enter into spot, medium- and long-term contracts. Alii of
these energy-from-waste projects are in densely populated areas, with high waste generation rates and numerous
large and small participants in the regional market. Certain of our competitors in these markets are vertically-
integrated waste companies which include waste collection operations, and thus have the ability to control supplies
of waste which may restrict our ability to offer disposal services at attractive prices. Our business does not include
waste collection operations.
Our waste operations are largely concentrated in the northeastern United States. See Item IA. Risk Factors --
Our waste operations are concentrated in one region, and expose us to regional economic or market declines for
additional information conceming this geographic concentration.
If a long-term contract expires and is not renewed or extended by a client community, our percentage of
contracted disposal capacity will decrease, and we will need to compete in the regional market for waste disposal.
At that point, we will compete on price with landfills, transfer stations, other energy-from-waste facilities and other
waste disposal technologies that are then offering disposal service in the region. See discussion under Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview--
Contract Duration for additional information concerning the expiration of existing contracts.
We may develop or acquire, ourselves or jointly with others, additional waste or energy projects or businesses.
If we were to do so in a competitive procurement, we would face competition in the selection process from other
companies, some of which may have greater financial resources. If we were selected, the amount of market
Competition we would thereafter face would depend upon the extent to which the capacity at any such project would
be committed under contract. If we were to develop or acquire additional projects or businesses not in the context of
a competitive procurement, we would face competition in the regional market and compete on price with landfills,
transfer stations, other energy-from-waste facilities, other energy producers and other waste disposal or energy
generation technologies that are then offering service in the region.
With respect to our electricity sales from oar energy-from-waste projects and independent power projects, we
primarily sell our output pursuant to long-term contracts. Accordingly, we generally do not sell our output into
murlcets where we must compete on price. As these contracts expire, we will participate in such markets if we are
unable to enter into new or renewed long-term contracts. See discussion under Item IA. Risk Factors -- Covanta
Energy may face increased risk of market influences on its domestic revenues a fief its contracts expire for additional
information concerning the expiration of existing contracts.
Once a contract is awarded or a project is financed and constructed, our business can be impacted by a variety
of risk factors which can affect profitability over the life of a project. Some of these risks are at least partially within
our control, such as successful operation in compbance with laws and the presence or absence of labor difficulties or
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disturbances. Other risk factors are largely out of our control and may have an adverse impact on a project over a
long-term. See Item IA. Risk Factors for more information on these types of risks.
Technology, Research and Development
We have the exclusive right to market the proprietary mass-bum technology of Martin GmbH fur Umwelt and
Energietechnik, referred to herein as "Martin" in the United States, Canada, Mexico, Bermuda and certain
Caribbean countries (the "Territory"). The principal feature of the Martin technology is the reverse-reciprocating
stoker grate upon which the waste is burned. The patent for the basic stoker grate technology used in the Martin
technology has expired and there are various other expired and unexpired patents relating to the Martin technology.
We believe that it is Martin's know-how and worldwide ~epntation in the energy-from-waste industry, and our
know-how in designing, constructing and operating energy-from-waste facilities, rather than the use of patented
technology, that is important to our competitive position in the energy-from-waste industry in the United States. We
do not believe that the expiration of the remaining patents covering portions of the Martin technology will have a
material adverse effect on our financial condition or competitive position.
Since 1984, our rights to the Martin technology have been provided pursuant to a cooperation agreement with
Martin which gives us exclusive rights to market, and distribute parts and equipment for the Martin technology in
the Territory. Martin is obligated to assist us in installing, operating and maintaining facilities incorporating the
Martin technology. The cooperation agreement renews automatically each year unless notice of termination is
given, in which case, the cooperation agreement would terminate ten years after such notice. Any termination would
not affect our rights to design, construct, operate, maintain or repair energy-from-waste facilities for which
contracts have been' entered into or proposals made prior to the date of termination.
We believe that mass-bum technology is now the predominant technology used for the combustion of
municipal solid waste. We believe that the Martin technology is a proven and reliable mass-bum technology, and
that our association with Martin has created significant name recognition and value for our domestic energy-from-
waste business. Through facility acquisitions, we own and/or operate some energy-from-waste facilities which
utilize additional technologies, including non-Martin mass-bum technologies, and refuse-derived fuel technologies
which include pre-combustion waste processing not required with a mass-burn design. As we continue our efforts to
develop and/or acquire additional energy-from-waste projects intemationaily, we will consider mass-bum and other
technologies, including Martin systems, which best fit the needs of the local environment of a particular project.
We believe energy-from-waste technologies offer an environmentally superior solution to waste disposal and
energy challenges faced by leaders around the world, and that our efforts to expand our domestic and international
businesses, will be enhanced by the development of additional technologies in such fields as emission controls,
residue disposal, alternative waste treatment processes, and combustion controls. During 2006, we advanced our
research and development efforts in these areas, and have developed, along with Martin, a proprieta~ waste
combustion process that we expect will reduce emissions of nitrogen oxides. We also developed a proprietary
process to improve the handling of the residue from our energy-from-waste facilities. We intend to maintain a focus
in the years ahead on research and development of technologies in these and other areas we believe will enhance our
competitiye position and complement our business.
REGULATION OF BUSINESS
Our waste and energy services business and our insurance business are both highly regulated.
Regulations Affecting Our Domestic Waste and Energy Services Business
Environmental Regulations
Our business activities in the United States are pervasively regulated pursuant to federal, state and local
environmental laws. Federal laws, such as the Clean Air Act and Clean Water Act, and their state counterparts,
govern discharges of pollutants to air and water. Other federal, state and local laws comprehensively govern the
generation, transportation, storage, treatment and disposal of solid and hazardous waste and also regulate the
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storage and handling of chemicals and petroleum products (such laws and regulations are referred to collectively as
the "Environmental Regulatory Laws").
Other federal, state and local laws, such as the Comprehensive Environmental Response Compensation and
Liability Act commonly known as "CERCLA," and collectively referred to with such other laws as the
"Environmental Remediation Laws," make us potentially liable on a joint and several basis for any onsite or
offsite environmental contamination which may be associated with our activities and the activities at sites. These
include landfills that our subsidiaries have owned, operated or leased or, at which then has been disposal of residue
or other waste generated, handled or processed by such subsidiaries. Some state and local laws also impose
liabilities for injury to persons or property caused by site contamination. Some service agreements provide for
indemnification of operating subsidiaries from certain liabilities. In addition, other subsidiaries involved in landfill
gas projects have access rights to landfill sites pursuant to certain leases that permit the installation, operation and
maintenance of landfill gas collection systems. A portion of these landfill sites have been federally-designated
"Superfund" sites. Each of these leases provide for indenmification of our subsidiaries from some liabilities
associated with these sites.
The Environmental Regulatory Laws require that many permits be obtained before the commencement of
construction and operation of any waste, renewable energy or independent power project or water facility, and
further require that permits be maintained throughout the operating life of the facility. We can provide no assurance
that all required permits will be issued or re-issued, and the process of obtaining such permits can often cause
lengthy delays, including delays caused by third-party appeals challenging permit issuance. Our failure to meet
conditions of these permits or of the Environmental Regulatory Laws can subject us or our operating subsidiaries to
regulatory enforcement actions by th~ appropriate governmental unit, which could include fines, penalties, damages
or other sanctions, such as orders requiting certain remedial actions or limiting or prohibiting operation. See
Item IA. Risk Factors -- Compliance with environmental laws could adversely affect our results of operations. To
date, we have not incurred material penalties, been required to incur maierial capital costs or additional expenses, or
been subjected to material restrictions on our operations as a result of ¥iolations of Environmental Regulatory Laws
or permit requirements.
Although our operations are occasionally subject to proceedings and orders pertaining to emissions into the
environment and other environmental violations, which may result in fines, penalties, damages or other sanctions,
we believe that we are in substantial compliance with existing Environmental Regulatory Laws. We may be
identified, along with other entities, as being among parties potentially .responsible for contribution to costs
associated with the correction and remediation of environmental conditions at disposal sites subject to CERCLA
and/or analogous state Environmental Remediation Laws. In certain instances, we may. be exposed to joint and
several liability for remedial action or damages. Our ultimate liability in connection with such environmental claims
will depend on many factors, including our volumetric share of waste, the total cost of remediation, and the financial
viability of other companies that have also sent waste to a given site and, in the case of divested operations, our
contractual arrangement with the purchaser of such operations.
The Environmental Regulatory Laws are subject to revision. New technology may be required or stricter
standards may be established for the control of discharges of air or water pollutants, for storage and handling of
petroleum products or chemicals, or for solid or hazardous waste or ash handling and disposal. Thus, as new
technology is developed and proven, we may be required to incorporate it into new facilities or major modifications
to existing facilities. This new technology may often be more expensive than the technology we use currently.
On May 10, 2006, the Environmental Protection Agency ("EPA") issued revisions to the New Source
Performance Standards ("NSPS") and Emission Guidelines ("EG") applicable to new and existing municipal waste
combustion ("MWC") units (the "Revised MACT Rule"). The Revised MACT Rule lowered the emission limits for
most of the regulated air pollutants emitted by MWCs. The general compliance deadline for the revised EG is
April 28, 2009; however, the actual compliance date for a particular facility may be earlier depending on the state in
which the facility is located. We anticipate that one existing energy-from-waste facility, which we operate on behalf
of a municipality, will require capital improvements to comply with revised EG, and have initiated discussions with
such municipality regarding implementation and its intended financing options. Most existing facilities also will
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incur increased operating and maintenance costs to meet the revised EG requirements, none of which are expected
to be material.
On October 17, 2006, EPA issued a final role to implement the revised National Ambient Air Quality
Standards for fme particulate matter, or PM2.5 ("PM2.5 Rule"). Unlike the Revised MACT Rule discussed above,
the PM2.5 Rule is not specific to energy-from-waste facilities, but instead is a nationwide standard for ambient air
quality. The primary impact of the PM2.5 Rule will be on those counties in certain states that are designated by EPA
as "non-attainment" with respect to those standards. EPA's PM2.5 Rule will guide how states achieve compliance
with the PM2.5 Rule, and could result in more stringent regulation of certain energy-from-waste facility emissions
that aimady are regulated by the Revised MACT Rule. EPA is expected to make "non-attainment" designations by
November 2009; however, state plans to meet the PM2.5 Rule will not be due until April 2013.
The costs to meet new roles for existing facilities owned by municipal clients generally will be borne by the
municipal clients. For projects we own or lease, the municipal clients generally have the obligation to fund such
capital improvements, and at certain of our projects we may be required to fund a portion of the related costs. In
certain cases, we are required to fund the full cost of capital improvements.
We believe that most costs incurred to meet the Revised MACT Rule and PM2.5 Rule at facilities we operate
may be recovered from municipal clients and other users of our facilities through increased fees permitted to be
charged under applicable contracts.
The Environmental Remediation Laws prohibit disposal of regulated hazardous waste at our municipal solid
waste facilities. The service agreements recognize the potential for inadvertent and improper deliveries of
hazardous waste and specify procedures for dealing with hazardous waste that is delivered to a facility.
Although under some service agreements, we are responsible for some costs related to hazardous waste
deliveries, to date no operating subsidiary has incurred material hazardous waste disposal costs.
During 2006, increased public and political debate occurred over the need for additional regulation of
greenhouse gasses (principally carbon dioxide ("CO2") and methane) as a contributor to global warming, that could
in the future affect our business. While the political discussion has not been aimed specifically at the waste or
energy-from-waste businesses, regulatory initiatives developed to date are broad in scope and are generally
designed to promote renewable energy, development of a certified inventory and ultimately reduction of greenhouse
gas emissions. Most of these initiatives are at the state or regional levels, but with debate currently underway in
Congress, federal regulation is possible as well, and may need to be reconciled with state and regional efforts. We
believe that energy-from-waste is a mitigating technology that provides net reductions in greenhouse gas emissions,
because it avoids CO2 emissions f¥om fossil fuel power plants and methane from landfills. For policymakers at the
local level, who make decisions on waste disposal alternatives, we believe using energy-from-waste instead of
landfilling will result in significantly lower net greenhouse gas emissions, while als0 introducing more control over
the cost and supply of local electrical power.
Some regulatory initiatives exist in regions where we have projects. For example, during 2006, a group of
seven northeastern states, including Connecticut, New Jersey and New York, acting through the Regional
Greenhouse Gas Initiative ("RGGI"), issued a "model role" to implement reductions in greenhouse gas
emissions. The model role establishes a "cap and trade" program with a market-based emissions trading
system aimed at reducing emissions of CO2, and may be followed in individual state mlemakings. The model
role establishes an initial cap for regional CO2 emissions equivalent to 1990 levels, with incremental reductions
below those levels after 2014. To date, RGGI is focused on fossil fuel-fired electric generators; however, we
continue to monitor developments with respect to state implementation of RGGI and intend to participate in
mlemaking.
Also during 2006, Califomia enacted the California Global Warming Solutions Act of 2006 ("AB 32"). AB 32
requires annual reporting of greenhouse gas emissions for sources deemed "significant" by the state Air Resoumes
Board ("ARB") and sets emission limits to cut California's emissions to 1990 levels by 2020. During 2006, we
joined the California Climate Action Registry, certifying our greenhouse gas emissions from our Caiifomia
facilities. As a member, we will participate in the evolving regulatory process by which the ARB will implement the
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requirements of AB 32. Until the ARB issues its regulations, it is not possible to predict with certainty the impact of
AB 32 on our Califomia facilities.
Energy Regulation
Our businesses are subject to the provisions of federal, state and local energy laws applicable to the
development, ownership and operation of domestic facilities. Pursuant to the Public Utility Regulatory Policies
Act of 1978 ("PURPA"), the Federal Energy Regulatory Commission ("FERC") has promulgated regulations that
exempt qualifying facilities (cogeneration facilities and other facilities making use of non-fossil fuel power sources
such as waste, wlfich meet certain size, ownership and other applicable requirements, referred to as "QFs") from
compliance with certain provisions of the Federal Power Act ("FPA"), the Public Utility Holding Company Act of
1935 ("PUHCA") (repealed effective February 2006), and certain state law5 regulating the rates charged by, or the
financial and organizational activities of, electric utilities. PURPA was enacted in 1978 to encourage the
development of, among other things, requiring electric utilities to offer to purchase electric energy from and
sell electric energy to QFs at nondiscriminatory rates. The exemptions afforded by PURPA to QFs from regulation
under the FPA and most aspects of state electric utility regulation are of great importance to us and our competitors
in the energy-from-waste and independent power industries. Except with respect to energy-from-waste facilities
with a net power production capacity in excess of 30 MW (where rates are set by the FERC), state public utility
commissions must approve the rates, and in some instances other contract terms, by which public utilities pumhase
electric power from QFs.
The Energy Policy Act of 2005, passed in August 2005, makes certain changes to the federal energy laws
applicable to our business, the most significant of which are described below:
· The Energy Policy Act repealed PUHCA, effective February 2006, which eliminated any remote risk we
might have faced by being subject to PUHCA's'extensive, utility-type regulation and reporting requirements
imposed on holding companies under PUHCA. The repeal of PUHCA has been balanced with increased
FERC authority to cause record keeping and conduct investigations under appropriate cimumstances. As a
company that owns only QFs, exempt wholesale generators and/or foreign utility companies, we are
generally exempt from such record keeping and such investigations.
· The Energy Policy Act amends certain provisions of PURPA. It terminated PURPA's mandatory purchase
(and sale) obligation imposed on utilities for the benefit of QFs where the QF has nondiscriminatory access
to competitive power markets. Existing contracts are grandfathered, but many expansions, renewals and new
development projects must rely on competitive power markets, rather than PURPA protections, in
establishing and maintaining their viability in most geographic regions in which we operate. The
Energy Policy Act also eliminates the utility ownership limitation for QFs. In October 2006, FERC
issued final regulations under the Energy Policy Act providing for, among other things, a rebuttable
presumption that (1) the competitive power market requirement is satisfied in regions served by Midwest
Independent Transmission System Operator, PJM Interconnection, L.L.C., ISO New England, Inc., New
York Independent System Operator and the Electric Reliability Council of Texas, and (2) QFs with a
capacity greater than 20 MW have non-discriminatory access to those markets. As to QFs with a capacity at
or below 20 MW, the regulations provide for a rebuttable presumption that such QFs do not have non-
discriminatory access to any market.
· This change might have the effect of making some transactions and development projects more likely to be
consummated. This could result in greater utility ownership of QFs than previously was the case due to
PURPA and PUHCA restrictions and considerations. If these transactions and development projects occur in
the areas of energy-from-waste, other renewable energy and independent power, it could serve to increase
competition with our businesses by bringing greater utility participation to these markets.
· The Energy Policy Act extends or establishes certain renewable energy incentives and tax credits which
might be helpful to expand our businesses or for new development.
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Regulations Affecting Our International Business
We presently have ownership and operating interests in electric generating projects outside thc United States.
Most countries have expansive systems for the regulation of the power business. These generally inchidc provisions
relating to ownership, licensing, rate setting and financing of generation and transmission facilities.
We aim to provide energy generating and other infrastructure through environmentally protective project
designs, regardless of the location of a particular project. This approach is consistent with the stringent
envirnnmcntal requirements of multilateral financing institutions, such as the World Bank, and also with our
experience in domestic energy-from~waste projects, where environmentally protective facility design and
performance is required. Compliance with environmental standards comparable to those of the United States
may be conditions to the provision of credit by multilateral banking agencies, as well as other lenders or credit
providers. The laws of other countries also may require regulation of emissions into thc cnvirnnment, and provide
governmental entities with thc authority to impose sanctions for violations, although these reqnirements are
generally different from those applicable in the United States. See Item lA. Risk Factors- Exposure to
international economic and political factors may materially and adversely affect our international
businesses and -- Compliance with environmental [aws could adversely affect our results of operations. As
with domestic project dcvchipment, we can provide no assurance that all required permits will be issued, and
the process can oficn cause lengthy delays.
Certain international markets in which we compete have recently adopted regulatory or policy frameworks that
encourage energy-from-waste as an important component of waste management planning and practice. For
example, China currently has a favorable regulatory environment for the development of energy-frnm-waste
projects. The National Plan issued by thc Ministry of Construction calls for an increase in municipal solid waste
incineration from 1.65% (2005 estimate) to 30% by 2030. Energy-from-waste is designated by the Chinese central
government as an "encouraged industry", and China accordingly has various promotional policies in place to
promote energy-from-waste projects including value added tax refunds, prioritized commercial bank loans, state
subsidies for loan interest, and a guaranteed subsidized price for the sale of electricity.
Similarly, thc European Union has adopted regulations which require member countries to reduce utilization
of and reliance upon landfill disposal. The legislation emanating from the European Union is primarily in the form
of "Directives." These are not directly applicable within the member states. Rather, they need enabling domestic
legislation to implement them, which results in significant variance between the legislative schemes introduced by
member states. Certain Directives notably affect the regalation of energy-from-waste facilities across the European
Union. These include (1) Directive 96/61/EC concerning integrated pollution prevention and control (known as the
"PPC Directive") which governs the emissions to air, land and water from certain large industrial installations,
(2) Directive 1999/31/EC concerning the landfill of waste (known as the "Landfill Directive") which imposes
operational and technical controls on landfills and restricts, on a reducing scale to the year 2020, thc amount of
biodegradable municipal waste which member states may dispose of to landfill, and (3) Directive 2000/76/EC on
the incineration of waste (known as the "Waste Incineration Directive" or "WID"), which imposes limits on
emissions to air on the incineration and co-incineretion of waste. In response to these Directives, member countries
have begun to implement such measures as imposing incremental fees on landfill disposal and providing rate
subsidies for energy generated at energy-lmm-waste projects.
Regulations Affecting Our Insurance Business
Insurance companies are subject to insurance laws and regulations established by the states in which they
transact business. The agencies established pursuant to these state laws have broad administrative and supervisory
powers relating to the granting and revocation of licenses to transact business, regulation of trade practices,
establishment of guaranty associations, licensing of agents, approval of policy forms, premium rate filing
requirements, reserve requirements, the form and content of required regulatory financial statements, capital
and surplus requirements and the maximum concentrations of certain classes of investments. Most states also have
enacted legislation regulating insurance holding company systems, including acquisitions, extraordinary dividends,
the terms of affiliate transactions and other related matters. We and our insurance subsidiaries have registered as
holding companies pursuant to such legislation in California and Montana, and routinely report to other
24
jurisdictions. The National Association of Insurance Commissioners has formed committees and appointed
advisory groups to study and formulate regulatory proposals on such diverse issues as the use of surplus
debentures, accounting for reinsurance transactions and the adoption of risk-based capital requirements. It is
not possible to predict the impact of future state and federal regulation on the operations of our insurance business.
NAICC is an insurance company domiciled in the State of California and is regulated by the California
Department of Insurance for the benefit of policyholders. The Califomia Insurance Code does not permit the
payment of an extraordinary shareholder dividend without prior approval from the California Insurance
Commissioner. Dividends are considered extraordinary if they exceed the greater of net income or 10% of
statutory surplus as of the preceding December 31st. For the foreseeable futura, NAICC is not expected to have
sufficient accumulated earned surplus to pay dividends.
A model for determining the risk-based capital requirements, referred to as "RBC mqnirements," for property
and casualty insurance companies was adopted in December 1993. The model generally assesses the assets at risk
and underwriting operations and determines policyholders' surplus levels necessary to support such activity.
NAICC has calculated its RBC requirement under the most recent RBC requirement model and, as of December 31,
2006, it had capital in excess of the mgniatory Authorized Control level.
EMPLOYEES
As of December 31, 2006, we employed approximately 3,300 full-time employees worldwide, of which a
majority are employed in the United States.
Of our employees in the United States, approximately 13% are represented by organized labor. Currently, we
are party to seven collective bargaining agreements: three expire in 2007, two expire in 2008 and two expire in 2009.
We consider relations with our employees to be good and do not anticipate any significant labor disputes in
2007.
EXECUTIVE OFFICERS
A list of our executive officers and their business experience follows. Ages shown are as of February 23, 2007.
Anthony J. Orlando was named President and Chief Executive Officer in October 2004. Mr. Orlando was
elected as one of our directors in September 2005 and is a member of the Public Policy Committee and the Finance
Committee. Previously, he had been President and Chief Executive Officer of Covanta Energy since November
2003. From March 2003 to November 2003, he served as Senior Vice President, Business and Financial
Management of Covanta Energy. From January 2001 until March 2003; Mr. Orlando served as Covanta
Energy's Senior Vice President, Waste-to-Energy. Previously, he served as Executive Vice President of
Covanta Energy Group, Inc. Mr. Orlando joined Covanta Energy in 1987. Age: 47.
Mark A. Pytosh has served as Senior Vice President and Chief Financial Officer since September 2006.
Previously, Mr. Pytosh served as Executive Vice President from February 2004 to August 2006 and Chief Financial
Officer from May 2005 to August 2006 of Waste Services, Inc., a publicly-traded integrated waste services
company. Prior to his tenure with Waste Services Inc., Mr. Pytosh served as a Managing Director in Investment
Banking at Lehman Brothers where he led the fmm's Global Industrial Group, from November 2000 to February
2004. Before joining Lehman Brothers in 2000, Mr. Pytosh had 15 years of investment banking experience at
Donaldson, Lufkin & Jenrette and Kidder, Peabody. Age: 42.
John M. Klett was appointed SeniOr Vice President and Chief Operating Officer of Covanta Energy in
May 2006. Mr. Klett has served as Senior Vice President, Operations of Covanta Energy since March 2003. Prior
thereto he served as Executive Vice President of Covanta Waste to Energy, Inc. for more than five years. Mr. Klett
joined Covanta Energy in 1986. Mr. Klett has been in the energy-from-waste business since 1977. He has been in the
power business since 1965. Age: 60.
Timothy J. Simpson has served as Senior Vice President, General Counsel and Secretary since October 2004.
Since March 2004, he has served as Senior Vice President, General Counsel and Secretary of Covanta Energy. From
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June 2001 to March 2004, Mr. Simpson served as Vice President, Associate General Counsel and Assistant
Secretary of Covanta Energy. Previously, he served as Senior Vice President, Associate General Counsel and
Assistant Secretary of Covanta Energy Group, Inc. Mr. Simpson joined Covanta Energy in 1992. Age: 48.
Thomas E. Backs has served as Vice President and Chief Accounting Officer since April 2005. Mr. Bucks
served as Controller from February 2005 to April 2005. Previously, Mr. Bucks served as Senior Vice President --
Controller of Centennial Commtmications Corp., a leading provider of regional wireless and integrated
communications services in the United States and the Caribbean, from March 1995 through February 2005,
where he was the principal accounting officer and was responsible for accounting operations and external financial
reporting. Age: 50.
Involvement In Certain Legal Proceedings
Messrs. Orlando, Klett and Simpson were officers of Covanta Energy when it filed for bankruptcy and have
continued as officers of Covanta Energy after its emergence from bankruptcy and conf'u'mation of its plan of
reorganization. As further described in the Business section above, Covanta Energy's Chapter 11 proceedings
commenced on April 1, 2002. Covanta Energy and most of its domestic subsidiaries filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code in the United States Banlauptcy Court for the Southern District of
New York. All of the bankruptcy cases were jointly administered under the caption "In m Ogden New York
Services, Inc., et al., Case Nos. 02-40826 (CB), et al." On March 5, 2004, the Bankruptcy Court entered an order
confirming the plan of reorganization and plan for liquidation for subsidiaries involved in non-core businesses and
on March 10, 2004, both plans were effected.
Item lA. RISK FACTORS
The following risk factors could have a material adverse effect on our business, financial condition and results
of operations.
We cannot be certain that our NOLs will continue to be available to offset tax liability.
Our NOLs will expire in various amounts, if not used, between 2007 and 2025. The Internal Revenue Service
("IRS") has not audited any of our tax returns for any of the years during the carryforward period including those
returns for the years in which the losses giving rise to the NOLs were reported. We cannot assure you that we would
prevail if the IRS were to challenge the availability of the NOLs. If the IRS were successful in challenging our
NOLs, all or some portion of the NOLs would not be available to offset our future consolidated taxable income.
As of December 31, 2006, we estimated that we had approximately $410 million of NOLs. In order to utilize
the NOLs, we must generate consolidated taxable income which can offset such carryforwards. The NOLs are also
utilized by income from certain grantor trusts that were established as part of the reorganization in 1990 of certain of
our subsidiaries engaged in the insurance business and are administered by state regulatory agencies. As a result of
uncertainty regarding the administration of certain of these grantor trusts during June 2006, we reduced the
aggregate amount of our available NOLs by $46 million. During or at the conclusion of the administration of these
grantor trusts, taxable income could result, which could utilize a portion of our NOLs and, in turn, could accelerate
the date on which we may be otherwise obligated to pay incremental cash taxes.
In addition, if our existing insurance business were to require capital infusions from us in order to meet certain
regulatory capital requirements, and we were to fail to provide such capital, some or all of our subsidiaries
comprising our insurance business could enter insurance insolvency or bankruptcy proceedings. In such event, such
subsidiaries may no longer be included in our consolidated tax return, and a portion, which could constitute a
significant portion, of our remaining NOLs may no longer be available to us. In such event, there may be a
significant inclusion of taxable income in our federal consolidated income tax retum.
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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.
The level of our consolidated indebtedness could have significant consequences on our future operations,
including:
· making it difficult for us to meet our payment and other obligations under our outstanding indebtedness,
including the Debentures;
· 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 the New
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.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of
operations and our ability to meet our payment obligations under our consolidated debt, and the price of our
common stock.
We cannot assure you that our cash flow from operations will be sufficient to service our indebtedness.
Our ability to meet our obligations under our indebtedness depends on our subsidiaries' ability to generate cash
and our ability to receive dividends and distributions from our subsidiaries in the future. This, in tum, is subject to
many factors, some of which are beyond our control, including the following:
· 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.
We cannot assure you that our business will generate cash flow from operations, or that future borrowings will
be available to us under the New Credit Facilities or otherwise, in an amount sufficient to enable us to meet our
payment obligations under our outstanding indebtedness and to fund other liquidity needs. If our subsidiaries are not
able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our
debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to
implement one or more of these alternatives, we may not be able to meet our payment obligations under our
outstanding indebtedness, and which could have a material and adverse affect on our financial condition.
Covanta Energy's debt agreements contain covenant restrictions that may limit our ability to operate our
business.
Covanta Energy's New Credit Facilities contain, and any of our other future debt agreements may contain,
operating and financial restrictions and covenants that impose operating and financial restrictions on Covanta
Energy and certain of its subsidiaries and require Covanta Energy to meet certain financial tests. Complying with
these covenant restrictions may have a negative impact on our business, results of operations and financial condition
by limiting Covanta Energy's ability to engage in certain transactions or activities, including:
· incun-ing additional indebtedness or issuing guarantees, in excess of specified amounts;
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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.
Covanta Energy's ability to comply with these covenants is dependent on our future performance, which will
be subject to many factors, some of which are beyond our control, including prevailing economic conditions. As a
result of these covenants, our ability to respond to changes in business and economic conditions and to obtain
additional financing, if needed, may be restricted, and we may be prevented from engaging in transactions that
might otherwise be beneficial to us, or in declaring and paying dividends to our stockholders. In addition, the failure
to comply with these covenants in Covanta Energy's New Credit Facilities could result in a default thereunder and a
default under the Debentures. Upon the occurrence of such an event of default, the lenders under Covanta Energy's
New Credit Facilities could elect to declare all amounts outstanding under such agreement, together with accrued
interest, to be immediately due and payable. If the lenders accelerate the payment of the indebtedness under
Covanta Energy's New Credit Facilities, we cannot assure you that the assets securing such indebtedness would be
sufficient to repay in full that indebtedness and our other indebtedness, including the Debentures, and which could
have a material and adverse affect on our financial condition.
Operation of our facilities and the expansion of facilities involve significant risks.
The operation of our waste and energy facilities and the constmction of new or expanded facilities involve
many risks, including:
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;
the unavailability of sufficient quantities of waste;
decreases in the fees for solid waste disposal;
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;
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.
We cannot predict the impact of these risks on our business or operations. These risks, if they were to occur,
could prevent Covanta Energy and its subsidiaries from meeting their obligations under their operating contracts.
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The rapid growth of our operations could strain our resources and cause our business to suffer.
We have experienced rapid growth and intend to further grow our business. This growth has placed, and
potential future growth will continue lo place, a strain on our management systems, infrastructure and resources.
Our ability to successfully offer services and implement our business plan in a rapidly evolving market requires an
effective planning and management process. We expect that we will need to continue to improve our financial and
managerial controls, reporting systems and procedures. We will also need to expand, train and manage our
workforce worldwide. Furthermore, we expect that we will be required to manage an increasing number of
relationships with various customers and other third parties. Failure to expand in any of the foregoing areas
efficiently and effectively could interfere with the growth of our business as a whole.
Development, construction and operation of new projects may not commence as scheduled, or at all.
The development and construction of new waste and energy facilities involves many risks including siting,
permitting, f'mancing and construction delays and expenses, start-up problems, the breakdown of equipment and
performance below expected levels of output and efficiency. New facilities have no operating history and may
employ recently developed technology and equipment. Our businesses maintain insurance to protect against risks
relating to the construction of new projects; however, such insurance may not be adequate to cover lost revenues or
increased expenses. As a result, a new facility may be unable to fund principal and interest payments under its debt
service obligations or may operate at a loss. In certain situations, if a facility fails to achieve commercial operation,
at certain levels or at all, termination rights in the agreements governing the facility's financing may be triggered,
rendering all of the facility's debt immediately due and payable. As a result, the facility may be rendered insolvent
and we may lose our interest in the facility.
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 efforts to grow OUr waste and energy business will depend in part on how successful we are in developing
new projects and expanding existing projects. The development period for each project may occur over several
years, during which we incur substantial expenses relating to siting, design, permitting, community relations,
financing and professional fees associated with all of the foregoing. Not ail of our development efforts will be
successful, and we may decide to cease developing a project for a variety of reasons. If the cessation of our
development efforts were to occur at an advanced stage of development, we may have incurred a material amount of
expenses for which we will realize no return.
A failure to identify suitable acquisition candidates and to complete acquisitions could have an adverse
effect on our business strategy and growth plans.
As part of our business strategy, we intend to continue to pursue acquisitions of complementary businesses.
Although we regularly evaluate acquisition opportunities, we may not be able to successfully identify suitable
acquisition candidates; to obtain sufficient financing on acceptable terms to fund acquisitions; or to complete
acquisitions.
Our insurance and contractual protections may not always cover lost revenues, increased expenses or
liquidated damages payments.
Although our businesses maintain insurance, obtain warranties from vendors, require contractors to meet
certain performance levels and, in some cases, pass risks we cannot control to the service recipient or output
purchaser, the proceeds of such insurance, warranties, performance guarantees or risk sharing arrangements may
not be adequate to 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.
Most service agreements for our energy-from-waste facilities provide for limitations on damages and cross-
indemnities among the parties for damages that such parties may incur in connection with their performance under
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the service agreement. In most cases, such contractual provisions excuse our businesses from performance
obligations to the extent affected by uncontrollable circumstances and provide for service fee adjustments if
uncontrollable circumstances increase our costs. We cannot assure you that these provisions will prevent our
businesses from incurring losses upon the occurrence of uncontrollable circumstances or that if our businesses were
to incur such losses they would continue to be able to service their debt.
Covanta Energy and certain of its subsidiaries have issued or are party to performance guarantees and related
contractual obligations associated with its energy-from-waste, renewable energy, independent power and water
facilities. With respect to its domestic businesses, Covanta Energy and certain of its subsidiaries have issued
guarantees to its municipal clients and other parties that Covanta Energy's subsidiaries will perform in accordance
with contractual terms, including, where required, the payment of damages or other obligations. The obligations
guaranteed will depend upon the contract involved. Many of Covanta Energy's subsidiaries have contracts to
operate and maintain energy-from-waste facilities. In these contracts, the subsidiary typically commits to operate
and maintain the facility in compliance with legal requirements; to accept minimum amounts of solid waste; to
generate a minimum amount of electricity per ton of waste; and to pay damages to contract counterparties under
specified circumstances, including those where the operating subsidiary's contract has been terminated for default.
Any contractual damages or other obligations incurred by Covanta Energy and certain of its subsidiaries could be
material, and in circumstances where one or more subsidiary's contract has been terminated for its default, such
damages could include amounts sufficient to repay project debt. Additionally, damages payable under such
guarantees on Covanta Energy's owned energy-from-waste facilities could expose Covanta Energy to recourse
liability on project debt. Covanta Energy and certain of its subsidiaries which have issued these guarantees may not
have sufficient sources of cash to pay such damages or other obligations. We cannot assure you that Covanta Energy
and such subsidiaries will be able to continue to avoid incurring material payment obligations under such
guarantees or that, if Covanta Energy did incur such obligations, that Covanta Energy would have the cash
resources to pay them.
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.
Covanta Energy's subsidiaries must satisfy performance and other obligations under contracts governing
energy-from-waste facilities. These contracts typically require Covanta Energy's subsidiaries to meet certain
performance criteria relating to amounts of waste processed, energy generation rates per ton of waste processed,
residue quantity and environmental standards. The failure of Covanta Energy's subsidiaries to satisfy these criteria
may subject them to termination of their respective operating contracts. If such a temaination were to occur, Covanta
Energy's subsidiaries would lose the cash flow related to the projects and incur material termination damage
liability, which may be guaranteed by Covanta Energy or certain of its subsidiaries. In circumstances where the
contract of one or more subsidiaries has been terminated due to the default of one of Covanta Energy's subsidiaries
they may not have sufficient sources of cash to pay such damages. We cannot assure you that Covanta Energy's
subsidiaries will be able to continue to perform their respective obligations under such contracts in order to avoid
such contract terminations, or damages related to any such contract termination, or that if they could not avoid such
terminations that they would have the cash resources to pay amounts that may then become due.
Covanta Energy and certain of its subsidiaries have provided guarantees and support in connection with
its subsidiaries' projects.
Covanta Energy and certain of its subsidiaries are obligated to guarantee or provide f'mancial support for its
subsidiaries' projects in one or more of the following forms:
· support agreements in connection with service or operating agreement-related obligations;
· direct guarantees of certain debt relating to three of its facilities;
· contingent obligations to pay lease payment installments in connection with three of its facilities;
· contingent credit support for damages arising from performance failures;
· environmental indemnities; and
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· contingent capital and credit support to fmance costs, in most cases in connection with a corresponding
increase in service fees, relating to uncontrollable circumstances.
Many of these contingent obligations cannot readily be quantified, but, if we were required to provide this
support, it may be material to our cash flow and financial condition.
Covanta Energy may face increased risk of market influences on its domestic revenues after its contracts
expire.
Covanta Energy's contracts to operate energy-from-waste projects expire on various dates between 2008 and
2027, and our contracts to sell energy output generally expire when the project's operating contract expires.
Expiration of these contracts will subject Covanta Energy to greater market risk in entering into new or replacement
contracts at pricing levels which will generate comparable or enhanced revenues. As its operating contracts at
municipally-owned projects approach expiration, Covanta Energy will seek to enter into renewal or replacement
contracts to continue operating such projects. However, we cannot assure you that Covanta Energy will be able to
enter into renewal or replacement contracts on terms favorable to it, or at all. Covanta Energy will seek to bid
competitively for additional contracts to operate other facilities as similar contracts of other vendors expire. The
expiration of existing energy sales contracts, if not renewed, will require Covanta Energy to sell project energy
output either into the electricity grid or pursuant to new contracts.
At some of our facilities, market conditions may allow Covanta Energy to effect extensions of exisling
operating contracts along with facility expansions. Such extensions and expansions are currently being considered
at a limited number of our facilities in conjunction with Covanta Energy's clients. If Covanta Energy is unable to
reach agreement with its municipal clients on the terms under which they would implement such extensions and
expansions, or if the implementation of these extensions, including renewals and replacement contracts, and
expansions are materially delayed, this may adversely affect our cash flow and profitability. We cannot assure you
that Covanta Energy will be able to enter into such contracts or that the terms available in the market at the time will
be favorable to it.
Our businesses depend on performance by third parties under contractual arrangements.
Our waste and energy businesses depend on a limited number of third parties to, among other things, purchase
the electric and steam energy produced by our facilities, and supply and deliver the waste and other goods and
services necessary for the operation of our energy facilities. The viability of our facilities depends significantly
upon the performance by third parties in accordance with lung-term contracts, and such performance depends on
factors which may be beyond our control. If those third parties do not perform their obligations, or are excused from
performing their obligations because of nonperformance by our waste and energy businesses or other parties to the
contracts, or due to force majeure events or changes in laws or regulations, our businesses may not be able to secure
alternate arrangements on substantially the same terms, if at all, for the services provided under the contracts. In
addition, the bankmptey or insolvency of a participant or third party in our facilities could result in nonpayment or
nonperformance of that party's obligations to us.
Concentration of suppliers and customers may expose us to heightened financial exposure.
Our waste and energy businesses often rely on single suppliers and single customers at our facilities, exposing
such facilities to financial risks if any supplier or customer should fail to perform its obligations.
For example, our businesses often rely on a single supplier to provide waste, fuel, water and other services
required to operate a facility and on a single customer or a few customers to purchase all or a significant portion of a
facility's output. In most cases our businesses have lung-term agreements with such suppliers and customers in
order to mitigate the risk of supply interruption. The financial performance of these facilities depends on such
customers and suppliers continuing to perform their obligations under their lung-term agreements. A facility's
financial results could be materially and adversely affected if any one customer or supplier fails to fulfill its
contractual obligations and we are unable to fred other customers or suppliers to produce the same level of
profitability. We cannot assure you that such performance failures by third parties will not occur, or that if they do
occur, such failures will not adversely affect the cash flows or profitability of our businesses.
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In addition, for their energy-from-waste facilities, our subsidiaries rely on their municipal clients as a source
not only of waste for fuel but also of revenue from the fees for disposal services our subsidiaries provide. Because
contracts of our subsidiaries with their municipal clients are generally long-term, our subsidiaries may be adversely
affected if the credit quality of one or more of their municipal clients were to decline materially.
Our business is subject to pricing fluctuations caused by the waste disposal and energy markets.
While our businesses sell the majority of their waste disposal capacity and energy output pursuant to long-term
contracts, a material portion of this capacity and output is subject to market price fluctuation. Consequently, our
operating results may be adversely affected by fluctuations in waste disposal and energy prices.
Our waste operations are concentrated in one region, and expose us to regional economic or market
declines.
The majority of our waste disposal facilities are located in the northeastern United States, primarily along the
Washington, D.C. to Boston, Massachusetts corridor. Adverse economic developments in this region could affect
regional waste generation rates and demand for waste disposal services provided by us. Adverse market
developments caused by additional waste disposal capacity in this region could adversely affect waste disposal
pricing. Either of these developments 9ould have a material adverse effect on our revenues and cash generation.
Some of our energy contracts involve greater risk of exposure to performance levels which could result in
materially lower revenues.
Eight of our 31 energy-from-waste facilities receive 100% of the energy revenues they generate. As a result, if
we are unable to operate these facilities at their historical performance levels for any reason, our revenues from
energy sales could materially decrease.
Exposure to internatiOnal economic and political factors may materially and adversely affect our
international businesses,
Our international operati~s expose us to legal, tax, currency, inflation, convertibility and repatriation risks, as
well as potential constraints on the development and operation of potential business, any of which can limit the
benefits to us of a foreign project.
Our projected cash distributions from existing international facilities come from facilities located in countries
with sovereign ratings below investment grade. The financing, development and operation of projects outside the
United States can entail significant political and financial risks, which vary by country, including:
· changes in law or regulations;
changes in electricity, tariffs;
changes in foreign tax laws and regulations;
changes in United States federal, state and local laws, including tax laws, related to foreign operations;
compliance with United States federal, state and local foreign corrupt practices laws;
changes in government policies or personnel;
changes in general economic conditions affecting each country, including conditions in financial markets;
changes in labor relations in operations outside the United States;
political, economic or military instability and civil unrest;
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· expropriation and confiscation of assets and facilities; and
· credit quality of entities that purchase our power.
The legal and financial environment in foreign countries in which we currently own assets or projects could
also make it more difficult for us to enforce our rights under agreements relating to such projects.
Any or all of the risks identified above with respect to our international projects could adversely affect our
revenue and cash generation. As a result, these risks may have a material adverse effect on our business,
consolidated financial condition and results of operations.
Exposure to foreign currency fluctuations may affect our costs of operations.
We have sought to participate in projects where the host country has allowed the convertibility of its currency
into U.S. dollars and repatriation of earnings, capital and profits subject to compliance with local regulatory
requirements. In most cases, components of project costs incurred or funded in the currency of the United States are
recovered with limited exposure to currency fluctuations 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. As a result, there
is a 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.
Exposure to fuel supply prices may affect our costs and results of operations for our international
projects.
Changes in the market prices and availability of fuel supplies to generate electricity may increase our cost of
producing power, which could adversely impact our energy businesses' profitability and f'mancial performance.
The market prices and availability of fuel supplies for some of our international facilities fluctuate. Any price
increase, delivery dismption or reduction in the availability of such supplies could affect our ability to operate the
facilities and impair their cash flow and profitabihty. We may be subject to fmaher exposure if any of our future
international operations are concentrated in facilities using fuel types subject to fluctuating market prices and
availability. We may not be successful in our efforts to mitigate our exposure to supply and price swings.
Our inability to obtain resources for operations may adversely affect our ability to effectively compete.
Our energy-from-waste facilities depend on solid waste for fuel, which provides a source of revenue. For most
of our facilities, the prices we charge for disposal of solid waste are fixed under long-term contracts and the supply
is guaranteed by sponsoring municipalities. However, for some of our energy-from-waste facilities, the availability
of solid waste to us, as well as the tipping fee that we must charge to attract solid waste to our facilities, depends
upon competition from a number of sources such as other energy-from-waste facilities, landfills and transfer
stations competing for waste in the market area. In addition, we may need to obtain waste on a competitive basis as
our long-term contracts expire at our owned facilities. There has been consolidation and there may be further
consolidation in the solid waste industry which would reduce the number of solid waste collectors or haulers that are
competing for disposal facilities or enable such collectors or haulers to use wholesale purchasing to negotiate
favorable below-market disposal rates. The consolidation in the solid waste industry has resulted in companies with
vertically integrated collection activities and disposal facilities. Such consolidation may result in economies of
scale for those companies as well as the use of disposal capacity at facilities owned by such companies or by
affiliated companies. Such activities can affect both the availability of waste to us for disposal at some of our
energy-from-waste facilities and market pricing.
Compliance with environmental laws could adversely affect our results of operations.
Costs of compliance with federal, state and local existing and future environmental regulations could adversely
affect our cash flow and profitability. Our waste and energy businesses are subject to extensive environmental
regulation by federal, state and local authorities, primarily relating to air, waste (including residual ash from
combustion) and water. We are required to comply with numerous environmental laws and regulations and to obtain
33
numerous governmental permits in operating our facilities. Our businesses may incur significant additional costs to
comply with these requirements. Environmental regulations may also limit our ability to operate our facilities at
maximum capacity or at all. If our businesses fall to comply with these requirements, we could be subject to civil or
criminal liability, damages and fines. Existing environmental regulations could be revised or reinterpreted and new
laws and regulations could be adopted or become applicable to us or our facilities, and future changes in
environmental laws and regulations could occur. This may materially increase the amount we must invest to
bring our facilities into compliance. In addition, lawsuits or enforcement actions by federal and/or state regulatory
agencies may materially increase our costs. Stricter environmental regulation of air emissions, solid waste handling
or combustion, residual ash handling and disposal, and waste water discharge could materially affect our cash flow
and profitability. Certain environmental laws make us potentially liable on a joint and several basis for the
remediation of contamination at or emanating from properties or facilities we currently or formerly owned or
operated or properties to which we arranged for the disposal of hazardous substances. Such liability is not limited to
the cleanup of contamination we actually caused. Although we seek to obtain indenmities against liabilities relating
to historical contamination at the facilities we own or operate, we cannot provide any assurance that we will not
incur liability relating to the remediation of contamination, including contamination we did not cause.
Our businesses may not be able to obtain or maintain, from time to time, all required environmental regulatory
approvals. If there is a delay in obtaining any required environmental regulatory approvals or if we fail to obtain and
comply with them, the operation of our facilities could be jeopardized or become subject to additional costs.
Energy regulation could adversely affect our revenues and costs of operations.
Our waste and energy businesses are subject to extensive energy regulations by federal, state and foreign
authorities. We cannot predict whether the federal, state or foreign governments will modify or adopt new
legislation or regulations relating to the solid waste or energy industries. The economics, including the costs, of
operating our facilities may be adversely affected by any changes in these regulations or in their interpretation or
implementation or any future inability to comply with existing or future regulations or requirements.
The FPA regulates energy generating companies and their subsidiaries and places constraints on the conduct of
their business. The FPA regulates wholesale sales of electricity and the transmission of electricity in interstate
commerce by public utilities. Under PURPA our domestic facilities are exempt from most provisions of the FPA and
state rate regulation. Our foreign projects are also exempt from regulation under the FPA.
The Energy Policy Act of 2005 enacted comprehensive changes to the domestic energy industry which may
affect our businesses. The Energy Policy Act removed certain regulatory constraints that previously limited the
ability of utilities and utility holding companies to invest in certain activities and businesses, which may have the
effect over time of increasing competition in energy markets in which we participate. In addition, the Energy Policy
Act includes provisions that may remove some of the benefits provided to non-ntility electricity generators, like us,
after our existing energy sale contracts expire. As a result, we may face increased competition after such expirations
OCCur.
If our businesses lose existing exemptions under the FPA, the economics and operations of our energy projects
could be adversely affected, including as a result of rate regulation by the FERC, with respect to our output of
electricity, which could result in lower prices for sales of electricity. In addition, depending on the terms of the
project's power purchase agreement, a loss of our exemptions could allow the power purchaser to cease taking and
paying for electricity under existing contracts. Such results could cause the loss of some or all contract revenues or
otherwise impair the value of a project and could trigger defaults under provisions of the applicable project
contracts and fmancing agreements. Defaults under such financing agreements could render the underlying debt
immediately due and payable. Under such circumstances, we cannot assure you that revenues received, the costs
incurred, or both, in connection with the project could be recovered through sales to other purchasers.
Failure to obtain regulatory approvals could adversely affect our operations.
Our waste and energy businesses ale continually in the process of obtaining or renewing federal, state and local
approvals required to operate our facilities. While our businesses currently have all necessary operating approvals,
we may not always be able to obtain all required regulatory approvals, and we may not be.able to obtain any
34
necessary modifications to existing regulatory approvals or maintain all required regulatory approvals. If them is a
delay in obtaining any required regulatory approvals or if we fall to obtain and corhply with any required regulatory
approvals, the operation of our facilities or the sale of electricity to third parties could be prevented, made subject to
additional regulation or subject our businesses to additional costs or a decrease in revenue.
The energy industry is becoming increasingly competitive, and we might not successfully respond to these
changes.
We may not be able to respond in a timely or effective manner to the changes resulting in increased competition
in the energy industry in both domestic and international markets, These changes may include deregulation of the
electric utility industry in some markets, privatization of the electric utility industry in other markets and increasing
competition in all markets. To the extent competitive pressures increase and the pricing and sale of electricity
assumes more characteristics of a commodity business, the economics of our business may come under increasing
pressure.
Changes in technology may have a material adverse effect on our profitability.
Research and development activities are ongoing to provide alternative and more efficient technologies to
dispose of waste or produce powen It is possible that advances in these or other technologies will reduce the cost of
waste disposal or power production from these technologies to a level below our costs. Ftathermore, increased
conservation efforts could reduce the demand for power or reduce the value of our facilities. Any of these changes
could have a material adverse effect on our revenues and profitability.
Our reputation could be adversely affected if opposition to our efforts to grow our business results in
adverse publicity or our businesses were to fail to comply with United States or foreign laws or
regulations.
With respect to our efforts to renew our contracts and grow our waste and energy business both domestically
and intematiunally, we sometimes experience opposition from advocacy groups or others intended to halt a
development effort or other opportunity we may be pursuing. Such opposition is often intended to discourage third
parties from doing business with us and may be based on inaccurate, incomplete or inflammatory assertions. We
cannot provide any assurance that our reputation would not be adversely affected as a result of adverse publicity
resulting from such opposition. Some of our projects and new business may be conducted in countries where
corruption has historically penetrated the economy to a greater extent than in the United States. It is our policy to
comply, and to require our local partners and those with whom we do business to comply, with all applicable anti-
bribery laws, such as the U.S. Foreign Corrupt Practices Act and with applicable local laws of the foreign countries
in which we operate. We cannot provide any assurance that our reputation would not be adversely affected if we
were reported to be associated with corrupt practices or if we or our local partners failed to comply with such laws.
Our controls and procedures may not prevent or detect all errors or acts of fraud.
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that any
disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent limitations in alt control systems, they cannot provide
absolute assurance that all control issues and instances of fraud, if any, within our companies have been prevented or
detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, comrols can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls.
The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future
events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future
conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to
error or fraud may occur and may not be detected.
35
Failure to maintain an effective system of internal control over financial reporting may have an adverse
effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and the roles and regulations promulgated by the
Securities and Exchange Commission ("SEC") to implement Section 404, we are required to furnish a report by our
management to include in our annual report on Form 10-K regarding the effectiveness of our internal control over
financial reporting. The report includes, among other things, an assessment of the effectiveness of our internal
control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our
internal control over financial reporting is effective. This assessment must include disclosure of any material
weaknesses in our internal control over financial reporting identified by management.
We have in the past discovered, and may potentially in the future discover, areas of internal control over
financial reporting which may require improvement. If we are unable to assert that our internal control over
financial reporting is effective now or in any future period, or if our auditors are unable to express an opinion on the
effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our
financial reports, which could have an adverse effect on our stock price.
Concentrated stock ownership may discourage unsolicited acquisition proposals.
As of January 12, 2007, SZ Investments, L.L.C., together with its affiliate, EGI-Fund (05-07) Investors, L.L.C.,
referred to as "Fund 05-07" and, collectively with SZ Investments, L.L.C. "SZ Investments," Third Avenue Trust,
on behalf of Third Avenue Value Fund, referred to as "Third Avenue," and D. E. Shaw Laminar Portfolios, L.L.C.,
referred to as "Laminar," separately own approximately 15.7%, 6.0% and 9.0%, respectively, or when aggregated,
approximately 30.7% of our outstanding common stock. Although there are no agreements among SZ Investments,
Third Avenue and Laminar regarding their voting or disposition of shares of our cormnon stock, the level of their
combined ownership of shares of our common stock could have the effect of discouraging or impeding an
unsolicited acquisition proposal. Further, as a result, these stockholders may continue to have the ability to
influence the election or removal of our directors and influence the outcome of matters presented for approval by
our stockholders. Circumstances may occur in which the interests of these stockholders could be in conflict with the
holders of the Debentures.
Provisions of our certificate of incorporation and Debentures could discourage an acquisition by a third pa~y.
Provisions of our restated certificate of incorporation could make it more difficult for a third party to acquire
control of us. For example, our restated certificate of incorporation authorizes our Board of Directors to issue
preferred stock without requiting any stockholder approval, and preferred stock could be issued as a defensive
measure in response to a takeover proposal. These provisions could make it more difficult for a third party to acquire
us even if an acquisition might be in the best interest of our stockholders. In addition, certain provisions of the
Debentures could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of
certain transactions constituting a fundamental change, the holders of the Debentures will have the right to require
us to repurchase their Debentures. We may also be required to issue additional shares upon conversion or provide for
conversion based on the acquirer's capital stock in the event of certain fundamental changes. These possibilities
could discourage an acquisition of us.
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.
The price of our common stock on the New York Stock Exchange constantly changes. We expect that the
market price of our common stock will continue to fluctuate. In addition, because the Debentures are convertible
into our common stock, volatility or depressed prices for our common stock could have a similar effect on the
trading price of the Debentures. Consequently, there can be no assurance as to the liquidity of an investment in our
common stock.
36
The market price of our common stock may fluctuate as a result of a variety of factors, many of which are
beyond our control. These factors include:
· 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;
· departures of key personnel;
· changes in governmental regulations; and
· geopolitical conditions, such as acts or threats of terrorism or military conflicts.
In addition, in recent years, the stock market in general has experienced extreme price and volume fluctuations.
This volatility has had a significant effect on the market price of securities issued by many companies for reasons
often unrelated to their operating performance. These broad market fluctuations may adversely affect the market
price of our common stock, regardless of our operating results.
Future issuances of our common stock will dilute the ownership interests of stockhoMers and may
adversely affect the trading price of our common stock.
We are not restricted from issuing additional shares of our common stock, or securities convertible into or
exchangeable for our common stock. Future sales of substantial amounts of our common stock or equity-related
securities in the public market, or the perception that such sales could occur, could materially and adversely affect
prevailing trading prices of our common stock. In addition, the conversion of some or all of the Debentures will
dilute the ownership interests of our existing stockholders. Any sales in the public market of our common stock
issuable upon such conversion could adversely affect prevailing market prices of oar common stock. In addition, the
existence of the Debentures may encourage short selling by market participants because the conversion of the
Debentures could depress the trading price of our common stock.
37
Item lB. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
Our executive offices are located at 40 Lane Road, Fairfield, New Jersey, in an office building located on a
5.4 acre site owned by a subsidiary. The following table summarizes certain information relating to the locations of
properties that we or our subsidiaries own or lease:
Approximate
Size Site
Location (in Acres)O)
OTHER SERVICES
1. Fairfield, New Jersey ................. 5.4
5.
6.
7.
8.
9.
Long Beach, California ............... 14,632 sq. ft.
Calabasas, California ................. 5,713 sq. ft.
3.
WASTE AND ENERGY SERVICES
Domestic
Anderson, California ................. 2,000 sq. ft
Sante Fe Springs, California ............ 3,194 sq. ft.
Montvale, New Jersey ................ 34,000 sq. ft.
Woodcliff Lake, New Jersey ............ 18,048 sq. ft.
Imperial County, California ............ 83.0
Lake County, Florida ................. 15.0
10. Marion County, Oregon ............... 15.2
11. Bristol, Connecticut .................. 18.2
12. Niagara Falls, New York .~ ............ 12.5
13. Rochester, Massachusetts .............. 123.2
14. Hempstead, New York ................ 14.9
15. Newark, New Jersey .................. 15.4
16. Preston, Connecticut ................. 11.9
17. Alexandria/Arlington, Virginia .......... 3.3
18. Indianapolis, Indiana ................. 23.5
19. Stanislaus County, California ........... 16.5
20. Babylon, New York .................. 9.5
21. Haverhill, Massachusetts .............. 12.7
22. Wallingford, Connecticut .............. 10.3
23. Faiffax County, Virginia ............... 22.9
24. Union County, New Jersey ............. 20.0
25. Huntington, New York ................ 13.0
26. Warren County, New Jersey ............ 19.8
27. Onondaga County, New York ........... 12.0
28. Chester, Pennsylvania ................ 51.2
29. Whatcom County, Washington .......... N/A
30. Weeks Falls, Washington .............. N/A
31. Haverhill, Massachusetts .............. 20.2
32. Haverhill, Massachusetts .............. 16.8
33. San Diego, California ................ N/A
34. Oxnard, California ................... N/A
Nature of
Site Use Interest(2)
Office space Own
Office space Lease
Office space Lease
Office space Lease
Office space Lease
Office space Lease
Office space Lease
Undeveloped desert land Own
Energy-from-waste facility Own
Energy-from-waste facility Own
Energy-from-waste facility Own
Energy-from-waste facility Own
Energy-from-waste facility Own (90)%
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Energy-from-waste facility Lease
Hydroelectric project Own (50)%
Hydroelectric project Lease
Landfill Lease
Landfill expansion Lease
Landfill gas project Lease
Landfill gas project Lease
38
35. Salinas, California ................... N/A
36. Stockton, California .................. N/A
37. Lawrence, Massachusetts .............. 11.8
38. Burney, California ................... 40.0
39. Jamestown, California ................ 26.0
40. Westwood, California ................. 60.0
41. Oroville, California .................. 43.0
42. Braintree, Massachusetts .............. 6.7
43. Lynn, Massachusetts ................. 1.4
International
44. Manila, Philippines .................. 2,812 sq.
45. Bangkok, Thailand ................... 7;276 sq.
46. Chennai, India ...................... 1,797 sq.
47. Samalpatti, India .................... 2,546 sq.
48. Samayanalhir, India .................. 1,300 sq.
49. Shanghai, China .................... 1,561 sq.
50. Zhejiang Province, People's
Republic of China ................... 8.2
51. Jiangsu Province, People's
Republic of China ................... 16.1
52. Samayanallur, India .................. 17.1
53. Samayanallur, India .................. 2.3
54. Samalpatti, India .................... 30.3
(1) All sizes are in acres unless otherwise indicated.
Approximate
Size Site
(in Acres)(l)
Nature of
Site Use Interest(2)
Landfill gas project Lease
Landfill gas project Lease
Vacant Land Own
Wood waste project Lease
Wood waste project Own (50)%
Wood waste project Own
Wood waste project Own
Transfer station Lease
Transfer station Own
Office space Lease
Office space Lease
Office space Lease
Office space Lease
Office space Lease
Office space Lease
Coal-fired coganeration
facility (3)
Coal-fired cogencration
facility (3)
Heavy fuel-oil project Lease
Heavy fuel-oil project Lease
Heavy fuel-oil project Lease
(2) All ownership or leasehold interests relating to projects are subject to material liens in connection with the
financing of the related project, except those listed above under items 25, 32-35, and 49-50. In addition, all
leasehold interests exist at least as long as the term of applicable project contxacts, and several of the leasehold
interests are subject to renewal and/or purchase options.
(3) Land use fight reverts to China joint venture partner upon termination of joint venture agreement.
Item 3. LEGAL PROCEEDINGS
For itfformation regarding legal proceedings, see Note 20. Commitments and Contingent Liabilities of the
Notes to the Consolidated Financial Statements in item 8, which information is incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The results of the proposals voted on at our Annual Meeting of Stockholders held on May 31, 2006 were
previously reported in our Quarterly Repor~ on Form 10-Q for the quarter ended June 30, 2006 that was filed with
the SEC on August 3, 2006.
39
We held a Special Meeting of Stockholders on November 16, 2006. At that meeting, stockholders voted on the
following proposals:
To approve an amendment to our certificate of incorporation to delete Article FIFTH which
restricted the acquisition and transfer of common stock by owners of 5% or more of the
outstanding common stock.
Votes For Votes Against Abstentions
132,184,465 753,310 120,213
To approve an amendment to our certificate of incorporation to delete Section 4.3 which required
stockholder approval of the terms of any preferred stock issued by us to affilifites and to holders of
1% or more of the common stock.
res For Votes Against Abstentions
03,803,566 29,128,276 126,146
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY,, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock was traded on the American Stock Exchange under the symbol "DHC" until close of
trading on October 4, 2005. Since that date, our common stock has been traded on the New York Stock Exchange
under the symbol "CVA". On February 14, 2007, there were approximately 1,055 holders of record of our common
stock. On Febmary 14, 2007, the closing price of our common stock on the New York Stock Exchange was
$24.00 per share.
The following table sets forth the high and low stock prices of our common stock for the last two years. These
prices are as reported on the American Stock Exchange Composite Tape with respect to dates through the close of
business on October 4, 2005 and these prices are as reported on the New York Stock Exchange Composite Tape with
respect to dates on and after October 5, 2005.
2006 2005
High Low High Low
First Quarter ................................. $ 18.15 $ 14.61 $ 17.34 $ 7.95
Second Quarter ............................... $ 18.60 $ 14.36 $ 17.70 $ 10.42
Third Quarter ................................ $ 21,84 $ 16.04 $ 13.64 $ 11.67
Fourth Quarter ............................... $ 22.84 $ 18.52 $ 15.06 $ 10.41
The prices above reflect the impa, ct of a rights offering announced in February 2005 and completed on Jtme 24,
2005 and a rights offering announced in January 2006 and completed on February 24, 2006.
We have not paid dividends on our common stock and do not expect to declare or pay any dividends in the
foreseeable future. Under current financing arrangements there are restrictions on the ability of our subsidiaries to
transfer funds to us in the form of cash dividends, loans or advances that would likely limit the future payment of
dividends on our common stock. See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations- Liquidity and Capital Resources- 2007 Recapitalization Plan for more detailed
information on our 2007 Recapitalization Plan.
40
Item 6. SELECTED FINANCIAL DATA
Given the significance of the Covanta Energy and ARC Holdings acquisitions to our business, results of
operations and financial condition during the third quarter of 2005, we combined the previously separate business
segments of Insurance Services and holding company operations into one reportable segment referred to as "Other
Services." Certain prior period amounts, such as holding company investment income, have been reclassified in the
consolidated financial statements to conform to the current period presentation.
For the Years Ended December 31,
2006 2005(1) 2094(2) 2003(3) 2002(4)
(In thousands of dollars, except per share amounts)
Statements of Operations Data
Operating revenues ................... $ 1,268,536
Equity in net income (loss) from
unconsolidated investments ........... 28,636
Net income (loss) .................... 105,789
Income (loss) per share(5)
Basic ........................... 0.73
Diluted .......................... 0.72
Balance Sheet Data
Cash and cash equivalents .............. $ 233,442 $ 128,556
Restricted funds held in tmst ........... 407,921 447,432
Property, plant and equipment, net ....... 2,637,923 2,724,843
Total assets ........................ 4,437,820 4,702,165
Long-term debt ...................... 1,260,123 1,308,119
Project debt ........................ 1,435,947 1,598,284
Stockholders' equity .................. 739,152 599,241
Book value per share of common stock(5).. 5.01 4.24
Shares of common stock outstanding(5) .... 147,500 141,166
$ 978,763 $ 576,196 $ 41,123 $ 531,501
25,609 17,024 (54,877) --
59,326 34,094 (69,225) (32,955)
0.49 0.39 (1.05) (0.58)
0.46 0.37 (1.05) (0.58)
$ 96,148 $ 17,952 $ 25,183
239,918 -- --
8t9,400 254 654,575
1,939,081 162,648 1,032,945
312,896 40,000 597,246
944,737 -- --
134,815 27,791 77,360
1.84 0.50 1.63
73,430 55,105 47,459
( 1 ) For the year ended December 31, 2005, ARC Holdings' results of operations were included in our consolidated
results subsequent to June 24, 2005. As a result of the consummation of the ARC Holdings acquisition on
June 24, 2005, future performance will be significantly driven by the combined performance of Covanta Energy
and ARC Holdings' operations. As a result, the nature of our business, the risks attendant to such business and
the trends that we will face have been significantly altered by the acquisitions of Covanta Energy and ARC
Holdings. Accordingly, our historical financial performance and results of operations will not be indicative of
our futura performance.
(2) For the year ended December 3i, 2004, Covanta Energy's results of operations were included in our
consolidated results since March 10, 2004. As a result of the consummation of the Covanta Energy
acquisition on March 10, 2004, our futura performance will predominantly reflect the performance of
Covanta Energy's operations which are significantly larger dian our insurance operations.
(3) American Commemial Lines LLC ("ACL"), which was acquired on May 29, 2002, and certain of its
subsidiaries, filed a petition on January 31, 2003 with the U.S. Bankruptcy Court for the Southern District
of Indiana, New Albany Division to reorganize under Chapter 11 of the U.S. Bankruptcy Code. As a result of
this filing, we no longer maintained control of the activities of ACL and our equity interest in ACL was
cancelled when ACL's plan of reorganization was confirmed on December 30, 2004 and it emerged from
bankruptcy on January 11, 2005. Our investments in these entities are presented using the equity method
effective as of the beginning of 2003 and were no longer consolidated. Equity in net loss from unconsolidated
investments above consists of our equity in the net loss of ACL, Global Materials Services, LLC ("GMS") and
Vessel Leasing, LLC ("Vessel Leasing") in 2003.
(4) In 2002, we purchased 100% of ACL, 5.4% of GMS and 50% of Vessel Leasing.
41
(5) Basic and diluted earnings per share, the average shares used in the calculation of basic and diluted earnings per
share, book value per share of common stock and shares of common stock outstanding for all periods have been
adjusted retroactively to reflect the bonus element contained in the fights offering issued on May 18, 2004 and
for the ARC Holdings rights offering completed on June 24, 2005. Book value per share of common stock is
calculated by dividing stockholders' equity by the number of shares of common stock outstanding.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Covanta Holding Corporation is organized as a holding company which conducts all of its operations through
subsidiaries which are engaged in die businesses of waste and energy services, and insurance se/vices. Covanta
Holding Corporation's predominant business is the waste and energy services business, however its historical
consolidated operations were conducted in the insurance industry prior to the acquisition of Covanta Energy
Corporation in March 2004 and the acquisition of Covanta ARC Holdings, Inc. in June 2005.
The terms "we," "our," "ours," "us" and "Company" refer to Covanta Holding Corporation and its subsidiaries;
the term "Covanta Energy" refers to our subsidiary Covanta Energy Corporation and its subsidiaries; the term "ARC
Holdings" refers to our subsidiary Covanta ARC Holdings, Inc. and its subsidiaries; the term "TransRiver" refers to
our subsidiary TransRiver Marketing Company, L.P.; the term "CPIH" refers to our subsidiary Covanta Power
International Holdings, Inc.; and the term "NAICC" refers to our subsidiaE/National American Insurance Company
of California and its subsidiaries.
We are a leading developer, owner and operator of infrastructure for the conversion of energy-from-waste,
waste disposal and renewable energy production businesses in the United States. We also engage in the independent
power production business outside the United States. We own or operate 51 energy generation facilities, 41 of which
are in the United States and 10 of which are located outside the United States. Our energy generation facilities use a
variety of fuels, including municipal solid waste, water (hydroelectric), natural gas, coal, wood waste, landfill gas
and heavy fuel-oil. We also own or operate several businesses that are associated with our energy-from-waste
business, including a waste procurement business, two landfills, and several waste transfer stations. We also operate
one domestic water treatment facility.
We believe our business offers solutions to public sector leaders around the world in two related elements of
critical infrastructure: post-recycling waste disposal, and energy generation. We believe the environmental benefits
of energy-from-waste, as an alternative to landfilling, are clear and compelling: utilizing energy-from-waste
reduces greenhouse gas emissions, lowers the risk of groundwater contamination, and conserves land. At the same
time, energy-from-waste generates clean reliable energy from a renewable fuel source, thus reducing dependence
on fossil fuels. As public planners address their needs for more environmentally sensitive waste disposal and energy
generation in the years ahead, we believe energy-from-waste will be an increasingly attractive alternative..
We are focused on:
· providing customers with superior service by operating our existing businesses to historic high standards;
· generating sufficient cash to meet our liquidity needs;
· paying down Covanta Energy's debt, as well as project debt;
· investing in and growing our business in order to create additional value for stockholders; and
· seeking acquisition opportunities to expand our operations in the United States and abroad.
Maintaining historic facility production levels while effectively managing operating and maintenance expense
is important to optimize Covanta Energy's long'term cash generation. We do not expect to make any cash
contributions to Covanta Energy except in conjunction with certain acquisitions and investments permitted under
Covanta Energy's new credit facilities as described below. Covanta Energy may make limited cash distributions to
us under the new credit facilities.
42
On JarlUary 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed the following transactions:
· the refinancing of Covama Energy's debt facilities with new Covanta Energy debt facilities, comprised of a
$300 million revolving credit facility, a $320 million funded letter of credit facility, and a $650 million term
loan (collectively referred to as the "New Credit Facilities");
· an underwritten public offering of 6.118 million shares of our common stock, in which we received proceeds
of approximately $136.6 million, net of underwriting discounts and commissions;
· an underwritten public offering of approximately $373.75 million aggregate principal amount of convertible
debentures (the "Debentures") issued by us, from which we received proceeds of approximately
$364.4 million, net of underwriting discounts and commissions; and
· the mpaymem, by means of a tender offer, of approximately $604.4 million in aggregate principal amount of
outstanding notes previously issued by Covanta Energy's intermediate subsidiaries.
We completed our public offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the New Credit Facilities on
February 9, 2007. We completed our tender offer for approximately $604.4 million in aggregate principal
amount of outstanding notes on February 22, 2007. Additional information, including material terms and
fmanciai statement impacts related to our recapitalization plan, is contained in Liquidity and Capital Resources
below. Under the New Credit Facilities, we will have substantially greater, but not unrestricted, ability to make
investments in our business and to take advantage of opportunities to grow our business through investments and
acquisitions, both domestically and internationally.
Our liquidity is enhanced by the existence of net operating loss carryforwards ("NOLs"), which predominantly
arose from our predecessor insurance entities ("Mission Insurance Entities", formerly named Mission Insurance
Group, Inc.), which have been in state insolvency proceedings in California and Missouri since the late 1980s. As
described below, certain grantor trusts associated with these predecessor insurance entities (and the taxable income
and toss they generate) continue to be included in our consolidated tax group.
Our ability to utilize the NOLs to offset taxable income generated by operations in our Waste and Energy
Services segment could have a material effect on our consolidated financial condition and results of operations. We
had NOLs estimated to be $410 million for federal income tax purposes as of December 31, 2006. The NOLs will
expire in various amounts from December 31, 2007 through December 31, 2025, if not used. The amount of NOLs
available to us will be reduced by any taxable income generated by current members of our consolidated tax group,
which include the grantor trusts described above. During or at the conclusion of the administration of these grantor
trusts by state insurance regulatory agencies, taxable income could result, which could utilize a portion of our NOLs
and in mru could accelerate the date on which we may be otherwise obligated to pay incremental cash taxes. While
we cannot predict with certainty what amounts, if any, may be includable in our taxable income as a result of the
final administration of the trusts, we believe that any such taxable income will not result in a material reduction in
available NOLs.
For additional detail relating to our NOLs and risks attendant thereto, see Note 21. Income Taxes of the Notes
to the Consolidated Financial Statements ("Notes") and Item IA. Risk Factors -- We cannot be certain that our
NOLs will continue to be available to offset tax liability.
Our Business Segments
Given the significance of the Covanta Energy and ARC Holdings acquisitions to our results of operations and
financial condition, we decided, during the third quarter of 2005, to combine the previously separate business
segments of Insurance Services and Parent-Only operations into one reportable segment called Other Services.
Therefore, we have two reportable business segments -- Waste and Energy Services and Other Services.
43
Waste and Energy Services
The Waste and Energy Services segment includes our domestic and international businesses.
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 disposal fees or
operating fees. In addition, we own and in some cases operate, other renewable energy projects in the United States
which generate electricity from wood waste, landfill gas, and hydroelectric resources. The electricity from these
projects is sold to utilities. For these projects, we receive revenue from electricity sales, and in some cases cash from
equity distributions.
We also have ownership interests in, and/or operate, independent power production facilities in the Philippines,
China, Bangladesh, India, and Costa Rica, and one energy-from-waste facility in Italy. The Costa Rica facilities
generate electricity from hydroelectric resources, while the other independent power production facilities generate
electricity and steam by combusting coal, natural gas, or heavy fuel-oil. For these projects, we receive revenue from
operating fees, electricity and steam sales, and in some cases cash from equity distributions.
Contract Structures
We have 23 energy-from-waste projects where we charge a fixed fee (which escalates over time pursuant to
contractual indices we believe are appropriate to reflect price inflation) for operation and maintenance services. We
refer to these projects as having a "Service Fee" structure. 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. In addition, at most of our Service Fee projects, the operating subsidiary retains only a fraction
of the energy revenues generated, with the balance 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.
We also have 8 energy-from-waste projects where we receive a per-ton fee under contracts for processing
waste. We refer to these projects as having a "Tip Fee" structure. At Tip Fee projects, we generally enter into long-
term waste disposal contracts for a substantial portion of project disposal capacity and retain all of the energy
revenue generated. 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.
Under both structures, our returns are expected to be stable if wc do not incur mawrial 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 domestic 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 countcrpartics. With respect to domestic and international
independent power projects, such structural features generally do not exist because either we operate and
maintain such facilities for our own account or we do so on a cost-phis basis rather than a fixed-fee basis.
At some of our domestic and intemational independent power projects, our operating subsidiaries purchase
fuel in the open markets which exposes us to fuel price risk. At other plants, fuel costs are contractually included in
our electricity revenues, or fuel is provided by our customers. In some of our international projects, the project entity
(which in some cases is not our subsidiary) 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.
Seasonal Effects
Our quarterly operating income from domestic and international operations within the same fiscal year typically
differs substantially due to seasonal factors, primarily as a result of the timing of scheduled plant maintenance.
We typically conduct scheduled maintenance periodically each year, which requires that individual boiler units
temporarily cease operations. During these scheduled maintenance periods, we incur material repair and
maintenance expenses and receive less revenue, until the boiler units resume operations. This scheduled
maintenance typically occurs during periods of off-peak electric demand in the spring and fail. The spring
scheduled maintenance period is typicaily more extensive than scheduled maintenance conducted during the fail.
As a result, we typicaily incur the highest maintenance expense in the first half of the year. Given these factors, we
typicaily experience lower operating income from our projects during the first six months of each year, and higher
operating income during the second six months of each year.
Contract Duration
We operate domestic energy-from-waste projects under long-term agreements. For those projects we own, our
contract to sell the project's ~nergy output (either electricity or steam) generally expires at or after the date when the
initiai term of our contract to operate or receive waste aiso expires. Expiration of these contracts will subject us to
greater market risk in maintaining and enhancing revenues as we enter into new contracts. We intend to enter into
replacement or additionai contracts for waste supplies and will sell our energy output either into the regional
electricity grid or pursuant to new contracts. Because project debt on these facilities will be paid off at such time, we
believe we will be able to offer disposal services at rates that will attract sufficient quantifies of waste and provide
acceptable revenues. For those projects we operate but do not own, prior to the expiration of thc initiai term of our
operating contract, we will seek to enter into ranewai or replacement contracts to continue operating such projects.
Wc will seek to bid competitively in the market for additionai contracts to operate other facilities as similar contracts
of other vendors expire. There can be no assurance that we will be able to enter into such rencwais, replacement or
additinnai contracts, or that the terms available in the market at the time will be favorable. For additionai
information regarding contract expiration dates, see Item 1. Business.
Energy-from-Waste Project Ownership
We operate many publicly-owned energy-from-waste facilities and own and operate many other facilities. In
addition, as a result of acquisitions of additionai projects originaily owned or operated by other vendors, we operate
several projects under a lease structure where a third party lessor owns the project. Regardless of ownership
structure, we provide the same service to our municipai clients and customers.
Under any of these ownership structures, the municipaiities typicaily borrow funds to pay for the facility
construction by issuing bonds. In a private ownership structure, the municipai entity loans the bond proceeds to the
project subsidiary, the facility is recorded as an asset, and the project debt is recorded as a liability, on our
consolidated baiance sheet. In a public ownership structure, the municipality would fund the construction costs
without loaning the bond proceeds to us.
At all projects where a Service Fee structure exists (regardless of ownership structure), our municipal clients
are generally responsible contractuaily for paying the project debt after construction is complete. At the 11 publicly-
owned Service Fee projects we operate, the municipaiity pays periodic debt service directly to a trustee under an
indenture. We own 12 projects where a Service Fee structure exists, and at these projects the municipai client pays
debt service as a component of a monthly service fee payment to us. The debt service payment is retained by a
trustee, and is not held or available to us for general use. At these projects, we record revenue on our consolidated
financial statements with respect to debt service (both principai and interest) on project debt, and interest expense
on project debt. For projects that are owned, all cash held by trustees is r6corded as restricted funds held in trust on
our consolidated baiance shee~.
We own or lease 8 projects where a Tip Fee structure exists and neither debt service nor lease rent is expressly
included in the fee paid to us. Accordingly, we do not record revenue refiecting principal on this project debt or on
lease rent. In most cases, our operating subsidiaries for these projects make equai monthly deposits with their
respective project trustees in amounts sufficient for the trustees to pay principai and interest, or lease rent, when due.
The term of our operating contracts with manicipal clients generaily coincides with the term of the bonds issued
to pay for the project construction. Therefore, another important difference between public and private ownership of
our energy-from-waste projects is project ownership after these contracts expire. In many cases, the municipality has
45
contractual fights (not obligations) to extend the contract. If a contract is not extended on a publicly-owned project, oar
role, and oar revenue, with respect to that project would cease. If a contract is not extended on a project that we own,
we would be free to enter into new revenue generating contracts for waste supply (with the municipality, other
municipalities, or private waste haulers) and for electricity or steam sales. We would, in such cases, have no remaining
project debt to repay from project revenue, and would be entitled to retain 100% of energy sales revenue.
Other Factors Affecting Performance
We have historically performed our operating obligations without experiencing material unexpected service
interruptions or incurring material increases in costs. In addition, with respect to many of our contracts at domestic
projects, we generally have limited our exposure for risks not within our control. With respect to projects acquired in
the ARC Holdings acquisition, we have assumed contracts where there is less contractual protection against such
risks and more exposure to market influences. For additional information about such risks and damages that we may
owe for unexcused operating performance failures, see Item IA. Risk Factors. In monitoring and assessing the
ongoing operating and financial performance of oar businesses, we focus on certain key factors: tons of waste
processed, electricity and steam sold, and boiler availability.
Our ability to meet or exceed historical levels of performance at projects, and oar general financial
performance, is affected by the following:
· 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 and other variations in the heat content of waste processed, and thereby the amount of
waste that can be processed by a 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.
General financial performance at our international projects is affected by the following:
· 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 parchasers of electricity, and whether or when such requests
are made, our facilities are then available to deliver such electricity;
· Oar 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;
· The financial condition and creditworthiness of parchasers 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 Development
In our domestic business development efforts, we encounter competition from other companies in pursuing
opportunities in the waste disposal and energy markets. With the New Credit Facilities, we will have greater
flexibility to pursue such opportunities by investing in the business, and making acquisitions.
46
Our business is capital intensive because it is based upon building and operating municipal solid waste
processing and energy generating projects. In order to provide meaningful growth through development, we must be
able to invest our funds, obtain equity and/or debt financing, and provide support to our operating subsidiaries. Our
domestic project development has recently concentrated on working with our client communities to expand existing
energy-from-waste project capacities and, as a result, we have two expansion projects under construction. We are
pursuing additional project expansion opportunities, contract extension opportunities, acquisition opportunities,
and opportunities in businesses ancillary to our existing business, such as additional waste transfer, transportation,
processing and landfill businesses.
As with our domestic business, the New Credit Facilities afford greater flexibility to invest in and grow our
international business. We are pursuing international waste and/or energy business opportunities, particularly in
markets where the market demand, regulatory envimnment or other factors encourage technologies such as energy-
from-waste in order to reduce dependence on landfilling, such as in Italy, the United Kingdom, China or island
nations where landfilling is a less desirable disposal option.
Other Services
Our Othe~ Services segment is comprised of the holding company and insurance subsidiaries operations.
Holding company operations prior to the acquisition of Covanta Energy on March 10, 2004, primarily included
general and administrative expense related to officer salaries, legal and other professional fees and insurance.
Subsequent to the acquisition of Covanta Energy, these expenses have been reimbursed by Covanta Energy under a
corporate services agreement. The holding company operations also include income earned on its investments.
The operations of our principal insurance subsidiary, NAICC, and its subsidiaries, are primarily property and
casualty insurance. Based upon the profitability of its insurance lines, NAICC has responded to expand, contract or
cease issuing certain of its insurance policies. For example, effective July 2003, the decision was made to focus
exclusively on the California non-standard personal automobile insurance market. In contrast, in November 2004,
NAICC ended a self-imposed moratorium and commenced writing a new non-standard automobile program under a
new rate and class plan. NAICC, from time to time, has also entered into a quota share reinsurance agreement based
upon its view of underwriting risk, its reserves and internal cost structure, in order to reduce its potential exposure to
outstanding policies.
As a result of declining net premium production, NAICC's investment base has steadily declined, its reserve
adjustments on discontinued lines have disproportionately impacted current operating ratios and it continues to lose
operating leverage. As a result of positive results in the non-standard automobile program in 2005 despite soft
market conditions, NAICC cancelled the reinsurance programs effective"~anuary 1, 2006 in an attempt to retain
more gross premium.
RESULTS OF OPERATIONS
As discussed above, we combined the previously separate business segments of our insurance operations and
our holding company operations into one reportable segment referred to as "Other Services" during the third quarter
of 2005. Therefore, we currently have two reportable business segments -- Waste and Energy Services and Other
Services. Certain prior period amounts, such as holding company investment income, have been reclassified in the
consolidated financial statements to conform to the current period presentation.
The results of operations for the years ended December 31, 2004 and 2005 are not representative of our
ongoing results since we only included Covanta Energy's and ARC Holdings' results of operations in our
consolidated results of operations from March 11, 2004 and June 25, 2005 forward, respectively. Therefore,
given the significance of the Covanta Energy and ARC Holdings acquisitions to our current and future results of
operations and financial condition, we believe that an understanding of our reported results, trends and ongoing
performance is enhanced by presenting results on a pro forma basis for the years ended December 31, 2004 and
2005 at both the consolidated and Waste and Energy segment levels. Our consolidated and segment results of
operations, as reported and where applicable, on a pro forma basis, are sununarized in the tables and discussions
below. However, the pro forma results are equivalent to reported results for the year ended December 31, 2006 as
there are no pro forma adjustments for this period. The pro forma based presentation assumes that the acquisitions
47
of Covanta Energy and ARC Holdings both occurred on January 1, 2004. The pro forma financial information is
presented for information purposes only and is not indicative of the results of operations that would have been
achieved if the acquisitions had taken place at the beginning of each period or that may result in the future. In
addition, the pro forma information provided has not been adjusted to reflect any operating efficiencies that have
been realized as a result of the ARC Holdings acquisition. The pro forma adjustments are described starting on
page 64.
The comparability of the information provided below with respect to our revenue, expense and certain other
i~ems for periods during each of the years presented was affected materially by several factors in addition to the
Covanta Energy and ARC Holdings acquisitions. These factors principally include:
· The exclusion of revenue and expenSe after May 2004 relating to the operations of the Philippines Magellan
Project ("MCI facility"), which commenced a reorganization proceeding under Philippine law on May 31,
2004, and is no longer included as a consolidated subsidiary after such date;
· The reduction of revenue and expense after August 2004 relating to the Philippines Edison Bataan facility,
which ceased operations due to the expiration and termination of energy contracts;
· The emergence of the Covanta Energy's subsidiaries owning and operating the Lake County, Florida and
Warren County, New Jersey energy-from-waste facilities (the "Remaining Debtors") from bankruptcy on
December 14, 2004 and December 15, 2005, respectively, and their inclusion as consolidated subsidiaries
since their respective emergence dates; and
· The reduction of revenue and expense after May 2006 relating to the China Huantal facility, which was sold
in the second quarter of 2006.
The factors noted above must be taken into account in developing meaningful comparisons between the
periods compared below.
48
RESULTS OF OPERATIONS -- Year Ended December 31, 2006 vs. Year Ended December 31, 2005
Our consolidated results of operations are presented on both a reported and pro forma basis in the table below
(in thousands of dollars, except per share amounts):
CONSOLIDATED RESULTS OF OPERATIONS:
Total operating revenues ...............................
Total operating expenses ...............................
Operating income ..................................
OTHER INCOME (EXPENSE):
Investment income ...................................
Interest expense .....................................
Loss on extinguishment of debt ..........................
Gain on derivative instruments, ACL warrants ................
Total other expenses ................................
Income before income taxes, minority interests and equity in net
income from unconsolidated investments ...................
Income tax expense ..................................
Minority interests ...................................
Equity in net income from unconsolidated investments ..........
NET INCOME ....................................... $
EARNINGS PER SHARE:
Basic ............................................ $
Diluted ........................................... $
For the Years Ended December 31,
Reported Pro Forma
2OO6 2005 2006 2O05
(Unaudited)
$ 1,268,536 $ 978,763 $ 1,268,536 $ 1,209,075
1,041,776 832,547 1,041,776 1,016,431
226,760 146,216 226,760 192,644
11,770 6,129 11,770 7,354
(113,960) (89,973) (113,960) (119,244)
(2,342) -- (2,342) --
-- 15,193 -- 15,193
(104,532) (68,651) (104,532) (96,697)
122,228 77,565 122,228 95,947
(38,465) (34,651) (38,465) (43,176)
(6,610) (9,197) (6,610) (9,253)
28,636 25,609 28,636 25,609
105,789 $ 59,326 $ 105,789 $ 69,127
0.73 $ 0.49 $ 0.73 $ 0.49
0.72 $ 0.46 $ 0.72 $ 0.47
Basic and diluted earnings per share and the weighted average shares used for the calculation of basic and
diluted earnings per share have been adjusted retroactively to reflect the bonus element contained in the rights
offering conducted in June 2005.
The following general discussions should be read in conjunction with the above table, the consolidated
financial statements and the Notes thereto and other financial information appearing and referred to elsewhere in
this report. Additional detail on comparable revenues, costs and expenses, and operating income is provided in the
reported and pro forma Waste and Energy Services segment discussion and reported Other Services segment
discussion below.
Consolidated Results of Operations -- Comparison of Reported Results for the Year Ended December 31,
2006 vs. Reported Results for the Year Ended December 31, 2005
Our operating revenues increased by $289.8 million primarily from increases in waste and service revenues of
$179.1 million and increases in electricity and steam sales of $111.1 million. Our operating income increased by
$80.5 million resulting primarily from impacts of the businesses acquired as part of the ARC Holdings acquisition
in the second quarter of 2005, combined with increased operating revenues, cost reduction initiatives in 2006 in the
Waste and Energy Services segment and reduced operating expenses due to the absence of an aggregate of
$17.1 million of expenses in 2005 related to the California Grantor Trust Settlement, acquisition-related charges
and restructuring charges. For additional information, see Note 3. Acquisitions and Dispositions and Note 21.
Income Taxes of the Notes.
Our total investment income increased by $5.6 million primarily due to higher invested cash balances. Interest
expense increased by $24.0 million primarily due to Covanta Energy's financing arrangements put into place as part
49
of the ARC Holdings acquisition in June 2005. As a result of amendments to Covanta Energy's financing
arrangements in May 2006, a loss on extinguishment of debt of $2.3 million was recognized for the year ended
December 31, 2006. For the year ended December 3 l, 2005, we realized a pre-tax gain on derivative instruments of
$15.2 million related to an investment in American Commercial Lines LLC ("ACL") warrants which was liquidated
in October 2005 as discussed in Note 18. Financial Instruments of the Notes.
Equity in net income from unconsolidated investments increased by $3.0 million primarily due to $1.5 million
related to earnings from domestic investments combined with $1.5 million related to the effects of the following
factors relating to Quezon Power, Inc. in the Philippines ("Quezon"):
· the absence during 2006 of a major scheduled turbine-generator maintenance project that occurred during
2005 that is generally scheduled twice in a seven-year cycle combined with lower project debt interest
expense;
· a $7.0 million cumulative deferred income tax benefit recorded in the second quarter of 2006 related to
unrealized foreign exchange losses that are expected to be tax deductible for Philippine tax purposes in
future years, offset by a $2.1 million adjustment to this deferred tax asset as a result of strengthening of the
Philippine peso versus the U.S. dollar in the last six months of 2006;
· a $2.3 million write-offof a deferred income tax asset due to a change in the deductibility of the amortization
of deferred financing costs; and
· an increase in tax expense of approximately $4.1 million related to the conclusion of a six-year income tax
' holiday in May 2006.
Income tax expense increased by $3.8 million due to higher taxable income primarily from impacts of the
businesses acquired as part of the ARC Holdings acquisition offset by a one-time tax benefit of $ I 0 million recorded
during 2006 associated with the adoption of the permanent reinvestment exception under Accounting Principles
Board ("APB") Opinion No. 23, "Accounting for Income Taxes -- Special Areas" ("APB 23") as discussed in
Note 21. Income Taxes of the Notes.
Net income and diluted earnings per share increased by $46.5 million and $0.26, respectively, as a result of the
combined effects of the factors in this section as discussed above.
Consolidated Results of O~erations -- Comparison of Reported Results for the Year Ended December 31,
2006 vs. Pro Forma Results for the Year Ended December 31, 2005
Our operating revenues increased by $59.5 million primarily from increases in waste and service revenues of
$28.5 million and increases in electricity and steam sales of $31.4 million due to contract fee escalations and higher
energy and ferrous and non-ferrous metal prices. Our operating income increased by $34.1 million primarily due to
higher operating revenues, cost reduction initiatives in the Waste and Energy Services segment and reduced
operating expenses due to the absence of $10.3 million of expenses in 2005 related to the California Grantor
Trust Settlement. For additional information, see Note 21. Income Taxes of the Notes.
Our total investment income increased by $4.4 million primarily due to higher invested cash balances. Interest
expense decreased by $5.3 million primarily due lower outstanding debt balances and lower interest rates relating to
amendments to Covanta Energy's financing arrangements in May 2006. As a result of these 2006 amendments, a
loss on extinguishment of debt of $2.3 million was recognized for the year ended December 31, 2006. For the year
ended December 31, 2005, we realized a pre-tax gain on derivative instruments of $15.2 million related to an
investment in ACL warrants which was liquidated in October 2005 as discussed in Note 18. Financial Instruments
of the Notes.
50
Equity in net income from unconsolidated investments increased by $3.0 million primarily due to $1.5 million
related to earnings from domestic investments combined with $1.5 million related to the effects of the following
factors relating to the Quezon facility:
· the absence during 2006 of a major scheduled turbine-generator maintenance project that occurred during
2005 that is generally scheduled twice in a seven-year cycle combined with lower project debt interest
expense;
· a $7.0 million cumulative deferred income tax benefit recorded in the second quarter of 2006 related to
unrealized foreign exchange losses that are expected to be tax deductible for Philippine tax purposes in
future years, offset by a $2.1 million adjustment to this deferred tax asset as a result of strengthening of the
Philippine peso versus the U.S. dollar in the last six months of 2006;
· a $2.3 million write_off of a deferred income tax asset due to a change in the deductibility of the amortization
of deferred financing costs; and
· an increase in tax expense of approximately $4.1 million related to the conclusion of a six-year income tax
holiday in May 2006.
Income tax expense decreased by $4.7 million primarily due to a one-time tax benefit of $10 million recorded
during the three months ended June 30, 2006 associated with the adoption of the permanent reinvestment exception
under APB 23. For additional detail, see Note 21. Income Taxes of the Notes.
Net income and diluted earnings per share increased by $36.7 million and $0.25, respectively, as a result of the
combined effects of the factors in this section as discussed above.
Waste and Energy Services Results of Operations -- Comparison of Reported Results for the Year Ended
December 31, 2006 vs. Pro Forma Results for the Year Ended December 31, 2005
Waste and Energy Services results of operations are presented on both a reported and pro forma basis in the
table below (in thousands of dollars):
For the Years Ended December 31,
Reported Pro Forma
2006 2005 2006 2005
Waste and service revenues ............ $ 817,633 $ 638,503
Electricity and steam sales ............. 433,834 322,770
Other operating revenues 3,328 2,693
Total operating revenues ............. 1,254,795 963,966
(Unaudited)
$ 817,633 $ 789,155
433,834 402,430
3,328 2,693
1,254,795 1,194,278
Plant operating expenses .............. 712,156 559,638 712,156 666,391
Depreciation and amortization expense .... 193,114 124,814 193,114 183,341
Net interest expense on project debt ...... 60,210 52,431 60,210 67,497
Other operating income ............... (7,840) (887) (7,840) (368)
General and administrative expenses ...... 70,833 64,216 70,833 73,950
California Grantor Trust Settlement ...... -- 10,342 -- 10,342
Restructuring charges ................. -- 2,765 -- --
Acquisition-related charges ............. -- 3,950 -- --
Total operating expenses ............. 1,028,473 817,269 . 1,028,473 1,001,153
Operating income .................... $ 226,322 $ 146,697 $ 226,322 $ 193,125
The following Waste and Energy Services segment discussion is presented on a pro forma basis for the year
ended December 31, 2005. The results of operations for the year ended December 31, 2005 are not representative of
our ongoing results since ARC Holdings' results of operations were included in Covanta Energy's consolidated
51
results of operations from June 25, 2005 forward. Therefore, given the significance of the ARC Holdings
acquisition to our current and future results of operations and financial condition, we believe that an
understanding of our reported results, trends and ongoing performance is enhanced by discussing results on a
pro forma basis at the Waste and Energy Services segment level for the year ended December 31, 2005. The
following general discussion should be read in conjunction with the above table, the consolidated financial
statements and the Notes. Additional detail on comparable revenues, costs and expenses, and operating income,
within the Waste and Energy Services segment is provided in the pro forma domestic and international business
discussion below.
Operating income increased l?y $33.2 million primarily due to the effects of:
· increases in operating revenues of $60.5 million primarily due to contract fee escalations and nigher energy
prices in 2006 in the domestic business, and
· increases in operating expenses of $27.3 million primarily due to nigher plant operating expenses, partially
offset by lower general and administrative expenses resulting from cost reduction initiatives, nigher other
operating income due to final distributions and settlements of disputed matters relating to Covanta Energy's
reorganization, and insurance recoveries and the absence of $10.3 million of allocated expenses in 2005
relating to the California Grantor Trust Settlement.
Waste and Energy Domestic Business Results of Operations -- Comparison of Reported Results for the
Year Ended December 31, 2006 vs. Pro Forma Results for the Year Ended December 31, 2005
The domestic business results of operations are presented on both a reported and pro forma basis in the table
below (in thousands of dollars):
For the Years Ended December 31,
Reported Pro Forma
2006 2005 2006 2005
Waste and service revenues ............. $ 813,260 $ 634,268
Electricity and steam sales ............. 301,339 194,057
Other operating revenues ............... 3,328 2,693
Total operating revenues ............. 1,117,927 831,018
(Unaudited)
$ 813,260 $ 784,920
301,339 273,717
3,328 2,693
1,117,927 1,061,330
Plant operating expenses ............... 612,202
Depreciation and amortization expense .... 184,921
Net interest expense on project debt ....... 53,270
Other operating income ...... ~ .......... (5,388)
General and administrative expenses ...... 66,439
California Grantor Trust Settlement ........
Acquisition-related charges .............
471,641 612,202 578,394
116,083 184,921 174,610
44,762 53,270 59,828
(3,651) (5,388) (3,132)
59,249 66,439 68,983
10,342 -- 10,342
-- 3,950 -- __
Total operating expenses ............. ~911,444 702,376 911,444 889,025
Operating income .................... $ 206,483 $ 128,642 $ 206,483 $ 172,305
Total domestic revenues increased by $56.6 million primarily due to contract fee escalations and nigher energy
and ferrous and non-ferrous metal prices as described below.
Waste and service revenues increased by $28.3 million or 3.6% resuiting from the impacts of the following
factors:
· Revenue from energy-from-waste projects structured with Service Fee arrangements increased by
$9.1 million. Such revenues increased by $13.5 million primarily due to contractual escalations and
higher additional waste service fees offset by a reduction of $4.4 million related to lower revenues earned
explicitly to service debt;
52
· Revenue from energy-from-waste projects structured with Tip Fee arrangements increased by $13.4 million.
Such revenues increased by $5.2 million primarily driven by higher volumes of waste handled and favorable
pricing and $8.2 million primarily due to the emergence of a subsidiap./from bankruptcy in December 2005,
and its subsequent inclusion in our consolidated results of operations; and
· Other waste and service fee revenues increased by $5.8 million primarily due to higher pricing for ferrous
and non-ferrous metal.
Electricity and steam revenue increased by $27.6 million or 10.1%, comprised of an increase of $18.3 million
due to higher energy rates and increased production, and an increase of $5.2 million due to the emergence of a
subsidiary from bankruptcy in December 2005, and its subsequent inclusion in our consolidated results of
operations. Also contributing to the favorable variance was a $4.8 million gain relating to the settlement of a
dispute regarding the 2005 power rate at one of our facilities. These gains were partially offset by $0.7 million due to
the termination of activities at two landfill gas facilities.
Plant operating expenses increased by $33.8 million primarily due to the scope of scheduled plant
maintenance, normal cost escalations such as wages, and the emergence of a subsidiary from bankruptcy in
December 2005, and its subsequent inclusion in our consolidated results of operations, partially offset by cost
reduction initiatives.
Depreciation and amortization expense increased by $10.3 million primarily due to additions to property, plant
and equipment and the emergence of a subsidiary from bankruptcy in December 2005, and its subsequent inclusion
in our consolidated results of operations.
Net interest expense on project debt decreased by $6.6 million primarily as a result of lower project debt
balances.
Other operating income increased by $2.3 million primarily due to final distributions and settlements of
disputed matters relating to Covanta Energy's reorganization, and insurance recoveries.
General and administrative expenses decreased by $2.5 million primarily due synergies from the ARC
Holdings acquisition partially offset by wage escalations and increased development spending.
During the fourth quarter of 2005, we incurred $10.3 million of allocated expenses relating to the California
Grantor Trust Settlement. For additional information, see Note 21. Income Taxes of the Notes.
53
Waste and Energy International Business Results of Operations -- Comparison of Reported Results for
the Year Ended December 31, 2006 vs. Pro Forma Results for the Year Ended December 31, 2005
The international business results of operations are presented on both a reported and pro forma basis in the
table below (in thousands of dollars):
For the Years Ended December 31,
Reported Pro Forma
2006 2005 2006 2005
Waste and service revenues .................. $ 4,373 $ 4,235
Electricity and steam sales .................. 132,495 128,713
Total revenues .......................... 136,868 132,948
(Unau~ted)
$ 4,373 $ 4,235
132,495 128,713
136,868 132,948
Plant operating expenses ....................
Depreciation and amortization expense .........
Net interest expense on project debt ............
Other operating (income) expenses ............
General and administrative expenses ...........
Restructuring charges ......................
Total operating expenses .................. 117,029
Operating income ......................... $ 19,839
99,954 87,997 99,954 87,997
8,193 8,731 8,193 8,731
6,940 7,669 6,940 7,669
(2,452) 2,764 (2,452) 2,764
4,394 4,967 4,394 4,967
-- 2,765 -- --
114,893 117,029 112,128
$ 18,055 $ 19,839 $ 20,820
Total revenues for the international business increased by $3.9 million primarily due to the effects of the
following factors:
· a $16.6 million increase in revenues under energy contracts at both Indian facilities resulting from higher
fuel costs passed through to the off-taker;
· aS1.1 million decrease in the debt servicecomponentofrevenueasaresult oftherepaymant ofproject debt;
· a $1.4 million provision related to a dispute with the off-taker;
· a $9 million decrease in revenues from the Huantai facility in China due primarily to the sale of the facility
during the second quarter of 2006; and
· a $1.3 million decrease in revenues due to lower net sales at our other two facilities in China.
Plant operating expenses increased by $12.0 million primarily due to the effects of the following factors:
· an $18.9 million increase due to higher fuel costs at both Indian facilities;
· a $1..1 .million increase in bad debt expense for prior period amounts related to interest on the working capital
provision;
· a $7.4 million decrease in expenses at the Huantal facility in China due primarily to the sale of the facility
during the second quarter of 2006; and
· a $0.7 million decrease in net operating costs at our other two facilities in China.
Depreciation and amortization expense decreased by $0.5 million primarily due to the sale of the Huantai
facility in China during the second quarter of 2006.
Net interest expense on project debt decreased by $0.7 million primarily due to the scheduled quarterly
payment of project debt at both Indian facilities, partially offset by an increase in the amortization of deferred
financing costs at both projects.
54
Other operating income increased by $5.2 million primarily due to the effects of the following factors:
· a $1.7 million write_off of the remaining assets of the Bataan facility in the Philippines during the year ended
December 31, 2005;
· a $1.2 million gain on the sale of the Huantai facility in China during the second quarter of 2006; and
· a $0.4 million gain on the sale of inventory at the Bataan facility in the Philippines during the second quarter
of 2006.
General and administrative expenses decreased by $0.6 million primarily due to lower personnel costs.
Other Services Results of Operations -- Comparison of Reported Results for the Year Ended December 31,
2006 vs. Reported Results for the Year Ended December 31, 2005
Other Services reported results of operations are presented in the table below (in thousands of dollars):
For the Years Ended
December 31,
2OO6 2OO5
OPERATING REVENUES:
Net earned premiums .........................................
Net investment income ........................................
Net realized investment gains (losses) .............................
Othgr income ...............................................
Total other operating revenues ...................................
Other operating expenses .......................................
Depreciation and amortization expense ............................
General and administrative expenses ..............................
Total operating expenses .......................................
Operating income (loss) ........................................
$ 11,888 $ 12,685
1,635 1,999
218 (71)
-- 184
13,741 14,797
10,434 11,902
103 111
2,766 3,265
13,303 15,278
$ 438 $ (481)
Net earned premiums decreased by $0.8 million primarily due to the change in net written premiums which
were significantly impacted by softer insurance market conditions. Net investment income decreased by
$0.4 million primarily due to a decrease in the fixed income portfolio base. Other operating expenses consist
of net loss and loss adjustment expenses ("LAE") and policy acquisition costs and decreased by $1.5 million, as
described below. General and administrative expenses decreased by $0.5 million due primarily to reductions in
administrative personnel in the insurance business.
Generally, quota share reinsurance agreements exclude expected costs of in-house claims handling cost often
referred as unallocated LAE or ULAE, and in return, provide ceding commissions in excess of the direct acquisition
costs. Consequently with the cancellation of the quota share reinsurance program on the private passenger
automobile program in the beginning of 2006, the loss and LAE and the policy acquisition cost ratios were
inversely impacted. The loss and LAE ratios were 66.3% and 78.3% and the policy acquisition cost ratios were
21.5% and 15.5% for the years ended December 31, 2006 and 2005, respectively. The loss and LAE ratio for the
year ended December 31, 2006 improved largely resulting from lower loss reserve developments of approximately
2.5% in 2006 versus 14.0% in 2005. The policy acquisition cost ratio was adversely impacted by the cancellation of
the reinsurance agreements which eliminated both provisional and profit ceding commissions.
55
RESULTS OF OPERATIONS -- Year Ended December 31, 2005 vs. Year Ended December 31, 2004
Our consolidated results of operations on both a reported and pro forma basis are presented in the table below
(in thousands of dollars, except per share amounts):
For the Years Ended December 31,
Reported Pro Forma
2005 2004 2005 2004
CONSOLIDATED RESULTS OF OPERATIONS
Total operating revenues ................................ $ 978,763
(Unaudited)
$ 576,196 $ 1,209,075 $ 1,204,481
499,326 1,016,431 1,010,268
76,870 192,644 194,213
6,129 2,343 7,354 4,867
(89,973) (43,739) (119,244) (120,295)
15,193 -- 15,193 --
(68,651) (41,396) (96,697) (115,428)
77,565 35,474 95,947 78,785
(34,651) (11,535) (43,176) (36,240)
(9,197) (6,869) (9,253) (9,674)
25,609 17,024 25,609 21,918
Total operating expenses ................................ 832,547
Operating income ..................................... 146,216
OTHER INCOME (EXPENSE)
Investment income ....................................
Interest expense ......................................
Gain on derivative instruments, ACL warrants .................
Total other expenses ...................................
Income before income taxes, minority interests and equity in net
income from unconsolidated investments .....................
Income tax expense ...................................
Minority interests .....................................
Equity in net income from unconsolidated investments ...........
NET INCOME ........................................ $ 59,326
EARNINGS PER SHARE OF COMMON STOCK:
Basic ............................................. $ 0.49
Diluted ............................................ $ 0.46
$ 34,094 $ 69,127 $ 54,789
$ 0.39 $ 0.49 $ 0.39
$ 0.37 $ 0.47 $ 0.38
Basic and diluted earnings per share and the weighted average shares used in the calculation of basic and
diluted earnings per share have been adjusted retroactively to reflect the bonus element contained in the rights
offerings conducted in May 2004 and June 2005.
The following general discussions should be read in conjunction with the above table, the consolidated
financial statements and the Notes thereto and other f'mancial information appearing and referred to elsewhere in
this report. Additional detail on comparable revenues, costs and expenses, and operating income is provided in the
reported and pro forma Waste and Energy Services segment discussion and reported Other Services segment
discussion below.
Consolidated Results of Operations -- Comparison of Reported Results for the Year Ended December 31,
2005 vs. Reported Results for the Year Ended December 31, 2004
Our operating revenues increased by $402.6 million primarily from increases in waste and service revenues of
$265.8 million and increases in electricity and steam sales of $141.7 million. Operating income for the Waste and
Energy Services segment increased by $66.5 million primarily from the impacts of the businesses acquired as part
of the Covanta Energy and ARC Holdings acquisitions. Operating expenses include $10.3 million of allocated
expenses related to the California Grantor Trust Settlement. For additional information, see Note 21. Income Taxes
of the Notes. The year ended December 31, 2005 includes the write-off of deferred financing charges of $7.0 million
on Covanta Energy's prior domestic and international debt, as well as $6.7 million of restructuring and acquisition-
related charges. Operating loss for the Other Services segment decreased by $2.8 million primarily due to reduced
general and administrative expenses.
Total investment income increased by $3.8 million primarily due to higher invested cash balances. Interest
expense increased by $46.2 million primarily due to the financing arrangements put into place as part of the ARC
56
Holdings acquisition in June 2005 and the write-off of deferred financing costs related to the debt incurred with the
acquisition of Covanta Energy in 2004, which debt was refinanced in connection with the June 2005 financing
arrangements. Equity in net income from unconsolidated investments increased by $8.6 nfillion primarily due to the
acquisition of Covanta Energy, revenue adjustments which occurred in 2004, in addition to lower operating costs in
2005 at a project in the Philippines and lower project debt interest expense at projects in the Philippines and
Bangladesh in 2005 as a result of project debt payments. As discussed in Note 18. Financial Instruments of the
Notes, we recorded a pre-tax gain on derivative instmments of $15.2 million for the year ended December 31,2005
related to an investment in ACL warrants.
Income tax expense increased by $23.1 million due to higher taxable income primarily from impacts of the
businesses acquired as part of the Covanta Energy and ARC Holdings acquisitions.
Net income and diluted earnings per share increased by $25.2 million and $0.09, respectively, as a result of the
combined effects of the factors in this section as discussed above.
Consolidated Results of Operations -- Comparison of Pro Forma Results for the Year Ended
December 31, 2005 vsl Pro Forma Results for the Year Ended December 3l, 2004
Our operating revenues increased by $4.6 million primarily from increases in waste and service revenues of
$5.9 million. Operating income for the Waste and Energy Services segment decreased by $4.4 million primarily due
to higher operating revenues offset by $10.3 million of allocated expenses related to the California Grantor
Trust Settlement. For additional information, see Note 21. Income Taxes of the Notes. Operating loss for the Other
Services segment decreased by $2.8 million primarily due to reduced general and administrative expenses.
Total investment income increased by $2.5 million primarily due to higher invested cash balances. Interest
expense decreased $1.1 million. Equity in net income from unconsolidated investments increased by $3.7 million
primarily due to revenue adjustments which occurred in 2004 in addition to lower operating costs in 2005 at a
project in the Philippines and lower project debt iht&rest expense at projects in the Philippines and Bangladesh in
2005 as a result of project debt payments. As discussed in Note 18. Financial Instruments of the Notes, we recorded
a pre-tax gain on derivative instruments of $15.2 million for the year ended December 31, 2005 related to an
investment in ACL warrants.
Income tax expense increased by $6.9 million due to higher taxable income.
Net income and diluted earnings per share increased by $14.3 million and $0:09, respectively, as a result of the
combined effects of the factors in this section as discussed above.
57
Waste and Energy Services Results of Operations -- Comparison of Pro Forma Results for the Year
Ended December 31, 2005 vs. Pro Forma Results for the Year, Ended December 31, 2004
Waste and Energy Services results of operations on both a reported and pro forma basis are presented in the
table below (in thousands of dollars):
For the Years Ended December 31,
Reported Pro Forma
2005 2004 2005 2004
(Unaudited)
Waste and service revenues ............. $ 638,503 $ 372,748 $ 789,155 $ 783,252
Electricity and steam sales ..............
Other operating revenues ...............
Total operating revenues ..............
Plant operating expenses ...............
Depreciation and amortization expense. ~
Net interest expense on project debt .......
Other operating income ................
General and administrative expenses .......
California Grantor Trust Settlement .......
Restructuring charges ..................
Acquisition-related charges ..............
Total operating expenses ...............
322,770 181,074 402,430 398,797
2,693 1,506 2,693 1,564
963,966 555,328 1,194,278 1,183,613
559,638 349,502 666,391 658,254
124,814 53,131 183,341 183,598
52,431 32,586 6%497 76,465
(887) (721) (368) (732)
64,216 40,632 73,950 68,487
10,342 -- 10,342 --
2,765 -- -- --
3,950 -- -- --
817,269 475,130 1,001,153 986,072
Operating income ..................... $ 146,697 $ 80,198 $ 193,125 $ 197,541
The following Waste and Energy Services segment discussion is presented on a pro forma basis only. We
believe that due to the significance of the Covanta Energy and ARC Holdings acquisitions to our current and future
results of operations and financial condition that an understanding of our reported results, trends and ongoing
performance is enhanced by a discussion of the Waste and Energy Services Segment on a pro forma basis. The
following general discussions should be read in conjunction with the above table, the consolidated financial
statements and the Notes thereto. Additional detail on comparable revenues, costs and expenses, and operating
income, within the Waste and Energy Services segment is provided in the pro forma domestic and international
business discussions below.
Operating income remained relatively unchanged primarily due increased revenues offset by allocated
expenses related to the California Grantor Trust Settlement. Revenues increased $10.7 million primarily from
increases in waste and service revenues. Total operating expenses increased by $15.1 million as a result of higher
plant operating expenses and lower project debt interest expense in both the domestic and international operations
offset by an increase in domestic general and administrative expenses and the California Grantor Trust Settlement.
58
Waste and Energy Domestic Business Results of Operations -- Comparison of Pro Forma Results for the
Year Ended December 31, 2005 vs. Pro Forma Results for the Year Ended December 31, 2004
The domestic business results of operations on both a reported and pro forma basis are presented in the table
below (in thousands of dollars):
For the Years Ended December 31,
Reported Pro Forma
2005 2004 2005 2004
Waste and service revenues ............. $ 634,268
Electricity and steam sales .............. 194,057
Other operating revenues 2,693
Total operating revenues ................ 831,018
Plant operating expenses ...............
Depreciation and amortization expense .....
Net interest expense on project debt .......
Other operating (income) expenses ........
General and administrative expenses .......
California Grantor Trust Settlement .......
Acquisition-related charges ..............
Total operating expenses ............... 702,376
Operating income ..................... $ 128,642
(Unau~ted)
$ 369,583 $ 784,920 $ 778,917
81,894 273,717 265,252
1,506 2,693 1,564
452,983 1,061,330 1,045,733
471,641 281,342 578,394 564,858
116,083 46,537 174,610 174,528
44,762 23,786 59,828 64,575
(3,651) 618 (3,132) 314
59,249 35,699 68,983 63,135
10,342 -- 10,342 --
3,950 -- -- --
387,982 889,025 867,410
$ 65,001 $ 172,305 $ 178,323
Total domestic revenue increased by $15.6 million primarily due to contract fee service escalation and higher
energy prices as further described below.
Waste and service revenues increased by $6.0 million as primarily due to:
· Revenue from energy-from-waste projects structured with Service Fee agreements increased by
$7.4 million;
· Revenues increased $4.1 million primarily due to contractual escalations of $10.6 million offset by a
reduction of $3.9 million related to lower revenues eamed explicitly to service debt and a reduction of
$2.6 million in additional waste service fees; and
· Revenues increased by $3.3 million due to one-time events including the impact of the emergence of a
subsidiary from bankruptcy which was partially offset by the termination or sale of certain non-core
operations primarily in the fourth quarter of 2004 and a reduction of service fees at one facility due to a
contract amendment in exchange for reduced letter of credit obligations;
· Revenue from energy-from-waste projects structured with Tip Fee agreements increased by $1.6 million.
Revenues for waste handled increased $4.5 million primarily driven by waste pricing offset by a reduction of
$2.9 million related to intermittent low margin brokered waste; and
· Other waste and service fee revenues decreased by $3.0 million primarily due to lower selling price for
recovered ferrous and non-ferrous metal.
Electricity and steam sales increased $8.5 million. Revenues increased $9.9 million primarily driven by higher
energy rates partially offset by a biogas project that was shut down in the fourth quarter of 2004.
Plant operating expenses increased by $13.5 million primarily due to the normal escalation of costs such as
wages and benefits, as well as additional scheduled maintenance and a subsidiary emerging from bankruptcy
partially offset by a reduction in disposal costs related to brokered waste and the impact of the termination or sale of
certain of our non-core operations.
59
Depreciation and amortization expense for the year ended December 31, 2005 was comparable to the year
ended December 31, 2004.
Net interest expense on project debt decreased $4.7 million primarily as a result of lower project debt balances.
Other operating income increased by $3.4 million primarily due to a gain at a facility related to a debt
refinancing in April 2005 and due to third quarter insurance recoveries.
General and administrative expenses increased $5.8 million primarily due to wage escalations, additional
professional and consulting fees and an increase in non-cash stock compensation expense resulting from additional
grants in 2005.
During the fourth quarter of 2005, we incurred $10.3 million of allocated expenses relating to the California
Grantor Trust Settlement. For additional information, see Note 21. Income Taxes of the Notes.
Waste and Energy International Business Results of Operations -- Comparison of Pro Forma Results for
the Year Ended December 31, 2005 vs. Pro Forma Results for the Year Ended December 31, 2004
The international business results of operations on both a reported and pro forma basis are presented in the
table below (in thousands of dollars):
Waste and service revenues .................. $ 4,235
Electricity and steam sales .................. 128,713
Total revenues ............................ 132,948
Plant operating expenses .................... 87,997
Depreciation and amortization expense ......... 8,731
Net interest expense on project debt ............ 7,669
Other operating expenses (income) ............ 2,764
General and administrative expenses ........... 4,967
Restructuring charges ..... , ................ 2,765
Total operating expenses .................... 114,893
Operating income ......................... $ 18,055
For the Years Ended December 31,
RepoSed Pro Forma
2005 2004 2005 2004
(Unau~ted)
$ 3,165 $ 4,235 $ 4,335
99,180 128,713 133,545
102,345 132,948 137,880
68,160 87,997 93,396
6,594 8,731 9,070
8,800 7,669 11,890
(1,339) 2,764 (1,046)
4,933 4,967 5}352
87,148 112,128 118,662
$ 15,197 $ 20,820 $ 19,218
Total revenues for the international business for 2005 decreased $4.9 million primarily due to elimination of
revenue from marginal businesses in 2004, offset by an increase in revenues due to higher fuel prices as described
below. This decrease was primarily due to a $7.5 million decrease from the 2004 expiration of an energy contract in
the Philippines, a $4.1 million decrease from the deconsolidation of the MCI facility in May 2004, as well as a
$2.4 million decrease due to lower demand at the Huantai facility in China. These decreases were partially offset by
an $8.1 million increase primarily due to an increase in revenues under energy contracts at both Indian facilities in
2005 resulting from higher fuel costs passed through to the off-taker; as well as a $0.8 million increase in steam
revenues from the Yanjiang facility in China.
Plant operating expenses were lower by $5.4 million primarily as a result of a $4.9 million decrease in costs
from the expiration of an energy contract in the Philippines, a $4.6 million reduction in costs due to the
deconsolidation of the MCI facility in the Philippines in May 2004, as well as a $2.3 million decrease due to
lower generation at the Huantai facility in China. These decreases were partially offset by a $6.1 million increase in
plant operating costs due primarily to higher fuel prices at two facilities in India.
Depreciation and amortization expense for the year ended December 31, 2005 was comparable to the year
ended December 31, 2004.
60
Net interest expense on project debt decreased $4.2 million primarily due to lower expenses at two Indian
facilities resulting from the October 2004 refinancing and scheduled quarterly pay down of project debt, as well as
the deconsolidation of the MCI facil/ty in May 2004.
Other operating expenses increased by $3.8 million primarily due to the $1.7 million write-off of the remaining
assets at the Edison Bataan facility in the Philippines, and a 2005 foreign currency exchange loss of $1.0 million,
compared to a $0.2 million gain recorded in 2004 on a euro-denominated note receivable from the Trezzo project in
Italy and U.S. dollar-denominated debt in India.
Other Services Results of Operations -- Comparison of Reported Results for the Year Ended December 31,
2005 vs. Reported Results for the Year Ended December 31, 2004
Other Services reported results of operations are presented in the table below (in thousands of dollars):
For the Years Ended
December 31,
2005 2004
OPERATING REVENUES:
Net earned premiums ......................................... $ 12,685 $ 17.998
Net investment income ........................................
Net realized investment (losses) gains .............................
Other income ...............................................
Total other operating revenues ...................................
Other operating expenses .......................................
Depreciation and amortization expense ............................
General and administrative expenses ..............................
Total operating expenses .......................................
Operating loss ............................................... $
1,999 2,405
(71) 201
184 264
14,797 20,868
11,902 17,281
111 151
3,265 6,764
15,278 24,196
(481) $ (3,328)
Net written premiums decreased by $2.7 million primarily due to the insurance business entering into quota
share arrangements as described in the Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Overview -- Other Services section above.
Net earned premiums decreased by $5.3 million. The change in net earned premiums was directly related to the
change in net written premiums and the mn-off of the commercial automobile program.
Other operating expenses decreased by $5.4 million. Other operating expenses consist of net loss and LAE, and
policy acquisition costs as described below.
Net loss and LAE decreased by $2.9 million. The loss and LAE ratio worsened due to the underwriting
performance of the new program which was not as profitable as the renewal book. The resulting loss and LAE ratios
were 78.3% and 71.5% for the years ended December 31, 2005 and 2004, respectively. For both 2005 and 2004,
adverse reserve development accounted for approximately 14.0% of the net loss and LAE ratio.
Policy acquisition costs decreased by $2.5 million. As a percentage of net earned premiums, policy acquisition
costs were 15.5% and 24.6% for the years ended December 31, 2005 and 2004, respectively. Policy acquisition costs
decreased due to reduced profit commissions incurred related to non-standard personal automobile and from ceding
commissions earned under reinsurance agreements during 2005.
General and administrative expenses decreased by $3.5 million primarily due to reductions in administrative
personnel and rent in the insurance business. Decreases in holding company expenses were primarily the result of
the corporate services agreement, entered into between us and Covanta Energy on March 10, 2004, pursuant to
which we provided to Covanta Energy, at Covanta Energy's expense, certain administrative and professional
services.
61
Pro Forma Reconciliations
The following tables provide reconciliations from the as reported results to the pro forma results presented
above for the consolidated and Waste and Energy Services segment where applicable (in thousands of dollars,
except per share amounts). Notes to the pro forma reconciliations begin directly after the tables.
CONSOLIDATED PRO FORMA RECONCILIATIONS
Year Ended December 31, 2005 Year Ended Decem~r 31, 2004
Acquisition Pro forma Acquisition Pro Forma
As Reported Activity A~ust. Pro Forma As Reported Activity Adjust, Pro Forma
(Unaudited)
Operating revenues
Waste and service revenues ..... $ 638,503 $ 148,792 $ 1,860 $ 789,155 $ 372,748 $ 411,263 $ (759) $ 783,252
Electricity and steam sales ...... 322,770 79,660 -- 402,430 181,074 218,258 (535) 398,797
Other operating revenues ....... 17,490 -- -- 17,490 22,374 58 -- 22,432
Total operating revenues ....... 978,763 228,452 1,860 1,209,075 576,196 629,579 (1,294) 1,204,481
Operating expenses
Plant operating expenses ....... 559,638 103,617 3,136 666,391 349,502 306,025 2,727 658,254
Depreciation and amogizafion
expense ................ 124,925 57,032 1,495 183,452 53,282 133,973 (3,506) 183,749
Net interest expense on project
debt ................... 52,431 13,964 1,102 67,497 32,586 41,786 2,093 76,465
Other operating expenses
(income) ................ 11,015 519 -- 11,534 16,560 (127) 116 16,549
General and administrative
expenses ................ 67,481 52,133 (42,399) 77,215 47,396 34,210 (6,355) 75,251
California Grantor
Trust Settlement ........... 10,342 -- -- 10,342 ....
Restructuring charges ......... 2,765 -- (2,765) -- --
Acquisition-related charges ..... 3,950 (3,950) -- -- --
Reorganization items ......... -- (58,282) 58,282 --
Fresh start adjustments ........ -- -- -- -- (399,063) 399,063
Gain on extinguishment of debt . . -- .... 510,680 (510,680) --
Total operating expenses ....... 832,547 227,265 (43,381) 1,016,431 499,326 569,202 (58,260) 1,010,268
Operating Income ........... 146,216 1,187 45,241 192,644 76,870 60,377 56,966 194,213
Other Income {expenses)
Investment income ........... 6,129 1,225 -- 7,354 2,343 2,524 -- 4,867
Interest expense ............. (89,973) (26,368) (2,903) (119,244) (43,739) (66,208) (10,348) 020,295)
Gain on derivative instruments,
ACL warrants ............ 15,193 -- -- 15,193 ....
Total other expenses .......... (68,651) (25,143) (2,903) (96,697) (41,396) (63,684) (10,348) (115,428)
Income before income tax
(expense) benefit, minority
interest and equity in net income
from unconsolidated
investments ............... 77,565 (23,956) 42,338 95,947 35,474 (3,307) 46,618 78,785
Income tax (expense) benefit ...... (34,651) 6,033 (14,558) (43,176) (11,535) (48,058) 23,353 (36,240)
Minority interest .............. (9,197) (56) -- (9,253) (6;869) (3,422) 617 (9,674)
Equity in net income of
unconsolidated investments ..... 25,609 -- -- 25,609 17,024 3,924 970 21,918
Net income0oss) ............. $ 59,326 $ (17,979)$ 27,780 $ 69,127 $ 34,094 $ (50,863)$ 71,558 $ 54,789
Earnings Per Share:
Basic ..................... $ 0.49 $ 0.49 $ 0.39 $ 0.39
Diluted .................... $ 0.46 $ 0.47 $ 0.37 $ 0.38
62
WASTE AND ENERGY SERVICES PRO FORMA RECONCILIATIONS
Domestic
Year Ended December 31, 2005 Year Ended Dccember 31, 2004
Acquisition Pro Forma Acquisition Pro Forma
As Reported Activity AdjusL Pro Fornm As Reported Activity Adjust. Pro Forma
(Unaudited)
Operating revenues
Waste and service
revenues ........... $ 634,268 $ 148,792 $ 1,860 $ 784,920 $ 369,583 $ 410,093 $
(759)$ 778,917
79,660 -- 273,717 81,894 183,893 (535) 265,252
-- -- 2,693 1,506 58 -- 1,564
831,018 228,452 1,860 1,061,330 452,983 594,044 (1,294) 1,045,733
Electricity and steam
sales .............. 194,057
Other operating revenues.. 2,693 __
Total operating revenues..
Operating expenses
Plant operating expenses.. 471,641
Depreciation and
amortization expense... 116,083
Net interest expense on
project debt ......... 44,762
Other operating (income)
expenses ........... (3;651)
General and admithstrative
expenses ........... 59,249
California Grantor
Trust Settlement ...... 10,342
Acquisition-related
charges ............ 3,950
Reorganization items .... --
Fresh start adjustments . .. --
Gain on extinguishment of
debt .............. --
Total operating expenses..
Operating income ....... $ 128,642 $
103,617 3,136 578,394 281,342 280,789 2,727 564,858
57,032 1,495 174,610 46,537 130,606 (2,615) 174,528
13,964 1,102 59,828 23,786 38,696 2,093 64,575
519 -- (3,132) 618 (420) 116 314
52,133 (42,399) 68,983 35,699 33,791 (6,355) 63,135
-- -- 10,342 ....
-- (3,950) .....
.... (58,282) 58,282 --
.... (282,924) 282,924 --
.... 510,680 (510,680) --
702,376 227,265 (40,616) 889,025 387,982 652,936 (173,508) 867,410
1,187 $ 42,476 $ 172,305 $ 65,001 $ (58,892)$ 172,214 $ 178,323
63
International
Year Ended December 31, 2005 Year Ended December 31, 2004
Acquisition Pro Forma Acquisition Pro forma
As Reported Activity Adjust. Pro Forma As Reported Activity Adjust.
revenues ........... $ 4,235
Electricity and steam
sales .............. 128,713
Total operating revenues.. 132,948
Operating expenses
Plant operating expenses.. 87,997
Depreciation ant
amortization expense... 8,731
project debt ......... 7,669
Other operating expenses
(income) ........... 2,764
General and administrative
expenses ........... 4,967
Restructuring charges .... 2,765
Fresh start adjustments... --
Total operating expenses.. 114,893
Operating income ....... $ 18,055
Pro Forma
(Unaudited)
-- $ -- $ 4,235 $ 3,165 $ 1,170 $ -- $ 4,335
-- -- 128,713 99,180 34,365 -- 133,545
-- -- 132,948 102,345 35,535 -- 137,880
-- 87,997 68,160 25,236 -- 93,396
-- 8,731 6,594 3,367 (891) 9,070
-- 7,669 8,800 3,090 -- 11,890
-- 2;764 (1,339) 293 -- (1,046)
-- 4,967 4,933 419 -- 5,352
(2,765) .....
-- -- -- (116,139) 116,139 --
-- (2,765) 112,128 87,148 (83,734) 115,248 118,662
$ -- $ 2,765 $ 20,820 $ 15,197 $ 119,269 $ (115,248) $ 19,218
Notes To Pro Forma Reconciliations
Pro Forma Assumptions
The unauditea pro forma combined consolidated financial statements reflect the following assumptions:
Covanta Energy Transactions:
· We acquired Covanta Energy on January 1, 2004, on the same terms described in "Acquisitions -- Covanta
Energy" in Note 3. Acquisitions and Dispositions of the Notes.
· The debt structure of Covanta Energy and CPIH that was in place upon Covanta Energy's emergence from
bankruptcy on March 10, 20(:4, was assumed to be refinanced, prior to the amendment to the credit facilities
on May 26, 2006, in connection with the acquisition of ARC Holdings as of January 1, 2004 as more fully
described in Note 3. Acquisitions and Dispositions of the Notes.
ARC Holdings' Transactions:
· We, through Covanta Energy, acquired 100% of the issued and outstanding shares of ARC Holdings' capital
stock on January 1, 2004 on the same terms described in "Acquisitions -- ARC Holdings" in Note 3.
Acquisitions and Dispositions of the Notes.
· On April 30, 2004, as a result of series of transactions that ARC Holdings' then owners entered into, ARC
Holdings gained effective control of Covanta Ref-Fuel LLC (the "Ownership Change"), and began
consolidating its balance sheet and results of operations thereafter. It is assumed that these transactions
occurred as of January 1, 2004.
Acquisition Activity:
· Represents Covanta Energy's results of operations prior to March 11, 2004 for the pro forma year ended
December 31, 2004.
· Represents ARC Holdings' results of operations prior to June 25, 2005 for the pro forma years ended
December 31, 2005 and 2004 including the period January 1, to April 30, 2004 as a result of the Ownership
Change.
Pro Forma Adjustments
The following are a summary of the pro forma adjustments made:
· To exclude the operating results of the Waste and Energy Services domestic business comprising the
Remaining Debtors for the period January 1 through March 10, 2004 ("predecessor period").
· Waste and service revenues: To record additional revenues prior to June 25, 2005, as a result of conforming
debt service revenue recognition at ARC Holdings subsidiaries to Covanta Energy's debt service revenue
recognition policy, which policy has been implemented by ARC Holdings since its acquisition.
· Plantoperatingexpenses: Torucordasrentexpensethenetimpactofthechangeinthefairvalueofalease
owned by an operating subsidiary of ARC Holdings as of January 1, 2004.
· Depreciation and amortization expense: To reverse historical depreciation and amortization expense and
to record pro forma depreciation and amortization expense based on fair values assigned to Covanta
Energy's and ARC Holdings' property, plant and equipment and amortizable intangible assets prior to their
respective acquisition dates of March 10, 2004 and June 24, 2005.
· Net interest expense on project debt: To reverse Covanta Energy's project debt prior bond issue cost
amortization and to reverse ARC Holdings' project debt prior bond issuance cost amortization and to record
the impact of fair value adjustments to Covanta Energy's and ARC Holdings' project debt prior to their
respective acquisition dates.
· General and administrative expenses: To reverse ARC Holdings' executive compensation of
approximately $30 million and related expenses of approximately $12 million in the periods prior to
the acquisition date.
· Restructuring charges: To reverse severance and incentive payments to CPIH executives as a result of
overhead reductions made possible by the elimination of CPIH's separate capital structure and debt
repayments in connection with the refinancing of Covanta Energy's and CPIH's debt.
· Acquisition-related charges: To reverse employee bonuses and integration expenses as a result of the
acquisition of ARC Holdings.
· Reorganization items, fresh-start adjustments and gain on cancellation ofpre-petition debt: To reverse the
historical items resulting from Covanta Energy's bankruptcy proceedings. Since the pro forma results of
operations has been prepared on the basis that Covanta Energy's emergence from bankruptcy and the
business combination with us both occurred on January 1, 2004, these items have been removed, as these
transactions to effect Covanta Energy's reorganization would have been completed and these items would
have been recorded prior to January 1, 2004.
· Interest expense: To reverse Covanta Energy's predecessor period and ARC Holdings' pre-acquisition
period amortization of deferred f'mancing costs; to record the impact of the fair value adjustment to the
intermediate debt of ARC Holdings; to record the effect of the fair value adjustment associated with
terminating an obligation to one of ARC Holdings' prior owners; and to record the net adjustment to interest
expense as a result of the new capital structure of Covanta Energy, prior to the amendment to the credit
facilities on May 26, 2006, described in Liquidity and Capital Resources below. Additionally, to adjust for
changes in valuation estimates of ARC Holdings debt premiums in the quarter ended December 31, 2005.
65
· Income tax (expense) benefit: To record the adjustment for the estimated income tax effects associated
with the pro forma adjustments to pre-tax income and arrive at a blended assumed effective tax rate of 46%
for the combined company for the year ended December 31, 2004 and 45% for the year ended December 31,
2005. We used an effective tax rate rather than the combined federal and statutory rate based upon the nature
of the permanent difference related to the pro forma adjustments.
· Earningspershareandweightedaveragesharesoutstanding: Basicanddilutedeamingspershareandthe
average shares outstanding used in the calculation of basic and diluted earnings per share of common stock
and shares of common stock outstanding for the pro forma years ended December 31, 2004 and 2005 have
been adjusted, as necessary, to reflect the following equity transactions, as if they occurred on January 1,
2004, the issuance of: ( 1 ) 5.1 million shares to the bridge lenders relating to the Covanta Energy acquisition;
(2) 27.4 million shares pursuant to a pro rata rights offering to all of our stockholders on May 18, 2004
following the Covanta Energy acquisition; (3) 8.75 million shares pursuant to the conversion nf notes issued
in connection with the bridge financing related to the Covanta Energy acquisition; and (4) 66.7 million
shares pursuant to a pro rata rights offering to all of our stockholders on June 24, 2005 in connection with the
ARC Holdings acquisition. In addition, diluted earnings per share and the weighted average shares used in
the calculation of diluted earnings per share of common stock and shares of common stock outstanding for
the pro forma year ended December 31, 2004 and the year ended December 31, 2005 have been adjusted, as
necessasy, to reflect the offering of 5.7 million shares of our common stock in a rights offering as if it
occurred on January 1, 2004.
LIQUIDITY AND CAPITAL RESOURCES
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. We completed public offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the new credit facilities on February 9,
2007. We completed the tender offer of Covanta Energy's intermediate debt for approximately $604.4 million in
aggregate principal amount of outstanding notes on February 22, 2007. Under the New Credit Facilities, we will
have substantially greater, but not unrestricted, ability to make investments in our business and to take advantage of
opportunities to grow our business through investments and acquisitions, both domestically and internationally.
Given the significance and timing of this recapitalization, the following discussion includes 2006 cash flow and
financing arrangements and information related to the 2007 recapitalization plan. Additional information, including
material terms related to our recapitalization plan, is contained below under 2007 Recapitalization Plan.
Generating sufficient cash to meet our liquidity needs, pay down debt and to invest in our business remains an
important objective of management. Maintaining historic facility production levels while effectively managing
operating and maintenance expenses is important to optimize long-term cash generation. We do not expect to make
any cash contributions to Covanta Energy, except in connection with certain acquisitions and investments permitted
under Covanta Energy's New Credit Facilities (described below under 2007 Recapitalization Plan). Covanta
Energy may make limited cash distributions to us under the New Credit Facilities.
Covanta Energy derives its cash flows principally from its domestic and international project operations and
businesses. The frequency and predictability of Covanta Energy's receipt of cash from projects differs, depending
upon various factors, including whether restrictions on distributions exist in applicable project debt arrangements,
whether a project is domestic or international, and whether a project has been able to operate at historical levels of
production.
Covanta Energy's receipt of cash from its international projects is also subject to satisfaction of financial tests
and other covenants contained in applicable project debt arrangements. A material portion of cash from Covanta
Energy's international projects are received semi-annually, during the second and fourth quarters.
As of December 31, 2006, Covanta Energy was in compliance with covenants under the credit facilities. We
believe that when combined with its other sources of liquidity, including the revolving loan facility that is a
component of the New Credit Facilities, Covanta Energy's operations will generate sufficient cash over at least the
next twelve months to meet operational needs, make capital expenditures, invest in the business and service debt
due prior to maturity.
66
Capital Resources and Commitments
The following chart summarizes our various debt facilities and cash resources as of December 31, 2006 (in
millions of dollars):
International Subsidiaries®
$24 Cash151
$36 Restricted CashI'l
Covanta Holding Corporation
$63 Cash and Marketable Securities
$7 Restricted Cash®
Covanta Energy Corporation
$109 Cmporate Cash and
Marketable Securities
$100 Revolving Credit Facilit3}a/
$320 1~t Lien L/C FacilityIbl
$368 Ist Lien Term Loan
$260 2~ Lien Term Loan
(a) Undrawn and up to $89 available for
L/C's
(b) $319.5 utilized at December 31, 2006
Domestic Subsidiaries
$192 Restricted Cash°~
$644 Project Debt1:/~3~
Covanta ARC
Holdings, Inc.
MSW Energy Holdings 1I LLC
$9 Restricted Cashm
$224 Senior Secured Notes due 2010
MSW Energy Holdings LLC
$9 Restricted Cashm
$196 Senior Secured Notes due 2010 ~2~
(1) Held in trust primarily for debt service
(2) Par Value
(3) Non-recourse to Covanta Energy Corporation
(4) Classified in other current assets
(5) Available to Covanta Energy Corporation
subject to financial tests and convenants.
(6) Standalone letters of credit issued totaling
$5 million exist for International projects.
Covanta Ref-Fuel
Holdings LLC
Covanta ARC LLC
$42 CashIsl
$21 Restricted Cashm
$192 Senior Notes due 2015all31
Operating Subsidiaries
$2 CashI:l
$141 Restricted Cashm
$671 Project Debt ~2~o~
67
The 2007 recapitalization plan discussed below greatly simplifies our capital structure. The following chart
summarizes our pro forma capital structure as if the 2007 recapitalization plan was in effect as of December 31,
2006 (in millions of dollars):
New Capital Structure (Pro Forma)
Covanta Holding Corporation
$78 Cash and Marketable Securities
$373.75 Convertible Debentures
Covanta Energy Corporation
$30 Corporate Cash and
Marketable Securities
$300 Revolving Credit Facilit~a)
$320 Funded L/C Facility®
$650 Term Loan Facility
(a) $0 utilized at December 31, 2006
(b) $317.5 utilized at December 31, 2006
International Subsidiaries15~
$24 CashI~/
$36 Restricted CashI~
$76 Project Debt
Domestic Subsidiaries
$333 Restricted Cash(~1
$1,315 Project Debt°1(4/
(1) Available to Covanta Energy Corporation
subject to financial tests and covenants.
(2) Held in trust primarily for debt service
(3) Par value
(4) Non-recourse to Covanta Energy Corporation
(5) Standalone letters of credit issued totaling
$5 million exist for International projects.
The following represents assumptions used to determine the pro forma amounts above:
(i) The net proceeds from refinancing the Term Loan was $5.6 million.
(ii) Proceeds of approximately $364.4 million and $136.6 million, each net of underwriting
discounts and commissions, were received related to underwritten public offerings of
Debentures and Equity, respectively.
(iii) The combination of the proceeds noted above and approximately $130 million in cash and
restricted cash (available for use as a result of the recapitalization plan) were utilized for
the repayment, by means of a tender offer, of approximately $604.4 million in aggregate
principal amount of outstanding notes previously issued by Covanta Energy's intermediate
subsidiaries.
68
2006 Liquidity and Financing Arrangements
The information set forth below regarding liquidity and capital resources as of December 31. 2006 is presented
according to our consolidated operations and our current business segments of Waste and Energy Services and
Other Services.
2006 Cash Flow
Our sources of funds are our investments and £mancing activities (including offerings of equity and/ur debt
securities), as well as dividends, if any, and other payments received from Covanta Energy and NAICC. Under the
financing arrangements existing during 2006 and prior to the New Credit Facilities, Covanta Energy's ability to pay
dividends to us was limited, except in certain circumstances. Under the New Credit Facilities, Covanta Energy has
greater flexibility to distribute cash to us. Various state insurance requirements restrict the amounts that may be
transferred to us in the form of dividends or loans from our insurance subsidiaries without prior regulatory approval.
Currently, NAICC cannot pay dividends or make loans to us.
Summarized cash flow information for our current business segments reconciled to the consolidated
statements of cash flows is as follows (in thousands of dollars):
For the Year Ended December 31, 2006
Waste and Energy Other EIImlnat~o~as Tolal
Net cash provided by (used in) operating
activities .............................. $ 314,414
Net cash (used in) provided by investing
activities(I) ............................ (76,200)
Net cash (used in) provided by financing
activities .............................. (159,126)
Effect of exchange rate changes on cash and cash
equivalents ............................ 221
Net increase in cash and cash equivalents ........ $ 79,309
$ (5,167) $ -- $ 309,247
9,296 -- (66,904)
21,448 -- (137,678)
-- -- 221
$ 25,577 $ -- $ 104,886
For the Year Ended December 31, 2005
Waste and Energy Other Eliminations Total
Net cash provided by (used in) operating
activities .............................. $ 230,184
Net cash (used in) investing activities(2) ........ (707,472)
Net cash provided by financing activities ........ 493,948
Effect of exchange rate changes on cash and cash
equivalents ............................ (221 )
Net increase in cash and cash equivalents ....... $ 16,439
$ (21,925) $-- $ 208,259
(354,361) 384,954 (676,879)
392,255 (384,954) 501,249
-- -- (221)
$ 15,969 $ -- $ 32,408
69
For the Year Ended December 3I, 2004
Waste and Energ3, Other Eliminations Total
Net cash provided by (used in) operating
activities ...................... $ 134,116
Net cash (used in) provided by investing
activities(3) .................... (12,103)
Net cash (used in) provided by financing
activities ...................... (101,583)
Effect of exchange rate changes on cash
and cash equivalents .............. (112)
Net increase in cash and cash
equivalents ..................... $ 20,318
$ (25,763) $ -- $ 108,353
68,094 -- 55,991
15,547 -- (86,036)
-- -- (112)
$ 57,878 $ -- $ 78,196
(1) Waste and Energy Services is net of proceeds of $3.6 million from the sale of a facility in China.
(2) Waste and Energy Services is net of cash acquired from ARC Holdings of $62,358.
(3) Other is net of cash acquired from Covanta Energy, at the holding company-level of $57,795.
Waste and Energy Services Segment
Cash provided by operating activities was $314.4 million and $230.2 million for the years ended December 31,
2006 and 2005, respectively. The increase in cash flow from operating activities was primarily due to operations
acquired in the ARC Holdings acquisition. Net cash used in investing activities was $76.2 million in the year ended
December 31, 2006 and was primarily due to $54.3 million in purchases of property, plant and equipment and the
acquisition of the limited parmership interests Covanta Onondaga Limited Partnership for $27.5 million in
December 2006. Net cash used in financing activities was $159.1 million for the year ended December 31,
2006 and was primarily driven by the payment of project and long-term debt partially offset by the proceeds from
borrowings of long-term debt and a decrease in restricted funds held in trust.
Cash provided by operating activities was $230.2 million and $134.1 million for the years ended December 31,
2005 and 2004, respectively. The increase in cash flow from operating activities was primarily due to the ARC
Holdings acquisition. Net cash used in investing activities was $707.5 million for the year ended December 31, 2005
and was primarily due to the purchase of ARC Holdings, net of cash acquired. Net cash provided by financing
activities was $493.9 million for the year ended December 31, 2005 and was primarily driven by the our capital
contribution, the net impact of the refinancing of the prior long-term debt and for the acquisition of ARC Holdings
offset partially by the payment and future funding of project debt.
Restricted funds held in trust were $407.9 million as of December 31, 2006. Restricted funds held in trust are
primarily amounts received and held by third party trustees relating to projects owned by Covanta Energy, and
which may be used only for specified purposes. These payments are made directly to the trustee primarily for
related project debt and are held by it until paid to project debt holders. We do not have access to these funds. In
addition, as of December 31, 2006, we had $19.6 million in cash held in restricted accounts to pay for certain taxes
which may be due relating to the period prior to Covanta Energy's bankruptcy and that are estimated to be paid in
the future. Cash held in such reserve accounts is not available for general corporate purposes.
Other Services Segment
Net cash used in operating activities was $5.2 million for the year ended December 31, 2006 primarily due to
executed agreements in January 2006 with the California Commissioner regarding the final administration and
conclusion of grantor trusts associated with predecessor insurance entities. See Note 21. Income Taxes of the Notes
for additional information. During 2005, we received net proceeds from the ARC Holdings rights offering of
$395.9 million and contributed approximately $385 million to Covanta Energy to fund a portion of the $740 million
cash purchase price for the outstanding shares in ARC Holdings.
70
For the year ended December 31, 2006, the holding company held cash and investments of approximately
$62.6 million, an increase of $23.3 million from December 31, 2005. This increase was primarily due to proceeds
received on February 24, 2006 from the 9.25% Offering in which 5,696,911 shares were issued for $20.8 million in
gross proceeds as described in Note 24. Stockholders' Equity of the Notes. Of the $62.6 million held in cash and
investments, $56.0 million was available to pay general corporate expenses and for general working capital
purposes.
Net cash used by operating activities from the insurance business was $6.9 million and $14.2 million for the
years ended December 31, 2006 and 2005, respectively. The ongoing use of cash in operations was due to the
insurance business continuing to make payments related to discontinued lines and territories in excess of premium
receipts from existing lines. This negative cash flow restricted the insurance business from fully re-investing bond
maturity proceeds and in some circumstances required the sale of bonds in order to meet obligations as they arose.
Cash provided from investing activities was $9.2 million for the year ended December 31, 2005 compared with
$13.6 million for the comparable period in 2004. The $4.4 million decrease in cash provided by investing activities
in 2006 was due to a reduction in reinvestment activity in conjunction with reduced cash used in operations. During
2005, one of our subsidiaries liquidated its interest in ACL warrants as described in Note 18. Financial Instruments
of the Notes. A portion of the warrant proceeds were paid to NAICC to redeem an approximate 14% interest held by
NAICC in such subsidiary. NAICC received net proceeds of approximately $1.5 million. There were no fmancing
activities in either twalve-month period ended December 31, 2006 and 2005.
The insurance business, which comprises a portion of our Other Services segment, requires both readily liquid
assets and adequate capital to meet ongoing obligations to policyholders and claimants, as well as to pay ordinary
operating expenses. The insurance business meets both its short-term and long-term liquidity requirements through
operating cash flows that include premium receipts, investment income and reinsurance recoveries. To the extent
operating cash flows do not provide sufficient cash flow, the insurance business relies on the sale of invested assets.
Its investment policy guidelines require that all loss and LAE liabilities be matched by a comparable amount of
investment grade assets. We believe that the insurance business has both adequate capital resources and sufficient
reinsurance to meet its current operating requirements.
The National Association of Insurance Commissioners provides minimum solvency standards in the form of
risk based capital requirements ("RBC"). The RBC model for property and casualty insurance companies requires
that carriers report their RBC ratios based on their statutory annual statements as filed with the regulatory
authorities. We believe our insurance business has projected its RBC requh'ement as of December 31, 2006 under
the RBC model and believes that it is above the level which would trigger increased oversight by regulators.
We estimate our insurance business' reserves for unpaid losses and LAE based on reported losses and historical
experience, including losses reported by other insurance companies for reinsurance assumed, and estimates of
expenses for investigating and adjusting all incurred and unadjusted claims. Key assumptions used in the estimation
process could have significant effects on the reserve balances. Our insurance business regularly evaluates its
estimates and assumptions based on historical experience adjusted for current economic conditions and trends.
Changes in the unpaid losses and LAE can materially affect the statement of operations.
California and Montana insurance laws and regulations regulate the amount and type of NAICC's investments.
NAICC's investment portfolio is comprised primarily of fixed maturities and is weighted heavily toward investment
grade short and medium term securities. See Note 1. Organization and Summary of Significant Accounting Policies
of the Notes for information regarding significant accounting policies affecting these investments.
71
NAICC's investment portfolio as of December 31, 2006 was as follows (in thousands of dollars):
Amortized Cost Fair Value
Investments by investment by grade:
Fixed maturities:
U.S. GovemmentJAgency ..................................
Mortgage-backed ........................................
Corporate (AAA to A) ....................................
Corporate (BBB) ........................................
Total fixed maturities .....................................
Equity securities ..........................................
$ 17,595 $ 17,238
8,456 8,099
8,763 8,653
1,018 1,017
35,832 35,007
1,289 1,549
$ 37,121 $ 36,556
2006 Financing Arrangements
As of December 31, 2006, we did not have any outstanding debt for borrowed money. Covanta Energy and
several of its subsidiaries had outstanding debt obligations, which are described below. We guaranteed Covanta
Energy's debt obligations described below.
Covanta Energy Long-Term Debt
Long-term debt was comprised of credit facilities and intermediate debt as follows (in thousands of dollars):
Asof Asof
December 31, December 31,
2006 2005
Covanta Energy Senior Secured Credit Facilities
First Lien Term Loan Facility ............................... $ 368,389 $ 229,312
Second Lien Term Loan Facility ............................. 260,000 400,000
Intermediate Subsidiary Debt
6.26% Senior Notes due 2015 ...............................
8.50% Senior Secured Notes due 2010 ........................
7.375% Senior Secured Notes due 2010 .......................
Unamortized debt premium ................................
Total intermediate subsidiary debt ............................
Other long-term debt ....................................
Total long-term debt ......................................
Less: current portion (includes $4,732 and $4,807 of unamortized
premium) ............................................
Total long-term debt .................................... $ 1,223,689
628,389 629,312
192,000 234,000
195,785 195,785
224,100 224,100
611,885 653,885
19,748 24,726
631,633 678,611
101 196
1,260,123 1,308,119
(36,434) (47,549)
$ 1,260,570
On May 26, 2006, Covanta Energy entered into agreements which amended its existing credit agreements. All
material terms of Covanta Energy's first priority secured term loan facility ("First Lien Term Loan Facility") and
priority secured term loan facility ("Second Lien Term Loan Facility") remained unchanged except for the
following:
· Interest rates applicable to the existing First Lien Term Loan Facility and to credit linked deposits applicable
to its first priority secured funded letter of credit facility ("Funded Letter of Credit Facility") were reduced
72
from a reserve adjusted British Bankers Association Interest Settlement Rate, commonly referred to as
"LIBOR," plus 3.00% to LIBOR plus 2.25%.
· The amount available for the issuance of letters of credit under the existing $100 million Revolving Credit
Facility was increased from $75 million to $90 million.
· New ~erm loan commitments were provided which allowed Covanta Energy to increase the principal amount
outstanding under its First Lien Term Loan Facility by up to $140 million, and use the proceeds to prepay up
to $140 million under the existing Second Lien Term Loan Facility.
· Certain covenants restricting Covanta Energy's ability to invest available cash and enter into limited
recourse borrowings have been modified to provide additional flexibility in the context of permitted
acquisitions.
On June 30, 2006, Covanta Energy utilized the additional term loan commitment of $140 million on its First
Lien Term Loan Facility to prepay $140 million under the Second Lien Term Loan Facility. Covanta Energy
incurred a call premium of $2.8 million which was paid on June 30, 2006. Covanta Energy recognized a loss on
extinguishment of debt of $2.3 million, which was classified as other expense on the consolidated statement of
operations, and a write-off to interest expense of a portion of the Second Lien Term Loan Facility deferred £mancing
costs of $4.5 million in the three months ended June 30, 2006 related to the $140 million prepayment under the
Second Lien Term Loan Facility.
Covanta Energy Short-Term Liquidity
As of December 31, 2006, Covanta Energy had available credit for liquidity as follows (in thousands of
dollars):
Total
Available
Under Facility
Revolving Credit Facility(l) ........................ $ 100,000
Funded Letter of Credit Facility ..................... $ 320,000
Available
As of
December 31,
Maturing 2006
2011 $ 99,000
2012 $ 549
(1) Up to $90 million of which may be utilized for letters of credit.
As of December 31, 2006, Covanta Energy had not drawn on the first priority secured revolving credit facility
("Revolving Credit Facility") and issued $1 million of letters of credit under the Revolving Credit Facility. On
March 21,2006, Covanta Energy's availability under the Funded Letter of Credit Facility was voluntarily reduced to
$320 million from $340 million. As of December 31, 2006, Covanta Energy had approximately $319.5 million
outstanding letters of credit under the Funded Letter of Credit Facility.
Intermediate Subsidiary Debt
Three ARC Holdings subsidiaries identified below had outstanding non-project debt facilities as of
December 31, 2006 which are described below. Under the 2007 recapitalization plan, on February 22, 2007,
we repaid, by means of a tender offer, approximately $604.4 million in aggregate principal amounts of these
outstanding notes.
As of December 31, 2006, MSW Energy Holdings LLC, collectively with MSW Energy Finance Co., Inc.,
referred to her~m after as ("MSW I"), had outstanding debt financing consisting of $196 million in aggregate
principal amount of 8.50% senior secured notes due 2010 ("MSW I Notes").
As of December 31, 2006, MSW Energy Holdings II LLC, collectively with MSW Energy Finance Co. II, Inc.,
referred to herein after as "MSW II", had outstanding debt financing consisting of $224 million in aggregate
principal amount of 7.375% senior secured notes due 2010 ("MSW H Notes").
As of December 31, 2006, Covanta ARC LLC ("ARC LLC") had outstanding debt financing consisting of
$192 million in aggregate principal amount of 6.26% senior notes due 2015 ("ARC Notes").
73
Covanta Energy Project Debt
Domestic Project Debt
Financing for Covanta Energy's energy-from-waste projects is generally accomplished through tax-exempt
and taxable municipal revenue bonds issued by or on behalf of the municipal client. For such facilities that are
owned by Covanta Energy's subsidiary, the issuers of the bond loans the bond proceeds to Covanta Energy's
subsidiary to pay for facility construction. For such facilities, project-related debt is included as "Project debt
(short- and long-term)" in our consolidated fmancial statements. Generally, such project debt is secured by the
revenues generated by the project and other project assets including the related facility. Such project debt of
Covanta Energy's subsidiaries is described in the chart below under Capital Requirements as non-recourse project
debt. The only potential recourse to Covanta Energy with respect to project debt arises under the operating
performance guarantees described below under Other Commitments.
Certain subsidiaries had recourse liability for project debt which is recourse to ARC LLC, but is non-recourse
to Covanta Energy and as of December 31, 2006 was as follows (in thousands of dollars):
Covanta Niagara, L.P. Series 2001 Bonds ................................... $ 165,010
Covanta Southeastern Connecticut Company Corporate Credit Bonds ............... $ 43,500
Covanta Hempstead Company Corporate Credit Bonds ......................... $ 42,670
International Project Debt
Financing for projects in which we have an ownership or operating interest is generally accomplished through
commercial loans from local lenders or financing arranged through international banks, bonds issued to institutional
investors and from multilateral lending institutions based in the United States. Such debt is generally secured by the
revenues generated by the project and other project assets and is without recourse to CPIH or Covanta Energy.
Project debt relating to two CPIH projects in India is included as "Project debt (short- and long-term)" in our
consolidated fmancial statements. In most projects, the instruments defining the rights of debt holders generally
provide that the project subsidiary may not make distributions to its parent until periodic debt service obligations are
satisfied and other financial covenants are complied with.
2007 Recapitalization Plan
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed the following transactions:
· the refinancing of Covanta Energy's debt facilities with new Covanta Energy debt facilities, comprised of a
$300 million revolving credit facility, a $320 million funded letter of credit facility, and a $650 million term
loan (collectively referred to as the "New Credit Facilities");
· an underwritten public offering of 6.118 million shares of our common stock, in which we received proceeds
of approximately $136.6 million, net of underwriting discounts and commissions;
· an underwritten public offering of approximately $373.75 million aggregate principal amount of convertible
debentures (the "Debentures") issued by us, from which we received proceeds of approximately
$364.4 million, net of underwriting discounts and commissions; and
· the repayment, by means of a tender offer, of approximately $604.4 million in aggregate principal amount of
outstanding notes previously issued by Covanta Energy's intermediate subsidiaries.
We completed our public offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the New Credit Facilities on
Februa~ 9, 2007. The combination of the proceeds noted above and approximately $130 million in cash and
restricted cash (available for use as a result of the recapitalization plan) were utilized for the repayment, by means of
a tender offer, of approximately $604.4 million in aggregate principal amount of outstanding notes previously
issued by Covanta Energy intermediate subsidiaries. The repayment was completed on February 22, 2007. As a
result of the recapitalization plan, we expect to record in the first quarter of 2007 an aggregate charge of
74
approximately $30 million, pre-tax, which is comprised of the write-down of deferred fmancing costs, tender
premiums paid for the MSW I Notes, MSW II Notes and ARC Notes, a call premium paid for the Second Lien Term
Loan Facility, partially offset by the write-down of unamortized premiums relating to the MSW I Notes, MSW II
Notes and ARC Notes and a gain associated with the settlement of our interest rote swap agreements. Components
of this charge will be classified in our statement of operations as part of either loss on extinguishment of debt or
interest expense. We are currently completing our analysis based upon the relevant authoritative accounting
literature. The following discussion details the material terms of each of these transactions.
Material Terms of the New Credit Facilities
The New Credit Facilities include the following:
· 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 $650 million term loan facility, due 2014 (the "Term Loan Facility").
Amortization Terms
The New Credit Facilities include mandatory annual amortization of the Term Loan Facility to be paid in
quarterly installments beginning June 30, 2007, through the date of maturity as follows (in thousands of dollars):
2007.. ~ ........................................................... $ 4,875
2008 .............................................................. 6,500
2009 .............................................................. 6,500
2010 .............................................................. 6,500
2011 .............................................................. 6,500
2012 .............................................................. 6,500
2013 .............................................................. 6,500
2014 .............................................................. 606,125
Total .............................................................. $ 650,000
Under the New Credit Facilities, Covanta Energy is obligated to apply a portion of excess cash from operations
on an annual basis (calculated pursuant to the credit agreement), as well as specified other soumes, to repay
borrowings under the Term Loan Facility. The portion of excess cash to be used for this purpose is 50%, 25%, or 0%,
based on measurement of the leverage ratio described below.
Interest and Fee Terms
Loans under the New Credit Facilities are designated, at our election, as eurodollar rate loans or base rate loans.
Eurodollar loans bear interest at LIBOR for deposits in dollars plus a borrowing margin as described bel°w. Interest
on eurodollar rate loans is payable at the end of the applicable interest period of one, two, three or six months (and at
the end of every three months in the case of six month eurodollar loans). Base rate loans bear interest at (a) a rate per
annum equal to the greater of (1) the "prime rate" designated in the relevant facility or (2) the federal funds rote plus
0.5% per annum, plus (b) a borrowing margin as described below.
Letters of credit that may be issued in the future under the Revolving Loan Facility will accrue fees at the then
effective borrowing margins on eurodollar rate loans (described below), plus a fee on each issued letter of credit
payable to the issuing bank. Letter of credit availability under the Funded L/C Facility accrues fees (whether or not
letters of credit are issued thereunder) at the then-effective borrowing margin for Eurodollar rate loans times the
total availability under letters of credit (whether or not then utilized), plus a fee on each issued letter of credit
75
payable to the issuing bank. In addition, Covanta Energy has agreed to pay to the participants under the Funded L~C
Facility a fee equal to 0,10% times the average daily amount of the credit linked deposit paid by such participants for
their participation under the Funded L/C Facility.
The borrowing margins referred to above for the Revolving Loan Facility, the Term Loan Facility and the
Funded L/C Facility are as follows:
Leverage Ratio
Borrowing Margin
for Revolving Loans
(Eurodollar Loans)
Borrowing Margin
for Revolving Loans
(Base Ra~ Loans)
Borrowing Margin Borrowing Margin
for Term Loans, for Term Loans,
Funded Letters of Funded Letters of
Credit and Credit and
Credit-Linked Credit-Linked
Deposits Deposits
(Eurodollar Loans) (Base Rate Loans)
--> 4.00:1.00 · 2.00% 1.00% 1.75% 0.75%
< 4.00:1.00
1.75% 0.75% 1.50% 0.50%
--> 3.25:1.00
< 3.25:1.00
1.50% 0.50% 1.50% 0.50%
--> 2.75:1.00
< 2.75:1.00 1.25% 0.25% 1.50% 0.50%
Guarantee~ and Securitization
The New Credit Facilities are guaranteed by us and by certain Covanta Energy subsidiaries. Covanta Energy
and certain of its subsidiaries that are party to the New Credit Facilities agreed to secure all of Covanta Energy's
obligations under the New Credit Facilities by granting, for the benefit of secured parties, a first priority lien on
substantially all of their assets, to the extent permitted by existing contractual obligations, a pledge of substantially
all of the Capital stock of each of Covanta Energy's domestic subsidiaries owned by it and 65 % of substantially all
the capital stock of each of Covanta Energy's foreign subsidiaries directly owned by it, in each case to the extent not
otherwise pledged.
Debt Covenants and Defaults
The loan documentation under the New Credit Facilities contains customary affirmative and negative
covenants and financial covenants. During the term of the New Credit Facilities, we expect that the negative
covenants will place limitations on Covanta Energy, but be materially less restrictive than the restrictions in effect
during 2006 and prior to February 9, 2007.
The affirmative covenants of the New Credit Facilities include covenants relating to the following:
· financial statements and other reports;
· continued existence;
· payment of taxes and claims;
· 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.
The negative covenants of the New Credit Facilities include limitations on the following:
· indebtedness (including guarantee obligations);
· liens;
· negative pledge clauses;
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· 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.
The financial covenants of the New Credit Facilities include the following:
· maximum Covantu Energy leverage ratio, which measures Covanta Energy's principal amount of
consolidated debt tess 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 New Credit Facilities ("Adjusted EBITDA");
· maximum Covanta Energy capital expenditures; and
· minimum Covanta Energy interest coverage ratio, 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.
Defaults under the New Credit Facilities include:
· 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-defuult to material indebtedness;
· violation of a covenant (subject, in the case of certain aff'mnative 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.
Material Terms of the Equity Offering
On January 31, 2007, we completed an offering of 5.32 million shares of our common stock in an underwritten
public offering. The shares were sold to the public at a price of $23.50 per share. We granted the underwriters an
option to purchase up to an additional 798,000 shares of conmaon stock at $22.325 per share for a period of 30 days
beginning on and including the date of original issuance of the shares in connection with this offering, solely to
cover over-allotments. The option was exercised and such additional shares were sold on Febmary 6, 2007.
Proceeds received in these offerings were approximately $136.6 million, net of underwriting discounts and
commissions.
Material Terms of the Debentures
On January 31, 2007, we also completed an underwritten public offering of approximately $373.75 million
aggregate principal amount of 1.00% Senior Convertible Debentures due 2027, issued by us, from which we
received proceeds of approximately $364.4 million, net of underwriting discounts and commissions. This offering
included Debentures sold pursuant to an over-allotment option which was exercised by the underwriters. The
Debentures constitute our general unsecured senior obligations and will rank equally in fight of payment with any
future senior unsecured indebtedness. The Debentures are effectively junior to our existing and future secured
77
indebtedness, including the New Credit Facilities, to the extent of the value of the assets securing such indebtedness.
The Debentures are not guaranteed by any of our subsidiaries and are effectively subordinated to all existing and
future indebtedness and liabilities (including trade payables) of our subsidiaries.
The Debentures bear interest at a rate of 1.00% per year, payable senti-annually in arrears, on February I and
August 1 of each year, commencing on August 1, 2007 and will mature on February 1,2027. Beginning with the six-
month interest period commencing February 1, 2012, we will pay contingent interest on the Debentures during any
six-month interest period in which the trading price of the Debentures measured over a specified number of trading
days is 120% or more of the principal amount of the Debentures. When applicable, the contingent interest payable
per $1,000 principal amount of Debentures will equal 0.25 % of the average trading price of $1,000 principal amount
of Debentures during the five trading days ending on the second trading day immediately preceding the first day of
the applicable six-month interest period.
Under limited cimumstances, the Debentures are conveaible by the holders thereof, at any time, into cash and
shares of our common stock, if any, initially based on a conversiOn rate of 35.4610 shares of our common stock per
$1,000 principal amount of Debentures, (which represents an initial conveisiun price of approximately $28.20 per
share), subject to adjustment. In the event of certain types of fundamental changes, such as an acquisition of us by a
third party, we will increase the conversion rate by a number of additional shares or, in lieu thereof and if applicable,
an acquirer may elect to adjust the conversion obligation and conversion rate so that the Debentures are convertible
based on the shares of the acquired or surviving company.
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 (including contingent interest, if any). 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
(including contingent interest, if any). The Debentures are also subject to repurchase by us, at the holder's option, if
a "fundamental change" occurs, for cash at a repurchase price equal to 100% of the principal amount of the
Debentures, plus accrued and unpaid interest (including contingent interest, if any).
Intermediate Subsidiary Debt Tender Offer
On January 23, 2007, we commenced cash tender offers for (a) any and all of the outstanding MSW I Notes
(b) any and all of the outstanding MSW II Notes and (c) any and all of the outstanding ARC Notes.
In connection with each of the tender offers, we solicited the consents of the holders of each of the MSW I
Notes, MSW II Notes, and ARC Notes to certain proposed amendments to the indentures governing such notes. The
primary purpose of the solicitations and the proposed amendments was to eliminate from the indentures
substantially all of the restrictive covenants, certain events of default provisions contained therein and to
remove the requirements to file periodic reports with the SEC for MSW I and MSW II.
Under the terms of the tender offer for the MSW I Notes and MSW II Notes, we offered to purchase the
outstanding MSW I Notes and MSW II Notes for total consideration, for each $1,000 principal amount of MSW I
Notes and MSW II Notes validly tendered and accepted for payment, equal to $1,096.46 and $1,079.92,
respectively, which included a consent fee of $30 for each $1,000 principal amount of MSW I Notes and
MSW II Notes validly tendered and accepted for payment.
Under the terms of the tender offer for the ARC Notes, we offered to purchase the outstanding ARC Notes for
total consideration, for each $1,000 original principal amount of ARC Notes validly tendered and accepted for
payment, equal to $729.82, which included a consent fee of $30 for each $1,000 principal amount of ARC Notes
validly tendered and accepted for payment.
The solicitations for the MSW I Notes, MSW II Notes and ARC Notes expired on February 5, 2007. At that time,
we had received consents from the requisite number of holders of each of the outstanding MSW I Notes, MSW II
Notes and ARC Notes, to amend the applicable indentures governing each of the notes to eliminate substantially all of
the restrictive covenants and certain events of default provisions. Each of the issuers entered into a supplemental
indenture with the respective trustee for the applicable notes. The supplemental indentures became operative on
Febmary 22, 2007, at which time we repurchased $604.4 million aggregate principal amount of outstanding notes. We
intend to redeem all remaining notes in accordance with applicable provisions of the respective indentures.
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Credit Ratings
Moody's Investors Service ("Moody's") announced on January 22, 2007 that it had (1) assigned the
Debentures a B1 issue rating, (2) reassigned the Corporate Family Rating to us from Covanta Energy
Corporation, while simultaneously raising this rating to Ba2, and (3) assigned a Ba2 rating to the New Credit
Facilities. Moody's also reassigned to us from Covanta Energy and affmned its SGL-1 speculative grade liquidity
rating. On January 22, 2007, Standard & Poor's Ratings Services ("S&P") announced that it had (1) assigned the
Debentures a B rating, (2) raised Covanta Energy's current corporate credit rating to BB- and assigned to us a BB-
corporate credit rating, and (3) assigned a BB- rating to the New Credit Facilities, with a "2" recovery rating. Both
Moody's and S&P indicated their outlook for us remains "stable." A security rating is not a recommendation to buy,
sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization.
Each rating should be evaluated independently of any other rating.
Capital Requirements
The following table summarizes oar gross contractual obligations including project debt, leases and other
contractual obligations as of December 31, 2006. The Debenture offerings and the New Credit Facilities (as
described above under the 2007 Recapitalization Plan) closed in January and February 2007, respectively.
Therefore, long-term debt and estimated interest payments are based on these recent obligations. (Amounts
expressed in thousands of dollars. Note references are to the Notes):
Domestic project debt (Note 17) .....
Intemational project debt (Note 17) ..
Total project debt (Note 17) ........
Term Loan Facility (Note 16 and
Note 30) ....................
Debentures(1 ) ..................
Other long-term debt (Note 16) .....
Total debt obligations(2) ..........
Less: Non-recourse debt(3) .......
Payments Due by Period
20~8 and 2010 and 2012 and
Total 2007 2009 2011 Beyond
$ 1,314,674 $ 147,608 $ 311,549 $ 276,445 $ 579,072
76,150 27,978 29,115 19,057 --
1,390,824 175,586 340,664 295,502 579,072
650,000 4,875 13,000 13,000 619,125
373,750 -- -- -- 373,750
101 86 15 -- --
2,414,675 180,547 353,679 308,502 1,571,947
i,390,925 175,672 340,679 295,502 579,072
Total recoarse debt ............... $ 1,023,750
Operating leases .................
Less: Non-recourse rental
payments ..................
Total recourse rental payments ......
Interest payments(4) ..............
Less: Non-recourse interest
payments ..................
Total recourse interest payments ..... $
Retirement plan obligations(5) ...... $
Other long-term obligations ........ $
Total contractual obligations ........
$ 4,875 $ 13,000 $ 13,000 $ 992,875
420,900 33,962 92,274 79,789 214,875
248,748 15,749 42,343 46,933 143,723
$ 172,152 $ 18,213 $ 49,931 $ 32,856 $ 71,152
899,289 138,854 196,877 152,381 411,177
536,224 90,693 145,146 101,282 199,103
363,065 $ 48,161 $ 51,731 $ 51,099 $ 212,074
29,400 $ 3,100 $ 10,320 $ 10,410 $ 5,570
12~01 $ -- $ -- $ -- $ 12,001
$ 1,600,368 $ 74,349 $ 124,982 $ 107,365 $ 1,293,672
(1) 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. In addition,
beginning with the six-month interest period commencing Febmary 1, 2012, we will pay contingent interest on
the Debentures, calculated with reference to the trading price of the Debentures. For purposes of this Capital
79
Requirements chart, we have assumed no conversions or redemptions of the Debentures and no contingent
interest related to the Debentures. For information detailing the contingent interest, conversion or redemption
features of the Debentures, see Material Terms of the Debentures under 2007 Recapitalization Plan.
(2) Excludes $45.1 million of Covanta Energy's unamortized debt premium.
(3) Payment obligations for the project debt associated with energy-from-waste facilities owned by Covanta
Energy are limited recourse to the operating subsidiary and non-recourse to Covanta Energy, subject to
operating performance guarantees and commitments.
(4) Interest payments and letter of credit fees are estimated based on current rates.
(5) Retirement plan obligations are based on actuarial estimates for the pension plan obligations and post-
retirement plan obligations as of December 31, 2006.
Other Commitments
Other commitments as of December 31, 2006 were as follows (in thousands of dollars):
Commitments Expiring by Period
Le~s Than More Than
Total
Letters of credit .................................. $ 325,032
Surety bonds ..................................... 61,880
Total other commitments -- net ....................... $ 386,912
$ 4,401 $ 320,631
-- 61,880
$ 4,401 $ 382,511
The letters of credit were issued pursuant to the Funded Letter of Credit Facility (and for two international
projects under separate unsecured, letter of credit facilities) to secure Covanta Energy's performance under various
contractual undertakings related to its domestic and international projects, or to secure obligations under its
insurance program. Each letter of credit relating to a project is required to be maintained in effect for the period
specified in related project contracts, and generally may be drawn if it is not renewed prior to expiration of that
period.
As of December 31, 2006, Covanta Energy had approximately $0.5 million in available capacity for additional
letters of credit under its Funded Letter of Credit Facility and $89 million under its Revolving Credit Facility.
Covanta Energy believes that it will be able to fully perform its contracts to which these existing letters of credit
relate, and that it is unlikely that letters of credit would be drawn because of a default of its performance obligations.
If any of Covanta Energy's letters of credit were to be drawn under its current debt facilities, the amount drawn
would be immediately repayable to the issuing bank. If Covanta Energy were unable to immediately repay such
amounts drawn under letters of credit, unreimbursed amounts would be treated as additional term loans issued under
the First Lien Facilities.
The surety bonds listed on the table above relate primarily to performance obligations ($52.9 million) and
support for closure obligations of various energy projects when such projects cease operating ($9 million). Were
these bonds to be drawn upon, Covanta Energy would have a contractual obligation to indemnify the surety
company.
The New Credit Facilities include a $300 million revolving loan facility due 2013, which includes a
$200 million sub-facility for the issuance of letters of credit, a $320 million funded letter of credit facility, due
2014 and a $650 million term loan facility, due 2014. For additional information, see the 2007Recapitalization Plan
discussion above.
We have certain contingent obligations related to the Debentures. These are:
· holdersmayrequireustorepurchasetheirDebentures onFebruary 1,2012, February 1,2017 andFebmary 1,
2022;
· holders may require us to repurchase their Debentures if a "fundamental change" occurs; and
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· holders may exercise their conversion rights which would require us to pay the conversion settlement
amount in cash and/or in our common stock.
See Liquidity and Capital Resources --2007 Recapitalization Plan --Material Terms of the Debentures for
specific criteria related to contingent interest, conversion or redemption features of the Debentures.
Covanta Energy and certain of its subsidiaries have issued or are party to performance guarantees and related
contractual support obligations undertaken mainly pursuant to agreements to construct and operate certain energy-
from-waste facilities an.d a water facility. With respect to its domestic businesses, Covanta Energy and certain of its
subsidiaries have issued guarantees to municipal clients and other parties that Covanta Energy's subsidiaries will
perform in accordance with contractual terms, including, where required, the payment of damages or other
obligations. Such contractual damages or other obligations could be material, and in circumstances where one or
more subsiditmy's contract has been terminated for its default, such damages could include amounts sufficient to
repay project debt. For facilities owned .by municipal clients and operated by Covanta Energy, Covanta Energy's
potential maximum liability as of December 31, 2006 associated with the repayment of the municipalities' project
debt on such facilities was approximately $1 billion. This amount was not recorded as a liability in Covanta
Energy's consolidated balance sheet as of December 31, 2006 as Covunta Energy believes that it had not inc.urred
such liability at the date of the financial statements. Additionally, damages payable under such guarantees on
Covanta Energy-owned energy-from-waste facilities could expose Covanta Energy to recourse liability on project
debt. Covunta Energy also believes that it has not incurred such liabilities at the date of the financial statements. If
Covanta Energy is asked to perform under one or more of such guarantees, its liability for damages upon contract
termination would be reduced by funds held in trust and proceeds from sales of the facilities securing the project
debt, which is presently not estimable.
With respect to its international businesses, Covanta Energy and certain of its subsidiaries have issued
guarantees on behalf of our international operating subsidiaries with respect to contractual obligations to operate
certain international power projects and one energy-from-waste project. The potential damages owed under such
arrangements for international projects may be material. See Item IA. Risk Factors -- Covanta Energy and certain
of its subsidiaries have provided guarantees and support in connection with its subsidiaries' projects.
Depending upon the circumstances giving rise to such domestic and international damages, the contractual
terms of the applicable contracts, and the contract counterparty's choice of remedy at the time a claim against a
guarantee is made, the amounts owed pursuant to one or more of such guarantees could be greater than Covanta
Energy's tben-available sources of funds. To date, Covanta Energy has not incurred material liabilities under its
guarantees, either on domestic or international projects.
Insurance Coverage
We have obtained insurance for our assets and operations that provides coverage for what we believe are
probable maximum losses, subject to self-insured retentions, policy limits and premium costs which we believe to
be appropriate. However, the insurance obtained does not cover us for all possible losses.
Off-Balance Sheet Arrangements
Subsidiaries of Covanta Energy are parties to lease arrangements with Covunta Energy's municipal clients at
its Union County, New Jersey, its Alexandria, Virginia and its Delaware County, Pennsylvania energy-from-waste
facilities. At its Union County facility, Covanta Energy's operating subsidiary leases the facility from the Union
County Utilities Authority, referred to as the "UCUA," under a lease that expires in 2023, which Covunta Energy
may extend for an additional five years. Covunta Energy guarantees a potion of the rent due under the lease. Rent
under the lease is sufficient to allow the UCUA to repay tax exempt bonds issued by it to finance the facility and
which mature in 2023.
At its Alexandria facility, a Covanta Energy subsidiaqr is a party to a lease which expires in 2025 related to
certain pollution control equipment that was required in connection with the Clean Air Act amendments of 1990,
and which was financed by the City of Alexandria and by Arlington County, Virginia. Covanta Energy's subsidiary
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owns this facility, and rent under this lease is sufficient to pay debt service on tax exempt bonds issued to finance
such equipment and which mature in 2013.
At its Covanta Delaware Valley, L.P. ("Delaware Valley") facility, a Covanta Energy subsidiary is a party to a
lease for the facility that expires in 2019. Covanta Energy's operating subsidiary, referred to as the "Delaware
Partnership," is obligated to pay a portion of lease rent, designated as "Basic Rent B," and could be liable to pay
certain related contractually-specified amounts, referred to as "Stipulated Loss," in the event of a default in the
payment of rent under the Delaware Valley lease beyond the applicable grace period. The Stipulated Loss is similar
to lease termination liability and is generally intended to provide the lessor with the economic value of the lease, for
the remaining lease term, had the default in rent payment not occurred. The balance of reatal and Stipulated Loss
obligations are payable by a trust formed and collateralized by the project's former operator ia connection with the
disposition of its interest in the Delaware Valley facility. Pursuant to the terms of various guarantee agreements,
ARC Holdings has guaranteed the payments of Basic Rent B and Stipulated Loss to the extent such payments are
not made by the Delaware Partnership. We do not believe, however, that such payments constitute a material
obligation of our subsidiary since our subsidiary expects to continue to operate the Delaware Valley facility in the
ordinary course for the entire term of the lease and will continue to pay rent throughout the term of the lease. As of
December 31, 2006, the estimated Stipulated Loss would have been $153.2 million.
Covanta Energy is also a party to lease arrangements pursuant to which it leases rolling stock in connection
with its energy-from-waste and independent power facilities, as well as certain office equipment. Rent payable
under these arrangements is not material to our financial condition.
Covanta Energy generally uses operating lease treatment for all of the foregoing arrangements. A summary of
the operating lease obligations is contained in Note 15. Leases of the Notes.
As described above under Other Commitments, Covanta Energy and certain of its subsidiaries have issued or
are party to performance guarantees and related contractual obligations undertaken mainly pursuant to agreements
to construct and operate certain energy and waste facilities. To date, Covanta Energy has not incurred material
liabilities under its guarantees, either on domestic or international projects.
Covanta Energy has investments in several investees and joint ventures which are accounted for under the
equity and cost methods and therefore we do not consolidate the financial information of those companies. See
Note 4. Equity in Net Income from Unconsolidated Investments of the Notes for additional information regarding
these leases.
Discussion of Critical Accounting Policies
In preparing our consolidated financial statements in accordance with United States generally accepted
accounting principles, we are required to use judgment in making estimates and assumptions that affect the amounts
reported in our financial statements and related notes. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for
making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Many of our critical accounting policies are subject to significant judgments and uncertainties which could
potentially result in materially different results under different conditions and assumptions. Future events rarely
develop exactly as forecast, and the best estimates routinely require adjustment.
Stock-Based Compensation
Effective January 1, 2006, we adopted Statement of Financial Accounting Standards ("SFAS") No. 123
(revised 2004), "Share-Based Payment" ("SFAS 123R") using the modified prospective transition method and
therefore we have not restated results for prior periods. Under this transition method, stock-based compensation
expense for the year ended December 31, 2006 included compensation expense for all stock-based compensation
awards granted prior to, but not yet vested as of December 31, 2005, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123, "Accounting for Stock-Based Compensation."
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We calculate the fair value of our share-based option awards using the Black-Scholes option pricing model
which reqnims estimates of the expected life of the award and stock price volatility. We calculate the fair value of
our share-based stock awards based on the average of the high and low price on the day prior to the grant date;
however, we intend to use the closing price on the date of the grant for any new awards granted commencing in 2007
in order to align our valuation with the SEC's new disclosure requirements. In addition, we also estimate expected
forfeitures for our options and share-based awards and the probability of achieving specific performance factors
affecting the vesting of our share-based awards. For our current share-based awards, our estimate of a forfeiture rate
and determination of achieving stated performance vesting factors will have the most significant impact on the
compensation cost we must recognize. We recognized compensation expense based upon the number of stock
options and restricted stock awards expected to vest, which was determined based on historical turnover experience
of various Covanta Energy employee populations from the Covanta Energy pension plan. We review the forfeiture
rate at least annually and revise compensation expense, if neeessaty. We recognize compensation costs using the
graded vesting attribution method over the mqnisite service period of the award, which is generally the vesting term
of three years.
Purchase Accounting
We have applied purchase accounting in accordance with the SFAS No. 141, "Business Combinations," for
acquisitions consummated in 2006, 2005 and 2004. As described hi Note 3. Acquisitions and Dispositions of the
Notes, we valued the acquired assets and liabilities assumed at fair value. The fair value estimates used reflect our
best estimates based on our work and the work of independent valuation consultants based on relevant information
available to us. These estimates, and the assumptions used by us and by our valuation consultants, are subject to
inherent uncertainties and contingencies beyond our control. For example, we used the discounted cash flow
method to estimate the value of many of our assets. This entailed developing projections about future cash flows and
adopting an appropriate discount rate. We cannot predict with certainty actual cash flows and the selection of a
discount rate is heavily dependent on judgment. If different cash flow projections or discount rates were used, the
fair values of our assets and liabilities could be materially increased or decreased. Accordingly, there can be no
assurance that such estimates and assumptions reflected in the valuations will be realized, or that further
adjustments will not occur. The assumptions and estimates used by us substantially affect our balance sheet. In
addition, the valuations impact depreciation and amortization expense and changes in such assumptions and
estimates may affect earnings in the future. During the current year, some of our estimates have been refined which
resulted in changes to assets and liabilities recognized on the balance sheet as of December 31, 2006.
Depreciation and Amortization
We have estimated the useful lives over which we depreciate our long-lived assets. Additionally, in accordance
with SFAS No. 143, "Accounting for Asset Retirement Obligations," we have capitalized the estimate of our legal
liabilities which includes closure and post-closure costs for landfill cells and site restoration for certain energy-
from-waste and power producing sites.
Goodwill and Intangible Assets
We have recognized goodwill and intangible assets relative to our acquisition of ARC Holdings and Covanta
Energy's emergence from bankruptcy in 2004. In accordance with SFAS No. 142, "Goodwill and Other Intangible
Assets," we evaluate our goodwill and indefinite lived intangible assets for impairment at least annually or when
.indications of impnirment exist. There has been no impairment recognized in the current year, however an impact of
~mpatrment in the future could have a material impact on our financial position and results of operations.
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," we
evaluate our long-term assets and amortizable intangible assets for recoverability whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. No events or change in circumstances
occurred during the period to warrant this testing. However, had an event or change in circumstances occurred, the
impact of recognizing an impairment could have a material impact on our financial position and results of
operations.
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Net Operating Loss Carryforwards -- Deferred Tax Assets
As described in Note 21. Income Taxes of the Notes, we have recorded a deferred tax asset related to the NOLs.
The amount recorded was calculated based upon future taxable income arising from (a) the reversal of temporary
differences during the period the NOLs are available and (b) future operating income expected from our domestic
and international businesses, to the extent it is reasonably predictable.
We estimated that we have NOLs of approximately $410 million for federal income tax purposes as of the end
of 2006. The NOLs will expire in various amoums beginning on December 31, 2007 through December 31, 2025, if
not used. The amount of NOLs available to us will be reduced by any taxable income generated by current members
of our tax consolidated group including certain grantor trusts relating to the Mission Insurance Entities.
The Internal Revenue Service ("IRS") has not audited any of our tax returns for the years in which the losses
giving rise to the NOLs were reported, and the IRS could challenge any past and future use of the NOLs.
Beginning in the second quarter of 2006, we adopted the permanent reinvestment exception under APB 23,
whereby we will no longer provide deferred taxes on the undistributed earnings of our international subsidiaries. We
intend to permanently reinvest our international earnings outside of the United States in our existing international
operations and in any new international business we may develop or acquire.
Loss Contingencies
As described in Note 20. Commitments and Contingencies of the Notes, our subsidiaries are party to a number
of claims, lawsuits and pending actions, most of which are routine and all of which are incidental to our business.
We assess the likelihood of potential losses with respect to these matters on an ongoing basis and when losses are
considered probable and reasonably estimable, we record as a loss an estimate of the ultimate outcome. If we can
only estimate the range of a possible loss, an amount representing the low end of the range of possible outcomes is
recorded and disclosure is made regarding the possibility of additional losses. We review such estimates on an
ongoing basis as developments occur with respect to such matters and may in the future increase or decrease such
estimates. There can be no assurance that our initial or adjusted estimates of losses will reflect the ultimate loss we
may experience regarding such matters. Any inaccuracies could potentially have a material adverse effect on our
consolidated f'manciai condition.
Financial Instruments
As described in Note 18. Financial Instruments of the Notes, the estimated fair-value amounts have been
determined using available market information and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to develop estimates of fair value. Accordingly, the
estimates presented are not necessarily indicative of the amounts that we would realize in a current market
exchange.
For cash and cash equivalents, restricted cash, 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 debt were determined based on interest rates that are currently available to us for issuance of
debt with similar terms and remaining maturities for debt issues that are not traded on quoted market prices. The fair
value of project debt is estimated based on quoted market prices for the same or similar issues.
The fair value of our interest rate swap agreements is the estimated amount we would receive or pay to
terminate the agreement based on the net present value of the future cash flows as defined in the agreement.
Revenue Recognition
We earn fees to service project debt (principal and interest) where such fees are expressly included as a
component of 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 applicable
84
service 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. Such unbilled receivables amounted to $129.9 million as of December 31, 2006. Fees for waste
disposal are recognized in the period received. Revenue from electricity and steam sales are recorded when
delivered at rates specified in the contracts. We also earn fees under fixed-price construction contracts, in which
case revenue is accounted for using the percentage of completion of services rendered.
Pensions
Covanta Energy has defined benefit and defined contribution retirement plans that cover its employees.
Domestic employees not participating in our retirement plans generally participate in retirement plans offered by
collective bargaining units of which these employees are members. Of our international employees, 99% participate
in defined benefit or defined contribution retirement plans as required or available in accordance with local laws.
We froze the Covanta Energy defined benefit pension plan effective December 31, 2005. All active employees who
were eligible participants in the Covanta Energy defined benefit pension plan as of December 31, 2005, were 100%
vested and had a nonforfeitable right to this benefit as of December 31, 2005. Beginning January 1, 2006, all eligible
employees received a company contribution into a new defined contribution r~tu'ement plan.
Covanta Energy recorded a pension plan liability equal to the amount by which the present value of the
projected benefit obligations (using a discount rate of 5.75%) exceeded the fair value of pension assets as of
December 31, 2006.
Unpaid Losses and Loss Adjustment Expenses
Our insurance subsidiaries establish toss and LAE reserves that are estimates of ammmts needed to pay claims
and related expenses in the future for insured events that have already occurred. The process of estimating reserves
involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain.
Reserves are typically comprised of (1) case reserves for claims reported and (2) reserves for losses that have
occurred but for which claims have not yet been reported, referred to as incurred but not reported ("IBNR")
reserves, which include a provision for expected future development on case reserves. Case reserves are estimated
based on the experience and knowledge of claims staff regarding the nature and potential cost of each claim and are
adjusted as additional information becomes known or payments are made. IBNR reserves are derived by subtracting
paid loss and LAE and case reserves from estimates of ultimate loss and LAE. Actuaries estimate ultimate loss and
LAE using various generally accepted actuarial methods applied to known losses and other relevant information.
Like case reserves, IBNR reserves are adjusted as additional information becomes known or payments are made.
Ultimate loss and LAE are generally determined by extrapolation of claim emergence and settlement patterns
observed in the past that can reasonably be expected to persist into the future. In forecasting ultimate loss and LAE
with respect to any line of business, past experience with respect to that line of business is the primary resource, but
cannot be relied upon in isolation. The insurance businesses' own experience, particularly claims development
experience, such as trends in case reserves, payments on and closings of claims, as well as changes in business mix
and coverage limits, are the most important information for estimating reserves.
Uncertainties in estimating ultimate loss and LAE are magnified by the time lag between when a claim actually
occurs and when it is reported and settled. This time lag is sometimes referred to as the "claim-tall". The claim-tall
for most property coverages is typically short (usually a few days up to a few months). The claim-tail for automobile
liability is relatively short (usually one to two years) and liability/casualty coverages, such as general liability,
multiple peril coverage, and workers compensation, can be especially long as claims are often reported and
ultimately paid or settled years, even decades, after the related loss events occur. During the long claims reporting
and settlement 'period, additional facts regarding coverages written in prior accident years, as well as about actual
claims and trends may become known and, as a result, the insurance subsidiaries may adjust their reserves. If we
determine that an adjustment is appropriate, the adjustment is booked in the accounting period in which such
determination is made in accordance with generally accepted accounting principles in the United States.
Accordingly, should reserves need to be increased or decreased in the future from amounts currently
established, future results of operations would be negatively or positively impacted, respectively.
85
Our insurance subsidiaries use independent actuaries which we significantly rely on to form a conclusion on
reserve estimates. Those independent actuaries use several generally accepted actuarial methods to evaluate the
insurance business loss reserves, each of which has its own strengths and weaknesses. The independent actuaries
place more or less reliance on a particular method based on the facts and circumstances at the time the reserve
estimates are made and through discussions with our insurance subsidiaries' management.
Recent Accounting Pronouncements
See Note 1. Organization and Summary of Significant Accounting Policies and Note 2. New Accounting
Pronouncements of the Notes for a summary of additional accounting policies and new accounting
pronouncements.
Related-Party Transactions
Employment Arrangements
See the descriptions of our employment agreements with Anthony Orlando, Mark A. Pytosh, John Klett and
Timothy Simpson which are incorporated by reference into Item 11. Executive Compensation of this Form 10-K.
Affiliate Agreements
As part of our negotiations in 2003 with D. E. Shaw Laminar Portfolios, L.L.C. ("Laminar") and it becoming a
5% stockholder, pursuant to a letter agreement dated December 2, 2003, Laminar agreed to transfer restrictions on
the shares of common stock that Laminar acquired pursuant to the note purchase agreement. Further, in accordance
with the transfer restrictions previously contained in Article Fifth of our charter restricting the resale of our common
stock by 5% stockholders, we agreed with Laminar to provide it with limited rights to resell the common stock that it
holds. During 2006 Laminar sold a portion of its holdings pursuant to these in accordance with this agreement. On
November 16, 2006, our stockholders approved an amendment to our restated certificate of incorporation which
removed the transfer restrictions previously contained in Article Fifth.
As part of the Covanta Energy acquisition in March 2004, we agreed to conduct a rights offering for up to
3.0 million shares of our common stock to certain holders of 9.25% debentures issued by Covanta Energy prior to its
bankruptcy at a purchase price of $1.53 per share (the "9.25% Offering"). The 9.25% Offering was made solely to
those holders of Covanta Energy's 9.25 % Debentures (which had been issued prior to its bankruptcy) who had voted
in favor of Covanta Energy's second reorganization plan on January 12, 2004 or were otherwise authorized to
participate by the bankruptcy court. Laminar held a portion of such debentures and was entitled to participate in the
9.25% Offering. On January 31,2005, we entered into a letter agreement with Laminar pursuant to which we agreed
that if the 9.25% Offering had not closed prior to the record date for the ARC Holdings Rights Offering, then we
would revise the 9.25% Offering so that the holders that participated in the 9.25% Offering would be offered
additional shares of our common stock at the same purchase price as in the ARC Holdings Rights Offering and in an
amount equal to the number of shares of common stock that such holders would have been entitled to purchase in the
ARC Holdings Rights Offering if the 9.25% Offering was consummated on or prior to the record date for the ARC
Holdings Rights Offering. Accordingly, we restructured our offering to offer up to an additional 2.7 million
contingently issuable shares at $6.00 per share. The 9.25% Offering was completed on February 24, 2006 and
Laminar exercised its rights to purchase a total of 633,380 shares.
Clayton Yeutter, a current director, is senior advisor to the law firm of Hogan & Hartson LLP. Hogan & Hartson
has provided Covanta Energy with certain legal services for many years including 2006. This relationship preceded
our acquisition of Covanta Energy and Mr. Yeutter did not direct or have any direct or indirect involvement in the
procurement, provision, oversight or billing of such legal services and does not directly or indirectly benefit from
those fees. The Board has determined that such relationship does not interfere with Mn Yeutter's exercise of
independent judgment as a director.
As described in Note 4. Equity in Net Income from Unconsolidated Investments of the Notes, Covanta Energy
holds a 26% investment in Quezon. Covanta Energy and Quezon are both party to an agreement in which Covanta
Energy assumed responsibility for the operation and maintenance of Quezon's coal-fired electricity generation
86
facility. For the fiscal years ended December 31, 2006, 2005 and 2004, Covanta Energy, subsequent to its
acquisition by us, collected $26.9 million, $29.5 million and $34.7 million, respectively, for the operation and
maintenance of the facility. As of December 31, 2006, the net amount due to Quezon was $2.2 million and as of
December 31, 2005, the net amount due from Quezon was $0.1 million.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, our subsidiaries are party to financial instruments that are subject to market
risks arising from changes in interest rates, foreign currency exchange rates, and commodity prices. Our use of
derivative instruments is very limited and we do not enter into derivative instruments for trading purposes. The
following analysis provides quantitative information regarding our exposure to fmanciai instruments with market
risks. We use a sensitivity model to evaluate the fair value or cash flows of financial instruments with exposure to
market risk that assumes instantaneous, parallel shifts in exchange rates and interest rate yield curves. There am
certain limitations inherent in the sensitivity analysis presented, primarily due to the assumption that exchange rates
change in a parallel manner and that interest rates change instantaneously. In addition, the fair value estimates
presented herein are based on pertinent information available to us as of December 31,2006. Further information is
included in Note 18. Financial Instruments of the Notes.
Waste and Energy Services
Interest Rate Risk
Covanta Energy and/or its subsidiaries have project debt outstanding beating interest at floating rates that
could subject them to the risk of increased interest expense due to rising market interest rates, or an adverse change
in fair value due to declining interest rates on fixed rate debt. Of Covanta Energy's project debt, approximately
$156.3 million was floating rate debt at December 31, 2006. However, the entire interest rate risk related to the
floating rate project debt is borne by the client communities because debt service is passed through to those clients
under the contractual structure of their waste services agreements. Covanta Energy had only one interest rate swap
relating to project debt outstanding as of December 31, 2006 in the notional amount of $76.4 million related to
floating rate project debt. Gains and losses, however, on this swap are for the account of the client community and
are not borne by Covanta Energy.
As described in Note 16. Long-Term Debt of the Notes, Covanta Energy was required, under fmancing
arrangements in effect since June 24, 2005, to enter into hedging arrangements with respect to a portion of its
exposure to interest rate changes with respect to its borrowing under the financing arrangements. On July 8, 2005,
Covanta Energy entered into two pay-fixed, receive floating interest rate swap agreements with a total notional
amount of $300 million. On March 21, 2006, we entered into one additional pay fixed, receive floating interest rate
swap agreement with a notional amount of $37.5 million. On December 27, 2006, the notional amount of the
original swap agreements reduced to $250 million from $300 million. These swaps were designated as cash flow
hedges in accordance with SFAS No. 133, "Accounting for Derivative and Hedging Activities." Accordingly,
unrealized gains or losses will be deferred in other comprehensive income until the hedged cash flows affect
earnings. On February 9, 2007, the swap arrangements described above were settled and unrealized gains of
$2.1 million, net of tax, related to the swap arrangements were reflected in earnings. We have not entered into
interest rate swap arrangements related to the 2007 recapitalization plan and therefore increased our exposure to
fluctuations in interest rates. We do not believe these risks to be material to our cash flows and results of operations.
For floating rate project debt, a 20 percent hypothetical increase in the underlying December 31, 2006 market
interest rates would result in a potential loss to twelve month future earnings of $1.2 million. For fixed rate project
debt, the potential reduction in fair value from a 20 percent hypothetical increase in the underlying December 31,
2006 market interest rates would be approximately $4.2 million. The fair value of Covanta Energy's fixed rate
project debt (including $1.234 billion in fixed rate debt related to revenue bonds in which debt service is an explicit
component of the service fees billed to the client communities) was $1.209 billion as of December 31, 2006, and
was determined using average market quotations of price and yields provided by investment banks.
87
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Report of Independent Public Accounting Firm ........................................... 91
Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005 and 2004 ...... 92
Consolidated Balance Sheets as of December 31, 2006 and 2005 .............................. 93
Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004 ...... 94
Statements of Stockholders' Equity for the Years Ended December 31, 2006, 2005 and 2004 ......... 95
Notos to Consolidated Financial Statements .............................................. 96
Note 1. Organization and Summary of Significant Accounting Policies ..................... 96
Note 2. New Accounting Pronouncements .......................................... 104
Note 3. Acquisitions and Dispositions ............................................. 104
Note 4. Equity in Net Income from Unconsolidated Investments .......................... 108
Note 5. Revenues and Unbilled Service Receivables ................................... 110
Note 6. Reinsurance .......................................................... 111
Note 7. Investments .......................................................... 112
Note 8. Property, Plant and Equipment, net ........................... 116
Note 9. Intangible Assets and Goodwill ............................................ 117
Note 10. Other Noncurrent Assets ................................................. 118
Note 11. Accrued Expenses and Other Current Liabilities ............................... 119
Note 12. Deferred Revenue ...................................................... 119
Note 13. Other Noncurrent Liabilities .............................................. 120
Note 14. Unpaid Losses and Loss Adjustment Expenses ................................ 121
Note 15. Leases .............................................................. 122
Note 16. Long-Term Debt ....................................................... 124
Note 17. Project Debt .......................................................... 126
Note 18. Financial Instruments ................................................... 128
Note 19. Employee Benefit Plans ................................................. 130
Note 20. Commitments and Contingencies ........................................... 134
Note 21. Income Taxes ......................................................... 137
Note 22. Insurance Regulation, Dividend Restrictions and Statutory Surplus .................. 141
Note 23. Stock-Based Award Plans ................................................ 142
Note 24. Stockholders' Equity .................................................... 147
Note 25. Accumulated Other Comprehensive Income ................................... 148
Note 26. Earnings Per Share ..................................................... 149
Note 27. Business Segments ..................................................... 150
Note 28. Quarterly Data (Unaudited) ............................................... 152
Note 29. Related-Party Transactions ............................................... 152
Note 30. Subsequent Events ..................................................... 153
Financial Statement Schedules:
Schedule I Holding Company Only Financial Statements .................................. 160
Schedule 1I Valuation and Qualifying Accounts ......................................... 163
90
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of Covanta Holding Corporation
We have audited the accompanying consolidated balance sheets of Covanta Holding Corporation as of
December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial
statement schedules listed in the Index at Item 8. These fmancial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these financial statements and schedules
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in ail material respects, the consolidated
financial position of Covanta Holding Corporation at December 31, 2006 and 2005, and the consolidated results of
its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity
with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the effectiveness of Covanta Holding Corporation's internal control over financial reporting as of
December 31, 2006, based on criteria established in Internal Control-integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated Fobmary 25, 2007
expressed an unqualified opinion thereon.
MetroPark, New Jersey
February 25, 2007
/s/ Ernst & Young LLP
91
COVANTA HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
20O6 2OO5 2OO4
(ha thousands, except per share amounts)
OPERATING REVENUES:
Waste and service revenues .............................. $ 817,633
Electricity and steam sales .............................. 433,834
Other operating revenues ................................ 17,069
Total operating revenues .............................. 1,268,536
$ 638,503 $ 372,748
322,770 181,074
17,490 22,374
978,763 576,196
OPERATING EXPENSES:
Plant operating expenses ................................ 712,156
Depreciation and amortization expense ..................... 193,217
Net interest expense on project debt ....................... 60,2~0
Other operating expenses ............................... 2,594
General and administrative expenses ....................... 73,599
California Grantor Trust Settlement ........................ __
Restructuring charges .................................. __
Acquisition-related charges .............................. __
Total operating expenses .............................. 1,041,776
559,6~8 349,502
124,925 53,282
52,431 32,586
11,015 16,560
67,481 47,396
10,342 --
2,765 --
3,950 --
832,547 499,326
226,760 146,216 76,870
11,770 6,129 2,343
(113,960) (89,973) (43,739)
(2,342) -- --
-- 15,193 --
Operating income .......................................
Other income (expense):
Investment income ....................................
Interest expense ......................................
Loss on extinguishment of debt ...........................
Gain on derivative instruments, ACL warrants ................
Total other expenses .................................
Income before income tax expense, minority interests and equity in
net income from unconsolidated investments .................
Income tax expense .....................................
Minority interests .......................................
Equity in net income from unconsolidated investments ...........
NET INCOME ........................................ $
(104,532) (68,651) (41,396)
122,228 77,565 35,474
(38,465) (34,651) (11,535)
(6,610) (9,197) (6,869)
28,636 25,609 17,024
105,789 $ 59,326 $ 34,094
0.73 $ 0.49 $ 0.39
INCOME PER SHARE OF COMMON STOCK -- BASIC ........ $
INCOME PER SHARE OF COMMON STOCK -- DILUTED ..... $
0.72 $ 0.46 $ 0.37
The accompanying notes are an integral part of the consolidated financial statements.
92
COVANTA HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
As of D~cember 31,
2O06 2O05
(In thousands, except per
share amounts)
ASSETS
Current:
Cash and cash equivalents ............................................... $ 233,442 $ 128,556
Marketable securities available for sale ...................................... 7,080 7,400
Restricted funds held in trust ............................................. 178,054 197,527
Receivables (less allowances of $4,469 and $4,959) ............................. 209,306 202,893
Unbiiled service receivables .............................................. 56,868 57,588
Deferred income taxes .................................................. 24,146 21,058
Prepaid expenses and other current assets .................................... 94,690 79,378
Total Current Assets .................................................. 803,586 694,400
Property, plant and equipment, net ......................................... 2,637,923 2,724,843
Investments in fixed maturities at market (cost: $35,833 and $44,824) ................ 35,007 43,667
Restricted funds held in trust ............................................. 229,867 249,905
Unbiiled service receivables .............................................. 73,067 86,830
Intangible assets, net ................................................... 383,574 434,543
Goodwill ........................................................... 91,282 255,927
Investments in investees and joint ventures ................................... 73,717 66,301
Deferred income taxes .................................................. __ 26,236
Other assets ......................................................... 109,797 119,513
Total Assets ......................................................... $ 4,437,820 $ 4,702,165
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Current portion of long-term debt .......................................... $
Current portion of project debt ............................................
Accounts payable .....................................................
Deferred revenue .....................................................
Accrued expenses and other current liabilities .................................
Total Current Liabilities ...............................................
Long-term debt .......................................................
Project debt .........................................................
Deferred income taxes ..................................................
Other liabilities .......................................................
Total Liabilities ......................................................
Commitments and Contingencies (Note 20)
Minority Interests ....................................................
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 147,657 and
141,246 shares; outstanding 147,500 and 141,166 shares) ........................
Additional paid-in capital ...............................................
Unearned compensation .................................................
Accumulated other comprehensive income ....................................
Accumulated earnings (deficit) ............................................
~Yeasury stock, at par ..................................................
Total Stockholders' Equity ..............................................
Total Liabilities and Stockholders' Equity .................................. $ 4,437,820
36,434 $ 47,549
190,242 174,114
20,151 19,447
16,457 14,524
197,468 205,351
460,752 460,985
1,223,689 1,260,570
1,245,705 1,424,170
420,263 533,169
305,578 343,402
3,655,987 4,022,296
42,681 80,628
14,766 14,125
619,685 594,186
-- (4,583)
3,942 535
100,775 (5,014)
(16) (8)
739,152 599,241
$ 4,702,165
The accompanying notes are an integral part of the consolidated financial statements.
93
COVANTA HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
OPERATING ACTIVITIES:
Net income .......................................................... $ 105,789
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense ...................................... 193,217
Revenue contract levelization ............................................ 3,419
Amortization of long-term debt deferred financing costs ........................... 8,311
Amortization of debt premium and discount ................................... (22,506)
Accretion on principal of High Yield Notes ................................... --
Provision for doubtful accounts ........................................... 2,251
Stock-based compensation expense ......................................... 6,887
Equity in net income from unconsolidated investments ............................ (28,637)
Dividends from unconsolidated investments ................................... 19,375
Minority interests .................................................... 6,610
Gain on derivative instruments, ACL warrants ................................. --
Deferred income taxes ................................................. 20,908
Other, net ......................................................... 7,262
Change in operating assets and liabilities, net of effects of acquisitions:
Restricted funds for emergence costs ...................................... --
Receivables ...................................................... (8,577)
Unbilled service receivables ............................................ I7,294
Accounts payable and accrued expenses .................................... 2,351
Accrued emergence costs ............................................. --
Unpaid losses and loss adjustment expenses ................................. (8,848)
Other, net ........................................................ (15,859)
Net cash provided by operating activities ...................................... 309,247
INVESTING ACTIVITIES:
Decrease in restricted cash, Covanta Energy escrow .............................. --
Furchase of ARC Holdings and Covanta Energy, respectively ........................ --
Cash acquired from ARC Holdings and Covanta Energy, respectively .................. --
Proceeds from the sale of investment securities ................................. 10,615
Acquisition of non-controlling interest in subsidiary .............................. (27,500)
Purchase of investment securities .......................................... (774)
Purchase of property, plant and equipment .................................... (54,267)
Other, net ......................................................... 5,022
Net cash (used in) provided by investing activities ................................ (66,904)
FINANCING ACTIVmES:
Proceeds from rights offerings, net ......................................... 20,498
Proceeds from the exercise of options for common stock .......................... 1,126
Proceeds from borrowings on long-term debt .................................. 97,619
Proceeds from borrowings on project debt .................................... 6,868
Principal payments on long-term debt ....................................... (140,638)
Principal payments on project debt ......................................... (151,095)
Payments of long-term debt deferred financing costs ............................. 100
Prepaid financing costs new loan agreement ................................... (2,229)
Repayment of bridge financing ........................................... --
Increase in holding company restricted funds .................................. --
Decrease (increase) in restricted funds held in trust .............................. 39,373
Dist~bmions to minority partners .......................................... (9,263)
Other, net ......................................................... (37)
Net cash (used in) provided by financing activities ................................ (137,678)
Effect of exchange rate changes on cash and cash equivalents ......................... 221
Net increase in cash and cash equivalents ...................................... 104,886
Cash and cash equivalents at beginning of period ................................. 128,556
Cash and cash equivalents at end of period ..................................... $ 233,442
Cash Paid for Interest and Income Taxes:
Interest ............................................................ $ 205,807
Income taxes ......................................................... $ 17,398
$ 59,326 $ 34,094
124,925 53,282
2,068 --
10,785 7,045
(18,058) (10,457)
872 2,736
2,008 733
4,057 1,425
(25,609) (17,024)
19,287 16,926
9,197 6,869
(15,193) --
17,759 (2,916)
6,003 (172)
13,201 65,681
2,701 13,084
11,949 11,221
7,691 (19)
(13,201) (65,681)
(17,402) (19,110)
5,893 10,636
208,259 108,353
-- 37,026
(747,348) (36,400)
62,358 57,795
30,827 27,307
(3,458) (24,828)
(23,527) (11,999)
4,269 7,090
(676,879) 55,991
395,791 41,021
2,984 3,474
675,000 --
43,561 14,488
(368,432) (19,673)
(188,975) (67,943)
(35,485) (7,255)
-- (26,612)
(6,471) --
(6,337) (13,839)
(12,249) (8,261)
1,862 (1,436)
501,249 (86,036)
(221) (112)
32,408 78,196
96,148 17,952
$ 128,556 $ 96,148
$ 154,545 $ 66,917
$ 16,737 $ 24~207
The accompanying notes are an integral part of the consolidated financial statements.
94
COVANTA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Accumulated
Additional Other Accumulated
Common Stock Paid-In Unearned Comprehensive Earnings
Shares Amount Capital Compensation (Loss) Income (Deficit)
Balance as of December 31, 2003 ............ 35,793 $ 3,579 $ 123,446
Stock-based compensation expense ........... 181
Amortization of unearned compensation ........
Adjustment of unearned compensation for
terminated employees .................. (41) (4) (200)
Shares issued in tights offering, net of costs . .
Right cancelled for terminated employees ....
Exercise of options to purchase common stock
Shares cancelled in exercise of options ......
Conversion of portion of bridge financing ....
Share issued in restricted stock award ......
Stock purchase rights issued to creditors .....
Comprehensive income, net of income taxes:
Net income .........................
Foreign currency translation ..............
Minimum pension liability ...............
Net unrealized loss on available-for-sale
securities .........................
Total comprehensive income ............
Balance as of December 31, 2004 ............ 73,441 7,344 194,783
Stock-based compensation expense ........... (29)
Amortization of unearned compensation ........
Adjustment of unearned compensation for
terminated employees .................. (18) (2) (164)
Shares issued in rights offering, net of costs ..... 66,673 6,667 389,124
Exercise of options to purchase common stock . . . 724 72 4,937
Shares cancelled in exercise of options ......... (21) (1) (290)
Share issued in ~stricted stock award ......... 447 45 5,317
ACL gift upon emergence from bankruptcy ...... 508
Comprehensive income, net of income taxes:
Net income .........................
Foreign currency translation ..............
Minimum pension liability ...............
Net unrealized loss on available-for-sale-
securities .........................
Net umealized gain on derivative instruments...
Total comprehensive income ............
Balance as of December 31, 2005 ............ 141,246 14,125 594,186
Reclass of unearned compensation upon adoption
of SFAS 123R ....................... (4,583)
Shares issued in rights offering .............. 5,697 570 19,928
Stock-based compensation expense ........... 6,887
Tax benefit related to exercise of stock options and
vesting of restricted stock ................ 2,242
Shares cancelled for terminated employees ...... 7
Shares cancelled for non-vested stock rights for
terminated employee ................... (37)
Exercise of options to purchase common stock . . . 178 18 1,108
Shares issued in non-vested stock award ........ 536 53 (53)
Comprehensive income, net of income taxes:
Net income .........................
Foreign currency translation ..............
Minimum pension liability adjustment .......
Adjustment for unrecognized net gain upon
adoption of SFAS 158 ................
Net unrealized gain on available-for-sale
securities .........................
Net unrealized gain on derivative instraments...
Total comprehensive income ............
Balance as of December 31, 2006 ............ 147,657 $ 14,766 $ 619,685
$ (289)
1,345
68
(4,613)
(3,489)
4,086
166
(5,346)
. . 27,438 2,744 38,277
·. (12) (1) (18)
. . 966 96 5,520
. . (89) (9) (785)
. . 8,750 875 12,513
. . 636 64 4,549
. . -- -- 11,300
(4,583)
4,583
Share~ Amount
(In thousands)
$ (445) $ (98,434) 11 $ (66) $
34,094
549
1,225
(746)
1,028 34,094
583 (64,340) 11
69
Total
27,791
181
1,345
(136)
41,021
(19)
5,616
(794)
13,388
11,300
34,094
549
1,225
(746)
35,122
(66) 134,815
(29)
4,086
395,791
5,009
58 (233)
16
5O8
59,326 59,326
(675) (675)
(331) (331)
(1,055) (1,055)
2,013 2,013
(48) 59,326 59,278
535 (5,014) 80 (8) 599,241
6
20,498
6,887
2,242
(7) --
(1) (38)
105,789 105,789
986 986
100 100
1,650 1,650
559 559
112 112
3,407 105,789 109,196
$ -- $ 3,942 $ 100,775 157 $ (16) $ 739,152
The accompanying notes are an integral part of the consolidated financial statements.
95
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Summary of Significant Accounting Policies
Organization
The financial statements in this report represent thc consolidation of Covanta Holding Corporation and its
wholly-owned and majority-owned subsidiaries. Covanta Holding Corporation conducts all of its operations
through subsidiaries which are engaged in the businesses of waste and energy services, and insurance services.
Covanta Holding Corporation's predominant business is the waste and energy services business.
The terms "we," "our," "ours," "us" and "Company" refer to Covanta Holding Corporation and its subsidiaries;
the term "Covanta Energy" refers to our subsidiary Covanta Energy Corporation and its subsidiaries; the term "ARC
Holdings" refers to our subsidiary Covanta ARC Holdings, Inc. and its subsidiaries; the term "TransRiver" refers to
our subsidiary TransRiver Marketing Company, L.P.; the term "CPIH" refers to our subsidiary Covanta Power
International Holdings, Inc.; and the term "NAICC" refers to our subsidiary National American Insurance Company
of California and its subsidiaries.
We are a leading developer, owner and operator of infrastructure for the conversion of energy-from-waste,
waste disposal and renewable energy production businesses in the United States. We also engage in the independent
power production business outside the United States. We own or operate 51 energy generation facilities, 41 of which
are in the United States and 10 of which are located outside the United States. Our energy generation facilities use a
variety of fuels, including municipal solid waste, water (hydroelectric), natural gas, coal, wood waste, landfill gas
and heavy fuel-oil. We also own or operate several businesses that are associated with our energy-from-waste
business, including a waste procurement business, two landfills, and several waste transfer stations. We also operate
one domestic water treatment facility.
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed the following transactions:
· the refinancing of Covanta Energy's debt facilities with new Covanta Energy debt facilities, comprised of a
$300 million revolving credit facility, a $320 million funded letter of credit facility, and a $650 million term
loan (collectively referred to as the "New Credit Facilities");
· an underwritten public offering of 6.118 million shares of our common stock, in which we received proceeds
of approximately $136.6 million, net of underwriting discounts and commissions;
· an underwritten public offering of approximately $373.75 million aggregate principal mount of convertible
debentures (the "Debentures") issued by us, from which we received proceeds of approximately
$364.4 million, net of underwriting discounts and commissions; and
· the repayment, by means of a tender offer, of approximately $604.4 million in aggregate principal amount of
outstanding notes previously issued by Covanta Energy's intermediate subsidiaries.
We completed our public offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the New Credit Facilities on
February 9, 2007. We completed our tender offer for approximately $604.4 million in aggregate principal
amount of outstanding notes on February 22, 2007. Additional information, including material terms related to
our recapitalization plan, is contained in Note 30. Subsequent Events.
Our business segments are comprised of Waste and Energy Services, which is comprised of Covanta Energy's
domestic and international operations, and Other Services, which is comprised of the holding company and
insurance subsidiaries' operations.
Pursuant to the plan of reorganization ("Reorganization Plan"), we acquired 100% of the equity in Covanta
Energy upon its emergence from bankruptcy on MarCh 10, 2004 (the "Effective Date"). Covanta Energy's
subsidiaries owning and operating the Warren County, New Jersey and Lake County, Florida energy-from-
96
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
waste facilities and which were engaged in the Tampa Bay, Florida desalination project remained
debtors-in-possession (the "Remaining Debtors") after the Effective Date. As a result, we recorded our
investment in the Remaining Debtors using the equity method as of March 10, 2004. Subsequent to the
Effective Date, all Remaining Debtors associated with the Tampa Bay, Lake County, and Warren County
projects emerged from bankruptcy on August 6, 2004, December 14, 2004, and December 15, 2005,
respectively. We have included Lake County and Warren County as consolidated subsidiaries in our financial
statements since their respective emergence dates. Upon Tampa Bay's emergence from Chapter 11, we did not have
any operating or ownership rights in this facility.
We also have investments in subsidiaries engaged in insurance operations in California. We hold all of the
voting stock of Covanta Insurance Holding Corporation, which indirectly owns 100% of the common stock of
NAICC, our principal operating insurance subsidiary. The operations of NAICC are in property and casualty
insurance. NAICC writes non-standard private automobile insurance policies in Califomia.
During 2004, we also had an investment in American Commercial Lines LLC ("ACL"), an integrated marine
transportation and service company, which throughout 2004 was in bankruptcy proceedings under Chapter 11. ACL
is no longer our subsidiary. On December 30, 2004, ACL confirmed a plan of reorganization and has since emerged
from bankruptcy. As part of ACL's plan of reorganization, our stock in ACL was cancelled, and our ownership
interest was terminated. We received no distribution under the ACL plan of reorganization, but received from ACL's
creditors, in January 2005, warrants to purchase three percent of ACL stock. During October 2005, we exercised
such warrants and sold all of the resulting shares in ACL. See Note 18. Financial Instruments for additional
information regarding the ACL warrants.
Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements reflect the results of our operations, cash flows and financial position
and of our majority-owned or controlled subsidiaries. All intercompany accounts and transactions have been
eliminated. Investments in companies that are not majority-owned or controlled, but in which we have significant
influence are accounted for under the equity method. Investments in companies that we do not have the ability to
exercise significant influence are carried at the lower of cost or estimated realizable value. We monitor investments
for other than temporary declines in value and make reductions when appropriate.
Equity Method of Investments
Investments are accounted for using the equity method Of accounting if the investment gives us the ability to
exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if
we have an ownership interest in the voting stock of the investee of between 20% and 50%, although other factors,
such as representation on the investee's board of directors, are considered in determining whether the equity method
of accounting is appropriate.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly liquid investments having maturities of three
months or less from the date of purchase. These short-term investments are stated at cost, which approximates
market value.
Restricted Funds for Emergence Costs
We had $19.6 million as of December 31, 2006 and 2005 in cash held in restricted accounts to pay for certain
taxes which may be due relating to Covanta Energy's bankruptcy and that are estimated to be paid in the future.
Cash held in such restricted accounts is not available for general corporate purposes.
97
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Deferred income taxes are based on the difference between the financial reporting and tax basis of assets and
liabilities. The deferred income tax provision represents the change during the reporting period in the deferred tax
assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax
losses and credit cat, forwards and are reduced by a valuation allowance if, based on available evidence, it is more
likely than not that some portion or all of the deferred tax assets will not be realized.
During the periods covered by the consolidated financial statements, we filed a consolidated Federal income
tax return, which included all eligible United States subsidiary companies. Foreign subsidiaries were taxed
according to regulations existing in the countries in which they do business. Our subsidiary, Covanta Lake 1I, Inc.
has not been a member of any consolidated tax group since February 20, 2004.
Beginning in the second quar~r of 2006, we adopted the permanent reinvestment exception under Accounting
Principles Board ("APB") Opinion No. 23, "Accounting for Income Taxes -- Special Areas" ("APB 23") whereby
we will no longer provide for deferred taxes on the tmdistributed earnings of our international subsidiaries. We
intend to permanently reinvest our international earnings outside of the United States in our existing international
operations and in any new international business which may be developed or acquired. As a result of the adoption of
APB 23, we recognized a benefit of $10 million associated with the reversal of deferred taxes accrued on unremitted
earnings of international affiliates in prior periods. For additional information, see Note 21. Income Taxes.
Stock-Based Compensation
Effective January 1, 2006, we adopted Statement of Financial Accounting Standards ("SFAS") No. 123
(revised 2004), "Share-Based Payments" ("SFAS 123R"), which replaces SFAS No. 123, "Accounting for Stock-
Based Compensation" ("SFAS 123") and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"). SFAS 123R focuses primarily on accounting for share-based awards to employees in
exchange for services, and it requires entities to recognize compensation expense for these awards. The cost for
eqnity-based stock awards is expensed based on their grant date fair value. The pro forma disclosure previously
permitted under SFAS 123 is no longer an altemative to financial statement recognition.
Prior to January 1, 2006, we accounted for stock-based awards under the intrinsic value method of APB 25. In
accordance with APB 25, we did not record compensation expense related to our stock option awards because the
strike price was equal to the fair value of the underlying stock on the grant date; however, we did record
compensation expense over the reqnisi~ service period for restricted stock awards.
SFAS 123R is applicable to all of our outstanding unvested share-based payment awards as of January 1, 2006
and all prospective awards using the modified prospective method. Accordingly, the f'mancial results for prior
periods were not retroactively adjusted to reflect the effects of SFAS 123R. For additional information, see Note 23.
Stock-Based Award Plans.
Accumulated Other Comprehensive Income
Accumulated other comprehensive income ("AOCI"), in the statement of stockholders' equity, includes
unrealized gains and losses excluded from the consolidated statements of operations. These unrealized gains and
losses consist of adjustments to the minimum pension liability for our insurance business, unrecognized gains or
losses on our pension and other postretirement benefit obligations, foreign currency translation adjustments,
unrealized losses on securities classified as available-for-sale, and net unrealized gains and losses on interest rate
swaps.
98
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Waste and Energy Services
Revenues
Waste and Service Revenues
Revenue from waste and service agreements consist of the following:
1) Fees earned under contract to operate and maintain energy-from-waste, independent power and water
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 mounts 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
service 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. Unbilled service receivables were $129.9 million and $144.4 million as of December 31,2006
and 2005, respectively;
3) Fees earned for processing waste in excess of service agreement requirements are recognized as
revenue beginning in the period when we process waste in excess of the contractually stated requirements;
4) Tipping fees earned under waste disposal agreements are recognized as revenue in the period the waste
is received; and
5) Other miscellaneous fees, such as revenue for ferrous and non-ferrous metal recovered and sold, are
generally recognized as revenue when ferrous and non-ferrous metal is sold.
Electricity and Steam Sales
Revenue from the sale of electricity and steam are earned and recorded based upon output delivered and
capacity provided at rates specified under contract terms or prevailing market rates net of amounts due to client
communities under applicable service agreements. We account for certain long-term power contracts in accordance
with Emerging Issues Task Force ("EITF") No. 91-6, "Revenue Recognition of Long-Term Power Sales Contracts"
and EITF No. 96-17, "Revenue Recognition under Long-Term Power Sales Contracts That Contain both Fixed and
Variable Pricing Terms" which require that power revenues under these contracts be recognized as the lesser of
(a) amounts billable under the respective contracts; or (b) an amount determinable by the kilowatt hours made
available during the period multiplied by the estimated average revenue per kilowatt hour over the term of the
contract. The determination of the lesser amount is to be made annually based on the cumulative amounts that
would have been recognized had each method been applied consistently from the beginning of the contract. The
difference between the amount billed and the amount recognized is included in other long-term liabilities.
Construction Revenues
Revenues under fixed-price construction contracts are recognized using the percentage of completion method,
measured by the cost to cost method. Under this method, total contract costs are estimated, and the ratio of costs
incurred to date to the estimated total costs on the contract is used to determine the percentage-of-completion. This
method is used because we consider the costs incurred to be the best available measure of progress on these
contracts. Contracts to manage, supervise, or coordinate the construction activity of others are recognized using the
percentage of completion method, measured by the efforts-expended method. Under this method revenue is earned
based on the ratio of hours incurred to the total estimated hours required by the contract. We consider measuring the
work on labor hours to be the best available measure of progress on these contracts.
99
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Pass Through Costs
Pass through costs are costs for which we receive a direct contractually committed reimbursement from the
municipal client which sponsors an energy-from-waste project. These costs generally include utility charges,
insurance premiums, ash residue transportation and disposal, and certain chemical costs. These costs are recorded
net of municipal client reimbursements in our consolidated financial statements, Total pass through costs for the
years ended December 31, 2006, 2005 and 2004 were $57.4 million, $61.6 million, and $40.3 million, respectively.
Deferred Financing Costs
As of December 31, 2006 and 2005, we had $23.5 million and $28~9 million, respectively, of net deferred
financing costs recorded on the consolidated balance sheets. These costs were incurred in connection with our
various financing arrangements. These costs are being amortized over the expected period that the related financing
was to be outstanding using the effective interest rate method. See Note 30. Subsequent Events- 2007
Recapitalization Plan for information related to our New Credit Facilities.
Property, Plant and Equipment
As of March 10, 2004 and June 24, 2005, the assets and liabilities of Covanta Energy and ARC Holdings,
respectively, including property, plant, and equipment, were recorded at our estimate of their fair values. Additions,
improvements and major expenditures are capitalized if they increase the original capacity or extend the useful life
of the original asset more than one year. Maintenance repairs and minor expenditures are expensed in the period
incurred. Depreciation is computed using the straight-line method over the estimated remaining useful lives of the
assets, which range up to 39 years for energy-from-waste facilities. The original useful lives generally range from
three years for computer equipment to 50 years for components of energy-from-waste facilities. Leaseholds
improvements are depreciated over the life of the lease or the asset, whichever is shorter. Upon retirement or
disposal of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheet
and any gain or loss is reflected in the consolidated statement of operations.
Asset Retirement Obligations
In accordance with SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), we
recognize a legal liability for asset retirement obligations when it is incurred- generally upon acquisition,
construction, or development. Our legal liabilities include closure and post-closure costs for landfill cells and site
restoration for certain energy-from-waste and power producing sites. We principally determine the liability using
internal estimates of the costs using current information, assumptions, and interest rates, but also use independent
appraisals as appropriate to estimate costs. When a new liability for asset retirement obligation is recorded, we
capitalize the cost of the liability by increasing the carrying amount of the related long-lived asset. The liability is
accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related
asset. We recognize period-to-period changes in the liability resulting from revisions to the timing or the amount of
the original estimate of the undiscounted cash flows. Any changes are incorporated into the carrying amount of the
liability and will result in an adjustment to the amount of asset retirement cost allocated to expense in subsequent
periods.
Waste and Energy Contracts and Other Intangible Assets
As of March 10, 2004, our waste and energy contracts were recorded at their estimated fair market values in
accordance with SFAS No. 141, "Business Combinations" ("SFAS 141"), based upon discounted cash flows from
the service contracts and the "above market" and "below market" portion of the energy contracts using currently
available information. The remaining weighted-average life of the agreements is approximately 10 years. However,
many of such contracts have remaining lives that are significantly shorter.
100
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
As of June 24, 2005, ARC Holdings' waste and energy contracts, lease interest, renewable energy credits and
other indefinite-lived assets were recorded at their preliminary fair value, in accordance with SFAS 141, based upon
discounted cash flows attributable to the "above market" and "below markeC portion of these energy contracts and
assets using currently available information.
Amortization for the "above market" waste and energy contracts and lease interests was calculated using the
straight-line method over the remaining contract lives which range from two to twenty-three years. See Note 9.
Intangible Assets and Goodwill. Amortization for the "below market" waste and energy contracts were calculated
using the straight-line method over the remaining weighted-average contract life which is approximately 12 years.
See Note 13. Other Noncurrent Liabilities.
Impairment of Goodwill, Other Intangibles and Long-Lived Assets
We evaluate goodwill and indefinite-lived intangible assets not subject to amortization for impairment on an
annual basis, or between annual tests if events occur or circumstances change indicating that the fair value of a
reporting unit may be below its carrying amount, in accordance with SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). The evaluation of goodwill requires a comparison of the estimated fair value of the reporting
trait to which the goodwill has been assigned its carrying value. If the carrying value of the reporting unit exceeds
the fair value of that repo~ting unit, then the reporting unit's carrying value of goodwill is compared to its implied
value of goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied value of goodwill, this
difference will be recorded as an adjustment to the goodwill balance, resulting in an impairment charge. The fair
value was determined using a discounted cash flow approach based on forward-looking information regarding
market share and costs for each reporting unit as well as an appropriate discount rate. For indefinite-lived intangible
assets, the evaluation requires a comparison of the estimated fair value of the asset, which is generally estimated
using a discounted future net cash flow projection, to the carrying value of the asset. If the can~ng value of an
indefinite-lived intangible asset exceeds its fair value, as generally estimated using a discounted future net cash flow
projection, then the carrying value of the asset is reduced to its fair value.
Intangible and other long-lived assets such as property, plant and equipment and purchased intangible assets
with finite lives, are evaluated for impairment whenever events or changes in circumstances indicate its carrying
value may not be recoverable over their estimated useful life in accordance with SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." In reviewing for impairment, we compare the carrying value of the
relevant assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual
disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment
loss is recognized equal to the difference between the assets' fair value and its carrying value. To determine fair
value, we principally use internal discounted cash flow estimates, but also use quoted market prices when available
and independent appraisals as appropriate to determine fair value. Cash flow estimates are derived from historical
experience and internal business plans with an appropriate discount rate applied.
Restricted Funds Held in Trust
Restricted funds held in trust are primarily amounts received by third party trustees relating to certain projects
owned by Covanta Energy which may be used only for specified purposes. Covanta Energy generally does not
control these accounts. They include debt service reserves for payment of principal and interest on project debt,
deposits of revenues received with respect to projects prior to their disbursement, as provided in the relevant
indenture or other agreements, and lease reserves for lease payments under operating leases. Such funds are
101
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
invested principally in United States Treasury bills and notes and United States govemment agency securities.
Restricted fund balances are as follows (in thousands of dollars):
As of December 31,
2006 2005
Current Noncurrent Current Noncurrent
Debt service funds ..................... $ 85,806 $ 175,528 $ 123,902 $ 199,874
Revenue funds ........................ 25,303 -- 28,247 --
Lease reserve funds .................... 4,472 -- 4,221 --
Construction funds ..................... -- 617 -- 402
Other funds .......................... 62,473 53,722 41,157. 49,629
Total ............................... $ t78,054 $ 229,867 $ 197,527 $ 249,905
Interest Rate Swap Agreements
We use derivative fmancial instruments to manage risk from changes in interest rates pursuant to the
requirements under our debt agreement in existence as of December 31, 2006. We recognize derivative
instruments on the balance sheet at their fair value. Changes in the fair value of a derivative that is highly
effective as, and that is designated and qualifies as, a cash flow hedge are included in the consolidated statements of
stockholders' equity as a component of AOCI until the hedged cash flows impact earnings. Any hedge
ineffectiveness is included in current-period earnings. On February 9, 2007, our interest swap arrangements
were settled and unrealized gains of $2. I million, net of tax, were reflected in earnings. For additional information
regarding derivative financial instruments, see Note 18. Financial Instruments.
Foreign Currency Translation
For foreign operations, assets and liabilities are translated at year-end exchange rates and revenues and
expenses are translated at the average exchange rates during the year. Gains and losses resulting from foreign
currency translation are included in the consolidated statements of stockholders' equity as a component of AOCI.
For subsidiaries whose functional currency is deemed to be other than the U.S. dollar, translation adjustments are
included as a separate component of AOCI and stockholders' equity. Currency transaction gains and losses are
recorded in Other Operating Expenses in the consolidated statements of operations.
Pension and Postretirement Benefit Obligations
We have adopted SFAS No. 158, "Employer's Accounting for Defmed Benefit Pension and Other
Postretirement Plans -- an amendment to FASB Statements No. 87, 88, 106 and 132(R)" ("SFAS 158"), as of
December 31, 2006. Our pension and other postretirement benefit plans are accounted for in accordance with
SFAS 158, which require costs and the related obligations and assets arising from the pension and other
postrerirement benefit plans to be accounted for based on actuarially-determined estimates. The funded status
of these plans were recognized in the financial statements on March 10, 2004 in accordance with SFAS 141. Upon
the adoption of SFAS 158, we recognized a net gain of $2.5 million, $1.7 million net of deferred tax, in AOCI to
reflect the funded status of the pension and postretirement benefit obligations. For additional information, see
Note 19. Employee Benefit Plans.
Other Services
The insurance subsidiaries' fixed maturity debt and equity securities portfolio are classified as
"available-for-sale" and are carried at fair value. Changes in fair value are credited or charged directly to
102
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
AOCI in the consolidated statements of stockholders' equity as unrealized gains or losses, respectively. All
securities transactions are recorded on the trade date. Investment gains or losses realized on the sale of securities are
determined using the specific identification method. "Other than temporataj" declines in fair value are recorded as
realized losses in the consolidated statements of operations and the cost basis of the security is reduced. Realized
gains and losses are recognized in the consolidated statements of operations based on the amortized cost of fLxed
maturities and cost basis for equity securities on the date of trade, subject to any previous adjustments for "other
than temporary" declines.
Deferred Policy Acquisition Costs
The insurance subsidiaries deferred policy acquisition costs, consisting principally of commissions and
premium taxes paid at the time of issuance of the insurance policy, are deferred and amortized over the period
during which the related insurance premiums are earned. Deferred policy acquisition costs are limited to the
estimated future profit after anticipated losses and loss adjustment expenses ("LAE") (based on historical
experience), maintenance costs, policyholder dividends, and anticipated investment income.
Unpaid Losses and Loss Adjustment Expenses
Unpaid losses and LAE are based on estimates of reported losses and historical experience for incurred but
unreported claims, including losses reported by other insurance companies for reinsurance assumed, and estimates
of expenses for investigating and adjusting all incurred and unadjusted claims. We believe that the provisions for
unpaid losses and LAE are adequate to cover the cost of losses and LAE incurred to date. However, such liability is,
by necessity, based upon estimates, which may change in the near term, and there can be no assurance that the
ultimate lialYflit y will not exceed, or even materially exceed, such estimates. Unpaid losses and LAE are continually
monitored and reviewed, and as settlements are made or reserves adjusted, differences are included in current
operations.
Reinsurance
In the normal course of business, the insurance subsidiaries seek to reduce the loss they may incur on the
policies they each write by reinsuring certain portions of the insured benefit with other insurance enterprises or
reinsurers.
The insurance subsidiaries account for their reinsurance contracts which provide indemnification by reducing
earned premiums for the amounts ceded to the reinsurer and establishing recoverable amounts for paid and unpaid
losses and LAE ceded to the reinsurer. Amounts recoverable from reinsurers are estimated in a manner consistent
with the claim liability associated with the reinsured policy. Contracts that do not result in the reasonable possibility
that the reinsurer may realize a significant loss from the insurance risk generally do not meet conditions for
reinsurance accounting and are accounted for as deposits. For the years ended December 31, 2006 and 2005, the
insurance subsidiaries had no reinsurance contracts which were accounted for as deposits.
Earned Premiums
The insurance subsidiaries earned premium income is recognized ratably over the contract period of an
insurance policy. A lialYflity is established for unearned insurance premiums representing the portion of premium
received which is applicable to the remaining portion of the unexpired terms of the related policies. Reinsurance
premiums are accounted for on a basis consistent with those used in accounting for the original policies issued and
the terms of the reinsurance contracts.
Use of Estimates
The preparation of financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets or liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
103
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
could differ from those estimates. Significant estimates include useful lives of long-lived assets, unl~llled service
receivables, cash flows and taxable income from future operations, unpaid losses and loss adjustment expenses,
allowances for uncollectible receivables, and liabilities related to pension obligations, and for workers'
compensation, severance and certain litigation.
Reclassifications
Certain prior period amounts have been reclassified in the financial statements to conform to the current period
presentation.
Note 2. New Accounting Pronouncements
In June 2006, thc Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). This
interpretation increases the relevancy and comparability of financial reporting by clarifying the way companies
account for uncertainty in income taxes. FIN 48 prescribes a consistent recognition threshold and measurement
attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for
financial statement purposes. The interpretation also requires expanded disclosure with respect to the uncertainty in
income taxes. We will be required to adopt the provisions of FIN 48 in the first quarter of 2007. See Note 21. Income
Taxes.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157
defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and
expands disclosures about fair value measurements. SFAS 157 will be applied under other accounting principles
that require or permit fair value measurements, as this is a relevant measurement attribute. This statement does not
require any new fair value measurements. We will adopt the provisions of SFAS 157 beginning January 1, 2008. We
are currently evaluating the impact of this statement on our consolidated financial statements.
Note 3. Acquisitions and Dispositions
Acquisitions
Covanta Onondaga Limited Partnership
On December 27, 2006, we acquired for $27.5 million in cash the limited partnership interests held by
unaffdiated entities in Covanta Onondaga Limited Partnership, our subsidiary which owns and operates an energy-
from-waste facility in Onondaga County, New York. This acquisition is not material to our consolidated financial
statements. Therefore, disclosures of pro forma financial information have not been presented.
ARC HoMings
On June 24, 2005, we acquired 100% of the issued and outstanding shares of ARC Holdings' capital stock
through our wholly-owned subsidiary Covanta Energy. Under the terms of the stock purchase agreement, we paid
approximately $747 million in cash and transaction costs for the capital stock of ARC Holdings and assumed the
consolidated net debt of ARC Holdings of $1.3 billion as of June 24, 2005 ($1.5 billion of consolidated indebtedness
net of $0.2 billion of cash and restricted funds held in trust). The acquisition of ARC Holdings was financed by a
combination of debt and equity described below. Immediately after the transaction was completed, ARC Holdings
became a wholly-owned subsidiary of Covanta Energy.
As part of the ARC Holdings acquisition, Covanta Energy entered into credit arrangements which totaled
approximately $1.1 billion and are guaranteed by us and certain domestic subsidiaries of Covanta Energy. The
proceeds from these credit arrangements were used to fund the acquisition of ARC Holdings, to refinance
approximately $479 million of Covanta Energy's existing recourse debt and letters of credit, and to pay related fees
104
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
and expenses. The revolving credit and letter of credit facilities are further available for ongoing permitted
expenditures and for general corporate purposes. These credit arrangements were amended in May 2006. For details
related to these amended fmancing arrangements, see Note 16. Long-Term Debt.
The equity component of the financing consisted of a $400 million offering of warrants to purchase our
common stock (the "ARC Holdings Rights Offering"). Such warrants entitled our existing stockholders to purchase
our stock on a pro rata basis, with each holder entitled to purchase 0.9 shares of our common stock at an exercise
price of $6.00 for each share of our common stock held as of May 27, 2005, the record date. We received net
proceeds of approximately $395.8 million ($400 million gross proceeds, net of $4.2 million of expenses) and issued
66,673,004 shares of common stock.
Three of our largest stockholders, SZ Investments L.L.C. (together with its affiliate EGI-Fund (05-07)
Investors, L.L.C. to which it transferred a portion of its shares, "SZ Investments"), Third Avenue Business Trust, on
behalf of Third Avenue Value Fund Series ("Third Avenue"), and D. E. Shaw Laminar Portfolios, L.L.C.
("Laminar"), representing an aggregate ownership, at the time of the ARC Holdings Rights Offering, of
approximately 40% of our outstanding common stock, committed to participate in the ARC Holdings Rights
Offering and acquired at least their pro rata portion of the shares. As consideration for their commitments, we paid
each of these stockholders an amount equal to 1.75% of their respective equity commitments, which in the
aggregate was $2.8 million and was accounted for as a reduction of the ARC Holdings Rights Offering proceeds.
See Note 29. Related-Party Transactions.
The purchase price was comprised of the following (in millions of dollars):
Cash ............................................................... $ 740.0
Debt assumed ........................................................ 1,494.0
Direct transaction costs ................................................. 7.3
Restructuring liability .................................................. 9.1
$ 2,250.4
The purchase price included acquisition-related restructuring charges of $9.1 million which were recorded as a
liability and assumed in the ARC Holdings acquisition, and consisted primarily of severance and related benefits,
and the costs of vacating duplicate facilities. As of December 31, 2006, the remaining acquisition-related
restructuring liability was $4.0 million.
105
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The following table summarizes the allocation of values to the assets acquired and liabilities assumed at
June 24, 2005 in conformity with the SFAS 141 and SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109")
(in thousands of dollars):
Current assets ...................................................... $ 233,659
Property, plant and equipment .......................................... 1,982,847
Intangible assets (excluding goodwill) .................................... 287,421
Goodwill .......................................................... 91,282
Other assets ........................................................ 146,495
Total assets acquired ............................................... $ 2,741,704
Current liabilities .................................................... $ 76,258
Current portion of long-term debt ........................................ 29,958
Current portion of project debt .......................................... 64,344
Long-term debt ..................................................... 662,379
Project debt ........................................................ 737,385
Deferred income taxes ................................................ 250,945
Other liabilities ..................................................... 170,029
Total liabilities assumed ............................................. 1,991,298
Minority interest acquired ............................................. 3,058
Net assets acquired .................................................. $ 747,348
The acquired intangible assets of $287.4 million relate to favorable energy and waste contracts, landfill rights,
other nonamonizing intangibles and a favorable leasehold interest with an approximate ten-year average useful life.
As part of the purchase price allocation during 2006 for the ARC Holdings acquisition, goodwill was adjusted from
$255.9 million as ~'f December 31, 2005 to $91.3 million as of December 31, 2006. See Note 9. Intangible Assets
and Goodwill for additional information regarding these purchase price allocation adjustments.
Covanta Energy
On December 2, 2003, we executed a definitive investment and purchase agreement to acquire Covanta Energy
in connection with Covanta Energy's emergence from Chapter 11 proceedings after the non-core and geothermal
assets of Covanta Energy were divested. The primary components of the transaction were: (1) our purchase of 100%
of the equity of Covanta Energy in consideration for a cash purchase price of approximately $30 million, and
(2) agreement as to new letter of credit and revolving credit facilities for Covanta Energy's domestic and
international operations, provided by some of the existing Covanta Energy lenders and a group of additional
lenders we organized. Our acquisition of Covanta Energy was consummated on March 10, 2004.
The aggregate purchase price was $47.5 million which included the cash purchase price of $30 million,
$6.4 million for professional fees and other estimated costs incurred in connection with the acquisition, and an
estimated fair value of $11.3 million for our commitment to sell up to 3.0 million shares of our common stock at
$1.53 per share to certain creditors of Covanta Energy, subject to certain limitations. See Note 24. Stockholders'
Equity of the Notes for additional information regarding such commitment.
In addition to the purchase price allocation adjustments, Covanta Energy's emergence from Chapter 11
proceedings on March 10, 2004 resulted in the adoption of fresh start accounting as of that date, in accordance with
AICPA Statement of Position ("SOP") No. 90-7, "Financial Reporting by Entities in Reorganization Under the
106
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Bankruptcy Code". The following table summarizes the final allocation of values to the assets acquired and
liabilities assumed at March 10, 2004 in conformity with SFAS 141 and SFAS 109 (in thousands of dollars):
Current assets ...................................................... $ 522,659
Property, plant and equipment .......................................... 836,221
Intangible assets .................................................... 191,943
Other assets ........................................................ 327,065
Total assets acquired ............................................... $ 1,877,888
Current liabilities .................................................... $ 364,480
Long-term debt ..................................................... 328,053
Project debt ........................................................ 850,591
Deferred income taxes ................................................ 110,257
Other liabilities ..................................................... 176,982
Total liabilities assumed ............................................. 1,830,363
Net assets acquired ................................................. $ 47,525
The acquired intangible assets of $191.9 million primarily relate to service and energy agreements on publicly-
owned energy-from-waste projects.
Pro Forma Results of Operations
The results of operations from Covanta Energy and ARC Holdings are included in our consolidated results of
operations from March 11, 2004 and June 25, 2005, respectively. The following table sets forth certain unaudited
consolidated operating results for 2005 and 2004, as if the acquisitions of Covanta Energy and ARC Holdings were
consummated on the same terms at January 1, 2004 (in thousands, except per share amounts):
For the Years Ended
December 31,
Pro Forma (unaudited) 2005 2004
Total operating revenues ................................... $ 1,209,075 $ 1,204,481
Net income ............................................ $ 69,127 $ 54,789
Basic earnings per share:
Weighted average shares outstanding ........................ 139,996 139,150
Earnings per share ..................................... $ 0.49 $ 0.39
Diluted earnings per share:
Weighted average shares outstanding ........................ 145,698 143,783
Earnings per share ..................................... $ 0.47 $ 0.38
The pro forma results are not necessarily indicative of the results of operations that actually would have
resulted had the acquisitions been in effect at the beginning of the period or of future results.
Restructuring and Acquisition-Related Charges
We incurred restructuring costs in 2005 of $2.8 million. The restructuring costs resulted from $2.1 million of
severance payments to CPIH executives in connection with overhead reductions made possible by the elimination
of CPIH's separate capital structure during the second quarter of 2005. An additional $0.7 million was paid to
remaining CPIH executives as incentive payments from existing contractual obligations relating to CPIH debt
repayment in connection with the ARC Holdings acquisition.
107
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
In connection with the acquisition of ARC Holdings, we incurred integration costs of $4.0 million for the year
ended December 31, 2005 primarily related to professional fees and employee incentive costs. These charges were
included as part of the operating costs of the Waste and Energy Services segment.
Dispositions
Marine Services
We had investments in the marine services business, the largest of which was ACL, an integrated marine
transportation and service company which, throughout 2004 was in Chapter 11 bankruptcy proceedings. ACL is no
longer our subsidiary. On December 30, 2004, ACL's plan of reorganization was confn'med and ACL has since
emerged from bankruptcy. As part of ACL's plan of reorganization, our ACL stock was cancelled, and our
ownership interest was terminated. We received no cash distributions under the ACL plan of reorganization but,
through a subsidiary, received from ACL's former creditors warrants to purchase 672,920 shares of ACL stock at an
exercise price of $3.00 per share after ACL's emergence in January 2005. See Note 18. Financial Instruments of the
Notes for a discussion of these warrants.
Our other investees in the marine services business consisted of Global Materials Services, LLC ("GMS") and
Vessel Leasing, LLC ("Vessel Leasing"). GMS was our joint venture with ACL and a third party, in which we held a
5.4% interest. We sold our interests in GMS to the third party member of the joint venture as of October 6, 2004.
Vessel Leasing was our joint venture with ACL. We sold our interest in Vessel Leasing to ACL on January 13, 2005.
Note 4. Equity in Net Income from Unconsolidated Investments
Our subsidiaries are party to joint venture agreements through which we have equity investments in several
operating projects. The joint venture agreements generally provide for the sharing of operational control as well as
voting percentages. We record our share of earnings from our equity investees in equity in net income from
unconsolidated investments in our consolidated statements of operations.
Equity in net income from unconsolidated investments, after March 10, 2004, primarily relates to our 26%
investment in Quezon Power, Inc. in the Philippines CQuezon"). The Quezon project sells electricity to 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 produced by the facility 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 subsidiary 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. Project
management continues to negotiate with Meralco with respect to proposed amendments to the contract to modify
certain commercial terms and to resolve issues relating to the project's performance during its first year of
operation.
108
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
As of December 31, 2006 and 2005, investments in investces and joint ventures accounted for under the equity
method were as follows (in thousands of dollars):
Ownership Ownership
Interest as of Interest as of
December 31, December 31,
2006 2006 2005
2005
Ultrapower Chinese Station Plant (U.S.) .... 50% $ 4,824 50% $ 4,327
South Fork Plant (U.S.) ................ 50% 1,009 50% 859
Koma Kulshan Plant (U.S.) ............. 50% 5,051 50% 4,519
Ambiante 2000 (Italy) ................. 40% 283 40% 333
Haripur Barge Plant (Bangladesh) ......... 45% 13,332 45% 10,703
Quezon Power (Philippines) ............. 26% 49,218 26% 45,560
Total investments ..................... $ 73,717 $ 66,301
The unaudited combined results of operations and financial position of our equity method investments are
summarized below (in thousands of dollars):
2oo6 2oo5
Condensed Statements of Operations for the years ended
December 31:
Revenues ................................................ $ 321,507 $ 295,649
Operating income ......................................... 129,071 128,476
Net income .............................................. 83,390 77,114
Company's share of net income ............................... 28,636 25,609
Condensed Balance Sheets as of December 31:
Current assets ............................................ $ 155,521 $ 141,139
Noncurrent assets .......................................... 811,403 839,575
Total assets .............................................. 966,924 980,714
Current liabilities .......................................... 166,659 138,002
Noncurrent liabilities ....................................... 400,592 457,484
Total liabilities ............................................ 567,251 595,486
The reported net income included under the caption equity in net income from unconsolidated investments is
presented below (in thousands of dollars):
For the Years Ended December 31,
2006 2005 2004
GMS income as of October 6, 2004(1) .................... $ -- $ -- $ 156
Vessel Leasing income(2) .............................. -- -- 318
Write-down of Vessel Leasing investment held for sale ........ -- -- (985)
Equity in net loss from unconsolidated Marine Services
investments ....................................... -- -- (511 )
Equity in net income from unconsolidated Waste and Energy
Services investments(3) .............................. 28,636 25,609 17,535
Equity in net income from unconsolidated investments ......... $ 28,636 $ 25,609 $17,024
109
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(1) Oar investment in GMS was sold on October 6, 2004.
(2) Our investment in Vessel Leasing to ACL was sold on January 13, 2005.
(3) The year ended December 31, 2004 includes amounts from March 11 to December 31, 2004.
The results of operations of our significant equity investee was (in thousands of dollars):
For the Years Ended December 31,
2006 2005 2004
Quezon Power (Philippines)
Revenues ..................................... $ 271,817 $ 245,571 $ 214,865
Operating income ............................... 119,328 110,872 101,240
Net income ................................... 73,118 66,824 53,828
The Tampa Bay, Florida subsidiaries, the Lake County, Florida subsidiaries, and the Warren County, New
Jersey subsidiaries emerged from bankruptcy on August 6, 2004, December 14, 2004, and December 15, 2005,
respectively. We have included Lake County and Warren County as consolidated subsidiaries in our financial
statements since their respective emergence dates. Upon Tampa Bay's emergence from Chapter 11, we did not have
any operating or ownership, rights in this facility.
Equity in net income from unconsolidated investments for the year ended December 31, 2006 includes
approximately $4.9 million of cumulative deferred income tax benefits related to unrealized foreign exchange
losses at our Quezon facility that are expected to be tax deductible for Philippine tax purposes in future years. We
recorded a cumulative deferred income tax benefit of $7.0 million in the quarter ended June 30, 2006 on the basis of
rulings which were issued by the Philippine tax authorities in June 2006 clarifying the tax deductibility of such
losses upon realization. The realization of this deferred tax benefit is subject to fluctuations in the value of the
Philippine peso versus the US dollar. During the last six months of 2006, we reduced this cumulative deferred
income tax benefit by approximately $2.1 million as a result of the strengthening of the Philippine peso versus the
US dollar.
Over the last six years, Quezon has benefited from Philippine tax regulations which were designed to promote
investments in certain industries (including power generation). Equity in net income from unconsolidated
investments for the year ended December 31, 2006 includes approximately $4.1 million of increased tax
expense for Quezon related to the conclusion of this six-year income tax holiday in May 2006.
During the fourth quarter of 2006, we recorded a $2.3 million write-off of a deferred income tax asset due to a
change in the deductibility of the amortization of deferred financing costs related to our Quezon facility.
Note 5. Revenues and Unbilled Service Receivables
The following table summarizes the components of waste and service revenues for the periods presented below
(in thousands of dollars):
For the Period
For the Years Ended March 11, through
December 31, December 31,
2006 2005 2004
Waste and service revenues uarelated to project debt ...... $ 711,832 $ 544,418 $ 311,669
Revenue earned explicitly to service project debt-principal . . 69,097 59,060 36,029
Revenue earned explicitly to service project debt-interest ... 36,704 35,025 25,050
Total waste and service revenues ..................... $ 817,633 $ 638,503 $ 372,748
110
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
SEMASS Partnership ("SEMASS"), a Covanta Energy subsidiary, sells the electric power output from the
SEMASS facility to Commonwealth Electric Company dfo/a NSTAR Electric ("NSTAR") under two separate
power sale agreements. With respect to one of the agreements, a dispute arose between SEMASS and NSTAR
regarding the power purchase rate applicable to power deliveries on and after January 1, 2005. In December 2005,
SEMASS initiated an arbitration process to resolve the dispute. SEMASS and NSTAR engaged in settlemem
negotiations, and executed a definitive settlement agreement and related amendments to the power sale agreements.
The settlement became effective in December 2006 at which time SEMASS received approximately $8.1 million,
comprised of $4.8 million related to 2005 and $3.3 related to 2006, which was recorded as electricity and steam
sales.
Unbilled service receivables include fees related to the principal portion of debt service earned to service
project debt principal where such fees are expressly included as a component of the service fee paid by the
municipality pursuant to applicable energy-from-waste service agreements. Regardless of the timing of amounts
paid by municipalities relating to project debt principal, we record service revenue with respect to this principal
component on a levelized basis over the term of the service agreement. Long-term unbilled service receivables
related to energy-from-waste operations are recorded at their discounted amounts.
Note 6. Reinsurance
Reinsurance is the transfer of risk, by contract, from one insurance company to another for consideration
(premium). Reinsurance contracts do not relieve the insurance business from its obligations to policyholders.
Failure of reinsurers to honor their obligations could result in losses to the insurance business; consequently,
allowances are established for amounts deemed uncollectible. The insurance business evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions,
activities, or economic characteristics to reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies.
NAICC has reinsurance under both excess of loss and quota share treaties. NAICC cedes reinsurance on an
excess of loss basis for workers' compensation risks in excess of $0.4 million prior to January 1996, $0.5 million
through March 2000 and $0.2 million thereafter. Beginning inMay 2001, NAICC retained 50% of the loss between
$0.2 million and $0.5 million. For commercial automobile, NAICC cedes reinsurance on loss basis risks in excess of
$0.25 million. From January 1999 to December 2001, the California non-standard personal automobile quota share
reinsurance ceded percentage was 10%. Between January 2002 and December 2004, no reinsurance was in place for
the personal automobile business, however, with the introduction of a new program, that business was reinsured at
40% through 2005, and the renewal business, including new non-owner policies, was reinsured at 28%. The non-
standard automobile reinsurance programs established in 2005 were cancelled effective January 1, 2006. The
property and casualty book of business of former affiliates contains both excess of loss and quota share reinsurance
protection. Typically all excess of loss contracts effectively reduce NAICC's net exposure to any occurrence below
$0.1 million.
111
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The effect of reinsurance on written premiums and earned premiums reflected in other revenues in our
consolidated financial statements is as follows (in thousands of dollars):
For the Years Ended December 31,
2OO6
Direct written premium ................................ $11,520
Ceded written premium ............................... --
Net written premium ................................. $11,520
Direct earned premium ................................ $11,888
Ceded earned premium ................................ --
Net earned premium .................................. $11,888
2005 2oo4
$18,312 $15,165
(5,872) --
$12,440 $15,165
$18,557 $18,506
(5,872) (508)
$12,685 $17,998
The effect of ceded reinsurance on loss and LAE incurred was a decrease of $0.4 million, $3.9 million, and
$3.5 million for the years ended December 31, 2006, 2005 and 2004, respectively.
As of December 31, 2006, General Reinsurance Corporation ("GenRe") was the only reinsurer that comprised
more than 10% of NAICC's reinsurance recoverable on paid and unpaid claims. NAICC monitors all reinsurers, by
reviewing A.M. Best reports and ratings, information obtained from reinsurance intermediaries and analyzing
financial statements. As of December 31, 2006 and 2005, NAICC had reinsurance recoverable on paid and unpaid
balances from GenRe of $7.5 million and $8.1 million, respectively. GenRe has an A.M. Best rating of A++.
Allowances for paid and unpaid recoverables were $1.2 million and $1.3 million as of December 31, 2006 and 2005,
respectively.
Note 7. Investments
Other Services
The cost or amortized cost, unrealized gains, unrealized losses and fair value of our investments categorized by
type of security, were as follows (in thousands of dollars):
As of December 31, 2006
Cost or
Amortized Unrealized Unreafized Fair
Cost Gain Loss Value
Fixed maturities -- holding company .......... $
Fixed maturities -- insurance business:
U.S. government/Agency .................
Mortgage-backed .......................
Corporate ............................
Total fixed maturities -- insurance business .....
Equity securities -- insurance business .........
Total available-for-sale .................... $ 40,322
3,200 $ -- $ -- $ 3,200
17,596 3 361 17,238
8,456 1 358 8,099
9,781 12 123 9,670
35,833 16 842 35,007
1,289 261 1 1,549
$ 277 $ 843 $ 39,756
112
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Cost or
Amortized
Cost
Fixed maturities -- holding company .......... $
Fixed maturities -- insurance business:
U.S. govemmcnt/Agency ................. 21,240
Mortgage-backed ....................... 10,415
Corporate ............................ 13,169
Total fixed maturities -- insurance business ..... 44,824
Equity securities -- insurance business ......... 1,377
Total available-for-sale .................... $ 49,501
As of December 31, 2005
Unrealized Unrealized Fair
Gain L~s Value
3,300 $ -- $ -- $ 3,300
10 474 20,776
4 414 10,005
19 302 12,886
33 1,190 43,667
146 17 1,506
$ 179 $ 1,207 $ 48,473
The following table sets forth a summary of NAICC's
dollars):
temporarily impaired investments (in thousands of
As of December 31, As of December 31,
2006 2005
Description of Investments
U.S. Treasury and other direct U.S. Government
obligations ............................ $ 16,894 $ 361 $ 18,958 $ 474
Federal agency MBS ...................... 8,060 358 9,667 414
Corporate Bonds ......................... 8,223 123 10,892 302
Equity Securities ......................... 14 1 287 17
Total temporarily impaired investments ........ $ 33,191 $ 843 $ 39,804 $ 1,207
Fair Unrealized Fair Unrealized
Value Losses Value Losses
Of the fixed maturity investments noted above, 99% were acquired between June 30, 2002 and December 31,
2004 during an historic low interest rate environment and are investment grade securities rated A or better. The
number of U.S. Treasury and federal agency obligations, mortgage backed securities, and corporate bonds
temporarily impaired axe 37, 31, and 8 respectively. Of the total temporarily impaired fixed maturity
investments with a fair value of $33.2 million as of December 31, 2006, approximately $5.7 million have
maturities within 12 months and $27.4 million have maturities greater than 12 months.
Our fixed maturities include mortgage-backed securities and collateralized mortgage obligations, collectively
("MBS") representing 23.1% and 22.9% of the total fixed maturities at years ended December 31, 2006 and 2005,
respectively. Oar MBS holdings are issued by the Federal National Mortgage Association ("FNMA") or the Federal
Home Loan Mortgage Corporation ("FHLMC"), both of which are rated "AAA" by Moody's Investors Services.
MBS and callable bonds, in conh~ast to other bonds, are more sensitive to market value declines in a rising interest
rate environment than to market value increases in a declining interest rate environment.
113
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The expected maturities of fixed maturity securities, by amortized cost and fair value are shown below (in
thousands of dollars):
As of December 31, 2006
Amortized Cost Fair Value
Available-for-sale:
One year or less ........................................ $ 7,737 $ 7,650
Over one year to tive years ................................ 27,249 26,510
Over five years to ten years ............................... 847 847
More than ten years ..................................... -- --
Total fixed maturities .................................. $ 35,833 $ 35,007
Our fixed maturity and equity securities portfolio is classified as "available-for-sale" and is carried at fair
value. Changes in fair value are credited or charged directly to stockholders' equity as unrealized gains or losses
included as part of AOCI, respectively. "Other than temporary" declines in fair value are recorded as realized losses
in the statement of operations and the cost basis of the security is reduced.
The following reflects the change in net unrealized gain (loss) on available-for-sale securities included as a
separate component of accumulated AOCI in stockholders' equity (in thousands of dollars):
For the Years Ended
December 31,
20O6
Fixed maturities, net ................................... $ 331
Equity securities, net ................................... 130
Change in net unrealized gain (loss) on investments .......... $ 461
2O05 2004
$ (1,103) $ (874)
22 74
$ (1,081) $ (800)
The components of net unrealized gain (loss) on available-for-sale securities consist of the following (in
thousands of dollars):
For the Years Ended
December 31,
2006 2005 2004
Net unrealized holding gains (losses) on available-for-sale securities
arising during the period ............................... $ 679 $ (976) $ (500)
Reclassification adjustment for net realized losses on
available-for-sale securities included in net income ........... (218) (105) (300)
Net unrealized gain (loss) on available-for-sale securities ....... $ 461 $ (1,081) $ (800)
We consider the following factors in determining whether declines in the fair value of securities are "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 rotes;
· 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.
114
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Net realized investment gains (losses) are as follows (in thousands of dollars):
2006
Holding Company
Fixed maturities ........................................ $ __
Net realized investment gain ............................. $ __
Insurance Business
Fixed maturities ........................................ $ (96)
Equity securities ....................................... 314
Net realized investment gains (loss) ....................... $ 218
For the Years Ended
December 31,
2005 2004
$ -- $ 252
$ -- $ 252
$ (70) $ 219
(1) (18)
$ (71) $ 201
Gross realized gains relating to fixed maturities were zero, $0.06 million, and $0.2 million for the years ended
December 31, 2006, 2005, and 2004, respectively. Gross realized losses relating to fixed maturities were
approximately $0.1 million, $0.13 million and $0.02 million for each of the years ended December 31, 2006,
2005, and 2004, respectively. Gross realized gains relating to equity securities were $0.31 million, $0.001 million,
and zero for the years ended December 31, 2006, 2005, and 2004, respectively. Gross realized losses relating to
equity securities were zero, $0.002 million, and $0.02 million, for the years ended December 31, 2006, 2005, and
2004, respectively.
Net investment income was as follows (in thousands of dollars):
Holding Company
Fixed maturities ................................... $ __
Short-term investments .............................. 2,318
Net investment income --holding company ............. $ 2,318
Insurance business
Fixed maturities ................................... $ 1,582
For the Years Ended
December 31,
2006 2005 2004
$ -- $ 199
702 34
$ 702 $ 233
$ 2,021 $ 2,497
Dividend income ...................................
Other, net ........................................
Total investment income ...........................
Less: investment expense .........................
Net investment income -- insurance business ............ $
81 74 40
183 156 107
1,846 2,251 2,644
211 252 239
1,635 $ 1,999 $ 2,405
The insurance business, in compliance with state insurance laws and regulations, had securities with a fair
value of approximately $19.4 million and $23.0 million as of the years ended December 31, 2006 and 2005,
respectively, on deposit with various states or governmental regulatory authorities. In addition, as of the years ended
December 31, 2006 and 2005, the insurance business had investments with a fair value of $6.4 million in both years,
held in trust or as collateral under the terms of certain reinsurance treaties and letters of credit. NAICC has letters of
credit outstanding of $2.8 million as of December 31, 2006.
115
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Waste and Energ~ Services
Noncurrent investments are classified in other noncurrent assets in the consolidated balance sheets. The cost or
amortized cost, unrealized gains, unrealized losses and fair value of Waste and Energy Services' investments
categorized by type of security, were as follows (in thousands of dollars):
As of Deeember 31, 2006
Cost or Unrealized Unrealized Fair
Amortized Cost Gain Loss Value
Current investments:
Fixed maturities ........................ $ 3,880 $ -- $ -- $ 3,880
Noncurrent investments:
Investments at cost ...................... $ 3,284 $ -- $ -- $ 3,284
Mutual and bond funds .................. 2,206 98 -- 2,304
Total noncurrent investments .............. $ 5,490 $ 98 $ -- $ 5,588
As of December 31, 2005
Cost or Unrealized Unrealized Fair
Amortized Cost Gain Loss Value
Current investments:
Fixed maturities ........................ $ 4,100 $ -- $ -- $ 4,100
Noncurrent investments:
Investments at cost ...................... $ 926 $ -- $ -- $ 926
Mutual and bond funds .................. 2,149 25 -- 2,174
Total noncurrent investments .............. $ 3,075 $ 25 $ -- $ 3,100
Proceeds and realized gains and losses from the sales of securities classified as available-for-sale for the year
ended December 31, 2006 were $0.7 million and zero, respectively. Proceeds and realized gains and losses from the
sales of securities classified as available-for-sale for the year ended December 31, 2005 were $0.5 million and zero,
respectively. For the purpose of determining realized gains and losses, the cost of securities sold was based on
specific identification.
Note 8. Property, Plant and Equipment, net
Property, plant and equipment consisted of the following (in thousands of dollars):
As of December 31,
Useful Lives 2006 2005
Land ...................................... $ 8,976 $ 8,972
Facilities and equipment ....................... 3-39 years 2,874,305 2,813,065
Landfills ...................................
Construction in progress .......................
Less accumulated depreciation and amortization ......
Property, plant, and equipment -- net ..............
29,194 28,879
26,872 7,590
2,939,347 2,858,506
(301,424) (133,663)
$ 2,637,923 $ 2,724,843
116
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Depreciation and amortization related to property, plant and equipment amounted to $156.9 million,
$95.8 million and $37.6 million for the years ended December 31, 2006. 2005 and 2004, respectively.
Note 9. Intangible Assets and Goodwill
Intangible Assets
Intangible assets consisted of the following (in thousands of dollars):
As of December 31, 2006 As of December 31, 2005
Gross Gross
Carrying Accumulated Carrying Accumulated
Useful Life Amount Amortization Net Amount Amortization Net
Waste and energy contracts.. 2-22 years $ 388,378' $ 91.850 $ 296,528 $ 388,378 $ 46,704 $ 341,674
72,154 4,555 67,599 72,314 1.558 70.756
17,985 3,066 14,919 I7,985 400 17,585
Lease interest and other .... 12 - 23 years
Landfill .............. 7 years
Total amortizable intangible
assets ..............
Other intangibles ........ indefinite
intangible assets, net ......
478,517 99,471 379,046 $ 478,677 48,662 430,015
4,528 -- 4,528 4,528 -- 4,528
$ 483,045 $ 99,471 $ 383,574 $ 483,205 $ 48,662 $ 434,543
Amortization expense related to waste and energy contracts and other intangible assets was $47.8 million,
$33.0 million and $15.2 million for the years ended December 31, 2006, 2005 and 2004, respectively. The lease
interest asset is amortized to rant expense in plant operating expenses and was $3.0 million, $1.5 million and zero
for the years ended December 31, 2006, 2005, and 2004 respectively.
The following table details the amount of the actual/estimated amortization expense associated with intangible
assets as of December 31, 2006 included or expected to be included in our statement of operations for each of the
years indicated (in thousands of dollars):
Waste and
Energy
Contracls
Year ended December 31, 2006 .................. $ 45,146
2007 ..................................... $ 44,854
2008 ..................................... 43,180
2009 ..................................... 39,635
2010 ..................................... 27,317
2011 ..................................... 24,228
Thereafter .... ~ ............................. 117,314
Total ..................................... $ 296,528
Landfill, Lease
Interest and Other
Contracts Totals
$ 5,663 $ 50,809
$ 5,147 $ 50,001
5,147 48,327
5,147 44,782
5,147 32,464
5,147 29,375
56,783 174,097
$ 82,518 $ 379,046
Goodwill
Goodwill was $91.3 million and $255.9 million as of December 31, 2006 and 2005, respectively. Goodwill
represents the total consideration paid in excess of the fair value of the net tangible and identifiable intangible assets
acquired and the liabilities assumed in the ARC Holdings acquisition in accordance with the provisions of
SFAS 142. Goodwill has an indefinite life and is not amortized but is to be reviewed for impairment under the
provisions of SFAS 142. We performed the required annual impairment review of our recorded goodwill for
reporting units using a discounted cash flow approach as of October 1, 2006 and determined that no goodwill was
impaired. Goodwill is not deductible for federal income tax purposes.
117
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The following table details the changes in carrying value of goodwill for the years ended December 31, 2006
and 2005 (in thousands of dollars):
Total
Balance as of December 31, 2004 ......................................... $ --
Goodwill acquired (preliminary purchase price allocation) ..................... 255,927
Balance as of December 31, 2005 ......................................... 255,927
Purchase price allocation adjustments for the ARC Holdings acquisition
Reduction of liability owed to one of the prior owners of ARC Holdings (Note 13) . . . (27,358)
Increase in an unfavorable waste contract liability .......................... 12,140
Increase to carrying value of property, plant and equipment ................... (9,531)
Increase to net deferred tax assets related to Grantor Trust items (Note 21) ....... (109,796)
Increase to deferred tax assets associated with opening balance sheet adjustments .. (36,940)
Other, net ....................................................... 6,840
Balance as of December 31, 2006 ......................................... $ 91,282
Note 10. Other Noncurrent Assets
Other noncurrent assets consisted of the following (in thousands of dollars):
As of December 31,
2006 2005
Marketable securities available-for-sale ........................... $ -- $ 926
Unamo~ized bond issuance costs ............................... 736 2,255
Securities available-for-sale (Note 7) ............................ 2,206 2,149
Restricted funds for pre-petition tax liabilities ...................... 19,604 19,604
Deferred financing costs ..................................... 19,440 23,834
Other noncurrent receivables .................................. 11,131 16,890
Reinsurance recoverable on unpaid losses ......................... 12,308 14,786
Interest rate swaps .......................................... 13,125 14,949
Spare parts ............................................... 14,314 14,011
Other .................................................... 16,933 10,109
Total .................................................... $ 109,797 $ 119,513
The New Credit Facilities do not require the interest rate swap arrangements, and on February 9, 2007, the
swap arrangements described above were unwound. For additional information, see Note 30. Subsequent Events.
118
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 11. Accrued Expenses and Other Current Liabilities
Accrued expenses consisted of the following (in thousands of dollars):
As of December 31,
2006 2005
Operating expenses ......................................... $
Insurance .................................................
Interest payable ............................................
Municipalities' share of revenues ...............................
Payroll and payroll taxes .....................................
Lease payments ............................................
Pension and profit sharing ....................................
California Grantor Trust Settlement (Note 21) .....................
Taxes payable .............................................
Other ....................................................
Total .................................................... $ 197,468
55,460 $ 48,631
2,208 1,346
31,135 38,639
55,067 48,505
34,284 33,963
1,849 1,549
2,097 4,737
-- 10,342
1,544 3,198
13,824 14,441
$ 205,351
As of December 31,
2005
Note 12. Deferred Revenue
Deferred revenue consisted of the following (in thousands of dollars):
Advance billings to municipalities ................................ $ 7,985 $ 7,636
Unearned insurance premiums ................................... 641 1,009
Other ..................................................... 7,831 5,879
Total ...................................................... $ 16,457 $ 14,524
Advance billings to various customers are billed one or two months prior to performance of ser~ce and are
recognized as income in the period the service is provided.
119
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 13. Other Noncurrent Liabilities
Other noncurrent liabilities consisted of the following (in thousands of dollars):
As of December 31,
2006 2005
Waste and service contracts (Note 1) ............................ $ 135,607 $ 135,076
Interest rate swap .......................................... 9,855 11,852
Accrued pre-petition tax lial~fiities .............................. 19,604 19,604
Benefit obligation .......................................... 38,979 45,705
Asset retirement obligation ................................... 23,740 25,506
Liability to prior ARC Holdings owner ........................... -- 25,602
Insurance loss and loss adjustment reserves (Note 14) ................ 38,020 46,868
Service contract obligations ................................... 9,607 8,718
Other .................................................... 30,166 24,471
$ 305,578 $ 343,402
The New Credit Facilities do not require the interest rate swap arrangements, and on February 9, 2007, the
interest rate swap arrangements were settled. For additional information, see Note 18. Financial Instruments and
Note 30. Subsequent Events.
Agreements between an ARC Holdings' subsidiary and one of the prior owners of ARC Holdings were
terminated as of June 14, 2006. The liability related to these agreements has been adjusted to recognize the
termination of the habibty. See Note 3. Acquisitions and Dispositions for the ARC Holdings pumhase price
allocation adjustment related to the termination of these agreements.
As of June 25, 2005, ARC Holdings' waste and service contracts were recorded at their fair market values, in
accordance with SFAS 141, based upon discounted cash flows attributable to the "below market" portion of the
waste and service contracts using currently available information. Amortization is calculated by the straight-line
method over the remaining weighted-average contract life which is approximately 12 years.
The following table details the amount of the actual/estimated amortization contra-expense associated with the
below market waste and se~wice contracts liability as of December 31, 2006 included or expected to be included in
our statements of operations for each of the years indicated (in thousands of dollars):
Waste and
Service
Contracts
Year ended December 31, 2006 ........................................... $ 11,609
2007 .............................................................. $ 11,942
2008 .............................................................. 11,955
2009 .............................................................. 12,002
2010 .............................................................. 12,094
2011 .............................................................. 12,153
Thereafter ........................................................... 75,461
Total .............................................................. $ 135,607
120
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
In accordance with SFAS 143, we recognize a legal liability for asset retirement obligations when it is
incurred -- generally upon acquisition, construction, or development. Our legal liabilities include capping, closure
and post-closure costs of landfill cells and site restoration for certain energy-from-waste and power producing sites.
Our asset retirement obligation is presented as follows (in thousands of dollars):
As of December 31,
2006 2005
Beginning of period asset retirement obligation ...................... $ 25,506 $ 18,912
Accretion expense ............................................ 2,308 1,766
Deductions(l) ............................................... (5,972) --
Additions(2) ................................................ 4,675 4,828
End of period asset retirement obligation ........................... $ 26,517 $ 25,506
Less: current portion .......................................... (2,777) --
Asset retirement obligation ..................................... $ 23,740 $ 25,506
(1) Deductions in 2006 related to expenditures and settlements of the asset retirement obligation liability and net
revisions based on current estimates of the liability and revised expected cash flows and life of the liability.
(2) Additions in 2006 related primarily to asset retirement obligation revisions based on purchase price allocation
during 2006 for the ARC Holdings acquisition (See Note 3. Acquisitions and Dispositions). Additions in 2005
relate to the asset retirement obligation established upon emergence for the Warren County, New Jersey facility
and the asset retirement obligations assumed related to the ARC Holdings acquisition.
Note 14. Unpaid Losses and Loss Adjustment Expenses
The following table summarizes the activity in the insurance subsidiaries' liability for unpaid losses and LAE
during the three most recent years (in thousands of dollars):
As of December 31,
2006 2005 2004
Net unpaid losses and LAE at beginning of year ............ $ 32,082 $ 46,228 $ 65,142
Incurred, net, related to:
Current year .....................................
Prior years ......................................
Total net incurred ...................................
Paid, net, related to:
Current year .....................................
Prior years ......................................
Total net paid ......................................
Plus: Increase in allowance for reinsurance recoverable on
unpaid losses ..................................
Net unpaid losses and LAE at end of year .................
Plus: Reinsurance recoverable on unpaid losses .............
Gross unpaid losses and LAE at end of year ............... $ 38,020
7,579 8,172 10,343
297 1,763 2,518
7,876 9,935 12,861
(4,085) (4,792) (5,427)
(10,221) (19,349) (26,408)
(14,306) (24,141) (31,835)
60 60 60
25,712 32,082 46,228
12,308 14,786 18,042
$ 46,868 $ 64,270
The net losses and LAE incurred during 2006 related to prior years was $0.3 million. The net losses and LAE
incurred during 2006 related to prior years was attributable to recognition of unfavorable development in:
121
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
property & casualty of $0.2 million; workers' compensation of $0.4 million; and unallocated LAE for all lines of
$0.5 million. Favorable development on prior periods was recognized in commercial automobile and private
passenger automobile of $0.2 million and $0.6 million, respectively. The net losses and LAE incurred during 2005
related to prior years was $1.8 million. The net losses and LAE incurred during 2005 related to prior years was
attributable to recognition of unfavorable development in: commercial auto of $0.5 million; workers' compensation
of $0.5 million; and unallocated LAE for all lines of $1.6 million. Favorable development on prior periods was
recognized in property & casualty and private passenger automobile of $0.4 million and $0.4 million, respectively.
The net losses and LAE incurred during 2004 related to prior years was attributable to recognition of unfavorable
development in: commercial auto of $2.4 million primarily for accident years 2001 through 2002; and property and
casualty of $i.6 million; and unallocated LAE for all lines of $0.9 million. Favorable development on prior periods
was recognized in workers' compensation and private passenger automobile of $0.7 million and $1.8 million,
respectively.
The insurance business has claims for asbestos and environmental cleanup ("A&E") against policies issued
prior to 1985 and which are currenfly in mn-off. The principal exposure from these claims arises from direct excess
and primary policies of current and past Fortune 500 companies, the obligations of which were assumed by NAICC
or former affiliate companies. These direct excess and primary claims are relatively few in number and have policy
limits of between $50,000 and $1 million, with reinsurance generally above $50,000. NAICC also has A&E claims
primarily associated with participations in excess of loss facultative reinsurance contracts and voluntary risk pools
assumed by the same former affiliates. These facultative reinsurance contracts have relatively low limits, generally
less than $25,000, and estimates of tmpaid losses are based on information provided by the primary insurance
company.
The unpaid losses and LAE related to A&E is established considering facts currently known and the current
state of the law and coverage litigation. Liabilities are estimated for known claims (including the cost of related
litigation) when sufficient information has been developed to indicate the involvement of a specific contract of
insurance or reinsurance and we can reasonably estimate our liability. Estimates for unknown claims and
development of reported claims are included in NAICC's unpaid losses and LAE. The liability for the
development of reported claims is based on estimates of the range of potential losses for reported claims in the
aggregate. Estimates of liabilities are reviewed and updated continually and there is the potential that NAICC'S
exposure could be materially in excess of amounts which are currently recorded. We do not expect that liabilities
associated with these types of claims will result in a material adverse effect on the future liquidity or financial
position of our insurance business. However, claims such as these are based upon estimates and there can be no
assurance that the ultimate liability will not exceed or even materially exceed such estimates. As of the years ended
December 31, 2006 and 2005, NAICC's net unpaid losses and LAE relating to A&E were approximately
$6.0 million and $6.4 million, respectively.
Note 15. Leases
Waste and Energy Services principal leases are for leaseholds on energy-from-waste facilities and independent
power projects, trucks and automobiles, and machinery and equipment. Some of these operating leases have
renewal options.
Rent expense under operating leases was as follows (in thousands of dollars):
For the Years Ended December 31,
2006 2005 2004
Waste and energy services ............................ $ 25,916 $ 20,859 $ 15,823
Other services ..................................... 898 849 1,273
Total .......................................... $ 26,814 $ 21,708 $ 17,096
122
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The following is a schedule, by year, of future minimum rental payments required under operating leases that
have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2006 (in thousands of
dollars):
2007 ..........................................
2008 ..........................................
2009 ..........................................
2010 ..........................................
2011 ..........................................
Thereafter .......................................
Total ..........................................
Future Minimum
Rental Payments
of Future Minimum
Rental Payments
$ 33,962 $ 15,749
36,178 19,278
56,096 23,065
39,854 23,362
39,935 23,571
214,875 143,723
$ 420,900 $ 248,748
Waste and Energy Services' future minimum rental payment obligations include $248.7 million of future non-
recourse rental payments that relate to energy-from-waste facilities. Of this amount $147.8 million is supported by
third-party commitments to provide sufficient service revenues to meet such obligations. The remaining
$100.9 million is related to an energy-from-waste facility at which we serve as operator and directly markets
one half of the facility's disposal capacity. This facility currently generates sufficient revenues from short-,
medium-, and long-term contracts to meet rental payments. We anticipate renewing the contracts or entering into
new contracts to generate sufficient revenues to meet remaining future rental payments.
Waste and Energy Services' electricity and steam sales include lease income of approximately $95.9 million,
$91.6 million and $66.5 million for the year ended December 31, 2006, 2005, and 2004, respectively, related to two
Indian and one Chinese power project that were deemed to be operating lease arrangements under EITF No. 01-08,
"Determining Whether an Arrangement Contains a Lease" ("EITF 01-08"), as of March 10, 2004. This amount
represents contingent rentals because the lease payments for each facility depend on a factor directly related to the
future use of the leased property. The output deliverable and capacity provided by the two Indian facilities have each
been purchased by a single party under long-term power purchase agreements which expire in 2016. The electric
power and steam off-take arrangements and maintenance agreement for the Chinese facility are also with one party.
In June 2006, we sold our ownership interest in the Chinese facility.
Property, plant and equipment accounted for as leased to others under E1TF 01-08 consisted of the following
(in thousands of dollars):
Energy facilities .............................................
Buildings, machinery and improvements ...........................
Total ......................................................
Less accumulated depreciation and amortization ...................... (19,374)
Property, plant, and equipment -- net .............................. $ 64,255
As ~December31,
2006 2005
33 $ 31
75,376 86,885
8,220 8,430
83,629 95,346
(19,317)
$ 76,029
123
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 16. Long-Term Debt
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed the following transactions:
· the refinancing of Covanta Energy's debt facilities with new Covanta Energy debt facilities, comprised of a
$300 million revolving credit facility, a $320 million funded letter of credit facility, and a $650 million term
loan facility (collectively referred to as the "New Credit Facilities");
· an underwritten public offering of 6.118 million shares of our common stock, which we received proceeds of
approximately $136.6 million, net of underwriting discounts and commissions;
· an underwritten public offering of approximately $373.75 million in aggregate principal amount of
convertible Debentures issued by us, from which we received proceeds of approximately $364.4 million,
net of underwriting discounts and commissions; and
· the repayment, by means of a tender offer, of approximately $604.4 million in principal aggregate amount of
outstanding notes previously issued by Covanta Energy's intermediate subsidiaries.
We completed our public offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the New Credit Facilities on
February 9, 2007. We completed our tender offer for approximately $604.4 million in aggregate principal
amount of outstanding notes on February 22, 2007. Additional information, including material terms and
financial statement impacts related to our recapitalization plan, is provided in Note 30. Subsequent Events.
As of December 31, 2006 and 2005, long-term debt was comprised of credit facilities and intermediate debt as
follows (in thousands of dollars):
Covanta Energy Senior Secured Credit Facilities
First Lien Term Loan Facility ............................... $
Second Lien Term Loan Facility .............................
As of December 31,
2006 2005
368,389 $ 229,312
260,000 400,000
628,389 629,312
Intermediate Subsidiary Debt
6.26% Senior Notes due 2015 ............................... 192,000 234,000
8.50% Senior Secured Notes due 2010 ........................ 195,785 195,785
7.375% Senior Secured Notes due 2010 ....................... 224,100 224,100
611,885 653,885
19,748 24,726
Unamortized debt premium ................................
Total intermediate subsidiary debt .......................... 631,633 678,611
Other long-term debt .................................... 101 196
Total long-term debt ...................................... 1,260,123 1,308,119
Less: current portion (includes $4,732 and $4,807 of unamortized
premium) ............................................ (36,434) (47,549)
Total long-term debt .................................. $ 1,223,689
$ 1,260,570
124
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
On May 26, 2006, Covanta Energy entered into agreements which amended its existing credit agreements. All
material terms of Covanta Energy's first lieu term loan facility and second lien term loan facility remained
unchanged except for the following:
· Interest rates applicable to the existing First Lien Term Loan Facility and to credit linked deposits applicable
to its Funded L/C Facility were reduced from a reserve adjusted British Bankers Association Interest
Settlement. Rate, commonly referred to as "LIBOR," plus 3.00% to LIBOR plus 2.25%.
· The amount available for the issuance of letters of credit under the existing $100 million Revolving L/C
Facility was increased from $75 million to $90 million.
· New term loan commitments were provided which allowed Covanta Energy to increase the principal amount
outstanding under its first lien term loan facility by up to $140 million, and use the proceeds to prepay up to
$140 million under the existing second lien term loan facility.
· Certain covenants restricting Covanta Energy's ability to invest available cash and enter into limited
recourse borrowings were modified to provide additional flexibility in the context of permitted acquisitions.
On June 30, 2006, Covanta Energy utilized the new term loan commitment of $140 million on its first lien term
loan facility to prepay $140 million under the second lien term loan facility. Covanta Energy incurred a call
premium of $2.8 million which was paid on June 30, 2006. Covanta Energy recognized a loss on extinguishment of
debt of $2.3 million which was classified as other expense on the consolidated statement of operations and a write-
off to interest expense of a portion of the second lien term loan facility deferred financing costs of $4.5 million in the
three months ended Jmle 30, 2006 related to the $140 million prepayment under the second lien term loan facility.
The December 31, 2006 scheduled principal payment on the amended First Lien Term Loan Facility was made
on January 2, 2007 (the next business day). As of December 31, 2006, Covanta Energy was in compliance with
covenants under the credit facilities.
Short-Term Liquidity
As of December 31, 2006, Covanta Energy had available credit for liquidity as follows (in thousands of
dollars):
Total
Available
Under Facility
Revolving Credit Facility(l) .................... $ 100,000
Funded L/C Facility .......................... $ 320,000
Available
As of
Maturing December 31, 2006
2011 $ 99,000
2012 $ 549
(1) Up to $90 million of which may be utilized for letters of credit.
As of December 31, 2006, Covanta Energy issued $1 million of letters of credit under the secured revolving
credit facility ("Revolving Credit Facility") and had not drawn any loans from this Revolving Credit Facility. On
March 21, 2006, Covanta Energy's availability under the Funded L/C Facility was voluntarily reduced to
$320 million from $340 million. As of December 31, 2006, Covanta Energy had approximately $319.5 million
outstanding letters of credit under the Funded L/C Facility.
Financing Costs
Deferred financing costs on the consolidated balance sheet as of December 31, 2006 and 2005 represent
capitalizable costs incurred by us in colmection with the acquisition of ARC Holdings and refinancing of Covanta
Energy's recourse debt. All deferred financing costs are amortized to interest expense over the life of the related
debt using the effective interest method. Deferred financing costs on the consolidated balance sheet as of
December 31, 2004 represented capitalizable costs incurred by Covanta in connection with the acquisition of
125
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Covanta Energy. These costs were written down to zero on June 24, 2005 upon the refinancing in connection with
the ARC Holdings acquisition.
Amortization of deferred financing costs is included as a component of interest expense and was $8.3 million,
$10.8 million, and $7.0 million for the years ended December 31, 2006, 2005, and 2004, respectively.
Note 17. Project Debt
Project debt is presented below (in thousands of dollars):
As of December 31,
2006 2005
Project debt related to Service Fee structures
4.0-6.75% serial revenue bonds due 2007 through 2015 .......... $
3.0-7.0% term revenue bonds due 2007 through 2022 ...........
Adjustable-rate revenue bonds due 2007 through 2019 ...........
7.322% other debt obligations due 2007 through 2020 ...........
Subtotal ...............................................
Unamortized debt premium, net .............................
Total Service Fee structure related project debt ..................
Project debt related to Tip Fee structures
4.875-6.70% serial revenue bonds due 2007 through 2016 ........ 388,645
5.00-5.625% term revenue bonds due 2010 through 2019 ......... 257,750
Subtotal ............................................... 646,395
Unamortized debt premium, net ............................. 22,216
Total Tip Fee structure related project debt ..................... 668,611
International project debt ................................ 76,150
Total project debt ....................................... 1,435,947
Less current project debt (includes $14,656 and $16,893 of
unamortized premium) .................................. (190,242)
Noncurrent project debt .................................. $ 1,245,705
263,430 $ 305,360
224,225 244,390
111,115 121,065
69,509 83,621
668,279 754,436
22,907 34,413
691,186 788,849
429,205
265,700
694,905
28,897
723,802
85,633
1,598,284
(174,114)
$ 1,424,170
Project debt associated with the financing of energy-from-waste facilities is arranged by municipal entities
through the issuance of tax-exempt and taxable revenue bonds or other borrowings. Generally, debt service for
project debt related to Service Fee Structures is the primary responsibility of municipal entities, whereas debt
service for project debt related to Tip Fee structures is paid by our project subsidiary from project revenue expected
to be sufficient to cover such expense.
Payment obligations for the project debt associated with energy-from-waste facilities owned by Covanta
Energy are limited recourse to the operating subsidiary and non-recourse to Covanta Energy, subject to operating
performance guarantees and commitments. These obligations are secured by the revenues pledged under various
indentures and are collateralized principally by a mortgage lien and a security interest in each of the respective
energy-from-waste facilities and related assets. As of December 31, 2006, such revenue bonds were collateralized
by property, plant and equipment with a net carrying value of $2.5 billion and restricted funds held in lxust of
approxiraately $355.4 million.
126
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The interest rates on adjustable-ram revenue bonds are adjusted periodically based on current municipal-based
interest rates. The average adjustable rate for such revenue bonds was 3.84% and 3.47% as of December 31, 2006
and 2005, respectively, and the average adjustable rate for such revenue bonds was 3.38% and 2.43% during 2006
and 2005 for the full year, respectively.
The $76.2 million in international project debt includes the following obligations as of December 31, 2006:
· $38.6 million due to financial institutions, of which $10.1 million is denominated in U.S. dollars and
$28.5 million is denominated in Indian rupees as of December 31,2006. This debt relates 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% (9.87% as of
December 31, 2006). The outstanding Indian rupee debt borrowed for construction of the power plant bears a
coupon rate at 7.75% and the average coupon rate on the working capital debt was 9.65% in 2006. The
construction related debt extends through 2011. The entire debt is non-recourse to Covanta Energy, and is
secured by the project assets. The power off-taker has 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.
· $37.6 million as of December 31, 2006, due to financial institutions relate to the construction of a second
heavy fuel-oil fared 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 7.5% to 12.5% in 2006 and the average coupon rate on the working capital debt was
9.25% in 2006. The construction related debt extends through 2010. The entire debt is non-recourse to
Covanta Energy and is secured by the project assets. The power off-taker has 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.
As of December 31, 2006, Covanta Energy had one interest rate swap agreement related to project debt that
economically fixes the interest rate on certain adjustable-rate revenue bonds. For additional information related to
this interest rate swap, see Note 18. Financial Instruments.
The maturities of long-term project debt were as follows (in thousands of dollars):
2007 ........................................ $ 175,586
2008 ........................................ 164,415
2009 ........................................ 176,249
2010 ........................................ 175,488
2011 ........................................ 120,014
Thereafter .................................... 579,072
Less current portion ............................
Total noncurrent project debt ...................... $ 1,215,238
As of December 31, 2006
Debt Premium Total
$ 14,656 $ 190,242
10,597 175,012
7,941 184,190
5,364 180,852
2,932 122,946
3,633 582,705
1,390,824 45,123 1,435,947
(175,586) (14,656) (190,242)
$ 30,467 $ 1,245,705
127
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS m (Continued)
Note 18. Financial Instruments
The following disclosure of the estimated fair value of financial instruments is made in accordance with the
requirements of SFAS No. 107, "Disclosures About Fair Value of Financial Instruments." The estimated fair-value
amounts have been determined using available market information and appropriate valuation methodologies.
However, considerable judgment is necessarily required in interpreting market data to develop estimates of fair
value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we would
realize in a current market exchange.
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate that value.
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 debt were determined based on interest rates that are currently available to us for issuance of
debt with similar terms and remaining maturities for debt issues that are not traded on quoted market prices. The fair
value of project debt is estimated based on quoted market prices for the same or similar issues.
The fair value of our interest rate swap agreements is the estimated amount we would receive or pay to
terminate the agreement based on the net present value of the future cash flows as defined in the agreement.
Waste and Energy Services
The fair-value estimates presented herein are based on pertinent information available to us as of December 31,
2006. However, such amounts have not been comprehensively revalued for purposes of these financial statements
since December 31, 2006, and current estimates of fair value may differ significantly from the amounts presented
heroin.
The estimated fair value of financial instruments is presented as follows (in thousands of dollars):
As of December 31, 2006
Carrying Estimated
Amount Fair Value
Cash and cash equivalents ................................. $ 173,860 $ 173,860
Marketable securities ..................................... 3,880 3,880
Receivables ............................................ 223,404 223,404
Restricted funds ......................................... 427,526 428,365
Interest rate swap receivable ................................ 13,125 13,125
Liabilities:
Debt ................................................. $ 1,260,123 $ 1,261,293
Project debt ............................................ 1,435,947 1,396,204
Interest rate swap payable ................................. 9,855 9,855
Off Balance-Sheet Financial Instruments:
Guarantees(a)
(a) Additionally guarantees include approximately $9 million of guarantees related to international energy
projects. These guarantees were subsequently reduced to $1,9 million in February 2007.
128
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Other Services
The carrying amounts, which approximate the fair values of financial instruments, are as follows (in thousands
of dollars):
As of December 31, 2006
Carry Estimated
Amount Fair Value
Assets:
Cash ...................................................... $ 59,582 $ 59,582
Restricted funds ............................................. 6,660 6,660
Parent investments -- fixed maturity securities ....................... 3,200 3,200
Insurance business investments -- fixed maturity securities .............. 35,007 35,007
Insurance business investments -- equity securities .................... 1,549 1,549
ACL Warrants
On January 12, 2005, two of our subsidiaries received warrants to purchase 168,230 shares of common stock of
ACL at $12.00 per share. The number of shares and exercise price subject to the warrants were subsequently
adjusted to 672,920 shares at an exercise price of $3.00 per share, as a result of a four-for-one stock split effective as
of August 2005. The warrants were given by certain of the former creditors of ACL under the ACL plan of
reorganization. Our investment in ACL was written down to zero in 2003.
We recorded the warrants as a derivative security in accordance with SFAS No. 133, "Accounting for
Derivative Instmments and Hedging Activities" ("SFAS 133"). We recorded the warrants at their aggregate fair
value of $0.8 million on the grant date and marked the warrants to their fair value each subsequent financial
statement date. During October 2005, we converted the ACL warrants into shares of ACL's common stock and sold
the shares resulting in net cash proceeds of $18 million and a realized pre-tax gain of $15.2 million.
Interest Rate Swaps
As of December 31, 2006, Covanta Energy had one interest rate swap agreement related to project debt that
economically fixes the interest rate on certain adjustable-rate revenue bonds. This swap agreement was entered into
in September 1995 and expires in January 2019. Any payments made or received under the swap agreement,
including fair value amounts upon termination, are included as an explicit component of the client community's
obligation under the related service agreement. Therefore, all payments made or received under the swap agreement
are a pass through to the client community. Under the swap agreement, Covanta Energy paid an average fixed rate of
9.8% from 2003 through January 2005, and will pay 5.18% thereafter through January 2019, and received a floating
rate equal to the rate on the adjustable rate revenue bonds, unless certain triggering events occur (primarily credit
events), which results in the floating rate converting to either a set percentage of LIBOR or a set percentage of the
BMA Municipal Swap Index, at the option of the swap counterparty. In the event Covanta Energy terminates the
swap prior to its maturity, the floating rate used for determination of setting the fair value of the swap would also be
based on a set percentage of one of these two rates at the option of the counterparty. For the year ended December 31,
2006 the floating rate on the swap averaged 3.39%. The notional amount of the swap as of December 31, 2006 was
$76.4 million and is reduced in accordance with the scheduled repayments of the applicable revenue bonds. The
counterpar~y to the swap is a major fmancial institution. Covanta Energy believes the credit risk associated with
nonperformance by the counterparty is not significant. The swap agreement resulted in increased debt service
expense of $1.4 million and $2.2 million for 2006 and 2005, respectively. The effect on Covanta Energy's weighted-
average borrowing rate of the project debt was an increase of 0.09% for 2006.
Covanta Energy was required, under financing arrangements in effect since June 24, 2005, to enter into
hedging arrangements with respect to a portion of its exposure to interest rate changes with respect to its borrowing
129
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
under the Credit Facilities. On July 8, 2005, Covanta Energy entered into two separate pay fixed, receive floating
interest rate swap agreements with a total notional amount of $300 million. On March 21, 2006, we entered into one
additional pay fixed, receive floating interest rate swap agreement with a notional amount of $37.5 million. On
December 27, 2006, the notional amount of the original swap agreements reduced to $250 million from
$300 million. These swaps were designated as cash flow hedges in accordance with SFAS 133. Accordingly,
unrealized gains or losses will be deferred in other comprehensive income until the hedged cash flows affect
earnings. The impact of the swaps decreased interest expense for the year ended December 31, 2006 by $2.4 million
and increased interest expense for the year ended December 31, 2005 by $0.7 million. As of December 31, 2006 and
2005, the net after-tax dafenred gain in other comprehensive income was $2.1 million and $2.0 million, respectively
($3.3 million and $3.1 million before income taxes, respectively, which was recorded in other assets). The New
Credit Facilities do not require the interest rate swap arrangements, and on Febmary 9, 2007, the swap arrangements
described above were settled. For additional information related to the New Credit Facilities, see Note 30.
Subsequent Events.
Note 19. Employee Benefit Plans
Waste and Energy Services
We sponsor various retirement plans covering the majority of our domestic employees and retirees, as well as
other post-retirement benefit plans for a small number of domestic retirees that include healthcare benefits and life
insurance coverage. Of our intemational employees, 99% participate in defined benefit or defined contribution
retirement plans as required or available in accordance with local laws. Effective December 31, 2005, we froze the
defined benefit pension plan for domestic employees who do not participate in retirement plans offered by
collective bargaining units. All active employees who were eligible participants in the defined benefit pension plan,
as of December 31, 2005, became 100% vested and have a non-forfeitable right to these benefits as of such date. Our
funding policy for the defined benefit pension plan has been to contribute annually an amount to be exempt from the
Pension Benefit Guaranty Corporation variable rate premiums.
Substantially all of our domestic employees are eligible to participate in savings plans we sponsor. Domestic
employees not participating in our retirement plans generally participate in retirement plans offered by collective
bargaining units of which these employees are members. The savings plan allows employees to contribute a portion
of their compensation on a pre-tax basis in accordance with specified guidelines. We match a percentage of
employee contributions up to certain limits. Effective January 1, 2006, in connection with freezing our defined
benefit pension plans for domestic employees, we enhanced our savings plan for domestic employees by providing
a company contribution to the savings plan. Our costs related to these savings plans were $11.0 million and
$3.5 million for the years ended December 31, 2006 and 2005, respectively.
In September 2006, the FASB issued SFAS 158 which requires recognition of the overfunded or underfunded
positions of defined benefit pension and other postretirement benefit plans on the balance sheet. For an underfunded
plan, the incremental liability to be recorded is equal to the difference between the projected benefit obligation and
the fair value of plan assets. SFAS No. 87, "Employers' Accounting for Pensions" ("SFAS 87") and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106") allow for deferred
recognition of this liability through amortization of this difference over time. Under SFAS 158, actuarial gains and
losses and prior service costs and credits that arise during the period but, pursuant to SFAS 87 and SFAS 106 are not
yet recognized as components of net periodic benefit cost, would be recognized as a component of accumulated
other comprehensive income, net of tax. SFAS 158 requires an adjustment to the beginning balance of accumulated
earnings, net of tax, for any transition obligation remaining from the initial application of SFAS 87 and SFAS 106.
Such amounts would not be subsequently amortized as a component of net periodic benefit cost. SFAS 158 was
effective for fiscal years ending after December 15, 2006. We have adopted SFAS 158 for the year ended
December 31, 2006 and have determined that the impact to be immaterial to our consolidated financial statements.
130
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The following table is a reconciliation of the changes in the benefit obligations and fair value of assets for our
defined benefit pension and other postretirement benefit plans, the funded status (using a December 31
measurement date) of the plans and the related amounts recognized in our consolidated balance sheets (in
thousands of dollars, except percentages as noted):
PenMon Benefits Other Benefits
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
20~6 2005 2006 2005
Change in benefit obligation:
Benefit obligation ......................... $ 75,167 $ 67,098
Service cost ............................ -- 7,223
Interest cost ............................ 4,300 3,990
Actuarial loss (gain) ..................... 2,101 (1,384)
Benefits paid ........................... (1,423) (1,760)
Benefit obligation at end of year .............. $ 80,145 $ 75,167
Change in plan assets:
Plan assets at fair value ..................... $ 45,342 $ 36,976
Actual return on plan assets ................ 5,275 2,600
Covanta Energy contributions ............... 6,017 7,526
Benefits paid ........................... (1,423) (1,760)
11,582 $ 11,818
617 657
2,593 272
(941) (1,164)
$ 13,851 $ 11,583
941 1,164
(941) (1,164)
Plan assets at fair value at end of year .......... $ 55,211
Reconciliation of accrued benefit liability and
net amount recognized:
Funded status of the plan .................... $ (24,934)
Unrecognized net gain ...................... --
Net amount recognized ..................... $ (24,934)
Accumulated other comprehensive income --
recognized under SFAS 158:
Net actuarial (gain) loss ..................... $ (4,999)
Net prior service cost ...................... --
Total as of December 31, 2006 ............... $ (4,999)
Weighted average assumptions used to
determine net periodic benefit expense for
years ending December 31:
Discount rate .............................
Expected return on plan assets ................
Rate of compensation increase ................
Weighted average assumptions used to
determine projected benefit obligations as of
December 31:
Discount rate .............................
Rate of compensation increase ................
$ 45,342 $ -- $ --
$ (29,825) $ (13,851) $ (11,583)
(5,578) -- (133)
$ (35,403) $ (13,851) $ (11,716)
N/A $ 2,460 N/A
N/A -- N/A
N/A $ 2,460 N/A
5.75% 6.00% 5.75% 6.00%
8.00% 8.00% N/A N/A
4.00% 4.00% N/A N/A
5.75% 5.75% 5.75% 5.75%
4.00% 4.00% N/A N/A
131
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Plan assets had a fair value of $55.2 million and $45.3 million as of December 31,2006 and 2005, respectively.
The allocation of plan assets was as follows:
As of December 31,
2006 2005
U.S. Equities ................................................... 62% 68%
U.S. Debt Securities .............................................. 19% 19%
Other ......................................................... 19% 13%
Total ......................................................... 100% 100%
Our expected return on plan assets assumption is based on historical experience and by evaluating input from
the tmstee managing the plans assets. The expected return on the plan assets is also impacted by the target allocation
of assets, which is based on our goal of earning the highest rate of return while maintaining risk at acceptable levels.
The plan strives to have assets sufficiently diversified so that adverse or unexpected results from one security class
will not have an tmduly detrimental impact on the entire portfolio. The target ranges of allocation of assets are as
follows:
U.S. Equities ......................................................... 35 -- 70%
U.S. Debt Securities .................................................... 10- 55%
Other ............................................................... 0-- 55%
We anticipate that the long-term asset allocation on average will approximate the targeted allocation. Actual
asset allocations are reviewed and the pension plans' investments are rebalanced to reflect the targeted allocation
when considered appropriate.
For management purposes, an annual rate of increase of 9% in the per capita cost of health care benefits was
assumed for 2006 for covered employees. The rate was assumed to decrease gradually to 5.5 % in 2010 and remain at
that level.
For the pension plans with accumulated benefit obligations in excess of plan assets the projected benefit
obligation, accumulated benefit obligation, and fair value of plan assets were $80.1 million, $60.3 million, and
$55.2 million, respectively as of December 31, 2006 and $75.2 million, $56.8 million, and $45.3 million,
respectively, as of December 31, 2005.
We estimate that the future benefits payable for the retirement and post-retirement plans in place are as follows
(in thousands of dollars).
As of December 31,
Other Benefits
Pension Post
Benefits Medicare
2007 .................................................... $ 912 $ 1,002
2008 .................................................... 976 1,044
2009 .................................................... 1,191 1,076
2010 .................................................... 1,180 1,097
2011 .................................................... 1,441 1,110
2012 - 2016 ............................................... 11,641 4,731
132
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Pension costs for our defined benefit plans and other post-retirement benefit plans included the following
components (in thousands of dollars):
Pension Benefits Other Benefits
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
Components of Net Periodic Benefit Cost:
Service cost ...................... $ -- $ 7,223 $ -- $ --
Interest cost ...................... 4,300 3,990 617 657
Expected return on plan assets ........ (3,689) (3,015) -- --
Amortization of net actuarial gain ...... (64) -- -- --
Net periodic benefit cost ............. $ 547 $ 8,198 $ 617 $ 657
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan.
A one-pementage point change in the assumed health care trend rate would have the following effects (in thousands
of dollars):
One-Percentage One-Percentage
Point Increase Point Decrease
Effect on total service and interest cost components ............. $ 39 $ (38)
Effect on postretirement benefit obligation .................... 952 (829)
On December 8, 2003, the Medicare Prescription Drug, Improvement and Modemization Act of 2003 (the
"Act") was signed into Law. The Act introduces a prescription drag benefit under Medicare as well as a federal
subsidy to sponsors of retiree health care benefit plans that provide a prescription drug benefit that is at least
actuarially equivalent to Medicare Part D. In accordance with FASB Staff Position FAS 106-2, "Accounting and
Disclosure Requirements Related to the Medicare Prescription Drag, Improvement and Modernization Act of
2003," the accumulated post-retirement benefit obligation and net periodic post-retirement benefit cost in our
consolidated fmancial statements and this note reflects the effects of the Act on the plans.
Other Services
Under the NAICC 401(k) Plan, employees may elect to contribute up to 20% of the eligible compensation to a
maximum dollar amount allowed by the Internal Revenue Service ("IRS"). NAICC provides a matching
contribution equal to 50% of the first 6% of compensation contributed by employees to the 401(k) Plan.
Contributions for each of the three years ended December 31, 2006, 2005 and 2004 were less than $0.1 million.
A non-contributory defined benefit pension plan (the "Plan") covers substantially all of NAICC's employees.
However in 2001, service credits under the Plan were frozen and in 2006 eligibility was frozen. Pension benefits are
based on an employee's years of service and average f'mal compensation. The funding policy of the Plan is for
NAICC to contribute the minimum pension costs equivalent to the amount required under the Employee Retirement
Income Security Act of 1974 and the Internal Revenue Code.
133
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 20. Commitments and Contingencies
We and/or our subsidiaries are party to a number of claims, lawsuits and pending actions, most of which are
routine and all of which are incidental to our business. We assess the likelihood of potential losses on an ongoing
basis and when losses are considered probable and reasonably estimable, record as a loss an estimate of the ultimate
outcome. If we can only estimate the range of a possible loss, an amount representing the low end of the range of
possible outcomes is recorded. The final consequences of these proceedings are not presently determinable with
certainty.
Covanta Energy Corporation
Generally, claims and lawsuits arising from events occurring prior to their respective petition dates against
Covanta Energy and its subsidiaries, that had filed bankruptcy petitions and subsequently emerged from
bankruptcy, have been resolved pursuant to the Covanta Energy reorganization plan, and have been discharged
pursuant to orders of the Bankruptcy Court which confirmed the Covanta Energy reorganization plan or similar
plans of subsidiaries emerging separately from Chapter 11. However, to the extent that claims are not dischargeable
in bankruptcy, such claims may not be discharged. For example, the claims of certain persons who were personally
injured prior to the petition date but whose injury only became manifest thereafter may not be discharged pursuant
to the Covanta Energy reorganization plan.
Environmental Matters
Covanta Energy's operations are subject to environmental regulatory laws and environmental remediation
laws. Although Covanta Energy's operations are occasionally subject to proceedings and orders pertaining to
emissions into the environment and other environmental violations, which may result in fines, penalties, damages or
other sanctions, we believe that Covanta Energy is in substantial compliance with existing environmental laws and
regulations.
Covanta Energy may be identified, along with other entities, as being among parties potentially responsible for
contribution to costs associated with the correction and remediation of environmental conditions at disposal sites
subject to federal and/or analogous state laws. in certain instances, Covant~ Energy may be exposed to joint and
several liabilities for remedial action or damages. Covanm Energy's ultimate liability in connection with such
environmental claims will depend on many factors, including its volumetric share of waste, the total cost of
remediation, and the financial viability of other companies that also sent waste to a given site and, in the case of
divested operations, its contractual arrangement with the purchaser of such operations. Generally, such claims
arising prior to the first petition date were resolved in and discharged by Covanta Energy's Chapter 11 cases.
The potential costs related to the matters described below and the possible impact on future operations are
uncertain due in part to the complexity of governmental laws and regulations and their interpretations, the varying
costs and effectiveness of cleanup technologies, the uncertain level of insurance or other types of recovery and the
questionable level of Covanta Energy's responsibility. Although the ultimate outcome and expense of any litigation,
including environmental remediation, is uncertain, Covanta Energy believes that the following proceedings will not
have a material adverse effect on our consolidated financial position or results of operations.
In June 2001, the Environmental Protection Agency ("EPA") named Covanta Energy's wholly-owned
subsidiary, Covanta Haverhill, Inc. ("Haverhill"), as one of 2,000 potentially responsible parties ("PRPs") at
the Beede Waste Oil Superfund Site, Plaistow, New Hampshire ("Beede site"), a former waste oil recycling facility.
EPA alleges that approximately 14.3 million gallons of waste oil were disposed at the Beede site, including
approximately 45,000 gallons of waste oil from Haverhill. On January 9, 2004, EPA signed its Record of Decision
("ROD") with respect to cleanup of the Beede site. The estimated cost to implement the selected remedy is
$48 million, exclusive of reimbursement of past costs and future oversight costs of EPA and the State of New
Hampshire. On June 20, 2006, EPA issued a Unilateral Administrative Order ("UAO") to a group of PRPs, including
134
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Haverhill, with respect to implementation of the Beede site cleanup; however, the UAO effective date was extended
pending Consent Decree negotiations. On December 15, 2006, Haverhill together with numerous other PRPs,
signed the Beede Waste Oil Superfund Site RD/RA Consent Decree with respect to remediation of the Beede site.
The Consent Decree, which will supplant the UAO, becomes effective upon approval and entry by the U.S. District
Court in New Hampshire. We currently believe that based on the amount of waste oil Haverhill is alleged to have
sent to the Beede site in comparison to other similarly-situated settling respondent PRPs, its ultimate liability will
not be material to its financial position and results of operations although it is not possible at this time to predict that
outcome with certainty.
By letters dated August i3, 2004 and May 3, 2005, EPA notified Covanta Essex Company ("Essex" and
formerly named American Ref-Fuel Company of Essex County) that it was potentially liable under CERCLA
Section 107(a) for response actions in the Lower Passaic River Study Area, referred to as "LPRSA", a 17 mile
stretch of river in northern New Jersey. Essex is one of at least 60 PRPs named thus far that have joined the
cooperating PRP group. EPA alleges that hazardous substances found in the LPRSA were being released from the
Essex site, which abuts the river. EPA's notice letters stated that Essex may be liable for costs related to a proposed
remedial investigation and feasibility study ("RIIFS") of the Lower Passaic River, for certain past costs incurred by
EPA and for unspecified natural resource damages. Essex entered into an arrangement with EPA and the
cooperating PRP group of which Essex is a member to settle the potential liability Essex might have for the
$2.8 million in past costs incurred by EPA, and for the $10 million then estimated by EPA as the cost of the RI/FS by
contributing $0.25 million to the cost of the RI/FS and by agreeing to share in certain past and ongoing legal fees and
other costs of the cooperating PRP group. It is anticipated that additional contributions to the cost of the RI/FS will
be required of PRP's, including Essex, as the RIFFS proceeds through its predicted completion in 2010. Considering
the history of industrial and other discharges into the LPRSA from other sources, including named PRPs, Essex
believes any releases from its site to be de minimis in comparison; however, it is not possible at this time to predict
that outcome with certainty or to estimate Essex's ultimate liability in the matter, including for natural resource
damages.
Other Commitments
Other commitments as of December 31, 2006 were as follows (in thousands of dollars):
Commitments Expiring by Period
Less Than More Than
Total
Letters of credit .................................. $ 325,032
Surety bonds ..................................... 61,880
Total other commitments -- net ....................... $ 386,912
$ 4,401 $ 320,631
-- 61,880
$ 4,401 $ 382,511
The letters of credit were issued pursuant to the facilities to secure our performance under various contractual
undertakings related to our domestic and international projects, or to secure obligations under our insurance
program. Each letter of credit relating to a project is required to be maintained in effect for the period specified in
related project contracts, and generally may be drawn if it is not renewed prior to expiration of that period.
As of December 31, 2006, Covanta Energy had approximately $0.5 million in available capacity for additional
letters of credit under its Funded L/C Facility and $89 million available capacity for letters of credit under its
existing revolving credit facility. We believe that we will be able to fully perform under our contracts to which these
existing letters of credit relate, and that it is unlikely that letters of credit would be drawn because of a default of our
performance obligations. If any of these letters of credit were to be drawn under the current debt facilities, the
amount drawn would be immediately repayable to the issuing bank. If we were unable to immediately repay such
amounts drawn under these letters of credit, uureimbursed amounts would be treated under the Credit Facilities as
additional term loans issued under the First Lien Facilities.
135
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The surety bonds listed on the table above relate primarily to performance obligations ($52.9 million) and
support for closure obligations of various energy projects when such projects cease operating ($9 million). Were
these bonds to be drawn upon, Covanta Energy would have a contractual obligation to indemnify the surety
company.
We have certain contingent obligations related to the Debentures. These are:
· holders may require us to repurchasetheirDebentures onFebruary 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, which would require us to pay the conversion settlement
amount in cash and/or our common stock.
See Note 30. Subsequent Events- 2007 Recapitalization Plan- Material Terms of the Debentures for
specific criteria related to contingent interest, conversion or redemption features of the Debentures.
Covanta Energy and certain of its subsidiaries have issued or are party to performance guarantees and related
contractual support obligations undertaken mainly pursuant to agreements to construct and operate certain energy-
from-waste facilities and a water facility. With respect to its domestic businesses, Covanta Energy and certain of its
subsidiaries have issued guarantees to municipal clients and other parties that Covanta Ener§y's subsidiaries will
perform in accordance with contractual terms, including, where required, the payment of damages or other
obligations. Such contractual damages or other obligations could be material, and in circumstances where one or
more subsidiary's contract has been terminated for its default, such damages could include amounts sufficient to
repay project debt. For facilities owned by municipal clients and operated by Covanta Energy, Covanta Energy's
potential maximum liability as of December 31, 2006 associated with the repayment of the municipalities' project
debt on such facilities was approximately $1 billion. This amount was not recorded as a liability in Covanta
Energy's consolidated balance sheet as of December 31, 2006 as Covanta Energy believes that it had not incurred
such liability at the date of the financial statements. Additionally, damages payable under such guarantees on
Covanta Energy-owned energy-from-waste facilities could expose Covanta Energy to recourse liability on project
debt. Covanta Energy also believes that it has not incurred such damages at the date of the financial statements. If
Covanta Energy is asked to perform under one or mom of such guarantees, its liability for damages upon contract
termination would be reduced by funds held in trust and proceeds from sales of the facilities securing the project
debt, which is presently not estimable.
With respect to our international businesses, Covanta Energy and certala of its subsidiaries have issued
guarantees on behalf of our international operating subsidiaries with respect to contractual obligations to operate
certain international power projects and one energy-from-waste project. The potential damages owed under such
arrangements for international projects may be material.
Depending upon the circumstances giving rise to such domestic and international damages, the contractual
terms of the applicable contracts, and the contract counterparty's choice of remedy at the time a claim against a
guarantee is made, the amounts owed pursuant to one or more of such guarantees could be greater than Covanta
Energy's then-available sources of funds. To date, Covanta Energy has not incurred material liabilities under its
guarantees, either on domestic or international projects.
136
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 21. Income Taxes
We file a federal consolidated income tax return with our eligible subsidiaries. Covanta Lake II, Inc. files
outside of the consolidated return group. Our federal consolidated income tax return also includes the taxable
results of certain grantor trusts described below.
SFAS 109 requires the establishment of a valuation allowance when we conclude that it is "more likely than
not" that we will not realize our deferred tax assets. Pursuant to SFAS 109, we make periodic determinations of
whether it is "more likely than not" that all or a portion of our deferred tax assets will be realized. In making these
determinations, we consider all of the relevant factors, both positive and negative, which may impact upon our
future taxable income including the size and operating results of our subsidiaries, the competitive environment in
which these subsidiaries operate and the impact of the grantor trust activity. We have evaluated the realizability of
our deferred tax assets as of December 31, 2006 and have concluded that it is "more likely than not" that some of
these deferred tax assets will not be realized. As of December 31, 2006, we have a valuation allowance of
$68 million. During 2006, we reduced oar valuation allowance by $23 million. The reduction primarily included a
net $13 million adjustment to the goodwill associated with the acquisition of ARC Holdings, since the facts and
circumstances associated with these items existed as of the date of the ARC Holdings acquisition, and if not for the
ARC Holdings acquisition we would not have been able to make the conclusion that it was "more likely than not"
that these deferred tax assets would be realized, and $10 million that was a reduction to income tax expense.
Beginning in the second quarter of 2006, we adopted the permanent reinvestment exception under APB 23
whereby we will no longer provide for deferred taxes on the undistributed earnings of our international subsidiaries.
We intend to permanently reinvest our international earnings outside of the United States in our existing
interuational operations and in any new international business which may be developed or acquired. As a
result of the adoption of APB 23, we recognized a benefit of $10 million associated with the reversal of
deferred taxes accrued on u~emitted earnings of international affiliates in prior periods. Cumulative
undistributed foreign earnings for which United States taxes were not provided were included in consolidated
retained earnings in the amount of approximately $54 million as of December 31, 2006. This policy resulted in an
unrecognized deferred tax liability of approximately $19 million in 2006.
Deferred tax assets relating to tax benefits of employee stock option grants have been reduced to reflect
exercises in the calendar year ended December 31. 2006. Some exercises resulted in tax deductions in excess of
previously ~:ecorded benefits based on thc option value at the time of grant (a "windfall"). Although, these additional
tax benefits or windfalls were reflected in the NOLs, pursuant to SFAS 123R, the additional tax benefit associated
with the windfall is not recognized until the deduction reduces taxes payable. Accordingly, since the tax benefit
does not reduce our current taxes payable in 2006 due to the NOLs, these windfall tax benefits were not reflected in
our NOLs in the deferred tax assets for 2006. Windfalls included in NOLs but not reflected in deferred tax assets for
2006 were $2.8 million.
In June 2006, the FASB issued FIN 48. This interpretation increases the relevancy and comparability of
financial reporting by clarifying the way companies account for uncertainty in income taxes. FIN 48 prescribes a
consistent recognition threshold and measurement attribute as well as clear criteria for subsequently recognizing,
derecognizing and measuring such tax positions for financial statement purposes. Thc interpretation also requires
expanded disclosure with respect to uncertainty in income taxes. We will be required to adopt the provisions of
FIN 48 in the first quarter of 2007. We continue to evaluate the impact of adoption on our consolidated financial
statements. At this time, we do not know what the impact will be upon adoption of this standard.
137
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
We had consolidated federal NOLs estimated to be approximately $410 million for federal income tax
purposes as of the end of 2006. The NOLs will expire in various amounts from December 31, 2007 through
December 31, 2025, if not used. Our NOLs will expire, if not used, in the following amounts in the following years
(in thousands of dollars):
Amount of
Carryforward
Expiring
2007 ............................................................. $ 87,285
2008 ............................................................. 31,688
2009 ............................................................. 39,665
2010 ............................................................. 23,600
2011 ............................................................. 19,755
2012 ............................................................. 38,255
2019 ............................................................. 33,636
2022 ............................................................. 26,931
2023 ............................................................. 108,331
2024 ............................................................. 212
2025 ............................................................. 203
$ 409,561
In addition to the consolidated federal NOLs, we have additional federal credits and loss carryforwards of
$46 million and state credits and loss carryforwards of $13 million that will expire between 2007 and 2026. These
deferred tax assets are offset by a valuation allowance of $37 million.
The components of income tax expense were as follows (in thousands of dollars):
For the Years Ended December 31,
2006 2005 2004
Current:
Federal ......................................... $ (4,889) $ 5,757 $ 4,320
Foreign ........................................
Total current ......................................
Deferred:
Federal .........................................
State ..........................................
Foreign ........................................
Total deferred .....................................
Total income tax expense ............................. $ 38,465
15,196 4,194 5,392
7,250 6,941 5,079
17,557 16,892 14,791
29,819 12,014 (2,030)
1,530 5,916 (665)
(10,441) (171) (561)
20,908 17,759 (3,256)
$ 34,651 $ 11,535
138
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
A reconciliation of our income tax expense at the federal statutory income tax rate of 35% to income tax
expense at the effective tax rate is as follows (in thousands of dollars):
For the Years Ended
December 31,
2OO6
Income tax expense at the federal statutory rate ............ $ 42,780
State and other tax expense ........................... 12,296
Change in valuation allowance ......................... (10,319)
2005 2004
$ 27,148 $ 12,416
6,572 3,072
(9,485) (15,423)
Grantor trust income ................................
Subpart F income and foreign dividends ..................
Taxes on foreign earnings ............................
Production tax credits ...............................
Other, net ........................................
Total income tax expense ........................... $ 38,465
6,210 5,250 5,810
2,328 7,190 5,153
(9,531) (7) (138)
(3,158) (3,132) --
(2,141) 1,115 645
$ 34,651 $ 11,535
The tax effects of temporary differences that give rise to the deferred tax assets
follows (in thousands of dollars):
and liabilities are presented as
As of December 31,
2006 2005
Deferred Tax Assets:
Loss reserve discounting .................................. $
Capital loss carryforward ..................................
Net operating loss carryforwards ............................
Accrued expenses .......................................
Tax basis in bond and other costs ............................
Deferred tax assets attributable to Covanta Lake II, Inc ............
Deferred tax assets attributable to pass-through entities ............
Other .................................................
AMT and other credit carryforwards ..........................
Total gross deferred tax asset .............................
Less: valuation allowance ................................
Total deferred tax asset .................................
Deferred Tax Liabilities:
Unremitted earnings of foreign subsidiaries .................... --
Unbilled accounts receivable ............................... 32,728
Property, plant and equipment .............................. 156,340
Intangible assets ........................................ 45,425
Deferred tax liabilities attributable to pass-through entities ......... 433,857
Other, net ............................................. 7,971
Total gross deferred tax liability ........................... 676,321
Net deferred tax liability ................................ $ (396,117)
2,135 $ 2,O66
24,228 25,684
155,517 I74,198
42,042 51,075
12,893 22,067
5,505 10,425
84,368 --
4,290 17,306
17,441 10,203
348,419 313,024
(68,215) (90,959)
280,204 222,065
10,031
35,049
211,741
62,992
381,334
6,793
707,940
$ (485,875)
139
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Our NOLs predominantly arose from our predecessor insurance entities (which were subsidiaries of our
predecessor, which was formerly named Mission Insurance Group, Inc., "Mission"). These Mission insurance
entities have been in state insolvency proceedings in California and Missouri since the late 1980's. The amount of
NOLs available to us will be reduced by any taxable income generated by current members of our consolidated tax
group, which include grantor trusts associated with the Mission insurance entities. Based on a review of the claims
activity and balance sheets of the Califomia grantor trusts, we believe that additional tax deductions will be
recognized by the Califomia grantor trusts as they wind down. In the fourth quarter of 2006, a deferred tax asset of
$84 million was recognized on our consolidated balance sheet for this expected benefit. Additionally, $12 million
was recognized as a deferred tax asset as a result of revised taxable losses from the grantor trusts for the 2004 tax
year. These increases were recorded as a reduction to goodwill associated with the ARC Holdings acquisition, since
the facts and circumstances associated with these items existed as of the date of the ARC Holdings acquisition, and
if not for the ARC Holdings acquisition we would not have been able to make the conclusion that it was "more likely
than not" that these deferred tax assets would be realized. See Note 9. Intangible Assets and Goodwill for additional
information regarding these adjustments to goodwill.
In January 2006, we executed agreements with the California Commissioner of Insurance (the "California
Commissioner"), who administers the majority of the grantor trusts, regarding the final administration and
conclusion of such trusts. The agreements, which were approved by the California state court overseeing the
Mission insolvency proceedings (the "Mission Court"), settle matters that had been in dispute regarding the historic
rights and obligations relating to the conclusion of the grantor trusts. These include the treatment of certain claims
against the grantor trusts which are entitled to distributions of an aggregate of 1,572,625 shares of our common
stock previously issued to the California Commissioner under existing agreements entered into at the inception of
the Mission insurance entities' reorganization. The distribution of such shares by the California Commissioner is
among the final steps necessary to conclude the insolvency cases relating to the trusts being administered by the
California Commissionen
In connection with these agreements and in order to facilitate the orderly conclusion of the grantor trust estates,
the distribution of such stock and the settlement of the related disputes, we have paid an aggregate amount equal to
approximately $9.14 million to the California Commissioner. Additionally, we agreed to reimburse the California
Commissioner's Conservation and Liquidation Office for certain expenses and provide assistance under the
agreements. In the fourth quarter of 2005, we recorded an additional $1.175 million related to expenses associated
with these agreements.
We have discussed with the Director of the Division of Insurance of the State of Missouri (the "Missouri
Director"), who administers the balance of the grantor trusts relating to the Mission Insurance entities, similar
arrangements for distribution of the remaining 154,756 shares of our common stock by the Missouri Director to
claimants of the Missouri grantor trusts. Given the claims activity relating to the Missouri grantor trusts, and the lack
of disputed matters with the Missouri Director, we do not expect to enter into additional or amended contractual
arrangements with the Missouri Director with respect to the final administration of the Missouri grantor trusts or the
related distribution by the Missouri Director of shares of our common stock.
While we cannot predict with certainty what amounts, if any, may be includable in taxable income as a result of
the f'mal administration of these grantor trusts, we believe that neither arrangements with the California
Commissioner nor the final administration by the Missouri Director will result in a malerial reduction in
available NOLs.
140
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 22. Insurance Regulation, Dividend Restrictions and Statutory Surplus
Our insurance subsidiaries arc regulated by various states. For regalatory purposes, separate financial
statements which arc prepared in accordance with statutory accounting principles are filed with these states.
The insurance subsidiaries prepares its statutory-basis financial statements in accordance with accounting practices
prescribed or permitted by the California Department of Insurance (the "CDI'). Prescribed statutory accounting
practices include a variety of publications of the National Association of Insurance Commissiuncrs (the "Insurance
Association"), as well as state laws, regulations and general administrative roles. Permitted statutory accounting
practices encompass all accounting practices not so prescribed (see below for discussion of the insurance businesses
permitted practice). The Insurance Association has adopted a comprehensive set of accounting principles for
qualification as an Other Comprehensive Basis of Accounting which was effective in 2001. As of the years ended
December 31, 2006 and 2005, our operating insurance subsidiaries had statutory capital and surplus of $18.0 milton
and $17.3 million, respectively. The combined statutory net income for our operating insurance subsidiaries, as
reported to the regulatory authorities for thc years ended December 31, 2006, 2005 and 2004, was $0.8 million,
$4.8 million, and $0.8 million, respectively. In 2005, NAICC recognized an other than temporary impairment of its
investment in Valor for an amount equal to its cost basis of $5.9 million, reducing statutory surplus in 2005 by
$0.7 million.
A model for determining the risk-based capital ("RBC") requirements for property and casualty insurance
companies was adopted in December 1993 and companies are required to report their RBC ratios based on their
statutory annual statements. As of December 31, 2006, NAICC's RBC was substantially in excess of the regulatory
Authorized Control Level.
Insurance companies are subject to insurance laws and regulations established by the states in which they
transact business. The governmental agencies established pursuant to these state laws have broad administrative and
supervisory powers over insurance company operations. These powers include granting and revoking of licenses to
transact business, regulating trade practices, establishing guaranty associations, licensing agents, approving policy
forms, filing premium rates on certain business, setting reserve requirements, determining the form and content of
required regulatory financial statements, conducting periodic examination of insurers' records, determining the
reasonableness and adequacy of capital and surplus, and prescribing the maximum concentrations of certain classes
of investments. Most states have also enacted legislation regulating insurance holding company systems, including
acquisitions, extraordinary dividends, the terms of affilia~ transactions and other related matters. Our insurance
subsidiaries have registered as holding company systems pursuant to such legislation in California and routinely
report to other jurisdictions.
Under the California Insurance Code, NAICC is prohibited from paying shareholder dividends, other than
from accumulated earned surplus, exceeding the greater of net income or 10% percent of the preceding year's
statutory surplus, without prior approval of the CDI. No dividends were paid in 2006, 2005 or 2004. The overall
limit of dividends that can be paid during 2007 is approximately $1.8 million as long as there is sufficient
accumulated earned surplus to pay such. As of the year ended December 31, 2006, NAICC did not have sufficient
accumulated earned surplus, as defined by the CDI, to pay further ordinary dividends.
141
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 23. Stock-Based Award Plans
Stock-Based Compensation
Effective J~3auary 1, 2006, we adopted the fair value recognition provisions of SFAS 123R using the modified
prospective transition method and therefore have not restated results for prior periods. Under this transition method,
stock-based compensation expense for the year ended December 31, 2006 included compensation expense for
stock-based compensation awards granted prior to, but not yet vested as of December 31, 2005, based on the grant
date fair value estimated in accordance with the original provision of SFAS 123. Stock-based compensation expense
for all stock-based compensation awards granted after December 31, 2005 is based on the grant date fair value
estimated in accordance with the provisions of SFAS 123R. In March 2005, the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin No. 107 ("SAB 107") regarding the SEC's
interpretation of SFAS 123R and the valuation of share-based payments for public companies. We have
applied the provisions of SAB 107 in our adoption of SFAS 123R.
We recognized compensation expense based upon the number of stock options and restricted stock awards
expected to vest, which was determined based on historical turnover experience of Covanta Energy employees'
populations from the Covanta Energy pension plan. During the quarter ended September 30, 2006, we adjusted the
number of stock options and restricted stock awards expected to vest due to additional stock option and restricted
stock grants as described below and increased forfeitures of stock options and stock awards as compared to previous
estimations. We recognize compensation costs using the graded vesting attribution method over the requisite
service period of the award, which is generally the vesting term of three years.
The impact to the consolidated fmancial statements, as a result of the adoption of SFAS 123R compared to
continued recognition of stock-based compensation under APB 25, was approximately $1.4 million to income
before income taxes and approximately $1.2 million to net income for the year ended December 3I, 2006: The
impact on both basic and diluted earnings per share was less than $0.01 per share for the year ended December 31,
2006. The reductions that resulted from the adoption of SFAS 123R reflected the stock-based compensation
expense associated with the unvested stock option awards. Stock-based compensation expense previously
recognized in accordance with APB 25 for restricted stock awards remained essentially unchanged under the
pro;~isions of SFAS 123R.
We received $1.1 million, $3.0 million and $3.5 million from the exercise of non-qualified stock options in the
years ended December 31, 2006, 2005, and 2004 respectively. The tax benefits related to the exercise of the non-
qualified stock options and the vesting of the restricted stock award were not recognized during 2006 due to our
NOLs. When the NOLs have been fully utilized by as, we will recognize a tax benefit and an increase in additional
paid-in capital for the excess tax deductions received on the exercised non-qualified stock options and vested
restricted stock. Future realization of the tax benefit will be presented in cash flows from financing activities in the
consolidated statements of cash flows in the period the tax benefit is recognized.
Prior to the adoption of SFAS 123R, we recognized stock-based compensation expense in accordance with
APB 25 and followed the disclosure requirements of SFAS 123. The stock options fair values were estimated on the
date of grant using the Black-Scholes option pricing model with the following assumptions for 2005: dividend yield
of 0% per annum; an expected life of approximately 8 years; expected volatility of 70% - 80%; and a risk free
interest rate of 4% - 5%. The stock options fair values were estimated on the date of grant using the Black-Scholes
option pricing model with the following assumptions for 2004: dividend yield of 0% per annum; an expected life of
approximately 8 years; expected volatility of 50% - 73%; and a risk free interest rate of 4% - 6%. The following
table illustrates the effect on net income and earnings per share as if we had applied the fair value recognition
142
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
provisions of SFAS 123, as mended by SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition
and Disclosure" ("SFAS 148") (in thousands of dollars, except per share amounts).
For the Years Ended
December 31,
2OO5 2OO4
Net income as reported ........................................ $ 59,326 $ 34,094
Add: Actual stock-based option expense included in net income -- net of
tax effects ................................................ (19) 128
Less: Stock-based compensation expense determined under SFAS 123 --net
of tax effects .............................................. (2,613) (987)
Pm forma net income ......................................... $ 56,694 $ 33,235
Basic earnings per share:
As reported ............................................... $ 0.49 $ 0.39
Pro forma ................................................ $ 0.46 $ 0.38
Diluted earnings per share:
As reported ............................................... $ 0.46 $ 0.37
Pro forma ................................................ $ 0.44 $ 0.36
Stock-Based Award Plans
We adopted the Covanta Holding Corporation Equity Award Plan for Employees and Officers (the "Employees
Plan") and the Covanta Holding Corporation Equity Award Plan for Directors (the "Directors Plan"), (collectively
the "Award Plans"), effective with stockholder approval on October 5, 2004. On July 25, 2005, our Board of
Directors approved and on September 19, 2005, our stockholders approved the amendment to the Employees Plan
to authorize the issuance of an additional 2,000,000 shares. The 1995 Stock and Incentive Plan (the "1995 Plan")
was terminated with respect to any future awards under such plan on October 5, 2004 upon stockholder approval of
the Award Plans. The 1995 Plan will remain in effect until all awards have been satisfied or expired.
The purpose of the Award Plans is to promote our interests (including our subsidiaries and affiliates) and our
stockholders' interests by using equity interests to attract, retain and motivate our management, non-employee
directors and other eligible persons and to encourage and reward their contributions to our performance and
profitability. The Award Plans provide for awards to be made in the form of (a) shares of restricted stock,
(b) incentive stock options, (c) non-qualified stock options, (d) stock appreciation rights, (e) performance awards, or
(f) other stock-based awards which relate to or serve a similar function to the awards described above. Awards may
be made on a stand alone, combination or tandem basis. The maximum aggregate number of shares of common
stock available for issuance is 6,000,000 under the Employees Plan and 400,000 under the Directors Plan.
Restricted Stock Awards
Restricted stock awards that have been issued to employees and directors typically vest over a three-year
period. Restricted stock awards are stock-based awards for which the employee or director does not have a vested
right to the stock ("nunvested") until the requisite service period has been rendered and the required fmancial
performance factor has been reached for each pre-determined vesting date. A percentage of each employee
restricted stock award granted has financial performance factors. Stock-based compensation expense for each
financial performance factor is recognized beginning in the period when management has determined it is probable
the financial performance factor will be achieved for the respective vesting period.
Restricted stock awards to employees are subject to forfeiture if the employee is not employed on the vesting
date. Restricted stock awards issued to directors prior to 2006 were subject to the same forfeiture restrictions as are
143
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
applicable to employees. Restricted stock awards issued to directors in 2006 are not subject to forfeiture in the event
a director ceases to be a member of the Board of Directors, except in limited circumstances. Prior to vesting,
restricted stock awards have ail of the rights of common stock (other than the right to sell or otherwise transfer or to
receive dividends, when issued). The fair vaiue of restricted stock awards is based on the average of the high and low
market price of our common stock on the day immediately preceding the grant date of the award.
We entered into an employment agreement with Mark A. Pytosh to serve as Senior Vice President and Chief
Financiai Officer (the "Employment Agreement"). The Employment Agreement was effective as of September 1,
2006 and has a term expiring October 5, 2009. Pursuant to the Employment Agreement, upon commencement of his
employment on September 1, 2006, Mr. Pytosh received a grant of 20,000 shares of restricted stock. The restricted
stock award will be expensed over the requisite service period. The terms of the restricted stock award include
vesting provisions based on fmancial performance factors (applicable to 66% of the award) and continued service
over the passage of time (applicable to 34% of the award). If ail performance and service criteria are satisfied, the
award vests over three years, with 6,666 shares vesting on March 17, 2007, 6,667 shares vesting on March 17, 2008
and the remaining 6,667 shares vesting on March 17, 2009.
On May 31, 2006, in accordance with our existing program for annual director compensation, we granted
36,000 shares of restricted stock under the Directors Plan. The awards have a requisite service based vesting period
as follows: 12,000 shares (33.33%) vested on May 31, 2006; 12,000 shares (33.33%) vesting on May 31, 2007; and
12,000 shares (33.34%) vesting on May 31, 2008. We determined that the service vesting condition of the restricted
stock awards granted to the directors on May 31, 2006 to be non-substantive and, in accordance with SFAS 123R,
recorded the entire fair value of the awards as compensation expense in the three months ended June 30, 2006.
On March 17, 2006, we awarded certain employees 480,055 shares of restricted stock under the Employees
Plan. The restricted stock awards will be expensed over the requisite service period, and assumes an eight percent
forfeiture rate. The terms of the restricted stock awards include vesting provisions based on two financial
performance factors (applicable to 66% of the award) and continued service over the passage of time
(applicable to 34% of the award). If ail performance and service criteria are satisfied, the awards vest over
three years, with 160,002 shares (33.33%) vesting on March 17, 2007, 160,002 shares (33.33%) vesting on
March 17, 2008 and the remaining 160,051 shares (33.34%) vesting on March 17, 2009.
On September 19, 2005, in accordance with our existing program for annual director compensation, we
granted 13,500 shares of restricted stock under the Directors Plan. The restricted stock vests on a pro rata basis over
three years commencing on the date of grant.
On July 7, 2005, we awarded certain key employees 404,000 shares of restricted stock under the Employees
Plan. The terms of the restricted stock awards include vesting provisions based on two financial performance factors
(66%) and continued service over the passage of time (34%). The awards vest over approximately 31 months, with
134,636 shares (33.33%) vesting on February 28, 2006, 134,636 shares (33.33%) vesting on February 28, 2007 and
the remaining 134,728 shares (33.34%) vesting on February 29, 2008.
On October 5, 2004, we granted 641,010 shares of restricted stock under the Employees Plan. Restrictions
upon 50% of the restricted stock shail lapse on a pro rata basis over three years commencing on February 28, 2005
and the restrictions upon the remaining 50% of the restricted stock shall lapse over the same three year period based
upon the satisfaction of performance-based metrics of operating cash flow or such other performance measures as
may be determined by the Compensation Committee of the Board of Directors.
On October 5, 2004, we granted 15,500 shares of restricted stock under the Directors Plan. Restrictions on the
restricted stock shall lapse on a pro rata basis over three years commencing on the date of grant. On December 5,
2004, we granted an additionai 1,250 shares of restricted stock under the Directors Plans with similar term and
vesting provisions.
144
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Changes in nonvested restricted stock awards during the year ended December 31, 2006 were as follows:
Number of
Shams
Nunvested at December 31, 2005 ................................ 828,154 $ 9.88
Granted ................................................... 536,055 17.05
Vested .................................................... (356,189) 9.61
Forfeited .................................................. (72,487) 13.20
Nonvested at December 31, 2006 ................................ 935,533 13.85
Weighted-
Average
Grant Date
Fair Value
As of December 31, 2006, them was $7.1 million unrecognized stock-based compensation expense related to
nonvested restricted stock awards. This expense is expected to be recognized over a period of up to throe years. Total
compensation expense for restricted stock awards was $5.5 million, $4.1 million and $1.1 million for the years
ended December 31, 2006, 2005 and 2004, respectively.
Stock Options
2004 Stock Option Plan
We have also awarded stock options to certain employees and directors. Stock options awarded to directors
vested immediately. Stock options awarded to employees typically vested annually over three years. We had one
nonvested stock option award outstanding as of December 31, 2005, which was granted in October 2004. The fair
value of the options was calculated using the Black-Scholes option pricing model with the following assumptions:
fair value option price -- $5.68; risk-free interest rate -- 4.25%; dividend yield -- 0%; expected volatility (based
on historical volatility) -- 76%; and expected life -- 8 years.
Pursuant to the Employment Agreement, as discussed above, upon commencement of his employment on
September 1, 2006, Mr. Pytosh received options to purchase 50,000 shares of our common stock. The options have
an exercise price of $20.35 per share and expire 10 years from the date of grant. The options vest in two equal
installments, with 25,000 shares vesting on February 28, 2007 and 25,000 shares vesting on February 28, 2008. The
fair value of the options was calculated using the Black-Scholes option pricing model with the following
assumptions: fair value option price- $10.90; risk-free interest rate- 4.65%; dividend yield- 0%; expected
volatility (based on historical volatility) --40%; and expected life- 8 years.
On September 19, 2005, in accordance with our existing program for annual director compensation, we
granted options to purchase an aggregate of 120,006 shares of common stock under the Directors Plan. The options
have an exercise price of $12.90 per share and expire 10 years from the date of grant. The options vested upon the
date of grant, but were not exercisable until March 19, 2005.
On October 5, 2004, we granted options to purchase an aggregate of 1,020,000 shares of common stock under
the Employees Plan. The options have an exercise price of $7.43 per share and expire 10 years from the date of grant
and vest over three years commencing on February 28, 2006.
On October 5, 2004, we granted options to purchase an aggregate of 93,338 shares of common stock under the
Directors Plan. The options have an exercise price of $7.43 per share and expire 10 years from the date of grant and
vested upon the date of grant. On December 5, 2004, we granted an additional i1,111 stock options at an exercise
price of $7.85 under the Directors Plans with similar term and vesting provisions.
145
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
1995 Stock Option Plan
In September 2001, our stockholders approved amendments to the 1995 Plan which increased the aggregate
number of shares available for option grants from 1,700,000 to 2,540,000 and provided for options to be awarded to
independent contractors.
On July 24, 2002, our Board amended the 1995 Plan to increase the aggregate number of shares available for
grant from 2,540,000 to 4,976,273. The Board reserved 1,936,273 shares for the grant of stock options to
management of ACL, of which options for 1,560,000 shares of our common stock were granted. The options
have an exercise price of $5.00 per share and expire 10 years from the date of grant. One-half of the options time vest
over a four-year period in equal annual installments and one-half of the options vest over a four-year period in equal
annual installments contingent upon the financial performance of ACL and compliance with the terms of its senior
bank facility. During 2003, options for 829,375 shares of common stock were forfeited due to terminations and ACL
not achieving the performance targets.
In July 2002, options for 918,084 shares previously granted to our employees, directors and contractors, which
would have expired upon the termination of the service of these individuals to Covanta on July 24, 2002, were
extended two years or two years beyond the termination of their service in a new capacity, but in no event longer
than the original term with vesting acceleraU:d simultaneously with the extension.
On August 7, 2003, we granted options for 50,000 shares of common stock to an employee of NAICC. The
options have an exercise price of $1.45 per share and expire 10 years from the grant date. 20,000 of the options vest
on the first and second anniversary of the grant date and the remaining 10,000 options vest on the third anniversary
of the grant date.
The following table summarizes activity and balance information of the options under the Awards Plans and
1995 Plan:
As of December 31,
~6 ~5 2~
Weighted Weighted Weighted
Average Average Average
Exercise Exerc~e Exercise
Pdce Shares Price Shares Price
1995 Stock Option Plan
Outstanding at the beginning of the year ....... 315,093 $ 5.26
Granted ............................. -- --
Exercised ............................ 136,667 5.45
Forfeited ............................ -- --
Outstanding at the end of the year ............ 178,426 $ 5.11
Options exercisable at year end .............. 178,426 $ 5.11
Options available for future grant ............ -- --
2004 Stock Option Plan
Outstanding at the beginning of the year ....... 928,115 $ 8.14
Granted ............................. 50,000 20.35
Exercised ............................ 41,543 9A9
Forfeited ............................ 85,334 7.43
Outstanding at the end of the year ............ 851,238 $ 8.87
Options exercisable at year end .............. 216,572 $ 10.12
Options available for future grant ............ 3,494,230
795,677 $ 4.87 2,564,543 $ 4.79
427,250 4.41 965,991 4.27
53,334 6.25 802,875 5.14
315,093 $ 5.26 795,677 $ 4.87
305,093 $ 5.38 715,675 $ 5.04
1,124,449 $ 7.43 -- $ --
120,006 12.90 1,124,449 7.43
296,340 7.45 -- --
20,000 7.43 -- --
928,115 $ 8.14
258,115 $ 9.97
4,081,535
1,124,449 $ 7.43
104,449 $ 7.47
1,475,551
146
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
As of December 31, 2006, options for shares were in the following price ranges:
Weighted
Options Outstanding Average
Number of
Exercise Price Range Shares
$1.45 -$4.26 ..... ~ ....... 70,001 $ 3.06
$5.31 ................... 38,425 5.31
$7.06 ................... 70,000 7.06
$7.43 ................... 694,566 7.43
$12.90 .................. 106,672 12.90
$20.35 .................. 50,000 20.35
1,029,664 8.22
Remaining
Weighted Average Contractual Life
Exercise Price (Years)
Options Exercisable
Number of Weighted Average
Shares Exercise Price
6.5 70,001 $ 3.06
3.0 38,425 5.31
1.0 70,000 7.06
7.8 109,900 ~7.43
8.7 106,672 12.90
9.7 -- ~
394,998 7.86
The aggregate intrinsic value as of December 31, 2006 for options outstanding, options vested and expected to
vest in the future and options exercisable was $14.2 million, $13.5 million and $5.6 million, respectively. The
aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the closing stock price
on the last trading day of 2006 and the exercise price, multiplied by the number of in-the-money options) that would
have been received by the option holders had all option holders exercised their options on the last trading day of
2006 (December 29, 2006). The intrinsic value changes based on the fair market value of our common stock. Total
intrinsic value of options exercised for the year ended asof December 31, 2006 was $2.1 million.
As of December 31, 2006, them were options to purchase 978,891 shares of common stock that had vested and
were expected to vest in futura periods at a weighted average exercise price of $8;21. The to~l fair value of options
expensed was $1.4 million for the year ended December 31, 2006. As of December 31, 2006, there Was $1.0 million
of total unrecognized compensation expense related to stock options which is expected to be recognized over a
weighted-average period of 1.2 years.
Note 24. Stockholders' Equity
Covanta's common stock was traded on the American Stock Exchange under the symbol "DHC" until close of
trading On October 4, 2005. Since that date, Covanta's stock has been traded on the New York Stock Exchange under
the symbol "CVA".
On Janualy 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed an underwritten public offering of 6.118 million shares
of our common stock for approximately $136.6 million, net of underwriting discounts and commissions, and an
underwritten public offering of approximately $373.75 million aggregate priocipal amount of convertible
debentures issued by us, from which we received proceeds of approximately $364.4 million, net of
underwriting discounts and commissions. Additional information, including material terms related to our
recapitalization plan, is contained in Note 30. Subsequent Events.
In connection with a pro rata rights offering to all stockholders on May 27, 2005, we issued approximately
66.7 million additional shares of common stock for approximately $400 million of gross proceeds, as more fully
described in Note 3. Acquisitions and Dispositions of the Notes. On September 19, 2005, our stockholders approved
an amendment to the charter to increase the number of authorized shares of common stock to 250,000,000 from
150,000,000. As of December 31, 2006, there were 147,656,721 shares of common stock issued of which
147,499,500 were outstanding; the remaining 157,221 shares of common stock issued but not outstanding were
held as treasury stock as of December 3I, 2006.
147
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
In connection with a pro rata rights offering to all stockholders on May 18, 2004, we issued approximately
27.4 million additional shares of common stock for approximately $42 million of gross proceeds. In addition, we
issued the maximum 8.75 million shares to Laminar pursuant to the conversion of approximately $13.4 million in
principal amount of notes.
We agreed as part of the Covanta Energy acquisition in March 2004 to conduct a rights offering for up to
3.0 million shares of our common stock to certain holders of 9.25 % debentures issued by Covanta Energy prior to its
bankruptcy at a purchase price of $1.53 per share (the 9.25% Offering ). Because of the possthdtty that the 9.25%
Offering could not be completed prior to the completion of the ARC Holdings acquisition, and the related rights
offering to shareholders (the "ARC Holdings Rights Offering"), we restructured the 9.25% Offering so that the
holders that participated in the 9.25% Offering were offered the right to purchase an additional 2.7 million shares of
our common stock at the same purchase price ($6.00 per share) as in the ARC Holdings Rights Offering. This
represented an equivalent number of shares of common stock that such holders would have been entitied to purchase
in the ARC Holdings Rights Offering if the 9.25% Offering was consummated on or prior to the record date for the
ARC Holdings Rights Offering. On February 24, 2006, we completed the 9.25% Offering in which 5,696,911 shares
were issued in consideration for $20.8 million in gross proceeds.
For information related to stock-based award plans, see Note 23. Stock-Based Award Plans.
The following represents shares of common stock reserved for future issuance:
As of December 31,
2OO6
Estimated stock purchase rights of certain creditors of Covanta Energy ......... --
Shares available for issuance under Equity Plans ......................... 4,629,228
As of December 31, 2006, there were 10,000,000 shares of preferred stock authorized, with none issued or
outstanding. The preferred stock may be divided into a number of series as defined by the Covanta Board of
Directors. The Board of Directors is authorized to fix the rights, powers, preferences, privileges and restrictions
granted to and imposed upon the preferred stock upon issuance.
Note 25. Accumulated Other Comprehensive Income
AOCI, net of income taxes, consists of the following (in thousands of dollars):
As of
December 31,
2006 2005
Foreign currency translation .............................................. $ 860 $ (126)
Minimum pension liability ............................................... (303) (403)
Adjustment for ura:ecognized net gain upon adoption of SFAS 158 ................... 1,650 --
Net tmrealized gain on interest rate swap .................................... 2,125 2,013
Net unrealized loss on available-for-sale securities .............................. (390) (949)
Accumulated other comprehensive income .................................. $ 3,942 $ 535
148
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 26. Earnings Per Share
Per share data is based on the weighted average outstanding number of our, par value $0.10 per share, common
stock during the relevant period. Basic earnings per share are calculated using only the weighted average number of
outstanding shares of common stock. Diluted earnings per share computations, as calculated under the treasury
stock method, include the weighted average number of shares of additional outstanding common stock issuable for
stock oPtiOns, restricted stock, and rights whether or not currently exercisable. Diluted earnings per share for all the
periods presented does not include securities if their effect was anti-dilutive (in thousands, except per share
amounts).
For the Years Ended December 31,
2006 2005 2004
Net income ............................................. $ 105,789 $ 59,326 $ 34,094
Basic earnings per share:
Weighted average basic common shares outstanding ................
Basic earnings per share ................... ................. $
Diluted earnings per share:
Weighted average basic common shares outstanding ................
Stock options ...........................................
Restricted stock ..........................................
Rights ................................................
Weighted average diluted common shares outstanding ...............
Diluted earnings per share ................................... $
145,663 122,209 88,543
0.73 $ 0.49 $ 0.39
145,663 122,209 88,543
557 688 302
402 869 187
408 4,144 2,167
147,030 127,910 91,199
0.72 $ 0.46 $ 0.37
Basic and diluted earnings per share and the weighted average shares outstanding have been retroactively
adjusted in 2005 to reflect the bonus element contained in the ARC Holdings Rights Offering and retroactively
adjusted in 2004 to reflect the bonus element contained in the 2005 ARC Holdings Rights Offering and the rights
offering completed on May 18, 2004.
There were 50,000 stock options excluded from the weighted average diluted common shares calculation for
the year ended December 31, 2006 because their inclusion would have been anti-dilutive as their exercise price was
higher than the average market price during such period.
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed an underwritten public offering of 6.118 million shares
of our common stock for approximately $136.6 million, net of underwriting discounts and commissions, and an
underwritten public offering of approximately $373.75 million aggregate principal amount of convertible
debentures issued by us, from which we received approximately $364.4 million, ntt of underwriting discounts
and commissions. Additional information, including material terms related to our recapitalization plan, is contained
in Note 30. Subsequent Events.
On December 2, 2003, pursuant to the note purchase agreement, 5,120,853 shares of common stock were
issued and included in the weighted average outstanding shares calculation as of March 10, 2004, the date on which
certain conditions upon which the shares were contingently returnable were satisfied. The weighted average number
of such shares included in the basic and diluted earnings per share calculation was 4,152,801 for the year ended
December 31, 2004.
149
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 27. Business Segments
Given the significance of the Covanta Energy and ARC Holdings acquisitions to our results of operations and
financial condition, we decided, during the third quarter of 2005, to combine the previously separate business
segments of Insurance Services and Holding company operations into one reportable segment called Other
Services. We currently have two reportable business segments -- Waste and Energy Services and Other Services.
Certain prior period amounts, such as parent investment income, have been reclassified in the consolidated financial
statements to conform to the current period presentation.
The Waste and Energy Services segment develops, constructs, owns and operates key infrastructure for others
for the disposal of waste (primarily energy-from-waste) and independent power production facilities in the United
States and abroad. We also have one water treatment facility in this segment. The Other Services segment is
comprised of our insurance business, which writes property and casualty insurance in Califomia, and the holding
company which primarily receives income from its investments and incurred general and administrative expenses
prior to the acquisition of Covanta Energy.
The accounting policies of the reportable segments are consistent with those described in the summary of
significant accounting policies, unless otherwise noted. Segment results were as follows (in thousands of dollars):
For the Years Ended December 31,
2006 200~ 2004
Operating Revenues:
Waste and Energy Services
Domestic ................................. $ 1,117,927
International ............................... 136,868
Subtotal Waste and Energy Services ........... 1,254,795
Other Services ............................... 13,741
Total operating revenues .................... $ 1,268,536
income (loss) from segment operations:
Waste and Energy Services
Domestic ................................. $
International ...............................
Subtotal Waste and Energy Services ........... 226,322
Other Services ............................... 438
Total operating income ..................... 226,760
Other income (expense):
investment income ..........................
h~terest expense ............................
Loss on extinguishment of debt .................
Gain on. derivative instruments, ACL warrants ......
Income before income tax expense, minority interests
and equity in net income from unconsolidated
investments .............................. $
$ 831,018 $ 452,983
132,948 102,345
963,966 555,328
14,797 20,868
$ 978,763 $ 576,196
206,483 $ 128,642 $ 65,001
19,839 18,055 15,197
146,697 80,198
(481) (3,328)
146,216 76,870
11,770 6,129 2,343
(113,960) (89,973) (43,739)
(2,342) -- --
-- 15,193 --
122,228 $ 77,565 $ 35,474
150
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
For the years ended December 31, 2006, 2005, and 2004, total assets, depreciation and amortization and capital
additions were as follows (in thousands of dollars).
Depreciation
Total and Capital
Assets Amortization Additions
2,O06
Waste and Energy Services (includes goodwill of
$91.3 million) ................................ $ 4,313,828
Other Services ................................. 123,992
Consolidated .................................. $ 4,437,820
2005
Waste and Energy Services (includes goodwill of
$255.9 million) ............................... $ 4,569,025
Other Services ................................. 133,140
Consolidated .................................. $ 4,702,165
2OO4
Waste and Energy Services ........................ $ 1,814,042
Other Services ................................. 125,039
Consolidated .................................. $ 1,939,081
$ 193,114 $ 54,250
103 17
$ 193,217 $ 54,267
$ 124,814 $ 23,468
111 59
$ 124,925 $ 23,527
$ 53,131 $ 11,878
151 121
$ 53,282 $ 11,999
Our operations are principally in the United States. Operations outside of the United States are primarily in
Asia, with some projects in Latin America and Europe. A summary of revenues by geographic area is as follows (in
thousands of dollars):
For the Years Ended December 31,
2005 2004
Revenues:
United States ................................ $ 1,131,667
India ...................................... 108,150
Other Asia .................................. 27,741
Other International ............................ 978
Total ........................................ $ 1,268,536
$ 845,814 $ 473,851
94,680 64,805
37,735 36,648
534 892
$ 978,763 $ 576,196
A summary of total assets by geographic area is as follows (in thousands of dollars):
AS of December 31,
2OO6 2OO5
Total Assets:
United States ......................................... $ 4,199,607 $ 4,470,539
India ............................................... 71,098 75,279
Other Asia ........................................... 110,437 103,585
Other International ..................................... 56,678 52,762
Total ................................................. $ 4,437,820
$ 4,702,165
151
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Note 28. Quarterly Data (Unaudited)
Thc following tables present quarterly unaudited financial data for the periods presented on the consolidated
statements of operations (in thousands of dollars, except per share amounts):
For the Year Ended December 31, 2006
Fiscal Quarter First
Operating revenue ......... $ 305,356
Operating income .......... 35,518
Net income .............. 11,418
Earnings per share:
Basic ................. 0.08
Diluted ................ 0.08
Second Third Fourth Total
$ 334,136 $ 311,115 $ 317,929 $ 1,268,536
76,688 71,643 42,911 226,760
51,178 31,251 11,942 105,789
0.35 0.21 0.08 0.73
0.35 0.21 0.08 0.72
For the Year Ended December 31, 2005(1)
Fiscai Quarter First
Operating revenue ........... $ 174,819
Operating income ........... 13,859
Net income ................ 10,303
Earnings per share:
Basic .................. 0.10
Diluted ................. 0.10
Second Third Fou~h Total
$ 199,092 $ 301,490 $ 303,362 $ 978,763
28,814 64,991 38,552 146,216
5,917 37,401 5,705 59,326
0.06 0.27 0.04 0.49
0.05 0.26 0.04 0.46
(1) Includes ARC Holdings' results of operations since June 25, 2005.
Basic and diluted earnings per share and the weighted average shares outstanding have been retroactively
adjusted in 2005 to reflect the bonus element contained in the ARC Holdings Rights Offering and retroactively
adjusted in 2004 to reflect the bonus element contained in the 2005 ARC Holdings Rights Offering and the rights
offering completed on May 18, 2004.
Note 29. Related-Party Transactions
One member of our current Board of Directors is a senior advisor to a major law Yum which Covanta Energy
used for several years, predating our acquisition of Covanta Energy. Such member of the Board of Directors has had
no direct or indirect involvement in the procurement, oversight or provision of such services, is not involved in any
manner in the billing of such services, and does not directly or indirectly benefit from associated fees. We have
sought legal services and advice from this firm after March 10, 2004 and since that date have paid this law firm
approximately $0A million in 2004 (after March 10, 2004), $0.8 million in 2005 and $0.3 million in 2006.
As part of the investment and purchase agreement With Covanta Energy, we were obligated to arrange a second
lien credit facility to be entered into by Covanta Energy. Covanta Energy paid a fee to the agent bank for the second
lien facility which was shared by the Bridge Lenders, among others. Also, in order to finance our acquisition of
Covanta Energy and to arrange the second lien facility, Covanta entered into a note purchase agreement with the
Bridge Lenders. In addition, in connection with such note purchase agreement, Laminar arranged for a $10 million
revolving loan facility for CPIH secured by CPIH's assets. The second lien facility and the CPIH revolving loan
facility, were refinanced and replaced on June 24, 2005.
We and Covanta Energy have entered into a corporate services agreement, pursuant to which we provide to
Covanta Energy, at Covanta Energy's expense, certain administrative and professional services and Covanta Energy
pays most of our expenses, which totaled $5.3 million and $17.8 million for the year ended December 31, 2006 and
152
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
2005, respectively. The amounts accrued but not paid under these arrangements totaled $1.7 million and
$12.4 million for the years ended December 31, 2006 and 2005.
As described in Note 4. Equity in Net Income from Unconsolidated Investments of the Notes, Covanta Energy
holds a 26% investment in Quezon. Covanta Energy and Quezon are both party to an agreement in which Covanta
Energy assumed responsibility for the operation and maintenance of Quezon's coal-fired electricity generation
facility. For the fiscal years ended December 31, 2006, 2005 and 2004, Covanta Energy, subsequent to their
acquisition by us, collected $26.9 million, $29.5 million and $34.7 million, respectively, for the operation and
maintenance of the facility. As of December 31, 2006, the net amount due to Quezon was $2.2 million and as of
December 31, 2005, the net amount due from Quezon was $0.1 million.
ACL was our indirect, wholly-owned subsidiary prior to ACL's bankruptcy proceedings. At that same time, SZ
Investments, LLC's equity ownership in us was approximately 18%. SZ Investments, LLC is affiliated with Samuel
Zell, our current Chairman of the Board of Directors and William Pate, the former Chairman of our Board and a
current Directon Another affiliate of SZ Investments, HY I Investments, LLC, was a holder of approximately 42%
of ACL's Senior Notes and PIK Notes. The holders of ACL's Senior Notes were among the class of grantors of the
warrants to our subsidiaries.
SZ Investments, Third Avenue and Laminar, then representing aggregate ownership of approximately 40% of
our outstanding common stock, each agreed to and participated in the ARC Holdings Rights Offering and acquired
at least their respective pro rata portion of the shares. As consideration for their commitments, we paid each of these
stockholders an amount equal to 1.75% of their respective equity commitments, which in the aggregate was
$2.8 million. We also agreed to amend an existing registration rights agreement to provide these stockholders with
the right to demand that we undertake an underwritten offering within twelve months of the closing of the
acquisition of ARC Holdings in order to provide such stockholders with liquidity or to register for resale common
stock acquired in such offering. None of such stockholders exercised such right to request an underwritten offering
prior to the expiration of such period.
We agreed as part of the Covanta Energy acquisition to conduct the 9.25% Offering and because of the
possibility that the 9.25% Offering could not be completed prior to the completion of the ARC Holdings Rights
Offering, we restructured the 9.25% Offering to offer an additional 2.7 million shares of our common stock at the
same purchase price as in the ARC Holdings Rights Offering. On February 24, 2006, we completed the 9.25%
Offering in which 5,696,911 shares were issued in consideration for $20.8 million in gross proceeds, including
633,380 shares purchased by Laminar pursuant to the exercise of rights held by Laminar as a holder of
9.25% debentures.
Note 30. Subsequent Events
China Joint Venture
On Febmaty 12, 2007, we entered into agreements relating to the subscription for a 40% equity interest in
Chongqing Sanfeng Environmental Industry Co., Ltd. ("Sanfeng'). Sanfeng, a company located in Chongqing
Municipality, China, 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 tons per day 24 MW mass-burn energy-from-waste
projects. Energy-from-waste facility design and engineering services are provided by Sanfeng using technology
under license from Martin GmbH fur Umwelt und Energietechnik.
Our investment in Sanfeng is subject to various regulatory and other conditions precedent and is expected to be
completed during the second quarter of 2007. Upon completion of our investment, Sanfeng will be converted into a
Sino-foreign equity joint venture under Chinese law in which Sanfeng's current shareholder, Chongqing Iron &
Steel Company (Group) Limited, will hold the remaining 60% equity interest.
153
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
2007 Recapitalization Plan
On January 19, 2007, we announced a comprehensive recapitalization plan utilizing a series of equity and debt
financings. Subsequent to this announcement, we completed the following transactions:
· the refmancing of Covanta Energy's debt facilities with new Covanta Energy debt facilities, comprised of a
$300 million revolving credit facility, a $320 million funded letter of credit facility, and a $650 million term
loan;
· an unden~n'itten public offering of 6.118 million shares of our common stock, in which we received proceeds
of approximately $136.6 million, net of underwriting discounts and commissions;
· an underwritten public offering of approximately $373.75 million aggregate principal amount of convertible
debentures issued by us, from which we received proceeds of approximately $364.4 million, net of
underwriting discounts and commissions; and
· the repayment, by means of a tender offer, of approximately $604.4 million in aggregate principal amount of
outstanding notes previously issued by Covanta Energy's intermediate subsidiaries.
We compleWxl our public offerings of equity and debt, including over-allotment options exercised by
underwriters, on January 31, 2007 and February 6, 2007, and we closed on the New Credit Facilities on
February 9, 2007. We completed our tender offer for approximately $604.4 million in aggregate principal
amount of outstanding notes on February 22, 2007. As a result of the recapitalization plan, we expect to
record in the fa'st quarter of 2007 an aggregate charge of approximately $30 million, pre-tax, which is
comprised of the write-down of deferred financing costs, tender premiums paid for the intermediate subsidiary
debt, a call premium paid for the Second Lien Term Loan Facility, partially offset by the write-down of unamortized
premiums relating to the intermediate subsidiary debt and a gain associated with the settlement of our interest rate
swap agreements. Components of this charge will be classified in our statement of operations as part of either loss
on extinguishment of debt or interest expense. We are currently completing our analysis based upon the relevant
authoritative accounting literature. The following discussion details the material terms of each of these transactions.
Material Terms of New Credit Facilities
The New Credit Facilities are comprised of:
· 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 $650 million term loan facility, due 2014 (the "Term Loan Facility").
154
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Amortization Terms
The New Credit Facilities include mandatory annual amortization of the Term Loan Facility to be paid in
quarterly installments beginning June 30, 2007, through the date of maturity as follows (in thousands of dollars):
Annual
Amortization
2007 .............................................................. $ 4,875
2008 .............................................................. 6,500
2009 .............................................................. 6,500
2010 .............................................................. 6,500
2011 .............................................................. 6,500
2012 .............................................................. 6,500
2013 .............................................................. 6,500
2014 .............................................................. 606,125
Total ............................................................ $ 650,000
Under the New Credit Facilities, Covanta Energy is obligated to apply a portion of excess cash from operations
on an annual basis (calculated pursuant to the credit agreement), as well as specified other sources, to repay
borrowings under the Term Loan Facility. The portion of excess cash to be used for this purpose is 50%, 25%, or 0%,
based on measurement of the leverage ratio described below.
Interest and Fee Terms
Loans under the New Credit Facilities are designated, at our election, as Eurodollar rate loans or base rate
loans. Eurodollar loans bear interest at a reserve adjusted British Bankers Association Interest Settlement Rate,
commonly referred to as "LIBOR," for deposits in dollars plus a borrow'mg margin as described below, interest on
Eurodollar rate loans is payable at the end of the applicable interest period of one, two, three or SLX months (and at
the end of every three months in the case of six month Eurodollar loans). Base rate loans bear interest at (a) a rate per
annum equal to the greater of (1) the "prime rate" designated in the relevant facility or (2) the federal funds rate plus
0.5% per annum, plus (b) a borrowing margin as described below.
Letters of credit that may be issued in the future under the Revolving Credit Facility will accrue fees at the then
effective borrowing margins on Eurodollar rate loans (described below), plus a fee on each issued letter of credit
payable to the issuing bank. Let.s of credit availability under the Funded I.~C Facility accrues fees (whether or not
letters of credit are issued thereunder) at the then-effective borrowing margin for Eurodollar rate loans times the
total availability under letters of credit (whether or not then utilized), plus a fee on each issued letter of credit
payable to the issuing bank. In addition, Covanta Energy has agreed to pay to the participants under the Funded L/C
Facility a fee equal to 0.10% times the average daily amount of the credit linked deposit paid by such participants for
their participation under the Funded L/C Facility.
155
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The borrowing margins referred to above for the Revolving Credit Facility, the Term Loan Facility and the
Funded L/C Facility are as follows:
Leverage Ratio
Borrowing Margin
for Revolving Loans
(Eurodollar Loans)
Borrowing Margin
for Revolving Loans
(Base Rate Loans)
Borrowing Margin Borrowing Margin
for Term Loans, for Term Loans,
Funded Letters of Funded Letters of
Credit and Credit and
Credit-Linked Credit -Linked
Deposll~ Deposits
(Eurodollar Loans) (Base Rate Loans)
--> 4.00:1.00 2.00% 1.00% 1.75% 0.75%
< 4.00:1.00
1.75% 0.75% 1.50% 0.50%
-> 3.25:1.00
3.25:1.00
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
The New Credit Facilities are guaranteed by us and by certain Covanta Energy subsidiaries. Covanta Energy
and certain of its subsidiaries that are party to the New Credit Facilities agreed to secure ail of Covanta Energy's
obligations under the New Credit Facilities by granting, for the benefit of secured parties, a first priority lien on
substantially all of their assets, to the extent permitted by existing contractuai obligations, a pledge of substantiaily
ail of die capitai stock of each of Covanta Energy's domestic subsidiaries owned by it and 65% of substantially all
the capitai stock of each of Covanta Energy's foreign subsidiaries directly owned by it, in each case to the extent not
otherwise pledged.
Debt Covenants and Defaults
The loan documentation under the New Credit Facilities contains customary affirmatve and negative
covenants and financiai covenants. During the term of the New Credit Facilities, we expect that the negative
covenants will place limitations on Covanta Energy, but be materially less restrictive than the restrictions in effect
during 2006 and prior to February 9, 2007.
The affirmative covenants of the New Credit Facilities include covenants relating to the following:
· financial statements and other reports;
· continued existence;
· payment of taxes and claims;
· maintenance of properties;
· insurance coverage;
· inspections by lenders (subject to frequency and cost reimbursement limitations);
lenders meetings;
compliance with laws;
environmental matters;
additional materiai real estate assets;
designation of subsidiaries; and
post-closing matters.
156
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The negative covenants of the New Credit Facilities include limitations on the following:
indebtedness (including guarantee obligations);
liens;
negative pledge clauses;
resfficted 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.
The financial covenants of the New Credit Facilities include the following:
· maximum Covanta Energy leverage ratio, 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 New Credit Facilities ("Adjusted EBITDA");
· maximum Covanta Energy capital expenditures; and
· minimum Covanta Energy interest coverage ratio, 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.
Defaults under the New Credit Facilities include:
· 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);
· faihim of subordination; and
· actual or asserted invalidity of any guarantee or security document.
Material Terms of Equity Offering
On Janual~ 31, 2007, we completed an offering of 5.32 million shares of our common stock in an underwritten
public offering. The shares were sold to the public at a price of $23.50 per share. We granted the underwriters an
option to purchase up to an additional 798,000 shares of common stock at $22.325 per share for a period of 30 days
beginning on and including the date of original issuance of the shares in connection with this offering, solely to
cover over-allotments. The option was exercised and such additional shares were sold on February 6, 2007.
Proceeds received in these offerings were approximately $136.6 million, net of underwriting discounts and
commissions.
157
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continu~d)
Material Terms of the Debentures
On January 31, 2007, we also completed an offering of $373.75 million principal amount of 1.00% Senior
Convertible Debentures due 2027, in an underwritten public offering. This offering included debentures sold
pursuant to an over-allotment option which was exercised by the underwriters. The Debentures constitute our
general unsecured senior obligations and will rank equally in right of payment with any futur~ senior unsecured
indebtedness. The Debentures are effectively junior to our existing and future secured indebtedness, including the
New Credit Facilities, to the extent of the value of the assets securing such indebtedness. The Debentures are not
guaranteed by any of our subsidiaries and are effectively subordinated to all existing and future indebtedness and
liabilities (including trade payables) of our subsidiaries.
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. Beginning with the six-
month interest period commencing February 1, 2012, we will pay contingent interest on the Debentures during any
six-month interest period in which the trading price of the Debentures measured over a specified number of trading
days is 120% or more of the principal amount of the Debentures. When applicable, the contingent interest payable
per $1,000 principal amount of Debentures will equal 0.25% of the average trading price of $1,000 principal amount
of Debentures during the five trading days ending on the second trading day immediately preceding the first day of
the applicable six-month interest period.
Under limited circumstances, the Debentures are convertible by the holders thereof, at any lime, into cash and
shares of our common stock, if any, initially based on a conversion rate of 35.4610 shares of our :ommnn stock per
$1,000 principal amount of Debentures, (which represents an initial conversion price of approximately $28.20 per
share), subject to adjustment. In the event of certain types of fundamental changes, such as an acquisition of us by a
third party, we will increase the conversion rate by a number of additional shares or, in lieu thereof and if applicable,
an acqnirer may elect to adjust the conversion obligation and conversion rate so that the Debentures are convertible
based on the shares of the acquired or surviving company.
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 (including contingent interest, if any). 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
(including contingent interest, if any). The Debentures are also subject to repurchase by us, at the holder's option, if
a fundamental change occurs, for cash at a repurchase price equal to 100% of the principal amount of the
Debentures, plus accrued and unpaid interest (including contingent interest, if any).
Intermediate Subsidiary Debt Tender Offer
On January 23, 2007, we commenced cash tender offers for (a) any and all of the outstanding 8¼% Senior
Secured Notes due 2010 (the "MSW I Notes") issued by MSW Energy Holdings LLC and its wholly owned
subsidiary, MSW Energy Finance Co., Inc. (b) any and all of the outstanding 73A% Senior Secured Notes due 2010
(the "MSW II Notes") issued by MSW Energy Holdings II LLC and its wholly owned subsidiary, MSW Energy
Finance Co. II, Inc. and (c) any and all of the outstanding 6.26% Senior Notes due 2015 (the "ARC Notes") of
Covanta ARC LLC.
In connection with each of the tender offers, we solicited the consents of the holders of each of the Notes to
certain proposed amendments to the indentures goveming such Notes. The primary purpose of the solicitations and
the proposed amendments was to eliminate from the indentures substantially all of the restrictive covenants and
certain events of default provisions contained therein.
Under the terms of the tender offer for the MSW I Notes and MSW II Notes, we offered to purchase the
outstanding MSW I Notes and MSW II Notes for a total consideration, for each $1,000 principal amount ofMSW I
158
COVANTA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Concluded)
Notes and MSW II Notes validly tendered and accepted for payment, equal to $1,096.46 and $1,079.92,
respectively, which included a consent fee .of $30 for each $1,000 principal amount of MSW I Notes and
MSW II Notes validly tendered and accepted for payment.
Under the terms of the tender offer for the ARC Notes, we offered to purchase the outstanding ARC Notes for
to~al consideration, for each $1,000 original principal amount of ARC Notes validly tendered and accepted for
payment, equal to $729.82, which included a consent fee of $30 for each $1,000 principal amotmt of ARC Notes
validly tendered and accepted for payment.
The solicitations for each of the Notes expired on February 5, 2007. At that time, we had received consents
from the requisite number of holders of each of the outstanding MSW I Notes, MSW II Notes and ARC Notes, to
amend the applicable indentures governing each of the No~s to eliminate substantially all of the restrictive
covenants and certain events of default provisions. Each of the issuers entered into a supplemental indenture with
the respective trustee for the applicable Notes. The supplemental indentures became operative on February 22,
2007.
159
SCHEDULE I
COVANTA HOLDING CORPORATION
CONDENSED STATEMENT OF OPERATIONS
HOLDING COMPANY ONLY
For the Years Ended December 31,
2006 2005 2004
Operating revenues ........................................ $
Operating expenses:
Employee compensation and benefits ......................... --
Director fees ........................................... --
Professional fees ........................................ --
Insurance expense ....................................... --
Other general and administrative expenses ..................... --
Total operating expenses .................................... --
Operating loss before income taxes ............................ --
Investment income ........................................ 2,711
Interest expense .......................................... --
Income tax benefit ........................................ 3,891
Net income before equity in net income of subsidiaries ............. 6,602
Equity in net income of Waste and Energy Services subsidiaries ..... 98,752
Equity in net (loss) of insurance subsidiaries excluding gain on ACL
warrants ............................................ 435
Equity in net income of ACL Holdings LLC (former holder of die
ACL warrants) ........................................ --
Equity in net income of marine services subsidiaries ............. --
Total equity in net income of subsidiaries ..................... 99,187
Net income .............................................. $ 105,789
Holding company expenses from above ......................... $ --
Holding company expenses reported on Consolidated Statements of
Operations ............................................ $ --
(In th¢~usands)
-- 306
-- 99
-- 1,664
-- 296
-- 152
-- 2,517
-- (2,517)
800 485
-- (9,033)
274 13,273
1,074 2,208
4-3,540 33,276
(481) (879)
15,193 --
-- (511)
58,252 31,886
$ 59,326 $ 34,094
$ -- $ 2,517
$ -- $ 2,517
160
COVANTA HOLDING CORPORATION
CONDENSED STATEMENT OF FINANCIAL POSITION
HOLDING COMPANY ONLY
As of December 31,
2006 2005
(In thousands)
52,763 $ 29,478
3,200 3,300
ASSETS
Cash ........................................................... $
Fixed maturities, available-for-sale at fair value (cost: $3,200 and $3,300) ........
Total cash and investments ......................................... 55,963 32,778
Restricted cash, insurance subsidiary escrow .............................. 6,660 6,520
Investment in Waste and Energy Services subsidiaries ....................... 465,024 511,435
Investment in insurance subsidiaries .................................... 17,622 16,627
Intercompany receivable ....................................... ~ ..... 11,635 17,567
Deferred tax asset ................................................. 171,904 26,235
83
Prepaid and other assets ............................................. 2,582
Total assets ................................................... $ 731,390
$ 611,245
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable ................................................ $
Income taxes payable .............................................
Other liabilities .................................................
Total liabilities ................................................
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 and 150,000 shares; issued
147,657 and 141,246 shares; outstanding 147,500 and 141,166 shares) .......
Additional paid-in capital ..........................................
Unearned compensation ...........................................
Accumulated other comprehensive income .............................
Accumulated earnings (deficit) ......................................
Treasury stock, at par .............................................
Total stockholders' equity ........................................
Total liabilities and stockholders' equity ............................. $ 731,390
1,984 $ 1,423
(9,746) 239
-- 10,342
/7,762) 12,004
14,766 14,125
619,685 594,186
-- (4,583)
3,942 535
100,775 (5,014)
(16) (8)
739,152 599,241
$ 611,245
161
COVANTA HOLDING CORPORATION
CONDENSED STATEMENT CASH FLows
HOLDING COMPANY ONLY
For the Years Ended December 31,
2006 2005 2004
(In thousands)
Operating activities:
Net income ............................................. $ 105,789 $ 59,326 $ 34,094
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Net realized gain on the sale of investment securities ...........
Amorfizatio~a of deferred fmancing costs ....................
Change in accrued investment income ......................
Stock option and unearned compensation expense .............
Interest payable ......................................
Deferred tax asset .....................................
Receivable from Waste and Energy Services .................
Equity in net income of Waste and Energy Services subsidiaries ..
Equity in net loss of marine services subsidiaries ..............
Equity in net income of ACL Holdings LLC .................
Equity in net (income) loss of insurance subsidiaries ...........
Changes in other assets and liabilities:
Other assets .......................................
Other liabilities .....................................
Net cash provided by (used in) operating activities ................
Investing activities:
Purchase of Energy and Marine Services .....................
Contribution to Waste and Energy Services ....................
Proceeds from sale of marine services subsidiaries ..............
Proceeds from the sale of investment securities .................
Restricted cash, Covanta escrow ............................
Purchase of investment securities, net ........................
Net cash provided by (used in) investing activities ................
Financing activities
' Parent company debt issue costs ............................
Repayment of bridge financing .............................
Net proceeds from rights offering ...........................
Funds held in escrow ....................................
Proceeds from the exercise of options for common stock ..........
Other financing activities, net ..............................
Net cash provided by financing activities .......................
Net increase in cash and cash equivalents .......................
Cash and cash equivalents at beginning of period .................
Cash and cash equivalents at end of period ...................... $
-- -- (159)
-- -- 7,045
-- -- 39
-- 2 1,425
-- -- (40O)
1,068 (6,661) (16,693)
12,818 (11,495) (2,016)
(98,752) (43,540) (33,276)
-- -- 511
-- (15,193) --
(435) 481 879
(2,529) (190) (1,723)
(16,221) 8,060 3,224
1,738 (9,210) (7,050)
--, -- (36,400)
-- (384,954) --
-- 2,500 1,512
100 15,975 612
-- -- 37,026
-- -- (3,300)
100 (366,479) (550)
-- -- (900)
-- -- (26,612)
20,498 395,791 41,021
-- (6,471) --
1,126 2,984 3,474
(177) (49) --
21,447 392,255 16,983
23,285 16,566 9,383
29,478 12,912 3,529
52,763 $ 29,478 $ 12,912
162
Schedule II -- Valuation and Qualifying Accounts
Receivables Valuation and Qualifying Accounts
Additions
Balance at Charged to Charged to
Beginning Costs and Other
of Period Expense Accounts
WASTE AND ENERGY SERVICES
For the year ended December 31, 2006
Allowances deducted in the balance sheet from
the assets to which they apply:
Doubtful receivables -- current ............. $ 3,997
Retention receivables -- current ............ --
Doubtful receivables -- noncurrent .......... 274
Total ................................ $ 4,271
For the year ended December 31, 2005
Allowances deducted in the balance sheet from
the assets to which they apply:
Doubtful receivables -- current ............. $ 434
Retention receivables -- current ............ --
Doubtful receivables -- noncurrent .......... 170
Total ................................ $ 604
March 11, through December 31, 2004
Allowances deducted in the balance sheet from
the assets to which they apply:
Doubtful receivables -- current ............. $ --
Retention receivables -- current ............ --
Doubtful receivables -- noncurrent .......... --
Total ................................ $ --
OTHER SERVICES
Allowance for premiums and fees receivable
2006 ................................ $ 4
2005 ................................ 128
2004 ................................ 462
Allowance for uncollectible reinsurance on paid
losses
2006 ................................ $ 958
2005 ................................ 893
2004 ................................ 1,328
Allowance for uncollectible reinsurance on
unpaid losses
2006 ................................ $ 296
2005 ................................ 236
2004 ................................ 176
Deductions
(In thousands)
Balance at
End of
Period
$ 2,170 $ 1,003 $ 3,581 $ 3,589
81 -- (27) 382
$ 2,251 $ 1,003 $ 3,554 $ 3,971
$ 2,478 $ 2,344(1) $ 1,259 $ 3,997
99 -- (5) 274
$ 2,577 $ 2,344 $ 1,254 $ 4,271
733 $ -- $ 299 $ 434
-- -- (170) 170
$ 733 $ -- $ 129 $ 604
$ -- $ -- $ -- $ 4
(57) -- 67 4
(40) -- 294 128
$ (82) $ -- $ -- $ 876
81 -- 16 958
(103) -- 332 893
(1) Acquired with purchase of ARC Holdings
$ 60 $ -- $ -- $ 356
60 -- -- 296
60 -- -- 236
163
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with accountants on accounting and financial disclosure.
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer; has
evaluated the effectiveness of Covanta's disclosure controls and procedures, as required by Rule 13a-15(b) and
15d-15(b) under the Securities Exchange Act of 1934 (the "Exchange Act") as of Decembec 31, 2006. Our
disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us
in reports we file or submit under the Exchange Act is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding disclosure and is recorded, processed, summarized and reported within the time periods specified in the
SEC's roles and forms.
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, believes
that our disclosure controls and procedures are effective to provide such reasonable assurance.
Our management, including the Chief Executive Officer and Chief Financial Officer, believes that any
disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent limitations in all control systems, we cannot provide
absolute assurance that all control issues and instances of fraud, if any, within Covanta have been prevented or
detected. These inherent limitations include thc realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The
design of any systems of controls also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements
due to error or fraud may occur and may not be detected.
Changes in Internal Control over Financial Reporting
During the second quarter of 2006, we began implementation of a new operating system for the recording of
information relating to our business. That effort is underway and is expected to continue into 2007. We initiated this
effort as part of a routine system upgrade and as part of our integration efforts related to the ARC Holdings
acquisition. We believe the new operating system, when fully implemented, will maintain and enhance our system
of internal controls over financial reporting and our ability to record, process, summarize and report information
required to be disclosed within the time periods specified in the Securities and Exchange Commission's roles and
forms.
164
Management's Report on Internal Control over Financial Reporting
The management of Covanta Holding Corporation ("Covanta") is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f).
All internal control systems, no matter how well designed, have inherent limitations including the possibility
of human error and the circumvention or overriding of controls. Further, because of changes in conditions, the
effectiveness of internal controls may vary over time. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. Accordingly, even those systems determined to be
effective can provide us only with reasonable assurance with respect to financial statement preparation and
presentation.
Covanta's management has assessed the effectiveness of internal control over financial reporting as of
December 31, 2006, following the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control--Integrated Framework. Based on our assessment under the framework in
Internal Control -- Integrated Framework, Covanta's management has concluded that our internal control over
financial reporting was effective as of December 31, 2006.
Our independent auditors, Ernst & Young LLP, have issued an attestation report on our assessment of internal
control over financial reporting. This report appears on page 166 of this report on Form 10-K for the year ended
December 31, 2006.
Anthony J. Orlando
President and Chief Executive Officer
February 25, 2007
Mark A. Pytosh
Senior Vice President and
Chief Financial Officer
165
Report of Independent Registered Public Accounting Pirm
The Board of Directors and Stockholders
of Covanta Holding Corporation
We have audited management's assessment, included in the accompanying Management Report on Internal
Control Over Financial Reporting, that Covanta Holding Corporation maintained effective internal control over
financial reporting as of December 31, 2006 based on criteria established in Internal Control- Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO
criteria). Covanta Holding Corporation's management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our
responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the
company's internal control over fmancial reposing based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, evaluating management's
assessment, testing and evaluating the design and operating effectiveness of internal control, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company's internal control over fmancial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of fmancial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
contxols may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, management's assessment that Covanta Holding Corporation maintained effective internal
control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the
COSO criteria. Also, in our opinion, Covanta Holding Corporation maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2006, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets as of December 31, 2006 and 2005, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended
December 31, 2006 of Covanta Holding Corporation and our report dated February 25, 2007 expressed an
unqualified opinion thereon.
/s/ Ernst & Young LLP
MetroPark, New Jersey
February 25, 2007
166
Item 9B. OTHER INFORMATION
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding oar executive officers is incorporated by reference herein from the discussion under
Item 1. Business -- Executive Officers of this Annual Report on Form 10-K. Wc have a Code of Conduct and Ethics
for Senior Financial Officers and a Policy of Business Conduct. The Code of Conduct and Ethics applies to our
Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, controller or persons performing
similar functions. The Policy of Business Conduct applies to all of oar directors, officers and employees and those
of our subsidiaries. Both the Code of Conduct and Ethics and the Policy of Business Conduct are posted on our
website at www. covanmholdin~.com on the Corporate Governance page. We. wilt post on our website any
amendments to or walvars of the Code of Conduct and Ethics or Policy of Business Conduct for executive
officers or directors, in accordance with applicable laws and regulations. The remaining information called for by
this Item 10 is incorporated by reference herein from the discussions under the headings "Eleetion of Directors,"
"Board Structure and Composition -- Committees of the Board," and "Security Ownership of Certain Beneficial
Owners and Management -- Section 16(a)Beneficial Ownership Reporting Compliance" in thc definitive Proxy
Statement for the 2007 Annual Meeting of Stockholders.
Item 11. EXECUTIVE COMPENSATION
The information reqnired by Item 11 of Form 10-K is incorporated by reference herein from the discussions
under the headings "Compensation Committee Report," "Board Structure and Composition -- Compensation of
the Board," and "Executive Compensation" in our definitive Proxy Statement for the 2007 Annual Meeting of
Stockholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by Item 12 of Form 10-K with respect to directors, executive officers and certain
beneficial owners is incorporated by reference herein from the discussion under thc heading "Security Ownership of
Certain Beneficial Owners and Management" in our definitive Proxy Statement for thc 2007 Annual Meeting of
Stockholders.
167
Equity Compensation Plans
The following table sets forth information regarding the number of our securities which could be issued upon
the exercise of outstanding options, the weighted average exercise price of those options in the 2004 and 1995 Stock
Incentive Plans and the number of securities remaining for future issuance under the 2004 Stock Incentive Plans.
Upon adoption of the 2004 Stock Incentive Plans, future issuances under the 1995 Plan were terminated. We do not
have any equity compensation plans that have not been approved by our security holders.
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(A)
Equity Compensation Plans
Approved By Security Holders... 1,029,664 $ 8.22
Equity Compensation Plang Not
Approved By Security Holders ... N/A N/A
TOTAL ...................... L029,664 $ 8.22
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
Number of Securities Remaining
Available for Fuiure Issuance
Under Equity Compenzation
Plans (Excluding Securities
Reflected in Column A)
(c)
4,970,336(1)
N/A
4,970,336
(1) Of the 4,970,336 sh'ares that remain available for future issuance, 3,~94,230 are currently reserved for issuance
under the equity compensation plans.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 of Form 10-K is incorporated by reference herein from the discussions
under the headings Board Structure and Composmon and "Certain Relationships and Related Transactions" in
the definitive Proxy Statement for the 2007 Annual Meeting of Stockholders.
Item 14, PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 of Form 10-K is incorporated by reference herein from the discussion
under the heading "Independent Auditor Fees" in the definitive Proxy Statement for the 2007 Annual Meeting of
Stockholders:
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1) Consolidated Financial Statements of Covanta Holding Corporation:
Included in Part II of this Report:
Consolidated Statement of Operations for the years ended December 31, 2006, 2005 and 2004
Consolidated Balance Sheet as of December 31, 2006 and 2005
Consolidated Statement of Cash Flows for the years ended December 31, 2006, 2005 and 2004
Consolidated Statement of Stockholders' Equity for the years ended December 31, 2006, 2005 and
2004
Notes to Consolidated Financial Statements, for the years ended December 31, 2006, 2005 and 2004
Report of Ernst & Young LIP, Independent Auditors, on the consolidated financial statements of
Covanta Holding Corporation for the years ended December 31, 2006, 2005 and 2004
168
(2) Financial Statement Schedules of Covanta Holding Corporation:
Included in Part II of this report:
Schedule I -- Condensed Financial Information of Registrant
Schedule II -- Valuation and Qualifying Accounts
Included as Exhibit F in this Part IV:
Separate financial statements of fifty percent or less owned persons. See Appendix F-1 through F-23.
All other schedules are omitted because they are not applicable, not significant or not required, or because the
required information is included in the financial statement notes thereto.
(3) Exhibits:
EXHIBIT INDEX
Exhibit No. Description
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession.
2. D' Investment and Purchase Agreement by and between Covanta Holding Corporation and Covanta
Energy Corporation dated as of December 2, 2003 (incorporated herein by reference to Exhibit 2.1 of
Covanta Holding Corporation's Current Report on Form 8-K dated December 2, 2003 and filed with
the SEC on December 5, 2003, as amended by Covanta Holding Corporation's Current Report on
Form 8-IGA dated December 2, 2003 and filed with the SEC on January 30, 2004).
2.2? Note Purchase Agreement by and between Covanta Holding Corporation and the Purchasers named
therein dated as of December 2, 2003 (incorporated herein by reference to Exhibit 2.2 of Covanta
Holding Corporation's Current Report on Form 8-K dated December 2, 2003 and filed with the SEC on
December 5, 2003, as amended by Covanta Holding Corporation's Current Report on Form 8-K/A
dated December 2, 2003 and filed with the SEC on Janumy 30, 2004).
2.3? Amendment to Investment and Purchase Agreement by and between Covanta Holding Corporation and
Covanta Energy Corporation dated February 23, 2004 (incorporated herein by reference to Exhibit 2.3
of Covanta Holding Corporation's Current Report on Form 8-K dated March 10, 2004 and filed with
the SEC on March 11, 2004).
2.4'~ First Amendment to Note Purchase Agreement and Consent by and among Covanta Holding
Corporation and 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 as of February 23, 2004 (incorporated
herein by reference to Exhibit 2.4 of Covanta Holding Corporation's Current Report on Form 8-K dated
March 10, 2004 and filed with the SEC on March 11, 2004).
2.5 ~' Stock Purchase Agreement among Covanta ARC Holdings, Inc., the Sellers party thereto and Covanta
Holding Corporation dated as of January 31, 2005 (incorporated herein by reference to Exhibit 2.1 of
Covanta Holding Corporation's Current Report on Form 8-K dated January 31, 2005 and filed with the
SEC on February 2, 2005).
Articles of Incorporation and By-Laws.
3. D' 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, as amended and effective October 5,
2004 (incorporated herein by reference to Exhibit 3.1 of Covanta Holding Corporation's Current
Report on Form 8-K dated September 7, 2004 filed with the SEC on September 9, 2004).
lnstrmnents Defining Rights of Security Holders, Including Indentures.
4.17 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).
169
Exhibit No.
4.2t
Description
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 t 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? MSW Energy Holding LLC and MSW Energy Finance Co., Inc., and each of the Guarantors named
therein, Series A and Series B 8¼% Senior Secured Note Due 2010 Indenture, dated as of June 25,
2003, by and among MSW Energy Holding LLC, MSW Energy Finance Co., Inc. and Wells Fargo
Bank Minnesota, National Association, as Trustee (incorporated herein by reference to Exhibit 4.1 of
SW Energy Holding LLC s Registration Statement on Form S-4 filed with the SEC on September 23,
2003).
4.5? Supplemental Indenture, dated as of July 11, 2003, by and among MSW Energy Hudson LLC, MSW
Energy Holding LLC, MSW Energy Finance Co., Inc. and Wells Fargo Bank Minnesota, National
Association, as Trustee (incorporated herein by reference to Exhibit 4.2 of MSW Energy Holding
LC s Reg~stratmn Statement on Form S-4 filed with the SEC on September 23, 2003).
4.6? Second Supplemental Indenture, dated as of February 5, 2007, among MSW Energy Holdings II LLC,
MSW Energy Finance Co. II, Inc. Covanta Ref-Fuel II LLC, as the guaranteeing subsidiary, and Wells
Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota,
National Association (incorporated herein by reference to Exhibit 4.2 of Covanta Holding
Corporation's Current Report on Form 8-K dated February 5, 2007 and flied with the SEC on
February 9, 2007).
4.7? Form of Series A and Series B 8 ½% Senior Secured Note Due 2010 (incorporated herein by reference
to Exhibit 4.1 of MSW Energy Holding LLC's Registration Statement on Form S-4 filed with the SEC
on September 23, 2003).
4.8t MSW Energy Holding II LLC and MSW Energy Finance Co. II, Inc., and each of the Guarantors
named therein, Series A and Series B 7¼% Senior Secured Note Due 2010 Indenture, dated as of
November 24, 2003, by and among MSW Energy Holding II LLC, MSW Energy Finance Co. II, Inc.
and Wells Fargo Bank Minnesota, National Association, as Trustee (incorporated herein by reference
to Exhibit 4.1 of MSW Energy HoldingII LLC's Registration Statement on Form S-4 filed with the
SEC on February 10, 2004).
4.9? Supplemental Indenture, dated as of December 12, 2003, by and among UAE Ref-Fuel II Corp., MSW
Energy Holding II LLC, MSW Energy Finance Co. II, Inc. and Wells Fargo Bank Minnesota, National
Association, as Trustee (incorporated herein by reference to Exhibit 4.2 of MSW Energy Holding II
LLC's Registration Statement on Form S-4 filed with the SEC on February 10, 2004).
4.107 Second Supplemental Indenture, dated as of February 5, 2007, among MSW Energy Holdings 1I LLC,
MSW Energy Finance Co. II, Inc. Covanta Ref-Fuel II LLC, as the guaranteeing subsidiaw, and Wells
Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota,
National Association (incorporated herein by reference to EJ0aibit 4.2 of Covanta Holding
Corporation's Current Report on Form 8-K dated February 5, 2007 and filed with the SEC on
February 9~ 2007).
4.11 ? Form of Series A and Series B 7¼% Senior Secured Note Due 2010 (incorporated herein by reference
to Exhibit 4.10 of Covanta Holding Corporation's Amendment No. 3 to Registration Statement on
Form S-1 filed with the SEC on December 19, 2005).
4.127 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).
170
Exhibit No.
4.137
Description
Indenture dated as of May 1, 2003, by and between Covanta ARC LLC and Wachovia Bank, National
Association as Trustee and Securities Intermediary (incorporated herein by reference to Exhibit 4.12 of
Covanta Holding Corporation's Annual Report on Form 10-K for the year ended December 31, 2005
and filed with the SEC on March 14, 2006).
4.14? First Supplemental Indenture dated as of May 1, 2003, by and among Covanta ARC LLC and Wachovia
Bank, National Association as Trustee and Securities Intermediary (incorporated herein by reference to
Exhibit 4.13 of Covanta Holding Corporation's Annual Report on Form 10-K for the year ended
December 31, 2005 and filed with the SEC on March 14, 2006).
4.157 Second Supplemental Indenture, dated as of February 5, 2007, among Covanm ARC LLC, U.S. Bank
National Association, as successor trustee, and U.S. Bank National AssOCiation as successor securities
intermediary (incorporated herein by reference to Exhibit 4.3 of Covanta Holding Corporation's
Current Report on Form 8-K dated February 5, 2007 and filed with the SEC on Februmy 9, 2007).
4.16? Specimen copy of Covanta ARC LLC 6.26% Senior Notes due 2015 (incorporated herein by reference
to Exhibit 4.14 of Covanta Holding Corporation's Annual Report on Form 10-K for the year ended
December 31, 2005 and filed with the SEC on March 14, 2006).
4.177 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).
4.18? 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).
Material Contracts.
10.17 Equity Commitment for Rights Offering between Covanta Holding Corporation and SZ Investments
L.L.C. dated February l, 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).
10.27 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).
10.37 Equity Commitment for Rights Offering between Covantu Holding Corporation and Third Avenue
Trust, on behalf of The Third Avenue Value Fund Series dated February 1, 2005 (incorporated herein bv
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).
10.4~- Equity Commitment for Rights Offering between Covanta Holding Corporation and D.E. Shaw
Laminar Portfolios, L.L.C. dated February 1, 2005 (incorporated herein by reference to
Exhibit 10.5 of Covanta Holding Corporation's Current Report on Form 8-K dated January 31,
2005 and filed with the SEC on February 2, 2005).
10.57 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).
10.67 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).
171
Exhibit No.
10.7~
10.85'
lO.9p*
10.107'
10.117'
10.127'
10.137'
lO.14p*
10.159'
10.16t*
10.17t*
10.18~*
10. i9~*
10.209
Description
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).
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).
Covanta Holding Corporation Equity Award Plan for Employees and Officers, as amended
(incorporated herein by reference to Exhibit 10.1 of Covanta Holding Corporation's Report on
Form 10-Q for the period ended September 30, 2005 and filed with the SEC on November 9, 2005).
Covanta Holding Corporation Equity Award Plan for Directors (incorporated herein by reference to
Exhibit 4.3 of Covanta Holding Corporation's Registration Statement on Form S-8 filed with the SEC
on October 7, 2004).
Form of Covanta Holding Corporation Stock Option Agreement for Employees and Officers
(incorporated herein by reference to Exhibit 10.5 of Covanta Holding Corporation's Current
Report on Form 8-K dated October 5, 2004 and filed with the SEC on October 7, 2004).
Form of Covanta Holding Corporation Restricted Stock Award Agreement (incorporated herein by
reference to Exhibit 10.4 of Covanta Holding Corporation's Current Report on Form 8-K dated
October 5, 2004 and filed with the SEC on October 7, 2004).
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).
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).
Employment Agreement, dated October 5, 2004, by and between Craig D. Abolt and Covanta Projects,
Inc., Covanta Energy Corporation and Covanta Holding Corporation (incorporated herein by reference
to Exhibit 10.2 of Covanta Holding Corporation's Current Report on Form 8-K dated October 5, 2004
and filed with the SEC on October 7, 2004).
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).
Employment Agreement, dated as of April 27, 2004, by and between Covanta Holding Corporation and
Jeffrey R. Horowitz (incorporated herein by reference to Exhibit 10.1 of Covanta Holding
Corporation's Registration Statement on Form S-3/A filed with the SEC on August 20, 2004).
Form of Covanta H~lding 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).
Covanta Holding Corporation Amendment to Stock Option Agreement (incorporated herein by
reference to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated
May 25, 2005 and filed with the SEC on May 26, 2005).
Second Lien Credit and Guaranty Agreement, dated as of June 24, 2005, among Covanta Energy
Corporation, Covanta Holding Corporation, as a guarantor, certain subsidiaries of Covanta Energy
Corporation, as guarantors, various lenders, Credit Suisse, Cayman Islands Branch, as Joint Lead
Arranger, Co-Syndication Agent, Administrative Agent, Collateral Agent and Paying Agent, and
Goldman Sachs Credit Partners L.P., as Joint Lead Arranger and Co-Syndication Agent (incorporated
herein by reference to Exhibit 10.2 of Covanta Holding Corporation's Current Report on Form 8-K
dated June 24, 2005 and filed with the SEC on June 30, 2005).
172
Exhibit No.
10.217
10.277'
10.287
Description
First Lien Pledge and Security Agreement between each of Covanta Energy Corporation and the other
Grantors Party thereto and Goldman Sachs Credit Partners L.P., as Collateral Agent, dated as of June 24,
2005 (incorporated herein by reference to Exhibit 10.3 of Covanta Holding Corporation's Current
Report on Form 8-K dated June 24, 2005 and filed with the SEC on June 30, 2005).
10.227 Parity Lien Pledge and Security Agreement, dated as of June 24, 2005, between each of Covanta
Energy Corporation and the other Grantors Party thereto and Credit Suisse, Cayman Islands Branch, as
Collateral Agent (incorporated herein by reference to Exhibit 10.4 of Covanta Holding Corporation's
Current Report on Form 8-K dated June 24, 2005 and filed with the SEC on June 30, 2005).
10.237 First Lien Pledge Agreement, dated as of June 24, 2005, between Covanta Holding Corporation and
Goldman Sachs Credit Partners L.P., as Collateral Agent (incorporated herein by reference to
Exhibit 10.5 of Covanta Holding Corporation's Current Report on Form 8-K dated June 24, 2005
and filed with the SEC on June 30, 2005).
10.247 Parity Lien Pledge Agreement, dated as of June 24, 2005, between Covanta Holding Corporation and
Credit Suisse, Cayman Islands Branch, as Collateral Agent (incorporated herein by reference to
Exhibit 10.6 of Covanta Holding Corporation's Current Report on Form 8-K dated June 24, 2005 and
filed with the SEC on June 30, 2005).
10.257 Intercreditor Agreement, dated as of June 24, 2005, among Covanta Energy Corporation, Goldman
Sachs Credit Partners L.P., as Collateral Agent for the First Lien Claimholders, Credit Suisse, Cayman
Islands Branch, as Administrative Agent for the Second Lien Credit Clalmholders and as Collateral
Agent for the Parity Lien Clalmholders (incorporated herein by reference to Exhibit 10.7 of Covanta
Holding Corporation's Current Report on Form 8-K dated June 24, 2005 and filed with the SEC on
June 30, 2005).
10.267 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).
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).
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).
10.297 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).
10.307 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).
173
Exhibit No.
10.317
10.327'
10.367'
10.377'
Description
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
flied with the SEC on March 6, 2006).
Transition and Separation Agreement, dated April 5, 2006, among Craig D. Abolt, Covanta Holding
Corporation, Covanta Energy Corporation and Covanta Projects, Inc. (incorporated herein by reference
to Exhibit 10.1 of Covanta Holding Corporation's Current Report on Form 8-K dated April 5, 2006 and
filed with the SEC on April 7, 2006).
10.337 Amended and Restated Credit Agreement, dated as of May 26, 2006, among Covanta Energy
Corporation, Covanta Holding Corporation as a guarantor, certain subsidiaries of Covanta Energy
Corporation as guarantors, various lenders, Goldman Sachs Credit Partners L.P., as Sole Lead
Arranger, Sole Book Runner and Sole Syndication Agent, Administrative Agent and Collateral
Agent, JPMorgan Chase Bank, as Co-Documentation Agent, Revolving Issuing Bank and a
Funded LC Issuing Bank, UBS Securities LLC, as Co-Documentation Agent, UBS AG, Stamford
Branch, as a Funded LC Issuing Bank, and Calyon New York Branch, as Co-Documentation Agent
(incorporated herein by reference to Exhibit 10.1 o~Covanta Holding Corporation's Current Report on
Form 8-K dated May 26, 2006 and filed with the SEC on May 31, 2006).
10.347 Amendment to Second Lien Credit and Guaranty Agreement, dated as of May 26, 2006, among
Covanta Energy Corporation, Covanta Holding COrPoration and the parties signatory thereto
(incorporated herein by reference to Exhibit 10.2 of Covanta Holding Corporation's Current
Report on Form 8-K dated May 26, 2006 and fried with the SEC on May 31, 2006).
10.35~' Amendment and Limited Waiver to Intercreditor Agreement, dated as of May 26, 2006, among
Covanta Energy Corporation, Goldman Sachs Credit Partners L.P., as Collateral Agent under the First
Lien Credit Agreement, Credit Suisse, Cayman Islands Branch, as Administrative Agent for the
Second Lien Credit Agreement and as Collateral Agent for the Parity Lien Claimholders (incorporated
herein by reference to Exhibit 10.3 of Covanta Holding Corporation's Current Report on Form 8-K
dated May 26, 2006 and filed with the SEC on May 31, 2006).
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).
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).
10.38~' 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).
10.397 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 fried with the SEC on February 15, 2007).
10.407 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).
174
Exhibit No. Description
10.4D' 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).
Subsidiaries of the Registrant.
21.1 List of Subsidiaries.
Consents of Experts and Counsel.
23.1 Consent of Independent Registered Public Accotmting Firm of Covanta Holding Corporation and
Subsidiaries: Ernst & Young LLP.
23.2 Consent of Independent Registered Public Accounting Firm of Quezon Power, Inc.: Sycip Gorres
Velayo & Co., a member practice of Ernst & Young Global.
Rule 13a-14(a)/15fl-14(a) Certifications.
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).
31.2 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).
Section 1350 Certifications.
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.
Pursuant to paragraph 601 (b)(4)(iii)(A) of Regulation S-K, the registrant has omitted from the foregoing list of
exhibits, and hereby agrees to furnish to the Securities and Exchange Commission, upon its request, copies of
certain instruments, each relating to long-term debt not exceeding 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis.
(b) Exhibits: See list of Exhibits in this Part IV, Item 15(a)(3) above.
(c) Financial Statement Schedules: See Part IV, Item 15(a)(2) above.
175
SIGNATURES
Pursuant to the requirereents of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
COVANTA HOLDING CORPORATION
(Registrant)
By:
Date: February 26, 2007
ANTHONY J. ORLANDO
Anthony J. Orlando
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name Title Date
/s/ AN7HOH¥ J. ORLANDO
Anthony J. Orlando
/s/ MARK A. PVTOSH
Mark A. Pytosh
/s/ THOMAS E. BUCKS
Thomas E. Bucks
/s/ SAMUEL ZELL
Samuel Zell
/SI DAVID M. BARSE
David M. Barse
/s/ RONALD J. BROGLIO
Ronald J. Broglio
/s/ PETER C. B. BYNOE
Peter C. B. Bynoe
/s/ RICHARD L. HU~ER
Richard L. Huber
/s/ WILLIAM C. PATE
William C. Pate
President and Chief Executive
Officer and Director
(Principal Executive Officer)
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
Chairman of the Board
February 26, 2007
February 26, 2007
Februmy 26, 2007
February 26, 2007
Director February 26, 2007
Director February 26, 2007
Director Februat-y 26, 2007
Director February 26, 2007
Director February 26, 2007
176
Name
Robert S. Silberman
/S/ JEAN SMITH
Jean Smith
CLAYTON YEUTrER
Clayton Yeutter
Title
Director
Director
Director
Date
February 26, 2007
February 26, 2007
February 26, 2007
177
Exhibit 31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Anthony J. Orlando, certify that:
1. I have reviewed this Annual Report on Form 10-K of Covanta Holding Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over fmancial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for extemal purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectivaness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal
control over financial reporting; and
5. Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report fmancial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls over financial reporting.
Date: Febrnary 26, 2007
ANTHONY J. ORLANDO
Anthony J. Orlando
President and Chief Executive Officer
178
Exhibit 31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Mark A. Pytosh, certify that:
1. I have reviewed this Annual Report on Form 10-K of Covanta Holding Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operatiuns and cash flows of the registrant as
of, and for, the periods presented in this report;
4. Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relaling to the registrant, including its
consolidated subsidiaries, is made known to us by otherg within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such intemal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaiuated the effectiveness of the registrant's disclosure controls and procedures and presanted in this
report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over fmancial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal
control over financial reporting; and
5. Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls over financial reporting.
Date: February 26, 2007
/si MARK A. PYTOSH
Mark A. Pytosh
Senior Vice President and Chief
Financial Officer
179
Exhibit 32.1
Certification Of Periodic Financial Report Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K for the period ended December 31, 2006 of Covanta
Holding Corporation as filed with the Securities and Exchange Commission on the date hereof (the "Report"),
Anthony J. Orlando and Mark A. Pytosh, as President and Chief Executive Officer, and Senior Vice President and
Chief Financial Officer~ respectively, of Covanta Holding Corporation, each hereby certifies, pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of Covanta Holding Corporation.
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by Covanta Holding
Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement has been provided to Covanta Holding Corporation and will be
retained by Covanta Holding Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.
ANTHONY J. ORLANDO
Anthony J. Orlando,
President and Chief Executive Officer
Date: February 26, 2007
/S/ MARK A. PYTOSH
Mark A. Pytosh,
Senior Vice President and Chief Financial Officer
180
QUEZON POWER, INC.
Consolidated Financial Statements
December 31, 2006 and 2005
and Years Ended December 31, 2006, 2005 and 2004
(In United States Dollars)
and
Report of Independent Auditors
F-1
Report of Independent Registered Public Accounting Firm
To the Management Committee of
Quezon Power, Inc.
We have audited the accompanying consolidated balance sheets of Quezon Power, Inc. (incorporated in the
Cayman Islands, British West Indies) and subsidiary as of December 31, 2006 and 2005, and the related
consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three
years ended December 31, 2006. These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these f'mancial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the
Company's internal control over fmancial reporting. Our audits included consideration of intemal control over
financial reporting as a basis for designing audit procedures that are appropriate in the cimumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the
mounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Quezon Power, Inc. and subsidiary as of December 31, 2006 and 2005, and the results of their operations
and their cash flows for each of the three years ended December 31, 2006 in conformity with U.S. generally
accepted accounting principles.
Makati City, Philippines
February 9, 2007
F-2
QUEZON POWER, INC.
CONSOLIDATED BALANCE SHEETS
December 31
2006 2005
$ 35,939,993
ASSETS
Current Assets
Cash ....................................................... $ 18,683,459
Accounts receivable -- net of allowance for bad debts of $-- in 2006 and
$--in 2005 (Notes 9 and 11) ..................................
Fuel inventories ..............................................
Spare parts ..................................................
Due from affiliated companies (Note 7) .............................
Prepaid input value-added taxes -- net (Note 4) .......................
Prepaid expenses and other current assets ...........................
Deferred income taxes (Note 4).. .................................
73,866,818 41,698.703
8,132,162 12,104.570
14,239,098 13,793,870
411,156 469,312
3,513,866 9,074,191
3,223.205 4,182,879
2,733,683 --
117,263,518
675,212,269
21,758,848
9,531,174
Total Current Assets ......................................... 124,803,447
Property, Plant and Equipment -- net (Notes 3, 6 and 9) .............. 659,075,478
Deferred Financing Costs -- net (Note 6) .......................... 16,799,334
Deferred Income Taxes -- net (Note 4) ............................ 20,229,614
$820,907,873
$823,765,809
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term notes payable (Note 5) ................................. $ 19,000,000
Accounts payable and accrued expenses (Notes 9 and 11) ...............
Due to affiliated companies (Note 7) ...............................
Current portion of (Note 6):
Long-term loans payable ......................................
Bonds payable ..............................................
Income taxes payable (Note 4) ...................................
$ 11,666,667
83,818,004 64,211,536
223,998 348,836
38,799,027 41,005,046
10,750,000 7,525,000
7,361,841 121.675
Total Current Liabilities ....................................... 159,952,870
Long-term Loans Payable -- net of current portion (Note 6) ............ 176,948,631
Bonds Payable -- net of current portion (Note 6) ..................... 172,000,000
Asset Retirement Obligation (Note 2) ............................. 4,296,843
Minority Interest ............................................. 7,090,428
Stockholders' Equity (Note 8) ................................... 300,619,101
$820,907,873
124,878,760
215,747,657
182,750,000
4,053,639
6,604,434
289,731,319
$823,765,809
See accompanying Notes to Consolidated Financial Statements.
F-3
QUEZON POWER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31
2006 2005 2004
OPERATING REVENUES (Note 9) ................. $271,817,485 $245,570,990 $214,865,088
OPERATING EXPENSES
Fuel costs ......................................
Operations and maintenance .........................
Depreciation and amortization (Note 3) ................
General and administrative ..........................
85,773,607 68,022,825 40,822,798
32,060,447 32,048,502 36,770.262
17,805,160 18,557,511 19,263,376
16,849,783 16,069,798 16,768,912
152,488,997 134,698.636 113,625,348
1 t0,872,354 101.239,740
INCOME FROM OPERATIONS ................... 119,328,488
OTHER INCOME (CHARGES)
Interest income .................................. 1,803,600 1,169,215 731,751
Foreign exchange gain- net ........................ 952,748 182,650 105,899
Interest expense (Notes 5 and 6) ..................... (34,258,529) (37,079,185) (39,502,726)
Amortization of deferred financing costs ...............
Other charges -- net ..............................
INCOME BEFORE INCOME TAX AND MINORITY
INTEREST ...................................
BENEFIT FROM (PROVISION FOR) INCOME TAX
(Note 4)
(4,959,514) (5,618,118) (6,362,934)
(2,633,358) (950,363) (409,779)
(39,095,053) (42,295,801) (45,437,789)
80,233,435 : 68,576,553 55,801,951
Current ........................................ (18,791,782)
Deferred ....................................... 13,432,123
INCOME BEFORE MINORITY INTEREST ..........
MINORITY INTEREST [Note l(a)] .................
NET INCOME .................................. $
(338,975) (216,786)
190,607 (465,018)
(5,359,659) (148,368) (681,804)
74,873,776 68,428,185 55,120,147
(1,755,994) (1,604.489) (1,292,540)
73,117,782 $ 66,823,696 $ 53,827,607
See accompanying Notes to Consolidated Financial Statements.
F-4
QUEZON POWER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31
2006 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................. $ 73,117,782
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ................................... 17,805,160 18,557,511 19.263,376
Amortization of deferred financing costs ............................. 4,959,514 5,618.118 6,362.934
Minority interest ............................................ 1,755,994 1.604.489 1.292.540
Retirement of property, plant and equipment ........................ 1,262,715 -- --
Sale of property, plant and equipment ............................. -- 1,915 --
Accretion on assel retirement obligation ............................. 243,204 226,801 182,600
Unrealized foreign exchange gain -- net ............................. (194,287) (220,092) (182.117)
Deferred income taxes ........................................ (13,432,123) (190,607) 465.018
Changes in operatiag assets and liabilities:
Decrease (increase) in:
Accounts receivable ....................................... (31,993,873) (8,357.875) (3.233,753)
$ 66,823,696 $ 53,827.607
Fuel inventories ..........................................
Spare parts .............................................
Prepaid input value added taxes ...............................
Prepaid expenses and other current assets .........................
Increase in:
Accounts payable and accrued expenses ..........................
Income taxes payable ......................................
Net cash generated from operating activities ............................
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
Proceeds from sale of property, plant and equipment ......................
Net cash used in investing activities .................................
CASH FLOWS FROM FINANCING ACTIVITIES
3,972,408 (4,363,668) (4.927,484)
(445,228) (1,796,267) (4,134.891)
5,560,325 537,647 (3,586.180)
1,245,424 2,827,170 (1,275.504)
19,163,765 25,953,692 10,996,927
7,240,166 50.851 16,359
90,260,946 107,273,381 75.067,432
(2,931,084) (7,729,509) (3,337,655)
-- 39,299 --
(2,931,084) (7.690,210) (3,337,655)
Cash received from short-term notes payable ........................... $ 10,666,667 $ 23,333,333 $ --
Cash dividends ............................................... (62,230,000) (67,209,380) (75,849.060)
Net changes in accounts with affiliated companies ........................ (123,219) 166,182 (1.979, ffi3)
Payments of:
Short-term notes payable ....................................... (3,333,334) (11,666,666) --
Bonds payable .............................................. (7,525,000) (6,450,000) (6,450,000)
Long-term loans payable ....................................... (41,005,046) (40,002,310) (38,598,483)
Minority interest .............................................. (1,270,000) (1,371,620) (1,547,940)
Net cash used in financing activities ................................. (11M,819,932)
EFFECT OF EXCHANGE RATE CHANGES ON CASH ................. 233,536 153,102 64.339
NET DECREASE IN CASH ..................................... (17,256,534) (3,464,188) (52.630,470)
CASH AT BEGINNING OF YEAR ................................ 35,939,993 39,404.181 92,034,651
CASH AT END OF YEAR ...................................... $ 18,683,459 $ 35,939.993 $ 39,404,181
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest .................................................. $ 37,508,960 $ 37,360,460 $ 39,694,095
Income taxes ............................................... 11,551,616 288,124 200,427
Noncash investing and financing activities:
Retirement of property, plant and equipment .......................... 1,262,715 -- --
Revision for estimated cash flows of asset retirement obligation ............. -- 345,740 --
(103,200.461) (124,424,586)
See accompanying Notes to Consolidated Financial Statements.
F-5
QUEZON POWER, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2006, 2005 and 2004
Additional
Capital Stock Paid-in Retained
(Note 8) Capital Earnings
Balance at December 31, 2003 ........... $1,001 $207,641,266
Cash dividends ....................... -- --
Net income for the year ................. -- --
Balance at December 31, 2004 ........... $1,001 $207,641,266
Cash dividends ....................... -- __
Net income for the year ................. -- --
Balance at December 31, 2005 . .......... $1,001 $207,641,266
Cash dividends ........... ............ -- --
Net income for the year ................. -- --
Balance at December 31, 2006 .....~ ......
Total
$104,496,189 $312,138,456
(75,849,060) (75,849,060)
53,827,607 53,827,607
$ 82,474,736 $290,117,003
(67,209,380) (67,209,380)
66,823,696 66,823,696
$ 82,089,052 $289,731,319
(62,230,000 (62,230,000)
73,117,782 73,117,782
$1,001 $207,641,266 $ 92,976,834 $300,619,101
See accompanying Notes to Consolidated Financial Statements.
F-6
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Business
(a) Organization
Quezon Power, Inc. (the Company; formerly Ogden Quezon Power, Inc.), an exempted company with hmited
liability, was incorporated in the Cayman Islands, British West Indies on August 4, 1995 primarily: (i) to be a
promoter, a general or limited partner, member, associate, or manager of any general or limited partnership, joint
venture, trust or other entity, whether established in the Republic of the Philippines or elsewhere and (ii) to engage
in the business of power generation and transmission and in any development or other activity related thereto;
provided that the Company shall only carry on the business for which a license is required under the laws of the
Cayman Islands when so licensed under the terms of such laws. The Philippine Branch (the Branch) was registered
with the Philippine Securities and Exchange Commission on March 15, 1996 to carry out the Company's business in
the Republic of the Philippines to the extent allowed by law including, but not limited to, developing, designing and
arranging financing for a 470-megawatt (net) base load pulverized coal-fired power plant and related electricity
transmission line (the Project) located in Quezon Province, Republic of the Philippines. In addition, the Branch is
responsible for the organization and is the sole general partner of Quezon Power (Philippines), Limited Co. (the
Partnership), a limited partnership in the Philippines. The Partnership is responsible for financing, constructing,
owning and operating the Project.
The Branch is the legal and beneficial owner of (i) the entire general partnership interest in the Partnership
representing 21% of the economic interest in the Partnership and (ii) a limited partnership interest representing 77%
of the economic interest in the Partnership. The remaining 2% economic interest in the Partnership is in the form of
a limited partnership interest held by PMR Limited Co. (PMRL). PMRL does not have any equity funding
obligation. The accompanying financial statements include the consolidated results of the Company and the
Partnership.
Ultimately, 100% of the aggregate capital contributions of the Company to the Partnership were indirectly
made by Quezon Generating Company, Ltd. (QGC), a Cayman Islands limited liability company, and Covanta
Power Development -- Cayman, Inc. (CPD; formerly Ogden Power Development -- Cayman, Inc.), an indirect
wholly owned subsidiary of Covanta Energy Group, Inc. (formerly Ogden Energy Group, Inc.), a Delaware
corporation. The shareholders of QGC are QGC He, ldings, Ltd. and Global Power Investment, L.P. (GPI), both
Cayman Islands companies. QGC Holdings, Ltd. is a wholly owned subsidiary of InterGen N.V. (formerly
Inte~Gen) which was a joint venture between Bechtel Enterprises, Inc. (Bechtel) and Shell Generating Limited
(Shell). In August 2005, Shell and Bechtel completed the sale of InterGen N.V. and 10 of its power plants including
its interest in the Quezon Project to a partnership between AIG Highstar Capital II, L.P. and Ontario Teachers'
Pension Plan. The ultimate economic ownership percentages among QGC, CPD and PMRL in the Partnership are
71.875%, 26.125% and 2%, respectively.
(b) Allocation of Earnings
Each item of income and loss of the Partnership for each fiscal year (or portion thereof) shall be allocated 21%
to the Company, as a general partner; 77% to the Company, as a limited partner; and 2% to PMRL, as a limited
partner.
(c) The Project
The Project is a 470-megawatt (net) base load pulverized coal-fired electricity generation facility and related
transmission line. The Project receives substantially all of its revenue from a 25-year take-or-pay Power Purchase
Agreement (PPA) and a Transmission Line Agreement (TLA) with the Manila Electric Company (Meralco).
Construction of the Project commenced in December 1996 and the Project started commercial operations on
May 30, 2000. The total cost of the Project was $895.4 million.
F-7
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(d) Principal BusinessRisks
The principal risks associated with the Project include operating risks, dependence on one customer (Meralco),
environmental matters, permits, political and economic factors and fiuctuations in currency.
The risks associated with operating the Project include the breakdown or failure of equipment or processes and
the performance of the Project below expected levels of output or efficiency due to operator fault and/or equipment
failure. Meralco is subject to regulation by the Energy Regulatory Commission (ERC) with respect to sales charged
to consumers. In addition, pursuant to the Philippine Constitution, the Philippine government at any time may
purchase Meralco's property upon payment of just compensation. If the Philippine government was to purchase
Meralco's property or the ERC ordered any substantial disallowance of costs, Meralco Would remain obligated
under the PPA to make the fn'm payments to the Partnership. Such purchase or disallowance, however, could result
in Meralco being unable to fulfill its obligations under the PPA, which would have an adverse material effect on the
ability of the Partnership to meet its obligations under the credit facilities [see Notes 6, 9(a) and 9(b)].
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of the Company include the financial position and results of operations
of the Partnership and have been prepared in conformity with U.S. generally accepted accounting principles.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and the Partnership, a 98%-owned
and controlled limited partnership. All significant intercompany transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
Accounts receivable are recognized and carded at original invoice amount less an allowance for any
uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no
longer probable.
Inventories
Fuel inventories and spare parts are valued at the lower of cost or market value, net of any provision for
inventory losses. Cost is determined using the moving average cost method.
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation and amortization. Cost
includes the fair value of asset retirement obligation, capitalized interest and amortized deferred financing costs
incurred in connection with the constmctiun of the Project. Capitalization of interest and amortization of deferred
financing costs ceased upon completion of the Project.
F-8
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Depreciation and amortization are computed using the straight-line method over the estimated useful lives of
the assets. The estimated useful lives of the assets are as follows:
Category
Power plant ...................................................... 50
Transmission lines ................................................. 25
Others .......................................................... 3 to 5
Number of years
The cost of routine maintenance and repairs is charged to income as incurred while significant renewals and
betterments are capitalized. When assets are retired or otherwise disposed of, both the cost and related accumulated
depreciation and amortization are removed from the accounts and any resulting gain or loss is credited or charged to
current operations.
Deferred Financing Costs
Deferred financing costs represent the costs incurred to obtain project financing and arc amortized, using the
effective interest rate method, over the term of the related loans.
Derivative Instruments and Hedging Activities
The Company accounts for derivative instruments and hedging activities under Statement of Financial
Accounting Standards (SFAS) No. 133 (subsequently amended by SFAS No. 138 and No. 149), Accounting for
Derivative Instruments and Hedging Activities. This statement; as amended, establishes certain accounting and
reporting standards requiring all derivative instruments to be recorded as either assets or liabilities measured at fair
value. Changes in derivative fair values are recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting treatment for qualifying hedges allows a derivative's gains and losses to offset
related results on the hedged item in the statement of operations and requires the Company to formally document,
designate and assess the effectiveness of transactions that receive hedge accounting. The Company periodically
reviews its existing contracts to determine the existence of any embedded derivatives. As of December 31, 2006 and
2005, them are no significant embedded derivatives that exist.
Prepaid Input Value-Added Taxes
Prepaid input value-added taxes (VAT) represent VAT imposed on the Partnership by its suppliers for the
acquisition of goods and services required under Philippine taxation laws and regulations.
The input VATis recognized as an asset and will be used to offset the Partnership's current VAT liabilities [see
Notes 4 and 1 l(a)]. Excess input VAT, if any, will be'claimed as tax credits. InPut taxes are stated at their estimated
net realizable values.
Revenue Recognition
Revenue is recognized when electric capacity and energy are delivered to Meralco.[see Note 9(a)].
Commencing on the Commercial Operations Date and continuing throughout the term of the PPA, the
Partnership receives payment, net of penalty obligation for each kilowatt hour (kWh) of shortfall deliveries,
consisting of a Monthly Capacity Payment, Monthly Operating Payment and Monthly Energy Payment as defined
in the PPA.
Revenue from transmission lines consists of Capital Cost Recovery Payment (CCRP) and the Transmission
Line Monthly Operating Payment as defined in the TLA. Transmission Line Monthly Operating Payment is
recognized as revenue in the period it is intended for.
F-9
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The Partnership is registered with the Philippine Board of Investments as a pioneer enterprise under a statuto~
scheme designed '~o promote investments in certain industries (including power generation). As such, the
Partnership benefited from a six-year income tax holiday on its registered activities starting on January 1,
2000. During 2004, the Partnership was able to move the effective date of its income tax holiday period to
May 30, 2000, coinciding with the start of commercial operations. Under the present Philippine taxation laws, a
corporate income tax rate of 35% is levied against Philippine taxable income effective November 1, 2005 and 30%
starting January 1, 2009 (see Note 4). Prior to November 1, 2005, the corporate income tax rate was 32%. Net
operating losses canbe can'ied forward for three immediately succeeding years. The income tax holiday incentive
of the Partnership expired on May 29, 2006. The Partnership's income from the registered activities for the per~od
thereafter became subject to the regular corporate income tax rate of 35%.
The Partnership accounts for corporate income taxes in accordance with SFAS No. 109, Accounting for Income
Taxes, which requires an asset and liability approach in determining income tax liabilities. The standard recognizes
deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial
reporting bases of assets and liabilities and their related tax bases. Deferred tax assets and liabilities are measured
using the tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Deferred tax assets and deferred tax liabilities that will reverse during the
income tax holiday period are not recognized.
The Company is not subject to income taxes as a result of the Company's incorporation in the Cayman Islands.
However, the Philippine branch profit remittance tax of 15% will be levied against the total profit applied or
earmarked for remittance by the Branch to the Company.
Functional Currency
The functional currency of the Company and the Parmership has been designated as the U.S. dollar because
borrowings under the credit facilities are made and repaid in U.S. dollars. In addition, all major agreements are
primarily denominated in U.S. dollars or are U.S. dollar linked. Consequently, the consolidated financial statements
and transactions of the Company and the Partnership have been recorded in U.S. dollars.
Valuation of Long-lived Assets
Long-lived assets are accounted for in accordance with SFAS No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets. The Partnership periodically evaluates its long-lived assets for events or changes in
circumstances that might indicate that the carrying amount of the assets may not be recoverable. The Partnership
assesses the recoverability of the assets by determining whether the amortization of such long-lived assets over their
estimated lives can be recovered through projected undiscounted future cash flows. The amount of impairment, if
any, is measured based on the fair value of the assets. For the years ended December 31, 2006, 2005 and 2004, no
such impairment was recorded in the accompanying consolidated statements of operations.
Asset Retirement Obligation
The Partnership acqounts for asset retirement obligations hi accordance with SFAS No. 143, Accounting for
Asset Retirement Obligations. The Partnership recognizes asset retirement obligations in the period in which they
are incurred if a reasonable estimate of fair value can be made. In estimating fair value, the Partnership did not use a
market risk premium since a reliable estimate of the premium is not obtainable given that the retirement activities
will be performed many years into the future and the Partnership has insufficient information on how much a third
party contractor would charge to assume the risk that the actual costs will change in the future. The associated asset
retirement costs are capitalized as part of the carrying amount of the Power plant.
F-10
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
On January 1, 2005, the Partnership revised its estimate of asset retirement obligation to reflect an increase in
the marketplace rates of labor, overhead and materials. This change in estimate resulted in a charge to income for the
year ended December 31,2005 amounting to $29,936, net of related benefit from income tax of $12,830. The charge
to income resulted from the increase in depreciation and accretion expenses as a result of the revision in the
estimated cash flow. No payments of asset retirement obligation were made as of December 31, 2006 and 2005.
The following table describes all changes to the Partnership's asset retirement obligation liability as of
December 31, 2006 and 2005:
2006 2005
Asset retirement obligation at beginning of year ................... $4,053,639 $3,481,098
Revision in the estimated cash flows of asset retirement obligation ..... -- 345,740
Accretion expense for the year ................................ 243,204 226,801
Asset retirement obligation at end of year ........................ $4,296,843 $4,053,639
Impact of Recently Issued Accounfing Standards
In Jane 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement No. 109" ("FIN 48"). This
interpretation increases the relevancy and comparability of financial reporting by clarifying the way companies
account for uncertainty in income taxes. FIN 48 prescribes a consistent recognition threshold and measurement
attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for
fmancial statement purposes. The interpretation also requires expanded disclosure with respect to the uncertainty in
income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Partnership does not
expect the adoption of FIN 48 to have a material effect on its results of operations or financial condition.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157
defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles
and expands disclosures about fair value measurements. SFAS 157 will be applied under other accounting
principles that require or permit fair value measurements, as this is a relevant measurement attribute. This
statement does not require any new fair value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. The Partnership does not expect the adoption of
SFAS 157 to have a material effect on its result of operations or financial condition.
Property, Plant and Equipment
2o06
Power plant .......................................... $689,622,879
Transmission lines .................................. . ..
Furniture and fixtures ...................................
Transportation equipment ................................
· Leasehold improvements .................................
2005
$688,172,245
86,596,580 86,593,717
4,124,997 4,083,459
311,555 319,266
189,543 184,033
Less accumulated depreciation and amortization ............... 121,770,076
$659,075,478
780,845,554 779,352,720
104,140,451
$675,212,269
Approximately $99.0 million of interest on borrowings and $11.8 million of amortization of deferred financing
costs have been capitalized as part of the cost of property; plant and equipment and depreciated over the estimated
useful life of the Power plant. No interest on borrowings and amortization of deferred financing costs were
F-11
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
capitalized to property, plant and equipment in 2006, 2005 and 2004 since the Project started commercial operations
on May 30, 2000.
Total depreciation and amortization related to property, plant and equipment charged to operations amounted
to $17.8 million; $18.6 million and $19.3 million in 2006, 2005 and 2004, Iespectively.
4. Income Taxes
The significant components of the Partnership's deferred tax assets and liabilities at December 31, 2006 and
2005 are as follows:
2oo6 20o5
Current:
Deferred tax assets:
Unrealized foreign exchange losses .............................. $1,252,278 S--
Provision for probable losses ................................... 858,678 --
Loss on retirement of property, plant and equipment ................. 441,950 --
Others ................................................... 180,777 --
Current deferred tax assets ...................................... $2,733,683 $~
Noncurrent:
Deferred tax assets:
Unrealized foreign exchange losses ....................... $21,005,149 $ 3,883,992
Asset retirement obligations ............................ 490,023 398,262
Deferred financing costs ...............................
-- 9,762,369
Valuation allowance on unrealized foreign exchange losses ...... (3,883,992)
Noncurrent deferred tax assets ............................ 21,495,172 10,160,631
Deferred tax liability:
Excess of tax over book depreciation ...................... 1,265,558 629,457
Net noncurrent deferred tax assets .......................... $20,229,614 $ 9,531,174
Deferred income tax provision is provided for the temporary differences in financial reporting of unrealized
foreign exchange losses, accretion and depreciation expenses related to asset retirement obligation, provision for
probable losses, loss on retirement of property, plant and equipment and the excess of tax over book depreciation.
Under accounting principles generally accepted in the U. S., the deferred financing costs were treated as a deferred
asset and amortized, using the effective interest rate method, over the lives of the related loans. Prior to 2006, for
Philippine income tax reporting purposes, deferred financing costs and foreign exchange losses are capitalized and
depreciated as part of the cost of property, plant and equipment except for the depreciation of capitalized unrealized
foreign exchange losses which is not deductible under the Philippine tax base.
The Partnership provided for a full valuation allowance on deferred tax assets pertaining tO capitalized
umealized foreign exchange losses beginning in 2004 in view of a then pending revenue regulation of the Philippine
Bureau of Internal Revenue (BIR) on the use of functional currency other than the Philippine peso which may result
in the write-off of these amounts.
In May 2006, the BIR issued Revenue Regulation 6-2006 formally establishing its position on the use of
Philippine peso as the currency for tax reporting purposes. Furthermore, in July 2006, the Partnership obtained a
F~12
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
ruling from the BIR, effective January 1, 2006, allowing the Partnership to recognize retroactively foreign exchange
losses as deductible expense when realized. With this change, the Partnership recognized a deferred tax asset on the
full tax consequence of the unrealized foreign exchange losses which amounted to $22.3 million as of December 31,
2006 and reversed the valuation allowance on the deferred tax asset on unrealized foreign exchange losses of
$3.9 million as of December 31, 2005.
In August 2006, the Partnership obtained from the BIR a ruling, effective January 1, 2006, allowing the
Partnership to recognize retroactively the amortization of deferred financing costs using the effective interest rate
method over the terms of the related loans to be consistent with the Partnership's accounting treatment.
Consequently, the Partnership reversed the deferred tax asset relating to the excess of accounting over tax
amortization of deferred financing costs of about $9.8 million as of December 31, 2005.
Income from nonregistemd operations of the Partnership is not covered by its income tax holiday incentives.
The current provision for income tax in 2005 pertains to income tax due on interest income from offshore bank
deposits and certain other income. Starting May 30, 2006, the Partnership's income tax holiday incentives expired.
Consequently, the registered operations became subject to the regular corporate income tax rate of 35%.
A reconciliation of the statutory income tax rates to the effective income tax rates as a percentage of income
before income taxes is as follows:
2006 2005 2004
Statutory income tax rates ..................................... 35.0% 32.5% 32.0%
Tax effects of:
The Company's operations ................................... 6.3 5.5 5.4
Change in valuation allowance ................................ (4.8) 1.2 5.5
Change in tax rate ......................................... 3.0 1.0 --
Partnership's operations under income tax holiday .................. (32.8) (40.0) (42.0)
Others .................................................. -- -- 0.3
Effective tax rates ........................................... 6.7% 0.2% 1.2%
Republic Act (RA) No. 9337 was enacted into law effective November 1, 2005 amending various provisions in
the existing 1997 National Internal Revenue Code of the Philippines ( 1997 NIRCP). Among the reforms introduced
by the said RA are as follows:
· Increase in the corporate income tax rate from 32% to 35%, with a reduction thereof to 30% beginning
January 1, 2009;
· Expanded the scope of transactions subject to VAT which includes the sale of generated power;
· Grant of authority to the Philippine President to increase the 10% value added tax (VAT) rate to 12%
effective January 1, 2006, subject to compliance with certain economic conditions;
· Revised invoicing and reporting requirements for VAT; and
· Provided thresholds and limitation on the amount of VAT credits that can be claimed.
Due to the enactment of RA No. 9337, the effective statutory income tax rate as of December 31, 2006 is at
35%. The deferred income tax assets and liabilities were measured using the appropriate corporate income tax rate
on the year it is expected to be reversed or settled.
On January 31, 2006, the BIR issued Revenue Memorandum Circular No. 7-2006 increasing the VAT rate from
10% to 12% effective February 1, 2006.
F-13
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
RA No. 9361 was enacted into law effective December 13, 2006, amending Section 110B of the 1997 NIRCP
and abolishing the limitation on the amount of VAT credits that can be claimed.
5. Notes Payable
The Partnership entered into a $15.0 million Credit Facility Agreement (CFA) with Banco de Oro Universal
Bank (BDO) dated May 11, 2005 for the general working capital requirements of the Partnership. The Partnership
drew down on this facility in May 2005 and November 2005.
The Partnership has paid in full the $3.3 million from the May 2005 drawdown and was able to extend the
maturity of the November 2005 drawdown to September 12, 2007.
In November 2006, the Partnership amended its existing CFA with BDO to increase the total commitment of
BDO under the credit facility to $19.0 million under the same commercial terms as in the existing credit agreement.
The Partnership availed the remaining balance of the total commitment on November 10, 2006.
The outstanding balances of these drawdowns are as follows:
Amount Outstanding Interest
2006 2005 Rate
May 2005 drawdown ..... $ -- $ 3,333,334 LIBOR plus a
margin of 2%
November 2005 drawdown.
November 2006 drawdown.
8,333,333 8,333,333 At market rotes
10,666,667 -- At market rates
$19,000,000 $11,666,667
Due in 2 equal monthly
installments on January 13,
2006 and February 13, 2006
September 12, 2007
September 12, 2007
6. Debt Financing Agreements
The Partnership was financed through the collective arrangement of the Common Agreement, Eximbank-
Supported Construction Credit Facility, Trust Agreement, Uninsured Alternative Credit Agreement, Indenture,
Bank Notes, Bank Letters of Credit, Bonds, Interest Hedge Contracts, Eximbank Political Risk Guarantee, OPIC
Political Risk Insurance Policy, Eximbank Term Loan Agreement, Intercreditor Agreement, Side Letter
Agreements, Security Documents and Equity Documents.
The Common Agreement contains affirmative and negative covenants including, among other items,
restrictions on the sale of assets, modifications to agreements, certain transactions with affiliates, incurrence of
additional indebtedness, capital expenditures and distributions and collateralization of the Project's assets. The debt
is collateralized by substantially all of the assets of the Partnership and a pledge of certain affiliated companies'
shares of stock. The Partnership has complied with the provisions of the debt financing agreements, in all material
respects, or has obtained a waiver for noncompliance from the lenders [see Notes ll(c) and (d)].
(a) Term Loan Agreement
The debt financing agreements contemplated that the outstanding principal amount of the Eximbank-
Supported Construction Loans will be repaid on the Eximbank Conversion Date with the proceeds of a loan
from Eximbank under the Eximbank Term Loan.
Under the Exirabank Term Loan Agreement, Eximbank was to provide for a $442.1 million direct term loan,
the proceeds of which could only be used to refinance the outstanding Eximbank-Supported Construction Credit
Facility and to pay the Eximbank Construction Exposure Fee to Eximbank. This term loan, which would have had
interest at a fixed rate of 7.10% per annum, would have had a 12-year term and would have been amortized in 24
approximately equal semi-annual payments during such term.
F-14
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
In April 2001, in lieu of the Eximbank Term Loan, the Partnership availed of the alternative refinancing of the
Eximbank-Supported Construction Loans allowed under the Eximbank Option Agreement through an Export
Credit Facility guaranteed by Eximbank and financed by Private Export Funding Corporation (PEFCO). Under the
terms of the agreement, PEFCO established credit in an aggregate amount of $424.7 million which bears interest at
a fixed rate of 6.20% per annum and payable under the payment terms identical with the Eximbank Term Loan.
Upon compliance with the conditions precedent as set forth in the Term Loan Agreement, the PEFCO Term Loan
was drawn and the proceeds were applied to the Eximbank-Supported Construction Loans.
Amendments to the Omnibus Agreement were made to include, among other things, PEFCO as a party to the
Agreement in the capacity of a lender.
Annual future amortization payments for the next five years ending December 31 are as follows:
2007 ............................................................. $35,389,726
2008 ............................................................. 35,389,726
2009 ............................................................. 35,389,726
2010 ............................................................. 35,389,726
2011 ............................................................. 35,389,726
and thereafter ....................................................... 35,389,727
(b) Uninsured Alternative Credit Agreement
The Uninsured Alternative Credit Agreement provides for the arrangement of Construction Loans, Refunding
Loans and Cost Overrun Loans (collectively, the Uninsured Alternative Credit Facility Loans) as well as the
issuance of the PPA Letter of Credit and the Coal Supply Letter of Credit.
In July 1997, the Partnership terminated commitments in excess of $30 million in respect of the Construction
Loans in connection with the issuance of the bonds. The Construction Loans will have a seven-year term and will be
amortized in 14 semi-annual payments during such term commencing on JanuaE~ 15, 2001. Interest will accrue at a
rate equal to LIBOR plus a margin of 2.75% to 3.25%.
As of December 31, 2006 and 2005, approximately $3.4 million and $9.0 million, respectively, were
outstanding with respect to the Construction Loans. The $3.4 million outstanding as of December 31, 2006
will be repaid in two equal semi-annuai installments in 2007.
There were no outstanding balances at December 31, 2006 and 2005 for the Refunding Loans and Cost
Overrun Loans.
(c) Trust and Retention Agreement
The Trust and Retention Agreement provides, among others, for 6) the establishment, maintenance and
operation of one or more U.S. dollar and Philippine peso accounts into which power sales revenues and other
project-related cash receipts of thc Partnership will be deposited and from which all operating and maintenance
disbursements, debt service payments and equity distributions will be made; and (ii) the sharing by thc lenders on a
pari passu basis of the benefit of certain security.
(d) Bonds Payable
Bonds payable represents the proceeds from the issuance of the $215.0 million in aggregate principal amount
of the Partnership's 8.86% Senior Secured Bonds Due 2017 (the Series 1997 Bonds). The interest rate is 8.86% per
annum and is payable quarterly on March 15, June 15, September 15 and December 15 of each year (each, a Bond
Payment Date), with the first Bond Payment Date being September 15, 1997. The principal amount of the
Series 1997 Bonds is payable in quarterly installments on each Bond Payment Date occurring on or after
F-15
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
September 15, 2001 with the Final Maturity Date on June 15, 2017. The proceeds of the Series 1997 Bonds were
applied primarily by the Partnership to the payment of a portion of the development, construction and certain initial
operating costs of the Project.
The Series 1997 Bonds are treated as senior secured obligations of the Partnership and rank pad passu in right
of payment with all other credit facilities, as well as ail other existing and future senior indebtedness of the
Partnership (other than a working capitai facility of up to $15.0 million, subject to escalation), and senior in right of
payment to all existing and future indebtedness of the Partnership that is designated as subordinate or junior in right
of payment to the Series 1997 Bonds. The Series 1997 Bonds are subject to redemption by the Partnership in whole
or in pa,n, beginning five years from the date of issuance, at par plus a make-whole premium, calculated using a
discount rate equal to the applicable U.S. Treasury rate plus 0.75%.
Annual future amortization payments for the next five years ending December 31 are as follows:
2007 ............................................................ $ 10,750,000
2008 ............................................................ 12,900,000
2009 ............................................................ 12,900,000
2010 ............................................................ 12,900,000
2011 ............................................................ 12,900,000
and thereafter ...................................................... 120,400,000
7. Related Party Transactions
Due to the nature of the ownership structure, the majority of the transactions were among the Company, the
Partnership and the Partners, their affiliates or related entities.
The following approximate amounts were paid to affiliates of the Partners for the operation and maintenance
and management of the Project under the agreements discussed in Note 9:
2006 2005 2004
Covanta ................................... $26,854,303 $29,524,335 $40,564,370
InterGen ................................... 1,794,111 1,599,178 2,400,924
As of December 31, 2006 and 2005, the net amounts due from affiliated companies related to costs and
expenses incurred and cash advanced by the Project were $187,158 and $120,476, respectively.
F-16
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Capital Stock
2oo6
Number of
Shares
Class A, $0.01 par value:
Authorized ............................... 1,000,000
Issued .................................. 26,151
Class B, $0.01 par value:
Authorized ............................... 1,000,000
Issued .................................. 2,002
Class C, $0.01 par value:
Authorized ............................... 1,000,000
Issued .................................. 71,947
Class D, $0.01 par value:
Authorized ............................... 10
Issued .................................. 10
2oo5
Number of
Amount Shares Amount
1,000,000
$ 262 26,151 $ 262
1,000,000
20 2,002 20
1,000,000
719 71,947
719
10
-- 10 --
$1,001 $1,001
Class A and Class C shares have an aggregate 100% beneficial economic interest and 98% voting interest in the
Company divided among the holders of the Class A and Class C shares. ClaSs B shares have a 2% voting interest in
the Company. On October 18, 2004, the shareholders of the Company entered into a Third Amended and Restated
Development and Shareholders Agreement (D&S Agreement) to, among others, add GPI as party to the D&S
Agreement as a shareholder and holder of newly issued Class D shares. Class D shares have no economic interest,
no right to dividends and other distributions and no voting rights other than the power to appoint a director and an
alternate director.
9. Commitments and Contingencies
The Partnership has entered into separate site lease, construction, energy sales, electric transmission, coal
supply and transportation, operations and maintenance and project management agreements.
In connection with the construction and operation of the Project, the Partnership is obligated under the
following key agreements:
(a) Offiake Agreements -- General Terms
PPA
The Partnership and Meralco are parties to the PPA (as amended on June 9, 1995 and December 1, 1996). The
PPA provides for the sale of electricity from the Partnership's Generation Facility to Meralco. The term extends
25 years from the Commercial Operations Date, as defined in the PPA. As disclosed in Note l(c), the Commercial
Operations Date occurred on May 30, 2000.
The PPA provides that commencing on the Commercial Operations Date, the Partnership is required to deliver
to Meralco, and Meralco is required to take and pay for, in each year a minimum guaranteed electrical quantity
(MGEQ) of kWhs of net electrical output (NEO). The Parmership's delivery obligations are measured monthly and
annually.
Meralco is obligated to pay to the Partnership each month a monthly payment consisting of the following: (i) a
Monthly Capacity Payment, (ii) a fixed Monthly Operating Payment, (iii) a variable Monthly Operating Payment
F-17
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
and (iv) a Monthly Energy Payment. Under the PPA and related foreign exchange protocols between the parties,
Meralco may pay the dollar denominated components of the Monthly Capacity Payment, the Monthly Energy
Payment and the Monthly Operating Payment in U.S. dollars or in Philippine pesos based on prevailing exchange
rates at the time of payment.
Under the PPA, the Partnership has provided Meralco with a letter of credit in the amount of $6.5 million to
secure its obligations under the PPA.
TLA
Under the TLA dated as of June 13, 1996 (as amended on December 1, 1996) between the Partnership and
Meralco, the Partnership accepted responsibility for obtaining all necessary rights-of-way for, and the siting, design,
construction, operation and maintenance of the Transmission Line. The term of the TLA will extend for the duration
of the term of the PPA, commencing on the date of execution of the TLA and expiring on the 25th anniversary of the
Commercial Operations Date. Under the TLA, Meralco is obligated to make a monthly Capital Cost Recovery
Payment and a Monthly Operating Payment to the Partnership.
(b) OtItake Agreements -- Re-Negotiation and Capital Cost Recovery Payment History
Initial PPA Discussions
During the initial operating period (May 2000 through October 2001), the Plant did not provide the required
NEO to Meralco. Under the terms of the PPA, Meralco was entitled to specified shortfall payments for each kWh of
shortfall which would have reimbursed Meralco for a portion of the Monthly Capacity Payment and Monthly Fixed
Operating Payment.
In mid-2001, Meralco requested that the Partnership renegotiate certain terms of the PPA. In addition, Meralco
withheld payments of approximately $10.8 million ($2.3 million of which was otherwise payable to Meralco as
shortfall penalties in accordance with the PPA). A provision had already been recognized for the $8.5 million
Meralco withheld amount for which there were no offsetting shortfall penalties payable. The nature of the proposed
changes, agreements in principle and agreements that were executed but never became effective has evolved since
2001.
In 2002, the parties agreed in principle to the following changes to the PPA (which did not become effective):
· The parties would increase the amount of shortfall payments to be equal to the per kWh full Capacity
Payment and the Fixed Operating Payment, thereby placing availability risk with the Partnership.
· The Partnership would provide Meraico a $40.1 million rebate payable over 6 years.
· Meralco would pay the Monthly Capacity Payment, the Monthly Fixed Operating Payment and the Monthly
Variable Operating Payment based on the availability of the Plant.
· Meralco would reimburse the Partnership for extra fuel cos[s due to low dispatch of the Plant.
· As consideration for full settlement, the Partnership would pay the $8.5 million withheld amount to Meralco.
Transmission Line Capital Cost Disallowance and Partial CCRP Deferral
In 2003, the ERC issued a preliminary order dated March 20, 2003 disallowing a portion of the capital cost
associated with the construction of the transmission line. While confirming that the Partnership would be entitled to
payment by Memlco of the full CCRP despite the ERC order, Memlco requested and the Partnership agreed to the
deferral of a portion of the CCRP on a temporary basis and subject to resolution of all outstanding issues.
In 2004, the ERC issued its final order dated September 20, 2004 disallowing approximately 30% of the capital
cost associated with the construction of the transmission line. That order allowed Meralco to recover $60.7 million
F-18
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
of transmission line costs out of the total $88.8 million actual costs incurred by the Partnership and disallowed
$28.1 million of the total composed mainly of schedule extension costs. The impact of that decision on Meralco was
to reduce the annual CCRP that may be recovered by Meralco from its customers from $13.2 million to $9.0 million.
The monthly impact amounted to approximately $350,000 per month.
At approximately the same time, the Parmership reduced the temporary CCRP deferral amount. Meralco also
paid excess past deferrals to the Partnership.
Continuing PPA and TLA Amendment Discussions
The parties have continued to discuss possible amendments to the PPA consistent with the points that were
proposed in 2002.
In 2004, based on the aforementioned ERC orders, Meralco requested a reduction of the CCRP from March 26,
2003 through its remaining term in lieu of the $40.1 million six-year PPA rebate.
In 2005, Meralco again requested the Partnership to consider possible alternatives to evolving amendments to
the PPA and the 'FLA. This prompted a reevaluation by the Partnership of the provisions to be recognized as a resalt
of the renegotiations of the PPA and the TLA. As a result of this reevaluation, the Parmership recognized a
contingency to reflect management's best estimate of the probable loss from the reasonably expected CCRP
reduction amendment to the TLA. This estimate assumes that a full resolution with Meralco can be agreed and that
the required approvals will be received.
In 2006, the parties have continued to discuss proposals for resolution of outstanding offtake issues.
The total outstanding CCRP deferred for collection amounted to $16.1 million and $11.9 million as of
December 31, 2006 and 2005, respectively.
The existing PPA and the existing TLA remain effective. The potential effect of any proposals to amend the
PPA and TLA are based on the reasonable expectations of management consistent with applicable accounting
principles and taking into account the likely retroactive effect of a~y such amendments. Any amendments to either
the PPA or TLA would be subject to lender consent, approval of the board of directors of the general partner of the
Partnership and appropriate regulatory approvals.
(c) Coal Supply Agreements
In order to ensure that there is an adequate supply of coal to operate the Generation Facility, the Partnership has
entered into two coal supply agreements (CSA) with the intent to purchase approximately 70% of its coal
requirements from PT Adaro Indonesia (Adaro) and the remainder of its coal requirements from PT Kaltim Prima
Coal (Kaltim Prima, and together with Adaro, the Coal Suppliers). The agreement with Adaro (the Adaro CSA) will
continue to be in effect until October 1,2022. If the term of the Coal Cooperation Agreement between Adaro and the
Ministry of Mines and Energy of the Government of the Republic of Indonesia is extended beyond October 1, 2022,
the Partnership may elect to extend the Adaro CSA until the earlier of the expiration of the PPA or the expiration of
the extended C0al Cooperation Agreement, subject to certain conditions. The agreement with Kaltim Prima (the
Kaltim Prima CSA) has a scheduled termination date 15 years after the Commercial Operations Date. The
Partnership may renew the Kaltim Prima CSA for two additional five-year periods by giving not less than one year
prior written notice. The second renewal period will be subject to the parties agreeing to the total base price to be
applied during that period.
The Partnership is subject to minimum take obligations of 900,000 Metric Tonnes (MT) for Adaro and
360,000 MT for Kaltim Prima.
In 2003, the Partnership and its coal suppliers started discussions on the use of an alternative to the Australian-
Japanese benchmark price, which is the basis for adjusting the energy-base price under the Partnership's CSA. On
F-19
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
November 18, 2004, the Adaro CSA was amended to reflect the change in the benchmark price. Both parties agreed
to use the six-month rolling average of the ACR Asia Index with a certain discount as the new benchmark price
applied retroactively to April 1, 2003.
With respect to Kaitim Prima, the Project and Kaltim Prima, finalized in March 2006 the price adjustment for
coal shipments during the period April 2005 up to March 2006 which was consistent with the amounts already
provided for in 2005. The Partnership and Kaitim Prima agreed to continue to use the Australian-Japanese
benchmark price.
(d) Operations and Maintenance Agreement
The Partnership and Covanta Philippines Operating, Inc. (the Operator; formerly Ogden Philippines
Operating, Inc.), a Cayman Islands corporation and a wholly owned subsidiary of Covanta Projects, Inc. (CPI;
formerly Ogden Projects, Inc.), a subsidiary of CEGI, have entered into the Plant Operation and Maintenance
Agreement dated December 1, 1995 (as amended on February 29, 1996, December 10, 1996 and October 18, 2004,
the O&M Agreement) under which the Operator assumed responsibility for the operation and maintenance of the
Project pursuant to a cost-reimbursable contract. CPI, pursuant to an O&M Agreement Guarantee, guarantees the
obligations of the Operator. The initial term of the O&M Agreement extends 25 years from the Commercial
Operations Date. Two automatic mnewais for successive five year periods are available to the Operator, provided
that (i) the PPA has been extended; (ii) no default by the Operator exists; and (iii) the O&M Agreement has not been
previously terminated by either party. The Partnership is obligated to compensate the Operator for services under
the O&M Agreement, m reimburse the Operator for all reimbursable costs one month in advance of the incurrence
of such costs and to pay the Operator a base fee and certain bonuses. In certain circumstances, the Operator could be
required to pay liquidated damages depending on the operating performance of the Project, subject to contractual
limitations. Beginning on Provisional Acceptance, as def'med in the O&M Agreement, the Partnership is obligated
to pay the Operator a monthly fee of $160,000, subject to escalation.
The Operator may earn additional fees or reduced fees based on defined results with respect to output or
reduced operating costs. The 2004 amendments to the O&M Agreement brought several changes including changes
in the terms conceming material breach of the O&M Agreement; introduction of surviving service fees to the
Operator in case the agreement is pre-terminated; changes in the methodology of computing additions or reduction
in fees when NEO is greater or less than the MGEQ of each contract year; and introduction of banked hours that can
be applied to future reductions in fees or exchanged for cash subject to a 5 year expiration period. The adjustments
in Operator's fee, including the cash value of all banked hours accrued during a contract year, shall not exceed
$1.0 million, adjusted pursuant to an escalation index. These amendments in the O&M :Agreement were effective
from December 26, 2003.
(e) Management Services Agreement
The Partnership has entered into the Project Management Services Agreement, dated as of September 20, 1996
(as amended, the Management Services Agreement), with InterGen Management Services (Philippines), Ltd. (as
assignee of International Generating Company, Inc.), an affiliate of InterGen N.V., (the Manager), pursuant to
which, the Manager is providing management services for the Project. Pursuant to the Management Service~
Agreement, the Manager nominates a person to act as a General Manager of the Partnership, and, acting on behalf of
the Partnership, to be responsible for the day-to-day management of the Project. The initial term of the Management
Services Agreement extends for a period ending 25 years after the Commercial Operations Date, unless terminated
earlier, with provisions for extension upon mutually acceptable terms and conditions. InterGen N.V., pursuant to a
Project Management Services Agreement Guarantee dated as of December 10, 1996, guarantees the obligations of
the Manager.
The Partnership is obligated to pay the Manager an annual fee equal to $400,000 subject to escalation after the
first year relative to an agreed-upon index payable in 12 equal monthly installments.
F-20
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Similar to the O&M Agreement, amendments to the Management Services Agreement were made in 2004.
Significant changes to the Management Services Agreement include, among others, amendments to the duties of
the Manager, General Manager, rights of the Partnership, acting through the BOD of QPI, to audit the Manager's
procedures and past practices, changes in termination provisions and the introduction of a Surviving Management
Fee in case the agreement is pm-terminated. The amendments to the Management Services Agreement also have a
retroactive effect beginning December 26, 2003.
(f) Project Site Lease, Transmission Line Site Lease and Foreshore Lease Agreements
Due to Philippine legal requirements that limit the ownership interests in real properties and foreshore piers
and utilities to Philippine nationals and in order to facilitate the exercise by Meralco of its power of condemnation
should it be obligated to exercise such powers on the Purtnership's behalf, Meralco owns the Project Site and leases
the Project Site to the Partnership. Meralco has also agreed in the Foreshore Lease Agreement dated January 1,
1997, as amended, to lease from the Philippine government the foreshore property on which the Project piers were
constructed, to apply for and maintain in effect the permits necessary for the construction and operation of the
Project piers and to accept ownership of the piers.
The Company has obtained rights-of-way for the Transmission line for a majority of the sitos necessary to
build, operate and maintain the Transmission line. Meralco has agreed, pursuant to a letter agreement dated
December 19, 1996, that notwithstanding the provisions of the TLA that anticipates that Meralco would be the
lessor of the entire Transmission Line Site, Meralco will only be the Transmission Line Site Lessor with respect to
rights-of-way acquired through the exercise of its condemnation powers.
The Company, as lessor, and the Partnership, as lessee, have entered into the Transmission Line Site Leases,
dated as of December 20, 1996, with respect to real property required for the construction, operation and
maintenance of the Transmission line other than rights-of-way to be acquired through the exercise of
Meralco's condemnation powers. The initial term of each of the Project Site Leases and each of the
Transmission Line Site Leases (collectively, the Site Leases) extends for the duration of the PPA, commencing
on the date of execution of such Site Lease and expiring 25 years following the Commercial Operations Date. The
Partnership has the right to extend the term of any Site Lease for consecutive periods of five years each, provided
that the extended term of such Site Lease may not exceed 50 years in the aggregate.
(g) Community Memorandum of Agreement
The Partnership has entered into a Community Memorandum of Agreement (MOA) with the Province of
Quezon, the Municipality of Mauban, the Barangay of Cagsiay and the Department of Environmental and Natural
Resources (DENR) of the Philippines. Under the MOA, the Partnership is obligated to consult with local officials
and residents of the Municipality and Barangay and other affected parties about Project related matters and to
provide for relocation and compensation of affected families, employment and community assistance funds. The
funds include an electrification fund, development and livelihood fund and reforestation, watershed, management
health and/or environmental enhancement fund. Total estimated amount to be contributed by the Partnership over
the 25-year life and during the construction period is approximately $16.0 million. In accordance with the MOA, a
certain portion of this amount will be in the form of advance financial assistance to be given during the construction
period.
In addition, the Partnership is obligated to design, construct, maintain and decommission the Project in
accordance with existing roles and regulations. The Partnership deposited the amount of P5.0 million (about
$94,000) to an Environmental Guarantee Fund for rehabilitation of areas affected by damage in the environment,
monitoring compensation for parties affected and education activities.
F-21
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
10. Fair Value of Financial Instruments
The required disclosures under SFAS No. 107, Disclosure about Fair Value of Financial Instruments, follow:
The financial instruments recorded in the consolidated balance sheets include cash, accounts receivable, due
from (to) affiliated companies, notes payable, accounts payable and accrued expenses, loans payable and bonds
payable. Because of their short-term maturities, the car~ing amounts of cash, accounts receivable, due from (to)
affiliated companies, notes payable and accounts payable and accrued expenses approximate their fair values.
The fair value of long-term debt was based on the following:
Debt Type Fair Value Assumptions
Term loan ................... Estimated fair value is based on the discounted value of future
cash flows using the applicable risk free rates for similar types
of loans adjusted for credit risk.
Bonds payable ............... Estimated fair value is based on the discounted value of future
cash flows using the latest available yield percentage of the
Partnership's bonds prior to balance sheet dates.
Other variable rate loans ........ The carrying value approximates fair value because of recent
and frequent repricing based on market conditions.
Following is a summary of the estimated fair value (in millions) as of December 31, 2006 and 2005 of the
Partnership's financial instruments other than those whose carrying amounts approximate their fair values:
2OO6 2OO5
Term loan -- $212.3 in 2006 and $247.7 in 2005 ......................... $204.2 $224.6
Bonds payable -- $182.8 in 2006 and $190.3 in 2005 ..................... 192.6 184.7
11, Other Matters
(a) Electric Power Industry Reform Act (EPIRA)
Republic Act No. 9136, the EPIRA, and the coveting Implementing Rules and Regulations (IRR) provides for
significant changes in the power sector, which include among others:
(i) The unbundling of the generation, transmission, distribution and supply and other disposable assets of
a company, including its contracts with independent power producers and electricity rates;
(ii) Creation of a Wholesale Electricity Spot Market; and
(iii) Open and non-discriminatory access to transmission and distribution systems.
The law also requires public listing of not less than 15% of common shares of generation and distribution
companies within 5 years from the effective date of the EPIRA. It provides cross ownership restrictions between
transmission and generation companies and between transmission and distribution companies and a cap of 50% of
its demand that a distribution utility is allowed to source from an associated company engaged in generation except
for contracts entered into prior to the effective date of the EPIRA. In 2005, the Partnership has requested for
clarification from the ERC on the applicability of the public offering requirement under the provisions of the EPIRA
since it is in the form of a limited partnership and not a stock corporation. As of February 9, 2007, the Partnership
has not yet received any confirmation from ERC on this matter.
There are also certain sections of the EPIRA, specifically relating to generation companies, which provide for:
(i) a cap on the concentration of ownership to only 30% of the installed capacity of the grid and/or 25% of
the national installed generating capacity; and
(ii) VAT zero-rating of sale of generated power.
F-22
QUEZON POWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Starting November 1, 2005, by virtue of RA No. 9337, sale of generated power was subject to VAT (see Note 4).
The Partnership is complying with the applicable provisions of the EPIRA and its law.
(b) Clean Air Act
The Clean Air Act and the related IRR contain provisions that have an impact on the industry as a whole, and to
the Partnership in particular, that need to be complied with within 44 months from the effective date or by July 2004.
Based on the assessment made on the Partnership's existing facilities, the Partnership believes it complies with the
provisions of the Clean Air Act and the related IRR.
(c) Insurance Coverage Waiver
The Partnership was able to improve insurance coverage for the April 2006 to March 2007 insurance coverage
period. However, the insurance coverage amounts required by the lenders under the debt financing agreements still
have not been met due to market unavailability on commercially reasonable terms, based on determinations of the
Partnership's insurance advisor and the lenders' insurance advisor. Consequently, the Partnership requested, and
was granted by the requisite lender representatives, a waiver of certain insurance requirements. The latest waiver
received by the Partnership is effective until March 31, 2007, the end of the current insurance coverage period.
(d) PPA Default Waiver
In 2002, the Partnership successfully obtained consent from the requisite percentage of senior lenders to waive
on an interim basis the non-payment by Meralco of the $8.5 million [see Note 9(b)]. This interim waiver by the
Partnership had the effect of temporarily abating the effect of Memlco's non-payment. All conditions to the lenders'
consent for the interim waiver have been fulfilled or removed. '
In 2005, the Partnership elected to, in accordance with the project financing agreements, write-off the
$8.5 million withheld amount as an adjustment to receivables in the ordinary course of business.
F-23
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BERKLEY REGIONAL INSURANCE COMPANY
STATEMENT, DECEMBER 31, 2006
(AMOUNTS IN THOUSANDS)
STATUTORY BALANCE SHEET
Admitted Assets
Bonds
Common & Preferred Stocks
Cash & Short Term Investments
Premiums Receivable
Other Assets
$ 1,043,006
648,051
118,517
326,098
266,644
Total Admitted Assets
$ 2,402,316
Liabilities & Surplus
Loss & LAE Reserves
Unearned Premium Reserves
Other Liabilities
$ 1,079,621
594,358
63,371
Total Liabilities
$1,737,350
Capital Stock
Additional Paid In Capital
Unassigned Surplus
Total Policyholders' Surplus
Total Liabilities & Surplus
4,000
347,723
313,243
$ 664,966
$ 2,402,316
Officers:
President:
Treasurer:
Sr. Vice President:
Vice President:
Vice President:
Corporate Secretary:
William Robert Berkley
Robert Floyd Buehler
Eugene George Ballard
Robert Paul Cole
Clement Patrick Patafio
Ira Seth Lederman
Directors:
William Robert Berkley
Eugene George Ballard
Robert Paul Cole
William Robert Berkley, Jr.
Ira Seth Lederman
Clement Patrick Patafio
James Gerald Shiel
Paul James Hancock
Robert C. Hewitt
No. 125a
POWER OF ATTORNEY
BERKLEY REGIONAL INSURANCE COMPANY
WILMINGTON, DELAWARE
NOTICE: The warning found elsewhere in this Power of Attorney affects the validity thereof. Please review carefully.
KNOW ALL MEN BY THESE PRESENTS, that BERKLEY REGIONAL INSURANCE COMPANY (the "Company"), a
corporation duly organized and existing under the laws of the State of Delaware, having its principal office in Greenwich,
Connecticut, has made, constituted and appointed, and does by these presents make, constitute and appoint: Glen J. Radovich,
John R. Keane or Jeffrey W. Radovich of lnsight Companies, Inc. of Plainview, NY
its true and lawful Attorney-in-Fact, to sign its name as surety only as delineated below and to execute, seal, acknowledge and
deliver any and all bonds and undertakings, with the exception of Financial Guaranty Insurance, providing that no single obligation
shall exceed Fifteen Million and 00/100 Dollars ($15,000,000.00), to the same extent as if such bonds had been duly executed
and acknowledged by the regularly elected officers of the Company at its principal office in their own proper persons.
This Power of Attorney shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware,
without giving effect to the Principles of conflicts of laws thereof. This Power of Attorney is granted pursuant to the following
resolutions which were duly and validly adopted at a meeting of the Board of Directors of the Company held on August 21, 2000:
"RESOLVED, that the proper officers of the Company are hereby authorized to execute powers of attorney authorizing and
qualifying the attorney-in-fact named therein to execute bonds, undertakings, recognizances, or other suretyship obligations on
behalf of the Company, and to affix the corporate seal of the Company to powers of attorney executed pursuant hereto; and
further
RESOLVED, that such power of attorney limits the acts of those named therein to the bonds, undertakings, recognizances, or
other suretyship obligations specifically named therein, and they have no authority to bind the Company except in the manner
and to the extent therein stated; and further
RESOLVED, that such power of attorney revokes all previous powers issued on behalf of the attorney-in-fact named; and
further
RESOLVED, that the signature of any authorized officer and the seal of the Company may be affixed by facsimile to any power
of attorney or certification thereof authorizing the execution and delivery of any bond, undertaking, recognizance, or other
suretyship obligation of the Company; and such signature and seal when so used shall have the same fome and effect as though
manually affixed. The Company may continue to use for the purposes herein stated the facsimile signature of any person or
persons who shall have been such officer or officers of the Company, notwithstanding the fact that they may have ceased to be
such at the time when such instruments shall be issued."
IN WITNESS WHEREOF, the Company has caused thes.e presents to be signed and attested by its appropriate officers and its
corporate seal hereunto affixed this ~ day of ~ ,2007.
(Seal)
Attest: ~
By e~"A~
Ira S. Lederman
Senior Vice President & Secretary
Berkley Rgg~nal Insurance Company
Ro-bert P. Cole
Senior Vice President
WARNING: THIS POWER INVALID IF NOT PRINTED ON BLUE "BERKLEY' SECURITY PAPER.
STATE OF CONNECTICUT )
COUNTY OF FAIRFIELD )
Sworn to before me, a Notary Public in thc State of Connecticut, this ~ day of ~,,~.~ 2007, by Robert P. Cole and Ira S. Lederman
who are sworn to me to be the Senior Vice President, and the Sanlor Vice President"and Secretary, respectively, of Berkley Regional Insurance
Company.
EILEEN K. KILLEEN
NOTARY PUBLIC Notary Public, State ~f Connecticut
MY COMMISSION EXPIRES 6/30/2007
CERTIFICATE
1, the undersigned, Assistant Secretary of BERKLEY REGIONAL INSURANCE COMPANY, DO HEREBY CERTIFY that the foregoing is a
tree, correct and complete copy of the original Power of Attorney; that said Power of Attorney has not been revoked or rescinded and that the
authority of the Attorney-in-Fact set forth therein, who executed the bond or undertaking to which this Power of Attorney is aR,ached, is in full
force and effect as cf this date.
Given under my hand and seal of the Company, this ~ "/,N~' day of
BIDDER'S SOLICITATION
SOLID WASTE HAUL AND DISPOSAL SERVICES
AGREEMENT DOCUMENTS
TOWN OF SOUTHOLD
STATE OF NEW YORK
TOWN OfSOUTHOLD
Originally Prepared by:
Solid Waste Task Force
Technical Committee
53095 Main Road
Southold, NY 11971
May 2007
NOTICE TO BIDDERS
Solid Waste Haul-Disposal Services
The Town of Southold will receive sealed bids for solid waste haul-disposal services until the
time and at the location herein specified which, will then be opened and publicly read aloud;
PLACE:
Office Of the Town Clerk
Southold Town Hall
53095 Main Road
Southold New York 11971
(631) 765-1800
DATE: June 14, 2007
TIME: 10:00 AM
(LATE BIDS WILL NOT BE OPENED)
The offer to be made in accordance with this Bid Solicitation shall include a bid on the
following:
A bid price per ton, to provide equipment and labor for
hauling solid waste and disposing solid waste at the
Contractor's Solid Waste Disposal Site. The term of this
Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three (3) additional option years (see Section 18.0~ p. 21).
Notwithstanding contractual or other legal reasons for terminating this
Agreement, this Agreement will be guaranteed for a two (2) year term, through
June 30, 2009.
Bids must be made in writing on the forms fumished and shall be accompanied by a Bid
Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit
made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars
($100,000.00) wherein the named obligee shall be the Town of Southold.
The successful Bidder shall be required to furnish a performance Bond. and insurance in
accordance with the instructions in the Bid Solicitation.
The bid price shall not include any tax, Federal, state, or local, from which the Town of
Southold is exempt.
A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids,
but may withdraw his Bid at any time prior to the scheduled time for the opening of bids.
The Town reserves the right to reject any or all bids and to waive informalities, should this
action be in the best interest of the Town of Southold.
2
Bid Solicitation containing submission requirements, instructions, technical specifications,
and bidding forms may be examined free of charge and at the following location on weekdays
from 8:00 A.M. to 4:00 P.M.:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Upon payment of non-refundable fifty dollars ($150.00) Bid Solicitation may be picked up
at:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck,
Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Bunchuck's office is at the
Southold Town Transfer Station, located at:
Southold Town Solid Waste District
1 Zack's Lane
Cutchogue, New York 11935
Entrance to the facility is gained from Cox Lane, off County Rt. # 48. All bidders are
encouraged to inspect the Southold Town Transfer Station. Appointments to do so are not
required, but may be scheduled by calling Mr. Bunchuck at the phone number above.
Elizabeth A. Neville
Town Clerk
For further information regarding bidding requirements, contact Elizabeth A. Neville (631) 765-
1800. For information regarding Town Of Southold waste program and haul-disposal operations,
contact James Bunchuck (631) 734-7685.
3
TABLE OF CONTENTS
GLOSSARY OF TERMS
SECTION A- SUBMISSION REQUIREMENTS
1.0 Project Purpose
2.0 Schedule
3.0 Examination Of Agreement Documents
4.0 Information to be Submitted
4.1 Contractual Bid
4.2 Supplemental Information
5.0 Bid Format
5.1 Binding
5.2 Form Preparation
6.0 Submission of Bid
6.1 Withdrawal Of Bids
6.2 Questions & Addenda
7.0 Bid Guaranty
8.0 Execution Of Agreement
9.0 Consideration Of Bids
10.0 Selection Of Contractor
11.0 Acceptance of Bid
12.0 Assignment
13.0 Limitation Of Funds Available
14.0 Insurance and Bonds
14.1 Insurance
14.2 Bonds
15.0 Indemnity (Hold Harmless)
16.0 Payments
17.0 Default
18.0 Term of Agreement
19.0 Service Agreement
20.0 Subcontracts
21.0 Rights and Options
SECTION B - BID SPECIFICATION
1.0 Requirements
2.0 Program Goals and Objectives
3.0 Potential Regulatory and Operational Changes
4.0 Character Of The Solid Waste
4.1 Quality and Characteristics
5.0 Program Activities
5.1 Collection
5.2 Loading Mode
5.3 Town of Southold Accident and Damage Policy
5.4 NYSDEC Part 360 Permit to Operate
10
11
11
12
13
13
13
15
15
15
15
15
16
16
16
17
17
18
18
18
18
18
20
20
21
21
21
21
22
22
23
24
25
25
25
26
26
26
27
27
27
4
6.0 Haul Services
6.1 Transport Mode
6.2 Work Included
6.3 Equipment
6.4 Weighings
6.4 Routing Mode - Contractor's Responsibility
7.0 Disposal Services Program Activities
7.1 Work Included
7.2 Operational Capacity
7.3 Permit Requirements
7.3.1 Disposal Sites Inside State Of New York
7.3.2 Disposal Sites Outside State of New York
7.4 Weighings
8.0 Safety and Health Regulations
9.0 Operations and Procedures
9.1 Supporting Data
SECTION C - TOWN OF SOUTHOLD SOLID WASTE
HAUL/DISPOSAL SERVICES
1.0 Intent
2.0 General Bid Statement
3.0 Unit Price Bid Schedule 3.1 Compensation
3.2 Evaluation Unit Bid Price Formula
4.0 Bid Security Acknowledgment
5.0 Information Schedules
Information Schedule A
Information Schedule B
Information Schedule C
Information Schedule D
Information Schedule E
Information Schedule F
Information Schedule G
Information Schedule H
Information Schedule I
Information Schedule J
Information Schedule K
Information Schedule L
Information Schedule M
27
27
28
28
29
29
29
30
30
30
31
31
33
33
34
35
36
37
37
41
41
42
42
42
SECTION D - APPENDICES
Appendix A Sample Operating Agreement
Appendix B New York State Department of Environmental Conservation Permit
Appendix C Accident Report
6
GLOSSARY OF TERMS
ADMINISTRATOR -Shall mean the Coordinator of municipal solid waste (or his agent) of the
Town of Southold, New York.
AGREEMENT- Shall mean a Form operating agreement set forth by the Town and resulting
from this Bid Solicitation between the Town of Southold and the successful Bidder to be
executed in 1997.
AGREEMENT DOCUMENTS -Shall include the notice to bidders, instructions, bid solicitation,
bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance
bond, certificates of insurance, glossary of terms any general conditions or special conditions,
and any addenda. The Agreement Documents will Form a part of the Agreement.
AGREEMENT YEAR -Shall mean the period from ~Julv 1_, of a calendar year to _June 30, of
the next calendar year.
BIDDER -Shall mean any party or parties submitting in proper form a bid to perform the work as
specified in the Agreement Documents. The successful Bidder selected by the Town to perform
the specified work will thereafter be known as the Contractor.
BID PRICE -Shall mean the unit cost to determine the ranking of bidders.
BID SOLICITATION-Shall mean this document, specifications, and any bid addenda issued.
COMMENCEMENT DATE -Shall mean July 1, 2007_.
CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) -Shall mean solid
waste resulting from the construction, renovation, equipping, remodeling, repair and demolition
of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other
masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and
roofing shingles.
CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) DISPOSAL
SITES -Shall mean any site designated by the Contractor where construction and demolition
debris is disposed of in a manner that minimizes environmental hazards and is permitted under
the design and operation requirements of 6NYCRR Part 360 or alternatively outside the State of
New York, is permitted under design and operation requirements meeting the requirements of 1)
that jurisdiction's applicable regulatory agency and 2) Town of Southold's minimum standards.
GLOSSARY-I
CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents.
CONTRACT YEAR - Shall have the same meaning as Agreement Year.
CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors,
administrators, agents, or successors thereofi
COORDINATOR - Shall mean the coordinator of municipal solid waste for the Town of
Southold.
COUNTY - Shall mean Suffolk County, State Of New York.
DAILY - Sunday to Saturday, inclusive.
EPA - Environmental Protection Agency (Federal).
HAUL-DISPOSAL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in
dollars for each ton of solid waste actually hauled from the Town Of Southold Transfer Station
to the Contractor-Designated Disposal Site and disposed of at the Contractor-Designated
Disposal Site.
HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.. or "hazardous substance" as
defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., or "hazardous waste" as defined under New York Environmental
Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time,
and the regulations promulgated thereunder, and any analogous or succeeding Federal, state or
local law, rule or regulation and regulations promulgated thereunder and (2) any other material
which any governmental agency or unit having appropriate jurisdiction shall determine from
time to time cannot be processed at the facility because it is harmful, toxic or dangerous.
NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful
Bidder that the Town of Southold intends to award an Agreement to the successful Bidder,
subject to compliance with all their terms and conditions of the Agreement Documents.
NYSDEC - New York State Department Of Environmental Conservation.
OSHA - Federal Williams-Steiger Occupations Safety & Health Act of 1970, plus subsequent
revisions.
GLOSSARY - 2
OWNER - Shall mean the Town Of Southold, New York. Also may be referred to as the Town.
PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience
and necessity, Franchises or authorizations which must be issued by any Governmental Body
having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of
construction and demolition debris.
PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition
debris or to construct, establish, maintain or operate a construction and demolition debris
Disposal Site.
RCRA - Resource Conservation Recovery Act (Federal).
SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances,
including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid
Waste does not include C&D waste, recyclables, hazardous, or infectious waste).
SOLID WASTE DISPOSAL SITE(S) - Shall mean any site designated by the Contractor where
solid waste is disposed of in a manner that minimizes environmental hazards and Is permitted
under the design and operation requirements of 6NYCRR Part 360 - Solid Waste Management
Facilities, or alternatively outside of the State of New York, is permitted under design and
operation requirements meeting the requirements of 1) that jurisdiction's applicable regulatory
agency and 2) Town of Southold's minimum standards. Also may be referred to as Disposal
Site(s).
SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract
with the Contractor for services, equipment, materials and/or labor.
GLOSSARY-3
9
SECTION A
SUBMISSION REQUIREMENTS
BIDDERS INFORMATION, INSTRUCTIONS, AND
AWARD BASIS
10
SECTION A
SUBMISSION REQUIREMENTS
BIDDERS INFORMATION, INSTRUCTIONS AND AWARD BASIS
1.0 PROJECT PURPOSE
The Town of Southold expects that it will receive and need to dispose of approximately
10,000 tons of solid waste during the agreement year. It is possible that the Town of
Southold will contract with another town to receive and dispose of their solid wastes. If
this happens the quantity of wastes to be hauled and disposed of under this Agreement
will increase. This Bid Solicitation will ensure Town of Southold's solid waste will
continue to be 1) hauled From the Town of Southold Transfer Station to Disposal site(s)
and 2) disposed of at permitted Disposal Site(s).
2.0 SCHEDULE
The schedule below is an estimate of the time period leading up to the commencement of
the Agreement. Its intent is to provide each Bidder with an idea of when certain events
may occur. The dates given are guidelines and should not be construed as firm dates or
deadlines due to. the multiple parties involved in the decision making process.
EVENT
Transfer Station Visits
Pre-Bid Conference
Bid Opening
Town Board Approval
Agreement Executed
Operations Commencement
DATE
By Appointment
None
10:00 AM Thursday, June 14, 2007
June 19, 2007
On or Before June 29, 2007
July 1, 2007 .
11
3.0
EXAMINATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE
WORK
It is the responsibility of each Bidder before submitting a Bid to (a) examine the Sample
Operating Agreement and Agreement Documents thoroughly; (b) visit the site of the
Town of Southold Transfer Station; (c) attend and be familiar with the outcome of the
pre-bid conference (d) become familiar with conditions at the Town of Southold Transfer
Station and Disposal Sites that may affect cost, progress, performance or furnishing of
the work; (e) become familiar with and consider all federal, state and local laws,
regulations ordinances, permits, approvals and orders that may effect the cost, progress,
performance or furnishing of the work: (f) study and carefully correlate the Bidder's
observations with the Agreement Documents; and (g) notify the Town Clerk of all
conflicts, errors or discrepancies in the Agreement Documents.
Reference is made to the following Appendices which contain supplemental information
which is attached to and made part of the Agreement Documents:
Appendix A: Sample Operating Agreement
Appendix B: NYSDEC Part 360 Operating Permit
Appendix C: Town of Southold Accident Report
Reference is made to the Following information which is available for review by
Bidders at the Town Clerk's Office during normal business hours - 8:00 A.M. to 4:00
P.M. Monday through Friday.
i. Pending conceptual plans for the proposed Town of Southold Transfer Station.
ii. Town of Southold Solid Waste Management Plan.
This information is presented solely for the convenience of the Bidders and does not
constitute part of the Agreement Documents. Bidders shall form their own conclusions
and opinions from this information and shall confirm any information contained therein
regarding facilities and equipment through site visits. The Town does not guarantee the
accuracy of any information contained in these documents.
Before submitting a Bid, each Bidder shall, at the Bidder's own expense, make or obtain
any additional inspections, examinations, or 'studies and obtain any additional data and
information which may affect cost, progress, performance or furnishing of the work and
which Bidder deems necessary to determine its bid for performing and furnishing the
work in accordance with the time, price and other terms and conditions of the Agreement
Documents. The failure or omission of the Bidder to receive and examine any form,
instrument or document, or make required inquiries and inspections, shall not relieve the
Bidder from any obligation contained in the Agreement Documents. The Town will be
justified in rejecting any claim based on facts or conditions of which the Contractor
should have been cognizant.
12
The submission of a Bid will constitute an incontrovertible representation by Bidder that
Bidder has complied with every requirement of this Bid Solicitation, that without
exception the Bid is premised upon performing and furnishing the work required by the
Agreement Documents, and that the Agreement Documents are sufficient in scope and
detail to indicate and convey understanding of all terms and conditions for performing
and furnishing the work.
Bidders will be allowed to ask questions regarding the Bid Documents during the pre-bid
conference to be held at:
Town Hall
53095 Main Road
Southold, New York 11971
4.0
4.1
4.2
INFORMATION TO BE SUBMITTED WITH PROPOSAL
Contractual Bid
For the purpose of assisting the Town in determining the responsible Bidders for this Bid
Solicitation, the Bidder is required to submit the following minimum information with his
bid:
ii.
iii.
Contractor Bid Form
Bid Security or Bid Bond
Information Schedules A through M as applicable
Supplemental Information as described in 4.2
Supplemental Information
In addition to the aforementioned forms, the Bidder is. required to submit the following
supplemental information with his bid:
Operational Plan: A plan describing the Bidder's assessment of the requested
operation set forth in Exhibit M. This section shall be divided into the following
subsections:
o Haul
A detailed summary of requirements for manpower, materials and supplies,
mobile equipment, etc., shall be included to provide the Town with general
anticipated guidelines for performance under the Agreement.
o Disposal
A detailed summary of requirements of site capacity, useful life, hours and days
of the week, operation, etc., shall be included to provide the Town with general
13
ii.
iii.
iv.
anticipated guidelines for performance under the Agreement.
A copy of the current Permits to Construct and Permits to Operate shall be
included. If the Solid Waste Disposal Site is located outside the State of New
York, a copy of the current applicable laws and regulations governing the design,
construction and operation of the Disposal Site shall additionally be included.
Litigation: A section briefly describing any current litigation which in any way
may affect the Bidder's operational capability of useful life of the Solid Waste
Disposal Sites.
Subcontractors: If the Bidder intends to use one or more subcontractors to
complete any portion of the work, the Bidder must so indicate this intent in its
Bid. The Bidder is advised that any Agreement awarded will be contingent upon
the use of the subcontractor(s) so identified. In the event that the Bidder desires to
change the number or identity of such subcontractor(s), the proposed change must
be submitted to the Town for approval. No such change shall be made without the
Town's approval. In addition, it is the policy of the Town of Southold to
encourage the participation of Minority Business Enterprises (MBE's) and
Women- Owned Business Enterprises (WBE's) on Town projects. For this reason,
the Agreement will require Contractor to use its best efforts to include among its
subcontractors MBE and WBE firms. In the event the successful Bidder intends to
subcontract in excess of twenty-five percent (25%) of the work, the Bidder will be
required to submit to the Town an MBE/WBE Utilization Plan acceptable to the
Town prior to the Town's execution of the Agreement.
Disposal Site Subcontractor: In the event the Bidder does not own the Disposal
Site identified in its Bid, the Bidder shall furnish a statement, signed by an
authorized representative of the Disposal Site, which provides for Bidder's use of
the site pursuant to this Bid Solicitation in accordance with the Agreement
Documents. THE SUPPLEMENTAL INFORMATION REQUIREMENTS MAY
BE SATISFIED BY INCLUDING A REFERENCE TO AN INFORMATION
SCHEDULE (A-M) IF THE SCHEDULE PROVIDES THE INFORMATION
REQUESTED AND IS INCLUDED IN THE BID.
14
5.0
5.1
5.2
6.0
BID FORMAT
Binding
The document(s) if bound shall be in a manner that will provide for easy evaluation
access (to lie flat when opened). Printing on both sides of the sheets, provided a quality
paper is Utilized that will prevent the type from showing through, is acceptable. Paper
with substantial recycled content is preferred.
Form Preparation
Bids shall be submitted in the form described in this Bid Solicitation. All blank spaces for
bid prices shall be properly filled in, in ink or typed, in both words and numerals for all
bid categories required. In the event a price shown in words and its equivalent shown in
figures do not agree, the written words shall be binding on the Binder. BIDS SHALL
NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED IN ANY WAY. In
the event a specification is not applicable, it shall be so indicated. Incomplete bids may
not be considered, depending on the nature of the missing information.
SUBMISSION OF BID
Each Bidder shall submit six (6) separate complete sets of his Bid which shall be
enclosed in a sealed opaque envelope plainly marked on the outside with the title of the
work and the name and address of the Bidder. No Bid will be considered unless filed on
or before the time and at the place designated in the Notice to Bidders. Bids received
after the time set for the opening will be returned to Bidders unopened. When sent by
mail, preferably registered, the sealed Bid, marked as above, should be enclosed in an
additional envelope similarly marked and addressed to:
Office of the Town Clerk
Town of Southold
53095 Main Road
Southold, New York 11971
Bids received prior to the time of opening will be kept securely unopened. No bid
received thereafter will be considered.
15
6.1 Withdrawal of Bids
6.2
7.0
Any Bidder will be given permission to withdraw its Bid upon receipt of a properly
notarized written request made no later than the time set for opening. At the time of
opening of the bids, if such Bid is included, it will be returned to the Bidder unopened.
No bid may be withdrawn after opening until execution of the Agreement or rejection of
all bids as provided herein.
Questions & Addenda
All questions about this Bid Solicitation must be submitted in writing to the following:
Town Clerk
Town of Southold
53095 Main Road
Southold, New York 11971
No alterations to this Bid Solicitation will be considered valid unless in writing and
issued as Addenda. All such addenda shall become part of the documents and all Bidders
shall be bound by such addenda, whether or not received by the Bidders
All questions must be received at least ten (10) calendar days before bid opening in order
to be answered. It shall be the Bidder's responsibility to make inquiries concerning any
addenda issued. All addenda will be on file at the Town Clerk's office at least twenty-four
(24) hours before bids are opened. The Town will not be bound by oral clarifications.
BID GUARANTY
Each Bid must be accompanied by a bid guaranty (Section C, Schedule 5.0.K), without
condition or qualification, which shall be in the sum of one hundred thousand dollars
($100,000.00).
The guaranty may be certified check, bank draft, money order, standard form irrevocable
letter of credit, or a bid bond in the form attached. The bid bond shall be secured from a
surety company authorized to do business in the State of New York as a surety. No Bid
will be considered unless it is accompanied by the required guaranty, certified check,
money order or bank draft must be made payable to the order of the Town of Southold.
The bid bond shall name the Town as the obligee. Cash deposits will not be accepted.
The bid guaranty shall ensure the execution of the Agreement and the furnishing of the
surety bond or other required bonds by the successful Bidder, all as required by the
Agreement Documents.
All guaranties will be returned within ten (10) days after the execution of the Agreement
and required bonds insurance and other Agreement Documents are received from the
successful Bidder.
16
8.0
9.0
EXECUTION OF AGREEMENT/FURNISHING OF BONDS
The successful Bidder, or its legally authorized representative, shall be required to appear
in person within ten (10) days of the Notice of Award by the Town at the place and time
designated by the Town to execute the Agreement and other Agreement Documents for
Haul/disposal services.
The successful Bidder shall, at its own cost and expense, procure, execute and deliver to
the Town the following documents within ten (10) days of formal Notice of Award by the
Town.
Performance Bond - A Performance Bond shall be in an amount of one million five
hundred thoushand dollars ($1,500,000.00).
This bond (as shown by example in Section C, Schedule 5.0.L), shall be maintained at the
Contractor's own expense for the term of the Agreement. Failure or refusal of the
successful Bidder to execute and/or deliver such bond within the time designated, shall
constitute a breach of such Bidder of the Agreement created by the Town's acceptance of
the bid. In such event, the Town may determine that such Bidder has abandoned the
Agreement and the Town shall be entitled to take action for any and all damages it may
suffer as the result of such breach. The Town's rights in this regard shall include but not
be limited to a claim against the bid bond provided. The Town specifically reserves any
and all other rights against the Contractor as a result of his failure to perform as required
by these documents.
CONSIDERATION OF BIDS
The Town of Southold reserves the right to reject any/or all bids for haul and disposal
services if such action is deemed to be in the best interests of the Town. To be considered
responsive to this Bid Solicitation, each Bidder shall:
Provide equipment, labor, maintenance and management services to haul and dispose
of solid waste from the Town of Southold Transfer Station to Contractor designated
Solid Waste Disposal Site(s) as set forth in Section B - Bid Specifications.
B. Reserve and provide a minimum available capacity of 15,000 tons (52 weeks/year)
yearly, allowing for seasonal and other peak periods.
Provide evidence of all current valid state and Federal permits, licenses, local
ordinances, etc., required by law to receive solid waste at the designated Disposal
Site(s).
D. Provide evidence of physical and financial capability to perform services described in
the bid specifications.
10.0 SELECTION OF CONTRACTOR
17
Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only
bids solicited from firms or combinations thereof, who have sufficient management,
engineering capabilities, operating, and maintenance experience to fulfill the Town's
goals and comply with the applicable local, state, Federal laws, ordinances, regulations
e.g. New York State Department of Environmental Conservation, Resource Conservation
Recovery Act and Federal Environmental Protection Agency guidelines will be accepted.
The Town will review the bids and make a selection recommendation based on the
evaluation criteria included in this Bid Solicitation or take such other action as it deems
in its best interest.
Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation
Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole
discretion, to reject at bids submitted in response to this Bid Solicitation.
11.0 ACCEPTANCE OF BID
The acceptance of a Bid will be a Notice of Award signed by a duly authorized
representative of the Town, and no other act of the Town shall constitute the acceptance
of a Bid. The acceptance of a Bid shall bind the successful Bidder to execute the
Agreement and other Agreement Documents.
12.0 ASSIGNMENT
The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not
assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right,
title, or interest therein or his power to execute such Agreement, to any person or
corporation without the prior written consent of the Town.
13.0 LIMITATION OF FUNDS AVAILABLE
14.0
14.1
The Contractor specifically agrees that any Agreement shall be deemed executory only to
the extent of the funds appropriated for the purpose of the Agreement and that no liability
shall be incurred by the Town beyond the funds appropriated on the date of execution of
the Agreement by the Town for the said purpose.
INSURANCE AND BONDS
Insurance
For the period from Agreement commencement date until one (1) year after Agreement
termination date, Contractor must maintain insurance acceptable to the Town in the kinds
and amounts set forth below. All such insurance coverage, shall be provided by
companies licensed to do business in New York State and the state in which the Disposal
Site(s) is (are) located. The Town of Southold and its agent shall be named as an
additional insured and coverage shall not be changed or cancelled until thirty (30) days
written notice has been given to the Town. Within ten (10) days of the Notice of Award,
Contractor shall furnish to the Town, certificates of insurance, in a form satisfactory to
18
the Town Attorney, evidencing such insurance. The kinds and amounts of insurance are
as follows:
A. Contractor's Insurance - Insurance for liability for damage imposed by law of kinds
and in the amounts hereinafter provided covering all work under the Agreement,
whether performed by Contractor or his subcontractors. The kinds and amounts of
insurance are as follows:
(1)
Worker's Compensation Insurance - A Policy covering the operations of the
Contractor in accordance with the provisions of Chapter 41 of the Laws of
1914 as amended, known as the Worker's Compensation Law, covering all
operations Of the Contractor, whether performed by him or by his
subcontractors. The Agreement shall be void and of no effect unless the
person or corporation making or executing same shall secure compensation
coverage for the benefit of, and keep insured during the life of said Agreement
such employees in compliance with provisions of the Worker's Compensation
Law.
(2)
General Liability (Comprehensive Form) Insurance - Contractor's liability
insurance issued to and covering legal liability of the Contractor with respect
to all work performed by him under the Agreement.
The following insurance coverage shall be included:
(a)
Independent Contractor's Protective Liability - Covering work
performed by subcontractors.
(b) Completed Operations or Product Liability.
(c) Contractual Liability.
(d) Broad Form Property Damage
(e) Personal Injury.
NOTE: If any of the rating classifications embody property damage
exclusions C or U, coverage for eliminating such exclusions must be
provided.
Coverage for the above will be required in not less than the following
amounts:
SINGLE LIMITS OF LIABILITY:
AGGREGATE LIMITS OF LIABILITY:
$1,000,000.00
$10,000,000.00
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14.2
(3) Automobile Liability Insurance - Policy shall include coverage for all owned
as well as non-owned and hired vehicles, and limits shall not be less than the
following amounts:
BODILY INJURY LIABILITY
Aggregate: $3,000,000.00
Each Person Each Occurrence
$1,000,000.00
PROPERTY DAMAGE LIABILITY
Aggregate: $3.000,000.00
Each Occurrence
$1,000,000.00
Bonds
Prior to the execution Of the Agreement. the successful bidder shall furnish to the Town a
Performance Bond wherein the named obligee is the Town of Southold. The Performance
Bond's purpose is to secure the faithful performance of the Agreement. The bond' amount
shall be set forth in Section A-8.0. The bond shall be executed by a surety company
approved by the Town authorized to do business in the State of New York and with an
office or representative in Suffolk County, New York. The form shall be acceptable to the
Town of Southold and shall have a term through the completion of services.
As an a alternative to the Performance Bond, the successful Bidder may furnish a
certified check, bank draft, money order, or a standard form irrevocable letter of credit,
certified check, bank draft or money order must be made payable to the order of the
Town of Southold. The standard form irrevocable letter of credit shall be in a form
acceptable to the Town of Southold.
In the event the Contractor secures a Performance Bond from any of its subcontractors,
said bond shall also name the Town of Southold as a dual obligee.
Should the Town designate another public or private gent of contract administrator, the
same or others shall be added as additional named obligee at no added costs to the Town,
upon written request from the Town.
15.0 INDEMNITY (HOLD HARMLESS)
Contractor shall agree to defend, indemnify and save harmless the Town against any and
all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and
expenses of whatever kind or nature which the Town may directly or indirectly incur,
suffer or be required to pay by reason of or in consequence of the carrying out of or the
performance of the terms of such Agreement, or the failure to carry out any of the
revisions, duties, services or requirements of such Agreement, whether such losses and
damages are suffered or sustained by the Town directly or its employees, licensees,
agents, engineers, citizens or by other persons or corporations, including any of the
Contractor's employees and agents who may seek to hold the Town liable therefor. This
indemnity shall include any and all claims, penalties or other losses or damages incurred
by the Town as a result of enforcement or other proceedings by Federal, state or local
government agencies relating to Contractor's Disposal Site(s) operation. This obligation
20
shall be ongoing, survive the term of the Agreement and include, but not be limited to,
claims concerning non-sudden environmental impairments.
The Bidder agrees to join in the commencement of any action or proceeding or in the
defense of any action or proceeding which in the opinion of the Town constitutes actual
or threatened interference or interruption with the Town's rights hereunder, including all
necessary appeals which may be necessary, in the opinion of the Town.
16.0 PAYMENTS
17.0
18.0
Contractor shall receive monthly payments for services performed during the prior
calendar month upon submission of an invoice (with a Town voucher) that shall contain
an itemized list of municipal solid waste haul trips from the Town of Southold Transfer
Station including the tonnage of municipal-solid waste and the manifest number for each
load of municipal solid waste removed. Such payments shall be made within sixty (60)
days of the Town's approval of Contractor's invoice. Contractor's monthly invoice shall
include a daily summary of tonnage received by Contractor at the' Transfer Station. The
Town shall be entitled to deduct from any payment owing to Contractor any sums
expended by the Town to cure any default or other non-compliance by Contractor.
DEFAULT
In the event the Contractor fails to perform its obligations under the Agreement, the
Town may terminate such Agreement, and the Town may procure the services from other
sources and hold the Contractor responsible for any excess costs incurred and deduct
from payments owing to the Contractor and/or draw upon the Performance Bond as full
or partial reimbursement for such excess costs. The Town reserves the right to terminate
the Agreement for just cause.
TERM OF AGREEMENT
The term of this Agreement shall be two (2) years commencing on July 1,2007, with the
potential for three (3) additional option years. The Town and the Contractor, by
mutual consent, shall have the option of renewing this Agreement for up to three (3)
additional one-year terms at the prices bid herein. Notice of this mutual consent to be
expressed by the parties in writing not less than one-hundred eighty (I 80) days prior to
the expiration of the term in force (i.e., by January 1, 2009, January 1, 2010, and January
1,2011). Similarly, notice by either party of the intent to reject any option year shall be
submitted in writing by the same date (January 1) of each year. The Town reserves the
right to may terminate the Agreement at any time after Year Two (i.e., after June 30,
2009) of the Agreement for the purpose of entering into an inter-municipal solM waste
haul~disposal Agreement with another Long Island Town by giving one-hundred eighty
(180) days written notice to the Contractor.
19.0 SERVICE AGREEMENT
The Contractor shall be obligated to provide the Town with disposal services without
21
regard to the permit' status of its Disposal Site. In the event that Bidder wishes to submit
a bid for a Disposal Site for which Bidder does not currently have all necessary federal
and state permits, Bidder shall at its sole risk and expense, be responsible for obtaining
and/or renewing its permits or providing to the Town an alternate Solid Waste Disposal
Site at no additional cost (disposal plus any additional hauling) to the Town. This is a full
service Agreement and failure of the successful Bidder to provide the identified Disposal
Site or acceptable alternative Disposal Site, on or after the commencement date for
services under the Agreement Documents awarded hereunder shall constitute a breach of
this Agreement. The Bidder accordingly shall not be excused from it obligations
hereunder by reason of any failure to obtain or maintain its permits at the identified
Disposal Site.
20.0 SUBCONTRACTS
In the event Bidder does not own the Disposal Site identified in its bid prior to execution
of the Agreement, Bidder shall:
(1)
furnish to the Town a copy of the signed Agreement between Bidder and the Disposal
Site Contractor which provides for Bidder's use of the site pursuant to this Bid
Solicitation in accordance with the Agreement Documents;
(2)
require the Disposal Site Contractor to fumish to Contractor and the Town a
performance bond guaranteeing the availability of the Disposal Site throughout the
term of the Agreement;
(3) require the certificates Contractor to provide insurance naming the Town as
additional insureds on all policies maintained by Contractor.
21.0 RIGHTS AND OPTIONS
The Town of Southold, New York, reserves and holds at its discretion the following
rights and options upon issuing this Bid Solicitation:
To award an Agreement to the candidate whose bid is judged to be the lowest
responsible bid pursuant to Section 103 of the General Municipal Law of the State of
New York.
2. To reject any and/or all bids.
3. To issue subsequent bid solicitations.
4. To issue additional and subsequent solicitations for statements of qualifications and
conduct investigations or interviews with respect to the qualifications of each Bidder.
5. To designate another public body, private or public agency, group, or authority to act
in its behalf for evaluation and Agreement negotiations.
6. To designate another public body, private or public agency, group, or authority to act
in its behalf for contract administration of this project at any time during the
Agreement period.
22
SECTION B
BID SPECIFICATIONS
(TECHNICAL/MANAGEMENT)
23
1.0
SECTION B
BID SPECIFICATIONS
TECHNICAL/MANAGEMENT
REQUIREMENTS
This request for bids is issued for the Town of Southold, State of New York, Town Hall,
53095 Main Road, Southold, New York, 11971 (Telephone (516) 765-1800) The effort,
shall be known as the Town of Southold Solid Waste Transport and Disposal Service.
The Town of Southold desires to issue an Agreement with a qualified Contractor to haul
and dispose of a portion of its Solid Waste. The Town will need to dispose of
approximately 10,000 tons of solid waste during the agreement years The Contractor will
ensure the Town that solid waste will continue to be; 1 ) hauled from the Town of
Southold's transfer Station to disposal site(s), and; 2) disposed at permitted disposal
site(s). The following general services are sought in this request:
'HAUL
Provide equipment, labor, maintenance, management and policies to operate a
transportation system for hauling solid waste from the Town of Southold transfer
Station to Contractor designated disposal site(s) as set forth herein. Transportation
equipment shall be in accordance with New York. State Department of
Transportation, Interstate Commerce Commission, United States Department of
Transportation, as defined in the Code of Federal Regulations, or other applicable
state and federal regulatory requirements.
· Disposal
Reserve capacity and provide equipment, labor, maintenance, management and
policies to receive and dispose of solid waste from the Town of Southold Transfer
Station as set forth herein. The Contractor's New York State Solid Waste Disposal
Site(s) must be in compliance with all State of New York Department Of
Environmental Conservation's and U.S. Government's Regulatory requirements,
e.g., 6NYCRR Part 360, Resoume Conservation Recovery Act (RCRA),
Environmental Protection Agency - Subtitle D, et al. Disposal Sites outside New-
York State shall be permitted by applicable local, state and Federal laws
including RCRA and Subtitle D and regulations deemed by the Town to be no
less protective of the environment than those outlined in this specification.
Disposal alternatives that will be considered include land disposal, incineration,
24
composting, etc., as long as they comply with regulatory requirements and
environmental standards.
2.0
3.0
4.0
PROGRAM GOALS AND OBJECTIVES
The goal of this project is the continued safe and reliable hauling and disposal of the solid
waste materials from the Town Of Southold Transfer Station at minimum cost to the
citizenry.
It is also the objective of the Town of Southold to ensure that the haul-disposal operations
proceed according to the provisions of this document and subsequent
agreements/amendments are upheld.
POTENTIAL REGULATORY AND OPERATIONAL CHANGES
During the term of the Agreement, there may be a number of regulatory and operational
changes which may affect the quantities and types of solid waste received at the Town of
Southold Transfer Station and delivered to the Disposal Site; the manner in which solid
waste is handled by the Town prior to the loading of waste for transfer; and the
equipment maintained and used by Town forces in the handling of waste to be
transferred.
This Agreement will not provide any guarantees with respect to the volume of waste to
be hauled and/or disposed of by Contractor or the specific operational techniques and/or
equipment to be employed by the Town in the handling of waste at the Town transfer
station.
The Town reserves the right to designate another public body, private or public agency,
group or authority to act in its behalf for administration of the Agreement at any time
during the term of Agreement.
CHARACTER OF THE SOLID WASTE
The wastes which are to be hauled and disposed of under terms of this bid solicitation are
to include typical municipal wastes from a rural community. This will include all waste
types generated in private households, and, therefore, can include broken furniture, small
appliances, and other wastes generated in a private home or apartment as allowed under
6NYCRR Part 360- 1.2(a) regulations and the Garbage, Rubbish and Refuse Law,
Chapter 48 of the Code of the Town of Southold.
Commercial waste may also be included in the solid waste stream. It may include any
waste which is typically disposed of in dumpster or roll-off type container boxes at
restaurants, small businesses, light industries, hospitals, office buildings etc. It should not
include any wastes covered by special waste permits Such as pathogenic or hazardous
materials, but the Town cannot guarantee that the waste stream does not contain same.
25
Special costs associated with handling noncompliance loads will be compensated under
Forced Accounting (Appendix A-9).
4.1
5.0
5.1
Quality and Characteristics
The Town Of Southold's historical solid waste quantities and characterization data are
Available upon request. MSW Tonnage disposed in under contract in 2006 totaled
approx. 9,000 tons. Bidders are cautioned that actual quantities may differ significantly
from these data. Recycling programs may affect the quantity and characteristics of the
waste received at the Town of Southold Transfer Station.
If the Contractor discovers any non-compliance waste (hazardous, regulated medical or
special wastes), the Contractor shall notify the Town and dispose of [he noncompliance
waste in accordance with local, state and Federal regulations. Compensation for such
waste disposal services shall be provided for under Forced Accounting (Appendix A-9).
The Town makes no specific representations in the foregoing disclosure.
PROGRAM ACTIVITIES
Collection
The Town of Southold Transfer Station is open 7 days a week, except holidays, from
7:00 A.M. to 5:00 P.M. The Contractor will be expected to collect and remove solid
waste from the Transfer Station during the following hours:
Monday through Friday 7:00 A.M. to 4:00 P.M.
The Transfer Station is closed on the following holidays:
New Year's Day
Martin Luther King Day
President's Day
Easter Sunday
Memorial Day
Independence Day
Labor Day ,~
Columbus Day
Election Day
Veteran's Day
½ Thanksgiving Eve
Thanksgiving Day
'/2 Christmas Eve
Christmas Day
½ New Years Eve
The Contractor must make transfer containers available for loading seven days a week. if
requested, between 7:00 A.M. and 4:00 P.M. Removal of waste on Sundays is not always
required.
The Contractor will be expected to provide enough containers to empty the Transfer
Station tipping floor on a daily basis, delivery and staging of an adequate number of
containers for this purpose will be coordinated with Transfer Station Staff as needed.
26
5.2
5.3
Loading Mode
The Contractor shall fully prepare transfer containers for loading, including assuring that
container covers or empty containers are left open. [SEE NOTE AT END OF
SECTION 6.3.l
Solid Waste will be loaded by the Town at its Transfer Station using a front end wheel
loader. After loading, Contractor will bring transfer containers to the Town's truck scales
for weighing to prevent overloading and to document haul and disposal tonnages.
Contractor will then cover (tarp) his load prior to leaving the site.
If required by any local, state or Federal regulations or law, the contractor shall provide
sealed containers for loading. This service shall be at the Contractor's expense and
included in the unit price bid.
Town Of Southold Accident and Damage Policy
The Contractor shall be required to prepare an Accident Report (See Appendix C) Of any
accidents and/or damage that occur while performing services under the term of the
Agreement.
The Town of Southold shall immediately be notified of any major occurrences such as
bodily injury of structural damage to the Town's Transfer Station. An Accident Report
will be submitted to the Town within twenty-four (24) hours containing the date, time,
location, and complete description of all incidents. The offending Parts or
representative/e thereof shall also be recorded and required to sign the accident/damage
report prior to departing the Town of Southold Transfer Station.
All accident and/or damage reports will be included in reports to the Town
5.4 NYSDEC Part 360 Permit to Operate
The Town Of Southold operates the Transfer Station under a New York State Department
of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of
NYSDEC Permit is included as Appendix B.
6.0 HAUL SERVICES
For Solid Waste Haul-Disposal Services-Agreement, the following services will include
the tasks, responsibilities and performance required as outlined herein.
6.1 Transport Mode
The Town will consider a transportation mode of truck or truck and rail under this
solicitation.
27
6.2 Work Included
The Contractor shall provide the following major essential services or equipment and any
other non-specified items without limitations, to maintain a reliable haul services
operation in a manner that will meet the needs of the Town of Southold.
· Management and operation of a fleet of truck and/or mil containers to accommodate the
transport of solid waste from the Town transfer Station to Solid Waste Disposal Site(s) in
accordance with all local, state, and Federal regulations. [SEE NOTE AT END OF
SECTION 6.3.]
· Financial liability and maintenance responsibility of transport equipment, i.e., dump
trailers, transfer trailers bulk material containers, vehicles, personnel and services for
open-top loading solid waste hauling activities·
· Coordination of haul services with disposal services.
6.3 Equipment
The Contractor shall provide reliable refuse handling and other essential ancillary
equipment, along with personnel to operate and maintain a reliable haul services system
in a manner that will satisfy the needs of the Town of Southold. The minimum level of
haul services equipment acceptable to the Town to support the haul operation includes
open-top trailers and bulk material containers. The Contractor will supply additional
open-top trailers and containers, etc. UNDER THIS SOLICITATION, THE TOWN
WILL REQUIRE THE CONTRACTOR TO STAGE AN ADEQUATE NUMBER
OF TRANSFER TRAILERS TO ACCOMMODATE THE ANTICIPATED
WASTE STREAM COMFORTABLY. While the Town will not dictate the exact
number of trailers to be placed, typically, this means the Contractor will need to plan
on having three (3) or four (4) trailers at the Transfer Station at any given time.
The contractor must assure the Town that an adequate reserve supply of equipment exists
to haul and dispose of the daily and seasonal solid waste including unpredictable surges
or delays due to inclement weather and that transport equipment storage requirements
will meet the Town of Southold Transfer Station requirements· Each bidder is therefore
responsible for familiarizing itself with the Town of Southold Transfer Station site. solid
waste, etc., to assure equipment compatibility.
Transport equipment used at the Southold Town Transfer Station may be open-top bulk
material containers, dump trailers, roll-off containers or open-top transfer trailers,
provided that all such equipment is suitable for convenient loading given existing
configurations of the Town of Southold Transfer Station·
All Transport equipment, including equipment involved in any interim transfer operation
(i.e., any transfer of Southold Town MSW into other vehicles/containers prior to
disposal) shall be: 1) Registered with the State of New York Department of
Motor Vehicles or equivalent agency; 2) designed to preclude spillage of waste; 3) loaded
28
6.4
6.5
7.0
within their design capacity and New York State Department of Transportation
regulations; 4) well maintained in good working order. Corroded defective, bent,
deformed or punctured trailers, roll-off boxes, or other containers of waste materials shall
not be utilized at any time.
Suitable covers shall be provided and used while transporting solid waste in open-top
transport equipment. The bidder shall clearly indicate [he quantity and type of transport
equipment/vehicles it plans to use, their availability date, state of repair, and that such
units are compatible with the Town of Southold Transfer Station scales and New York
State DOT regulations, United States Department of Transportation, as defined in the
Code of Federal Regulations or equivalent. The Contractor will promptly remove from
use any transport equipment/vehicle that does not conform with these requirements and
replace it with an acceptable unit.
The Contractor shall maintain its own off-site maintenance shop facilities for servicing
the transport equipment and vehicle fleet, unless it elects to subcontract for these
services. No major maintenance may be done at the Town of Southold Transfer Station
site.
NOTE:
In the course of this Agreement, the Town may, at its discretion, provide
I or more transfer trailers for use by the Contractor. The Town
warrants that any such equipment provided would be compatible with
hauling vehicles (tractors) generally standard in the waste hauling
industry. In the event that the Town wishes to provide such equipment
for use by the Contractor, the Contractor together with the Town shall
develop an addendum to this agreement governing such use.
Weighings
The Town of Southold will provide certified weighing at the Town of Southold Transfer
Station. The Contractor will accept these weights for invoicing purposes. All weights will
be generated on current certified weigh scales.
Routing Mode - Contractor's Responsibility
Contractor will have the right to select the route(s) for travel from the Town of Southold
transfer Station to the Disposal Site(s). Contractor warrants and guarantees that, in
selecting and utilizing such route(s), Contractor will insure that it is not violating any
applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions,
local ordinances or Interstate Commerce Commission regulations. Contractor will
indemnify and hold the Town harmless from any claims, fines and other damages
assessed upon or incurred by the Town as a result of any violations of applicable
restrictions or regulations relating to the routes traveled by the Contractor.
DISPOSAL SERVICES PROGRAM ACTIVITIES
For Solid Waste Haul-Disposal Service Agreement, the following disposal services will
29
include the tasks, responsibilities and performance requirements as outlined herein.
7.1
7.2
Work Included
The Contractor shall provide the following major essential services or equipment and any
other non-specified items, without limitations, to maintain a reliable disposal services
operation in a manner that will meet the needs of the Town Of Southold.
· Liability insurance, performance and payment bonds.
· Safety equipment.
Operational Capacity
The bidder shall identify in its proposal, the following information:
· Disposal Site capacity.
· Flexibility of Disposal Site capacity to allow for seasonal variances in waste generation
and sufficient to permit service in the tonnages bid.
· Hours and days of the week that the designated Disposal Site will be open for receiving
solid waste from the Town of Southold, including weekends, holidays and special
closure periods.
7.3
Permit Requirements
Throughout the term of Agreement that may result from this Bid solicitation, the
Contractor must maintain all current and valid local, state and Federal permits, licenses,
or other authorizations, (either temporary and permanent) which are required by law to
receive solid waste at any and all Disposal sites designated by the bidder.
Because of the varying terms of Solid Waste Disposal Site permits, it is possible that a
permit will expire during the term of Agreement. The responsibility of obtaining and/or
renewing a permit to operate is solely upon the Contractor.
In the event a Contractor fails to maintain or obtain any necessary current and valid local
state and Federal Permits., licenses, or other authorizations, allowing the lawful use of its
designated Disposal Site then the Contractor will be solely responsible for obhaining the
utilization of an alternate Solid Waste Disposal Site at no additional cost to the Town
including any additional hauling cost because of the location of the alternate Disposal
site. Under no circumstances shall such a change in Disposal Site or failure or inability to
obtain permits by the Contractor be considered a change in conditions, in the event the
Contractor is unable to find an alternate Disposal Site, it shall be deemed to be in default
of the Agreement and liable for damages, bonds forfeitures and other expenses as
30
provided in the Agreement.
In the event the individual and/or entity submitting a bid in response to this bid
solicitation is not the individual and/or entity named as the permit holder on any
necessary current and valid local, state or federal permits, licenses or other
authorizations, required by law to receive solid waste at any disposal site designated by
the bidder or any alternate disposal site, the bidder is required to provide satisfactory
evidence to the Town of Southold of a binding contractual relationship between the
bidder and the permit holder which provides the bidder with the irrevocable fight to
utilize the solid waste disposal site during the term of Agreement, or portion thereof, in a
manner which is in complete compliance with this bid solicitation and the bidder's bid
submission. The agreement between the bidder and the permit holder shall include
provisions that:
Provide Town with the right to discuss operational matters with the permit
holder whenever necessary.
Require the permit holder to comply with directives of the Town which
are consistent with and pursuant to the Agreement which shall result from
this bid solicitation.
7.3.1 Disposal Sites Inside State of New York
The Contractor's Solid Waste Disposal Sites, if located within the State of New York,
must be in compliance with all State of New York Department of Environmental
Conservation's and U.S. Environmental Protection Agency regulators requirements, e.g.,
6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental
Protection Agency - Subtitle D, et al. The Solid Waste Disposal Site must have valid
construction and operating permits in accordance with all applicable laws in the
jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid
waste without violating applicable law. It shall meet the design, construction and
operating requirements of all applicable laws in the jurisdiction where the disposal site is
operating.
Disposal alternatives that will be considered include land disposal, waste to energy
(incineration), composting, etc., as long as they comply with all the above governing
regulators requirements and environmental standards. The use of Solid Waste Disposal
Sites shall be subject to the approval of the Town of Southold based upon review of
information submitted with the bid describing in detail the nature of the disposal process
and other information reasonably requested by the Town. No Disposal Site shall be
acceptable unless it poses no significant threat to the environment and its design,
construction and operation complies with all applicable laws.
7.3.2 Disposal Sites Outside State of New York
The Contractor's Solid Waste Disposal Sites, if located outside the State of New York
31
must be in compliance with all the applicable local, state and Federal laws and
regulations and U.S. Environmental Protection Agency regulatory requirements, e.g.
Resource Conservation Recovery Act (RCRA), Environmental Protection Agency -
Subtitle D, et al. The Solid Waste Disposal Sites must have valid construction and
operation permits in accordance with all applicable laws in the jurisdiction in which it is
located. It shall be permitted to accept Town of Southold solid waste without violating
applicable law. It shall meet the design, construction and operating requirements of all
applicable laws in the jurisdiction where the disposal site is operating.
If the Solid Waste Disposal Site is a landfill, it must comply with the following minimum
standards:
· Liner System. All proposed landfills under the Agreement shall be provided with at least
a single liner system to restrict the migration of leachate and prevent pollution of
underling soil or groundwater. Liner systems shall consist of low permeability soil
admixtures, clays or synthetic materials. Liners are at a minimum to consist of materials
having a demonstrated hydraulic conductivity and chemical and physical resistance not
adversely affected by waste emplacement or sanitary landfill leachate, including synthetic
geo-membranes and soils such as clay or other semi-impervious admixture.
Liner systems may consist of an impervious liner composed of at least two feet of clay
with demonstrated hydraulic conductivity of lx 10-> cm/sec or a synthetic single lining
system of a thickness of at least 60 mils. Thicknesses down to 40 mils may be acceptable
for composite liners which include impervious clay.
Foundation: The proposed landfill shall be designed and constructed on an appropriate
foundation which provides firm, relatively unyielding planar surfaces to support the liner
system and which is capable of providing support to the liner and resistance to the
pressure gradient above and below the liner resulting from settlement, compression or
uplift.
Leachate Collection: The proposed landfill shall be equipped by a leachate drainage
and removal system. The leachate drainage system-shall consist of collection pipes
and a drainage layer. The system shall be designed to ensure that the leachate head on
the liner does not exceed one foot at any time.
A leachate removal system shall be provided to remove leachate within the drainage
system to a central collection point for treatment and disposal.
Leachate Treatment and Disposal: Leachate shall be treated and disposed of in
accordance with all applicable taws, including applicable pretreatment standards and
discharge limitations.
Gas Collection and Venting: The proposed landfill shall be equipped with a suitable
gas collection and/or venting system which complies with all air pollution
requirements and other applicable laws.
32
7.4
8.0
Surface Drainage Systems: The proposed landfill shall be designed with an
appropriate surface drainage system which isolates the landfill from adjacent surface
water drainage in a controlled manner, as well as controlling run-off from the landfill
itself.
Monitoring System: The proposed landfill shall be equipped with appropriate systems
to monitor groundwater quality, gas production, leachate volume, quantity, slope and
settlement status. The number and location of ground water monitoring wells shall be
sufficient to define and detect any potential migration of contaminants. However, no
fewer than one up-gradient monitoring well and two down-gradient monitoring wells
shall be provided in any event. A regular sampling and analysis program shall be in
place to verify that no groundwater contamination results from the landfill.
Closure: The proposed landfill shall have in place a written closure plan which
conforms to applicable taws and standard industry practice. The closure plan shall, be
designed to insure that contamination does not spread from the landfill during) the
post closure period.
Bidder must clearly specify their intended disposal altematives and support same with
copies of appropriate experience, site location, permits, agreements et al., as outlined in
this bid solicitation. The use of Solid Waste Disposal Sites shall be subject to the
approval of the Town of Southold based upon review of information submitted with the
bid describing in detail the nature of the disposal process and other information
reasonably requested by the Town. The Contractor shall be solely and completely
Responsible for any and all liability relative to contractor's failure to dispose of solid
waste at an approved site.
Weighings
The Town will compensate the Contractor for waste material hauled and disposed of on a
net tonnage basis (short tons = 2000 pounds). The certified weighings will be made at the
Southold Town Transfer Station. The Disposal Site will accept these weights for
invoicing purposes. Alt weights will be generated on current certified weigh scales.
In the event of any dispute over differences in net weights between the Town and
Disposal Sites scales and weight records, the Town may make payment upon the weight
it deems to be most correct, until the dispute is reconciled. Any claims for differences
must be filed in writing within sixty (60) days of occurrence or the Town's calculation
shall be deemed final and binding between the parties.
SAFETY AND HEALTH REGULATIONS
The Contractor shall comply with all current Federal Department of Labor, Safety and
Health Regulations under the Occupational Safety and Health Act, 1972 (PL 91-596) and
Section 107, Agreement Work Hours and Safety Standards Act (PL 91-54). Specific
consideration shall be given, but not limited to the following major areas:
33
Maintenance safety procedures - guards and Shields on dynamic equipment,
guards, railings, electrical lockouts, vehicle wheelblocks, audio vehicle backup
alarms, vehicle wheel chocks, etc.
Employee safety orientation, education, teaching, first-aid training,
cardiopulmonary resuscitation, etc.
Noise and dust control, ear protection, respirators, hard-hats, safety shields,
glasses, protective clothing, sanitary facilities, etc.,
Fire and explosion preventions, control, equipment (fire blankets, extinguishers,
first aid hoses, etc.) and personnel escape alternatives.
e. Traffic flow control patterns.
Accident or injury reporting system (the Town shall received copies of al
reports and immediate verbal notification).
g. Employee health safeguards.
h. Mechanic's lien safeguard against work interference.
The Contractor shall comply with all local, state and Federal regulations, laws and
Statutes, which apply to the work and to safety in particular.
The Contractor shall comply with New York State Department of Labor current
requirements.
The Contractor shall be solely and completely responsible for operational safety during
performance of the Agreement. The obligation exists twenty-four (24) hours a day, each
and every day throughout the term of the Agreement.
The Town of Southold shall not have any responsibility for means, methods, sequences
of techniques selected by the Contractor for safety precautions and programs, or for any
failure to comply with laws, rules, regulations, ordinances, codes or orders applicable to
the Contractor furnishing and performing the services under the terms of the Agreement.
9.0
OPERATIONS AND PROCEDURES
The Contractor will be required, prior to commencement of operations, to provide the
following operational plans to the Town for review and acceptance. Revisions,
modification's, and updates shall be forwarded to the Town throughout the term of the
Agreement.
Organization personnel and structure, showing the chain of command, names and
telephone numbers and staffing requirements.
34
9.1
Operational plan - shifts, hours, etc.
Safety, disaster, and emergency procedures.
Transportation plan, including available transport equipment, vehicle fleet and
reserve capabilities.
Inclement Weather Plan - This shall describe the bidder's plan should inclement
weather alter normal daily operations as described in the bidder's operations plan. The
inclement weather plan shall include hauling operations and disposal operations. The
bidder's means of assessing inclement weather conditions (weather and road
conditions), method of reporting to the Town and the alternatives shall be described.
Supporting Data
In the event the Town requires any information in support of Town held licenses and
permits at the Town, County, State and Federal level, the Contractor will be required to
furnish all licenses, permits and inspection reports regarding equipment and disposal sites
which may be required by Town, County, State or Federal law.
In the event the Contractor requires any information in support of Contractor held
licenses and permits at the Town, County, State and Federal level, the Town will
cooperate in furnishing such information as it applies to the Southold Town operations.
Operating (hauling and disposal) records shall be considered essential to the operation.
The Contractor shall keep these data in an organized fashion that allows for easy retrieval
and analysis. The Town, or its designee, may upon 24 hours notice inspect the
contractor's records. Such records shall he kept, available by Contractor for a period of
two (2) years after termination of this Agreement.
In the event the Town requires additional .information for reporting purposes, the
Contractor will supply same. The Town, or its designee, may call upon the Contractor at
anytime for an oral review of any technical matter.
The Contractor shall file and update the following information as specified herein.
Items
Haul Equipment (Schedule H)
Haul Accident Report (Appendix C)
Disposal Accident Reports
Licenses, Permits and Inspection
Reports
Part 360 Permit
All Bid Information Schedules
Due
as changes occur
on occurrence
on occurrence
on occurrence
as changes occur
as changes occur
35
SECTION C
CONTRACTOR BID FORM
SECTION C
TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES
CONTRACTOR BID FORM
1.0 INTENT
The undersigned hereby recognizes that these documents are complementary and are
intended to provide for uniformity in bid evaluations. The formal Agreements resulting
from this Bid Solicitation shall be in a form provided by the Town.
These documents are intended to depict complete Solid Waste Haul-Disposal Services
Agreement and therefore any discrepancies contained in the documents, of the omission
from the documents of express reference to any work which obviously was intended
under the Agreement, shall not excuse or relieve the Bidder from furnishing the same. No
oral statement shall in any maimer or degree modify of otherwise affect the terms of the
Agreement. Work or materials described in words which have a well known technical or
trade meaning, shall be interpreted by such meaning.
2.0 GENERAL BID. STATEMENT
TO:
TOWN OF SOUTHOLD
STATE OF NEW YORK
53095 MAIN ROAD
SOUTHOLD, NEW YORK 11971
Gentlemen:
The undersigned Bidder has carefully examined the forms and content of the Bid
Solicitation, including notice to bidders, bid bond, sample operating agreement, performance
bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has
familiarized itself with the sites of work, and hereby proposes to furnish all necessary services,
permits, labor, materials, equipment, vehicles, and tools required to perform and complete the
work in strict accordance with all of the bid documents written by or on behalf of the Town of
Southold for this project.
37
The undersigned Bidder agrees to abide by all conditions stated, intended, or implied both
particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by
the Town, and the unit price Bid herein stated.
1. The Undersigned Bidder also agrees as follows:
FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a
satisfactory performance bond, and insurance all within ten (10) calendar days.
SECOND: To begin Solid Waste Haul-Disposal services operations on the
commencement date of any Agreement awarded hereunder, having completed all
necessary prior preparations of operational planning, personnel hiring, equipment
procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure
a smooth and orderly acceptance of these duties.
THIRD: To pay the Town any and all damages it may incur as a result of the
Contractor's failure to 'perform all acts necessary to the execution of the Agreement as
provided in the Bid Solicitation.
It is recognized and agreed that the Town has the unconditional right to utilize the funds
provided by the bid bond posted by the Bidder as a means of obtaining indemnification
or, payment of such damages.
FOURTH:
as follows:
During the performance of this Agreement, the Contractor hereby agrees
The Contractor shall not discriminate against any employee or applicant for
employment because of age, race, creed, color, sex, marital status, national origin,
physical disability, and shall take affirmative action to ensure that they are
afforded equal employment opportunities without discrimination because of age,
race, creed, color, sex, marital status, national origin or physical disability. Such
action shall be taken with reference, but not be limited to: recruitment,
employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or
termination, rates of pay, or other forms of compensation, and selection for
training or retraining, including apprenticeship and on-the-job training.
The Contractor shall comply with the provisions of Sections 290 through 301 of
the Executive Law, Shall furnish all information and reports deemed necessary by
the State Commission for Human Rights under these nondiscrimination clauses
and such sections of the Executive Law, and shall permit access to his books,
records, and accounts by the State Commission for Human Rights, the Attorney
General. and the Industrial Commissioner for purposes of investigation to
ascertain compliance with these nondiscrimination clauses and such sections of
the Executive Law and Civil Rights Law.
This Agreement may be forthwith cancelled, terminated, or suspended, in whole
or in part, by the Town upon the basis of a finding made by the State Commission
38
for Human Rights that the Contractor has not complied with these
nondiscrimination clauses, and the Contractor may be declared ineligible for
future Agreements made by or on behalf of the state or public authority or agency
of the state, until he satisfies to the State Commission for Human Rights that he
has established and is carrying out a program in conformity with the provisions of
these nondiscrimination clauses. Such findings shall be made by the State
Commission for Human Rights after conciliation efforts by the Commission have
failed to achieve compliance with these nondiscrimination clauses and after
verified complaint has been filed with the Commission, notice thereof has been
given to the Contractor, and an opportunity has been afforded to him to be heard
publicly before three members of the Commission. Such sanctions may be
imposed and remedies invoked independently or in addition to sanctions and
remedies otherwise provided by law.
No laborer, workman or mechanic in the employ of the Contractor or
subcontractor shall be permitted or required to work more than eight hours in any
one calendar day, or more than five days in any one week except as otherwise
provided in Labor Code Section 220.
The Contractor shall include the provisions of clauses (a) through (e) in every
subcontract or purchase order in such a manner that such provisions will be
binding upon each subcontractor or vendor as to operations to be performed
within the State of New York. The Contractor will take such action in enforcing
such provisions of such subcontract or purchase order as the Town may direct,
including sanctions and remedies.
FIFTH: By submission of this bid, the Bidder and each person signing on behalf of
any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own
organization, under penalty of perjury that to the best of his knowledge and beliefi
The prices in this bid have been arrived at independently without collusion,
consultation, communication, or agreement for the propose of restricting
competition, as to any matter relating to such prices with any other Bidder or with
any competitor.
Unless otherwise required by law, the prices which have been quoted in this bid
have not been knowingly disclosed by the Bidder and will not knowingly be
disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder
or to any competitor.
No attempt has been made nor will be made by the Bidder to induce any other
person, partnership, or corporation to submit or not to submit a bid for the purpose
of restricting competition.
The undersigned also declares that it has or they have carefully examined the Bid
Solicitation requirements and sample operating agreement and that it has or they have
personally inspected the actual location of work, together with the local sources of
39
supply, has or have satisfied itself or themselves as to all the quantities and conditions,
and waives all rights to claim any misunderstanding, omissions or errors regarding the
same which such inspection and observation would have disclosed.
The undersigned further understands and agrees that it is or they are to furnish and
provide in return for the respective Evaluation Unit Bid Price, all the necessary materials,
machinery, vehicles, implements, tools, labor services, and other items of whatever
nature, and to do and perform all work necessary under the aforesaid conditions, to
complete operations of the aforementioned Solid' Waste Haul-Disposal Services
operations in accordance with the Bid Solicitation requirements, which requirements are
a part of this response, and that it or they will accept in full compensation therefore, the
compensation provided for in Section C-3.
The undersigned submits herewith a bid guaranty within the form provided by the
applicable bid documents in the amount of $100,000.00 for any option or combination
thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10)
calendar days after date of receipt of Notice Of Award from the Town to execute and
deliver an Agreement in the form provided by the Town or fails to execute and deliver
evidence of proper insurance coverage and performance bond in the amounts required
and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty
Shall be forfeited and be retained by the Town toward the satisfaction of liquidated
damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will
be returned to the Bidder.
The undersigned acknowledges the receipt of the following addenda, but it agrees that it
is bound by all addenda whether or not listed herein and whether or not actually received,
it being the Bidder's responsibility to receive and have knowledge of all addenda.
ADDENDUM NUMBER AND DATES
Number 1 - Dated:
Number 2 - Dated:
Number 3 - Dated:
Number 4 - Dated:
Number 5 - Dated:
The Bidder has completed the Contract Bid Form and Unit Price Schedules in both
words and numerals in accordance with these bid requirements.
40
3.0
UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1 COMPENSATION
The undersigned hereby submits the following price bid to furnish Solid Waste Haul-
Disposal Services, to Southold Town, New York for the terms 200-/
through 2.0 12.
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year
~'o~'V~t F'W¢ cents ($ -/'3. q~- ). (C1)
The Haul-Disposal Service applicable unit price per ton for agreement year
ONE
dollars and
TWO
dollars and
~IV.~'¥ IZi'Vll; cents ($ -'/"/~'~ ). (C2)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
ONE is ~VEl'O-r'q ~Ciil4T' dollarsand
cents ($ -/8,5.5[ ). (C3)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
TWO is ~V~T'~ ~' I~Fr- dollars and
l::2~w-"W'q ~OtxA.. cents ($ ~q ). (C4)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
THREE is ~ ~.V ~; 1,,~-¥ /'4~ ~O~'- dollars and
cents ($. -lq Sq-- ). (C5)
41
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
(C 1)10,000+(C2)10,000+.5{C3)10,000+.5(C4)10,000+.5(C5) 10,000
35,000 tons
Evaluation Unit Bid Price = $ ~l~V£t, lT'/ I~ la~t'~ 'Doc,,~ '~ [t,E~/I;~ ~oTs
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
(78.
Bidder:
Firm-Corporation
By:
Authorized Representative Date
4.0 BID SECURITY ACKNOWLEDGEMENT
5.0
Address
I have attached the required bid security to this bid.
INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the main office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the firm (Schedule D, attached
hereto).
42
Dated:
E. Detailed financial statement for the Bidder, and if applicable, for parent
companies (Schedule E, attached hereto).
F. Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
G. Major Subcontractors - (Schedule G, attached hereto).
H. Equipment- (Schedule H, attached hereto).
I. Maximum Specified Capacity- (Schedule I, attached hereto).
J. Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
K. Form of Bid Bond (Schedule K, attached hereto).
L. Performance Bond (Schedule L, attached hereto).
M. Operation Plan (Schedule M, attached hereto).
Name of Bidder:
Address of Bidder: 2.H4 l~L.~/O2k~bLh_(Sil4 El>.
By:
Signature
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of
Title
JEANIE BORGEsANO
NOTARy PUBLIC, Stale of New York
No. 4918146
Ouelified in Su folk County
Commission Expires I:ebruar¥ 1, 20~0
Names and addresses of officers of the corporation:
(President) Name
(Secretary) Name
Address
?e / tgt.~ ~oor-
Address
43
(Treasurer) Name
Address
(If an individual or partnership)
Names and addresses of all principals or partners
44
INFORMATION SCHEDULE A
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
This Bidder .'~tng'lV '7~t:Oqtv'~ Po,~:r, qrl r~t Oot'l.~ .
(Bidder's legal name)
herein certifies that as a
Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending
or currently involved in any litigation involving the Town of Southold, State of New York.
Name of Bidder: '~fRI,,~'tTY 7"'~¢,tv',~.Jat~T~7~ ~
By:~~ Date: 6-11-03
(Authorized Sign~tme)
NOTE:
(1)
(2)
If blank not applicable, fill in with N/A
If bidder owes the Town taxes or is involved in any litigation, a statement
of explanation will be attached hereto.
Tax/Litigation Certification
BID (PROPOSAL) FORM
Schedule 5.0.A
Page 1 of 1
45
INFORMATION SCHEDULE B
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The following is information on the undersigned Bidder's office locations:
Bidder's Main Office
Manager's Name (Contact)
Bidder's Parent
Corporation Main Office
Manager's Name (Contact)
'l'IRl~q t'lW
Firm's Legal Name
Parent Firm's Legal Name
Street Address (Box Numbers)
Street Address (Box Numbers)
City State Zip
Telephone Number
The Bidder herein certifies that the
City State
Telephone Number
Firm
Parent Firm
Zip
is partially/wholly owned subsidiary of
This Iqllq
is owned
Parent Firm
By
or is a public/priva!e stock corporation.
Bidder Office Locations/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 1 of 2
46
INFORMATION SCHEDULE B - (Continued)
Name of Bidder: TI~II4VTV T~le~P~L"r~Tlo~ 0~0.
By: ~)~~ Date: /o ~ II -o'7
Note: (1)
Any attachments or modifications to this form shall be labeled Schedule 5.0.B,
and properly integrated into the Bid Form,
(2) If blank not applicable, fill in with N/A.
Bidder Office Location/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 2 of 2
47
INFORMATION SCHEDULE {.i
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
This is idcntJficatmn [hat Berkley Regional Insurance Company
will be the Surety Company for T_~ri_n!ty Transportation Co,~.
the Bidder, on this project and Lhat the named Surely Company herein p~ovid~ written
cextifimtion that the ns.meal Sme~ Company will provide th..- Performance Bond, sp~ified in the
Contract Docum~ts, in the evont the Bidder enters into a~ agreement w~th the Town. The Surety
Company herein certifies that such Company is li~sed to (to/h~.s~s$ in the State of New York.
(SEAL)
By:
_Be_rkley~R_e_g!onal Insurance Comp_.a_ny SurCT Company
Surety Verification
BID (PROPOSAL) FORM
Schedule 3.0.C
48
INFORMATION SCHEDULE D
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that the below named individuals are the current registered corporate
officers, along current permanent addresses, and designates their authority to execute an
Agreement on behalf of the firm
.]lQ Officer's Name
Officer's Name
Subsidiary Parent
Corporate Title _ _.. Corporate Title
Address , Address
City _ City
State, Zip State, Zip
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Officer's Name O~qP.O~O o..x>~.~ -1~,3W~
Parent
Corporate Title ~O,~j~/?_
Address M.OO~Z.~-~ IqltA. I~
City ~ ~4o~
Stme, Zip ~
Current Corporate Officers
BID (PROPOSAL) FORM
Schedule 5.0.D
Page I of 2
49
INFORMATION SCHEDULE D - (Continued)
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip
Corporate
Seal
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Name of Bidder:
Date: &-It~o7
NOTE:
If blank not applicable, fill in with N/A
Current Corporate Officer
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 2 of 2
50
INFORMATION SCHEDULE E
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
STATEMENT OF BIDDER'S FINANCIAL CONDITION
This Bidder agrees to provide for any subsidiary and parent firm, and hereto attaches a
current or the most recent audited financial Statement(s) including as a minimum the
firms opinions, notes, revenue/expense statements, conditions of cash, etc. The attached
statement provided includes:
Accounting Firm Name
Address ~q2~
Financial Period To
Statement Date
The bidder certifies that he currently has an available line of credit in the amount of
$ . A supporting documentary evidence attached to this
form is supplied by:
Name IqOT ~.'rffi 0_tW_D
Address
Date
The undersigned Bidder certifies to the validity of statement and agrees to furnish any
other information upon request that may be required by the Town of Southold, New
York.
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 1 of 2
51
INFORMATION SCHEDULE E - (continued)
The undersigned hereby authorizes and requests any person, firm or corporation to furnish any
information requested by Town of Southold, New York in verification of the firms financial
condition.
Dated at
This Il day_of ,~v~ ,200'7
Name of Bidder
~--~t '
Title
being duly sworn deposes and saws that~te
State of New York, County of ~ k)f-FOu&
Title
of "7~t~tT'Y 7'R~l~ P~ ynw i~c ~%o.
Name of Organization
and that the answers to the foregoing questions and all statement therein contained are true and
correct.
Sworn to me this I1 day of
My Commission expires:
,2007
JEANi'E 90RGESANO
NOTARY PUBLIC, Slate of New York
No. 4918146
Oualified in Suffolk County ~
~;:~Z~ ~ Commission Expires I:ebruary 1, 20"
Notary Public
NOTE:
(1)
(2)
(Bidder may submit additional information desired as Schedule E
attachments.)
If blank not applicable, fill in with N/A
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 2 of 2
52
INFORMATION SCHEDULE F
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and
that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the
Bidder offers the following related information and references in order that the Town may
evaluate the Bidder's qualifications and experience.
4.
5.
6.
7.
8.
9.
Bidder's Legal Name: '~RI
Business Address:
Street
City
New York State; Business License No.: I~1 ~
No. Years in contracting business under above name:
Has fi~ ever defaulted on a contract? Yes
Gross Value - work under cu~ent contract:
Nmber ofCu~ent Comracts: (~)
Brief description general work perfo~ed by fi~:
State Zip
Year incorp.: ~cl ~1D
Il- ~.}8o115'
years.
No
10.
Has Firm ever failed to complete work awarded? Yes
If yes, attach supporting statement as to circumstances.
No
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page I of 3
53
11.
11.1
iNFORMATION SCHEDULE F - (continued)
Related Experience Reference (within previous 5 years)
Project Title: -]--olo~ o~C , lmid /
t
Owner's Name: 'T'OI,,o~ O~7 ~c~t3'+~k2L
Address: ~5DC3o1~5 hqfl IIq I~D.; ~'DO'II-IOLD: t,4x4
Engineer: N }lq
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
'7 - %0o2.
Final Complete Project Value: $ ~ 1, 7oo, ooo.
BriefProjectDescription: RfllIL '~ 13t~l~O~,E o~ }q~v,J
11.2
Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
~/ zooq
Final Complete Project Value:
Brief Project Description: 141q~t~_
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 2 of 3
54
11.3
Project Title: ~IqlAL '~
Owner's Name: '-~0~ Iq
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value:
Brief Project Description: I~l~Ut.,
12.
Principal Firm Members' Background/Experience (3 members minimum). Attach current
resumes as Schedule 5.0.F supplement or give concise description by individual.
Name of Bidder:
By: l~)a~.~ t~ Date:
(Authorized Signature)
NOTE:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.F, and shall be properly integrated into this Bid Form.
If blank not applicable, fill in with N/A.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 3 of 3
55
iNFORMATION SCHDULE G
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul
sub-contractors on this project, bll'~tm
2.
3.
4.
5.
6.
7.
8.
9.
10.
Sub-Contractor/
Contract Trade/
Individual Address Phone # Specialties
NOTE:
Name o~ Bidder:
By: ~~ Date:
(Amhorized Signature)
If blank not applicable, fill in with N/A
Subcontractors
BID (PROPOSAL) FORM
Schedule 5.0.G
56
IFORMATION SCHEDULE H
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder states that it owns the following pieces of equipment that are available for use on the
project, if awarded the agreement.
Proposed Current
Equipment Item Project Use Equipment Location
NOTE:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.H and shall be properly integrated into the Bid Form.
If blank not applicable, fill in with N/A
Construction Equipment
BID (PROPOSAL) FORM
Schedule 5.0.H
57
INFORMATION SCHEDULE I
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
Contract Year
- 01ql~
- T~Jo
QpTL0'K_ - C>~q~
The Bidder hereby states that it will be prepared to dispose of up to the following Maximum
Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement
Maximum Tons per Contract Year
7-0,
2.5, ooo.
Nm~fBidder: ~Rl~t~ ~~~
By: Date:
Maximum Specified Capacity
BID (PROPOSAL) FORM
Schedule 5.0.I
58
INFORMATION SCHEDULE J
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
NOTE: IF A BIDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE
DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE
COMPLETED FOR EACH DISPOSAL SITE.
The following is information on the undersigned Bidder's Solid Waste Disposal Site:
I. GENERAL
A. Disposal Site Location
Name: r>t~l NI
Address:
Phone: ~,~o~1') Ioqq-Iloqq
Disposal Site mailing address (if different than I)
Address: ~q~4~- ~ fl-~ot>w~.
II.
CURRENT OPERATIONS
A. Operations Permit
1. Permittee:
2. No.:
3. State:
4. Date of Issue:
5. Date of Expiration:
6. Copy Enclosed:
O~ql ~,~:::~l¢_,t,,~ otc I~0,1294ta9~0: /a/C.
I - q V Zo - oo~q ~/Oooo ~ fo
Yes: / No:
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 1 of 7
59
INFORMATION SCHEDULE J - (continued)
Hours of Operations
1. What are the PERMITTED operating hours?
DAY A.M. P.M.
Monday q: O0 to 8 '. o
Tuesday q: oo to 8: o
Wednesday q ,. oo to ~?:
Thursday q '. o~ to ~:
Friday q: o o to 8 '.
Saturday q: oo to 5 -.
Sunday ~o ~m~ ~ to
Are there any PERMITTED closure periods stipulated?
What are the ACTUAL operating hours?
DAY
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
A.M. P.M.
to
to
to
to
to
to
to
4. What holiday or other period is the Disposal Site typically closed?
DAY YES NO
New Year's / to
4- Memorial ~" to
~r Independence ~ to
..-k'Labor ~' to
Thanksgiving ~'~ to
Christmas J to
Other (specify) to ,,~
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.2
Page 2 of 7
60
INFORMATION SCHEDULE J - (continued)
Will the ACTUAL operating hours be extended up to the PERMITTED
operating hours in Question II.B.1 in order to accommodate Town of
Southold solid waste? /n ~t;t~r~
Yes ~" No
Are there any local agreements, ordinances, etc. which would prohibit
extending the ACTUAL operating hours in Question II.B.3 up to the
PERMITTED operating hours in Question II.B. 1 ?
Yes No ~
What is the PERMITTED annual capacity in tons?
20 07 q2.t. 2c, o.
20
20
20
20
At the PERMITTED levels in Question II.C, what is the projected useful life in
years?
What is the annual RECEIVING6 level today? "- 21,~5, ~:>~.
At the RECEIVING levels in Question II.E, what is the projected useful life in
Years?
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 3 of 7
61
INFORMATION SCHEDULE J - (continued)
How much of the RECEIVING level in Question II.E is committed to under
contract in tons?
20 ~.0.o~o~. ~-, ttO0.
20
20
20
20
Does the Disposal Site have special waste restrictions?
Gate
Yes No Fee ($)
1. Construction/Demolition
2. Asbestos
3. Wastewater Treatment ~"
Sludge
4. Hazardous Waste
Are there any existing agreements with local municipalities which prohibit:
Item
Routing to site
Weight limits between
state coeds and site
Number of vehicles
Vehicle size
Solid waste importation
outside jurisdictional area
Host Community Benefits
Yes N~o
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 4 of 7
62
III.
INFORMATION SCHEDULE J - (Continued)
EXPANSION PLANS
A. Application Permit
1. Permitee:
2. No.:
3. State:
4.
5.
6.
Date of Submission:
Copy Enclosed:
Submission Status:
Yes No
Expansion of current site or new site
Local Citizenry Reaction
Regulatory agency
d. Litigation
Likelihood to succeed
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 5 of 7
63
INFORMATION SCHEDULE J - (Continued)
If you are successful in Question III.A., what is the additional annual DESIGN
capacity in tons (do not include figures from Question II.C.)? Iq Iq
2O
20
20
2O
20
At the annual DESIGN levels in Question III.B., what would be the projected
useful life in years?
Would you be willing to share with the Town of Southold engineering reports
utilized for the preparation of the Operating Permits on Expansion Application?
Yes No
Bidder's Disposal Site(s) Engineer of Record
Firm's Name
Firm's Address
Project Engineer
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 6 of 7
64
INFORMATION SCHEDULE J - (Continued)
Are you willing to meet with the Town of Southold to discuss your short and long term
disposal capabilities? Yes / No
The undersigned hereby certifies that services, material, equipment to be furnished as a
result of this bid will be in accordance with Town of Southold specifications applying thereto
unless exceptions are indicated above and an explanation attached.
Bidding Company -T"RIM
Address
City
By ~TR~CUq ~ }~lh-rrE'o , ~'
~Please Pr~p~ NAME AND TITLE
Signature
Phone No.
Date
State Zip
NOTARY PUBLIC. State of New York
Qualified in Suffo k CounW · ~
Commission Expires February 1, 20.L.~
CORPORATE SEAL
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 7 of 7
65
INFORMATION SCHEDULE K
FORM OF BID BOND iStD 15Ot4D ~qmlq~.
KNOW ALL MEN BY THESE PRESENTS, that we, the tmdersigned,
as Principal, and
as Surety, are hereby held and firmly bound unto
Owner in the sum of
and truly be made, we hereby jointly and severally bind ourselves, our heirs, executors,
administrators, successors and assigns. Signed this day of _, 20
as
for the payment of which, will
The condition of the above obligation is such that whereas the Principal has submitted to the
Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into a
contract in writing, for the hauling and disposal of solid waste;
NOW, THEREFORE,
(a) If said Bid shall be rejected or in the alternate,
(b)
If said Bid shall be accepted, and the Principal shall execute and deliver an
Agreement in the form off the Sample Operating Agreement attached hereto
(properly completed in accordance with said Bid) and shall furnish certificates of
insurance and a bond for this faithful performance of said Agreement, and for the
payment of all persons performing labor or furnishing materials in connection
therewith, and shall in all other respects perform the Agreement created by the
acceptance of said Bid, then this obligation shall be void, otherwise the same shall
remain in force and effect; it being expressly understood and agreed that the
liability of the Surety for any and all claims hereunder shall, in no event, exceed
the penal amount of this obligation as herein stated.
The Surety, for value received, hereby stipulates and agrees that the obligations of
said Surety and its bond shall be in no way impaired or affected by any extension
of the time within which the Owner may accept such Bid; and said Surety does
hereby waive notice of any such extension.
Form of Bid Bond
BID (PROPOSAL) FORM
Schedule 5.0.K
Page 1 of 3
66
IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seats,
and such of them as are corporations have caused their corporate seals to be hereto affixed and
these presents to be signed by their proper officers, the day and year first set forth above.
(L.S.)
Principal
Surety
SEAL
By:
Address of Surety:
(ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION)
STATE OF:
COUNTY:
On this
) SSN:
day of ,20__ before me personally came
, to me known, who being duly sworn, did depose
and say that he resides in ; that he is the
of the
corporation described in and which executed the foregoing instrument; that he knows the seal of
corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by
the order of the Board of Directors of the corporation; and that he signed his name thereto by like
order.
Notary Public
Form of Bid Bond
BID (PROPOSAL) FORM
(ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP)
Schedule 5.0.K
Page 2 of 3
67
STATE OF: )
COUNTY: ) SSN:
On this day of ,20 before me personally came
, to me known, and known to me to be a member of the firm
of , and known to me to be an individual described in, and
who executed the foregoing instrument in the firm name of .,
and he duly acknowledged to me that he executed the same for and in the behalf of said firm for
the uses and purposes mentioned therein.
Notary Public
(ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR)
STATE OF: )
COUNTY: ) SSN:
On this day of ,20 __
before me personally came
, to me know, and known to be the person described in and
who executed the foregoing instrument and duly acknowledged that he executed the same.
Notary Public
Form of Bid Bond
BID (PROPOSAL) FORM
Schedule 5.0.K
Page 3 of 3
68
INFORMATION SCBEDULE L
PERFORMANCE BOND
Bond No.
KNOW ALL MEN BY THESE PRESENTS, that
(hereinafter called the "principal") and
(hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter
called the "Owner") in the full and just sum of dollars
($ ) good and lawful money of the United States of America, for the
payment of which sum of money, well and truly to be made and done, the Principal binds
himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors
and assigns, jointly and severally, firmly by these presents.
WHEREAS, the Principal has entered into a certain written Agreement bearing date on
the day of ,20 __., with the Owner for the Town of
Southold Solid Waste Haul-Disposal Services, a copy of which Agreement is annexed to and
hereby made part of this bond as though herein set forth in full.
NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his
or its representatives or assigns, shall well and faithfully comply with and perform all the terms,
covenants and conditions of said Agreement or his (their, its) part to be kept and performed and
all modifications, amendments, additions and alterations thereto that may hereafter be made,
according to the true intent and meaning of said Agreement, and shall fully indemnify and save
harmless the Owner from all cost and damage which it may suffer by reason of failure so to do,
and shall fully reimburse and repay the Owner for all outlay and expense which the Owner may
incur in making good any such default, and shall protect the said Owner against, and pay any and
all amounts, damages, costs and judgments which may or shall be recovered against said Owner
or its officers or agents or which the said Owner may be called upon to pay to any person or
corporation by reason of any damages arising or growing out of the doing of said work, or the
repair of maintenance thereof, or the manner of doing the same, or the neglect of the said
Principal, or his (their, its) agents or servants or the improper performance of the said work by
the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent
rights by reason of the use of any materials furnished or work done as aforesaid or otherwise,
then this obligation shall be null and void, otherwise to remain in full force and effect;
Performance Bond
BID (PROPOSAL) FORM
Schedule 5.0.L
Page I of 2
69
PROVIDED HOWEVER, the Surety, for the value received, hereby stipulates and
agrees, if requested to do so by the Owner, to fully perform and complete the work mentioned
and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for
any cause the Principal fails or neglects to so fully perform and complete such work and the
Surety further agrees to commence such work of completion within ten (10) calendar days after
written notice thereof from the Owner and to complete such work within ten (10) calendar days
from the expiration of the time allowed the Principal in the Agreement for the completion
thereof; and further
PROVIDED HOWEVER, the Surety, for value received, for itself, and its successors and
assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no
may impaired or affected by an extension of time, modification, work to be performed
thereunder, or by any payment thereunder before the time required herein, or by any waiver of
any provisions thereof or by any assignment, subletting or other transfer of any work to be
performed or any monies due or to become due thereunder; and said Surety does hereby waive
notice of any and all of such extensions, modifications, omissions, additions, changes, payments,
waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that
any and all things done and omitted to be done by and in relation co assignees, subcontractors,
and other transferees shall have the same effect as to said Surety as though done or omitted to be
done by or in relation to said Principal.
IN WITNESS WHEREOF, the Principal has hereunto sec his (their, its) hand and seal
and the Surety has caused this instrument to be signed by its
and its corporate seal to be hereunto affixed this day of ., 20__
(If Corporation add
Seal and Attestation)
By:
Attest:
Principal
Surety
Add Corporate Seal
By:
Attest:
Address of Surety:
Performance Bond
BID (PORPOSAL) FORM
Schedule 5.0.L
Page 2 of 2
70
INFORMATION SCHEDULE M
OPERATIONAL PLAN
The Bidder hereby states that it proposes to implement the following operational plan to haul and
dispose of Municipal Solid Waste (MSW) from the Town of Southold Landfill if awarded an
Agreement.
I. Haul
Summarize the manpower and equipment you will make available to perform under this
Agreement.
II.
Disposal
Summarize the identity and location of the primary and secondary sites you plan to use for
disposal of the solid waste. Describe the arrangements between your company and the disposal
site for use of the site. Describe any treatment the MSW will undergo during transport or upon
arrival at the disposal site. Attach copies of the permits to construct and permits to operate the
disposal site.
Site No. 1
NAME Ol~t}41 ~'0/q,~ oF la. qf~qCo[3 ; ! ~x~.
LOCATION Itq
CONTACT PERSON AND PHONE NO. pti t].<.~cJ~ 'D'~ 14R'r~o , ¢~I/a~EK..
ARRANGEMENTS FOR USE R,~ blE¢l>~
TREATMENT OR UNUSUAL CONDITIONS ESIDD~R_
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page I of 2
71
Site No. 2
NAME ~t.q~t3
LOCATION
CONTACT PERSON AND PHONE NO.
ARRANGEMENTS FOR USE
TREATMENT OR UNUSUAL CONDITIONS I~0~ fiND
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page 2 of 2
72
APPENDIX A
SAMPLE OPERATING AGREEMENT
73
THIS AGREEMENT, made on the __ day of ,20 ,
by and between the Town of Southold, a municipal corporation of the State of New York having
its Principal place of business at 53095 Main Road Southold, New York hereinafter called the
"Town" and
hereinafter called the "Contractor."
WITNESSETH
WHEREAS, Contractor has submitted to the Town a bid dated
20 _, ("Bid") in response to the Town's Bid Solicitation for Solid Waste Hauling-
Disposal Services dated ,20__, ("Solicitation"); and
WHEREAS, the Town Board of the Town of Southold by resolution No.
adopted on authorized the Town Supervisor to
enter into an agreement with the Contractor to perform certain services in connection with the
handling of solid waste,
NOW, THEREFORE, it is mutually covenanted and agreed by and between the parties
hereto as follows:
I. DEFINITIONS - Terms defined in the Bid Solicitation shall have the same
meaning as if defined herein.
II. SCOPE OF SERVICES - The Contractor shall perform the services in accordance
with the description of those services as set forth in the Solicitation.
III. TERM OF AGREEMENT
The term of this Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three (3) additional option years. The Town and the Contractor, by
mutual consent, shall have the option of renewing this Agreement for up to three (3)
additional one-year terms at the prices bid herein. Notice of this mutual consent to be
expressed by the parties in writing not less than one-hundred eighty (180) days prior to
APPENDIX A-1
74
the expiration of the term in force (i.e., by January 1, 2009, January 1, 2010, and January
1,2011). Similarly, notice by either party of the intent to reject any option year shall be
submitted in writing by the same date (January 1) of each year.
The Town reserves the right to may terminate the Agreement at any time after Year Two
(i. e., after June 30, 2009) of the Agreement for the purpose of entering into an inter-
municipal solid waste haul~disposal Agreement with another Long Island Town by giving
one-hundred eighty (180) days written notice to the Contractor.
IV. PRICE SCHEDULE/COMPENSATION
The unit bid price schedule for the services to be furnished by Contractor is found
in Section C - 3.1, 3.2, Contractor's bid which is incorporated into this Agreement.
V. PAYMENTS
A. The Contractor shall receive monthly payments for services
performed during the prior calendar month. The Contractor shall submit a request for payment
on a Town approved voucher form along with Contractor's invoice which shall include a daily
summary of tonnage hauled by Contractor to a Disposal Site and disposed by Contractor at a
Disposal Site as applicable. Such payments shall be made within sixty (60) days of the Town's
approval of Contractor's invoice. The Town shall be entitled to deduct from any payment
owning to Contractor any sums expended by the Town to cure any default or other Agreement
non-compliance by Contractor or to protect the Town from loss on account of claims filed or
reasonably anticipated to be filed.
VI. CONTRACTOR'S WARRANTIES AND REPRESENTATIONS
Contractor makes the following warranties and representations:
A. Contractor represents that the Town has made no commitment under this
Agreement with respect to the volume solid waste to be handled by Contractor during the term of
this Agreement.
B. Contractor warrants that Contractor shall comply with all federal, state
and local laws, ordinances regulations applicable to ail of the services to be performed
Contractor.
APPENDIX A-2
75
C. Contractor represents that the information furnished by Contractor in the
equipment schedules included in the bid is accurate and complete and Contractor acknowledges
that Town has relied upon the accuracy and completeness of that information in the selection of
Contractor as the lowest responsible bidder.
D. The Contractor represents that Contractor shall utilize its best efforts to
insure that Minority and Women Owned Businesses (MBE's and WBE's) have the opportunity to
participate as subcontractors under this Agreement. In the event the contractor subcontracts
twenty-five percent (25%) or more of its work hereunder, Contractor shall submit to the Town an
and a WBE Utilization Plan, prior to execution of this Agreement,
D. In the event the Contractor's Disposal Site is unable to receive and dispose
of the Town's waste for any reason (including failure to obtain or maintain necessary permits or
licenses), Contractor shall be responsible for providing to the Town an alternate Disposal Site for
the Town's use at no additional cost to the Town, and shall indemnify the Town against any
additional hauling cost by the Town or its agent because of the location of the alternate Disposal
Site. Under no circumstances shall a change in Disposal Site(s) or failure or inability to obtain or
maintain necessary permits by the Contractor be considered a change in conditions. In the event
the Contractor is unable to find an alternate Disposal Site(s), he shall be deemed to be in default
of this Agreement and liable for damages, bond forfeitures and other expenses as provided in the
Agreement.
VII. 1NDEMNIFCATION INSURANCE/BONDS
A. Contractor agrees to defend, indemnify and save harmless the Town of
Southold against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge,
attorney's fees and expenses of what ever kind or nature which the Town may directly or
indirectly incur, suffer or be required to pay by reason of or in consequence of the Contractor
carrying out or performing under the terms of this Agreement, or failure to carry out any of the
provisions, duties, services or requirements of this Agreement, whether such losses and damages
are suffered or sustained by the Town directly or by its employees, licensees, agents, engineers,
citizens or by other persons or corporations, including any of Contractor's employees or agents
APPENDIX A-3
76
who may seek to hold the Town liable therefore. This obligation shall be ongoing, shall survive
the term of this Agreement and include, but not be limited to, claims concerning non-sudden
environmental impairments,
The Contractor shall join in the commencement of any action or proceeding or in the
defense of any action or proceeding which in the opinion of the Town constitutes actual or
threatened interference or interruption with the Town's rights hereunder, including all appeals
which, in the opinion of the Town, may be necessary.
B. Contractor shall procure and maintain the insurance described in Section
A of the Solicitation for a period commencing on the date of this Agreement and terminating no
earlier than one year following termination of services under this Agreement. All such insurance
coverage shall name the Town as an additional insured and shall provide that the coverage shall
not be changed or canceled until thirty (30) days written notice has been given to the Town. All
such insurance shall be issued by a company duly authorized, to transact business in the State of
New York and acceptable to the Town and shall include all riders and additional coverage
necessary to insure that Contractor will be financially able to meet its obligations under the
foregoing indemnification.
C. Contractor shall, for the period of the performance of services hereunder,
maintain a Performance Bond in the amount of one million ($1,000,000.00) dollars wherein
named obligee is Town of Southold. The Bond shall be in a form acceptable to the Town
Attorney and issued by a surety licensed to do business in New York as a surety.
VIII. FORCE MAJEURE
If either party is delayed or prevented from fulfilling any of its obligations under
this Agreement due to any act, event or condition, whether affecting the Town, the Contractor,
the Disposal Site or any of the Town's or the Contractor's respective subcontractors or suppliers,
to the extent that it materially and adversely affects the ability of either party to perform any
obligation hereunder (except for payment obligations), and if such act, event or condition is
APPENDIX A-4
77
beyond the reasonable control and is not also the result of the willful or negligent action,
inaction, or fault of the party relying thereon as justification for not performing an obligation or
complying with any condition required of such party under the Agreement, the time for fulfilling
that obligation shall be extended day-by-day for the period of the uncontrollable circumstance;
provided, however, that the contesting in good faith or the failure in good faith to contest such
action or in action shall not be construed as willful or negligent action or a lack of reasonable
diligence of either party. Subject to the foregoing, such acts or events shall include the following:
(1) an act of God (but not including reasonable anticipated weather conditions for the
geographic area of the Town or Disposal Site) hurricane, landslide, lightning, earthquake, fire,
explosion, flood, sabotage or similar occurrence, acts of a public enemy, extortion, war, blockade
or insurrection, riot or civil disturbance;
(2) the failure of any appropriate federal, state, county, town or local public agency or
private utility having Jurisdiction in the areas in which the Transfer Station or Disposal Site is
located to provide and maintain utilities, services, water and sewer lines and power transmission
lines which are required for the operation or maintenance of the Transfer Station or Disposal
Site;
(3) governmental pre-emption of materials or services in connection with a public
emergency or any condemnation or other taking by eminent domain of any portion of the transfer
Station or Disposal Site; and
(4) the presence of hazardous waste upon, beneath or migrating from the Transfer
Station.
It is specifically understood that none of the following acts or conditions shall constitute
uncontrollable circumstances: (a) general economic conditions, interest or inflation rates, or
currency fluctuations; (b) the financial condition of the Town, the Contractor, any of its affiliates
or any sub-contractor; (c) union work rules, requirements or demands which have the effect of
increasing the number of employees employed otherwise increase the cost to the Contractor of
operating its haul operation or the Disposal Site (d) equipment failure; (e) any impact of
prevailing wage law, customs practices on the Contractor's costs; (f) any act, event or
APPENDIX A-5
78
circumstances occurring outside of the United States, or (g) any change in law or in the permit
conditions or status of the Transfer Station Disposal Site or alternate Disposal Site.
IX. SUBONTRACTS
Contractor shall not enter into any subcontracts in connection with the services to
be performed by Contractor hereunder without the prior written approval by the town of such
subcontracts. All such subcontracts shall make express reference to the terms and conditions of
this agreement and shall obligate the subcontractor to comply with all applicable federal, state
and local laws, ordinances or regulations relating to the services to be performed under the
subcontract. In the event the subcontractor is required to fumish any insurance or bonds for the
benefit of Contractor, the Town shall also be named as an additional insured or obliges.
X. PREVAILING WAGE RATES
Contractor agrees to comply with the provisions of the New York State Labor
Law relating to the payment of prevailing wage rates to the extent applicable, or the applicable
State Law in the state of disposal. In the event that at any time during performance under this
Agreement the Contractor is required to increase the wages paid to any of its employees as a
result of such requirement, all costs be borne exclusively by Contractor.
XI. FORCED ACCOUNTING
In the event the Town directs the Contractor, by written authorization signed
either by the Town Supervisor or Town's Solid Waste Coordinator, to perform additional
services beyond the scope of those described in this Agreement, the Contractor shall be
compensated for such additional services on the following basis:
TOTAL COMPENSATION FOR ADDITIONAL SERVICES =
DIRECT LABOR COST + DIRECT MATERIAL COST + OVERHEADO + PROFIT
For the purposes of this Section:
APPENDIX A-6
79
A. DIRECT LABOR COST shall include hourly wages, including overtime
premiums actually paid plus the following fringe benefits-associated with those wages - group
medical, group life insurance, pensions, FICA, uniforms, safety equipment or special tools.
These fringe benefits shall be separately identified and shall not duplicate fringe benefits paid in
connection with work performed within the scope off the Agreement.
B. DIRECT MATERIAL COST shall be those costs actually paid by
Contractor for materials utilized by Contractor in performance of the additional services. The
costs for such materials shall not include sales tax for any materials which constitute personal
property incorporated into the structures, buildings, or real property of the Town since such
personal property is exempt from taxation York State Tax Law, under Section 1115 of the New
York State Tax Law.
C. OVERHEAD shall be 10% of the total of the Direct Labor Costs and the
Direct Material Costs,
D. PROFITS shall be 5% of the total of the Direct Labor Costs, the Direct
Material Costs and the Overhead.
XII. CONTRACTOR'S OPERATIONS AND PROCEDURES REPORTS
Contractor will provide the operating plan and supporting data listed in Sections
A and B of the Solicitation to the Town for review and acceptance. Contractor will update the
plan as necessary and furnish copies of those updates to the Town.
XIII. DEFAULT
In the event the Contractor fails co' perform its obligations under the Agreement,
the Town may terminate the Agreement, procure the services from other sources and hold the
Contractor responsible for any costs incurred. This Town also may deduct such costs from
payments owing to the Contractor and/or draw upon the Performance Bond as full or partial
reimbursement for such excess costs. The Town reserves the right to terminate the Agreement
for just cause.
XIV. SERVICE AGREEMENT
The Contractor shall be obligated to provide the Town with disposal services
without regard to the permit status of its Disposal Site. In the event that Contractor submits a
APPENDIX A-7
80
Bid for a Disposal Site for which Contractor does not currently have all necessary federal and
state permits, or which after the acceptance of the Bid loses its permitted status, Contractor shall,
at its sole risk and expense, be responsible for obtaining and/or renewing its permits or providing
the Town an alternate Solid Waste Disposal Site at no additional cost (disposal plus any
additional hauling) to the Town. The parties agree that this is a full service Agreement and
failure of the Contractor to provide the identified Disposal Sits or acceptable alternative Disposal
Site, on or after the commencement date shall constitute a breach of this Agreement. The
Contractor accordingly shall not be excused from its obligations hereunder by reason of any
failure to obtain or maintain its permits at the identified Disposal Site.
XV. LIMITATION OF FUNDS
The Contractor agrees that this Agreement shall be deemed executory only to the
extant of the funds currently available for the purposes of this Agreement and that the Town
incurs no liability beyond those available by authorization of the Town Board as of the date of
this Agreement.
XVI. DISPUTES/ARBITRATION
Any disputes between the parties to this Agreement may be referred to arbitration
by mutual agreement of the parties. Absent such an agreement, any actions or claims by either
party hereto shall be commenced in Supreme Court, Suffolk County, New York.
In the event the parties agree to arbitrate a dispute, such arbitration shall be
conducted in accordance with the rules of the American-Arbitration Association. In no event
shall any demand for arbitration be made after the date when institution of legal or equitable
proceedings based on such claim or dispute would be barred by the applicable statute of
limitations. An award rendered by arbitrators following any such arbitration shall be final and
Judgment may be entered upon it in accordance with applicable law in any court having
jurisdiction thereof.
XVII. MISCELLANEOUS
A. This Agreement shall be governed by the laws of the State of New York.
B. Contractor shall not assign, convey or otherwise transfer its rights or
obligations under this Agreement without the prior written consent of the Town.
APPENDIX A-8
81
C. This Agreement, including all Exhibits and documents referred to herein,
along with the Specifications, Solicitation and the Bid, and all Appendices and Exhibits thereto,
represent the entire agreement between the Town and Contractor relating to the Services to be
performed hereunder. This Agreement may be modified only by written agreement of
Contractor and the Town.
D. To the extent of any inconsistency among the documents constituting the
agreement of the parties, the priority among those documents shall be:
2.
3.
4.
This Agreement;
Exhibits hereto;
The Solicitation including Appendices;
Contractor's Bid.
E. Without limiting any other right and/or remedy which the Town may have
at law or under this Agreement, if the Contractor is adjudged bankrupt or makes an assignment
for the benefit of creditors or s receiver is appointed for the Contractor or any insolvency
arrangement proceedings are instituted by or against the Contractor, the Town may terminate this
Agreement.
F. Contractor agrees that it will conduct itself consistent with its status, said
status being that of an independent contractor and, Contractor, its employees or agents will
neither held themselves out nor claim to be an officer or employee of the Town of Southold nor
make claim to any right accruing thereto including, but not limited to, Worker's Compensation,
Unemployment Benefits, Social Security or retirement membership or credit.
G. If any provision of this Agreement shall for any reason he held to be
invalid or unenforceable, the invalidity or unenforceability of such provision shall not affect any
of the remaining provisions of this Agreement and this Agreement shall be enforced as if such
invalid and unenforceable provision had not been contained herein.
H. Contractor agrees that it shall not discriminate and that it shall cause there
to be no discrimination against any employee who is employee in the work, or against any
APPENDIX A-9
82
applicant for such employment, because of race, religion, color, sex, age, marital status, handicap
or national origin in any manner prohibited by the laws of the United States or of the State of
New York. These requirements shall include, but not be limited to, the following: employment;
upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for training.
XVIII. NOTICES
All notices required to be given hereunder shall be made in writing by first class
mail addressed as follows:
If to the Town:
With a copy to:
Supervisor of the Town of Southold
P.O. Box 1179
Southold, New York 11971
Solid Waste Coordinator, Town of Southold
P.O. Box 962
Cutchogue, NY 11935
If to the Contractor:
1N WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
TOWN OF SOUTHOLD
By:
Scott A. Russell, Supervisor
By:
APPENDIX A- 10
83
APPENDIX B
NEW YORK STATE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION PERMIT
84
TRINITY TRANSPORTATION CORP.
4, BLYDENBURGH ROAD
CENTRALISLIP, NY I 1722
Tel. (516) 342-9673
Fax(516) 34.7°9676
Town of Southold
June 14, 2007
Bidder's Solicitation
Solid Waste Haul and Disposal Services
Omni Recycling of Babylon, Inc.
NYS, DEC Permit No. 1-472022643/00002-0
Operating under permit extension
Dave Gibb, NYS, DEC Monitor (631) 444-0387
Verification of operational status and current operating compliance.
Jet Paper Stock, Corp. (owner)
Island Recycling Corp. (operator)
NYS, DEC Permit No. 1-4728-00720/00001
Operating under permit extension
Jagg, NYS. DEC Monitor (631) 444-0375
Verification of operational status and current operating compliance.
---~'I~'-16-99 TUE 11:43 AM BABYLON/BAGE FACILITY FAX NO, 694181[~ P, 1
P,61
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Article 15, Title ;~7: WiL~,
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DESCRIPTION OF AI~THORIZED ACTIVITY
i'I
Page
APPENDIX C
Town of Southold Accident Report
87
1994 Mack CL
1994 Mack CL
1994 Mack Dump
1994 Mack ~ Dump
~ ~ semi
1987 Autocar
Semi
Semi
Semi
Semi
Dump
GVW CLASS.
80,000 50453
102,000 50453
102,000 50453
102,000 50453
120,000 50453
80,000 50453
80,000 50453
120,000 50453
102,000 50453
102,000 50453
15,550 67453
15,550 67453
16,000 67453
120,000 50453
107,000 50453
15,600 67453
15,600 67453
15,600 67453
15,600 67453
15,600 67453
15,600 67453
66,420 40453
GARAGE LOC.
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
VEHICLE
R686ST30778
1M2AD37YXRW001877
1M2AD37Y1RW001878
1M2AD37Y3RW001879
1M2AD37Y4RW001874
1M2AD27Y5PW001048
1 M2AD27Y6PW001060
1M2AD37Y8RW001876
1M2AD37Y3RW001509
1M2AD37Y9RW001398
1 S8AL4527P0008096
1S8AIA525P0008050
1E1U1X282PRA14230
1M2P267Y2RM020646
1M2P267Y1RM020850
1E1U1X289SRG17623
1E1UAX287SRG17636
1E1U1X289SRG17637
1E1U1X289SRG17640
IE1U1X280SRG17641
1EIU1X282SRG17642
lWAUDCVGXHU304346
VEHICLE SCHEDULE
GVW C~ss.
67453
67453
;600 67453
i 1'5,600 67453
I ltl,600 67453
I '1~i600 67453
I 15,600 67453
I i5,600 67453
~ 15,800 67453
I~[g]~ll~t~l~ffi ~ ~ 15,800 67453
1993 Mack CH 80,000 50453
1994 Mack CH 97,000 50453
1994 Mack CH 97,000 50453
1994 Mack CH 80,000 50453
1994 M~i~' RD 120,000 50453
~~ i Semi 15,000 67453
Semi 15,000 67453
~~t
Semi 15,000 67453
Semi 15,000 67453
Semi 15,800 67453
Semi 15,700 67453
Semi 15,800 67453
GARAGE LOC.
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
Islandia
VEHICLE I.D.
1E1U1X286SRG17644
1E1U1X28XSRG17646
1E1U1X283SRG17648
1E1U1X285SRG17649
1E1U1X281SRG17650
1E1U1X283SRG17651
1E1U1X285SRG17652
1E1U1X281SRG17664
1S8AL4529R0008491
1SSAiA529R0008510
I M2AA 13Y4PW026354
1M1AA13Y1RW038369
1M1AA13Y4RW039810
1M1AD37Y9RW001891
1M2P267Y4RM020356
1E1U1X280SRF17023
1E1U1X284SR.F17025
1E1U1Y28XSRG17054
1E1U1Y283SRG17056
ISSAL4524R0008303
1 S8AL4521 R0008260
1S8AL4528R0008255
TRANSPORTATION YEHICLF~ SCHEDULE
MODEL
CH
?
CH
1~ Fold F-700
t995 Mac& CH
1995 Mnelr CH
1995 Mack Tractor
Trailer
?&~i~:!~Spectec Semi
i~j9~9~ ~ Spectec Scm
1984 Mack Dump
GVW CLASS. GARAGE LOC. VEHICLE I.D.
80,000 50453 Islandia
15,000 67453 Islandia
80,000 50453 Islandia
24,500 33453 Islandia
80,000 50453 Islandia
80,000 50453 Islandia
120,000 40453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,890 67453 Islandia
15,200 67453 Islandia
t5,800 67453 Islandia
16,000 67453 Islandia
15,800 67453 Islandia
25,850 67453 Islandia
19,800 67453 Islandia
77,460 50453 Islandia
1M2AA12Y9RW035846
1E1U1Y285SRG17055
1M2AA 14Y 1 SW049565
1 FDNK74N7FVA49248
1M2AA14Y5SW049567
1M2AA14Y3SW049566
1M2P267Y8SM021788
1sgwA452XSS188198
1 S9WA4520SS188199
1 S9WA4523SS188200
1S9WA4525SS188201
1 S9WA4527SS 188202
1 S9WA4520SS 188204
1 S9WA4522SS 188205
1 S9WA4524SS188206
1 S9WA4526SS 188207
1 S9DA3231 SS 188209
1 S8AL4526S0008936
1SSAIM-524S0008935
1S8AIM523S0008718
1S19DS3239SS188214
1S9DS2831RS188101
1M2B128C6EA010352
;PORTATION VEHICLE SCHEDULE
GVW OLASS. GARAGE LOC. VEHICLE I.D.
Pick-Up
Pick-Up
2~3 Dodge S~b~b~
Trailer
1988 Mack Tractor
1987 Autocar Tractor
1997 Ford F25
67453 Islandia
67453 Islandia
6,100 01499 Islandia
~,000 67453 Islandia
5,450 01499 Islandia
67453 Islandia
17,000 67453 Islandia
5,211 01499 Islandia
19,140 67453 Islandia
15,600 67453 Islandia
19,000 67453 Islandia
16,000 67453 Islandia
120,000 67453 Islandia
120,000 67453 Islandia
120,000 67453 Islandia
80,000 50453 Islandia
Tremont
17,600 67453 Islandia
5,066 01499 Islandia
1 S8AD3434T0009072
1S9D5323XSS188271
1FTEF14N2RNB40325
1E1U1X289RRK15480
2FTDF 15Y 1 KCB24892
1E1U1X282RRK15479
1UYVS2488EC990303
1D7HUI8Z03J524303
1RBH40204KAR21293
1E1U1X281SRGt7647
1H9DG1338J1022017
1 S8AD2837P0008203
1E1U1X289PRA14239
1E1U1X285PRA14254
1E1U1X281PRA14249
1M2N187Y7JW025047
1WAUDCVGCHU304346
5DMDSAFC41M000169
1FTHX26HOVEC62053
TRINITY TRANSPORTATION CORPORATION
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005
TABLE OF CONTENTS
Page 1
2
3
4
5
6
ACCOUNTANTS' REPORT
BALANCE SHEET
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
SUPPLEMENTARY SCHED~rLES
MICHAEL J. BERGER, CPA
JACK M. ROSENTHAL
]ANICE R. STAUDT
RICHARD W. MARSTELLER, CPA
CHRISTINE A. PETRIGNANI, CPA
BETH A. FRIEDMAN, CPA
MICHAEL ]. BERGER AND COeLLP
CERTIFIED PUBLIC ACCOUNTANTS
-JJ 3425 VETERANS MEMORIAL HIGHWAY
~ SUITE B
ANNE M. ROBELEN
ADMINISTRATIVE ASST.
VITO W. LAMONICA JR., E.A.
TAX MANAGER
RONKONKOMA, NEW YORK 11779
TEL: 1631)471-3400
FAX: (631) 471-6227
web SI1e: www,ber~ercpa,com
Emalh cpa@berOercpa.com
ACCOUNTANTS' REPORT
To The Stockholders
Trinity Transportation Corporation
214 Blydenburgh Road
Islandia NY 11749
We have compiled the accompanying Balance Sheet of Trinity Transportation
Corporation as of December 31, 2005, and the accompanying Statements of
Income and Accumulated Deficit and Cash Flows for the year then ended,- and
the accompanying Supplementary Schedules which are presented only for supple-
mentary analysis purposes, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting, in the form of financial statements
and supplementary schedules, information that is the representation of manage-
ment. We have not audited or reviewed the accompanying financial statements
and supplementary schedules and, accordingly, do not express an opinion or
any other form of assurance on them.
Michael J. Berger and Co., LLP
Certified Public Accountants
June 27, 2006
Page 1
ESTABLISHED]978
TRINITY TRANSPORTATION CORPORATION
BALANCE SHEET
DECEMBER 31, 2005
ASSETS
CURRENT ASSETS: Cash
Accounts Receivable
Loans Receivable
Payroll Taxes Receivable
Loans to Affiliates
Total Current Assets
FIXED ASSETS - AT COST - Notes A and B:
Trucks and Trailers
Machinery and Equipment
office Fixtures and Equipment
Leasehold Improvements
Total
Less: Accumulated Depreciation
Fixed Assets - Net
OTNER ASSETS:
Security Deposits
Investment in Subsidiary - At Cost
Officers' Loans
Total Other Assets
TOTAL ASSETS
$ 4,818,289
613,938
30,299
52,757
5,515,283
5,372,065
61,550
32,000
69,800
$ 1,335,017
1,504,399
13,500
18
985,901
3,838,835
143,218
163,350
$ 4,145,403
LIABILITIES AND CAPITAL DEFICIENCY
CURRENT LIABILITIES:
Accounts Payable
Employee Loans
N.Y.S. Franchise Tax Payable
401K Payable
Total Current Liabilities
CAPITAL DEFICIENCY:
Capital Stock - No Par Value - 200 Shares
Authorized - 60 Shares Issued & Outstanding
Accumulated Deficit
Total Capital Deficiency
TOTAL LIABILITIES kND CAPITAL DEFICIENCY
$ 300
( 417,588)
4,557,722
2,347
425
2,197
4,562,691
( 417,288)
$ 4,145,403
SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REPORT
Page 2
T~NITY TRANSPORTATION CORPORATION~a~
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2005
SERVICE INCOME
$ 22,812,867
OPERATING EXPENSES:
Direct Payroll and Subcontracting
Truck and Road Expenses
Total Operating Expenses
$ 19,611,950
2,477,003
22,088,953
OPERATING INCOME
723,914
ADMINISTRATIVE EXPENSES
555,973
INCOME BEFORE OTHER INCOME AND (DEDUCTIONS)
167,941
OTHER INCOME AND (DEDUCTIONS):
Interest Income
Provision for Depreciation
Provision for N.Y.S. Franchise Tax
Total Other Income and (Deductions)
7,875
29,177)
750)
( 22,052)
NET INCOME
145,889
ACCUMULATED DEFICIT:
Balance - Beginning
Less: Distributions
Balance - End
527,477)
36,000)
($ 417,588)
SEE ACCOMPkNYING NOTES AND ACCOUNTANT'S REPORT
Page 3
T~ITY TRANSPORTATION CORPORATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation
(Increase) Decrease in Assets:
Accounts Receivable
Payroll Taxes Receivable
Increase (Decrease) in Liabilities:
Accounts Payable
Employee Loans
401K Payable
NYS Franchise Tax Payable
Total Adjustments
Net Cash Provided by Operating Activities
29,177
363,010)
18)
252,127
2,347
25,303)
325
$ 145,889
104,355)
41,534
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets
139,834)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions
Loans to Affiliates
Net Cash Used by Financing Activities
36,000)
214,803)
250,803)
NET DECREASE IN CASH
349,103)
CASH:
Balance - Beginning
Balance - End
1,684,120
$ 1,335,017
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year for:
Interest
Income Taxes
425
SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REPORT
Page 4
TP~_NITY TRANSPORTATION CORPORATION
TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1. Nature of Business:
The Company is a Trucking Company whose operations are predominantly
in Nassau and Suffolk Counties, New York.
2. Accounting Basis for Recording Income:
The Company reports its income and expenses on the accrual basis for
both tax purposes and financial statement purposes. Under the accrual
method of accounting, revenue is recognized when earned and expenses
are recognized when incurred.
The Company prepares its financial statements on the income tax basis of
accounting.
The Company has no items of Other Comprehensive Income.
3. Fixed Assets and Depreciation:
Fixed Assets are stated at cost. Expenditures for additions, renewals,
and betterments are capitalized; expenditures for maintenance and re-
pairs are charged to expenses as incurred. Upon retirement or disposal
of assets, the cost and accumulated depreciation are eliminated from the
accounts, and the resulting gain or loss is included in determining the
results of operations.
Depreciation is computed over the Estimated Useful Lives of Assets on
the Straight Line Method for these financial statements.
Estimated useful lives are as follows:
Asset Classification
Trucks and Trailers
Machinery and Equipment
office Fixtures and Equipment
Leasehold Improvements
Estimated Useful Life
10 Years
10 Years
5-10 Years
40 Years
4. Income Taxes:
The Stockholders have elected to be treated as a Sub-chapter S Corporation,
wherein the income is taxed directly to the Stockholders. Accordingly,
no provision has been made for Corporate Federal Income Taxes.
SEE ACCOUNTANTS' REPORT
Page 5
SUPPLEMENTARY SCHEDULES
TRINITY TRANSPORTATION CORPORATION
SUPPLEMENTARY ~,:~K,)~ES
FOR THE YEAR ENDED DECEMBER 31, 2005
DIRECT PAYROLL AND SUBCONTRACTING:
Direct Payroll
Payroll Overhead
Subcontracting
TOTALS
1,342,139
284,029
17,985,782
$ 19,611,950
TRUCK AND ROAD EXPENSES
Truck Repairs
Gas and Oil
Tires
Dumping
Tolls
Insurance
Licenses and Permits
Truck and Road Taxes
TOTALS
$ 8,335
643,772
53,598
1,104,774
12,378
551,998
55,157
46,991
$ 2,477,003
ADMINISTRATIVE EXPENSES
office Salaries
Payroll Overhead
Office Expenses
Telephone
Professional Fees
Yard Maintenance
Repairs and Maintenance
Rent
TOTALS
$ 256,658
54,101
15,506
25,488
17,569
8,153
148,498
30,000
$ 555,973
SEE ACCOUNTANTS' REPORT
Page 6
2006 S-Corporation Return
prepared for:
TRINITY TRANSPORTATION CORPORATION
214 BLYDENBURGH ROAD
ISLANDIA, NY 11749
Michael J. Berger and Co., CPA's, LLP
3425 Veterans Memorial Hwy, Suite B
Ronkonkoma, NY 11779-7628
Form11205 u.s. Income Tax Return for an S Corporation oMa,o. ~m-0~30
"Do not file this form unless the corporation has filed Form 2553
Department of the Treasury to elect to be an S corporation. 2006
internal Revenue Service I~ See separate instructions.
fur ca~enaar )/ear ~uuo or [ax 'ear De,inning , ZOOb, ~ndin~
A Effective date of C em#oyeridentificafionnurnber
S election USO the
IRS TRINITY TRANSPORTATION CORPORATION 11-3180115
10/19/1993 label. D Date incorporated
Other- 214 BLYDENBURGH ROAD
B Business activity
codenurnber wise, IS~LNDIA, NY 11749 10/19/1993
(see instructions) print or E Total assefs (see instructions)
484200 type. $ 4,934r 063.
F Checkif: (1) L_lnitialreturn (2) ~] Final return (3)1 I Namechange (4) I I Address change (5) N Amended return
G Enter the number of shareholders in the corporation at the end of the tax year ................................................ ,,- 3
H Check if Schedule M-3 is required (attach Schedule M-3~ ....................................................................... ~ ~-- ~-
Caution. Include only frade or business income and expenses on lines la through 21. See the instructions for more information.
laGressreceiptaorsale~..I 24,016r448.1b Lessreturesandaowances / .6,448.
I 2 Cost of goods sold (Schedule A, line 8). .............................................................
N
C 3 Gross profit. Subtract line 2 from line lc ............................................................ 448.
MO 4 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797)
E 5 Other income (loss) (attach statement) ........................................ SEE. STATE[,{ENT. 1 75 9.
6 Total income (loss). Add lines 3 through 5 ........................................................ 207.
7 Compensation of officers ............................................................................
D 8 Salaries and wages (less employment credits) ................... ~,. ~.,~¢,,% ~ ............................ 091.
E 9 Repairs and maintenance ................... I.!~.l~ / 485,105.
U 10 Bad debts ................................... ~.}t,J[ ...........................
C 11 Rents ...................................... 85~000.
T 12 Taxes and licenses . SEE. STATEMEN:r. 2 232r 399.
O 13 Interest .........................................................................................
14 Depreciation not claimed on Schedule A or elsewhere on return (attach Form 4562) .................. 553.
15 Depletion (Do not deduct oil and gas depletion.) ..................................................
16 Advertising ...................................................................................... 641.
17 Pension, profit-sharing, etc, plans ......................
i 18 Employee benefit programs., 190r 658
s 19 Other deductions (attach statement) ..... SEE.STATENENT. 3 21,176 895.
e 20 Total deductions. Add lines 7 through tg... > ~63,342.
21 Ordinar~ business income (loss). Subtract line 20 from line 6 153 865.
22a Excess net passive income or LIFO recapture
tax (see instructions) ...................................................
AT b Tax from Schedule D (Form 1120S)...
c Add lines 22a and 22b (see instructions for additional taxes)
~ 23a 2006 estimated tax payments and 2005 overpayment credited to 2006 ...... 23a
D b Tax deposited with Form 7004 ...........................................
23b
c Credit for federal tax paid on fuels (attach Form 4136) .................... 23c
AP d Credit for federal telephone excise tax paid (attach Form 8913) ............ 23d
MY e Add lines 23a through 23d ............................ 759.
NE 24 Estimated tax penalty (see instructions). Check if Form 2220 is attached ....................... ~" []
25 Amount owed. If line 23e is smaller than the total of lines 22c and 24, enter amount owed. 0.
[ 26 Overpayment. If line 23e is larger than the total of lines 22c and 24, enter amount 759.
27 Enter amount from line 26 Credited to 2007 estimated tax Refunded 7 5 9.
Unde{~ena es ope ury. ~ declare that I have examined this return including accompanym schedules and statements and to the best of rny knowledge and
be e. s ta~r~,~e~a on o p eparer o her hah axpayer .s bese~on a in orma ,on o which preparer has any know edge.
ELECTRONICALLY FILED
EIN 11-2524858
P~neno. (631) 471-3400
Sign
Here
,~, Paid
~preoarefs Firm's name MICHAEL J. BERGER AND CO.r
(or urs r;
se~'-e°~ployecO, } 3425 VETERANS MEMORIAL HWY, SUITE B
Ma the IRS discuss this return
PRESIDENT I wit[ ~ preparer shown below I
(see instructions ? I
Da3e/o5/07 eChm~)~e~if.'.,, [] I~r~}I~jr~N7OrlPTIN
CPA' Sr LLP
RONKONKOMAr NY 11779-7628
BAA For Privacy Act and Paperwork Reduction Act Notice, see the separate instructions.
Form 1120S (2006)
Form 1120S (2006} TRINITY TRANSPORTATION CORPORATION 11-3180115 Pa~)e ?
li~~ Cost of Goods Sold (see instructions)
I Inventory at beginning of year...
2 Purchases .......................................................................................
$ Cost of labor .......................................................................................
4 Additional section 263A costs (attach statement) ....................................................
5 Other costs (attach statement) ......................................................................
6 Total. Add lines '1 through 5 .........................................................................
7 Inventory at end of yea[ ................................................................................
8 Cost of goods sold, Subtract line 7 from line 6. Enter here and on page .1, line 2. .........................
9a Check all methods used for valuing closing inventory:
(/) [] Cost as described in Regulations section 1.471
-3
(//) ~ Lower of cost or market as described in Regulations section '1.471 -4
(///) L] Other (Specify method used and attach explanation.)
b Check if there was a writedown of subnormal goods as describe~ i~ ~{e'~u"]a'~io-n; s-ec~i;n'-t .-47-~ -'-2(-c)-~ .-~ 7 ~ 7 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ -~'"~
c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) ........................ ·L]
d If the LIFO inventory method was used for this tax year enter percentage (or amounts) of closing
inventory computedunder L FO .........................................................................
e If property is produced or acquired for resale, do the rules of section 263A apply to the corporation? ................ [] Yes [] No
f Was there any change in determining quantities, cost or valuations between opening
and closin~ inventor,/? If 'Yes,' attach explanation ............. i ...............................................
~ther Informatipn (see instructions) No
1 Check accounting method'~--'-~ ; '~ Cash ~ ~ (specify)--~'
2 See the instructions and enter the:
a Business activity ~'_S~R_~_[_C~_ .............. b Product or service... ~ TRUCKING
3 At the end of the tax year, did the corporation own, directly or indirectly, 50% or more of the voting stock of a
domestic corporation? (For rules of attribution see section 267(c).) If 'Yes ' attach a statement showing
(a) name anaemployer ident f cat on number (EIN), (b) percentage owned, and (c) if t00% owned,
was a QSub election made7 ........................................................................................
4 Was the corporation a memberofa controlled group subject to the provisions ofsection 156t? ......................... X
5 Has this corporation filed, or is it required to file, a return under section 6'111 to provide information on any
reportable transaction? ............................................................................................. X
6 Check this box if the corporation issued publicly offered debt instruments with original issue discount ............... ·
If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue
Discount Instruments.
7 If the corporation: (a) was a C corporation before it elected to be an S corporation or the corporation acqu red
an asset with a basis determined by reference to its basis (or the basis of any other property)in the hands of a
C corporation and (b) has net unrealized built-in gain (defined in section .1374(d)(1)) in excess of the net
recognized built-in gain from prior years, enter the net unrealized built-in gain reduced by net recognized
built-in gain from prior years ..................................................... · $
8 Enter the accumulated earnings and profits of the corporation at the end of the tax year ........ $
9 Are the corporation's total receipts (see instructions) for the tax year and its total assets at the end of the tax year less
than $250,0007 If 'Yes,' the corporation is not required to complete Schedules L and M-.1 X
Note: If the corporation, at any time dudng the tax year, had assets or operated a business in a foreign country or U.S. possession, it may be
required to attach $c;~edule N (t:'otm 712g), Foreign Operations of U.S. Corporations, to this return. See Schedule N for details.
~ ~ Shareholders' Pro Rata Share Items Total amount
I Ordinary business income (loss) (page 1, line 21) ..................................................... I 153,865.
2 Net rental real estate income (loss) (attach Form 8825) ............................................... 2
3a Other gross rental income (loss) ......................................... Sa ~
b Expenses from other rental activities (attach statement.) ...........3b ~
NI c Other net rental income (loss). Subtract line 3b from line 3a ........................................... $ c
C 4 Interest income ..................................................................................... 4 27,453.
MO 5 Dividends:. a Ordinary dividends .................................................................. 5~
E b Qualified dividends. ...................................... ] 6bl I~
(L 6 Royalties ........................................................................................... 6
O 7 Net short-term capital gain (loss) (attach Schedule D (Form 1120S)) ................................... 7
SS) 8a Net long-term capital gain (loss) (attach Schedule D (Form 1120S)) .................................... 8t
b Collectibles (28%) gain (loss) ............................................ [~L ~
c Unresaptured sestio01250 gain (attach statement) ..................................
9 Net section 123'1 gain (loss) (attach Form 4797) ...................................................... 9
10 Other income (loss) (see instructions) ................................................................ 10
SPSA0112L 01/05/07
Form 1120S (2006)
Form 1120S (2006) TRINITY TRANSPORTATION CORPORATION 11-3180115
Shareholders' Pro R'ata Share Items (continued) Total amount
Deduc- 11 Section 179 deduction (attach Form 4562) .................................................. 11
tions 12a Contributions .................................................. SEE. STATEI~ENI'. 4 ..... '~2a 300.
~ b Investment interest expense ............................................................... 12 b
c Section 59(e)(2) expenditures (1) Type ~ .................. (2) Amount. ~' 12c (21
dOther deductions ~see instructions).. Type #' 12d
Credits 13a Low-income housing credit (section 4.2(j)(5)) ................................................
b Low-income housing credit (other) .......................................................... 13b
c Qualified rehabilitation expenditures (rental real estate) (attach Form 346g) ................................... 13c
d Other rental real estate credits (see instrs) Type i,- 15d
e Other renta~ credits (see instrs) Type~' 13e
f Credit for alcohol used as fuel (attach Form E478) ........................................... 15f
, ~1 Other credits (see instructions). Type ~' 13g
Foreign 14a Name of country or U.S. possession ......
Trans- - .......................
actions b Gross income from all sources ............................................................. 14b
c Gross income sourced at shareholder level .................................................. 14c
Foreign gross income sourced at corporate level
d Passive ................................................................................... 14d
· Listed categories (attach statement) ........................................................ 14e
f General limitation ......................................................................... 14f
Deductions allocated and apportioned at shareholder level
g Interest expense ..........................................................................
h Other ..................................................................................... 14h
Deductions a/located and apportioned at corporate level to foreign source income
i Passive ................................................................................... 14i
j Listed categories (attach statement) ........................................................ 14j
k General limitation ......................................................................... 14k
Other information
I I Total foreign taxes (check one): '" [] Paid [] Accrued .............................. 141
m Reduction in taxes available for credit
(attach statement) ........................................................................ 14m
n Other foreign tax information (attach statement) ...............................
Alterna- 15a Post-1986 depreciation adjustment ........................................................ 15a 4,384.
rive
Mini- b Adjusted gain or loss ..................................................................... 15b
mum c Depletion (other than oil and gas) ......................................................... 15c
Tax
(AMI') d Oil, gas, and geothermal properties - gross income ........................................
Items e Oil, gas, and geothermal properties - deductions .......................................... 15. e
f Other AMT items (attach statement)...., .................................................... 15f
Items 16a Tax-exempt interest income ................................................................ 16a
Affec- b Other tax-exempt income... 16b
ting ...............................................................
Share- c Nondeductible expenses ................................................................... 16c 6t 738.
holder
Basis d Property distributions ...................................................................... 16d 66r 000.
e Repayment of loans from shareholders ..................................................... 16e
Other 17a Investment income ........................................................................ 17a 27,453.
Inform-
ation b Investment expenses ...................................................................... 17b
c Dividend distributions paid from accumulated earnings and profits ............................ 17c
d Other items and amounts
(attach statement) .........................................................................
Recon- 18 Income/loss reconciliation. Combine the amounts on lines ) through tO in the far right col-
ciliation i umn. From the result, subtract the sum of the amounts on lines ] 1 through ~2d and lines t41... 18 181,018.
BAA Form 1120S (2006)
SPSA0134L 09127106
Form 1120S
Balance Sheets per Books
Assets
1 Cash .....................................
2a Trade notes and accounts receivable .......
b Less allowance for bad debts ...............
$ Inventories.
4 U.S. government obligations
5 Tax-exempt securities (see instructions.) ..
60thercurrentassets(attachstmO....SEE.ST..5..
7 Loans to shareholders ...................
8 Mortgage and real estate loans ...........
9 Other investments (attachstatement).. SE'~.. ST..6..
10a Buildings and other depreciable assets ....
b Less accumulated depreciation ...........
11 a Depletable assets .......................
b Less accumulated depletion ....
12 Land (net of any amortization)..
13a Intangible assets (amortizable only) .....
b Less accumulated amortization.
14 Other assets (attach strut). ..... SEE..ST. ~
15 Total assets.
Liabilities and Shareholders' Equity
16 Accounts payable ....
17 Mortgages, notes, bonds payable in less than ! year .....
18 Other current liabilities (att~ch stmt). . SET~ . ST. . 8. .
19 Loans from shareholders ..................
20 Mortgages, notes, bonds payable in ! year or more ....
21 Other liabilities (attach statement) ................
22 Capital stock .............................
23 Additional paid-in capital ..................
24 Retained earnings ........................
25 Adjustments to shareboldera' equity (att stmt) .......
26 Less cost of treasury stock ................
27 Total liabilities and shareholders'
TRINITY TRANSPORTATION CORPORATION 11-3180115
Page 4
Beginning of tax year End of tax year
(a) (b) (c) (d)
143
300
421.-
698.
5031500.
69,800.
000.-
193.
878 451.
,063.
,971.
6,775.
300.
-308~ 983 ._
063
Reconciliation of Income (Loss) per Books With Income (Loss) per Return
Note: Schedule M-3 required instead of Schedule M-1 if total assets are St0 million or more - see instructions
I Net income (loss) per books ................. 174 r 280. 5 Income recorded on books this year not included
2 Income iocluded on Schedule K, lines 1, 2, 3c, 4, 5a, 6, 7, 0o Schedule K, lines ] through 10 (itemize):
ga, 9, and 10, not recorded on books this year (itemize): a Tax-exempt interest $ ...........
3 Expenses recorded on books this year not 6 Deductions included on Schedule K lines ! ~r0ugh
included on Schedule K, lines t through ] 2, 12, and 14, not charged against book income this
and t 4~ (itemize): year (itemize):
a Depreciation ....... $ ........... a Depreciation... $ ...........
b Travel and entertainment. $ ...........
...S_gg_ _S.TA_T_g_HE_~_~- 9_ ..... _6J_38_. 6,738. 7 '~'d~i~'e~-~-a~-~-.~'.~'.~'.~'.~'.~'.~'.~'.~'.~'.- 0
4 Add lines 1 through 3 ....................... 181r 018. 8 Income {loss} {Schedule K~ In 18}. Ln 4 less In 7.. 181r 018
Analysis of Accumulated Adjustments Account Other Adjustments Account, and
Shareho tiers' Undistributed Taxable Income Previously Taxed (see instructions)
(a) Accumulated
adjustments account
Balance at beginning of tax year. ................................
Ordinary income from page t, line 21 ............................
Other additions ....................... S~.~.. .S"I].'~TEHF'-NT..lQ..
Loss from page 'i, line 21 .......................................
Other reductions ...................... S~..~...STATF. HRRT..11..
Combine lines I through 5
Distributions other than dividend distributions .....................
Balance at end of tax year. Subtract line 7 from line 6 ............
SPSA0134L 09/2710~
-417
-308
(b) Other I (c) Shareholders' undis-
previously taxed
adjustments account tnbuted taxable income
Form 1120S (2006)
671106
Final
K-1
II Amended K-t OMa No. 1545.0130
Schedule K-1 ~UU~ Shareholder's Share of Current Year Income,
~l(Form 1120S) For calendar year 2006, or tax Deductions~ Credits~ and Other Items
FDepartmentoftheTreasum year beginning ,2~ 1 Ordinary business income (loss) 13 Credits
Intecnal Revenue Service
ending 51, 2 8 8.
Shareholder's Share of Income, Deductions, 2 Net rental real estate inc0me (10ss)
Credits~ etc. ~ see page 2 of form and separate instructions, 3 Other net rental income (loss) ................
~ Information Aboutthe Corporation ................
4 Interest income
A Corporation's employer identification number 9r 151. _ ...............
11-3180115 5a Ordinary dividends
B Corporation's name, address, city, state, and ZIP code
TRINITY TRANSPORTATION CORPORATION 5b Qualified dividends 14 -'oreign transactions
214 BLYDENBURGH ROAD
ISLANDIA, NY 11749 ...............
6 Royalties
7 ~et short-term capital gain (loss)
C IRS Center where corporation filed return
CINCINNATI, OH 8a Net long-term capital gain (loss)
D [] Tax shelter registration number, if
any
E~ U Check if Form 8271 is attached 8b 2,ollectibles (28%) gain (loss) .................
~ Information About the Shareholder Sc Jnrecaptured section 1250 gain
F Shareholder's identifying number 9 ~let section 1231 gain (loss)
052-58-0232
G Shareholder's name, address, city, state, and ZIP code 10 Other income (loss) 15 Alternative minimum tax (AMT) items
CAROLYN CORE KENAVAN .................. ~_ .......... _1,_4_6_1._
674 SALISBURY PARK DRIVE
WESTBURY, NY 11590
H Shareholder's percentage of stock
ownership for tax year .................... 33. 333333 %
11 Section 179 deduction 16 Items affecting shareholder basis
c_ .......... 2336:
12 Other deductions
.a_ .............. ! 0_0_. _D_ ......... _2_2 0_0_0:
F
O
I
S
U
S 17 Other information
E A
._ 9,151
N
Y
*See attached statement for additional information.
BAA For Privacy Act and Paperwork Reduction Act Notice, see Instructions for Form 1120S, Schedule K-1 (Form t 120S) 2006
SHAREHOT.DgR i
671106
Final K-1 Amended K-1 OMe No, 1545.0130
Schedule K-1 ~UU~ ~ Shareholder's Share of Current Year Income,
~(Form 1120S) For calendar year 200~,or tax Deductionsr Credit% and Other rems
Department of the Treasury year beginning ,2CO6 '1 Ordinary business income (loss) 13 ;redits
Internal Revenue Service
ending 51r 288 . -- ...............
Shareholder's Share of Income, Deductions, 2 Net rental real estate inc0me (Ioss)
Credits, etc. - see page 2 of form and separate instructions 3 ...............
Other
net
rental
income
(loss)
~ Information About the Corporation ................
4 Interest income
A Corporation's employer identification number 9r 151. _ ................
11-3180115 5a Ordinary dividends
B Corporation's name, address, city, state, and ZIP code
TRINITY TRANSPORTATION CORPORATION 5b 21ualified dividends 14 Foreign transactions
214 BLYDENBURGH ROAD
ISLANDIA, NY 11749 .................
6 Royalties
7 qet short-term capital gain (loss)
C IRS Center where corporation flied return
CINCINNATI, OH 8a qet long-term capital gain (loss) .................
D [] Tax shelter registration number, if
any
E L_[ Check if Form 8271 is attached 81: ~,ollectibles (28%) gain (loss) .................
~ Information About the Shareholder 8c Jnrecaptured section ]250 gain
F Shareholder's identifying number 9 Net section t231 gain (loss)
120-52-8898
G Shareholder's name, address, city, state, and ZIP code 10 Other income (loss) 15 Alternative minimum tax (AMT) items
PATRICIA DIMATTEO ................. _A_ .......... _~ ~_4_6_~_
61 OLD BROOK ROAD
DIX HILLS, NY 11746
H Shareholder's percentage of stock
ownership for tax year .................... 33. 333333 %
11 Section 179 deduction 16 terns affectiegshareh01der basis
12 Other deductions
.A_ .............. 10_0_. .D__ 22~_000.
O
S
S 17 Dther information
O
N
Y
*See attached statement for additional information.
BAA For Privacy Act and Paperwork Reduction Act Notice, see Instructions for Form 1120S.
SHAREHOLDER 2
Schedule K.1 (Form '~ 120S) 2006
671106
Final K-1 r-] Amended K-1 oMe No. 1545.0130
Schedule K-1 ~'UU~ Shareholder's Share of Current Year Income,
~(Form 11205) For calendar year ~, or tax Deductionsr Credit% and Other Items
Department of the Treasu~ year beginning , 2c06 1 Ordinary business income (loss) 13 3redits
ending 51r 289. -- ...............
Shareholder's Share of Income, Deductions, 2 Net rentalreal estateinc0me(10ss)
Credits, etc, ,~ see page 2 of form and separate instructions 3 Other net rental income (loss) ...............
~ Information Aboutthe Corporation 4 Interest income ...............
A Corporation's employer identification number 9~ 151. _ ..............
11-3180115 5a Ordinary dividends
B Corporation's name, address, city, state, and ZIP code
TRINITY TRANS?ORTATION CORPORATION 5b Qualified dividends 14 =oreign transactions
214 BLYDENBURGH ROAD
ISLANDIA, NY 11749 $ qoya~tiee ................
7 ~let short-term capital gain (loss)
C IRS Center where corporation flied return
CINCINNATI, OH 8a '4et long-term capital gain (loss)
D [] Tax shelter registration number, if
any
E [_J Check if Form 8271 is attached 8b ]ollectibles (28%) gain (loss)
~ Information About the Shareholder 8c Jnrecaptured section 1250 gain
F Shareholder's identifying number 9 qet section 1231 gain (loss)
128-58-5325
G Shareholder's name, address, city, state, and ZIP code 10 Dther income (loss) 15 Alternative minimum tax (AMT) items
GINA CORE ................. ~A_ .......... _1,_4_6_2._
535 SPLIT ROCK ROAD
SYOSSET, NY 11791
H Shareholder's percentage of stock
ownership for tax year .................... 33. 333333 -%
11 ~ection179 deduction 16 It~rnsaffectingshare~lderbasis
c_ ........... 2,_231=
12 Dther deductions
_A_ ............. _z o_o_ p_ ......... _2_2,_0_o_0=
F
0
I
S
S 17 Other information
E ................... A ..........
0
N
Y
..................................
*See attached statement for additional information.
BAA For Privacy Act and Paperwork Reduction Act Notice, see Instructions for Form 11205. Schedule K-1 (Form 11205) 2006
SHAREHOLDER 3
SPSA04t2L ~/28/06
Form 4562 Depreciation and Amortization
(Including Information on Listed Property)
Deparlment of the Treasury
~lnternal Revenue Service ~' See separate instructions. '~ Attach to your tax tatum.
~Name(s) shown on return
TRINITY TRANSPORTATION CORPORATION
Business or activity to which this form relates
FORM ll20S
~ Election To Expense Certain Property Under Section 179
Note: If.you have any listed properS, complete Part V before,you complete Part I.
OMB No. 1545-0172
2006
Attachment
Sequence NO. 67
11-3180115
I Maximum amount. See the instructions for a higher limit for certain businesses .............................
2 Total cost of section 179 property placed in service (see instructions) ......................................
3 Threshold cost ofsection 179 property before reduction in limitation
4 Reduction in limitation. Subtract line 3 from tine 2. If zero or less, enter -0-.
5 Dollar limitation for tax ),ear. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing
see instruchons.
6 (a) Descriptio. of property ~~ (C) Elected cost
7 Listed property. Enter the amount from line 29 ...................................... 'J'----' ~[
8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7.
3 Tentative deduction. Enter the smaller of line 5 or line 8
10 Carryover of disallowed deduction from line 13 of your 2005 Form 4562.,
11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instrs)...
12 Section 179 expense deduction. Add lines 9 and tO, but do not enter more than line 11 .,,
13 Carryover of disallowed deduction to 2007. Add lines 9 and 10, I,ess line 12. ........ ~'1 13 J
Note: Do not use Part II or Part III below for listed property. Instead, use Part V.
~ Special Depreciation Allowance and Other Depreciation (Do not include listed property.) (See instructions.)
14 Special allowance for qualified New York Liberty or Gulf Opportunity Zone property (other than listed
property) placed in service during the tax year (see instructions) ........................................... 14
'15 Property subject to section 168(t)(t) election ............................................................. 15
16 Other depreciation (includin~ACRS) ..................................................................... ~ 16 i
~ MACRS Depreciation (Do not include listed properb/.)/See instructions,)
Section A
$108r000.
$430,000.
834.
17 MACRS deductions for assets placed in service in tax years beginning before 2006 ....................... 258.
18 If you are electing to group any assets placed in service during the tax year into one or more general
asset accounts, check her~ ..................................................................... ~'
Section B - Assets Placed in ,' 2006 Tax Year Usin the General
(a) (b) Month a.d (C) Basis for deprecia§oft (d) (e) (f) (g) Oepreciano.
Classification of property year placed (business/investment use Recovep/peried Convention Method deduction
~ 62,528. 5 MQ 200DB 12,461.
c7- ear ro ed __.
d10- ear ro err__.
e15- ear ro ert--.
f 20- ear ro ert__. __
~125-¥ear propert~ ~ 25 yrs S/L
h Residential rental 27.5 yrs ~ S/L
property ................ 27.5 yrs ~ S/L
i Nonresidential real 39 yrs ~ S/L
property ............... ~ S / L
Section C - Assets Placed in Service During 2006 Tax Year Using the Alternative Depreciation System
b 12-year ................. 12 yrs S/L [
_ ~_ar ................. 40 yrs MM S/L I
~ Summa~ (see instructions,)
O921~ Listed property. Enter amount fram line 28 ......
Total. Acid amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on
the appropriate lines of your return. Partnerships and S corporations - see instructions ..........
23 For assets shown above and placed in service during the current year enter
th_.~_portion of the basis attributable to section 263A costs .......................
BAA For Paperwork Reduction Act Notice, see separate instructions. FDIZ0812L C6/22/06
553.
Form4562 (2006)
Form 4562 (2006} TRINITY TRANSPORTAT, ION CORPORATION 11-3180115 Page
~ Listed Property (Include automobiles certain other vehicles cellular telephones, certain computers, and property used for
entertainment, recreat on, or amusement.)
Note: For any vehicle for which ,You are using the standard mileage rate or deduct ng lease expense, complete ol;/.v 24a, 24b,
columns (a) through (c) of Section A, all of Section B, and Section C if applicable.
Section A - Depreciation and Other Information (Caution: See. the instructions ,for limits for passenger automobiles.
,24a Do you have evidence t~ support the business/investment us9 claimedZ ......... [~ Yes ~ No 124b If 'Yes,' is the evidence written?...
(a) I (b) I (c) , I (d) (e) (f) (g) (h)
Type of prop?%y (lis Date plaCed Buslness~ Cost or Basis for depreciation Recovery Melhod
vehicles first) I in service I Inve,~.ment r other besis (besiness/invest rne nt I per[od Convention J Depreciation
~ ~L ~ use on~Y) / /
- - -- '- ....I
26 Pr,operty used more than 50% in a qualified business use:
27 Property used 50% or less in a qualified business use:
28 Add amounts in column (h), lines 25 through 27. Enter here and on line 2t, page t ..........
29 Add amounts in column (0, line 2§. Eqter here and on line 7, page 1 ...........
Section B - Information on Use of Vehicles
Complete this section for vehicles used by a sole proprietor, partner, or other 'more than 5% owner,' or related person. If you provided vehicles
to your employees, first answer the questions in Section C to see if'ou meet an exception to completing this section for those vehicles.
(a) (b) (c) (d) (e)
30 Total business/investment miles driven
during the year (do not include Vehicle 1 Vehicle 2 Vehicle 3 Vehicle 4 Vehicle 5 Vehicle 6
commuting miles~ ........................
$1 Total commuting miles driven during the yea[ .......
32 Total other personal (noncommuting)
miles driven ..............................
33 Total mi~es driven during the year. Add
lines 30 through 32 .......................
Yes No Yes No Yes No Yes No Yes No Yes No
34 Was the vehicle available for personal use
during off-duty hours?
35 Was the vehicle used primarily by a more
than 5% owner or related person? .........
36 Is another vehicle available for
personal use? ....................... , .....
Section C - Questions for Employers Who Provide Vehicles for Use by Their Employees
Answer these questions to determine if you meet an exception to completing Section B for vehicles used by employees who are not more than
5% owners or related persons (see instructions).
37 Do you maintain a written policy statement that prohibits all personal use of vehicles, including commuting,
by your employees? .................................................................................................
38 Do you maintain a written policy statement that prohibits personal use of vehicles except commuting by your
employees? See the instructions for vehicles used by corporate officers, directors, or 1% or more owners ...............
39 Do you treat all use of vehicles by employees as personal use?
40 Do you provide more than five vehicles to your employees, obtain information from your employees about the use of the
vehicles, and retain the information received? .....................................................................
41 Do you meet the requirements concerning qualified automobile demonstration use? (See instructions) ................
Note: If your answer to 37, 38, 39, 40, or 41 is 'Yes,' do not complete Section B for the covered vehicles.
~ Amortization
No
(a) (b) (c) (cO (e)
Description of costs Date amortization Amortizable Code Amortization
begins amount sec[ion period or
42 Amortization of costs that begins during your 2006 tax year (sg~ i,nstructionsl:
Amortization
for this year
Form4562 (2006)
Form 89'13
Department of the Tmasu~
~lntemal Revenue Sen/ice
Credit for Federal Telephone
Excise Tax Paid
Attach to your income tax return.
~FName(s) shown on your income tax return
TRINITY TRANSPORTATION CORPORATION
2006
Sequence NO, 63
11-3180115
Enter the federal telephone excise tax billed during each period as listed in column (a) of lines 1-14 below.
By filing this form, you are certifying that you (1) have not received from your serv ce prov der a cred t or refund of the tax paid on long
distance service or bundled service billed after February 28 2003, and before August 1,2006, and (2) will not ask your provider for a credit or
refund or have withdrawn any request subm tted to the provider for a credit or refund.
Caution. See the instructions for explanations of the services that qualify for a credit or refund of the federal telephone excise tax.
Amount of federal excise tax on long distance or
bundled service only
(b) Long (c) Bundled (d) Tax credit or (e) Interest
(a) Bills dated during: distance service refund (add (see ~nstructions)
service columns (b) and (c))
I March, April, and May of 2003 ..... $ $ $ 41.21 $ 8.4E
2 June, July, and August of 2003 .... 60.15 11.7~
3 September, October, and
November of 2003 ................ AY. 87 8.8~c
December of 2003; January and
4 February of 2004 ................. 49.34 8.6~c
5 March, April, and May of 2004 ..... 72.32 11.95
6 June, July, and August of 2004 .... 54.31 8. Az]
~ 7 September, October, and
November of 2004 .... 55.7 9 8.0~'
8 December of 2004; January and
February of 2005 ................. 49.18 6.49
9 March, April, and May of 2005 ..... 61.35 7.22
10 June, July, and August of 2005 .... 26.36 2.72
11 September, October, and
November of 2005 ................ 46.72 4.03
12 December of 2005; January and
February of 2006 ................. 40.64 2.86
'13 March, April, and May of 2006 ..... 37.26 2.00
14 June and July of 2006 ............ 24.56 0.86
15 Add lines 3 - 34 in columns (d~ and (e.'t ............................................. $ 667.06 $ 92.37
16 Total credit or refund requested. Add columns (d) and (e) on line ]5. Enter here and ~
on Form 3040, line 73; Form ] 040A, line 42; Form 'I040EZ, line 9; Form 3040EZ-T,
line la; Form 3040NR, line 69; Form ]040NR-EZ, line 2]; Form 1 ]20, line 32g; Form
]]20-A, line 28g; Form ]]20S, line 23d; Form ]04], line 24f; Form ]065, line 23;
Form 990-T, line 44f; or the proper line of other returns ............................ ~' $ 759.
BAA For Paperwork Reduction Act Notice, see the instructions.
Form 8913 (2006)
2006 FEDERAL STATEMENTS PAGE 1
CLIENT 206801
TRINITY TRANSPORTATION CORPORATION
11-31[
STATEMENT1
FORM l120S, LINE5
OTHERINCOME
TELEPHONE EXCISE TAX REFUND ..............................................................
TOTAL
759.
759.
STATEMENT 2
FORM 1120S, LINE 12
TAXES AND LICENSES
LICENSES AND PERMITS .......................................................................... $
PAYROLL TAXES .....................................................................................
ROAD TAXES ..........................................................................................
STATE TAX ...........................................................................................
TOTAL $
42,683.
139,420.
49,546.
750.
232,399.
STATEMENT3
FORM l120S, LINE19
OTHER DEDUCTIONS
AUTO AND TRUCK EXPENSE .....................................................................
CANVASES ...........................................................................................
FUEL ................................................................................................
INSURANCE .........................................................................................
LEGAL AND PROFESSIONAL .....................................................................
OFFICE EXPENSE .................................................................................
OUTSIDE DAMAGES ................................................................................
PERMIT SERVICE .................................................................................
SHOP EXPENSES ...................................................................................
SUBCONTRACTING .................................................................................
TELEPHONE .........................................................................................
TIRES .................................................................................................
TOWING ...............................................................................................
UNIFORMS ............................................................................................
YARD MAINTENANCE ................................................................................
$ 15,968.
3,925.
653,925.
531,746.
18,905.
12,489.
6,351
3,332
19,488
19,698,405
18,518
122,432
4,630
5,591
61~190.
TOTAL $ 21 176 895.
STATEMENT 4
FORM 1120S, SCHEDULE K, LINE 12A
CHARITABLE CONTRIBUTIONS
CASH CONTRIBUTIONS - 50% LIMITATION .................................................... $ 300.
TOTAL $ 300.
2006 FEDERAL STATEMENTS PAGE 2
CLIENT 206801 TRINITY TRANSPORTATION CORPORATION 11-3180115
STATEMENT5
FORM 1120S, SCHEDULE L, LINE6
OTHER CURRENT ASSETS
LOAN TO AFFILIATE .......................................................... $ 13,500. $
LOANS & EXCHANGES .......................................................... 490,000.
TOTAL $ 503~500. $
ENDING
13,500.
490,000.
503,500.
STATEMENT 6
FORM 1120S, SCHEDULE L, LINE 9
OTHER INVESTMENTS
INVESTMENT IN SUB HILLSIDE ............................................ $
TOTAL $
BEGINNING ENDING
32,000. $ 32,000.
32,000. $ 32,000.
STATEMENT 7
FORM 1120S, SCHEDULE L, LINE 14
OTHER ASSETS
LOANS AND EXCHANGES ....................................................... $
PAYROLL TAXES RECEIVABLE ...............................................
SECURITY DEPOSITS ..........................................................
TOTAL $
BEGINNING ENDING
495,901. $ 816,901.
18. 0.
61,550. 61r550.
557r469. $ 878~451.
STATEMENT 8
FORM 1120S, SCHEDULE L, LINE 18
OTHER CURRENT LIABILITIES
401K PAYABLE
EMPLOYEE LOANS
STATE TAX PAYABLE
TOTAL
BEGINNING ENDING
2,197. $ 0.
2,347. 6,350.
100. 425.
4~644. $ 6,775.
STATEMENT9
FORM1120S, SCHEDULE M-1,LINE$
EXPENSES ON BOOKSNOTONSCHEDULE K
OFFICERS LIFE INSURANCE PREMIUMS ........................................................ $ 1,843.
PENALTIES ........................................................................................... 4,895.
TOTAL $ 6 738.
2006
CLIENT 206801
FEDERAL STATEMENTS
TRINITY TRANSPORTATION CORPORATION
PAGE
11-318011
STATEMENT 10
FORM 1120S, SCHEDULE M-2, COLUMN A, LINE 3
OTHER ADDITIONS
INTEREST INCOME ..................................................................................
TOTAL
27,453.
27r453.
STATEMENT 11
FORM 1120S, SCHEDULE M-2, COLUMN A, LINE 5
OTHER REDUCTIONS
CONTRIBUTIONS .....................................................................................
OFFICERS LIFE INSURANCE PREMIUMS ........................................................
PENALTIES ...........................................................................................
TOTAL
300.
1,843.
4,895.
2006
CLIENT 206801
NEW YORK FILING INSTRUCTIONS
TRINITY TRANSPORTATION CORPORATION
11-3180115
ELECTRONICALLY FILED:
FORM CT-3-S - 2006 NEW YORK S CORPORATION FRANCHISE TAX RETURN. THE
ABOVE TAX RETURN WILL BE ELECTRONICALLY FILED WITH THE NEW YORK
DEPARTMENT OF TAXATION AND FINANCE,IJ-P-6fC-ik~ECEIPT~~
PAYMENT:
THE BALANCE DUE OF $425 WILL BE WITHDRAWN ELECTRONICALLY ON MARCH 9,
2007.
2006 CT-3-S --']
New York S Corporation
Franchise Tax Return
Tax Law - Articles 9-A and 22
All filers must enter tax period:
Final return ~ Amended return ~
Employer identificahan number Pile number
I 11-3180115 I AA7
Business telephone number
631-342-9673
beginning
01-01-06 ending II
If you have any subsidiaries
incorporated outside NYS,
mark an X in the box ·
12-31-06
If you cleim an
an X in the box
Legal name of corporation
TRINITY TRANSPORTATION CORPORATION
Mailing name (if different from legal name above)
C/O
Number and street or PO box
214 BLYDENBURGH ROAD
ISLANDIA
State ZIP code
NY 11749
Trade name/DBA
State or country of incorporation
Date of incorporation
10-19-93
orpign c~r r Lions: date began
NAICS business code number (from federal return) If your name, employer identification number address
or owner/officer information has changed, you must file
If address above Form DTF-95. If onl your address has changed you may
I 4 8 4 2 0 0 is new, mark an file Form DT~-g6. ~ou can get these forms from our Web
X in the box ~ site, by phone, or by fax. See the Need he/p? in the instructions.
Principal business activity SERVICE ~.~.[~,o~]~ 1~t' '""~ ~bt' ~*~*~
Has the corporation re~okod its elect~on to be treated as a New York S c~[o~,,_ ~ T~[ ~
Number
shareholders
YeS · ~0 · ~ If Yes, enter effective date: · 3
A Pay amount shown on line 48. Make check payable to: New ¥orl~$tate Corporation 7'ax
Attach your payment here. Detach all check stubs, (see instructions for details.) ~ A.
Payment enclosed
425.
You must attach a copy of the following: (1) federal Form 1120S as filed (2) Form CT-34-SH; (3) Form CT-3-S-ATT
(/frequire~, see instructions); and (4) any applicable cred t c a m forms.
B If you filed a return(s) other than federal Form ] 120S, enter the form number(s) here: ..... ·
C If you included a qualified subchapter S subsidiary (QSSS) in this return, mark an Xin the box and attach Form CT-60*QSSS ..... III
D Mark an A'in the box only if you need a tax packet mailed to you next year (see instructions) ................................... II
E Enter your busings allccation percentage (ifyou did not complete Form CT.3.S.ATT, Schedule A, you must enter eitherO.O0 or 100) ....... ·
100 %
F ~ntery~uri~vestme~ta~1~cat~r~percentage(ify~d~dn~tc~mp~ete£~rmcT~3.$~ATT~chedu/eB~y~umustentereither~r1~) ..... ·
100 %
G Did the S corporation make an IRC section 338 or 453 election? ........................................... Yes · No · ~
H Did this entity have an interest in real property located in New York State during the last three years? ....... Yes · No · X
I Has there been a transfer or acquisition of a controlling interest in this entity during the last three years? .... Yes · No · ~
J If the IRS has completed an audit of any of your returns within the last five years, list years
K If this return is for a New York S termination year, mark an X in the appropriate box to indicate which method of accounting was used for
the New York S short year (see instructions) ........... Normal accounting rules Daily pro rata allocation
L Issuer's allocation percentage · 1 0 0. %
L 44001061032 J
Page 2 of 3 Form CT-3-S (2006)
TRINITY TRANSPORTATION CORPORATION 11-3180115
rovide the information for lines 1 through 10 from the corresponding lines on your federal Form 1120S,
Schedule K, total amount column. (Show any negative amounts with a minus (-.) sign; do not use parentheses or brackets.)
I Ordinary business income or loss ..................................................... · 1. 153, 865.
2 Net rental real estate income or loss .................................................. · 2.
3 Other net rental income or loss ....................................................... ·
4 Interest income ..................................................... : ................ · 4.
50rdinarydividends` .................................................................. · 5.
6 Royalties ............................................................................ · 6.
7 Net short-term capital gain or loss .................................................... · 7.
8 Net long-term capital gain or loss ..................................................... · 8.
9 Net section ]23t gain or loss ......................................................... · 9.
10 Other income or Ios~ ................................................................ · 10.
11 Loans to shareholders (from federal Form i 12OS, Schedule L, line 7, columns b and d)
27,453.
Beginning of tax year ·
69,800.
End of tax year ·
69,800.
12 Total assets (from federal Form 112OS, Schedule L, line 15, columns b and d)
Beginning of tax year ·
4,145,403.
End of tax year ·
4,934,063.
13 Loans from shareholders (from federal Form 112OS, Schedule L, line 19, columns b and d)
Beginning of tax year ·
End of tax year ·
Provide the information for lines 14 through 21 from the corresponding lines on your federal Form 1120S,
~chedule M-2. (Show any negative amounts with a minus (-) sign; do not use parentheses or brackets..)
14 Balance at beginning 0f tax yeac ........ ·
15 Ordinary income from federal
Formll20S, page l, line 21 ...... ·
16 Other additions .................. ·
17 Loss from federal Form H20S,
page ], line 2] .................. ·
18 Other reductions, ................ ·
19 Add lines ~4through 18 .......... ·
20 eistributions other fi]an dividend distributions ·
21 Balance at end of tax year.
Subtract In 20 from In t9 ......... ·
A B C
Accumulated adjustments Other adjustments Shareholders' undistributsd
account account taxable inco~ previously tax~
-417,263. ·
153,865.
27,453.
-7,038.
-242,983.
66,000.
-308,983. · ·
Computation of tax (see instructions)
You must enter an amount on lines 22, 23, and 24 below; if none, enter g,
22 Gross payroll everywhere ......................................................... · 22.
23 Total receipts everywhere ................................................. · 2.R.
24 Average value of gross assets everywhere ......................................... · 24,
25 Fixed dollar minimum tax ......................................................... · 25.
26 Recapture of tax credits ........................................................... · 26.
27 Total tax after recapture of tax credits (add lines 25 and 26) ......................... · 27.
28 Special additional mortgage recording tax credit (from Form CT.43.) ................. · 28.
29 Tax due after tax credits (subtract fine 28 from line 27.) ............................. ~1 29.
NYSA0312t. 12/27/06
1,642,091.
24,017,207.
4,539,733.
425.
425.
425.
L 44002061032
TRINITY TRANSPORTATION CORPORATION
Form CT-~S (2006) Page 3 of 3
11-3180115
Computation of tax (continued)
First installment of estimated tax for the next tax period:
30 Enter amount from line 29[ .........................................................
31 If you filed a request for extension, enter amount from Form CT-5.4, line 2 ............ · 31.
32 If you did not file Form CT-5,4 and line 30 is over $],000, enter 25%(.25) of line 30;
otherwise enter 0 .................................................................. ~ 32.
33 Add line 30 and ~ine 3'~ or 32. ...................................................... ~3,
Composition of prepayments: (see instructions): Date paid Amount
34 Mandatory first installment ..................... 34.
35 Second installment from Form CT-400 .......... 35.
36 Third installment from Form CT-400 ............. 36.
$7 Fourth installment from Form CT-400 ........... 37.
38 Payment with extension request from
Form CT-5,4 .................................. 38.
39 Overpayment credited from prior years .................................. 39.
40 Totel prepaymente (add lines 34 through 39). ................................................. · 40,
41 Balance (subtract line 40 from line 33; if line 40 is larger than line 33, enter g) ........ 41,
42 Pena~ty f~r underpayment ~f e~timated tex (mark an ~ in th~ b~x if F~rrn cT-222 is at~ached)~ ~ ~ . · · 42,
43 Interest on late payment ........................................................... · 4~,
44 Late filing and late payment penalties ............................................... · 44.
45 Balance (add lines 41 through 44) .................................................. 45.
Voluntary gifts/contributions (see instructions):
46a Return a Gift to Wildlife ............................... ~ 46a.
46b Breast Cancer Research and Education Fund ........... ~ 46b.
46c Prostate Cancer Research, Detection, and Education Fund .......... ~ 46c.
16dWorld Trade Center Memorial Foundation Fund ......... ] 45d.
47 Add lines 33, 42, 43, 44, and 46a through 46d ....................................... 47,
48 Balance due (if line 40 is less than line 47, subtract line 40 from line 47 and enter here.
this is the amount due; enter your payment amount on line A on page I) ............. ~ 48.
49 Overpayment (if line 40 is more than line 47, subtract line 47 from line 40 and
enter here. This is fhe amount of your overpayment; see instructions.) ................ 49.
50 Amount of overpayment to be credited to next period ................................ ~ 50.
51 Refund of overpayment (subtract fine 50 from line 49) ............................... ~ 51.
52: If you claim a refund of unused special additional mortgage recording tax credit, enter the amount from
Form CT-43, line 13 (see instructions) ...................................................... I 52.
53 Amount of special additional mortgage recording tax credit to be applied as an
overpayment to next period ........................................................
Third- Do you want to allow anob~er person to discuss this return with the Tax Dept? (see instructions) Yes X
party Designee's name eesignee*s phone number
designee
?P, EPARER
Certification: I certify that this return and any attachments are to the best of my knowledge and belief true, correct, and complete.
signature of authorized pe~son
THIS RETURN HAS BEEN
ELECTRONICALLY FILED
Signature of individual
SIGN OFt FILE
PRESIDENT
Firm's name (or yours if self. emplo, ve~
MICHAEL J. BERGER AND CO.,
425 .
425.
Add,ess 3425 VETERANS MEMORIAL HWY, SUITE B
Cay State Z~P C~e
RONKONKOMA NY 11779-7628
Seeinstructionsforwheretofile.
425.
O.
425.
425.
425.
(complete the following) NO
Personal identdication number (PIN)
Date
CPA'S, LLP
ID number Date
11-2524858 3-05-07
NYSA0334L 12/27/06
44003061032
CT-34-SH I Staple forms here I ~
2006
/
New York S Corporation
Shareholders' Information Schedule
Attachment to Form CT-3-S or CT-32-S
TRINITY TRANSPORTATION CORPORATION 11-3180115
Schedule A - Shareholders' New York State modifications and credits (Enter the total amount reported by the New York
S corporation on each line. Each shareholder must nc ude his or her pro rata share of these amounts on his or her personal
income tax return.)
Part I - Total shareholder modifications related to S corporation items
Additions
I New York State franchise tax imposed under Article 9-A or Article 32 ....................... 1.
2 Federal depreciation deduction from Form CT-399, if applicable (see instructions) ........... 2.
3 Other additions (see instructions and attach explanation) ................................... 3.
Subtractions
4 Allowable New York depreciation from Form CT-399, if applicable (see instructions) ......... 4,
5 Other subtractions (see instructions and attach explanatmn) ............................................ 5.
Other items (see instructions and attach explanation)
6 Additions to federal itemized deduction~ .................................................. 6.
7 Subtractions from federal itemized deductions ............................................. 7.
8 New York State adjustments to federal tax preference items ............................................ 8.
Part 2 - Total S corporation New York State credits and taxes on early dispositions
Credits and taxes on early dispositions
750.
9 Investment tax credit retail enterprise tax credit, historic barn credt and employment
ncentive credit (attach Form CT.46 and, if applicab e, Form CT-46-A Ti') ................ · 9.
10 Investment tax credit on research and development property (attach Form CT-46) ....... · 10.
Investment tax credit for financial services industry (attach Form CT-44) ................ · 11.
12 Tax on early dispositions - investment tax credit, retail enterprise tax credit, historic
barn credit, investment tax credit on research and development property, or investment
tax credit for financial services industry (attach Form CT-44 or CT-46) .................. · 12.
Empire zone (EZ) tax credits
13 EZ wage tax credit (attach Form CT-60;). ............................................. · 13.
EZ capital tax credit:
14a Investments in certified EZ businesses (from Form CT-602) ............................ · 14a.
14bMonetary contributions to EZ community development projects (from Form CT-602) ...... · 14b.
15 EZ investment tax credit (attach Form CT-603) ........................................ · 15.
16 EZ investment tax credit for financial services industry (attach Form CT-605) ............ · 16.
17 Recaptured tax credit -- EZ capital tax credit EZ investment tax credit, or EZ investment tax credit for financial
services iedustry (attach Form CLEO2, CT-603, or CT. E05) ......................................... · 17.
Qualified empire zone enterprise (QEZE) tax credits (attach Forms CT.604 and CT-606; corporate partners, see instructions)
18 QEZE real property tax credit allowed (attach Form CT-606) ............................ · 18.
19 Recapture of QEZE real property tax credit (attach Form CT-606) ....................... · 19.
QEZE tax reduction credit (attach Form CT-604):
20 QEZE employment increase factor .................................................... · 20.
21 QEZE zone allocation factor .......................................................... · 21.
22 QEZE benefit period factor .......................................................... · 22.
NYSA0] 12J. 11/14/06
(continued)
L 43301061032 J
TRINITY TRANSPORTATION CORPORATION 11-3180115
CT-34-SH (2006) Page 2 of 3
OPart 2 - Total S corporation New York State credits and taxes on early dispositions (continued)
Farmers' school tax credit (see instructions)
23 Total acres of qualified agricultural property ......................................... · 23.
24 Total amount of eligible taxes paid .................................................. · 24.
25 Total acres of qualified agricultural property converted to nonqualified use ............. · 25.
26 Total acres of qualified conservation property. ....................................... · 26.
Other credits
27a Alternative fuels credit (attach Form CT-40) ......................................... · 27a.
27b Recapture of alternative fuels credit (attach Form CT-40) ............................. · 27b.
28 Credit for employment of persons with disabilities (attach Form CT.41). ............... ·
29 QETC employment credit (attach Form DTF-621) .................................... ·
30 QETC capital tax credit (attach Form DTF-622) ...................................... ·
31 Recapture of QETC capital tax credit (attach Form DTF-622) ......................... ·
32 Industrial or manufacturing business OMB) credit (attach Form DTF-623) .............. ·
33 Credit for purchase of an automated external defibrillator (attach Form CT.250~ ....... ·
34 Low-income housing credit (attach Form DTF-624) ................................... ·
35 Recapture of Iow-income housing credit (attach Form DTF-626). ...................... ·
36 Green building credit (attach Form DTF-630) ........................................
37 Long-term care insurance credit (attach Form CT-249) ............................... ·
38 Empire state film production credit (attach Form CT-248) ............................. ·
39a~r~nfie~dredeve~pmenttaxcredit-$itepreparati~n~reditc~mp~nent(attachF~rm¢T~6/~) ............ ·
39b~r~w~eIdredeve~pmenttaxcredit-tangib~epr~pertycreditc~mp~nent(attachF~rmcT~6ti) ........... ·
39c Brewnfield redevelopment tax credit - on-site ground water remediation
credit component (attach Form CT-6I t) ............................................. ·
40 Recapture of brownfield redevelopment credit (attach Form CT-6~ ~) .................. ·
41 Remediated brownfield credit for real property taxes (attach Form CT-6~2) ............ ·
42 Recaptureofremediatedbrownfieldcreditforrealpropertytaxes(attachFormCT.6f2) .................. ·
43 Environmental remediation insurance credit (attach Form CT-6~3) .................... ·
44 Recapture of environmental remediation insurance credit (attach Form CT-613). ....... ·
45a QETC research and development property credit component (attach Form DTF.6~9).. ·
45 b QETC qualified research expenses credit component (attach Form DTF-6~9) ......... ·
45 c QETC qualified high-technology training expenditures credit component (attach Form DTF-619) ............ ·
46 Security officer training tax credit (attach Form CT-63~) ............................. ·
47 Fuel cell electric generating equipment tax credit (attach Form CT-259) .............. ·
48 Biofuel production credit (attach Form CT-24.3) ..................................... ·
49 Clean heating fuel tax credit (attach Form CT-241). ................................. ·
50 Handicapped-accessible taxicabs and livery service vehicles credit (attach Form CT.239) ................. ·
51 Other tax credit(s) (see instructions) ................................................ ·
28.
29.
30.
31.
32,
33.
34,
35.
· 36.
37.
38.
39a.
$9b.
$9c.
40.
42.
43.
44.
45b.
45c,
46.
47,
48.
49.
50.
L 43302061032
· 1.
· 2.
· 3.
· 4.
· 5.
· 6.
· 7.
· 8.
· 9.
·10.
· 11.
TRINITY TR3%NSPORTATION CORPORATION 11-3180115
CT-34-SH (2006) Page 3 of 3
Schedule B - Shareholders' identifying information
(Photocopy Schedule B, as needed, attach additional sheets, and mark an X in the box .)
A B C D E
For each shareholder, enter last name, Identifying number Percentage Shareholder Shareholder
first name, middle initial on first line; (SSN or EIN) of ownership residency status entity status
(make only (make only
enter home address on second, third, and fourth lines. I entr~) 1 en~/)
(ahach federal Schedule K- / for each shareholder) 1 for NY State
2 for city of NY I for individual
S for city of F for estate
Yonkers or trust
4 for NYS E fo~ exem t
CAROLYN CORE KENAVAN
674 SALISBURY PARK DRIVE
WESTBURY, NY 11590
PATRICIA DIMATTEO
61 OLD BROOK ROAD
DIX HILLS, NY 11746
GINA CORE
535 SPLIT ROCK ROAD
SYOSSET, NY 11791
1. 052-58-0232 33.333 1 I
2. 120-52-8898 33.333 1 I
3. 128-58-5325 33.333 1 I
43303061032
ELIZABETH A. NEVILLE
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southold, New York 11971
Fax (631) 765-6145
Telephone (631) 765-1800
southoldtown.northfork.net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
SOLID WASTE REMOVAL & DISPOSAL
Bid Opening
6/14/07 ~ 10:00 AM
THREE (3) bids were received:
Trinity Transportation Corp.
Michael Avery
214 Blydenburgh Road
Islandia, NY 11749
(631)342-9673
TransRiver Marketing Company, LP
Derek Veenhof
40 Lane Road
Fairfield, NJ 07004
(973)882-2445
Winter Brothers Recycling Corporation
Stephen R. Soucy
107 Mahan Street
West Babylon, NY 11704
Bid results are attached
Original copies are in Town Clerk's file. Five copies sent to SWMD.
Town Of Southold
P,O Box 1179
Southold, NY 11971
Date: 05/31/07
* * * RECEIPT * * *
Receipt: 1272
Transaction(s):
1 1
2007 Waste Hauling
Reference Subtotal
#3 $150.00
Check: 1272
Total Paid: $150.00
Name:
Empire, Waste Service Inc.
910 Lexington BIvd
Bethel, CT 06801
Clerk ID: LINDAC Internal ID: #3
#8374
STATE OF NEW YORK)
) SS:
COUNTY OF SUFFOLK)
Dina Mac Donald of Mattituck, in said county, being duly sworn,
says that he/she is Principal clerk of THE SUFFOLK TIMES, a weekly
newspaper, published at Mattituck, in the Town of Southold, County of Suffolk
and State of New York, and that the Notice of which the annexed is a printed
copy, has been regularly published in said Newspaper once each week for
1 week(s), successively, commencing on the 24th day of May, 2007.
Principal Clerk
Sworn to before me this day of ~
2007
I~O'{ARY pUBLiC '$TA'1E 0¥ NEW yORK
NO 01 _V06~ 05050
Qua~tie~ ~n Sutlolk county
CommissiOn Expires FebrUarY 28, 2008
NOTICE TO BIDDERS
NOTICE IS HEREBY GIVEN, in
accordance with the provisions of Sec-
tion 103 of the General Municipal Law,
that the Town of Southold will receive
sealed bids for solid waste haul.disoosal
services until the time and at the loca-
tion herein soecffied which, will then be
opened and publicly read aloud;
PLACE: Office Of the Town Clerk
Southold Town Hall
53095 Main Road
Southold New York 11971
(631) 765-1800
DATE: Thursday, June 14, 2007
TIME: 10:00 A. M.
(LATE BIDS WILL NOT BE
OPENED)
The offer to be made in accordance
with this Bid Solicitation shall include a
bid on the following:
A bid price per ton, to provide equip
merit and labor for hauling solid waste
and disposing solid waste at the Con
tractoffs Solid Waste Disposal Site. The
term of this Agreement shall be two (2)
years commencing on July 1, 2007. The
Town and the Contractor shall HOLD
A MUTUAL OPTION to renew the
Agreement for one (1) additional one
year term. Agreement by both parties to
implement the Option Year, or intent by
either party to reject the Option Year,
shall be submitted in writing not later
than 180 days prior to the expiration of
the initial 2 year term (i.e., by Janua~
1, 2009).
Bids must be made in writing on the
forms furnished and shall be accom
panied by a Bid Guaranty in the Form
of certified check, moncy order, bank
draft or standard form letter of credit
made payable to Town of Southold. or
bid bond, in the sum of one hundred
thousand dollars ($100.000.00) wherein
the named obligce shall be the Town of
Southold.
The successful Bidder shall be re-
quired to furnish a performance Bond
and insurance in accordance with the
instructions in the Bid Solicitation,
The bid price shall not include any
tax. Federal. state, or local from which
the Town of Southold is exempt.
A Bidder may not withdraw his bid
within forty-five (45) days after the
opening of thc bids, but may withdraw
his Bid at any time prior to the sched
uled time for the opening of bids.
The Town reserves the right to reject
any or all bids and to waive informali-
ties, should this action be in the best in
terest of the Town of Southold.
Bid Solicitation may be examined
free of charge and at the following lo-
cation on weekdays from 8:00 A.M. to
4:00 RM.:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southoid, New York 11971
Upon payment of non-refundable
one hundred fffly dollars ($150.00) Bid
Solicilafion may be picked up at:
Office of the Town Clerk
Soutbold Town Hall
53095 Main Road
Southold, New York 11971
Bidders should contact Southold
Town So[id Waste Coordinator James
Bunchuck at the Southold Town Trans-
fer Station (631-734-7685) with any
questions regarding this Bid Solicita-
tion or Towa Of Southold waste pro
sram and haul-disposal operations. In
addition, bidders may visit the Transfer
Station at any time during the normal
business hours of 7:00 am to 5:00 pm,
7 days per week, except holidays. The
Transfer Station address is 1 Zack's
Lane, Cutchogue, NY 11935, BUT IS
ACCESSED FROM COX LANE, OFF
COUNTY RT. #48, in Cutchogue.
For specific further information re-
garding bidding requirements, contact
Southold Town Clerk Elizabeth A. Nev-
ille (631) 765-1800. For information re
garding (631) 734-7685.
All bids must be signed and sealed in
envelopes plainly marked "Bid On Sol-
id Waste Haul-Disposal Services 2007",
and submitted to the Office of the Town
Clerk, 53095 Main Road, P O Box 1179,
Southold, NY 11971. The bid price shall
not include any tax, federal, state, or lo-
cal, from which the Town of Southold is
exempt.
Dated: May 22, 2007
ELIZABETH A. NEVILLE
SOUTHOLD TOWN CLERK
8374 1T 5/24
Southold Town Board
Meeting of May 22, 2007
RESOLUTION 2007-475
ADOPTED
Item # 11
DOC ID: 2903
THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2007-475 WAS
ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON
MAY 22, 2007:
RESOLVED that the Town Board of the Town of Southold hereby authorizes and directs the
Town Clerk to advertise for bids for the Transportation and Disposal of Municipal Solid
Waste (MSW} from the Cutehogue Transfer Station-
Elizabeth A. Neville
Southold Town Clerk
RESULT: ADOPTED [UNANIMOUS]
MOVER: Louisa P. Evans, `iusUce
SECONDER: William P. Edwards, Councilman
AYES: Krupski .Ir., Edwards, Ross, Wickham, Evans, Russell
Generated May 24, 2007 Page 16
Town Of Southold
P.O Box 1179
Southold, NY 11971
Date: 05/25/07
* * * RECEIPT * * *
Receipt~: 18023
Transaction(s):
1 1
2007 Waste Hauling
Reference Subtotal
#1 $150.00
Check~: 18023
Total Paid: $150.00
Name;
Trinity, Transportation Corp
214 Blydenburgh Road
Islandia, NY 11749
Clerk ID: LINDAC Internal ID: #1
BIDDER'S SOLICITATION
SOLID WASTE HAUL AND DISPOSAL SERVICES
AGREEMENT DOCUMENTS
TOWN OF SOUTHOLD
STATE OF NEW YORK
TOWN Of SOUTHOLD
Originally Prepared by:
Solid Waste Task Force
Technical Committee
53095 Main Road
Southold, NY 11971
May 2007
NOTICE TO BIDDERS
Solid Waste Haul-Disposal Services
The Town of Southold will receive sealed bids for solid waste haul-disposal services until the
time and at the location herein specified which, will then be opened and publicly read aloud;
PLACE:
Office Of the Town Clerk
Southold Town Hall
53095 Main Road
Southold New York 11971
(631) 765-1800
DATE: June 14, 2007
TIME: 10:00 AM
(LATE BIDS WILL NOT BE OPENED)
The offer to be made in accordance with this Bid Solicitation shall include a bid on the
following:
A bid price per ton, to provide equipment and labor for
hauling solid waste and disposing solid waste at the
Contractor's Solid Waste Disposal Site. The term of this
Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three (3) additional option years (see Section 18.0~ p. 21).
Notwithstanding contractual or other legal reasons for terminating this
Agreement, this Agreement will be guaranteed for a two (2) year term, through
June 30, 2009.
Bids must be made in writing on the forms furnished and shall be accompanied by a Bid
Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit
made payable to Town of Southold, or bid bond, in the stun of one hundred thousand dollars
($100,000.00) wherein the named obligee shall be the Town of Southold.
The successful Bidder shall be required to fumish a performance Bond. and insurance in
accordance with the instructions in the Bid Solicitation.
The bid price shall not include any tax, Federal, state, or local, from which the Town of
Southold is exempt.
A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids,
but may withdraw his Bid at any time prior to the scheduled time for the opening of bids.
The Town reserves the right to reject any or all bids and to waive informalities, should this
action be in the best interest of the Town of Southold.
2
Bid Solicitation containing submission requirements, instructions, technical specifications,
and bidding forms may be examined free of charge and at the following location on weekdays
from 8:00 A.M. to 4:00 P.M.:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Upon payment of non-refundable fifty dollars ($150.00) Bid Solicitation may be picked up
at:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck,
Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Bunchuck's office is at the
Southold Town Transfer Station, located at:
Southold Town Solid Waste District
1 Zack's Lane
Cutchogue, New York 11935
Entrance to the facility is gained from Cox Lane, off County Rt. # 48. All bidders are
encouraged to inspect thc Southold Town Transfer Station. Appointments to do so are not
required, but may be scheduled by calling Mr. Bunchuck at thc phone number above.
Elizabeth A. Neville
Town Clerk
For further information regarding bidding requirements, contact Elizabeth A. Neville (631) 765-
1800. For information regarding Town Of Southold waste program and haul-disposal operations,
contact James Bunchuck (631) 734-7685.
TABLE OFCONTENTS
GLOSSARY OF TERMS
SECTION A- SUBMISSION REQUIREMENTS
1.0 Project Purpose
2.0 Schedule
3.0 Examination Of Agreement Documents
4.0 Information to be Submitted
4.1 Contractual Bid
4.2 Supplemental Information
5.0 Bid Format
5.1 Binding
5.2 Form Preparation
6.0 Submission of Bid
6.1 Withdrawal Of Bids
6.2 Questions & Addenda
7.0 Bid Guaranty
8.0 Execution Of Agreement
9.0 Consideration Of Bids
10.0 Selection Of Contractor
11.0 Acceptance of Bid
12.0 Assignment
13.0 Limitation Of Funds Available
14.0 Insurance and Bonds
14.1 Insurance
14.2 Bonds
15.0 Indemnity (Hold Harmless)
16.0 Payments
17.0 Default
18.0 Term of Agreement
19.0 Service Agreement
20.0 Subcontracts
21.0 Rights and Options
SECTION B - BID SPECIFICATION
1.0 Requirements
2.0 Program Goals and Objectives
3.0 Potential Regulatory and Operational Changes
4.0 Character Of The Solid Waste
4.1 Quality and Characteristics
5.0 Program Activities
5.1 Collection
5.2 Loading Mode
5.3 Town of Southold Accident and Damage Policy
5.4 NYSDEC Part 360 Permit to Operate
10
11
11
12
13
13
13
15
15
15
15
15
16
16
16
17
17
18
18
18
18
18
20
20
21
21
21
21
22
22
23
24
25
25
25
26
26
26
27
27
27
4
6.0 Haul Services
6.1 Transport Mode
6.2 Work Included
6.3 Equipment
6.4 Weighings
6.4 Routing Mode - Contractor's Responsibility
7.0 Disposal Services Program Activities
7. I Work Included
7.2 Operational Capacity
7.3 Permit Requirements
7.3.1 Disposal Sites Inside State Of New York
7.3.2 Disposal Sites Outside State of New York
7.4 Weighings
8.0 Safety and Health Regulations
9.0 Operations and Procedures
9.1 Supporting Data
27
27
28
28
29
29
29
30
30
30
31
31
33
33
34
35
SECTION C - TOWN OF SOUTHOLD SOLID WASTE
HAUL/DISPOSAL SERVICES
36
1.0 Intent
2.0 General Bid Statement
3.0 Unit Price Bid Schedule 3.1 Compensation
3.2 Evaluation Unit Bid Price Formula
4.0 Bid Security Acknowledgment
5.0 Information Schedules
37
37
41
41
42
42
42
Information Schedule A
Information Schedule B
Information Schedule C
Information Schedule D
Information Schedule E
Information Schedule F
Information Schedule G
Information Schedule H
Information Schedule I
Information Schedule J
Information Schedule K
Information Schedule L
Information Schedule M
5
SECTION D - APPENDICES
Appendix A Sample Operating Agreement
Appendix B New York State Department of Environmental Conservation Permit
Appendix C Accident Report
6
GLOSSARY OF TERMS
ADMINISTRATOR -Shall mean the Coordinator of municipal solid waste (or his agent) of the
Town of Southold, New York.
AGREEMENT- Shall mean a Form operating agreement set forth by the Town and resulting
from this Bid Solicitation between the Town of Southold and the successful Bidder to be
executed in 1997.
AGREEMENT DOCUMENTS -Shall include the notice to bidders, instructions, bid solicitation,
bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance
bond, certificates of insurance, glossary of terms any general conditions or special conditions,
and any addenda. The Agreement Documents will Form a part of the Agreement.
AGREEMENT YEAR -Shall mean the period from ~July 1~ of a calendar year to June 30~ of
the next calendar year.
BIDDER -Shall mean any party or parties submitting in proper form a bid to perform the work as
specified in the Agreement Documents. The successful Bidder selected by the Town to perform
the specified work will thereafter be known as the Contractor.
BID PRICE -Shall mean the unit cost to determine the ranking of bidders.
BID SOLICITATION-Shall mean this document, specifications, and any bid addenda issued.
COMMENCEMENT DATE -Shall mean ~July 1, 2007_.
CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) -Shall mean solid
waste resulting from the construction, renovation, equipping, remodeling, repair and demolition
of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other
masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and
roofing shingles.
CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) DISPOSAL
SITES -Shall mean any site designated by the Contractor where construction and demolition
debris is disposed of in a manner that minimizes environmental hazards and is permitted under
the design and operation requirements of 6NYCRR Part 360 or alternatively outside the State of
New York, is permitted under design and operation requirements meeting the requirements of 1)
that jurisdiction's applicable regulatory agency and 2) Town of Southold's minimum standards.
GLOSSARY4
CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents.
CONTRACT YEAR - Shall have the same meaning as Agreement Year.
CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors,
administrators, agents, or successors thereof.
COORDINATOR - Shall mean the coordinator of municipal solid waste for the Town of
Southold.
COUNTY - Shall mean Suffolk County, State Of New York.
DAILY - Sunday to Saturday, inclusive.
EPA - Environmental Protection Agency (Federal).
HAUL-DISPOSAL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in
dollars for each ton of solid waste actually hauled from the Town Of Southold Transfer Station
to the Contractor-Designated Disposal Site and disposed of at the Contractor-Designated
Disposal Site.
HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.. or "hazardous substance" as
defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., or "hazardous waste" as defined under New York Environmental
Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time,
and the regulations promulgated thereunder, and any analogous or succeeding Federal, state or
local law, rule or regulation and regulations promulgated thereunder and (2) any other material
which any governmental agency or unit having appropriate jurisdiction shall determine from
time to time cannot be processed at the facility because it is harmful, toxic or dangerous.
NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful
Bidder that the Town of Southold intends to award an Agreement to the successful Bidder,
subject to compliance with all their terms and conditions of the Agreement Documents.
NYSDEC - New York State Department Of Environmental Conservation.
OSHA - Federal Williams-Steiger Occupations Safety & Health Act of 1970, plus subsequent
revisions.
GLOSSARY-2
OWNER - Shall mean the Town Of Southold, New York. Also may be referred to as the Town.
PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience
and necessity, Franchises or authorizations which must be issued by any Governmental Body
having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of
construction and demolition debris.
PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition
debris or to construct, establish, maintain or operate a construction and demolition debris
Disposal Site.
RCRA - Resource Conservation Recovery Act (Federal).
SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances,
including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid
Waste does not include C&D waste, recyclables, hazardous, or infectious waste).
SOLID WASTE DISPOSAL SITE(S) - Shall mean any site designated by the Contractor where
solid waste is disposed of in a manner that minimizes environmental hazards and Is permitted
under the design and operation requirements of 6NYCRR Part 360 - Solid Waste Management
Facilities, or alternatively outside of the State of New York, is permitted under design and
operation requirements meeting the requirements of 1) that jurisdiction% applicable regulatory
agency and 2) Town of Southold's minimum standards. Also may be referred to as Disposal
Site(s).
SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract
with the Contractor for services, equipment, materials and/or labor.
GLOSSARY-3
SECTION A
SUBMISSION REQUIREMENTS
BIDDERS INFORMATION, INSTRUCTIONS, AND
AWARD BASIS
10
SECTION A
SUBMISSION REQUIREMENTS
BIDDERS INFORMATION, INSTRUCTIONS AND AWARD BASIS
1.0
2.0
PROJECT PURPOSE
The Town of Southold expects that it will receive and need to dispose of approximately
10,000 tons of solid waste during the agreement year. It is possible that the Town of
Southold will contract with another town to receive and dispose of their solid wastes. If
this happens the quantity of wastes to be hauled and disposed of under this Agreement
will increase. This Bid Solicitation will ensure Town of Southold's solid waste will
continue to be 1) hauled From the Town of Southold Transfer Station to Disposal site(s)
and 2) disposed of at permitted Disposal Site(s).
SCHEDULE
The schedule below is an estimate of the time period leading up to the commencement of
the Agreement. Its intent is to provide each Bidder with an idea of when certain events
may occur. The dates given are guidelines and should not be construed as firm dates or
deadlines due to. the multiple patties involved in the decision making process.
EVENT
Transfer Station Visits
Pre-Bid Conference
Bid Opening
Town Board Approval
Agreement Executed
Operations Commencement
DATE
By Appointment
None
10:00 AM Thursday, June 14, 2007
June 19, 2007
On or Before June 29, 2007
July 1, 2007
11
3.0
EXAMINATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE
WORK
It is the responsibility of each Bidder before submitting a Bid to (a) examine the Sample
Operating Agreement and Agreement Documents thoroughly; (b) visit the site of the
Town of Southold Transfer Station; (c) attend and be familiar with the outcome of the
pre-bid conference (d) become familiar with conditions at the Town of Southold Transfer
Station and Disposal Sites that may affect cost, progress, performance or furnishing of
the work; (e) become familiar with and consider all federal, state and local laws,
regulations ordinances, permits, approvals and orders that may effect the cost, progress,
performance or furnishing of the work: (f) study and carefully correlate the Bidder's
observations with the Agreement Documents; and (g) notify the Town Clerk of all
conflicts, errors or discrepancies in the Agreement Documents.
Reference is made to the following Appendices which contain supplemental information
which is attached to and made part of the Agreement Documents:
Appendix A: Sample Operating Agreement
Appendix B: NYSDEC Part 360 Operating Permit
Appendix C: Town of Southold Accident Report
Reference is made to the Following information which is available for review by
Bidders at the Town Clerk's Office during normal business hours - 8:00 A.M. to 4:00
P.M. Monday through Friday.
i. Pending conceptual plans for the proposed Town of Southold Transfer Station.
ii. Town of Southold Solid Waste Management Plan.
This information is presented solely for the convenience of the Bidders and does not
constitute part of the Agreement Documents. Bidders shall form their own conclusions
and opinions from this information and shall confirm any information contained therein
regarding facilities and equipment through site visits. The Town does not guarantee the
accuracy of any information contained in these documents.
Before submitting a Bid, each Bidder shall, at the Bidder's own expense, make or obtain
any additional inspections, examinations, or 'studies and obtain any additional data and
information which may affect cost, progress, performance or furnishing of the work and
which Bidder deems necessary to determine its bid for performing and furnishing the
work in accordance with the time, price and other terms and conditions of the Agreement
Documents. The failure or omission of the Bidder to receive and examine any form,
instrument or document, or make required inquiries and inspections, shall not relieve the
Bidder from any obligation contained in the Agreement Documents. The Town will be
justified in rejecting any claim based on facts or conditions of which the Contractor
should have been cognizant.
12
The submission of a Bid will constitute an incontrovertible representation by Bidder that
Bidder has complied with every requirement of this Bid Solicitation, that without
exception the Bid is premised upon performing and furnishing the work required by the
Agreement Documents, and that the Agreement Documents are sufficient in scope and
detail to indicate and convey understanding of all terms and conditions for performing
and furnishing the work.
Bidders will be allowed to ask questions regarding the Bid Documents during the pre-bid
conference to be held at:
Town Hall
53095 Main Road
Southold, New York 11971
4.0
4.1
4.2
INFORMATION TO BE SUBMITTED WITH PROPOSAL
Contractual Bid
For the purpose of assisting the Town in determining the responsible Bidders for this Bid
Solicitation, the Bidder is required to submit the following minimum information with his
bid:
ii.
iii.
iv.
Contractor Bid Form
Bid Security or Bid Bond
Information Schedules A through M as applicable
Supplemental Information as described in 4.2
Supplemental Information
In addition to the aforementioned forms, the Bidder is. required to submit the following
supplemental information with his bid:
Operational Plan: A plan describing the Bidder's assessment of the requested
operation set forth in Exhibit M. This section shall be divided into the following
subsections:
o Haul
A detailed summary of requirements for manpower, materials and supplies,
mobile equipment, etc., shall be included to provide the Town with general
anticipated guidelines for performance under the Agreement.
o Disposal
A detailed summary of requirements of site capacity, useful life, hours and days
of the week, operation, etc., shall be included to provide the Town with general
13
ii.
iii.
iv.
anticipated guidelines for performance under the Agreement.
A copy of the current Permits to Construct and Permits to Operate shall be
included. If the Solid Waste Disposal Site is located outside the State of New
York, a copy of the current applicable laws and regulations governing the design,
construction and operation of the Disposal Site shall additionally be included.
Litigation: A section briefly describing any current litigation which in any way
may affect the Bidder's operational capability of useful life of the Solid Waste
Disposal Sites.
Subcontractors: If the Bidder intends to use one or more subcontractors to
complete any portion of the work, the Bidder must so indicate this intent in its
Bid. The Bidder is advised that any Agreement awarded will be contingent upon
the use of the subcontractor(s) so identified. In the event that the Bidder desires to
change the number or identity of such subcontractor(s), the proposed change must
be submitted to the Town for approval. No such change shall be made without the
Town's approval. In addition, it is the policy of the Town of Southold to
encourage the participation of Minority Business Enterprises (MBE's) and
Women- Owned Business Enterprises (WBE's) on Town projects. For this reason,
the Agreement will require Contractor to use its best efforts to include among its
subcontractors MBE and WBE firms. In the event the successful Bidder intends to
subcontract in excess of twenty-five percent (25%) of the work, the Bidder will be
required to submit to the Town an MBE/WBE Utilization Plan acceptable to the
Town prior to the Town's execution of the Agreement.
Disposal Site Subcontractor: In the event the Bidder does not own the Disposal
Site identified in its Bid, the Bidder shall fumish a statement, signed by an
authorized representative of the Disposal Site, which provides for Bidder's use of
the site pursuant to this Bid Solicitation in accordance with the Agreement
Documents. THE SUPPLEMENTAL iNFORMATION REQUIREMENTS MAY
BE SATISFIED BY INCLUDING A REFERENCE TO AN INFORMATION
SCHEDULE (A-M) IF THE SCHEDULE PROVIDES THE INFORMATION
REQUESTED AND IS INCLUDED IN THE BID.
14
5.0
5.1
BID FORMAT
Binding
The document(s) if bound shall be in a manner that will provide for easy evaluation
access (to lie flat when opened). Printing on both sides of the sheets, provided a quality
paper is Utilized that will prevent the type from showing through, is acceptable. Paper
with substantial recycled content is preferred.
5.2 Form Preparation
6.0
Bids shall be submitted in the form described in this Bid Solicitation. All blank spaces for
bid prices shall be properly filled in, in ink or typed, in both words and numerals for all
bid categories required. In the event a price shown in words and its equivalent shown in
figures do not agree, the written words shall be binding on the Binder. BIDS SHALL
NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED IN ANY WAY. In
the event a specification is not applicable, it shall be so indicated. Incomplete bids may
not be considered, depending on the nature of the missing information.
SUBMISSION OF BID
Each Bidder shall submit six (6) separate complete sets of his Bid which shall be
enclosed in a sealed opaque envelope plainly marked on the outside with the title of the
work and the name and address of the Bidder. No Bid will be considered unless filed on
or before the time and at the place designated in the Notice to Bidders. Bids received
after the time set for the opening will be returned to Bidders unopened. When sent by
mail, preferably registered, the sealed Bid, marked as above, should be enclosed in an
additional envelope similarly marked and addressed to:
Office of the Town Clerk
Town of Southold
53095 Main Road
Southold, New York 11971
Bids received prior to the time of opening will be kept securely unopened. No bid
received thereafter will be considered.
15
6.1
6.2
7.0
Withdrawal of Bids
Any Bidder will be given permission to withdraw its Bid upon receipt of a properly
notarized written request made no later than the time set for opening. At the time of
opening of the bids, if such Bid is included, it will be returned to the Bidder unopened.
No bid may be withdrawn after opening until execution of the Agreement or rejection of
all bids as provided herein.
Questions & Addenda
All questions about this Bid Solicitation must be submitted in writing to the following:
Town Clerk
Town of Southold
53095 Main Road
Southold, New York 11971
No alterations to this Bid Solicitation will be considered valid unless in writing and
issued as Addenda. All such addenda shall become part of the documents and all Bidders
shall be bound by such addenda, whether or not received by the Bidders
All questions must be received at least ten (10) calendar days before bid opening in order
to be answered. It shall be the Bidder's responsibility to make inquiries concerning any
addenda issued. All addenda will be on file at the Town Clerk's office at least twenty-four
(24) hours before bids are opened. The Town will not be bound by oral clarifications.
BID GUARANTY
Each Bid must be accompanied by a bid guaranty (Section C, Schedule 5.0.K), without
condition or qualification, which shall be in the sum of one hundred thousand dollars
($100,000.00).
The guaranty may be certified check, bank draft, money order, standard form irrevocable
letter of credit, or a bid bond in the form attached. The bid bond shall be secured from a
surety company authorized to do business in the State of New York as a surety. No Bid
will be considered unless it is accompanied by the required guaranty, certified check,
money order or bank draft must be made payable to the order of the Town of Southold.
The bid bond shall name the Town as the obligee. Cash deposits will not be accepted.
The bid guaranty shall ensure the execution of the Agreement and the furnishing of the
surety bond or other required bonds by the successful Bidder, all as required by the
Agreement Documents.
All guaranties will be returned within ten (10) days after the execution of the Agreement
and required bonds insurance and other Agreement Documents are received from the
successful Bidder.
16
8.0
9.0
EXECUTION OF AGREEMENT/FURNISHING OF BONDS
The successful Bidder, or its legally authorized representative, shall be required to appear
in person within ten (10) days of the Notice of Award by the Town at the place and time
designated by the Town to execute the Agreement and other Agreement Documents for
Haul/disposal services.
The successful Bidder shall, at its own cost and expense, procure, execute and deliver to
the Town the following documents within ten (10) days of formal Notice of Award by the
Town.
Performance Bond - A Performance Bond shall be in an mount of one million five
hundred thoushand dollars ($1,500,000.00).
This bond (as shown by example in Section C, Schedule 5.0.L), shall be maintained at the
Contractor's own expense for the term of the Agreement. Failure or refusal of the
successful Bidder to execute and/or deliver such bond within the time designated, shall
constitute a breach of such Bidder of the Agreement created by the Town's acceptance of
the bid. In such event, the Town may determine that such Bidder has abandoned the
Agreement and the Town shall be entitled to take action for any and all damages it may
suffer as the result of such breach. The Town's rights in this regard shall include but not
be limited to a claim against the bid bond provided. The Town specifically reserves any
and all other rights against the Contractor as a result of his failure to perform as required
by these documents.
CONSIDERATION OF BIDS
The Town of Southold reserves the right to reject any/or all bids for haul and disposal
services if such action is deemed to be in the best interests of the Town. To be considered
responsive to this Bid Solicitation, each Bidder shall:
Provide equipment, labor, maintenance and management services to haul and dispose
of solid waste from the Town of Southold Transfer Station to Contractor designated
Solid Waste Disposal Site(s) as set forth in Section B - Bid Specifications.
B. Reserve and provide a minimum available capacity of 15,000 tons (52 weeks/year)
yearly, allowing for seasonal and other peak periods.
Provide evidence of all current valid state and Federal permits, licenses, local
ordinances, etc., required by law to receive solid waste at the designated Disposal
Site(s).
D. Provide evidence of physical and financial capability to perform services described in
the bid specifications.
10.0 SELECTION OF CONTRACTOR
17
Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only
bids solicited from firms or combinations thereof, who have sufficient management,
engineering capabilities, operating, and maintenance experience to fulfill the Town's
goals and comply with the applicable local, state, Federal laws, ordinances, regulations
e.g. New York State Department of Environmental Conservation, Resource Conservation
Recovery Act and Federal Environmental Protection Agency guidelines will be accepted.
The Town will review the bids and make a selection recommendation based on the
evaluation criteria included in this Bid Solicitation or take such other action as it deems
in its best interest.
Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation
Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole
discretion, to reject at bids submitted in response to this Bid Solicitation.
11.0 ACCEPTANCE OF BID
The acceptance of a Bid will be a Notice of Award signed by a duly authorized
representative of the Town, and no other act of the Town shall constitute the acceptance
of a Bid. The acceptance of a Bid shall bind the successful Bidder to execute the
Agreement and other Agreement Documents.
12.0 ASSIGNMENT
The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not
assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right,
title, or interest therein or his power to execute such Agreement, to any person or
corporation without the prior written consent of the Town.
13.0 LIMITATION OF FUNDS AVAILABLE
14.0
14.1
The Contractor specifically agrees that any Agreement shall be deemed executory only to
the extent of the funds appropriated for the purpose of the Agreement and that no liability
shall be incurred by the Town beyond the funds appropriated on the date of execution of
the Agreement by the Town for the said purpose.
INSURANCEANDBONDS
Insurance
For the period from Agreement commencement date until one (1) year after Agreement
termination date, Contractor must maintain insurance acceptable to the Town in the kinds
and amounts set forth below. All such insurance coverage, shall be provided by
companies licensed to do business in New York State and the state in which the Disposal
Site(s) is (are) located. The Town of Southold and its agent shall be named as an
additional insured and coverage shall not be changed or cancelled until thirty (30) days
written notice has been given to the Town. Within ten (10) days of the Notice of Award,
Contractor shall furnish to the Town, certificates of insurance, in a form satisfactory to
18
the Town Attorney, evidencing such insurance. The kinds and amounts of insurance are
as follows:
A. Contractor's Insurance - Insurance for liability for damage imposed by law of kinds
and in the amounts hereinafter provided covering all work under the Agreement,
whether performed by Contractor or his subcontractors. The kinds and amounts of
insurance are as follows:
(1)
Worker's Compensation Insurance - A Policy covering the operations of the
Contractor in accordance with the provisions of Chapter 41 of the Laws of
1914 as amended, known as the Worker's Compensation Law, covering all
operations Of the Contractor, whether performed by him or by his
subcontractors. The Agreement shall be void and of no effect unless the
person or corporation making or executing same shall secure compensation
coverage for the benefit of, and keep insured during the life of said Agreement
such employees in compliance with provisions of the Worker's Compensation
Law.
(2)
General Liability (Comprehensive Form) Insurance - Contractor's liability
insurance issued to and covering legal liability of the Contractor with respect
to all work performed by him under the Agreement.
The following insurance coverage shall be included:
(a)
Independent Contractor's Protective Liability - Covering work
performed by subcontractors.
(b) Completed Operations or Product Liability.
(c) Contractual Liability.
(d) Broad Form Property Damage
(e) Personal Injury.
NOTE: If any of the rating classifications embody property damage
exclusions C or U, coverage for eliminating such exclusions must be
provided.
Coverage for the above will be required in not less than the following
amounts:
SiNGLE LIMITS OF LIABILITY: $1,000,000.00
AGGREGATE LIMITS OF LIABILITY: $10,000,000.00
19
(3) Automobile Liability Insurance - Policy shall include coverage for all owned
as well as non-owned and hired vehicles, and limits shall not be less than the
following amounts:
BODILY INJURY LIABILITY
Aggregate: $3,000,000.00
Each Person Each Occurrence
$1,000,000.00
PROPERTY DAMAGE LIABILITY
Aggregate: $3.000,000.00
Each Occurrence
$1,000,000.00
14.2
Bonds
Prior to the execution Of the Agreement. the successful bidder shall furnish to the Town a
Performance Bond wherein the named obligee is the Town of Southold. The Performance
Bond's purpose is to secure the faithful performance of the Agreement. The bond' amount
shall be set forth in Section A-8.0. The bond shall be executed by a surety company
approved by the Town authorized to do business in the State of New York and with an
office or representative in Suffolk County, New York. The form shall be acceptable to the
Town of Southold and shall have a term through the completion of services.
As an a alternative to the Performance Bond, the successful Bidder may furnish a
certified check, bank draft, money order, or a standard form irrevocable letter of credit,
certified check, bank draft or money order must be made payable to the order of the
Town of Southold. The standard form irrevocable letter of credit shall be in a form
acceptable to the Town of Southold.
In the event the Contractor secures a Performance Bond from any of its subcontractors,
said bond shall also name the Town of Southold as a dual obligee.
Should the Town designate another public or private gent of contract administrator, the
same or others shall be added as additional named obligee at no added costs to the Town,
upon written request from the Town.
15.0 INDEMNITY (HOLD HARMLESS)
Contractor shall agree to defend, indemnify and save harmless the Town against any and
all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and
expenses of whatever kind or nature which the Town may directly or indirectly incur,
suffer or be required to pay by reason of or in consequence of the carrying out of or the
performance of the terms of such Agreement, or the failure to carry out any of the
revisions, duties, services or requirements of such Agreement, whether such losses and
damages are suffered or sustained by the Town directly or its employees, licensees,
agents, engineers, citizens or by other persons or corporations, including any of the
Contractor's employees and agents who may seek to hold the Town liable therefor. This
indemnity shall include any and all claims, penalties or other losses or damages incurred
by the Town as a result of enforcement or other proceedings by Federal, state or local
government agencies relating to Contractor's Disposal Site(s) operation. This obligation
20
shall be ongoing, survive the term of the Agreement and include, but not be limited to,
claims concerning non-sudden environmental impairments.
The Bidder agrees to join in the commencement of any action or proceeding or in the
defense of any action or proceeding which in the opinion of the Town constitutes actual
or threatened interference or interruption with the Town's rights hereunder, including all
necessary appeals which may be necessary, in the opinion of the Town.
16.0 PAYMENTS
17.0
18.0
Contractor shall receive monthly payments for services performed during the prior
calendar month upon submission of an invoice (with a Town voucher) that shall contain
an itemized list of municipal solid waste haul trips from the Town of Southold Transfer
Station including the tonnage of municipal-solid waste and the manifest number for each
load of municipal solid waste removed. Such payments shall be made within sixty (60)
days of the Town's approval of Contractor's invoice. Contractor's monthly invoice shall
include a daily summary of tonnage received by Contractor at the' Transfer Station. The
Town shall be entitled to deduct from any payment owing to Contractor any sums
expended by the Town to cure any default or other non-compliance by Contractor.
DEFAULT
In the event the Contractor fails to perform its obligations under the Agreement, the
Town may terminate such Agreement, and the Town may procure the services from other
sources and hold the Contractor responsible for any excess costs incurred and deduct
from payments owing to the Contractor and/or draw upon the Performance Bond as full
or partial reimbursement for such excess costs. The Town reserves the right to terminate
the Agreement for just cause.
TERM OF AGREEMENT
The term of this Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three (3) additional option years. The Town and the Contractor, by
mutual consent, shall have the option of renewing this Agreement for up to three (3)
additional one-year terms at the prices bid herein. Notice of this mutual consent to be
expressed by the parties in writing not less than one-hundred eighty (180) days prior to
the expiration of the term in force (i.e., by January 1, 2009, January 1, 2010, and January
1,2011). Similarly, notice by either party of the intent to reject any option year shall be
submitted in writing by the same date (January 1) of each year. The Town reserves the
right to may terminate the Agreement at any time after Year Two (i.e., after June 30,
2009) of the Agreement for the purpose of entering into an inter-municipal solid waste
haul~disposal Agreement with another Long Island Town by giving one-hundred eighty
(180) days written notice to the Contractor.
19.0 SERVICE AGREEMENT
The Contractor shall be obligated to provide the Town with disposal services without
21
regard to the permit' status of its Disposal Site. In the event that Bidder wishes to submit
a bid for a Disposal Site for which Bidder does not currently have all necessary federal
and state permits, Bidder shall at its sole risk and expense, be responsible for obtaining
and/or renewing its permits or providing to the Town an alternate Solid Waste Disposal
Site at no additional cost (disposal plus any additional hauling) to the Town. This is a full
service Agreement and failure of the successful Bidder to provide the identified Disposal
Site or acceptable alternative Disposal Site, on or after the commencement date for
services under the Agreement Documents awarded hereunder shall constitute a breach of
this Agreement. The Bidder accordingly shall not be excused from it obligations
hereunder by reason of any failure to obtain or maintain its permits at the identified
Disposal Site.
20.0 SUBCONTRACTS
In the event Bidder does not own the Disposal Site identified in its bid prior to execution
of the Agreement, Bidder shall:
(1)
fumish to the Town a copy of the signed Agreement between Bidder and the Disposal
Site Contractor which provides for Bidder's use of the site pursuant to this Bid
Solicitation in accordance with the Agreement Documents;
(2)
require the Disposal Site Contractor to fumish to Contractor and the Town a
performance bond guaranteeing the availability of the Disposal Site throughout the
term of the Agreement;
(3) require the certificates Contractor to provide insurance naming the Town as
additional insureds on all policies maintained by Contractor.
21.0 RIGHTS AND OPTIONS
The Town of Southold, New York, reserves and holds at its discretion the following
rights and options upon issuing this Bid Solicitation:
To award an Agreement to the candidate whose bid is judged to be the lowest
responsible bid pursuant to Section 103 of the General Municipal Law of the State of
New York.
2. To reject any and/or all bids.
3. To issue subsequent bid solicitations.
4. To issue additional and subsequent solicitations for statements of qualifications and
conduct investigations or interviews with respect to the qualifications of each Bidder.
5. To designate another public body, private or public agency, group, or authority to act
in its behalf for evaluation and Agreement negotiations.
6. To designate another public body, private or public agency, group, or authority to act
in its behalf for contract administration of this project at any time during the
Agreement period.
22
SECTION B
BID SPECIFICATIONS
(TECHNICAL/MANAGEMENT)
23
1.0
SECTION B
BID SPECIFICATIONS
TECHNICAL/MANAGEMENT
REQUIREMENTS
This request for bids is issued for the Town of Southold, State of New York, Town Hall,
53095 Main Road, Southold, New York, 11971 (Telephone (516) 765-1800) The effort,
shall be known as the Town of Southold Solid Waste Transport and Disposal Service.
The Town of Southold desires to issue an Agreement with a qualified Contractor to haul
and dispose of a portion of its Solid Waste. The Town will need to dispose of
approximately 10,000 tons of solid waste during the agreement years The Contractor will
ensure the Town that solid waste will continue to be; 1 ) hauled from the Town of
Southold's transfer Station to disposal site(s), and; 2) disposed at permitted disposal
site(s). The following general services are sought in this request:
'HAUL
Provide equipment, labor, maintenance, management and policies to operate a
transportation system for hauling solid waste from the Town of Southold transfer
Station to Contractor designated disposal site(s) as set forth herein. Transportation
equipment shall be in accordance with New York. State Department of
Transportation, Interstate Commerce Commission, United States Department of
Transportation, as defined in the Code of Federal Regulations, or other applicable
state and federal regulatory requirements.
· Disposal
Reserve capacity and provide equipment, labor, maintenance, management and
policies to receive and dispose of solid waste from the Town of Southold Transfer
Station as set forth herein. The Contractor's New York State Solid Waste Disposal
Site(s) must be in compliance with all State of New York Department Of
Environmental Conservation's and U.S. Government's Regulatory requirements,
e.g., 6NYCRR Part 360, Resource Conservation Recovery Act (RCRA),
Environmental Protection Agency - Subtitle D, et al. Disposal Sites outside New-
York State shall be permitted by applicable local, state and Federal laws
including RCRA and Subtitle D and regulations deemed by the Town to be no
less protective of the environment than those outlined in this specification.
Disposal alternatives that will be considered include land disposal, incineration,
24
composting, etc., as long as they comply with regulatory requirements and
environmental standards.
2.0
3.0
4.0
PROGRAM GOALS AND OBJECTIVES
The goal of this project is the continued safe and reliable hauling and disposal of the solid
waste materials from the Town Of Southold Transfer Station at minimum cost to the
citizenry.
It is also the objective of the Town of Southold to ensure that the haul-disposal operations
proceed according to the provisions of this document and subsequent
agreements/amendments are upheld.
POTENTIAL REGULATORY AND OPERATIONAL CHANGES
During the term of the Agreement, there may be a number of regulatory and operational
changes which may affect the quantities and types of solid waste received at the Town of
Southold Transfer Station and delivered to the Disposal Site; the manner in which solid
waste is handled by the Town prior to the loading of waste for transfer; and the
equipment maintained and used by Town forces in the handling of waste to be
transferred.
This Agreement will not provide any guarantees with respect to the volume of waste to
be hauled and/or disposed of by Contractor or the specific operational techniques and/or
equipment to be employed by the Town in the handling of waste at the Town transfer
station.
The Town reserves the right to designate another public body, private or public agency,
group or authority to act in its behalf for administration of the Agreement at any time
during the term of Agreement.
CHARACTER OF THE SOLID WASTE
The wastes which are to be hauled and disposed of under terms of this bid solicitation are
to include typical municipal wastes from a rural community. This will include all waste
types generated in private households, and, therefore, can include broken furniture, small
appliances, and other wastes generated in a private home or apartment as allowed under
6NYCRR Part 360- 1.2(a) regulations and the Garbage, Rubbish and Refuse Law,
Chapter 48 of the Code of the Town of Southold.
Commercial waste may also be included in the solid waste stream. It may include any
waste which is typically disposed of in dumpster or roll-off type container boxes at
restaurants, small businesses, light industries, hospitals, office buildings etc. It should not
include any wastes covered by special waste permits Such as pathogenic or hazardous
materials, but the Town cannot guarantee that the waste stream does not contain same.
25
Special costs associated with handling noncompliance loads will be compensated under
Forced Accounting (Appendix A-9).
4.1
5.0
5.1
Quality and Characteristics
The Town Of Southold's historical solid waste quantities and characterization data are
Available upon request. MSW Tonnage disposed in under contract in 2006 totaled
approx. 9,000 tons. Bidders are cautioned that actual quantities may differ significantly
from these data. Recycling programs may affect the quantity and characteristics of the
waste received at the Town of Southold Transfer Station.
If the Contractor discovers any non-compliance waste (hazardous, regulated medical or
special wastes), the Contractor shall notify the Town and dispose of [he noncompliance
waste in accordance with local, state and Federal regulations. Compensation for such
waste disposal services shall be provided for under Forced Accounting (Appendix A-9).
The Town makes no specific representations in the foregoing disclosure.
PROGRAM ACTIVITIES
Collection
The Town of Southold Transfer Station is open 7 days a week, except holidays, from
7:00 A.M. to 5:00 P.M. The Contractor will be expected to collect and remove solid
waste from the Transfer Station during the following hours:
Monday through Friday 7:00 A.M. to 4:00 P.M.
The Transfer Station is closed on the following holidays:
New Year's Day
Martin Luther King Day
President's Day
Easter Sunday
Memorial Day
Independence Day
Labor Day
Columbus Day
Election Day
Veteran's Day
½ Thanksgiving Eve
Thanksgiving Day
½ Christmas Eve
Christmas Day
½ New Years Eve
The Contractor must make transfer containers available for loading seven days a week. if
requested, between 7:00 A.M. and 4:00 P.M. Removal of waste on Sundays is not always
required.
The Contractor will be expected to provide enough containers to empty the Transfer
Station tipping floor on a daily basis, delivery and staging of an adequate number of
containers for this purpose will be coordinated with Transfer Station Staff as needed.
26
5.2
5.3
Loading Mode
The Contractor shall fully prepare transfer containers for loading, including assuring that
container covers or empty containers are left open. ]SEE NOTE AT END OF
SECTION 6.3.]
Solid Waste will be loaded by the Town at its Transfer Station using a front end wheel
loader. After loading, Contractor will bring transfer containers to the Town's track scales
for weighing to prevent overloading and to document haul and disposal tonnages.
Contractor will then cover (tarp) his load prior to leaving the site.
If required by any local, state or Federal regulations or law, the contractor shall provide
sealed containers for loading. This service shall be at the Contractor's expense and
included in the unit price bid.
Town Of Southold Accident and Damage Policy
The Contractor shall be required to prepare an Accident Report (See Appendix C) Of any
accidents and/or damage that occur while performing services under the term of the
Agreement.
The Town of Southold shall immediately be notified of any major occurrences such as
bodily injury of structural damage to the Town's Transfer Station. An Accident Report
will be submitted to the Town within twenty-four (24) hours containing the date, time,
location, and complete description of all incidents. The offending Parts or
representative/e thereof shall also be recorded and required to sign the accident/damage
report prior to departing the Town of Southold Transfer Station.
All accident and/or damage reports will be included in reports to the Town
5.4 NYSDEC Part 360 Permit to Operate
The Town Of Southold operates the Transfer Station under a New York State Department
of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of
NYSDEC Permit is included as Appendix B.
6.0 HAUL SERVICES
For Solid Waste Haul-Disposal Services-Agreement, the following services will include
the tasks, responsibilities and performance required as outlined herein.
6.1 Transport Mode
The Town will consider a transportation mode of truck or truck and rail under this
solicitation.
27
6.2 Work Included
The Contractor shall provide the following major essential services or equipment and any
other non-specified items without limitations, to maintain a reliable haul services
operation in a manner that will meet the needs of the Town of Southold.
· Management and operation of a fleet of track and/or rail containers to accommodate the
transport of solid waste from the Town transfer Station to Solid Waste Disposal Site(s) in
accordance with all local, state, and Federal regulations. [SEE NOTE AT END OF
SECTION 6.3.1
· Financial liability and maintenance responsibility of transport equipment, i.e., dump
trailers, transfer trailers bulk material containers, vehicles, personnel and services for
open-top loading solid waste hauling activities·
· Coordination of haul services with disposal services.
6.3 Equipment
The Contractor shall provide reliable refuse handling and other essential ancillary
equipment, along with personnel to operate and maintain a reliable haul services system
in a manner that will satisfy the needs of the Town of Southold. The minimum level of
haul services equipment acceptable to the Town to support the haul operation includes
open-top trailers and bulk material containers. The Contractor will supply additional
open-top trailers and containers, etc. UNDER THIS SOLICITATION, THE TOWN
WILL REQUIRE THE CONTRACTOR TO STAGE AN ADEQUATE NUMBER
OF TRANSFER TRAILERS TO ACCOMMODATE THE ANTICIPATED
WASTE STREAM COMFORTABLY. While the Town will not dictate the exact
number of trailers to be placed, typically, this means the Contractor will need to plan
on having three (3) or four (4) trailers at the Transfer Station at any given time.
The contractor must assure the Town that an adequate reserve supply of equipment exists
to haul and dispose of the daily and seasonal solid waste including unpredictable surges
or delays due to inclement weather and that transport equipment storage requirements
will meet the Town of Southold Transfer Station requirements. Each bidder is therefore
responsible for familiarizing itself with the Town of Southold Transfer Station site. solid
waste, etc., to assure equipment compatibility.
Transport equipment used at the Southold Town Transfer Station may be open-top bulk
material containers, dump trailers, roll-off containers or open-top transfer trailers,
provided that all such equipment is suitable for convenient loading given existing
configurations of the Town of Southold Transfer Station.
All Transport equipment, including equipment involved in any interim transfer operation
(i.e., any transfer of Southold Town MSW into other vehicles/containers prior to
disposal) shall be: 1) Registered with the State of New York Department of
Motor Vehicles or equivalent agency; 2) designed to preclude spillage of waste; 3) loaded
28
within their design capacity and New York State Department of Transportation
regulations; 4) well maintained in good working order. Corroded defective, bent,
deformed or punctured trailers, roll-off boxes, or other containers of waste materials shall
not be utilized at any time.
Suitable covers shall be provided and used while transporting solid waste in open-top
transport equipment. The bidder shall clearly indicate [he quantity and type of transport
equipment/vehicles it plans to use, their availability date, state of repair, and that such
units are compatible with the Town of Southold Transfer Station scales and New York
State DOT regulations, United States Department of Transportation, as defined in the
Code of Federal Regulations or equivalent. The Contractor will promptly remove from
use any transport equipment/vehicle that does not conform with these requirements and
replace it with an acceptable unit.
The Contractor shall maintain its own off-site maintenance shop facilities for servicing
the transport equipment and vehicle fleet, unless it elects to subcontract for these
services. No major maintenance may be done at the Town of Southold Transfer Station
site.
NOTE:
6.4 Weighings
In the course of this Agreement, the Town may, at its discretion, provide
1 or more transfer trailers for use by the Contractor. The Town
warrants that any such equipment provided would be compatible with
hauling vehicles (tractors) generally standard in the waste hauling
industry. In the event that the Town wishes to provide such equipment
for use by the Contractor, the Contractor together with the Town shall
develop an addendum to this agreement governing such use.
The Town of Southold will provide certified weighing at the Town of Southold Transfer
Station. The Contractor will accept these weights for invoicing purposes. All weights will
be generated on current certified weigh scales.
6.5 Routing Mode - Contractor's Responsibility
7.0
Contractor will have the right to select the route(s) for travel from the Town of Southold
transfer Station to the Disposal Site(s). Contractor warrants and guarantees that, in
selecting and utilizing such route(s), Contractor will insure that it is not violating any
applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions,
local ordinances or Interstate Commerce Commission regulations. Contractor will
indemnify and hold the Town harmless from any claims, fines and other damages
assessed upon or incurred by the Town as a result of any violations of applicable
restrictions or regulations relating to the routes traveled by the Contractor.
DISPOSAL SERVICES PROGRAM ACTIVITIES
For Solid Waste Haul-Disposal Service Agreement, the following disposal services will
29
include the tasks, responsibilities and performance requirements as outlined herein.
7.1
7.2
Work Included
The Contractor shall provide the following major essential services or equipment and any
other non-specified items, without limitations, to maintain a reliable disposal services
operation in a manner that will meet the needs of the Town Of Southold.
· Liability insurance, performance and payment bonds·
· Safety equipment·
Operational Capacity
The bidder shall identify in its proposal, the following information:
· Disposal Site capacity.
· Flexibility of Disposal Site capacity to allow for seasonal variances in waste generation
and sufficient to permit service in the tonnages bid.
· Hours and days of the week that the designated Disposal Site will be open for receiving
solid waste from the Town of Southold, including weekends, holidays and special
closure periods.
7.3 Permit Requirements
Throughout the term of Agreement that may result from this Bid solicitation, the
Contractor must maintain all current and valid local, state and Federal permits, licenses,
or other authorizations, (either temporary and permanent) which are required by law to
receive solid waste at any and all Disposal sites designated by the bidder·
Because of the varying terms of Solid Waste Disposal Site permits, it is possible that a
permit will expire during the term of Agreement. The responsibility of obtaining and/or
renewing a permit to operate is solely upon the Contractor.
In the event a Contractor fails to maintain or obtain any necessary current and valid local
state and Federal Permits., licenses, or other authorizations, allowing the lawful use of its
designated Disposal Site then the Contractor will be solely responsible for obtaining the
utilization of an alternate Solid Waste Disposal Site at no additional cost to the Town
including any additional hauling cost because of the location of the alternate Disposal
site. Under no circumstances shall such a change in Disposal Site or failure or inability to
obtain permits by the Contractor be considered a change in conditions, in the event the
Contractor is unable to find an alternate Disposal Site, it shall be deemed to be in default
of the Agreement and liable for damages, bonds forfeitures and other expenses as
30
provided in the Agreement.
In the event the individual and/or entity submitting a bid in response to this bid
solicitation is not the individual and/or entity named as the permit holder on any
necessary current and valid local, state or federal permits, licenses or other
authorizations, required by law to receive solid waste at any disposal site designated by
the bidder or any alternate disposal site, the bidder is required to provide satisfactory
evidence to the Town of Southold of a binding contractual relationship between the
bidder and the permit holder which provides the bidder with the irrevocable fight to
utilize the solid waste disposal site during the term of Agreement, or portion thereof, in a
manner which is in complete compliance with this bid solicitation and the bidder's bid
submission. The agreement between the bidder and the permit holder shall include
provisions that:
Provide Town with the right to discuss operational matters with the permit
holder whenever necessary.
Require the permit holder to comply with directives of the Town which
are consistent with and pursuant to the Agreement which shall result from
this bid solicitation.
7.3.1 Disposal Sites Inside State of New York
The Contractor's Solid Waste Disposal Sites, if located within the State of New York,
must be in compliance with all State of New York Department of Environmental
Conservation's and U.S. Environmental Protection Agency regulators requirements, e.g.,
6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental
Protection Agency - Subtitle D, et al. The Solid Waste Disposal Site must have valid
construction and operating permits in accordance with all applicable laws in the
jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid
waste without violating applicable law. It shall meet the design, construction and
operating requirements of all applicable laws in the jurisdiction where the disposal site is
operating.
Disposal alternatives that will be considered include land disposal, waste to energy
(incineration), composting, etc., as long as they comply with all the above governing
regulators requirements and environmental standards. The use of Solid Waste Disposal
Sites shall be subject to the approval of the Town of Southold based upon review of
information submitted with the bid describing in detail the nature of the disposal process
and other information reasonably requested by the Town. No Disposal Site shall be
acceptable unless it poses no significant threat to the environment and its design,
construction and operation complies with all applicable laws.
7.3.2 Disposal Sites Outside State of New York
The Contractor's Solid Waste Disposal Sites, if located outside the State of New York
31
must be in compliance with all the applicable local, state and Federal laws and
regulations and U.S. Environmental Protection Agency regulatory requirements, e.g.
Resource Conservation Recovery Act (RCRA), Environmental Protection Agency -
Subtitle D, et al. The Solid Waste Disposal Sites must have valid construction and
operation permits in accordance with all applicable laws in the jurisdiction in which it is
located. It shall be permitted to accept Town of Southold solid waste without violating
applicable law. It shall meet the design, construction and operating requirements of all
applicable laws in the jurisdiction where the disposal site is operating·
If the Solid Waste Disposal Site is a landfill, it must comply with the following minimum
standards:
· Liner System. All proposed landfills under the Agreement shall be provided with at least
a single liner system to restrict the migration of leachate and prevent pollution of
underling soil or groundwater. Liner systems shall consist of low permeability soil
admixtures, clays or synthetic materials. Liners are at a minimum to consist of materials
having a demonstrated hydraulic conductivity and chemical and physical resistance not
adversely affected by waste emplacement or sanitary landfill leachate, including synthetic
geo-membranes and soils such as clay or other semi-impervious admixture.
Liner systems may consist of an impervious liner composed of at least two feet of clay
with demonstrated hydraulic conductivity of Ix 10-> cm/sec or a synthetic single lining
system of a thickness of at least 60 mils. Thicknesses down to 40 mils may be acceptable
for composite liners which include impervious clay.
Foundation: The proposed landfill shall be designed and constructed on an appropriate
foundation which provides firm, relatively unyielding planar surfaces to support the liner
system and which is capable of providing support to the liner and resistance to the
pressure gradient above and below the liner resulting from settlement, compression or
uplift.
Leachate Collection: The proposed landfill shall be equipped by a leachate drainage
and removal system. The leachate drainage system-shall consist of collection pipes
and a drainage layer. The system shall be designed to ensure that the leachate head on
the liner does not exceed one foot at any time.
A leachate removal system shall be provided to remove leachate within the drainage
system to a central collection point for treatment and disposal.
Leachate Treatment and Disposal: Leachate shall be treated and disposed of in
accordance with all applicable taws, including applicable pretreatment standards and
discharge limitations.
Gas Collection and Venting: The proposed landfill shall be equipped with a suitable
gas collection and/or venting system which complies with all air pollution
requirements and other applicable laws.
32
7.4
8.0
Surface Drainage Systems: The proposed landfill shall be designed with an
appropriate surface drainage system which isolates the landfill from adjacent surface
water drainage in a controlled manner, as well as controlling run-off from the landfill
itself.
Monitoring System: The proposed landfill shall be equipped with appropriate systems
to monitor groundwater quality, gas production, leachate volume, quantity, slope and
settlement status. The number and location of ground water monitoring wells shall be
sufficient to define and detect any potential migration of contaminants. However, no
fewer than one up-gradient monitoring well and two down-gradient monitoring wells
shall be provided in any event. A regular sampling and analysis program shall be in
place to verify that no groundwater contamination results from the landfill.
Closure: The proposed landfill shall have in place a written closure plan which
conforms to applicable taws and standard industry practice. The closure plan shall, be
designed to insure that contamination does not spread from the landfill during) the
post closure period.
Bidder must clearly specify their intended disposal altematives and support same with
copies of appropriate experience, site location, permits, agreements et al., as outlined in
this bid solicitation. The use of Solid Waste Disposal Sites shall be subject to the
approval of the Town of Southold based upon review of information submitted with the
bid describing in detail the nature of the disposal process and other information
reasonably requested by the Town. The Contractor shall be solely and completely
Responsible for any and all liability relative to contractor's failure to dispose of solid
waste at an approved site.
Weighings
The Town will compensate the Contractor for waste material hauled and disposed of on a
net tonnage basis (short tons = 2000 pounds). The certified weighings will be made at the
Southold Town Transfer Station. The Disposal Site will accept these weights for
invoicing purposes. Alt weights will be generated on current certified weigh scales.
In the event of any dispute over differences in net weights between the Town and
Disposal Sites scales and weight records, the Town may make payment upon the weight
it deems to be most correct, until the dispute is reconciled. Any claims for differences
must be filed in writing within sixty (60) days of occurrence or the Town's calculation
shall be deemed final and binding between the parties.
SAFETY AND HEALTH REGULATIONS
The Contractor shall comply with all current Federal Department of Labor, Safety and
Health Regulations under the Occupational Safety and Health Act, 1972 (PL 91-596) and
Section 107, Agreement Work Hours and Safety Standards Act (PL 91-54). Specific
consideration shall be given, but not limited to the following major areas:
33
9.0
h. Mechanic's lien safeguard against work interference.
The Contractor shall comply with all local, state and Federal regulations, laws and
Statutes, which apply to the work and to safety in particular.
The Contractor shall comply with New York State Department of Labor current
requirements.
Maintenance safety procedures - guards and Shields on dynamic equipment,
guards, railings, electrical lockouts, vehicle wheelblocks, audio vehicle backup
alarms, vehicle wheel chocks, etc.
Employee safety orientation, education, teaching, first-aid training,
cardiopulmonary resuscitation, etc.
Noise and dust control, ear protection, respirators, hard-hats, safety shields,
glasses, protective clothing, sanitary facilities, etc.,
Fire and explosion preventions, control, equipment (fire blankets, extinguishers,
first aid hoses, etc.) and personnel escape alternatives.
Traffic flow control patterns.
Accident or injury reporting system (the Town shall received copies of al
reports and immediate verbal notification).
Employee health safeguards.
The Contractor shall be solely and completely responsible for operational safety during
performance of the Agreement. The obligation exists twenty-four (24) hours a day, each
and every day throughout the term of the Agreement.
The Town of Southold shall not have any responsibility for means, methods, sequences
of techniques selected by the Contractor for safety precautions and programs, or for any
failure to comply with laws, rules, regulations, ordinances, codes or orders applicable to
the Contractor furnishing and performing the services under the terms of the Agreement.
OPERATIONS AND PROCEDURES
The Contractor will be required, prior to commencement of operations, to provide the
following operational plans to the Town for review and acceptance. Revisions,
modification's, and updates shall be forwarded to the Town throughout the term of the
Agreement.
· Organization personnel and structure, showing the chain of command, names and
telephone numbers and staffing requirements.
34
9.1
· Operational plan - shifts, hours, etc.
Safety, disaster, and emergency procedures.
Transportation plan, including available transport equipment, vehicle fleet and
reserve capabilities.
Inclement Weather Plan - This shall describe the bidder's plan should inclement
weather alter normal daily operations as described in the bidder's operations plan. The
inclement weather plan shall include hauling operations and disposal operations. The
bidder's means of assessing inclement weather conditions (weather and road
conditions), method of reporting to the Town and the alternatives shall be described.
Supporting Data
In the event the Town requires any information in support of Town held licenses and
permits at the Town, County, State and Federal level, the Contractor will be required to
furnish all licenses, permits and inspection reports regarding equipment and disposal sites
which may be required by Town, County, State or Federal law.
In the event the Contractor requires any information in support of Contractor held
licenses and permits at the Town, County, State and Federal level, the Town will
cooperate in furnishing such information as it applies to the Southold Town operations.
Operating (hauling and disposal) records shall be considered essential to the operation.
The Contractor shall keep these data in an organized fashion that allows for easy retrieval
and analysis. The Town, or its designee, may upon 24 hours notice inspect the
contractor's records. Such records shall he kept, available by Contractor for a period of
two (2) years after termination of this Agreement.
In the event the Town requires additional .information for reporting purposes, the
Contractor will supply same. The Town, or its designee, may call upon the Contractor at
anytime for an oral review of any technical matter.
The Contractor shall file and update the following information as specified herein.
Items
Haul Equipment (Schedule H)
Haul Accident Report (Appendix C)
Disposal Accident Reports
Licenses, Permits and Inspection
Reports
Part 360 Permit
All Bid Information Schedules
Due
as changes occur
on occurrence
on occurrence
on occurrence
as changes occur
as changes occur
35
SECTION C
CONTRACTOR BID FORM
SECTION C
TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES
CONTRACTOR BID FORM
1.0 INTENT
The undersigned hereby recognizes that these documents are complementary and are
intended to provide for uniformity in bid evaluations. The formal Agreements resulting
from this Bid Solicitation shall be in a form provided by the Town.
These documents are intended to depict complete Solid Waste Haul-Disposal Services
Agreement and therefore any discrepancies contained in the documents, of the omission
from the documents of express reference to any work which obviously was intended
under the Agreement, shall not excuse or relieve the Bidder from furnishing the same. No
oral statement shall in any manner or degree modify of otherwise affect the terms of the
Agreement. Work or materials described in words which have a well known technical or
trade meaning, shall be interpreted by such meaning.
2.0 GENERAL BID. STATEMENT
TO:
TOWN OF SOUTHOLD
STATE OF NEW YORK
53095 MAIN ROAD
SOUTHOLD, NEW YORK 11971
Gentlemen:
The undersigned Bidder has carefully examined the forms and content of the Bid
Solicitation, including notice to bidders, bid bond, sample operating agreement, performance
bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has
familiarized itself with the sites of work, and hereby proposes to furnish all necessary services,
permits, labor, materials, equipment, vehicles, and tools required to perform and complete the
work in strict accordance with all of the bid documents written by or on behalf of the Town of
Southold for this project.
37
The undersigned Bidder agrees to abide by all conditions stated, intended, or implied both
particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by
the Town, and the unit price Bid herein stated.
1. The Undersigned Bidder also agrees as follows:
FIRST: If this bid is accepted, to execute the Agreement and fumish to the Town a
satisfactory performance bond, and insurance all within ten (10) calendar days.
SECOND: To begin Solid Waste Haul-Disposal services operations on the
commencement date of any Agreement awarded hereunder, having completed all
necessary prior preparations of operational planning, personnel hiring, equipment
procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure
a smooth and orderly acceptance of these duties.
THIRD: To pay the Town any and all damages it may incur as a result of the
Contractor's failure to 'perform all acts necessary to the execution of the Agreement as
provided in the Bid Solicitation.
It is recognized and agreed that the Town has the unconditional right to utilize the funds
provided by the bid bond posted by the Bidder as a means of obtaining indemnification
or, payment of such damages.
FOURTH:
as follows:
During the performance of this Agreement, the Contractor hereby agrees
The Contractor shall not discriminate against any employee or applicant for
employment because of age, race, creed, color, sex, marital status, national origin,
physical disability, and shall take affirmative action to ensure that they are
afforded equal employment opportunities without discrimination because of age,
race, creed, color, sex, marital status, national origin or physical disability. Such
action shall be taken with reference, but not be limited to: recruitment,
employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or
termination, rates of pay, or other forms of compensation, and selection for
training or retraining, including apprenticeship and on-the-job training.
The Contractor shall comply with the provisions of Sections 290 through 301 of
the Executive Law, Shall furnish all information and reports deemed necessary by
the State Commission for Human Rights under these nondiscrimination clauses
and such sections of the Executive Law, and shall permit access to his books,
records, and accounts by the State Commission for Human Rights, the Attorney
General. and the Industrial Commissioner for purposes of investigation to
ascertain compliance with these nondiscrimination clauses and such sections of
the Executive Law and Civil Rights Law.
This Agreement may be forthwith cancelled, terminated, or suspended, in whole
or in part, by the Town upon the basis ora finding made by the State Commission
38
for Human Rights that the Contractor has not complied with these
nondiscrimination clauses, and the Contractor may be declared ineligible for
future Agreements made by or on behalf of the state or public authority or agency
of the state, until he satisfies to the State Commission for Human Rights that he
has established and is carrying out a program in conformity with the provisions of
these nondiscrimination clauses. Such findings shall be made by the State
Commission for Human Rights after conciliation efforts by the Commission have
failed to achieve compliance with these nondiscrimination clauses and after
verified complaint has been filed with the Commission, notice thereof has been
given to the Contractor, and an opportunity has been afforded to him to be heard
publicly before three members of the Commission. Such sanctions may be
imposed and remedies invoked independently or in addition to sanctions and
remedies otherwise provided by law.
No laborer, workman or mechanic in the employ of the Contractor or
subcontractor shall be permitted or required to work more than eight hours in any
one calendar day, or more than five days in any one week except as otherwise
provided in Labor Code Section 220.
The Contractor shall include the provisions of clauses (a) through (e) in every
subcontract or purchase order in such a manner that such provisions will be
binding upon each subcontractor or vendor as to operations to be performed
within the State of New York. The Contractor will take such action in enforcing
such provisions of such subcontract or purchase order as the Town may direct,
including sanctions and remedies.
FIFTH: By submission of this bid, the Bidder and each person signing on behalf of
any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own
organization, under penalty of perjury that to the best of his knowledge and belief:
The prices in this bid have been arrived at independently without collusion,
consultation, communication, or agreement for the purpose of restricting
competition, as to any matter relating to such prices with any other Bidder or with
any competitor.
Unless otherwise required by law, the prices which have been quoted in this bid
have not been knowingly disclosed by the Bidder and will not knowingly be
disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder
or to any competitor.
No attempt has been made nor will be made by the Bidder to induce any other
person, partnership, or corporation to submit or not to submit a bid for the purpose
of restricting competition.
The undersigned also declares that it has or they have carefully examined the Bid
Solicitation requirements and sample operating agreement and that it has or they have
personally inspected the actual location of work, together with the local sources of
39
supply, has or have satisfied itself or themselves as to all the quantities and conditions,
and waives all rights to claim any misunderstanding, omissions or errors regarding the
same which such inspection and observation would have disclosed.
The undersigned further understands and agrees that it is or they are to fumish and
provide in return for the respective Evaluation Unit Bid Price, all the necessary materials,
machinery, vehicles, implements, tools, labor services, and other items of whatever
nature, and to do and perform all work necessary under the aforesaid conditions, to
complete operations of the aforementioned Solid' Waste Haul-Disposal Services
operations in accordance with the Bid Solicitation requirements, which requirements are
a part of this response, and that it or they will accept in full compensation therefore, the
compensation provided for in Section C-3.
The undersigned submits herewith a bid guaranty within the form provided by the
applicable bid documents in the amount of $100,000.00 for any option or combination
thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10)
calendar days after date of receipt of Notice Of Award from the Town to execute and
deliver an Agreement in the form provided by the Town or fails to execute and deliver
evidence of proper insurance coverage and performance bond in the amounts required
and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty
Shall be forfeited and be retained by the Town toward the satisfaction of liquidated
damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will
be returned to the Bidder.
The undersigned acknowledges the receipt of the following addenda, but it agrees that it
is bound by all addenda whether or not listed herein and whether or not actually received,
it being the Bidder's responsibility to receive and have knowledge of all addenda.
ADDENDUM NUMBER AND DATES
Number 1 - Dated:
Number 2 - Dated:
Number 3 - Dated:
Number 4 - Dated:
Number 5 - Dated:
The Bidder has completed the Contract Bid Form and Unit Price Schedules in both
words and numerals in accordance with these bid requirements.
40
3.0
UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1 COMPENSATION
The undersigned hereby submits the following price bid to furnish Solid Waste Haul-
Disposal Services, to Southold Town, New York for the terms
through
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year
is
cents ($ ). (C1)
The Haul-Disposal Service applicable unit price per ton for agreement year
is
ONE
dollars and
TWO
dollars and
cents ($_ ). (C2)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
ONE is dollars and
cents ($ ). (C3)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
TWO is dollars and
cents ($. ). (C4)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
THREE is dollars and
cents ($. ). (CS)
41
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
(C1) 10,000+(C2) 10,000+.5(C3)10,000+.5(C4)10,000+.5(C5)10,000
35,000 tons
Evaluation Unit Bid Price = $
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
Bidder:
Finn-Corporation
Address
By:
4.0
5.0
Authorized Representative Date
BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
A. Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
B. Location and address of the Bidder's main office and the main office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
C. Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
D. Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the finn (Schedule D, attached
hereto).
42
H.
I.
J.
M.
Dated:
Detailed financial statement for the Bidder, and if applicable, for parent
companies (Schedule E, attached hereto).
Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
Major Subcontractors - (Schedule G, attached hereto).
Equipment- (Schedule H, attached hereto).
Maximum Specified Capacity- (Schedule I, attached hereto).
Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
Form of Bid Bond (Schedule K, attached hereto).
Performance Bond (Schedule L, attached hereto).
Operation Plan (Schedule M, attached hereto).
Name of Bidder:
Address of Bidder:
By:
Signature Title
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of
Names and addresses of officers of the corporation:
(President) Name Address
(Secretary) Name Address
43
(Treasurer) Name Address
(If an individual or partnership)
Names and addresses of all principals or partners
44
INFORMATION SCHEDULE A
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
This Bidder herein certifies that as a
(Bidder's legal name)
Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending
or currently involved in any litigation involving the Town of Southold, State of New York.
Name of Bidder:
By: Date:
(Authorized Signature)
NOTE:
(1)
(2)
If blank not applicable, fill in with N/A
If bidder owes the Town taxes or is involved in any litigation, a statement
of explanation will be attached hereto.
Tax/Litigation Certification
BID (PROPOSAL) FORM
Schedule 5.0.A
Page 1 of I
45
INFORMATION SCHEDULE B
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The following is information on the undersigned Bidder's office locations:
Bidder's Parent
Bidder's Main Office Corporation Main Office
Manager's Name (Contact)
Firm's Legal Name
Street Address (Box Numbers)
City State Zip
Telephone Number
The Bidder herein certifies that the
is partially/wholly owned subsidiary of
This
By
Manager's Name (Contact)
Parent Finn's Legal Name
Street Address (Box Numbers)
City State Zip
Telephone Number
Finn
is owned
Parent Firm
Parent Firm
or is a public/private stock corporation.
Bidder Office Locations/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 1 of 2
46
iNFORMATION SCHEDULE B - (Continued)
Name of Bidder:
By:
Date:
Note: (1)
Any attachments or modifications to this form shall be labeled Schedule 5.0.B,
and properly integrated into the Bid Form,
(2) If blank not applicable, fill in with N/A.
Bidder Office Location/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 2 of 2
47
This is identification that
will be the Surety Company for
INFORMATION SCHEDULE C
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
the Bidder, on this project and that the named Surety Company herein provides written
certification that the named Surety Company will provide the Performance Bond, specified in the
Contract Documents, in the event the Bidder enters into an agreement with the Town. The Surety
Company herein certifies that such Company is licensed to do business in the State of New York.
(L.S.)
(SEAL)
Principal
Surety Company
By:
Surety Verification
BID (PROPOSAL) FORM
Schedule 5.0.C
48
INFORMATION SCHEDULE D
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that the below named individuals are the currem registered corporate
officers, along current permanent addresses, and designates their authority to execute an
Agreement on behalf of the firm
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip.
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip.
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip.
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Current Corporate Officers
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 1 of 2
49
INFORMATION SCHEDULE D - (Continued)
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip_
Corporate
Seal
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Name of Bidder:
By:
Date:
NOTE:
If blank not applicable, fill in with N/A
Current Corporate Officer
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 2 of 2
50
INFORMATION SCHEDULE E
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
STATEMENT OF BIDDER'S FiNANCIAL CONDITION
This Bidder agrees to provide for any subsidiary and parent firm, and hereto attaches a
current or the most recent audited financial Statement(s) including as a minimum the
firms opinions, notes, revenue/expense statements, conditions of cash, etc. The attached
statement provided includes:
Accounting Firm Name
Address
Financial Period
Statement Date
To
The bidder certifies that he currently has an available line of credit in the amount of
$ . A supporting documentary evidence attached to this
form is supplied by:
Name
Address
Date
The undersigned Bidder certifies to the validity of statement and agrees to fumish any
other information upon request that may be required by the Town of Southold, New
York.
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 1 of 2
51
iNFORMATION SCHEDULE E - (continued)
The undersigned hereby authorizes and requests any person, finn or corporation to furnish any
information requested by Town of Southold, New York in verification of the firms financial
condition.
Dated at This day of ,20
State of New York, County of
Name of Bidder
Title
is of
Title
being duly sworn deposes and saws that he
Name of Organization
and that the answers to the foregoing questions and all statement therein contained are true and
correct.
Sworn to me this day of ,20
My Commission expires:
Notary Public
NOTE:
(1)
(2)
(Bidder may submit additional information desired as Schedule E
attachments.)
If blank not applicable, fill in with N/A
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 2 of 2
52
INFORMATION SCHEDULE F
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and
that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the
Bidder offers the following related information and references in order that the Town may
evaluate the Bidder's qualifications and experience.
4.
5.
6.
7.
8.
9.
Bidder's Legal Name:
Business Address:
State incorporated:
Street
City State Zip
Year incorp.:
New York State; Business License No.:
No. Years in contracting business under above name:
Has firm ever defaulted on a contract? Yes
Gross Value - work under current contract: $
Number of Current Contracts:
Brief description general work performed by firm:
No
10.
Has Firm ever failed to complete work awarded? Yes
If yes, attach supporting statement as to circumstances.
Qualifications Summary
BID (PROPOSAL) FORM
No
Schedule 5.0.F
Page 1 of 3
53
INFORMATION SCHEDULE F - (continued)
11. Related Experience Reference (within previous 5 years)
11.1 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
11.2 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 2 of 3
54
11.3 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
12.
Principal Firm Members' Background/Experience (3 members minimum). Attach current
resumes as Schedule 5.0.F supplement or give concise description by individual.
Name of Bidder:
By: Date:
(Authorized Signature)
NOTE:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.F, and shall be properly integrated into this Bid Form.
If blank not applicable, fill in with N/A.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 3 of 3
55
INFORMATION SCHDULE G
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul
sub-contractors on this project.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Sub-Contractor/
Contract Trade/
Individual Address Phone # Specialties
NOTE:
Name of Bidder:
By:_
(Authorized Signature)
If blank not applicable, fill in with N/A
Date:
Subcontractors
BID (PROPOSAL) FORM
Schedule 5.0.G
56
IFORMATION SCHEDULE H
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder states that it owns the following pieces of equipment that are available for use on the
project, if awarded the agreement.
Proposed Current
Equipment Item Project Use Equipment Location
NOTE:
Name of Bidder:
By:.
Date:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.H and shall be properly integrated into the Bid Form.
If blank not applicable, fill in with N/A
Construction Equipment
BID (PROPOSAL) FORM
Schedule 5.0.H
57
INFORMATION SCHEDULE I
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it will be prepared to dispose of up to the following Maximum
Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement
Contract Year
Maximum Tons per Contract Year
Name of Bidder:
By: Date:
Maximum Specified Capacity
BID (PROPOSAL) FORM
Schedule 5.0.I
58
NOTE:
INFORMATION SCHEDULE J
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
IF A BIDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE
DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE
COMPLETED FOR EACH DISPOSAL SITE.
The following is information on the undersigned Bidder's Solid Waste Disposal Site:
I. GENERAL
A. Disposal Site Location
Name:
Address:
Phone:
Disposal Site mailing address (if different than I)
Address:
II.
CURRENT OPERATIONS
A. Operations Permit
1. Permittee:
2. No.:
3. State:
4. Date of Issue:
5. Date of Expiration:
6. Copy Enclosed:
Yes: No:
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 1 of 7
59
INFORMATION SCHEDULE J - (continued)
Hours of Operations
1. What are the PERMITTED operating hours?
DAY A.M.
Monday to
Tuesday to
Wednesday to
Thursday to
Friday to
Saturday to
Sunday to
2. Are there any PERMITTED closure periods stipulated?
What are the ACTUAL operating hours?
DAY A.M.
Monday to
Tuesday to
Wednesday to
Thursday to
Friday to
Saturday to
Sunday to
PoMo
What holiday or other period is the Disposal Site typically closed?
DAY YES
New Year's to
Memorial to
Independence to
Labor to
Thanksgiving to
Christmas to
Other (specify) to
NO
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 2 of 7
60
INFORMATION SCHEDULE J - (continued)
4. Will the ACTUAL operating hours be extended up to the PERMITTED
operating hours in Question II.B.1 in order to accommodate Town of
Southold solid waste?
Yes No
6. Are there any local agreements, ordinances, etc. which would prohibit
extending the ACTUAL operating hours in Question II.B.3 up to the
PERMITTED operating hours in Question II.B. 1 ?
Yes No
What is the PERMITTED annual capacity in tons?
20
20
20
20
20
At the PERMITTED levels in Question II.C., what is the projected useful life in
years?
What is the annual RECEIVING6 level today?
At the RECEIVING levels in Question II.E, what is the projected useful life in
Years?
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 3 of 7
61
INFORMATION SCHEDULE J - (continued)
How much of the RECEIVING level in Question II.E is committed to under
contract in tons?
20
20
20
20
20
Does the Disposal Site have special waste restrictions?
Gate
Yes No Fee ($)
1. Construction/Demolition
2. Asbestos
3. Wastewater Treatment
Sludge
4. Hazardous Waste
Are there any existing agreements with local municipalities which prohibit:
Item Yes No
1. Routing to site
2. Weight limits between
state coeds and site
3. Number of vehicles
4. Vehicle size
5. Solid waste importation
outside jurisdictional area
6. Host Community Benefits
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 4 of 7
62
INFORMATION SCHEDULE J - (Continued)
III.
EXPANSION PLANS
A. Application Permit
2.
3.
4.
5.
6.
Permitee:
No.:
State:
Date of Submission:
Copy Enclosed:
Submission Status:
Yes No
Expansion of current site or new site
Local Citizenry Reaction
Regulatory agency
d. Litigation
Likelihood to succeed
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.03
Page 5 of 7
63
Bo
INFORMATION SCHEDULE J - (Continued)
If you are successful in Question III.A., what is the additional annual DESIGN
capacity in tons (do not include figures from Question II.C.)?
20
20
20
20
20
At the annual DESIGN levels in Question III.B., what would be the projected
useful life in years?
Would you be willing to share with the Town of Southold engineering reports
utilized for the preparation of the Operating Permits on Expansion Application?
Yes No
Bidder's Disposal Site(s) Engineer of Record
Firm's Name
Firm's Address
Project Engineer
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 6 of 7
64
INFORMATION SCHEDULE J - (Continued)
Are you willing to meet with the Town of Southold to discuss your short and long term
disposal capabilities? Yes No
The undersigned hereby certifies that services, material, equipment to be furnished as a
result of this bid will be in accordance with Town of Southold specifications applying thereto
unless exceptions are indicated above and an explanation attached.
Bidding Company
Address
City State Zip
(Please Print or Type) NAME AND TITLE
By
Signature
Phone No.
Date
CORPORATE SEAL
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 7 of 7
65
INFORMATION SCHEDULE K
FORM OF BID BOND
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned,
as Principal, and
as Surety, are hereby held and firmly bound unto
Owner in the sum of
and truly be made, we hereby jointly and severally bind ourselves, our heirs, executors,
administrators, successors and assigns. Signed this day of ,20
as
for the payment of which, will
The condition of the above obligation is such that whereas the Principal has submitted to the
Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into a
contract in writing, for the hauling and disposal of solid waste;
NOW, THEREFORE,
(a) If said Bid shall be rejected or in the alternate,
If said Bid shall be accepted, and the Principal shall execute and deliver an
Agreement in the form off the Sample Operating Agreement attached hereto
(properly completed in accordance with said Bid) and shall furnish certificates of
insurance and a bond for this faithful performance of said Agreement, and for the
payment of all persons performing labor or furnishing materials in connection
therewith, and shall in all other respects perform the Agreement created by the
acceptance of said Bid, then this obligation shall be void, otherwise the same shall
remain in force and effect; it being expressly understood and agreed that the
liability of the Surety for any and all claims hereunder shall, in no event, exceed
the penal amount of this obligation as herein stated.
The Surety, for value received, hereby stipulates and agrees that the obligations of
said Surety and its bond shall be in no way impaired or affected by any extension
of the time within which the Owner may accept such Bid; and said Surety does
hereby waive notice of any such extension.
Form of Bid Bond
BID (PROPOSAL) FORM
Schedule 5.0.K
Page 1 of 3
66
1N WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seats,
and such of them as are corporations have caused their corporate seals to be hereto affixed and
these presents to be signed by their proper officers, the day and year first set forth above.
(L.S.)
Principal
Surety
By:
Address of Surety:
SEAL
(ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION)
STATE OF:
COUNTY:
On this
SSN:
__ before me personally came
; that he is the
day of 2 20
., to me known, who being duly sworn, did depose
and say that he resides in
of the
corporation described in and which executed the foregoing instrument; that he knows the seal of
corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by
the order of the Board of Directors of the corporation; and that he signed his name thereto by like
order.
Notary Public
Form of Bid Bond
BID (PROPOSAL) FORM
(ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP)
Schedule 5.0.K
Page 2 of 3
67
STATE OF: )
COUNTY: ) SSN:
On this day of ., 20__ before me personally came
, to me known, and known to me to be a member of the firm
of , and known to me to be an individual described in, and
who executed the foregoing instrument in the firm name of ,
and he duly acknowledged to me that he executed the same for and in the behalf of said firm for
the uses and purposes mentioned therein.
Notary Public
(ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR)
STATE OF: )
COUNTY: .) SSN:
On this day of ,20__ before me personally came
, to me know, and known to be the person described in and
who executed the foregoing instrument and duly acknowledged that he executed the same.
Notary Public
Form of Bid Bond
BID (PROPOSAL FORM
Schedule 5.0.K
Page 3 of 3
68
INFORMATION SCBEDULE L
PERFORMANCE BOND
Bond No.
KNOW ALL MEN BY THESE PRESENTS, that
(hereinafter called the "principal") and
(hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter
called the "Owner") in the full and just sum of dollars
($ ) good and lawful money of the United States of America, for the
payment of which sum of money, well and truly to be made and done, the Principal binds
himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors
and assigns, jointly and severally, firmly by these presents.
WHEREAS, the Principal has entered into a certain written Agreement beating date on
the day of ,20 __, with the Owner for the Town of
Southold Solid Waste Haul-Disposal Services, a copy of which Agreement is annexed to and
hereby made part of this bond as though herein set forth in full.
NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his
or its representatives or assigns, shall well and faithfully comply with and perform all the terms,
covenants and conditions of said Agreement or his (their, its) part to be kept and performed and
all modifications, amendments, additions and alterations thereto that may hereafter be made,
according to the true intent and meaning of said Agreement, and shall fully indemnify and save
harmless the Owner from all cost and damage which it may suffer by reason of failure so to do,
and shall fully reimburse and repay the Owner for all outlay and expense which the Owner may
incur in making good any such default, and shall protect the said Owner against, and pay any and
all amounts, damages, costs and judgments which may or shall be recovered against said Owner
or its officers or agents or which the said Owner may be called upon to pay to any person or
corporation by reason of any damages arising or growing out of the doing of said work, or the
repair of maintenance thereof, or the manner of doing the same, or the neglect of the said
Principal, or his (their, its) agents or servants or the improper performance of the said work by
the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent
rights by reason of the use of any materials furnished or work done as aforesaid or otherwise,
then this obligation shall be null and void, otherwise to remain in full force and effect;
Performance Bond
BID (PROPOSAL) FORM
Schedule 5.0.L
Page 1 of 2
69
PROVIDED HOWEVER, the Surety, for the value received, hereby stipulates and
agrees, if requested to do so by the Owner, to fully perform and complete the work mentioned
and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for
any cause the Principal fails or neglects to so fully perform and complete such work and the
Surety further agrees to commence such work of completion within ten (10) calendar days after
written notice thereof from the Owner and to complete such work within ten (10) calendar days
from the expiration of the time allowed the Principal in the Agreement for the completion
thereof; and further
PROVIDED HOWEVER, the Surety, for value received, for itself, and its successors and
assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no
may impaired or affected by an extension of time, modification, work to be performed
thereunder, or by any payment thereunder before the time required herein, or by any waiver of
any provisions thereof or by any assignment, subletting or other transfer of any work to be
performed or any monies due or to become due thereunder; and said Surety does hereby waive
notice of any and all of such extensions, modifications, omissions, additions, changes, payments,
waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that
any and all things done and omitted to be done by and in relation co assignees, subcontractors,
and other transferees shall have the same effect as to said Surety as though done or omitted to be
done by or in relation to said Principal.
IN WITNESS WHEREOF, the Principal has hereunto sec his (their, its) hand and seal
and the Surety has caused this instrument to be signed by its
and its corporate seal to be hereunto affixed this __ day of 20
(If Corporation add
Seal and Attestation)
By:
Attest:
Principal
Surety
Add Corporate Seal
By:
Attest:
Address of Surety:
Performance Bond
BID (PORPOSAL) FORM
Schedule 5.0.L
Page 2 of 2
70
iNFORMATION SCHEDULE M
OPERATIONAL PLAN
The Bidder hereby states that it proposes to implement the following operational plan to haul and
dispose of Municipal Solid Waste (MSW) from the Town of Southold Landfill if awarded an
Agreement.
I. Haul
Summarize the manpower and equipment you will make available to perform under this
Agreement.
II. Disposal
Summarize the identity and location of the primary and secondary sites you plan to use for
disposal of the solid waste. Describe the arrangements between your company and the disposal
site for use of the site. Describe any treatment the MSW will undergo during transport or upon
arrival at the disposal site. Attach copies of the permits to construct and permits to operate the
disposal site.
Site No. 1
NAME
LOCATION
CONTACT PERSON AND PHONE NO.
ARRANGEMENTS FOR USE
TREATMENT OR UNUSUAL CONDITIONS
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page 1 of 2
71
Site No. 2
NAME
LOCATION
CONTACT PERSON AND PHONE NO.
ARRANGEMENTS FOR USE
TREATMENT OR UNUSUAL CONDITIONS
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page 2 of 2
72
APPENDIX A
SAMPLE OPERATING AGREEMENT
73
THIS AGREEMENT, made on the __ day of ,20 ,
by and between the Town of Southold, a municipal corporation of the State of New York having
its Principal place of business at 53095 Main Road Southold, New York hereinafter called the
"Town" and
hereinafter called the "Contractor."
WITNESSETH
WHEREAS, Contractor has submitted to the Town a bid dated
20 ., ("Bid") in response to the Town's Bid Solicitation for Solid Waste Hauling-
Disposal Services dated ,20__, ("Solicitation"); and
WHEREAS, the Town Board of the Town of Southold by resolution No.
adopted on authorized the Town Supervisor to
enter into an agreement with the Contractor to perform certain services in connection with the
handling of solid waste,
NOW, THEREFORE, it is mutually covenanted and agreed by and between the parties
hereto as follows:
I. DEFiNITIONS - Terms defined in the Bid Solicitation shall have the same
meaning as if defined herein.
II. SCOPE OF SERVICES - The Contractor shall perform the services in accordance
with the description of those services as set forth in the Solicitation.
III. TERM OF AGREEMENT
The term of this Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three {3) additional option years. The Town and the Contractor, by
mutual consent, shall have the option of renewing this Agreement for up to three (3)
additional one-year terms at the prices bid herein. Notice of this mutual consent to be
expressed by the parties in writing not less than one-hundred eighty (180) days prior to
APPENDIX A-1
74
the expiration of the term in force (i.e., by January 1, 2009, January 1, 2010, and January
1, 2011). Similarly, notice by either party of the intent to reject any option year shall be
submitted in writing by the same date (January 1) of each year.
The Town reserves the right to may terminate the Agreement at any time after Year Two
(i.e., after June 30, 2009) of the Agreement for the purpose of entering into an inter-
municipal solid waste haul~disposal Agreement with another Long Island Town by giving
one-hundred eighty (180) days written notice to the Contractor.
IV. PRICE SCHEDULE/COMPENSATION
The unit bid price schedule for the services to be furnished by Contractor is found
in Section C - 3.1, 3.2, Contractor's bid which is incorporated into this Agreement.
V. PAYMENTS
A. The Contractor shall receive monthly payments for services
performed during the prior calendar month. The Contractor shall submit a request for payment
on a Town approved voucher form along with Contractor's invoice which shall include a daily
summary of tormage hauled by Contractor to a Disposal Site and disposed by Contractor at a
Disposal Site as applicable. Such payments shall be made within sixty (60) days of the Town's
approval of Contractor's invoice. The Town shall be entitled to deduct from any payment
owning to Contractor any sums expended by the Town to cure any default or other Agreement
non-compliance by Contractor or to protect the Town from loss on account of claims filed or
reasonably anticipated to be filed.
VI. CONTRACTOR'S WARRANTIES AND REPRESENTATIONS
Contractor makes the following warranties and representations:
A. Contractor represents that the Town has made no commitment under this
Agreement with respect to the volume solid waste to be handled by Contractor during the term of
this Agreement.
B. Contractor warrants that Contractor shall comply with all federal, state
and local laws, ordinances regulations applicable to ail of the services to be performed
Contractor.
APPENDIX A-2
75
C. Contractor represents that the information fumished by Contractor in the
equipment schedules included in the bid is accurate and complete and Contractor acknowledges
that Town has relied upon the accuracy and completeness of that information in the selection of
Contractor as the lowest responsible bidder.
D. The Contractor represents that Contractor shall utilize its best efforts to
insure that Minority and Women Owned Businesses (MBE's and WBE's) have the opportunity to
participate as subcontractors under this Agreement. In the event the contractor subcontracts
twenty-five percent (25%) or more of its work hereunder, Contractor shall submit to the Town an
and a WBE Utilization Plan, prior to execution of this Agreement,
D. In the event the Contractor's Disposal Site is unable to receive and dispose
of the Town's waste for any reason (including failure to obtain or maintain necessary permits or
licenses), Contractor shall be responsible for providing to the Town an alternate Disposal Site for
the Town's use at no additional cost to the Town, and shall indemnify the Town against any
additional hauling cost by the Town or its agent because of the location of the alternate Disposal
Site. Under no circumstances shall a change in Disposal Site(s) or failure or inability to obtain or
maintain necessary permits by the Contractor be considered a change in conditions. In the event
the Contractor is unable to find an alternate Disposal Site(s), he shall be deemed to be in default
of this Agreement and liable for damages, bond forfeitures and other expenses as provided in the
Agreement.
VII. INDEMNIFCATION INSURANCE/BONDS
A. Contractor agrees to defend, indemnify and save harmless the Town of
Southold against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge,
attorney's fees and expenses of what ever kind or nature which the Town may directly or
indirectly incur, suffer or be required to pay by reason of or in consequence of the Contractor
carrying out or performing under the terms of this Agreement, or failure to carry out any of the
provisions, duties, services or requirements of this Agreement, whether such losses and damages
are suffered or sustained by the Town directly or by its employees, licensees, agents, engineers,
citizens or by other persons or corporations, including any of Contractor's employees or agents
APPENDIX A-3
76
who may seek to hold the Town liable therefore. This obligation shall be ongoing, shall survive
the term of this Agreement and include, but not be limited to, claims concerning non-sudden
environmental impairments,
The Contractor shall join in the commencement of any action or proceeding or in the
defense of any action or proceeding which in the opinion of the Town constitutes actual or
threatened interference or interruption with the Town's fights hereunder, including all appeals
which, in the opinion of the Town, may be necessary.
B. Contractor shall procure and maintain the insurance described in Section
A of the Solicitation for a period commencing on the date of this Agreement and terminating no
earlier than one year following termination of services under this Agreement. All such insurance
coverage shall name the Town as an additional insured and shall provide that the coverage shall
not be changed or canceled until thirty (30) days written notice has been given to the Town. All
such insurance shall be issued by a company duly authorized, to transact business in the State of
New York and acceptable to the Town and shall include all riders and additional coverage
necessary to insure that Contractor will be financially able to meet its obligations under the
foregoing indemnification.
C. Contractor shall, for the period of the performance of services hereunder,
maintain a Performance Bond in the amount of one million ($1,000,000.00) dollars wherein
named obligee is Town of Southold. The Bond shall be in a form acceptable to the Town
Attorney and issued by a surety licensed to do business in New York as a surety.
VIII. FORCE MAJEURE
If either party is delayed or prevented from fulfilling any of its obligations under
this Agreement due to any act, event or condition, whether affecting the Town, the Contractor,
the Disposal Site or any of the Town's or the Contractor's respective subcontractors or suppliers,
to the extent that it materially and adversely affects the ability of either party to perform any
obligation hereunder (except for payment obligations), and if such act, event or condition is
APPENDIX A-4
77
beyond the reasonable control and is not also the result of the willful or negligent action,
inaction, or fault of the party relying thereon as justification for not performing an obligation or
complying with any condition required of such party under the Agreement, the time for fulfilling
that obligation shall be extended day-by-day for the period of the uncontrollable circumstance;
provided, however, that the contesting in good faith or the failure in good faith to contest such
action or in action shall not be construed as willful or negligent action or a lack of reasonable
diligence of either party. Subject to the foregoing, such acts or events shall include the following:
(1) an act of God (but not including reasonable anticipated weather conditions for the
geographic area of the Town or Disposal Site) hurricane, landslide, lightning, earthquake, fire,
explosion, flood, sabotage or similar occurrence, acts of a public enemy, extortion, war, blockade
or insurrection, riot or civil disturbance;
(2) the failure of any appropriate federal, state, county, town or local public agency or
private utility having Jurisdiction in the areas in which the Transfer Station or Disposal Site is
located to provide and maintain utilities, services, water and sewer lines and power transmission
lines which are required for the operation or maintenance of the Transfer Station or Disposal
Site;
(3) governmental pre-emption of materials or services in connection with a public
emergency or any condemnation or other taking by eminent domain of any portion of the transfer
Station or Disposal Site; and
(4) the presence of hazardous waste upon, beneath or migrating from the Transfer
Station.
It is specifically understood that none of the following acts or conditions shall constitute
uncontrollable circumstances: (a) general economic conditions, interest or inflation rates, or
currency fluctuations; (b) the financial condition of the Town, the Contractor, any of its affiliates
or any sub-contractor; (c) union work rules, requirements or demands which have the effect of
increasing the number of employees employed otherwise increase the cost to the Contractor of
operating its haul operation or the Disposal Site (d) equipment failure; (e) any impact of
prevailing wage law, customs practices on the Contractor's costs; (f) any act, event or
APPENDIX A-5
78
circumstances occurring outside of the United States, or (g) any change in law or in the permit
conditions or status of the Transfer Station Disposal Site or alternate Disposal Site.
IX. SUBONTRACTS
Contractor shall not enter into any subcontracts in connection with the services to
be performed by Contractor hereunder without the prior written approval by the town of such
subcontracts. All such subcontracts shall make express reference to the terms and conditions of
this agreement and shall obligate the subcontractor to comply with all applicable federal, state
and local laws, ordinances or regulations relating to the services to be performed under the
subcontract. In the event the subcontractor is required to furnish any insurance or bonds for the
benefit of Contractor, the Town shall also be named as an additional insured or obliges.
X. PREVAILING WAGE RATES
Contractor agrees to comply with the provisions of the New York State Labor
Law relating to the payment of prevailing wage rates to the extent applicable, or the applicable
State Law in the state of disposal. In the event that at any time during performance under this
Agreement the Contractor is required to increase the wages paid to any of its employees as a
result of such requirement, all costs be borne exclusively by Contractor.
XI. FORCED ACCOUNTING
In the event the Town directs the Contractor, by written authorization signed
either by the Town Supervisor or Town's Solid Waste Coordinator, to perform additional
services beyond the scope of those described in this Agreement, the Contractor shall be
compensated for such additional services on the following basis:
TOTAL COMPENSATION FOR ADDITIONAL SERVICES =
DIRECT LABOR COST + DIRECT MATERIAL COST + OVERHEADO + PROFIT
For the purposes of this Section:
APPENDIX A-6
79
A. DIRECT LABOR COST shall include hourly wages, including overtime
premiums actually paid plus the following fringe benefits-associated with those wages - group
medical, group life insurance, pensions, FICA, uniforms, safety equipment or special tools.
These fringe benefits shall be separately identified and shall not duplicate fringe benefits paid in
connection with work performed within the scope off the Agreement.
B. DIRECT MATERIAL COST shall be those costs actually paid by
Contractor for materials utilized by Contractor in performance of the additional services. The
costs for such materials shall not include sales tax for any materials which constitute personal
property incorporated into the structures, buildings, or real property of the Town since such
personal property is exempt from taxation York State Tax Law, under Section 1115 of the New
York State Tax Law.
C. OVERHEAD shall be 10% of the total of the Direct Labor Costs and the
Direct Material Costs,
D. PROFITS shall be 5% of the total of the Direct Labor Costs, the Direct
Material Costs and the Overhead.
XII. CONTRACTOR'S OPERATIONS AND PROCEDURES REPORTS
Contractor will provide the operating plan and supporting data listed in Sections
A and B of the Solicitation to the Town for review and acceptance. Contractor will update the
plan as necessary and furnish copies of those updates to the Town.
XIII. DEFAULT
In the event the Contractor fails co' perform its obligations under the Agreement,
the Town may terminate the Agreement, procure the services from other sources and hold the
Contractor responsible for any costs incurred. This Town also may deduct such costs from
payments owing to the Contractor and/or draw upon the Performance Bond as full or partial
reimbursement for such excess costs. The Town reserves the right to terminate the Agreement
for just cause.
XIV. SERVICE AGREEMENT
The Contractor shall be obligated to provide the Town with disposal services
without regard to the permit status of its Disposal Site. In the event that Contractor submits a
APPENDIX A-7
80
Bid for a Disposal Site for which Contractor does not currently have all necessary federal and
state permits, or which after the acceptance of the Bid loses its permitted status, Contractor shall,
at its sole risk and expense, be responsible for obtaining and/or renewing its permits or providing
the Town an altemate Solid Waste Disposal Site at no additional cost (disposal plus any
additional hauling) to the Town. The parties agree that this is a full service Agreement and
failure of the Contractor to provide the identified Disposal Sits or acceptable altemative Disposal
Site, on or after the commencement date shall constitute a breach of this Agreement. The
Contractor accordingly shall not be excused from its obligations hereunder by reason of any
failure to obtain or maintain its permits at the identified Disposal Site.
XV. LIMITATION OF FUNDS
The Contractor agrees that this Agreement shall be deemed executory only to the
extant of the funds currently available for the purposes of this Agreement and that the Town
incurs no liability beyond those available by authorization of the Town Board as of the date of
this Agreement.
XVI. DISPUTES/ARBITRATION
Any disputes between the parties to this Agreement may be referred to arbitration
by mutual agreement of the parties. Absent such an agreement, any actions or claims by either
party hereto shall be commenced in Supreme Court, Suffolk County, New York.
In the event the parties agree to arbitrate a dispute, such arbitration shall be
conducted in accordance with the rules of the American-Arbitration Association. In no event
shall any demand for arbitration be made after the date when institution of legal or equitable
proceedings based on such claim or dispute would be barred by the applicable statute of
limitations. An award rendered by arbitrators following any such arbitration shall be final and
Judgment may be entered upon it in accordance with applicable law in any court having
jurisdiction thereofi
XVII. MISCELLANEOUS
A. This Agreement shall be governed by the laws of the State of New York.
B. Contractor shall not assign, convey or otherwise transfer its rights or
obligations under this Agreement without the prior written consent of the Town.
APPENDIX A-8
81
C. This Agreement, including all Exhibits and documents referred to herein,
along with the Specifications, Solicitation and the Bid, and all Appendices and Exhibits thereto,
represent the entire agreement between the Town and Contractor relating to the Services to be
performed hereunder. This Agreement may be modified only by written agreement of
Contractor and the Town.
D. To the extent of any inconsistency among the documents constituting the
agreement of the parties, the priority among those documents shall be:
2.
3.
4.
This Agreement;
Exhibits hereto;
The Solicitation including Appendices;
Contractor's Bid.
E. Without limiting any other right and/or remedy which the Town may have
at law or under this Agreement, if the Contractor is adjudged bankrupt or makes an assignment
for the benefit of creditors or s receiver is appointed for the Contractor or any insolvency
arrangement proceedings are instituted by or against the Contractor, the Town may terminate this
Agreement.
F. Contractor agrees that it will conduct itself consistent with its status, said
status being that of an independent contractor and, Contractor, its employees or agents will
neither held themselves out nor claim to be an officer or employee of the Town of Southold nor
make claim to any right accruing thereto including, but not limited to, Worker's Compensation,
Unemployment Benefits, Social Security or retirement membership or credit.
G. If any provision of this Agreement shall for any reason he held to be
invalid or unenforceable, the invalidity or unenforceability of such provision shall not affect any
of the remaining provisions of this Agreement and this Agreement shall be enforced as if such
invalid and unenforceable provision had not been contained herein.
H. Contractor agrees that it shall not discriminate and that it shall cause there
to be no discrimination against any employee who is employee in the work, or against any
APPENDIX A-9
82
applicant for such employment, because of race, religion, color, sex, age, marital status, handicap
or national origin in any manner prohibited by the laws of the United States or of the State of
New York. These requirements shall include, but not be limited to, the following: employment;
upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for training.
XVIII. NOTICES
All notices required to be given hereunder shall be made in writing by first class
mail addressed as follows:
If to the Town:
With a copy to:
Supervisor of the Town of Southold
P.O. Box 1179
Southold, New York 11971
Solid Waste Coordinator, Town of Southold
P.O. Box 962
Cutchogue, NY 11935
If to the Contractor:
1N WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
TOWN OF SOUTHOLD
By:
Scott A. Russell, Supervisor
By:
APPENDIX A- 10
83
APPENDIX B
NEW YORK STATE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION PERMIT
84
NEW YORK STATE DEPARTMI~ OF ENVIRONMF~NTAL CONSERVATION
Bufl&!n_* 40 - SONY, Stony Brook, New York 11790-2~5S6
Phone (S16) 404-037S
Fax (S16) ~.~923!
John P. Calrlll
Acting Comr~$1on~r
Jim Bunchuk
Solid Waste Coordinator -Town of Southold
PO BOx 962
Cutchogue, New York 11935.
Dear Mr. Bunchuk:
Enclosed is a validated copy of your registration form submitted to the New York State
Department of Environmental Conservation pursuant to 6 NYCRR Part 360, to register the
existing municipal solid waste transfer operation.
This letter only acknowledges receipt of your registration form and does not, in any way,
verifies that the information provided on the form is true or correct. In addition, you are
responsible for obtaining any other permits and approvals that may be required; and for
complying with all other applicable State and Federal laws, rules, regulations and all other
applicable local ordinances including, but not limited to, zoning ordinances, building codes,
Fire Marshal codes, etc.
This registered activity shall in no way conflict with any mined land reclamation permit and
approved reclamation plan.
You are reminded that 6 NYCRR Part 360 contains various requirements that must be
followed to warrant your facility's continued status as a registered facilitY. This information
was provided in the registration package.
If you have any questions regarding this matter or need an additional copy of the
registration requirements, please contact me at the above telephone number.
~rd
ous Materials Engineer
AJC:ek
eric.
~NEg~¥OR~STATE DEPARTMENT OF ENVIRONMENT~ONSERVATION
DIVISION OF SOLID WASTE ~
REGZSTRATZON FORH FOR A
SOLID HASTE HANAGEHENT FACZLITY
~Lease read and Follow all Lnstructiens before completing
this registration Form
Please Type or Print clearly THIS IS HOT A UPA PERMIT
1. FACILITY NAME AND LOCATION
Road
CiW/vi L Lage
So~Thold
Tel ephene #taube r
County
Suffolk
DEC REGISTRATION #
DEC ADMINI~TRATIO~ #
USE ONLY
'DATE RECEIVED
2. FACILITY OWNER'S NAME
Town Of Southold
Mai [ ins Address
City/Town/Vi l Lage
$outhold
State/Zip Code
New York 119~
TeLephone Number
( 516 > 765-t800
FACILITY OPERATOR'S NAME (if diFFerent) ¢ 4. SITE OWNER'S NAME (if different)
Same Same
Mailing Acklress Mailing A~q~ress
City/Town/Village City/Town/village
State/Zip Cnde State/Zip Code
TeLeph~NUllli~r Tete~dlone Number
( ) ( )
S. TYPE OF FACILITY REGISTRATION (check ail applicable bexes)
~ ~l E~EnergY Recovery Incinerators or Pyrolysis Units r-~source Separated, NonputrescibLe Solid Waste RecycLabies
11 ~60-3.1(C)3 Handling and Recovery Facilities [360-1Z.l(d)]
E~Land App[icatien and Sludge Storage Facilities £360-4.1(c)] []Waste Tire Retreaders [360-13.1(d)(1)(i)3
[~Waste Tires Stored for On-site Energy Recovery
[$60-1~.1(d)(1)(ii)]
[~Tire Dealers Selling Waste Tires ($60-1~.l(i:l)~(T~'lii)]
[~Tire Manufacturing Facilities (]60-13.1(d)(1)(iv)]
F~Processing Facilities Receiving Only Recognizable
Uncontaminated Concrete~ Asphalt Pavement~ Brick,
or Rock [360-16.1(d)(1)(i)]
r-~uncontaminated Unadulterated Wood Processing Facilities
[~60-16.1(d)(1)(ii)]
r-1
t-~Cml)osting and Other Distribution and Marketing Facilities
:[~]Land CLearing Debris Landfills three acres or lees
]Transfer Stations (municipally owned/operated/contracted)
receiving Less than 50,000 cubic yards or 12,500 tone of
household solid waste annually [360-11.1(b)(1))
m
~-]Transfer Stations (municipally owned/eperatod/centracted)
receiving less than 50,000 cubic yards or 12,500 tons of
containerized solid waste annually ~60-11.1(b)(~)3
[]Other Facilities not specifically described above, Specify
6. ~LlO WASTE NANOLED
a. List wastes and/or materials to be accepted
Nunicipal Solid Waste
b. Quantity (SPecify Units - see instructions)
design capacity ~, 50(~ ~lons
storage o~site 0
7. (~OERATIONS SCHEDULE - Normal schedule of eperation
7;00 am - 5:00 pm, 7 days per
week
B. NAMECS) OF ALL MUNICIPALITIES SERVED
To~n of Southold
Village of ~reenport
CERTIFI~TION:
I hereby afFirm under penalty of perjury that information proW~od on this form and attached statements and exhibits was
prepared by ma or ureter my supervision and direction and is t~ue to the best of my knowledge and belief, and that I have
the authority as S~ervlsor (titLe) of Town of Southold (Entity) to sign this
regtatratien form pursuant to 6 NYCRR Part ]60. By signing this registration form. I affirm that I have read the
applicable regu(atiens and will abide by all conditions of the registration requirementS. I am aware that any false
statmaent made herein is punishable as a CLass A misdemeanor pursuant to Section 210.45 of the Penal Law.
Printed/Tyl:~ Name 1~i~}!~C;Signatur~ ~ mi Mo. m Day I Year
Jean W. Cochran ~ 'r~~: ~'~'''''~''''-- ~I ~i ~21 ~ I ~ 17
R~ISTRANT'$ VALIDATSD~OPY ~COP¥ #~
APPENDIX C
Town of Southold Accident Report
87
TOWN OF $OUTHOLD - Incident Report
(Use Auto Accident Pamphlet for Auto Accident)
(Use ~Quick Fax" form for employee injury)
Date & Time of Incident
Type of Incident/Accident:
__.Trip & Fall or Bodily Injury
Vehicle
__Damage to Property
Other
Location of Incident/Accident
Description of Incident/Accident
Description of Injudee
Injured's Name & Address & Date of Birth
Medical Care Given?
What care was given?
.By whom?
Anyone taken to hospital?
Witness Name & Address
Hospital Name
REMARKS:
Reported by (Signature)
Date & Time Reported to Department Head
Signature of Dept. Head:
Date & Time
Date & Time
8~00 Edition
TOWN OF $OUTHOLD
DIRECTIONS FOR COMPLETING INClDEN~III~EPORT
(If Auto Accident, use Auto Accident Pamphlet)
(If employee injury, use "Quick Fax")
1. ComPlete report immediately.
2. Fill in all Blank Spaces.
Sign and have your Department Head sign form. (If Depafb,ent Head is not
available to sign within the next 24 hours, proceed to next step. You, the employee,
will then forward this form to John Cushman yourself.)
4. Keep a copy for your department.
5. Department Head sends Incident Report to John Cushman in the Accounting
Department the same day as incident.
NEVER do the following:
'Make a Deal" for damages.
Leave the scene of even a MINOR accident.
Accept an offer of cash, check, or "private" settlement.
Disavow injury to you or your passengers;
Offer to pay ANYTHING even if you think you are at fault.
Administer first aid unless you are LICENSED to do so.
ALWAYS do the following:
If there is an injury, ask someone to summon police and seek medical
assistance.
Remember to remain calm, courteous and consistent in what happened.
Obtain complete information from those involved.
Obtain the names of witnesses including addresses and phone numbers.
8100 Edition
LEGAL NOTICE
NOTICE TO BIDDERS
NOTICE IS HEREBY GIVEN, in accordance with the provisions of Section 103 of the
General Municipal Law, that the Town of Southold will receive sealed bids for solid
waste haul-disposal services until the time and at the location herein specified which,
will then be opened and publicly read aloud;
PLACE:
Office Of the Town Clerk
Southold Town Hall
53095 Main Road
Southold New York 11971
(631) 765-1800
DATE:
Thursday, June 14, 2007
TIME: 10:00 A. M.
(LATE BIDS WILL NOT BE OPENED)
The offer to be made in accordance with this Bid Solicitation shall include a bid on the
following:
A bid price per ton, to provide equipment and labor for
hauling solid waste and disposing solid waste at the
Contractor's Solid Waste Disposal Site. The term of this
Agreement shall be two (2) years commencing on July 1,2007.
The Town and the Contractor shall HOLD A MUTUAL OPTION to
renew the Agreement for one (1) additional one year term. Agreement by
both parties to implement the Option Year, or intent by either party to
reject the Option Year, shall be submitted in writing not later than 180
days prior to the expiration of the initial 2 year term (i.e., by January 1,
2009).
Bids must be made in writing on the forms furnished and shall be accompanied by a Bid
Guaranty in the Form of certified check, money order, bank draft or standard form letter
of credit made payable to Town of Southold, or bid bond, in the sum of one hundred
thousand dollars ($100,000.00) wherein the named obligee shall be the Town of
Southold.
The successful Bidder shall be required to furnish a performance Bond and insurance
in accordance with the instructions in the Bid Solicitation.
The bid price shall not include any tax, Federal, state, or local, from which the Town
of Southold is exempt.
A Bidder may not withdraw his bid within forty-five (45) days after the opening of
the bids, but may withdraw his Bid at any time prior to the scheduled time for the
opening of bids.
The Town reserves the right to reject any or all bids and to waive informalities,
should this action be in the best interest of the Town of Southold.
Bid Solicitation may be examined free of charge and at the following location on
weekdays from 8:00 A.M. to 4:00 P.M.:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Upon payment of non-refundable one hundred fifty dollars ($150.00) Bid
Solicitation may be picked up at:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Bidders should contact Southold Town Solid Waste Coordinator James Bunchuck at the
Southold Town Transfer Station (631-734-7685) with any questions regarding this Bid
Solicitation or Town Of Southold waste program and haul-disposal operations. In
addition, bidders may visit the Transfer Station at any time during the normal business
hours of 7:00 am to 5:00 pm, 7 days per week, except holidays. The Transfer Station
address is 1 Zack's Lane, Cutchogue, NY 11935, BUT IS ACCESSED FROM COX
LANE, OFF COUNTY RT. #48, in Cutchogue.
For specific further information regarding bidding requirements, contact Southold Town
Clerk Elizabeth A. Neville (631 ) 765-1800. For information regarding (631) 734-7685.
All bids must be signed and sealed in envelopes plainly marked "Bid On Solid Waste
Haul-Disposal Services 2007", and submitted to the Office of the Town Clerk, 53095
Main Road, P O Box 1179, Southold, NY 11971. The bid price shall not include any tax,
federal, state, or local, from which the Town of Southold is exempt.
Dated: May 22, 2007
ELIZABETH A. NEVILLE
SOUTHOLD TOWN CLERK
PLEASE PUBLISH ON MAY 24, 2007, AND FORWARD ONE (1) AFFIDAVIT
OF PUBLICATION TO ELIZABETH NEVILLE, TOWN CLERK, TOWN HALL,
PO BOX 1179, SOUTHOLD, NY 11971.
Copies to the following:
The Suffolk Times
Town Board Members
Town Attorney
Accounting
James Bunchuck, SWD
Data Construction
Dodge Reports
Brown's Letters
Burrelle's Information Services
Town Clerk's Bulletin Board
STATE OF NEW YORK)
SS:
COUNTY OF SUFFOLK)
ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, New York being
duly swom, says that on the ~ ¥ day of '-tg~ ,2007 she affixed a notice
of which the annexed printed notice is a tree copy, in a proper and substantial manner, in
a most public place in the Town of Southold, Suffolk County, New York, to wit: Town
Clerk's Bulletin Board, Southold Town Hall, 53095 Main Road, Southold, New York.
Legal Notice to Bidders:
Solid Waste Haul-Disposal Services
Bid opening June 14, 2007 at 10:00 AM.
Elizabeth A. ]q'eville
Southold Town Clerk
Sworn to before me this
Day of ~)/~61_t ~- ,2007
O
(Jxlotary Public
LYND^ M. BOHN
NOTAFIY PUBLIC, State of Now York
No. 01BO6020932
Qualified in Suffolk Count]t
Term Expires March 8, 20 ~
Page 1 of 1
Cooper, Linda
From: JOAN^NN riaweber@timesreview.com]
Sent: Friday, May 18, 2007 3~02 PM
To: Cooper, Linda
Subject: Re: Legal notice for May 24, 2007
Linda
Received for publication on the 24th
Joan Ann
.... Original Message ....
From: Co_oger, Linda
To: JOAN ANN
Sent: Friday, May 18, 2007 2:35 PM
Subject: Legal notice for May 24, 2007
Please send confirmation of receipt of this legal.
5/18/2007
RESOLUTION 2007-475
ADOPTED
DOC ID: 2903
THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2007-475 WAS
ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON
MAY 22, 2007:
RESOLVED that the Town Board of the Town of Southold hereby authorizes and directs the
Town Clerk to advertise for bids for the Transportation and Disposal of Municipal Solid
Waste (MSW) from the Cutchogue Transfer Station.
Elizabeth A. Neville
Southold Town Clerk
RESULT: ADOPTED [UNANIMOUS]
MOVER: Louisa P. Evans, Justice
SECONDER: William P. Edwards, Councilman
AYES: Kmpski Jr., Edwards, Ross, Wickham, Evans, Russell
· Complete items 1, 2, and 3. AJso complete
item 4 if Restricted Delivery Is desired.
· Print your name and address on the reverse
so that we can return the card to you.
· Attach this card to the back of the mailpiece,
mr on the front if space permits.
2. ~utlole Number
~ PS Form 3811, Fe~ua~ 2004
A. Signature
D. I~d~li~fyedd:~diif~m'ltfromit~nl? i'-I ¥~I
If YES, enter delJve~ address below: [] No
3. ~le~Mail 1-1 Express Mall
[] Registered [] Return Receipt for Merchandise
[] Insured Mail [] C.O.D.
4. Restrloted Delivef3~ ~ Fee) D Yes
7005 3110 0003 0247 0946
· Complete items 1, 2, and 3. ,Nso complete
item 4 if Restricted Delivery is desired.
· Print your name and address on the mveme
so that we can return the card to you.
· Attach this card to the back of the mailplsoe,
or on the front if space permits.
1. Article Addressed to:
A, Signature
[] ~gent
;~ Addressee
Bi Received b Date of Dailve~7
Ih
~ address different fiom item 17
If YES, enter daiivery address below: I-1 No
~ifled Mail [] ~ Mall
?3 Registered [] Return Receipt for MercflandJse
I-I Inmm~d Mail [] C.O.D.
4. Resttloted Daiive~/? (Extra Fee) [] Yes
2. Article Number
~from~
7005 3110 0003 0248 0723
PS Form 3811, Februa~j 2004 Demeet~ Relurn Re~Cpt 102595-02-M-1540
· Complete items 1, 2, and
item 4 if
so that we can returr you.
· Attach this card to the bso~k of the meJlpleco,
or on the fTont if space pan, its.
2. ~ NumUer
(Trar~/ro~ Mm~e JM~
7005 3110 0003 0247 0922
· Complete items 1, 2, and 3. Also complete
item 4 if Resthcted Delive/y is desired.
· Print your name and address on the reveme
so that we can return the card to you.
· Attach this card to the back of the mailpiece,
or on the front if space permits.
1. Article Addressed to:
('rrans~
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3. Sewice lype
~'/C~tme~ Marl [] ~ M~ml
I [] Registered [] Retum Receipt for Meragendlee
[] In~ured Mall ri C.O.D.
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BIDDEWS SOLICITATION
SOLID WASTE HAUL AND DISPOSAL SERVICES
AGREEMENT DOCUMENTS
TOWN OF SOUTHOLD
STATE OF NEW YORK
TOWN OfSOUTHOLD
Originally Prepared by:
Solid Waste Task Force
Te6hnical Committee
53095 Main Road
Southold, NY 11971
May 2007
Southold Town Board - Letter
Boar~]'Meeflng of June 19, 2007
RESOLUTION 2007-558
ADOPTED
Item # 25
DOC ID: 2979
THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2007-558 WAS
ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON
JUNE 19, 2007:
RESOLVED that the Town Board of the Town of Southold hereby accepts the bid of
Trinity Transportation Corp. to supply the town with MSW Transportation and Disposal
services~ as detailed in the Town of Southold Bidders' Solcitation for Solid Waste Haul and
Disposal Services of May of 2007 in the Evaluation Unit Bid Price mount of $ $78.11 per ton.
It is further
RESOLVED that the Town Board of the Town of Southold hereby authorizes Supervisor Scott
A. Russell to execute a contract with Trinity Transportation Services, Inc. for the provision of
such MSW Transportation and Disposal Services, subject to the review and approval of the
Town Attorney.
Elizabeth A. Neville
Southold Town Clerk
RESULT: ADOPTED [UNANIMOUS]
MOVER: Daniel C. Ross, Councilman
SECONDER: William P. Edwards, Councilman
AYES: Krupski Jr., Edwards, Ross, Wickham, Evans, Russell
Generated July 2, 2007 Page 32
ELIZABETH A. NEVILLE
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southold, New York 11971
Fax 1631) 765-6145
Telephone (631) 765-1800
southoldtown.northfork.net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
July 9, 2007
Michael Avery
Trinity Transportation Corp.
214 Blydenburgh Road
Islandia, NY 11749
Dear Mr. Avery:
Congratulations. At the regular Town Board meeting held on June 19, 2007, the
Town Board accepted the bid of Trinity Transportation Corp. to provide the Town of
Southold with MSW Transportation and Disposal services. A certified copy of the
resolution is enclosed.
The bid deposit will be returned to you at the end of the contract. Thank you for
your bid.
Very truly yours,
Lynda M Bohn
Deputy Town Clerk
UBS.
ELIZABETH A. NEVILLE
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southold, New York 11971
Fax (631) 765-6145
Telephone (631) 765-1800
southoldtown.nor th fork.net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
July 9, 2007
Stephen R. Soucy
Winter Brothers Recycling Corporation
107 Mahan Street
West Babylon, NY 11704
Dear Mr. Soucy:
At the regular Town Board meeting held on June 19, 2007, the Town Board
accepted the bid of Trinity Transportation Corp. to provide the Town of Southold with
MSW Transportation and Disposal services. A certified copy of the resolution is
enclosed.
Your bid bond is being returned to you. Thank you for your bid.
Very truly yours,
Lynda M Bolm
Deputy Town Clerk
Ens.
ELIZABETH A. NEVILLE
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southold, New York 11971
Fax (631) 765-6145
Telephone (631) 765-1800
southoldtown.northfork.net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
July 9, 2007
Derek Veenhof
TransRiver Marketing Company, LP
40 Lane Road
Fairfield, NJ 07004
Dear Mr. Veenhof:
At the regular Town Board meeting held on June 19, 2007, the Town Board
accepted the bid of Trinity Transportation Corp. to provide the Town of Southold with
MSW Transportation and Disposal services. A certified copy of the resolution is
enclosed.
Your bid bond is being retumed to you. Thank you for your bid.
Very truly yours,
Lynda M Bohn
Deputy Town Clerk
Ens.
ELIZABETH A. NEVILLE
TOWN CLERK
REGISTRAR OF VITAL STATISTICS
MARRIAGE OFFICER
RECORDS MANAGEMENT OFFICER
FREEDOM OF INFORMATION OFFICER
Town Hall, 53095 Main Road
P.O. Box 1179
Southold, New York 11971
Fax (631) 765-6145
Telephone (631) 765-1800
southoldtown.northfork.net
OFFICE OF THE TOWN CLERK
TOWN OF SOUTHOLD
SOLID WASTE REMOVAL & DISPOSAL
Bid Opening
6/14/07 ~ 10:00 AM
THREE (3) bids were received:
Trinity Transportation Corp.
Michael Avery
214 Blydenburgh Road
Islandia, NY 11749
(631)342-9673
TransRiver Marketing Company, LP
Derek Veenhof
40 Lane Road
Fairfield, NJ 07004
(973)882-2445
Winter Brothers Recycling Corporation
Stephen R. Soucy
107 Mahan Street
West Babylon, NY 11704
Bid results are attached
Original copies are in Town Clerk's file. Five copies sent to SWMD.
3.2 EVALUATION UNIT BID PRICE FORMULA
EvaluatiOn Unit Bid Price =
(C1)10,000+(C2}10,000+.5(C3)10,000+.5(C4)10,000+.5(C5)10,000
35,000 tons
Evaluation Unit Bid Price = $ ~V£~qT¥ ~ I~V~ 'Dot~qP~5 ~ [~ugV~ O~'r~
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
Bidder:
Firm-Co~oration
By:
Authorized Representative Date
2lq
Address
4.0 BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
5.0 INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the main office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the firm (Schedule D, attached
hereto).
42
UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
L 1 COMPENSATION
The undersigned hereby submits the following price bid to furnish Solid Waste Haul-
Disposal Services, to Southold Town, New York for the terms 'ZOO-'/
through 7_0 I ~.
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year ONE
is ~x/¢MT~t ~I~V~ dollars and
~'o~'l"-t ~'~¥~ cents ($ -/-/. q~ ' ). (C1)
The Haul-Disposal Service applicable unit price per ton for agreement year TWO
is ' ,~ ~.V~IWT'/ ~/~0 dollars and
D I ~'r"/ ~'~/I; cents ($ '7"1~'~ ). (C2)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
ONE is DEVEN'rw ~I~T' dollars and
cents ($ -/8 ~:[ ). (C3)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
TWO is ~V~lq'r'~ ~ t~Wi-- dollars and
cents ($ -~8~q-' ). (C4)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
THREE is ~V~'rY /,~1~6- dollars and
cents ($ ~c~ .~q..~ ). (C5)
41
H.
I.
J.
Ko
Dated:
Name of Bidder:
Detailed financial statement for the Bidder, and if applicable, for parent
'companies (Schedule E, attached hereto).
Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
Major Subcontractors - (Schedule G, attached hereto).
Equipment- (Schedule H, attached hereto).
Maximum Specified Capacity- (Schedule I, attached hereto).
Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
Form o£Bid Bond (Schedule K, attached hereto).
Performance Bond (Schedule L, attached hereto).
Address of Bidder:
M. Operation Plan (Schedule M, attached heretO).
to-Il-O'7
By:
Corporate Seal
(If a Corporation)
Signature
Incorporated under the laws of the State of
Names and addresses of officers of the corporation:
(President) Name
(Secretary) Name
Title.
JEANI~ BORGESANO
NOTARY PUNBoL. 14C~ 1S tate of New York
8146
Qualified in Sulfolk County
Contmission Expires Februarv 1,
43
(Treasurer) Name
(lfan individual or partnership)
Address
Names and addresses of all principals or partners
44
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
_ (C1)I 0,000+(C2)10,000+.5(C3)10,000+.5(C4)10,000+.5(C5)10,000
35,000 tons ~ .3t.~
EvaluationUnitBidPfice=$ ~"m"A"]-~v~' - ~ ~ OoL~t~ . I~_
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
~irm-Corporation fir Address
By:
4.0
5.0
Authorized Representative
Date
BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
ho
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the main office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the finn (Schedule D, attached
hereto).
42
3.0
UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1 COMPENSATION
The undersigned hereby submits the following price bid to furnish Solid Waste Haul-
Disposal Services, to Southold Town, New York for the terms ~'-~c~ .2 o ~
through ~'~ 2o~,~
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year ONE
is
The Haul-Disposal Service applicable unit price per ton for agreement year TWO
I'~,,;~ 1 ~ ~' cents ($ %:b. o,? ). (C2)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
ONE is ~' ~2-4f dollars and
tq a cents ($ ~o ,w~ ). (C3)
dollars and
dollars and
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
~TWO_is ~' Co I.~-t )/ - '7' ~a ~ dollars and
t~ o cents ($ ~ ~, ~'~ ). (C4)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
THREE is ~ '~k)~ ~ {"~r dollarsand
to ~ cents ($ o9~ ~ ). (C5)
41
Dated:
Ad,ess of Biddy: I 0¢ ~ ~
E. , Detailed financial statement for the Bidderr,and if applicab!~, for parent
companies (Schedule E, attached hereto). L~0}ox~,~ ~(
F. Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto). ..
G. Major Subcontractors - (Schedule G, attached hereto), t
H. Equipment- (Schedule H, attached hereto). *~" s t~. ho
I. Maximum Specified Capacity- (Schedule I, attached hereto).
J. Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
K. Form of Bid Bond (Schedule K, attached hereto). 0t~' {, i~L
L. Performance Bond (Schedule L, attached hereto), u~, ~,
M. Operation Plan (Schedule M, attached hereto). -~°,
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of P~ ¢ ~o ~/~ ,.
Names and addresses of officers of the corporation:
(President) Name Address
Title
(Secreta~ Name Address
43
(Treasurer) Name Address
(If an individual or partnership)
Names and addresses of all principals or partners
44
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
(C1)10,000+(C2)10,000+.S(C3)10,060+.5(C4)10,000+.5(C5)10,00O
35,000 tons
Evaluation Unit Bid Price = $
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
Firm-~n ~.,~ Address . ,
Au~ofiz~ R~r~tafive Date
4.0 BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
5.0 INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the main office of parent
companies 0fapplicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the firm (Schedule D, attached
hereto).
42
3.0
UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1
COMPENSATION
The undersigned hereby submits the following price bid to furni~ Splid Waste Haul-
Disp°sal Servic~esl t° S°uth°ld T°wn' New Y°rk f°r the terms~,~,~,l ~, r~[
I I
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year ONE
The Hau~-Disposal Service applicable unit price per ton for agreement year TWO
is ~/~ccen~ J/)t( dollars and
/ t
The Haul-Disposal Service. applicable unit price per 9n for agreement OPTION year
__ONE_is ~ ~ ff2t~t~bT/~4 dollars and
cents ($ '~/ ). (C3)
dollars and
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
TWOis ~) /~ /~~ dollarsand
cents ($. .). (C4)
The Haul-Disposal Senfice applicable unit price per ton for agreement OPTION year
THREE is ~ /~ f{.~~ dollars and
cents ($ ). (C5)
41
H.
I.
J.
M.
Dated:
Name of Bidder:
Address of Bidder:
Detailed financial statement for the Bidder, and if apPlicable, for parent
companies (Schedule E, attached hereto).
Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
Major Subcontractors - (Schedule G, attached hereto).
Equipment- (Schedule H, attached hereto).
Maximum Specified Capacity- (Schedule I, attached hereto).
Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
Form of Bid Bond (Schedule K, attached hereto).
Performance Bond (Schedule L, attached hereto).
Operation Plan (Schedule M, attached hereto).
By:
Signature Title
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of
Names and addresses of officers of the corporation:
(President) Name Address
(Secretary) Name Address
43
(Treasurer) Name Address
(If an individual or partnership)
Names and addresses of all principals or partners
44
Comerica Bank
June 15, 2007
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, NY 11971
Re: Winters Bros. Recycling Corp. Bid
Dear Gentlemen:
I have been asked to send this letter regarding the business relationship between Comerica Bank
and Winters Bros. Waste Systems, Inc. (Winters).
Winters has been a valued customer of Comerica's since 2003. We believe they have an
experienced management team and a solid business model. We currently have a significant
Revolving Credit Facility with Winters and as of today, they have availability in excess of $5.0
million.
My contact information is:
Ian S. Meatus
Vice President
Comerica Tower at One Detroit Center
Mail Code 3236
500 Woodward Avenue
Detroit, MI 48226
(313) 222-5562
If you have any questions, please feel free to contact me.
B ~ eg ds,
NOTICE TO BIDDERS
Solid Waste Haul-Disposal Services
The Town of Southold will receive sealed bids for solid waste haul-disposal services until the
time and at the location herein specified which, will then be opened and publicly read aloud;
PLACE:
Office Of the Town Clerk
Southold Town Hall
53095 Main Road
Southold New York 11971
(631) 765-1800
DATE: June 14, 2007
TIME: 10:00 AM
(LATE BIDS WILL NOT BE OPENED)
The offer to be made in accordance with this Bid Solicitation shall include a bid on the
following:
A bid price per ton, to provide equipment and labor for
hauling solid waste and disposing solid waste at the
Contractor's Solid Waste Disposal Site. The term of this
Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three (3) additional option years {see Section 18.0~ p. 21).
Notwithstanding contractual or other legal reasons for terminating this
Agreement, this Agreement will be guaranteed for a two (2) year term, through
June 30, 2009.
Bids must be made in writing on the forms furnished and shall be accompanied by a Bid
Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit
made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars
($100,000.00) wherein the named obligee shall be the Town of Southold.
The successful Bidder shall be required to furnish a performance Bond. and insurance in
accordance with the instructions in the Bid Solicitation.
The bid price shall not include any tax, Federal, state, or local, from which the Town of
Southold is exempt.
A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids,
but may withdraw his Bid at any time prior to the scheduled time for the opening of bids.
The Town reserves the right to reject any or all bids and to waive informalities, should this
action be in the best interest of the Town of Southold.
2
Bid Solicitation containing submission requirements, instructions, technical specifications,
and bidding forms may be examined free of charge and at the following location on weekdays
from 8:00 A.M. to 4:00 P.M.:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Upon payment of non-refundable fifty dollars ($150.00) Bid Solicitation may be picked up
at:
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, New York 11971
Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck,
Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Bunchuck's office is at the
Southold Town Transfer Station, located at:
Southold Town Solid Waste District
1 Zack's Lane
Cutchogue, New York 11935
Entrance to the facility is gained from Cox Lane, off County Rt. # 48. All bidders are
encouraged to inspect the Southold Town Transfer Station. Appointments to do so are not
required, but may be scheduled by calling Mr. Bunchuck at the phone number above.
Elizabeth A. Neville
Town Clerk
For further information regarding bidding requirements, contact Elizabeth A. Neville (631) 765-
1800. For information regarding Town Of Southold waste program and haul-disposal operations,
contact James Bunchuck (631) 734-7685.
3
TABLE OF CONTENTS
GLOSSARY OFTERMS
SECTION A- SUBMISSION REQUIREMENTS
1.0 Project Purpose
2.0 Schedule
3.0 Examination Of Agreement Documents
4.0 Information to be Submitted
4.1 Contractual Bid
4.2 Supplemental Information
5.0 Bid Format
5.1 Binding
5.2 Form Preparation
6.0 Submission of Bid
6.1 Withdrawal Of Bids
6.2 Questions & Addenda
7.0 Bid Guaranty
8.0 Execution Of Agremnent
9.0 Consideration Of Bids
10.0 Selection Of Contractor
11.0 Acceptance of Bid
12.0 Assignment
13.0 Limitation Of Funds Available
14.0 Insurance and Bonds
14.1 Insurance
14.2 Bonds
15.0 Indemnity (Hold Harmless)
16.0 Payments
17.0 Default
18.0 Term of Agreement
19.0 Service Agreement
20.0 Subcontracts
21.0 Rights and Options
SECTION B - BID SPECIFICATION
1.0 Requirements
2.0 Program Goals and Objectives
3.0 Potential Regulatory and Operational Changes
4.0 Character Of The Solid Waste
4.1 Quality and Characteristics
5.0 Program Activities
5.1 Collection
5.2 Loading Mode
5.3 Town of Southold Accident and Damage Policy
5.4 NYSDEC Part 360 Permit to Operate
7
10
11
11
12
13
13
13
15
15
15
15
15
16
16
16
17
17
18
18
18
18
18
20
20
21
21
21
21
22
22
23
24
25
25
25
26
26
26
27
27
27
4
6.0 Haul Services
6.1 Transport Mode
6.2 Work Included
6.3 Equipment
6.4 Weighings
6.4 Routing Mode - Contractor's Responsibility
7.0 Disposal Services Program Activities
7.1 Work Included
7.2 Operational Capacity
7.3 Permit Requirements
7.3.1 Disposal Sites Inside State Of New York
7.3.2 Disposal Sites Outside State of New York
7.4 Weighings
8.0 Safety and Health Regulations
9.0 Operations and Procedures
9.1 Supporting Data
SECTION C - TOWN OF SOUTHOLD SOLID WASTE
HAUL/DISPOSAL SERVICES
1.0 Intent
2.0 General Bid Statement
3.0 Unit Price Bid Schedule 3.1 Compensation
3.2 Evaluation Unit Bid Price Formula
4.0 Bid Security Acknowledgment
5.0 Information Schedules
Information Schedule A
Information Schedule B
Information Schedule C
Information Schedule D
Information Schedule E
Information Schedule F
Information Schedule G
Information Schedule H
Information Schedule I
Information Schedule J
Information Schedule K
Information Schedule L
Information Schedule M
27
27
28
28
29
29
29
30
30
30
31
31
33
33
34
35
36
37
37
41
41
42
42
42
5
SECTION D - APPENDICES
Appendix A Sample Operating Agreement
Appendix B New York State Department of Environmental Conservation Permit
Appendix C Accident Report
6
GLOSSARY OF TERMS
ADMiNISTRATOR -Shall mean the Coordinator of municipal solid waste (or his agent) of the
Town of Southold, New York.
AGREEMENT- Shall mean a Form operating agreement set forth by the Town and resulting
from this Bid Solicitation between the Town of Southold and the successful Bidder to be
executed in 1997.
AGREEMENT DOCUMENTS -Shall include the notice to bidders, instructions, bid solicitation,
bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance
bond, certificates of insurance, glossary of terms any general conditions or special conditions,
and any addenda. The Agreement Documents will Form a part of the Agreement.
AGREEMENT YEAR -Shall mean the period from __July 1~ of a calendar year to June 30, of
the next calendar year.
BIDDER -Shall mean any party or parties submitting in proper form a bid to perform the work as
specified in the Agreement Documents. The successful Bidder selected by the Town to perform
the specified work will thereafter he known as the Contractor.
BID PRICE -Shall mean the unit cost to determine the ranking of bidders.
BID SOLICITATION-Shall mean this document, specifications, and any bid addenda issued.
COMMENCEMENT DATE -Shall mean ~Jul¥ 1, 2007_.
CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) -Shall mean solid
waste resulting from the construction, renovation, equipping, remodeling, repair and demolition
of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other
masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and
roofing shingles.
CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) DISPOSAL
SITES -Shall mean any site designated by the Contractor where construction and demolition
debris is disposed of in a manner that minimizes environmental hazards and is permitted under
the design and operation requirements of 6NYCRR Part 360 or alternatively outside the State of
New York, is permitted under design and operation requirements meeting the requirements of 1)
that jurisdiction's applicable regulatory agency and 2) Town of Southold's minimum standards.
GLOSSARY-I
7
CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents.
CONTRACT YEAR - Shall have the same meaning as Agreement Year.
CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors,
administrators, agents, or successors thereof.
COORDiNATOR - Shall mean the coordinator of municipal solid waste for the Town of
Southold.
COUNTY - Shall mean Suffolk County, State Of New York.
DAILY - Sunday to Saturday, inclusive.
EPA - Environmental Protection Agency (Federal).
HAUL-DISPOSAL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in
dollars for each ton of solid waste actually hauled from the Town Of Southold Transfer Station
to the Contractor-Designated Disposal Site and disposed of at the Contractor-Designated
Disposal Site.
HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.. or "hazardous substance" as
defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., or "hazardous waste" as defined under New York Environmental
Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time,
and the regulations promulgated thereunder, and any analogous or succeeding Federal, state or
local law, role or regulation and regulations promulgated thereunder and (2) any other material
which any governmental agency or unit having appropriate jurisdiction shall determine from
time to time cannot be processed at the facility because it is harmful, toxic or dangerous.
NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful
Bidder that the Town of Southold intends to award an Agreement to the successful Bidder,
subject to compliance with all their terms and conditions of the Agreement Documents.
NYSDEC - New York State Department Of Environmental Conservation.
OSHA - Federal Williams-Steiger Occupations Safety & Health Act of 1970, plus subsequent
revisions.
GLOSSARY-2
OWNER - Shall mean the Town Of Southold, New York. Also may be referred to as the Town.
PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience
and necessity, Franchises or authorizations which must be issued by any Governmental Body
having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of
construction and demolition debris.
PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition
debris or to construct, establish, maintain or operate a construction and demolition debris
Disposal Site.
RCRA - Resource Conservation Recovery Act (Federal).
SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances,
including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid
Waste does not include C&D waste, recyclables, hazardous, or infectious waste).
SOLID WASTE DISPOSAL SITE(S) - Shall mean any site designated by the Contractor where
solid waste is disposed of in a manner that minimizes environmental hazards and Is permitted
under the design and operation requirements of 6NYCRR Part 360 - Solid Waste Management
Facilities, or alternatively outside of the State of New York, is permitted under design and
operation requirements meeting the requirements of 1) that jurisdiction's applicable regulatory
agency and 2) Town of Southold's minimum standards. Also may be referred to as Disposal
Site(s).
SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract
with the Contractor for services, equipment, materials and/or labor.
GLOSSARY-3
SECTION A
SUBMISSION REQUIREMENTS
BIDDERS INFORMATION, INSTRUCTIONS, AND
AWARD BASIS
10
SECTION A
SUBMISSION REQUIREMENTS
BIDDERS INFORMATION, INSTRUCTIONS AND AWARD BASIS
1.0 PROJECT PURPOSE
The Town of Southold expects that it will receive and need to dispose of approximately
10,000 tons of solid waste during the agreement year. It is possible that the Town of
Southold will contract with another town to receive and dispose of their solid wastes. If
this happens the quantity of wastes to be hauled and disposed of under this Agreement
will increase. This Bid Solicitation will ensure Town of Southold's solid waste will
continue to be 1) hauled From the Town of Southold Transfer Station to Disposal site(s)
and 2) disposed of at permitted Disposal Site(s).
2.0 SCHEDULE
The schedule below is an est'Lmate of the time period leading up to the commencement of
the Agreement. Its intent is to provide each Bidder with an idea of when certain events
may occur. The dates given are guidelines and should not be construed as firm dates or
deadlines due to. the multiple parties involved in the decision making process.
EVENT
Transfer Station Visits
Pre-Bid Conference
Bid Opening
Town Board Approval
Agreement Executed
Operations Commencement
DATE
By Appointment
None
10:00 AM Thursday, June 14, 2007
June 19, 2007
On or Before June 29, 2007
July 1, 2007
11
3.0
EXAMiNATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE
WORK
It is the responsibility of each Bidder before submitting a Bid to (a) examine the Sample
Operating Agreement and Agreement Documents thoroughly; (b) visit the site of the
Town of Southold Transfer Station; (c) attend and be familiar with the outcome of the
pre-bid conference (d) become familiar with conditions at the Town of Southold Transfer
Station and Disposal Sites that may affect cost, progress, performance or furnishing of
the work; (e) become familiar with and consider all federal, state and local laws,
regulations ordinances, permits, approvals and orders that may effect the cost, progress,
performance or furnishing of the work: (f) study and carefully correlate the Bidder's
observations with the Agreement Documents; and (g) notify the Town Clerk of all
conflicts, errors or discrepancies in the Agreement Documents.
Reference is made to the following Appendices which contain supplemental information
which is attached to and made part of the Agreement Documents:
Appendix A: Sample Operating Agreement
Appendix B: NYSDEC Part 360 Operating Permit
Appendix C: Town of Southold Accident Report
Reference is made to the Following information which is available for review by
Bidders at the Town Clerk's Office during normal business hours - 8:00 A.M. to 4:00
P.M. Monday through Friday.
i. Pending conceptual plans for the proposed Town of Southold Transfer Station.
ii. Town of Southold Solid Waste Management Plan.
This information is presented solely for the convenience of the Bidders and does not
constitute part of the Agreement Documents. Bidders shall form their own conclusions
and opinions fi.om this information and shall confirm any information contained therein
regarding facilities and equipment through site visits. The Town does not guarantee the
accuracy of any information contained in these documents.
Before submitting a Bid, each Bidder shall, at the Bidder's own expense, make or obtain
any additional inspections, examinations, or 'studies and obtain any additional data and
information which may affect cost, progress, performance or furnishing of the work and
which Bidder deems necessary to determine its bid for performing and furnishing the
work in accordance with the time, price and other terms and conditions of the Agreement
Documents. The failure or omission of the Bidder to receive and examine any form,
instrument or document, or make required inquiries and inspections, shall not relieve the
Bidder from any obligation contained in the Agreement Documents. The Town will be
justified in rejecting any claim based on facts or conditions of which the Contractor
should have been cognizant.
12
The submission of a Bid will constitute an incontrovertible representation by Bidder that
Bidder has complied with every requirement of this Bid Solicitation, that without
exception the Bid is premised upon performing and furnishing the work required by the
Agreement Documents, and that the Agreement Documents are sufficient in scope and
detail to indicate and convey understanding of all terms and conditions for performing
and furnishing the work.
Bidders will be allowed to ask questions regarding the Bid Documents during the pre-bid
conference to be held at:
Town Hall
53095 Main Road
Southold, New York 11971
4.0
4.1
4.2
INFORMATION TO BE SUBMITTED WITH PROPOSAL
Contractual Bid
For the purpose of assisting the Town in determining the responsible Bidders for this Bid
Solicitation, the Bidder is required to submit the following minimum information with his
bid:
ii.
iii.
iv.
Contractor Bid Form
Bid Security or Bid Bond
Information Schedules A through M as applicable
Supplemental Information as described in 4.2
Supplemental Information
In addition to the aforementioned forms, the Bidder is. required to submit the following
supplemental information with his bid:
Operational Plan: A plan describing the Bidder's assessment of the requested
operation set forth in Exhibit M. This section shall be divided into the following
subsections:
o Haul
A detailed summary of requirements for manpower, materials and supplies,
mobile equipment, etc., shall be included to provide the Town with general
anticipated guidelines for performance under the Agreement.
o Disposal
A detailed summary of requirements of site capacity, useful life, hours and days
of the week, operation, etc., shall be included to provide the Town with general
13
ii.
iii.
iv.
anticipated guidelines for performance under the Agreement.
A copy of the current Permits to Construct and Permits to Operate shall be
included. If the Solid Waste Disposal Site is located outside the State of New
York, a copy of the current applicable laws and regulations governing the design,
construction and operation of the Disposal Site shall additionally be included.
Litigation: A section briefly describing any current litigation which in any way
may affect the Bidder's operational capability of useful life of the Solid Waste
Disposal Sites.
Subcontractors: If the Bidder intends to use one or more subcontractors to
complete any portion of the work, the Bidder must so indicate this intent in its
Bid. The Bidder is advised that any Agreement awarded will be contingent upon
the use of the subcontractor(s) so identified. In the event that the Bidder desires to
change the number or identity of such subcontractor(s), the proposed change must
be submitted to the Town for approval. No such change shall be made without the
Town's approval. In addition, it is the policy of the Town of Southold to
encourage the participation of Minority Business Enterprises (MBE's) and
Women- Owned Business Enterprises (WBE's) on Town projects. For this reason,
the Agreement will require Contractor to use its best efforts to include among its
subcontractors MBE and WBE finns. In the event the successful Bidder intends to
subcontract in excess of twenty-five percent (25%) of the work, the Bidder will be
required to submit to the Town an MBE/WBE Utilization Plan acceptable to the
Town prior to the Town's execution of the Agreement.
Disposal Site Subcontractor: In the event the Bidder does not own the Disposal
Site identified in its Bid, the Bidder shall furnish a statement, signed by an
authorized representative of the Disposal Site, which provides for Bidder's use of
the site pursuant to this Bid Solicitation in accordance with the Agreement
Documents. THE SUPPLEMENTAL INFORMATION REQUIREMENTS MAY
BE SATISFIED BY INCLUDING A REFERENCE TO AN INFORMATION
SCHEDULE (A-M) IF THE SCHEDULE PROVIDES THE INFORMATION
REQUESTED AND IS INCLUDED IN THE BID.
14
5.0
5.1
5.2
6.0
BID FORMAT
Binding
The document(s) if bound shall be in a manner that will provide for easy evaluation
access (to lie flat when opened). Printing on both sides of the sheets, provided a quality
paper is Utilized that will prevent the type from showing through, is acceptable. Paper
with substantial recycled content is preferred.
Form Preparation
Bids shall be submitted in the form described in this Bid Solicitation. All blank spaces for
bid prices shall be properly filled in, in ink or typed, in both words and numerals for all
bid categories required. In the event a price shown in words and its equivalent shown in
figures do not agree, the written words shall be binding on the Binder. BIDS SHALL
NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED 1N ANY WAY. In
the event a specification is not applicable, it shall be so indicated. Incomplete bids may
not be considered, depending on the nature of the missing information.
SUBMISSION OF BID
Each Bidder shall submit six (6) separate complete sets of his Bid which shall be
enclosed in a sealed opaque envelope plainly marked on the outside with the title of the
work and the name and address of the Bidder. No Bid will be considered unless filed on
or before the time and at the place designated in the Notice to Bidders. Bids received
after the time set for the opening will be returned to Bidders unopened. When sent by
mail, preferably registered, the sealed Bid, marked as above, should be enclosed in an
additional envelope similarly marked and addressed to:
Office of the Town Clerk
Town of Southold
53095 Main Road
Southold, New York 11971
Bids received prior to the time of opening will be kept securely unopened. No bid
received thereafter will be considered.
15
6.1
6.2
7.0
Withdrawal of Bids
Any Bidder will be given permission to withdraw its Bid upon receipt of a properly
notarized written request made no later than the time set for opening. At the time of
opening of the bids, if such Bid is included, it will be returned to the Bidder unopened.
No bid may be withdrawn after opening until execution of the Agreement or rejection of
all bids as provided herein.
Questions & Addenda
All questions about this Bid Solicitation must be submitted in writing to the following:
Town Clerk
Town of Southold
53095 Main Road
Southold, New York 11971
No alterations to this Bid Solicitation will be considered valid unless in writing and
issued as Addenda. All such addenda shall become part of the documents and all Bidders
shall be bound by such addenda, whether or not received by the Bidders
All questions must be received at least ten (10) calendar days before bid opening in order
to be answered. It shall be the Bidder's responsibility to make inquiries concerning any
addenda issued. All addenda will be on file at the Town Clerk's office at least twenty-four
(24) hours before bids are opened. The Town will not be bound by oral clarifications.
BID GUARANTY
Each Bid must be accompanied by a bid guaranty (Section C, Schedule 5.0.K), without
condition or qualification, which shall be in the sum of one hundred thousand dollars
($100,000.00).
The guaranty may be certified check, bank draft, money order, standard form irrevocable
letter of credit, or a bid bond in the form attached. The bid bond shall be secured from a
surety company authorized to do business in the State of New York as a surety. No Bid
will be considered unless it is accompanied by the required guaranty, certified check,
money order or bank draft must be made payable to the order of the Town of Southold.
The bid bond shall name the Town as the obligee. Cash deposits will not be accepted.
The bid guaranty shall ensure the execution of the Agreement and the furnishing of the
surety bond or other required bonds by the successful Bidder, all as required by the
Agreement Documents.
All guaranties will be returned within ten (10) days after the execution of the Agreement
and required bonds insurance and other Agreement Documents are received from the
successful Bidder.
16
8.0
EXECUTION OF AGREEMENT/FURNISHING OF BONDS
The successful Bidder, or its legally authorized representative, shall be required to appear
in person within ten (10) days of the Notice of Award by the Town at the place and time
designated by the Town to execute the Agreement and other Agreement Documents for
Haul/disposal services.
The successful Bidder shall, at its own cost and expense, procure, execute and deliver to
the Town the following documents within ten (10) days of formal Notice of Award by the
Town.
Performance Bond - A Performance Bond shall be in an mount of one million five
hundred thoushand dollars ($1,500,000.00).
This bond (as shown by example in Section C, Schedule 5.0.L), shall be maintained at the
Contractor's own expense for the term of the Agreement. Failure or refusal of the
successful Bidder to execute and/or deliver such bond within the time designated, shall
constitute a breach of such Bidder of the Agreement created by the Town's acceptance of
the bid. In such event, the Town may determine that such Bidder has abandoned the
Agreement and the Town shall be entitled to take action for any and all damages it may
suffer as the result of such breach. The Town's rights in this regard shall include but not
be limited to a claim against the bid bond provided. The Town specifically reserves any
and all other rights against the Contractor as a result of his failure to perform as required
by these documents.
9.0 CONSIDERATION OF BIDS
The Town of Southold reserves the right to reject any/or all bids for haul and disposal
services if such action is deemed to be in the best interests of the Town. To be considered
responsive to this Bid Solicitation, each Bidder shall:
Provide equipment, labor, maintenance and management services to haul and dispose
of solid waste from the Town of Southold Transfer Station to Contractor designated
Solid Waste Disposal Site(s) as set forth in Section B - Bid Specifications.
B. Reserve and provide a minimum available capacity of 15,000 tons (52 weeks/year)
yearly, allowing for seasonal and other peak periods.
Provide evidence of all current valid state and Federal permits, licenses, local
ordinances, etc., required by law to receive solid waste at the designated Disposal
Site(s).
D. Provide evidence of physical and financial capability to perform services described in
the bid specifications.
10.0 SELECTION OF CONTRACTOR
17
Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only
bids solicited from finns or combinations thereof, who have sufficient management,
engineering capabilities, operating, and maintenance experience to fulfill the Town's
goals and comply with the applicable local, state, Federal laws, ordinances, regulations
e.g. New York State Department of Environmental Conservation, Resource Conservation
Recovery Act and Federal Environmental Protection Agency guidelines will be accepted.
The Town will review the bids and make a selection recommendation based on the
evaluation criteria included in this Bid Solicitation or take such other action as it deems
in its best interest.
Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation
Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole
discretion, to reject at bids submitted in response to this Bid Solicitation.
11.0 ACCEPTANCE OF BID
The acceptance of a Bid will be a Notice of Award signed by a duly authorized
representative of the Town, and no other act of the Town shall constitute the acceptance
of a Bid. The acceptance ora Bid shall bind the successful Bidder to execute the
Agreement and other Agreement Documents.
12.0 ASSIGNMENT
The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not
assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right,
rifle, or interest therein or his power to execute such Agreement, to any person or
corporation without the prior written consent of the Town.
13.0 LIMITATION OF FUNDS AVAILABLE
14.0
14.1
The Contractor specifically agrees that any Agreement shall be deemed executory only to
the extent of the funds appropriated for the purpose of the Agreement and that no liability
shall be incurred by the Town beyond the funds appropriated on the date of execution of
the Agreement by the Town for the said purpose.
INSURANCE AND BONDS
Insurance
For the period from Agreement commencement date until one (1) year after Agreement
termination date, Contractor must maintain insurance acceptable to the Town in the kinds
and amounts set forth below. All such insurance coverage, shall be provided by
companies licensed to do business in New York State and the state in which the Disposal
Site(s) is (are) located. The Town of Southold and its agent shall be named as an
additional insured and coverage shall not be changed or cancelled until thirty (30) days
written notice has been given to the Town. Within ten (10) days of the Notice of Award,
Contractor shall furnish to the Town, certificates of insurance, in a form satisfactory to
18
the Town Attorney, evidencing such insurance. The kinds and amounts of insurance are
as follows:
A. Contractor's Insurance - Insurance for liability for damage imposed by law of kinds
and in the amounts hereinafter provided covering all work under the Agreement,
whether performed by Contractor or his subcontractors. The kinds and amounts of
insurance are as follows:
(1)
Worker's Compensation Insurance - A Policy covering the operations of the
Contractor in accordance with the provisions of Chapter 41 of the Laws of
1914 as amended, known as the Worker's Compensation Law, covering all
operations Of the Contractor, whether performed by him or by his
subcontractors. The Agreement shall be void and of no effect unless the
person or corporation making or executing same shall secure compensation
coverage for the benefit of, and keep insured during the life of said Agreement
such employees in compliance with provisions of the Worker's Compensation
Law.
(2) General Liability (Comprehensive Form) Insurance - Contractor's liability
insurance issued to and covering legal liability of the Contractor with respect
to all work performed by him under the Agreement.
The following insurance coverage shall be included:
(a)
Independent Contractor's Protective Liability - Covering work
performed by subcontractors.
(b) Completed Operations or Product Liability.
(c) Contractual Liability.
(d) Broad Form Property Damage
(e) Personal Injury.
NOTE: If any of the rating classifications embody property damage
exclusions C or U, coverage for eliminating such exclusions must be
provided.
Coverage for the above will be required in not less than the following
amounts:
SINGLE LIMITS OF LIABILITY: $1,000,000.00
AGGREGATE LIMITS OF LIABILITY: $10,000,000.00
19
(3) Automobile Liability Insurance - Policy shall include coverage for all owned
as well as non-owned and hired vehicles, and limits shall not be less than the
following amounts:
BODILY iNJURY LIABILITY
Aggregate: $3,000,000.00
Each Person Each Occurrence
$1,000,000.00
PROPERTY DAMAGE LIABILITY
Aggregate: $3.000,000.00
Each Occurrence
$1,000,000.00
14.2
Bonds
Prior to the execution Of the Agreement. the successful bidder shall furnish to the Town a
Performance Bond wherein the named obligee is the Town of Southold. The Performance
Bond's purpose is to secure the faithful performance of the Agreement. The bond' amount
shall be set forth in Section A-8.0. The bond shall be executed by a surety company
approved by the Town authorized to do business in the State of New York and with an
office or representative in Suffolk County, New York. The form shall be acceptable to the
Town of Southold and shall have a term through the completion of services.
As an a alternative to the Performance Bond, the successful Bidder may furnish a
certified check, bank draft, money order, or a standard form irrevocable letter of credit,
certified check, bank draft or money order must be made payable to the order of the
Town of Southold. The standard form irrevocable letter of credit shall be in a form
acceptable to the Town of Southold.
In the event the Contractor secures a Performance Bond from any of its subcontractors,
said bond shall also name the Town of Southold as a dual obligee.
Should the Town designate another public or private gent of contract administrator, the
same or others shall be added as additional named obligee at no added costs to the Town,
upon written request from the Town.
15.0 iNDEMNITY (HOLD HARMLESS)
Contractor shall agree to defend, indemnify and save harmless the Town against any and
all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and
expenses of whatever kind or nature which the Town may directly or indirectly incur,
suffer or be required to pay by reason of or in consequence of the carrying out of or the
performance of the terms of such Agreement, or the failure to carry out any of the
revisions, duties, services or requirements of such Agreement, whether such losses and
damages are suffered or sustained by the Town directly or its employees, licensees,
agents, engineers, citizens or by other persons or corporations, including any of the
Contractor's employees and agents who may seek to hold the Town liable therefor. This
indemnity shall include any and all claims, penalties or other losses or damages incurred
by the Town as a result of enforcement or other proceedings by Federal, state or local
government agencies relating to Contractor's Disposal Site(s) operation. This obligation
20
shall be ongoing, survive the term of the Agreement and include, but not be limited to,
claims conceming non-sudden environmental impairments.
The Bidder agrees to join in the commencement of any action or proceeding or in the
defense of any action or proceeding which in the opinion of the Town constitutes actual
or threatened interference or interruption with the Town's rights hereunder, including all
necessary appeals which may be necessary, in the opinion of the Town.
16.0 PAYMENTS
17.0
18.0
Contractor shall receive monthly payments for services performed during the prior
calendar month upon submission of an invoice (with a Town voucher) that shall contain
an itemized list of municipal solid waste haul trips from the Town of Southold Transfer
Station including the tonnage of municipal-solid waste and the manifest number for each
load of municipal solid waste removed. Such payments shall be made within sixty (60)
days of the Town's approval of Contractor's invoice. Contractor's monthly invoice shall
include a daily summary of tonnage received by Contractor at the' Transfer Station. The
Town shall be entitled to deduct from any payment owing to Contractor any sums
expended by the Town to cure any default or other non-compliance by Contractor.
DEFAULT
In the event the Contractor fails to perform its obligations under the Agreement, the
Town may terminate such Agreement, and the Town may procure the services fi.om other
sources and hold the Contractor responsible for any excess costs incurred and deduct
from payments owing to the Contractor and/or draw upon the Performance Bond as full
or partial reimbursement for such excess costs. The Town reserves the right to terminate
the Agreement for just cause.
TERM OF AGREEMENT
The term of this Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three {3) additional option years. The Town and the Contractor, by
mutual consent, shall have the option of renewing this Agreement for up to three (3)
additional one-year terms at the prices bid herein. Notice of this mutual consent to be
expressed by the parties in writing not less than one-hundred eighty (180) days prior to
the expiration of the term in force (i.e., by January 1, 2009, January 1, 2010, and January
1, 2011). Similarly, notice by either party of the intent to reject any option year shall be
submitted in writing by the same date (January 1) of each year. The Town reserves the
right to may terminate the Agreement at any time after Year Two (i.e., after June 30,
2009) of the Agreement for the purpose of entering into an inter-municipal solid waste
haul~disposal Agreement with another Long Island Town by giving one-hundred eighty
(180) days written notice to the Contractor.
19.0 SERVICE AGREEMENT
The Contractor shall be obligated to provide the Town with disposal services without
21
regard to the permit' status of its Disposal Site. In the event that Bidder wishes to submit
a bid for a Disposal Site for which Bidder does not currently have all necessary federal
and state permits, Bidder shall at its sole risk and expense, be responsible for obtaining
and/or renewing its permits or providing to the Town an altemate Solid Waste Disposal
Site at no additional cost (disposal plus any additional hauling) to the Town. This is a full
service Agreement and failure of the successful Bidder to provide the identified Disposal
Site or acceptable alternative Disposal Site, on or after the commencement date for
services under the Agreement Documents awarded hereunder shall constitute a breach of
this Agreement. The Bidder accordingly shall not be excused from it obligations
hereunder by reason of any failure to obtain or maintain its permits at the identified
Disposal Site.
20.0 SUBCONTRACTS
In the event Bidder does not own the Disposal Site identified in its bid prior to execution
of the Agreement, Bidder shall:
(1)
furnish to the Town a copy of the signed Agreement between Bidder and the Disposal
Site Contractor which provides for Bidder's use of the site pursuant to this Bid
Solicitation in accordance with the Agreement Documents;
(2)
require the Disposal Site Contractor to furnish to Contractor and the Town a
performance bond guaranteeing the availability of the Disposal Site throughout the
term of the Agreement;
(3) require the certificates Contractor to provide insurance naming the Town as
additional insureds on all policies maintained by Contractor.
21.0 RIGHTS AND OPTIONS
The Town of Southold, New York, reserves and holds at its discretion the following
rights and options upon issuing this Bid Solicitation:
To award an Agreement to the candidate whose bid is judged to be the lowest
responsible bid pursuant to Section 103 of the General Municipal Law of the State of
New York.
2. To reject any and/or all bids.
3. To issue subsequent bid solicitations.
4. To issue additional and subsequent solicitations for statements of qualifications and
conduct investigations or interviews with respect to the qualifications of each Bidder.
5. To designate another public body, private or public agency, group, or authority to act
in its behalf for evaluation and Agreement negotiations.
6. To designate another public body, private or public agency, group, or authority to act
in its behalf for contract administration of this project at any time during the
Agreement period.
22
SECTION B
BID SPECIFICATIONS
(TECHNICAL/MANAGEMENT)
23
1.0
SECTION B
BID SPECIFICATIONS
TECHNICAL/MANAGEMENT
REQUIREMENTS
This request for bids is issued for the Town of Southold, State of New York, Town Hall,
53095 Main Road, Southold, New York, 11971 (Telephone (516) 765-1800) The effort,
shall be known as the Town of Southold Solid Waste Transport and Disposal Service.
The Town of Southold desires to issue an Agreement with a qualified Contractor to haul
and dispose of a portion of its Solid Waste. The Town will need to dispose of
approximately 10,000 tons of solid waste during the agreement years The Contractor will
ensure the Town that solid waste will continue to be; 1 ) hauled from the Town of
Southold's transfer Station to disposal site(s), and; 2) disposed at permitted disposal
site(s). The following general services are sought in this request:
'HAUL
Provide equipment, labor, maintenance, management and policies to operate a
transportation system for hauling solid waste from the Town of Southold transfer
Station to Contractor designated disposal site(s) as set forth herein. Transportation
equipment shall be in accordance with New York. State Department of
Transportation, Interstate Commerce Commission, United States Department of
Transportation, as defined in the Code of Federal Regulations, or other applicable
state and federal regulatory requirements.
· Disposal
Reserve capacity and provide equipment, labor, maintenance, management and
policies to receive and dispose of solid waste from the Town of Southold Transfer
Station as set forth herein. The Contractor's New York State Solid Waste Disposal
Site(s) must be in compliance with all State of New York Department Of
Environmental Conservation's and U.S. Government's Regulatory requirements,
e.g., 6NYCRR Part 360, Resource Conservation Recovery Act (RCRA),
Environmental Protection Agency - Subtitle D, et al. Disposal Sites outside New-
York State shall be permitted by applicable local, state and Federal laws
including RCRA and Subtitle D and regulations deemed by the Town to be no
less protective of the environment than those outlined in this specification.
Disposal altematives that will be considered include land disposal, incineration,
24
composting, etc., as long as they comply with regulatory requirements and
environmental standards.
2.0 PROGRAM GOALS AND OBJECTiVES
The goal of this project is the continued safe and reliable hauling and disposal of the solid
waste materials from the Town Of Southold Transfer Station at minimum cost to the
citizenry.
It is also the objective of the Town of Southold to ensure that the haul-disposal operations
proceed according to the provisions of this document and subsequent
agreements/amendments are upheld.
3.0 POTENTIAL REGULATORY AND OPERATIONAL CHANGES
During the term of the Agreement, there may be a number of regulatory and operational
changes which may affect the quantities and types of solid waste received at the Town of
Southold Transfer Station and delivered to the Disposal Site; the manner in which solid
waste is handled by the Town prior to the loading of waste for transfer; and the
equipment maintained and used by Town forces in the handling of waste to be
transferred.
This Agreement will not provide any guarantees with respect to the volume of waste to
be hauled and/or disposed of by Contractor or the specific operational techniques and/or
equipment to be employed by the Town in the handling of waste at the Town transfer
station.
The Town reserves the right to designate another public body, private or public agency,
group or authority to act in its behalf for administration of the Agreement at any time
during the term of Agreement.
4.0 CHARACTER OF THE SOLID WASTE
The wastes which are to be hauled and disposed of under terms of this bid solicitation are
to include typical municipal wastes from a rural community. This will include all waste
types generated in private households, and, therefore, can include broken furniture, small
appliances, and other wastes generated in a private home or apartment as allowed under
6NYCRR Part 360- 1.2(a) regulations and the Garbage, Rubbish and Refuse Law,
Chapter 48 of the Code of the Town of Southold.
Commercial waste may also be included in the solid waste stream. It may include any
waste which is typically disposed of in dumpster or roll-off type container boxes at
restaurants, small businesses, light industries, hospitals, office buildings etc. It should not
include any wastes covered by special waste permits Such as pathogenic or hazardous
materials, but the Town cannot guarantee that the waste stream does not contain same.
25
Special costs associated with handling noncompliance loads will be compensated under
Forced Accounting (Appendix A-9).
4.1
5.0
5.1
Quality and Characteristics
The Town Of Southold's historical solid waste quantities and characterization data are
Available upon request. MSW Tonnage disposed in under contract in 2006 totaled
approx. 9,000 tons. Bidders are cautioned that actual quantities may differ significantly
from these data. Recycling programs may affect the quantity and characteristics of the
waste received at the Town of Southold Transfer Station.
If the Contractor discovers any non-compliance waste (hazardous, regulated medical or
special wastes), the Contractor shall notify the Town and dispose of [he noncompliance
waste in accordance with local, state and Federal regulations. Compensation for such
waste disposal services shall be provided for under Forced Accounting (Appendix A~9).
The Town makes no specific representations in the foregoing disclosure.
PROGRAM ACTIVITIES
Collection
The Town of Southold Transfer Station is open 7 days a week, except holidays, from
7:00 A.M. to 5:00 P.M. The Contractor will be expected to collect and remove solid
waste from the Transfer Station during the following hours:
Monday through Friday 7:00 A.M. to 4:00 P.M.
The Transfer Station is closed on the following holidays:
New Year's Day
Martin Luther King Day
President's Day
Easter Sunday
Memorial Day
Independence Day
Labor Day
Columbus Day
Election Day
Veteran's Day
½ Thanksgiving Eve
Thanksgiving Day
½ Christmas Eve
Christmas Day
½ New Years Eve
The Contractor must make transfer containers available for loading seven days a week. if
requested, between 7:00 A.M. and 4:00 P.M. Removal of waste on Sundays is not always
required.
The Contractor will be expected to provide enough containers to empty the Transfer
Station tipping floor on a daily basis, delivery and staging of an adequate number of
containers for this purpose will be coordinated with Transfer Station Staff as needed.
26
5.2
5.3
5.4
6.0
6.1
Loading Mode
The Contractor shall fully prepare transfer containers for loading, including assuring that
container covers or empty containers are left open. [SEE NOTE AT END OF
SECTION 6.3.]
Solid Waste will be loaded by the Town at its Transfer Station using a front end wheel
loader. After loading, Contractor will bring transfer containers to the Town's track scales
for weighing to prevent overloading and to document haul and disposal tonnages.
Contractor will then cover (tarp) his load prior to leaving the site.
If required by any local, state or Federal regulations or law, the contractor shall provide
sealed containers for loading. This service shall be at the Contractor's expense and
included in the unit price bid.
Town Of Southold Accident and Damage Policy
The Contractor shall be required to prepare an Accident Report (See Appendix C) Of any
accidents and/or damage that occur while performing services under the term of the
Agreement.
The Town of Southold shall immediately be notified of any major occurrences such as
bodily injury of structural damage to the Town's Transfer Station. An Accident Report
will be submitted to the Town within twenty-four (24) hours containing the date, time,
location, and complete description of all incidents. The offending Parts or
representative/e thereof shall also be recorded and required to sign the accident/damage
report prior to departing the Town of Southold Transfer Station.
All accident and/or damage reports will be included in reports to the Town
NYSDEC Part 360 Permit to Operate
The Town Of Southold operates the Transfer Station under a New York State Department
of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of
NYSDEC Permit is included as Appendix B.
HAUL SERVICES
For Solid Waste Haul-Disposal Services-Agreement, the following services will include
the tasks, responsibilities and performance required as outlined herein.
Transport Mode
The Town will consider a transportation mode of truck or track and rail under this
solicitation.
27
6.2 Work Included
The Contractor shall provide the following major essential services or equipment and any
other non-specified items without limitations, to maintain a reliable haul services
operation in a manner that will meet the needs of the Town of Southold.
· Management and operation of a fleet of truck and/or rail conta'mers to accommodate the
transport of solid waste from the Town transfer Station to Solid Waste Disposal Site(s) in
accordance with all local, state, and Federal regulations. [SEE NOTE AT END OF
SECTION 6.3.]
· Financial liability and maintenance responsibility of transport equipment, i.e., dump
trailers, transfer trailers bulk material containers, vehicles, personnel and services for
open-top loading solid waste hauling activities.
· Coordination of haul services with disposal services.
6.3 Equipment
The Contractor shall provide reliable refuse handling and other essential ancillary
equipment, along with personnel to operate and maintain a reliable haul services system
in a manner that will satisfy the needs of the Town of Southold. The minimum level of
haul services equipment acceptable to the Town to support the haul operation includes
open-top trailers and bulk material containers· The Contractor will supply additional
open-top trailers and containers, etc. UNDER THIS SOLICITATION, THE TO~3N
WILL REQUIRE THE CONTRACTOR TO STAGE AN ADEQUATE NUMBER
OF TRANSFER TRAILERS TO ACCOMMODATE THE ANTICIPATED
WASTE STREAM COMFORTABLY. While the Town will not dictate the exact
number of trailers to be placed, typically, this means the Contractor will need to plan
on having three (3) or four (4) trailers at the Transfer Station at any given time.
The contractor must assure the Town that an adequate reserve supply of equipment exists
to haul and dispose of the daily and seasonal solid waste including unpredictable surges
or delays due to inclement weather and that transport equipment storage requirements
will meet the Town of Southold Transfer Station requirements. Each bidder is therefore
responsible for familiarizing itself with the Town of Southold Transfer Station site· solid
waste, etc., to assure equipment compatibility.
Transport equipment used at the Southold Town Transfer Station may be open-top bulk
material containers, dump trailers, roll-off containers or open-top transfer trailers,
provided that all such equipment is suitable for convenient loading given existing
configurations of the Town of Southold Transfer Station.
All Transport equipment, including equipment involved in any interim transfer operation
(i.e., any transfer of Southold Town MSW into other vehicles/containers prior to
disposal) shall be: 1) Registered with the State of New York Department of
Motor Vehicles or equivalent agency; 2) designed to preclude spillage of waste; 3) loaded
28
6.4
6.5
7.0
within their design capacity and New York State Depat~ent of Transportation
regulations; 4) well maintained in good working order. Corroded defective, bent,
deformed or punctured trailers, roll-off boxes, or other containers of waste materials shall
not be utilized at any time.
Suitable covers shall be provided and used while transporting solid waste in open-top
transport equipment. The bidder shall clearly indicate [he quantity and type of transport
equipment/vehicles it plans to use, their availability date, state of repair, and that such
units are compatible with the Town of Southold Transfer Station scales and New York
State DOT regulations, United States Department of Transportation, as defined in the
Code of Federal Regulations or equivalent. The Contractor will promptly remove from
use any transport equipment/vehicle that does not conform with these requirements and
replace it with an acceptable trait.
The Contractor shall maintain its own off-site maintenance shop facilities for servicing
the transport equipment and vehicle fleet, unless it elects to subcontract for these
services. No major maintenance may be done at the Town of Southold Transfer Station
site.
NOTE:
In the course of this Agreement, the Town may, at its discretion, provide
1 or more transfer trailers for use by the Contractor. The Town
warrants that any such equipment provided would be compatible with
hauling vehicles (tractors) generally standard in the waste hauling
industry. In the event that the Town wishes to provide such equipment
for use by the Contractor, the Contractor together with the Town shall
develop an addendum to this agreement governing such use.
Weighings
The Town of Southold will provide certified weighing at the Town of Southold Transfer
Station. The Contractor will accept these weights for invoicing purposes. All weights will
be generated on current certified weigh scales.
Routing Mode - Contractor's Responsibility
Contractor will have the right to select the route(s) for travel from the Town of Southold
transfer Station to the Disposal Site(s). Contractor warrants and guarantees that, in
selecting and utilizing such route(s), Contractor will insure that it is not violating any
applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions,
local ordinances or Interstate Commerce Commission regulations. Contractor will
indemnify and hold the Town harmless from any claims, fines and other damages
assessed upon or incurred by the Town as a result of any violations of applicable
restrictions or regulations relating to the routes traveled by the Contractor.
DISPOSAL SERVICES PROGRAM ACTIVITIES
For Solid Waste Hanl-Disposal Service Agreement, the following disposal services will
29
include the tasks, responsibilities and performance requirements as outlined herein·
7.1
7.2
Work Included
The Contractor shall provide the following major essential services or equipment and any
other non-specified items, without limitations, to maintain a reliable disposal services
operation in a manner that will meet the needs of the Town Of Southold.
· Liability insurance, performance and payment bonds.
· Safety equipment.
Operational Capacity
The bidder shall identify in its proposal, the following information:
· Disposal Site capacity.
· Flexibility of Disposal Site capacity to allow for seasonal variances in waste generation
and sufficient to permit service in the tonnages bid.
· Hours and days of the week that the designated Disposal Site will be open for receiving
solid waste from the Town of Southold, including weekends, holidays and special
closure periods.
7.3 Permit Requirements
Throughout the term of Agreement that may result from this Bid solicitation, the
Contractor must maintain all current and valid local, state and Federal permits, licenses,
or other authorizations, (either temporary and permanent) which are required by law to
receive solid waste at any and all Disposal sites designated by the bidder.
Because of the varying terms of Solid Waste Disposal Site permits, it is possible that a
permit will expire during the term of Agreement. The responsibility of obtaining and/or
renewing a permit to operate is solely upon the Contractor.
In the event a Contractor fails to maintain or obtain any necessary current and valid local
state and Federal Permits., licenses, or other authorizations, allowing the lawful use of its
designated Disposal Site then the Contractor will be solely responsible for obtaining the
utilization of an alternate Solid Waste Disposal Site at no additional cost to the Town
including any additional hauling cost because of the location of the alternate Disposal
site· Under no circumstances shall such a change in Disposal Site or failure or inability to
obtain permits by the Contractor be considered a change in conditions, in the event the
Contractor is unable to find an alternate Disposal Site, it shall be deemed to be in default
of the Agreement and liable for damages, bonds forfeitures and other expenses as
30
provided in the Agreement.
In the event the individual and/or entity submitting a bid in response to this bid
solicitation is not the individual and/or entity named as the permit holder on any
necessary current and valid local, state or federal permits, licenses or other
authorizations, required by law to receive solid waste at any disposal site designated by
the bidder or any alternate disposal site, the bidder is required to provide satisfactory
evidence to the Town of Southold of a binding contractual relationship between the
bidder and the permit holder which provides the bidder with the irrevocable right to
utilize the solid waste disposal site during the term of Agreement, or portion thereof, in a
manner which is in complete compliance with this bid solicitation and the bidder's bid
submission. The agreement between the bidder and the permit holder shall include
provisions that:
Provide Town with the right to discuss operational matters with the permit
holder whenever necessary.
Require the permit holder to comply with directives of the Town which
are consistent with and pursuant to the Agreement which shall result fi.om
this bid solicitation.
7.3.1 Disposal Sites Inside State of New York
The Contractor's Solid Waste Disposal Sites, if located within the State of New York,
must be in compliance with all State of New York Department of Environmental
Conservation's and U.S. Environmental Protection Agency regulators requirements, e.g.,
6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental
Protection Agency - Subtitle D, et al. The Solid Waste Disposal Site must have valid
construction and operating permits in accordance with all applicable laws in the
jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid
waste without violating applicable law. It shall meet the design, construction and
operating requirements of all applicable laws in the jurisdiction where the disposal site is
operating.
Disposal alternatives that will be considered include land disposal, waste to energy
(incineration), composting, etc., as long as they comply with all the above governing
regulators requirements and environmental standards. The use of Solid Waste Disposal
Sites shall be subject to the approval of the Town of Southold based upon review of
information submitted with the bid describing in detail the nature of the disposal process
and other information reasonably requested by the Town. No Disposal Site shall be
acceptable unless it poses no significant threat to the environment and its design,
construction and operation complies with all applicable laws.
7.3.2 Disposal Sites Outside State of New York
The Contractor's Solid Waste Disposal Sites, if located outside the State of New York
31
must be in compliance with all the applicable local, state and Federal laws and
regulations and U.S. Environmental Protection Agency regulatory requirements, e.g.
Resource Conservation Recovery Act (RCRA), Environmental Protection Agency -
Subtitle D, et al. The Solid Waste Disposal Sites must have valid construction and
operation permits in accordance with all applicable laws in the jurisdiction in which it is
located. It shall be permitted to accept Town of Southold solid waste without violating
applicable law. It shall meet the design, construction and operating requirements of all
applicable laws in the jurisdiction where the disposal site is operating.
If the Solid Waste Disposal Site is a landfill, it must comply with the following minimum
standards:
· Liner System. All proposed landfills under the Agreement shall be provided with at least
a single liner system to restrict the migration of leachate and prevent pollution of
underling soil or groundwater. Liner systems shall consist of low permeability soil
admixtures, days or synthetic materials. Liners are at a minimum to consist of materials
having a demonstrated hydraulic conductivity and chemical and physical resistance not
adversely affected by waste emplacement or sanitary landfill leachate, including synthetic
geo-membranes and soils such as clay or other semi-impervious admixture.
Liner systems may consist of an impervious liner composed of at least two feet of day
with demonstrated hydraulic conductivity of lx 10-> cm/sec or a synthetic single lining
system ora thickness of at least 60 mils. Thicknesses down to 40 mils may be acceptable
for composite liners which include impervious clay.
Foundation: The proposed landfill shall be designed and constructed on an appropriate
foundation which provides finn, relatively unyielding planar surfaces to suppoxt the liner
system and which is capable of providing support to the liner and resistance to the
pressure gradient above and below the liner resulting from settlement, compression or
uplift.
Leachate Collection: The proposed landfill shall be equipped by a leachate drainage
and removal system. The leachate drainage system-shall consist of collection pipes
and a drainage layer. The system shall be designed to ensure that the leachate head on
the liner does not exceed one foot at any time.
A leachate removal system shall be provided to remove leachate within the drainage
system to a central collection point for treatment and disposal.
Leachate Treatment and Disposal: Leachate shall be treated and disposed of in
accordance with all applicable taws, including applicable pretreatment standards and
discharge limitations.
Gas Collection and Venting: The proposed landfill shall be equipped with a suitable
gas collection and/or venting system which complies with all air pollution
requirements and other applicable laws.
32
7.4
8.0
Surface Drainage Systems: The proposed landfill shall be designed with an
appropriate surface drainage system which isolates the landfill from adjacent surface
water drainage in a controlled manner, as well as controlling mn-off from the landfill
itself.
Monitoring System: The proposed landfill shall be equipped with appropriate systems
to monitor groundwater quality, gas production, leachate volume, quantity, slope and
settlement status. The number and location of ground water monitoring wells shall be
sufficient to define and detect any potential migration of contaminants. However, no
fewer than one up-gradient monitoring well and two down-gradient monitoring wells
shall be provided in any event. A regular sampling and analysis program shall be in
place to verify that no groundwater contamination results from the landfill.
Closure: The proposed landfill shall have in place a written closure plan which
conforms to applicable taws and standard industry practice. The closure plan shall, be
designed to insure that contamination does not spread from the landfill during) the
post closure period.
Bidder must dearly specify their intended disposal alternatives and support same with
copies of appropriate experience, site location, permits, agreements et al., as outlined in
this bid solicitation. The use of Solid Waste Disposal Sites shall be subject to the
approval of the Town of Southold based upon review of information submitted with the
bid describing in detail the nature of the disposal process and other information
reasonably requested by the Town. The Contractor shall be solely and completely
Responsible for any and all liability relative to contractor's failure to dispose of solid
waste at an approved site.
Weighings
The Town will compensate the Contractor for waste material hauled and disposed of on a
net tonnage basis (short tons = 2000 pounds). The certified weighings will be made at the
Southold Town Transfer Station. The Disposal Site will accept these weights for
invoicing purposes. Alt weights will be generated on current certified weigh scales.
In the event of any dispute over differences in net weights between the Town and
Disposal Sites scales and weight records, the Town may make payment upon the weight
it deems to be most correct, until the dispute is reconciled. Any claims for differences
must be filed in writing within sixty (60) days of occurrence or the Town's calculation
shall be deemed final and binding between the parties.
SAFETY AND HEALTH REGULATIONS
The Contractor shall comply with all current Federal Department of Labor, Safety and
Health Regulations under the Occupational Safety and Health Act, 1972 (PL 91-596) and
Section 107, Agreement Work Hours and Safety Standards Act (PL 91-54). Specific
consideration shall be given, but not limited to the following major areas:
33
Maintenance safety procedures - guards and Shields on dynamic equipment,
guards, railings, electrical lockouts, vehicle wheelblocks, audio vehicle backup
alarms, vehicle wheel chocks, etc.
Employee safety orientation, education, teaching, first-aid training,
cardiopulmonary resuscitation, etc.
Noise and dust control, ear protection, respirators, hard-hats, safety shields,
glasses, protective clothing, sanitary facilities, etc.,
Fire and explosion preventions, control, equipment (fire blankets, extinguishers,
first aid hoses, etc.) and personnel escape alternatives.
e. Traffic flow control patterns.
Accident or injury reporting system (the Town shall received copies of al
reports and immediate verbal notification).
g. Employee health safeguards.
h. Mechanic's lien safeguard against work interference.
The Contractor shall comply with all local, state and Federal regulations, laws and
Statutes, which apply to the work and to safety in particular.
The Contractor shall comply with New York State Department of Labor current
requirements.
The Contractor shall be solely and completely responsible for operational safety during
performance of the Agreement. The obligation exists twenty-four (24) hours a day, each
and every day throughout the term of the Agreement.
The Town of Southold shall not have any responsibility for means, methods, sequences
of techniques selected by the Contractor for safety precautions and programs, or for any
failure to comply with laws, roles, regulations, ordinances, codes or orders applicable to
the Contractor furnishing and performing the services under the terms of the Agreement.
9.0
OPERATIONS AND PROCEDURES
The Contractor will be required, prior to commencement of operations, to provide the
following operational plans to the Town for review and acceptance. Revisions,
modification's, and updates shall be forwarded to the Town throughout the term of the
Agreement.
Organization personnel and structure, showing the chain of command, names and
telephone numbers and staffing requirements.
34
9.1
Operational plan - shifts, hours, etc.
Safety, disaster, and emergency procedures.
Transportation plan, including available transport equipment, vehicle fleet and
reserve capabilities.
Inclement Weather Plan - This shall describe the bidder's plan should inclement
weather alter normal daily operations as described in the bidder's operations plan. The
inclement weather plan shall include hauling operations and disposal operations. The
bidder's means of assessing inclement weather conditions (weather and road
conditions), method of reporting to the Town and the altematives shall be described.
Supporting Data
In the event the Town requires any information in support of Town held licenses and
permits at the Town, County, State and Federal level, the Contractor will be required to
furnish all licenses, permits and inspection reports regarding equipment and disposal sites
which may be required by Town, County, State or Federal law.
In the event the Contractor requires any information in support of Contractor held
licenses and permits at the Town, County, State and Federal level, the Town will
cooperate in furnishing such information as it applies to the Southold Town operations.
Operating (hauling and disposal) records shall be considered essential to the operation.
The Contractor shall keep these data in an organized fashion that allows for easy retrieval
and analysis. The Town, or its designee, may upon 24 hours notice inspect the
contractor's records. Such records shall he kept, available by Contractor for a period of
two (2) years after termination of this Agreement.
In the event the Town requires additional .information for reporting purposes, the
Contractor will supply same. The Town, or its designee, may call upon the Contractor at
anytime for an oral review of any technical matter.
The Contractor shall file and update the following information as specified herein.
Items
Haul Equipment (Schedule H)
Haul Accident Report (Appendix C)
Disposal Accident Reports
Licenses, Permits and Inspection
Reports
Part 360 Permit
All Bid Information Schedules
Due
as changes occur
on occurrence
on occurrence
on occurrence
as changes occur
as changes occur
35
SECTION C
CONTRACTOR BID FORM
36
SECTION C
TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES
CONTRACTOR BID FORM
1.0 INTENT
The undersigned hereby recognizes that these documents are complementary and are
intended to provide for uniformity in bid evaluations. The formal Agreements resulting
fi-om this Bid Solicitation shall be in a form provided by the Town.
These documents are intended to depict complete Solid Waste Haul-Disposal Services
Agreement and therefore any discrepancies contained in the documents, of the omission
from the documents of express reference to any work which obviously was intended
under the Agreement, shall not excuse or relieve the Bidder fi-om fumishing the same. No
oral statement shall in any manner or degree modify of otherwise affect the terms of the
Agreement. Work or materials described in words which have a well known technical or
trade meaning, shall be interpreted by such meaning.
2.0 GENERAL BID. STATEMENT
TO:
TOWN OF SOUTHOLD
STATE OF NEW YORK
53095 MAIN ROAD
SOUTHOLD, NEW YORK 11971
Gentlemen:
The undersigned Bidder has carefully examined the forms and content of the Bid
Solicitation, including notice to bidders, bid bond, sample operating agreement, performance
bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has
familiarized itself with the sites of work, and hereby proposes to furnish all necessary services,
permits, labor, materials, equipment, vehicles, and tools required to perform and complete the
work in strict accordance with all of the bid documents written by or on behalf of the Town of
Southold for this project.
37
The undersigned Bidder agrees to abide by all conditions stated, intended, or implied both
particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by
the Town, and the unit price Bid herein stated.
1. The Undersigned Bidder also agrees as follows:
FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a
satisfactory performance bond, and insurance all within ten (10) calendar days.
SECOND: To begin Solid Waste Haul-Disposal services operations on the
commencement date of any Agreement awarded hereunder, having completed all
necessary prior preparations of operational planning, personnel hiring, equipment
procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure
a smooth and orderly acceptance of these duties.
THIRD: To pay the Town any and all damages it may incur as a result of the
Contractor's failure to 'perform all acts necessary to the execution of the Agreement as
provided in the Bid Solicitation.
It is recognized and agreed that the Town has the unconditional right to utilize the funds
provided by the bid bond posted by the Bidder as a means of obtaining indemnification
or, payment of such damages.
FOURTH:
as follows:
During the performance of this Agreement, the Contractor hereby agrees
ao
The Contractor shall not discriminate against any employee or applicant for
employment because of age, race, creed, color, sex, marital status, national origin,
physical disability, and shall take affirmative action to ensure that they are
afforded equal employment opportunities without discrimination because of age,
race, creed, color, sex, marital status, national origin or physical disability. Such
action shall be taken with reference, but not be limited to: recruitment,
employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or
termination, rates of pay, or other forms of compensation, and selection for
training or retraining, including apprenticeship and on-the-job training.
The Contractor shall comply with the provisions of Sections 290 through 301 of
the Executive Law, Shall furnish all information and reports deemed necessary by
the State Commission for Human Rights under these nondiscrimination clauses
and such sections of the Executive Law, and shall permit access to his books,
records, and accounts by the State Commission for Human Rights, the Attorney
General. and the Industrial Commissioner for purposes of investigation to
ascertain compliance with these nondiscrimination clauses and such sections of
the Executive Law and Civil Rights Law.
This Agreement may be forthwith cancelled, terminated, or suspended, in whole
or in part, by the Town upon the basis of a finding made by the State Commission
38
for Human Rights that the Contractor has not complied with these
nondiscrimination clauses, and the Contractor may be declared ineligible for
future Agreements made by or on behalf of the state or public authority or agency
of the state, until he satisfies to the State Commission for Human Rights that he
has established and is carrying out a program in conformity with the provisions of
these nondiscrimination clauses. Such findings shall be made by the State
Commission for Human Rights after conciliation efforts by the Commission have
failed to achieve compliance with these nondiscrimination clauses and after
verified complaint has been filed with the Commission, notice thereof has been
given to the Contractor, and an opportunity has been afforded to him to be heard
publicly before three members of the Commission. Such sanctions may be
imposed and remedies invoked independently or in addition to sanctions and
remedies otherwise provided by law.
No laborer, workman or mechanic in the employ of the Contractor or
subcontractor shall be permitted or required to work more than eight hours in any
one calendar day, or more than five days in any one week except as otherwise
provided in Labor Code Section 220.
The Contractor shall include the provisions of clauses (a) through (e) in every
subcontract or purchase order in such a manner that such provisions will be
binding upon each subcontractor or vendor as to operations to be performed
within the State of New York. The Contractor will take such action in enforcing
such provisions of such subcontract or purchase order as the Town may direct,
including sanctions and remedies.
FIFTH: By submission of this bid, the Bidder and each person signing on behalf of
any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own
organization, under penalty of perjury that to the best of his knowledge and belief:
The prices in this bid have been anSved at independently without collusion,
consultation, communication, or agreement for the purpose of restricting
competition, as to any matter relating to such prices with any other Bidder or with
any competitor.
Unless otherwise required by law, the prices which have been quoted in this bid
have not been knowingly disclosed by the Bidder and will not knowingly be
disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder
or to any competitor.
No attempt has been made nor will be made by the Bidder to induce any other
person, partnership, or corporation to submit or not to submit a bid for the purpose
of restricting competition.
The undersigned also declares that it has or they have carefully examined the Bid
Solicitation requirements and sample operating agreement and that it has or they have
personally inspected the actual location of work, together with the local sources of
39
supply, has or have satisfied itself or themselves as to all the quantities and conditions,
and waives all fights to claim any misunderstanding, omissions or errors regarding the
same which such inspection and observation would have disclosed.
The undersigned further understands and agrees that it is or they are to furnish and
provide in remm for the respective Evaluation Unit Bid Price, all the necessary materials,
machinery, vehicles, implements, tools, labor services, and other items of whatever
nature, and to do and perform all work necessary under the aforesaid conditions, to
complete operations of the aforementioned Solid' Waste Haul-Disposal Services
operations in accordance with the Bid Solicitation requirements, which requirements are
a part of this response, and that it or they will accept in full compensation therefore, the
compensation provided for in Section C-3.
The undersigned submits herewith a bid guaranty within the form provided by the
applicable bid documents in the amount of $100,000.00 for any option or combination
thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10)
calendar days after date of receipt of Notice Of Award from the Town to execute and
deliver an Agreement in the form provided by the Town or fails to execute and deliver
evidence of proper insurance coverage and performance bond in the amounts required
and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty
Shall be forfeited and be retained by the Town toward the satisfaction of liquidated
damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will
be returned to the Bidder.
The undersigned acknowledges the receipt of the following addenda, but it agrees that it
is bound by all addenda whether or not listed herein and whether or not actually received,
it being the Bidder's responsibility to receive and have knowledge of all addenda.
ADDENDUM NUMBER AND DATES
Number 1 - Dated:
Number 2 - Dated:
Number 3 - Dated:
Number 4 - Dated:
Number 5 - Dated:
The Bidder has completed the Contract Bid Form and Unit Price Schedules in both
words and numerals in accordance with these bid requirements.
40
3.0 UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1 COMPENSATION
The undersigned hereby submits the following price bid to finnish Solid Waste Haul-
Disposal Services, to Southold Town, New York for the terms
through
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year __ONE__
is dollars and
cents ($ ). (C1)
The Haul-Disposal Service applicable unit price per ton for agreement year TWO
is dollars and
cents ($ ). (C2)
The Hanl-Disposal Service applicable unit price per ton for agreement OPTION year
ONE is dollars and
cents ($ ). (C3)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
TWO is dollars and
cents ($ ). (C4)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
THREE is dollars and
cents ($ ). (C5)
41
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
(C1) 10,000+(C2) 10,000+.5(C3)10,000+.5(C4)10,000+.5(C5) 10,000
35,000 tons
Evaluation Unit Bid Price = $
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
Bidder:
Firm-Corporation
Address
By:
4.0
Authorized Representative
Date
BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
5.0 INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the ma'm office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certffication from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the firm (Schedule D, attached
hereto).
42
H.
I.
J.
M.
Dated:
Detailed financial statement for the Bidder, and if applicable, for parent
companies (Schedule E, attached hereto).
Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
Major Subcontractors - (Schedule G, attached hereto).
Equipment- (Schedule H, attached hereto).
Maximum Specified Capacity- (Schedule I, attached hereto).
Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
Form of Bid Bond (Schedule K, attached hereto).
Performance Bond (Schedule L, attached hereto).
Operation Plan (Schedule M, attached hereto).
Name of Bidder:
Address of Bidder:
By:
Signature Title
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of
Names and addresses of officers of the corporation:
(President) Name Address
(Secretary) Name Address
43
(Treasurer) Name Address
(If an individual or partnership)
Names and addresses of all principals or partners
44
This Bidder
INFORMATION SCHEDULE A
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
herein certifies that as a
(Bidder's legal name)
Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending
or currently involved in any litigation involving the Town of Southold, State of New York.
Name of Bidder:
By: Date:
(Authorized Signature)
NOTE:
(1)
(2)
If blank not applicable, fill in with N/A
If bidder owes the Town taxes or is involved in any litigation, a statement
of explanation will be attached hereto.
Tax/Litigation Certification
BID (PROPOSAL) FORM
Schedule 5.0.A
Page 1 of 1
45
iNFORMATION SCHEDULE B
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The following is information on the undersigned Bidder's office locations:
Bidder's Parent
Bidder's Main Office Corporation Main Office
Manager's Name (Contact)
Firm's Legal Name
Street Address (Box Numbers)
City State Zip
Telephone Number
The Bidder herein certifies that the
is partially/wholly owned subsidiary of
This
By
Manager's Name (Comact)
Parent Firm's Legal Name
Street Address (Box Numbers)
City State Zip
Telephone Number
Firm
is owned
Parent Firm
Parent Firm
or is a public/private stock corporation.
Bidder Office Locations/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 1 of 2
46
INFORMATION SCHEDULE B - (Continued)
Name of Bidder:
By:
Date:
Note: (1)
Any attachments or modifications to this form shall be labeled Schedule 5.0.B,
and properly integrated into the Bid Form,
(2) If blank not applicable, fill in with N/A.
Bidder Office Location/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 2 of 2
47
This is identification that
will be the Surety Company for
INFORMATION SCHEDULE C
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
the Bidder, on this project and that the named Surety Company herein provides written
certification that the named Surety Company will provide the Performance Bond, specified in the
Contract Documents, in the event the Bidder enters into an agreement with the Town. The Surety
Company herein certifies that such Company is licensed to do business in the State of New York.
(SEAL)
Principal
Surety Company
(L.S.)
By:
Surety Verification
BID (PROPOSAL) FORM
Schedule 5.0.C
48
INFORMATION SCHEDULE D
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that the below named individuals are the current registered corporate
officers, along current permanent addresses, and designates their authority to execute an
Agreement on behalf of the finn
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip_
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip.
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip_
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Current Corporate Officers
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 1 of 2
49
INFORMATION SCHEDULE D - (Continued)
Officer's Name
Subsidiary
Corporate Title
Address
City
State, Zip_
Officer's Name
Parent
Corporate Title
Address
City
State, Zip
Corporate
Seal
Name of Bidder:
By:
Date:
NOTE:
If blank not applicable, fill in with N/A
Current Corporate Officer
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 2 of 2
50
iNFORMATION SCHEDULE E
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
STATEMENT OF BIDDER'S FiNANCIAL CONDITION
This Bidder agrees to provide for any subsidiary and parent firm, and hereto attaches a
current or the most recent audited financial Statement(s) including as a minimum the
firms opinions, notes, revenue/expense statements, conditions of cash, etc. The attached
statement provided includes:
Accounting Firm Name
Address
Financial Period
Statement Date
To
The bidder certifies that he currently has an available line of credit in the amount of
$ . A supporting documentary evidence attached to this
form is supplied by:
Name
Address
Date
The undersigned Bidder certifies to the validity of statement and agrees to furnish any
other information upon request that may be required by the Town of Southold, New
York.
Bidder s Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 1 of 2
51
INFORMATION SCHEDULE E - (continued)
The undersigned hereby authorizes and requests any person, firm or corporation to furnish any
information requested by Town of Southold, New York in verification of the firms financial
condition.
Dated at This day of _, 20 __
State of New York, County of
Name of Bidder
Title
being duly sworn deposes and saws that he
is of
Title
Name of Organization
and that the answers to the foregoing questions and all statement therein contained are tree and
correct.
Sworn to me this day of ,20
My Commission expires:
Notary Public
NOTE:
(1)
(Bidder may submit additional information desired as Schedule E
attachments.)
If blank not applicable, fill in with N/A
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 2 of 2
52
iNFORMATION SCHEDULE F
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and
that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the
Bidder offers the following related information and references in order that the Town may
evaluate the Bidder's qualifications and experience.
4.
5.
6.
7.
8.
9.
Bidder's Legal Name:
Business Address:
State incorporated:
Street
City State Zip
Year incorp.:
New York State; Business License No.:
No. Years in contracting business under above name:
Has firm ever defaulted on a contract? Yes
Gross Value - work under current contract: $
Number of Current Contracts:
Brief description general work performed by firm:
No
10.
Has Firm ever failed to complete work awarded? Yes
If yes, attach supporting statement as to circumstances.
Qualifications Summary
BID (PROPOSAL) FORM
No
Schedule 5.0.F
Page 1 of 3
53
iNFORMATION SCHEDULE F - (continued)
11. Related Experience Reference (within previous 5 years)
11.1 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
11.2 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 2 of 3
54
11.3 Project Title:
Owner's Name:
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value: $
Brief Project Description:
12.
Principal Firm Members' Background/Experience (3 members minimum). Attach current
resumes as Schedule 5.0.F supplement or give concise description by individual.
Name of Bidder:
By: Date:
(Authorized Signature)
NOTE:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.F, and shall be properly integrated into this Bid Form.
If blank not applicable, fill in with N/A.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 3 of 3
55
INFORMATION SCHDULE G
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul
sub-contractors on this project.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Sub-Contractor/
Contract Trade/
Individual Address Phone # Specialties
NOTE:
Name of Bidder:
By:
(Authorized Signature)
If blank not applicable, fill in with N/A
Date:
Subcontractors
BID (PROPOSAL) FORM
Schedule 5.0.G
56
IFORMATION SCHEDULE H
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder states that it owns the following pieces of equipment that are available for use on the
project, if awarded the agreement.
Proposed Current
Equipment Item Project Use Equipment Location
NOTE:
Name of Bidder:
By:.
Date:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.H and shall be properly integrated into the Bid Form.
If blank not applicable, fill in with N/A
Construction Equipment
BID (PROPOSAL) FORM
Schedule 5.0.H
57
INFORMATION SCHEDULE I
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it will be prepared to dispose of up to the following Maximum
Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement
Contract Year
Maximum Tons per Contract Year
Name of Bidder:
By: Date:
Maximum Specified Capacity
BID (PROPOSAL) FORM
Schedule 5.0.I
58
iNFORMATION SCHEDULE J
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
NOTE: IF A BIDDER iNTENDS TO UTILIZE MORE THAN ONE SOLID WASTE
DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE
COMPLETED FOR EACH DISPOSAL SITE.
The following is information on the undersigned Bidder's Solid Waste Disposal Site:
I. GENERAL
A. Disposal Site Location
Name:
Address:
Phone:
Disposal Site mailing address (if different than I)
Address:
II.
CURRENT OPERATIONS
A. Operations Permit
1. Permittee:
2. No.:
3. State:
4. Date of Issue:
5. Date of Expiration:
6. Copy Enclosed:
Yes: No:
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 1 of 7
59
iNFORMATION SCHEDULE J - (continued)
Hours of Operations
1. What are the PERMITTED operating hours?
DAY A.M.
Monday to
Tuesday to
Wednesday to
Thursday to
Friday to
Saturday to
Sunday to
P,Mo
2. Are there any PERMITTED closure periods stipulated?
o
What are the ACTUAL operating hours?
DAY A.M.
Monday to
Tuesday to
Wednesday to
Thursday to
Friday to
Saturday to
Sunday to
What holiday or other period is the Disposal Site typically closed?
DAY YES
New Year's to
Memorial to
Independence to
Labor to
Thanksgiving to
Christmas to
Other (specify) to
NO
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 2 of 7
60
INFORMATION SCHEDULE J - (continued)
4. Will the ACTUAL operating hours be extended up to the PERMITTED
operating hours in Question II.B.1 in order to accommodate Town of
Southold solid waste?
Yes No
6. Are there any local agreements, ordinances, etc. which would prohibit
extending the ACTUAL operating hours in Question II.B.3 up to the
PERMITTED operating hours in Question II.B. 1 ?
Yes No
What is the PERMITTED annual capacity in tons?
20
20
20
20
20
At the PERMITTED levels in Question II.C, what is the projected useful life in
years?
What is the annual RECEIVING6 level today?
At the RECEIVING levels in Question II.E, what is the projected useful life in
Years?
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 3 of 7
61
INFORMATION SCHEDULE J - (continued)
How much of the RECEIVING level in Question II.E is committed to under
contract in tons?
20
20
20
20
20
Does the Disposal Site have special waste restrictions?
Gate
Yes No Fee ($)
1. Construction/Demolition
2. Asbestos
3. Wastewater Treatment
Sludge
4. Hazardous Waste
Are there any existing agreements with local municipalities which prohibit:
Item Yes N_.~o
1. Routing to site
2. Weight limits between
state coeds and site
3. Number of vehicles
4. Vehicle size
5. Solid waste importation
outside jurisdictional area
6. Host Community Benefits
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 4 of 7
62
III.
INFORMATION SCHEDULE J - (Continued)
EXPANSION PLANS
A. Application Permit
1. Permitee:
2. No.:
3. State:
4. Date of Submission:
5. Copy Enclosed:
6. Submission Status:
a.
Yes No
Expansion of current site or new site
Local Citizenry Reaction
Regulatory agency
d. Litigation
Likelihood to succeed
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 5 of 7
63
INFORMATION SCHEDULE J - (Continued)
If you are successful in Question III.A., what is the additional annual DESIGN
capacity in tons (do not include figures from Question II.C0?
20
20
20
20
20
At the annual DESIGN levels in Question III.B., what would be the projected
useful life in years?
Would you be willing to share with the Town of Southold engineering reports
utilized for the preparation of the Operating Permits on Expansion Application?
Yes No
Bidder's Disposal Site(s) Engineer of Record
Firm's Name
Firm's Address
Project Engineer
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 6 of 7
64
INFORMATION SCHEDULE J - (Continued)
Are you willing to meet with the Town of Southold to discuss your short and long term
disposal capabilities? Yes No
The undersigned hereby certifies that services, material, equipment to be furnished as a
result of this bid will be in accordance with Town of Southold specifications applying thereto
unless exceptions are indicated above and an explanation attached.
Bidding Company
Address
City State Zip
(Please Print or Type) NAME AND TITLE
By
Signature
Phone No.
Date
CORPORATE SEAL
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page7 of 7
65
INFORMATION SCHEDULE K
FORM OF BID BOND
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned,
as Principal, and
as Surety, are hereby held and firmly bound unto
Owner in the sum of
and truly be made, we hereby jointly and severally bind ourselves, our heirs, executors,
administrators, successors and assigns. Signed this day of ,20
as
for the payment of which, will
The condition of the above obligation is such that whereas the Principal has submitted to the
Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into a
contract in writing, for the hauling and disposal of solid waste;
NOW, THEREFORE,
(a) If said Bid shall be rejected or in the alternate,
(b)
If said Bid shall be accepted, and the Principal shall execute and deliver an
Agreement in the form off the Sample Operating Agreement attached hereto
(properly completed in accordance with said Bid) and shall furnish certificates of
insurance and a bond for this faithful performance of said Agreement, and for the
payment of all persons performing labor or furnishing materials in connection
therewith, and shall in all other respects perform the Agreement created by the
acceptance of said Bid, then this obligation shall be void, otherwise the same shall
remain in force and effect; it being expressly understood and agreed that the
liability of the Surety for any and all claims hereunder shall, in no event, exceed
the penal amount of this obligation as herein stated.
The Surety, for value received, hereby stipulates and agrees that the obligations of
said Surety and its bond shall be in no way impaired or affected by any extension
of the time within which the Owner may accept such Bid; and said Surety does
hereby waive notice of any such extension.
Form of Bid Bond
BID (PROPOSAL) FORM
Schedule 5.0.K
Page 1 of 3
66
1N WITNESS WHEREOF, the Principal and the Surety have hereumo set their hands and seats,
and such of them as are corporations have caused their corporate seals to be hereto affixed and
these presents to be signed by their proper officers, the day and year first set forth above.
(L.S.)
Principal
Surety
By:
Address of Surety:
SEAL
(ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION)
STATE OF:
COUNTY: ) SSN:
On this day of ,20__ before me personally came
~ to me known, who being duly swom, did depose
and say that he resides in ; that he is the
of the
corporation described in and which executed the foregoing instrument; that he knows the seal of
corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by
the order of the Board of Directors of the corporation; and that he signed his name thereto by like
order.
Notary Public
Form of Bid Bond
BID (PROPOSAL) FORM
(ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP)
Schedule 5.0.K
Page 2 of 3
67
STATE OF: )
COUNTY: ) SSN:
On this day of ~ 20__ before me personally came
, to me known, and known to me to be a member of the firm
of _, and known to me to be an individual described in, and
who executed the foregoing instrument in the finn name of _,
and he duly acknowledged to me that he executed the same for and in the behalf of said finn for
the uses and purposes mentioned therein.
Notary Public
(ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR)
STATE OF: )
COUNTY: ) SSN:
On this day of ,20__ before me personally came
, to me know, and known to be the person described in and
who executed the foregoing instnmaent and duly acknowledged that he executed the same.
Notary Public
Form of Bid Bond
BID (PROPOSAL) FORM
Schedule 5.0.K
Page 3 of 3
68
INFORMATION SCBEDULE L
PERFORMANCE BOND
Bond No.
KNOW ALL MEN BY THESE PRESENTS, that
(hereinafter called the "principal") and
(hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter
called the "Owner") in the full and just sum of dollars
($. ) good and lawful money of the United States of America, for the
payment of which sum of money, well and truly to be made and done, the Principal binds
himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors
and assigns, jointly and severally, firmly by these presents.
WHEREAS, the Principal has entered into a certain written Agreement beating date on
the day of ,20 , with the Owner for the Town of
Southold Solid Waste Haul-Disposal Services, a copy of which Agreement is annexed to and
hereby made part of this bond as though herein set forth in full.
NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his
or its representatives or assigns, shall well and faithfully comply with and perform all the terms,
covenants and conditions of said Agreement or his (their, its) part to be kept and performed and
all modifications, amendments, additions and alterations thereto that may hereafter be made,
according to the true intent and meaning of said Agreement, and shall fully indemnify and save
harmless the Owner from all cost and damage which it may suffer by reason of failure so to do,
and shall fully reimburse and repay the Owner for all outlay and expense which the Owner may
incur in making good any such default, and shall protect the said Owner against, and pay any and
all amounts, damages, costs and judgments which may or shall be recovered against said Owner
or its officers or agents or which the said Owner may be called upon to pay to any person or
corporation by reason of any damages arising or growing out of the doing of said work, or the
repair of maintenance thereof, or the manner of doing the same, or the neglect of the said
Principal, or his (their, its) agents or servants or the improper performance of the said work by
the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent
rights by reason of the use of any materials furnished or work done as aforesaid or otherwise,
then this obligation shall be null and void, otherwise to remain in full force and effect;
Performance Bond
BID (PROPOSAL) FORM
Schedule 5.0.L
Page 1 of 2
69
PROVIDED HOWEVER, the Surety, for the value received, hereby stipulates and
agrees, if requested to do so by the Owner, to fully perform and complete the work mentioned
and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for
any cause the Principal fails or neglects to so fully perform and complete such work and the
Surety further agrees to commence such work of completion within ten (10) calendar days after
written notice thereof from the Owner and to complete such work within ten (10) calendar days
from the expiration of the time allowed the Principal in the Agreement for the completion
thereof; and further
PROVIDED HOWEVER, the Surety, for value received, for itself, and its successors and
assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no
may impaired or affected by an extension of time, modification, work to be performed
thereunder, or by any payment thereunder before the time required herein, or by any waiver of
any provisions thereof or by any assignment, subletting or other transfer of any work to be
performed or any monies due or to become due thereunder; and said Surety does hereby waive
notice of any and all of such extensions, modifications, omissions, additions, changes, payments,
waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that
any and all things done and omitted to be done by and in relation co assignees, subcontractors,
and other transferees shall have the same effect as to said Surety as though done or omitted to be
done by or in relation to said Principal.
IN WITNESS WHEREOF, the Principal has hereunto sec his (their, its) hand and seal
and the Surety has caused this instrument to be signed by its
and its corporate seal to be hereunto affixed this day of ~ 20
(If Corporation add
Seal and Attestation)
By:
Attest:
Principal
Add Corporate Seal
By:
Attest:
Address of Surety:
Surety
Performance Bond
BID (PORPOSAL) FORM
Schedule 5.0.L
Page 2 of 2
70
INFORMATION SCHEDULE M
OPERATIONAL PLAN
The Bidder hereby states that it proposes to implement the following operational plan to haul and
dispose of Municipal Solid Waste (MSW) from the Town of Southold Landfill if awarded an
Agreement.
I. Haul
Summarize the manpower and equipment you will make available to perform under this
Agreement.
II. Disposal
Summarize the identity and location of the primary and secondary sites you plan to use for
disposal of the solid waste. Describe the arrangements between your company and the disposal
site for use of the site. Describe any treatment the MSW will undergo during transport or upon
arrival at the disposal site. Attach copies of the permits to construct and permits to operate the
disposal site.
Site No. 1
NAME
LOCATION
CONTACT PERSON AND PHONE NO.
ARRANGEMENTS FOR USE
TREATMENT OR UNUSUAL CONDITIONS
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page 1 of 2
71
Site No. 2
NAME
LOCATION
CONTACT PERSON AND PHONE NO.
ARRANGEMENTS FOR USE
TREATMENT OR UNUSUAL CONDITIONS
Operational Plan
BID (PROPOSAL) FORM
Schedule 5.0.M
Page 2 of 2
72
APPENDIX A
SAMPLE OPERATING AGREEMENT
73
THIS AGREEMENT, made on the __ day of ,20 _,
by and between the Town of Southold, a municipal corporation of the State of New York having
its Principal place of business at 53095 Main Road Southold, New York hereinafter called the
"Town" and
hereinafter called the "Contractor."
WITNESSETH
WHEREAS, Contractor has submitted to the Town a bid dated
20 , ("Bid") in response to the Town's Bid Solicitation for Solid Waste Hauling-
Disposal Services dated ~ 20__, ("Solicitation"); and
WHEREAS, the Town Board of the Town of Southold by resolution No.
adopted on authorized the Town Supervisor to
enter into an agreement with the Contractor to perform certain services in connection with the
handling of solid waste,
NOW, THEREFORE, it is mutually covenanted and agreed by and between the parties
hereto as follows:
I. DEFINITIONS - Terms defined in the Bid Solicitation shall have the same
meaning as if defined herein.
II. SCOPE OF SERVICES - The Contractor shall perform the services in accordance
with the description of those services as set forth in the Solicitation.
III. TERM OF AGREEMENT
The term of this Agreement shall be two (2) years commencing on July 1, 2007, with the
potential for three (3) additional option years. The Town and the Contractor, by
mutual consent, shall have the option of renewing this Agreement for up to three (3)
additional one-year terms at the prices bid herein. Notice of this mutual consent to be
expressed by the parties in writing not less than one-hundred eighty (180) days prior to
APPENDIX A-1
74
the expiration of the term in force (i.e., by January 1, 2009, January 1, 2010, and January
1,2011). Similarly, notice by either party of the intent to reject any option year shall be
submitted in writing by the same date (January 1) of each year.
The Town reserves the right to may terminate the Agreement at any time after Year Two
(i.e., after June 30, 2009) of the Agreement for the purpose of entering into an inter-
municipal solid waste haul~disposal Agreement with another Long Island Town by giving
one-hundred eighty (180) days written notice to the Contractor.
IV. PRICE SCHEDULE/COMPENSATION
The unit bid price schedule for the services to be furnished by Contractor is found
in Section C - 3.1, 3.2, Contractor's bid which is incorporated into this Agreement.
V. PAYMENTS
A. The Contractor shall receive monthly payments for services
performed during the prior calendar month. The Contractor shall submit a request for payment
on a Town approved voucher form along with Contractor's invoice which shall include a daily
smnmary of tonnage hauled by Contractor to a Disposal Site and disposed by Contractor at a
Disposal Site as applicable. Such payments shall be made within sixty (60) days of the Towffs
approval of Contractor's invoice. The Town shall be entitled to deduct from any payment
owning to Contractor any sums expended by the Town to cure any default or other Agreement
non-compliance by Contractor or to protect the Town from loss on account of claims filed or
reasonably anticipated to be filed.
VI. CONTRACTOR'S WARRANTIES AND REPRESENTATIONS
Contractor makes the following warranties and representations:
A. Contractor represents that the Town has made no commitment under this
Agreement with respect to the volume solid waste to be handled by Contractor during the term of
this Agreement.
B. Contractor warrants that Contractor shall comply with all federal, state
and local laws, ordinances regulations applicable to ail of the services to be performed
Contractor.
APPENDIX A-2
75
C. Contractor represents that the information furnished by Contractor in the
equipment schedules included in the bid is accurate and complete and Contractor acknowledges
that Town has relied upon the accuracy and completeness of that information in the selection of
Contractor as the lowest responsible bidder.
D. The Contractor represents that Contractor shall utilize its best efforts to
insure that Minority and Women Owned Businesses (MBE's and WBE's) have the opportunity to
participate as subcontractors under this Agreement. In the event the contractor subcontracts
twenty-five percent (25%) or more of its work hereunder, Contractor shall submit to the Town an
and a WBE Utilization Plan, prior to execution of this Agreement,
D. In the event the Contractor's Disposal Site is unable to receive and dispose
of the Town's waste for any reason (including failure to obtain or maintain necessary permits or
licenses), Contractor shall be responsible for providing to the Town an alternate Disposal Site for
the Town's use at no additional cost to the Town, and shall indemnify the Town against any
additional hauling cost by the Town or its agent because of the location of the alternate Disposal
Site. Under no circumstances shall a change in Disposal Site(s) or failure or inability to obtain or
maintain necessary permits by the Contractor be considered a change in conditions. In the event
the Contractor is unable to find an alternate Disposal Site(s), he shall be deemed to be in default
of this Agreement and liable for damages, bond forfeitures and other expenses as provided in the
Agreement.
VII. 1NDEMNIFCATION INSURANCE/BONDS
A. Contractor agrees to defend, indemnify and save harmless the Town of
Southold against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge,
attorney's fees and expenses of what ever kind or nature which the Town may directly or
indirectly incur, suffer or be required to pay by reason of or in consequence of the Contractor
can'ying out or performing under the terms of this Agreement, or failure to carry out any of the
provisions, duties, services or requirements of this Agreement, whether such losses and damages
are suffered or sustained by the Town directly or by its employees, licensees, agents, engineers,
citizens or by other persons or corporations, including any of Contractor's employees or agents
APPENDIX A-3
76
who may seek to hold the Town liable therefore. This obligation shall be ongoing, shall survive
the term of this Agreement and include, but not be limited to, claims concerning non-sudden
environmental impairments,
The Contractor shall join in the commencement of any action or proceeding or in the
defense of any action or proceeding which in the opinion of the Town constitutes actual or
threatened interference or interruption with the Town's rights hereunder, including all appeals
which, in the opinion of the Town, may be necessary.
B. Contractor shall procure and maintain the insurance described in Section
A of the Solicitation for a period commencing on the date of this Agreement and terminating no
earlier than one year following termination of services under this Agreement. All such insurance
coverage shall name the Town as an additional insured and shall provide that the coverage shall
not be changed or canceled until thirty (30) days written notice has been given to the Town. All
such insurance shall be issued by a company duly authorized, to transact business in the State of
New York and acceptable to the Town and shall include all riders and additional coverage
necessary to insure that Contractor will be financially able to meet its obligations under the
foregoing indemnification.
C. Contractor shall, for the period of the performance of services hereunder,
maintain a Performance Bond in the amount of one million ($1,000,000.00) dollars wherein
named obligee is Town of Southold. The Bond shall be in a form acceptable to the Town
Attorney and issued by a surety licensed to do business in New York as a surety.
VIII. FORCE MAJEURE
If either patty is delayed or prevented from fulfilling any of its obligations under
this Agreement due to any act, event or condition, whether affecting the Town, the Contractor,
the Disposal Site or any of the Town's or the Contractor's respective subcontractors or suppliers,
to the extent that it materially and adversely affects the ability of either party to perform any
obligation hereunder (except for payment obligations), and if such act, event or condition is
APPENDIX A-4
77
beyond the reasonable control and is not also the result of the willful or negligent action,
inaction, or fault of the party relying thereon as justification for not performing an obligation or
complying with any condition required of such party under the Agreement, the time for fulfilling
that obligation shall be extended day-by-day for the period of the uncontrollable circumstance;
provided, however, that the contesting in good faith or the failure in good faith to contest such
action or in action shall not be construed as willful or negligent action or a lack of reasonable
diligence of either party. Subject to the foregoing, such acts or events shall include the following:
(1) an act of God (but not including reasonable anticipated weather conditions for the
geographic area of the Town or Disposal Site) hurricane, landslide, lightning, earthquake, fire,
explosion, flood, sabotage or similar occurrence, acts of a public enemy, extortion, war, blockade
or insurrection, riot or civil disturbance;
(2) the failure of any appropriate federal, state, county, town or local public agency or
private utility having Jurisdiction in the areas in which the Transfer Station or Disposal Site is
located to provide and maintain utilities, services, water and sewer lines and power transmission
lines which are required for the operation or maintenance of the Transfer Station or Disposal
Site;
(3) governmental pre-emption of materials or services in connection with a public
emergency or any condemnation or other taking by eminent domain of any portion of the transfer
Station or Disposal Site; and
(4) the presence of hazardous waste upon, beneath or migrating from the Transfer
Station.
It is specifically understood that none of the following acts or conditions shall constitute
uncontrollable circumstances: (a) general economic conditions, interest or inflation rates, or
currency fluctuations; (b) the financial condition of the Town, the Contractor, any of its affiliates
or any sub-contractor; (c) union work rules, requirements or demands which have the effect of
increasing the number of employees employed otherwise increase the cost to the Contractor of
operating its haul operation or the Disposal Site (d) equipment failure; (e) any impact of
prevailing wage law, customs practices on the Contractor's costs; (f) any act, event or
APPENDIX A-5
78
circumstances occurring outside of the United States, or (g) any change in law or in the permit
conditions or status of the Transfer Station Disposal Site or alternate Disposal Site.
IX. SUBONTRACTS
Contractor shall not enter into any subcontracts in connection with the services to
be performed by Contractor hereunder without the prior written approval by the town of such
subcontracts. All such subcontracts shall make express reference to the terms and conditions of
this agreement and shall obligate the subcontractor to comply with all applicable federal, state
and local laws, ordinances or regulations relating to the services to be performed under the
subcontract. In the event the subcontractor is required to furnish any insurance or bonds for the
benefit of Contractor, the Town shall also be named as an additional insured or obliges.
X. PREVAILING WAGE RATES
Contractor agrees to comply with the provisions of the New York State Labor
Law relating to the payment of prevailing wage rates to the extent applicable, or the applicable
State Law in the state of disposal. In the event that at any time during performance under this
Agreement the Contractor is required to increase the wages paid to any of its employees as a
result of such requirement, all costs be borne exclusively by Contractor.
XI. FORCED ACCOUNTING
In the event the Town directs the Contractor, by written authorization signed
either by the Town Supervisor or Town's Solid Waste Coordinator, to perform additional
services beyond the scope of those described in this Agreement, the Contractor shall be
compensated for such additional services on the following basis:
TOTAL COMPENSATION FOR ADDITIONAL SERVICES =
D1RECT LABOR COST + DIRECT MATERIAL COST + OVERHEADO + PROFIT
For the purposes of this Section:
APPENDIX A-6
79
A. DIRECT LABOR COST shall include hourly wages, including overtime
premiums actually paid plus the following fringe benefits-associated with those wages - group
medical, group life insurance, pensions, FICA, uniforms, safety equipment or special tools.
These fringe benefits shall be separately identified and shall not duplicate fringe benefits paid in
connection with work performed within the scope off the Agreement.
B. DIRECT MATERIAL COST shall be those costs actually paid by
Contractor for materials utilized by Contractor in performance of the additional services. The
costs for such materials shall not include sales tax for any materials which constitute personal
property incorporated into the structures, buildings, or real property of the Town since such
personal property is exempt from taxation York State Tax Law, under Section 1115 of the New
York State Tax Law.
C. OVERHEAD shall be 10% of the total of the Direct Labor Costs and the
Direct Material Costs,
D. PROFITS shall be 5% of the total of the Direct Labor Costs, the Direct
Material Costs and the Overhead.
XII. CONTRACTOR'S OPERATIONS AND PROCEDURES REPORTS
Contractor will provide the operating plan and supporting data listed in Sections
A and B of the Solicitation to the Town for review and acceptance. Contractor will update the
plan as necessary and furnish copies of those updates to the Town.
XIII. DEFAULT
In the event the Contractor fails co' perform its obligations under the Agreement,
the Town may terminate the Agreement, procure the services from other sources and hold the
Contractor responsible for any costs incurred. This Town also may deduct such costs fi'om
payments owing to the Contractor and/or draw upon the Performance Bond as full or partial
reimbursement for such excess costs. The Town reserves the right to terminate the Agreement
for just cause.
X1V. SERVICE AGREEMENT
The Contractor shall be obligated to provide the Town with disposal services
without regard to the permit status of its Disposal Site. In the event that Contractor submits a
APPENDIX A-7
8O
Bid for a Disposal Site for which Contractor does not currently have all necessary federal and
state permits, or which a~er the acceptance of the Bid loses its permitted status, Contractor shall,
at its sole risk and expense, be responsible for obtaining and/or renewing its permits or providing
the Town an alternate Solid Waste Disposal Site at no additional cost (disposal plus any
additional hauling) to the Town. The parties agree that this is a full service Agreement and
failure of the Contractor to provide the identified Disposal Sits or acceptable alternative Disposal
Site, on or after the commencement date shall constitute a breach of this Agreement. The
Contractor accordingly shall not be excused fi.om its obligations hereunder by reason of any
failure to obtain or maintain its permits at the identified Disposal Site.
XV. LIMITATION OF FUNDS
The Contractor agrees that this Agreement shall be deemed executory only to the
extant of the funds currently available for the purposes of this Agreement and that the Town
incurs no liability beyond those available by authorization of the Town Board as of the date of
this Agreement.
XVI. DISPUTES/ARBITRATION
Any disputes between the parties to this Agreement may be referred to arbitration
by mutual agreement of the parties. Absent such an agreement, any actions or claims by either
party hereto shall be commenced in Supreme Court, Suffolk County, New York.
In the event the parties agree to arbitrate a dispute, such arbih'ation shall be
conducted in accordance with the rules of the American-Arbitration Association. In no event
shall any demand for arbitration be made after the date when institution of legal or equitable
proceedings based on such claim or dispute would be barred by the applicable statute of
limitations. An award rendered by arbitrators following any such arbitration shall be final and
Judgment may be entered upon it in accordance with applicable law in any court having
jurisdiction thereof.
XVII. MISCELLANEOUS
A. This Agreement shall be governed by the laws of the State of New York.
B. Contractor shall not assign, convey or otherwise transfer its rights or
obligations under this Agreement without the prior written consent of the Town.
APPENDIX A-8
81
C. This Agreement, including all Exhibits and documents referred to herein,
along with the Specifications, Solicitation and the Bid, and all Appendices and Exhibits thereto,
represent the entire agreement between the Town and Contractor relating to the Services to be
performed hereunder. This Agreement may be modified only by written agreement of
Contractor and the Town.
D. To the extent of any inconsistency among the documents constituting the
agreement of the parties, the priority among those documents shall be:
2.
3.
4.
This Agreement;
Exhibits hereto;
The Solicitation including Appendices;
Contractor's Bid.
E. Without limiting any other right and/or remedy which the Town may have
at law or under this Agreement, if the Contractor is adjudged bankrupt or makes an assignment
for the benefit of creditors or s receiver is appointed for the Contractor or any insolvency
arrangement proceedings are instituted by or against the Contractor, the Town may terminate this
Agreement.
F. Contractor agrees that it will conduct itself consistent with its status, said
status being that of an independent contractor and, Contractor, its employees or agents will
neither held themselves out nor claim to be an officer or employee of the Town of Southold nor
make claim to any right accruing thereto including, but not limited to, Worker's Compensation,
Unemployment Benefits, Social Security or retirement membership or credit.
G. If any provision of this Agreement shall for any reason he held to be
invalid or unenforceable, the invalidity or unenforceability of such provision shall not affect any
of the remaining provisions of this Agreement and this Agreement shall be enforced as if such
invalid and unenforceable provision had not been contained herein.
H. Contractor agrees that it shall not discriminate and that it shall cause there
to be no discrimination against any employee who is employee in the work, or against any
APPENDIX A-9
82
applicant for such employment, because of race, religion, color, sex, age, marital status, handicap
or national origin in any manner prohibited by the laws of the United States or of the State of
New York. These requirements shall include, but not be limited to, the following: employment;
upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for training.
XVIII. NOTICES
All notices required to be given hereunder shall be made in writing by first class
mail addressed as follows:
If to the Town:
With a copy to:
Supervisor of the Town of Southold
P.O. Box 1179
Southold, New York 11971
Solid Waste Coordinator, Town of Southold
P.O. Box 962
Cutchogue, NY 11935
If to the Contractor:
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
TOWN OF SOUTHOLD
By:.
Scott A. Russell, Supervisor
By:.
APPENDIX A- 10
83
APPENDIX B
NEW YORK STATE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION PERMIT
84
NEW YORK STATE DEPARTMENT OF ~ONMI~NTAL CONSERVATION
BillS?-· 40 - ~, 5to~v Brook, Now York I1790-~.~
Fa~ (~16) 44~231
John P. ~
Acting Commissioner
Jim Bunchuk
Solid Waste Coordinator -Town of Southold
PO Box 962
Cutchogue, New York 11935.
Dear Mr. Bunchuk:
Enclosed is a validated copy of your registration form submitted to the New York State
Department of Environmental Conservation pursuant to 6 NYCRR Part 360, to register the
existing municipal solid waste transfer operation.
This letter only acknowledges receipt of your registration form and does not, in any way,
verifies that the information provided on the form is true or correct. In addition, you are
re~oensible for obtaining any other permits and approvals that may be required; and for
complying with all other applioable State and Federal laws, rules, regulations and all other
applicable local ordinances including, but not limited to, zoning ordinances, building codes,
Fire Marshal codes, etc.
This registered activity shall in no way conflict with any mined land reclamation permit and
approved reclamation plan.
You are reminded that 6 NYCRR Part 360 contains various requirements that must be
followed to warrant your facility's continued status as a registered facility. This information
was provided in the reglatration package.
tf you have any questions regarding this matter or need an additional copy of the
registration requirements, please contact me at the above telephone number.
~e~J~fl~Jd srld HaJerdous Materiala Engineer
AJC :ok
eric.
~" #Eg:~ORK.$TATE DEPARTmEnT OF ENVLRON#ENT~,'m'm~SERVATLON
OLVISiO# OF SOLIO WASTE
'-~ REGISTRATION FORH FOR A
.~ SOLID WASTE MANAGEMENT FACILITY
' .~Leese read and follow s I natruct ens before completing
· this registration form
PLease Type or Print clearly THIS IS NOT A UPA PERMIT
DEC REGISTRATION #
DEC ADMINIITRATIO~ #
Dt .ENT USE
OATE RECEIVEO., /O/k/ /
1. FACILITY NAME AND LOCATION
Stre t
County Road 4g
ci ty/VJ [ lage
S~ho1 d County Suffolk
Telephone Number
FACILITY OPERATOR'S NAME (if different) ¢
Same
Mai L inn Address
City/To,n/Village
State/Zip Code
Telephone
(
TYPE OF FACILITY REGISTRATION (check all applicable boxes
!'i?~lllEnergYRecovery Incinerators or Pyrolysis Units
G60-3.1(C)]
2. FACILITY OWNER'S NAME
Town Of Sou~hg~d
Mai Ling Address
Ci ty/Town/Vi L [age
Southold
State/Zip Code
Ne~ York, 119~
Telephone Number
(516) 765-1800
SITE OWNER'S NAME (if different)
Sa~
Mailing Address
City/Town/Village
State/Zip Code
TeLeph~ Nulsber
( )
[~Source Separated, Nonpu[rescib[e Solid Waste RecycLabl:es
Handling and Recovery Facilities []60~1g.l(d)]
DLand Application and SLudge Storage Facilities [360-4.1(c)] DUaste Tire Retreaders [360-13.1(d)(1)(i))
r'~calRonstlng and Other Distribution and Marketing Facilities [~Waste Tires Stored for On-site Energy Recovery
[~60-5~3(b)] [~60-13.1(d)(1)(ii))
El[end CLearing. DtUorls Landfills three acres or Less
]~ranefer Stations (munfcipeLty owned/operoted/centrected)
receiving Less than 50~000 cubic yards or 12~500 tons of
· bausch?Id solid waste annually ["560-11.1(b)(1)~
UTranefer Stations (municipally owned/operated/contracted)
receiving [ess than 50~000 cubic yardsor 12,500 tons of
containerized solid waste annually G60-11.1(b)(2)]
F-IOther Facilities not described above
6. SOL]O WASTE HANDLED
List wastes and/or materials to be accepted
Hunicipal Solid Waste
quantity (Specify Units -see nstructions)
design capacity
storage on site 0
[~Tire Dealers Set[inN Waste Tires L360-13.1(~fil)]:
~TJre Manufacturing Facilities [~60-13.1(d)(1)(Iv)]
[~Processing Facilities Receiving Only RecognizsbLe
Uncentamfnsted Concrete~ Aspha[t Pavement, Brick, Soil.
or Rock [360-16.1(d)(1)(i)]
[-1Uncentaminsted Unsdu[teratecl Wood Processing Facilities
[360-16.1(d)(1)(ii)]
OPERATIONS SCHEDULE - No?sial schedule of operation
7:00 am - 5:00 pm, 7 days per
week
NAME(S) OF ALL MUNICIPALITIES SERVED
TOWn of Sou[hold
Village of Breenport
CERTIFICATION:
I hereby affirm under penalty of perjury that information pro~,~ed on this form and attached statements and exhibits was
prepared by me or under my sgpervfsion and direction and ia t~ue to the best of my knowledge and belief° and that I have
the authority as Supervisor (title) of Town of Southold .(Entity) tosign this
· registration form pursuant to 6 N¥CRR Part $60. By signing this registration form, I affirm that ! have read the
app(icabte regulations and will abide by a[l conditions of the registration requirament~. I am aware that any~aLse
statement amds herein Ps punishable ss · CLass A misdemeanor pursuant to Section ~10.&5 of the Penal Low.
Printed/TypedName Mo. Day Year
Jean W. Cochran '
" VALIDATEI
APPENDIX C
Town of Southold Accident Report
87
TOWN OF SOUTHOLD - Incident Report
(Use Auto Accident Pamphlet for Auto Accident)
(Use "Quick Fax" form for employee injury)
Date & Time of Incident
Type of Incident/Accident:
__ Trip & Fall or Bodily Injury
__ Vehicle
__ Damage to Property
Other
Location of Incident/Accident
Description of Incident/Accident
Description of Injuries
Injured's Name & Address & Date of Birth
Medical Cam Given?
What cam was given?
By whom?
Anyone taken to hospital?
Mr~mss Name & Address
Hospital Name
REMARKS:
Reported by (Signature).
Date & Time Reported to Department Head
Signature of Dept. Head:
Date & Time
Date & Time
8/00 Edition
TOWN OF SOUTHOLD
DIRECT~IS FOR COMPLETING INCIDEN'~ ,~PEPORT
(if Auto Accident, use Auto Accident Pamphlet)
(If employee injury, use "Quick Fax")
1. Complete report immediately.
2. Fill in all Blank Spaces.
3. Sign and have your Department Head sign form. (If Department Head is not
available to sign within the next 24 hours, procccd to next step. You, the employee,
will then forward this form to John Cushman yourself.)
4. Keep a copy for your department.
5. Department Head sends Incident Report to John Cushman in the Accounting
Department the same day as incident.
NEVER do the following:
'Make a Deal" for damages.
Leave the scene of even a MINOR accident.
Accept an offer of cash, check, or 'private" settlement.
Disavow injury to you or your passengers~
Offer to pay ANYTHING even if you think you are at fault.
Administer first aid unless you are LICENSED to do so.
ALWAYS do the following:
If there is an injury, ask someone to summon police and seek medical
assistance.
Remember to remain calm, courteous and consistent in what happened.
Obtain complete information from those involved.
Obtain the names of witnesses including addresses and phone numbers.
8/00 Edition
~cydingfor a Healthier Long Island
Winters
107 Mahan Street, West Babylon, NY 11704
(631) 491-4923
Bid On Solid Waste
Haul-Disposal Services 2007
June 14, 2007
Respectfully Submitted to the
TOWN OF SOUTHOLD
Winters B ros.
waste systems, inc.
Winters Bros Recycling Corp
Winters Bros Transfer Station Corp
Winters Wasle Services of New York Inc
Winlers Brothers Recycling East End Inc
Winters HolJswlle Transfer Station LLC
Excel Recycling LLC
l%mc: 631 ,191 ,9)2 ~,
Fax: 6~i 491 9022
June I1, 2007
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, NY 11971
Re: Winters Bros. Recycling Corp. Bid
Dear Gentlemen:
As the Chief Financial Officer of Winters Bros. Recycling Corp and its parent Winters Bros. Waste
Systems, Inc., I certify that Winters Bros. Recycling Corp. has the financial and operational capability to
meet the requirements outlined in this bid.
Winters Bros. Waste Systems, Inc. is the largest waste services provider on Long Island. The Winters
family which owns and operates the Company were born and raised on Long Island and they have deep
ties to this community. Over the past forty years, the Company has grown the business to its current size
of over $150 million in annual revenues. We service over 20,000 Long Island businesses and homes and
Winters employs over 400 Long Islanders.
In addition, Winters Bros. Waste Systems, Inc. has long term relationships with all our key financial
relationships: Comerica Bank, our lead lending institution; Haggett Longobardi, our auditor, Evergreen
National Indemnity, our bonding company; and Clairvest Equity Partners, our equity investor. Each will
act as a reference and each is willing to sign a letter establishing that Winters Bros. is in good standing on
all terms and covenants.
Winters Bros. has the organizational experience and financial capacity to successfully meet the
commitments included in our proposals. There are no material lawsuits that could impair our ability to
transport and dispose of the waste stream covered under this bid. So we enter into this agreement with
full confidence we will be able to meet your needs.
We are happy to release more financial information if necessary upon the signing of a confidentiality
agreement or provide access to a third party reviewer subject to a confidentiality agreement.
We look forward to the opportunity to serve you.
.,/ £ hieI~ Financia
Wint erFsi~7~Tstfie~st em s, Inc.
107 Mahan Street · West Babylon, New York 11704
SECTION C
CONTRACTOR BID FORM
36
SECTION C
TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES
CONTRACTOR BID FORM
1.0 . INTENT
The undersigned hereby recognizes that these documents are complementary and are
intended to provide for uniformity in bid evaluations. The formal Agreements resulting
from tlfis Bid Solicitation shall be in a form provided by the Town.
These documents are intended to depict complete Solid Waste Haul-Disposal Services
Agreement and therefore any discrepancies contained in the documents, of the omission
from the documents of express reference to any work which obviously was intended
under the Agreement, shall not excuse or relieve the Bidder from furnishing the same. No
oral statement shall in any manner or degree modify of otherwise affect the terms of the
Agreement. Work or materials described in words which have a well known technical or
trade meaning, shall be interpreted by such meaning.
2.0 GENERAL BID. STATEMENT
TO:
TOWN OF SOUTHOLD
STATE OF NEW YORK
53095 MAIN ROAD
SOUTHOLD, NEW YORK 11971
Gentlemen:
The undersigned Bidder has carefully examined the forms and content of the Bid
Solicitation, including notice to bidders, bid bond, sample operating agreement, performance
bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has
familiarized itself with the sites of work, and hereby proposes to furnish all necessary services,
permits, labor, materials, equipment, vehicles, and tools required to perform and complete the
work in strict accordance with all of the bid documents written by or on behalf of the Town of
Southold for this project.
37
The undersigned Bidder agrees to abide by all conditions stated, intended, or implied both
particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by
the Town, and the unit price Bid herein stated.
1. The Undersigned Bidder also agrees as follows:
FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a
satisfactory performance bond, and insurance all within ten (10) calendar days.
SECOND: To begin Solid Waste Haul-Disposal services operations on the
commencement date of any Agreement awarded hereunder, having completed all
necessary prior preparations of operational planning, personnel hiring, equipment
procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure
a smooth and orderly acceptance of these duties.
THIRD: To pay the Town any and all damages it may incur as a result of the
Contractor's failure to 'perform all acts necessary to the execution of the Agreement as
provided in the Bid Solicitation.
It is recognized and agreed that the Town has the unconditional right to utilize the funds
provided by the bid bond posted by the Bidder as a means of obtaining indemnification
or, payment of such damages.
FOURTH:
as follows:
During the performance of this Agreement, the Contractor hereby agrees
The Contractor shall not discriminate against any employee or applicant for
employment because of age, race, creed, color, sex, marital status, national origin,
physical disability, and shall take affirmative action to ensure that they are
afforded equal employment opportunities without discrimination because of age,
race, creed, color, sex, marital status, national origin or physical disability. Such
action shall be taken with reference, but not be limited to: recruitment,
employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or
termination, rates of pay, or other forms of compensation, and selection for
training or retraining, including apprenticeship and on-the-job training.
The Contractor shall comply with the provisions of Sections 290 through 301 of
the Executive Law, Shall furnish all information and reports deemed necessary by
the State Commission for Human Rights under these nondiscrimination clauses
and such sections of the Executive Law, and shall permit access to his books,
records, and accounts by the State Commission for Human Rights, the Attorney
General. and the Industrial Commissioner for purposes of investigation to
ascertain compliance with these nondiscrimination clauses and such sections of
the Executive Law and Civil Rights Law.
This Agreement may be forthwith cancelled, terminated, or suspended, in whole
or in part, by the Town upon the basis of a finding made by the State Commission
38
for Human Rights that the Contractor has not complied with these
nondiscrimination clauses, and the Contractor may be declared ineligible for
future Agreements made by or on behalf of the state or public authority or agency
of the state, until he satisfies to the State Commission for Human Rights that he
has established and is carrying out a program in conformity with the provisions of
these nondiscrimination clauses. Such findings shall be made by the State
Commission for Human Rights after conciliation efforts by the Commission have
failed to achieve compliance with these nondiscrimination clauses and after
verified complaint has been filed with the Commission, notice thereof has been
given to the Contractor, and an opportunity has been afforded to him to be heard
publicly before three members of the Commission. Such sanctions may be
imposed and remedies invoked independently or in addition to sanctions and
remedies otherwise provided by law.
No laborer, workman or mechanic in the employ of the Contractor or
subcontractor shall be permitted or required to work more than eight hours in any
one calendar day, or more than five days in any one week except as otherwise
provided in Labor Code Section 220.
The Contractor shall include the provisions of clauses (a) through (e) in every
subcontract or purchase order in such a manner that such provisions will be
binding upon each subcontractor or vendor as to operations to be performed
within the State of New York. The Contractor will take such action in enforcing
such provisions of such subcontract or purchase order as the Town may direct,
including sanctions and remedies.
FIFTH: By submission of this bid, the Bidder and each person signing on behalf of
any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own
organization, under penalty of perjury that to the best of his knowledge and belief:
The prices in this bid have been arrived at independently without collusion,
consultation, communication, or agreement for the purpose of restricting
competition, as to any matter relating to such prices with any other Bidder or with
any competitor.
Unless otherwise required by law, the prices which have been quoted in this bid
have not been knowingly disclosed by the Bidder and will not knowingly be
disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder
or to any competitor.
No attempt has been made nor will be made by the Bidder to induce any other
person, partnership, or corporation to submit or not to submit a bid for the purpose
of restricting competition.
The undersigned also declares that it has or they have carefully examined the Bid
Solicitation requirements and sample operating agreement and that it has or they have
personally inspected the actual location of work, together with the local sources of
39
supply, has or have satisfied itself or themselves as to ail the quantities and conditions,
and waives ail fights to claim any misunderstanding, omissions or errors regarding the
same which such inspection and observation would have disclosed.
The undersigned further understands and agrees that it is or they are to furnish and
provide in return for the respective Evaiuation Unit Bid Price, ail the necessary materiais,
machinery, vehicles, implements, tools, labor services, and other items of whatever
nature, and to do and perform all work necessary under the aforesaid conditions, to
complete operations of the aforementioned Solid' Waste Haul-Disposai Services
operations in accordance with the Bid Solicitation requirements, which requirements are
a part of this response, and that it or they will accept in full compensation therefore, the
compensation provided for in Section C-3.
The undersigned submits herewith a bid guaranty within the form provided by the
applicable bid documents in the amount of $100,000.00 for any option or combination
thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10)
calendar days after date of receipt of Notice Of Award from the Town to execute and
deliver an Agreement in the form provided by the Town or fails to execute and deliver
evidence of proper insurance coverage and performance bond in the amounts required
and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty
8hail be forfeited and be retained by the Town toward the satisfaction of liquidated
damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will
be returned to the Bidder.
The undersigned acknowledges the receipt of the following addenda, but it agrees that it
is bound by ail addenda whether or not listed herein and whether or not actually received,
it being the Bidder's responsibility to receive and have knowledge of all addenda.
ADDENDUM NUMBER AND DATES
Number 1 - Dated:
Number 2 - Dated:
Number 3 - Dated:
Number 4 - Dated:
Number 5 - Dated:
The Bidder has completed the Contract Bid Form and Unit Price Schedules in both
words and numerais in accordance with these bid requirements.
4O
3.2 EVALUATION UNIT BID PRICE FORMULA
Evaluation Unit Bid Price =
(C1)10,000+(C2)10,000+.5(C3)10,000+.5{C4)10,000+.5(C5)10,000 35,000 tons
Evaluation Unit Bid Price = $ .._q3 ~e,A')/_ ~
The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three
through 5) at 1/2 the evaluate of each of the first two (2) years.
Bidder:
By:
4.0
Authorized Representative
Address
Date
BID SECURITY ACKNOWLEDGEMENT
I have attached the required bid security to this bid.
5.0 INFORMATION SCHEDULES
I agree to furnish and include the following information schedules in addition to the
information submitted with this proposal, as a part of this bid:
Certification that the Bidder does not currently owe taxes, or other outstanding
funds, or have pending or is currently involved in any litigation-involving the
Town of Southold, State of New York (Schedule A, attached hereto).
Location and address of the Bidder's main office and the main office of parent
companies (if applicable) and Certified Statements of Ownership (Schedule B,
attached hereto).
Identification of Surety Company and its Agent. and written certification from the
Surety verifying the bond specified herein will be provided (Schedule C, attached
hereto).
Identification of all currently registered parent bidding subsidiary corporate
officers, and their addresses, and identification and certification of offices
authorized to execute an Agreement on behalf of the firm (Schedule D, attached
hereto).
42
3.0
UNIT PRICE BID SCHEDULE
SOLID WASTE HAUL-DISPOSAL SERVICES
SOUTHOLD TOWN, NEW YORK
3.1 COMPENSATION
The undersigned hereby submits the following price bid to furnish Solid Waste Haul-
Disposal Services, to Southold Town, New York for the terms ~'-~c/ ,20~:~
through
HAUL-DISPOSAL SERVICES
The Haul-Disposal Service applicable unit price per ton for agreement year ONE
~3~-~ ] ~£~e cents ($ --[-6, ¢3 ). (C1)
The Haul-Disposal Service applicable unit price per ton for agreement year TWO
}:~ ~ ~ re u~v cents ($ q-~ '~? ). (C2)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
ONE is ~-' ~ L4 j dollars and
t~ a cents ($ ~o,~ ). (C3)
dollars and
dollars and
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
TWO_is ~' Co t-~ 4: } ~ ~ ~ ~ dollars and
tao cents ($ ~ ~-, ~ ). (C4)
The Haul-Disposal Service applicable unit price per ton for agreement OPTION year
THREE is U. ~k~,] - ~r dollarsand
to ~ cents ($. eY'tq TM ). (C5)
41
H.
I.
J.
M.
Dated:
Name of Bidder:
Address of Bidder:
Detailed financial statement for the Bidder~and if applicable, for par.e..n,t
companies (Schedule E, attached hereto). ~0L,~,~ ~'~(
Statement of Bidder's Qualifications and related experiences (Schedule F,
attached hereto).
Major Subcontractors - (Schedule G, attached hereto).
Equipment- (Schedule H, attached hereto), vt, ,~
Maximum Specified Capacity- (Schedule I, attached hereto).
Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached
hereto).
Form of Bid Bond (Schedule K, attached hereto). 0tt,' ~,i~c -s~ ~.~,
Performance Bond (Schedule L, attached hereto). ~¥, ~
Operation Plan (Schedule M, attached hereto)..to,
By: Sl.~a~ure~
Corporate Seal
(If a Corporation)
Incorporated under the laws of the State of /~t~o /,~.k.
Names and addresses of officers of the corporation:
(Presiden0 Name Address
Title
(Secreta~) Name Address
43
(Treasurer) Name
Address
(If an individual or partnership)
Names and addresses of all principals or partners
44
iNFORMATION SCHEDULE A
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
ThisBidder~O~r~er-e /gv-o, ~t,)/,t.,~
(Bidder's legal
herein certifies that as a
Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending
or currently involved in any litigation involving the Town of Southold, State of New York.
By: 1/ v '/~--- Date:
(Autlio'~fized Signature)
NOTE:
(1)
(2)
If blank not applicable, fill in with N/A
If bidder owes the Town taxes or is involved in any litigation, a statement
of explanation will be attached hereto.
Tax/Litigation Certification
BID (PROPOSAL) FORM
Schedule 5.0.A
Page 1 of 1
45
INFORMATION SCHEDULE B
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The following is information on the undersigned Bidder's office locations:
Bidder's Main Office
Bidder's Parent
Corporation Main Office
Manager's Name (Contact)
Manager's Name (Contact)
Finn's Legal Name
Street Address (Box Numbers)
Parent Finn's Legal Name
Street Address (Box Numbers)
City State Zip City State Zip
Telephone Number Telephone Number
The Bidder herein certifies that the k,~,~ftt.~ ~ro_~ ~,_¢/~z~_ Firm
is partially/wholly owned subsidiary of ~o; }. Pt ~ ~-~ ~. ~,, ,~ ~K 'P~ff¢~r ~ ~ c
P~ent Fi~
This ~ is owned ~/~ -- %
P~t Fi~
By
or is a pu ck co bO ~t5
Bidder Office Locations/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 1 of 2
46
iNFORMATION SCHEDULE B - (Continued)
Name of Bidder:
By: ~'~
Date:
Note: (1)
Any attachments or modifications to this form shall be labeled Schedule 5.0.B,
and properly integrated into the Bid Form,
(2) If blank not applicable, fill in with N/A.
Bidder Office Location/Ownership
Certification
BID (PROPOSAL) FORM
Schedule 5.0.B
Page 2 of 2
47
iNFORMATION SCHEDULE C
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
This is identification that /.2~.
will be the Surety Company for (,0,
the Bidder, on this project and that the named Surety Company herein provides written
certification that the named Surety Company will provide the Performance Bond, specified in the
Contract Documents, in the event the Bidder enters into an agreement with the Town. The Surety
Company herein certifies that such Company is licensed to do business in the State of New York.
Principal
(SEAL)
~.~"- V ~ ~ lr~c~~
S~t/ety Company
By: --~q ~-r-[/~tm
Surety Verification
BID (PROPOSAL) FORM
Schedule 5.0.C
48
INFORMATION SCHEDULE D
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that the below named individuals are the current registered corporate
officers, along current permanent addresses, and designates their authority to execute an
Agreement on behalf of the firm
Corporate Title
Address
City
State, Zip
Officer's Name
Parent ~, r. 3¢~
Co¢orate Title
Address 2 ~,~,
City X~.
State, Zip PJ/ j j ¢4,
Officer's Name
Subsidiary ~
Corporate Title
Address I 0
City £~. Ta ~-~
State, Zip r~ )} ~ ~ +~'
Officer's Name
Parent
Co.orate Tire
Address
City
State, Zip r4 )/ / ~ ¢~[ ~
Officer's Name
Subsidiary
Co.orate Title
Address ~ I
City )4
State, Zip r-,
Officer's Name
Parent
Corporate Title
Address
City fl~ ~'.~;¥~,'
State, Zip pt )/, ~ ¢v2
Current Corporate Officers
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 1 of 2
49
iNFORMATION SCHEDULE D - (Continued)
Officer's Name ~'~.~o~
Co.orate Title
Address ~5
City ~+ J~
State, Zip ~ ?~ / / ¢-~,
Officer's Name
Parent ~ ',~ ,~
Co.orate Title
Address ~/~
City ~ ~
State, Zip rt f ~ / ~
Corporate
Seal
Name of Bidder:
By:
Date: ~ / 'r~/~ 3c
NOTE:
If blank not applicable, fill in with N/A
Current Corporate Officer
BID (PROPOSAL) FORM
Schedule 5.0.D
Page 2 of 2
5O
INFORMATION SCHEDULE E
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
STATEMENT OF BIDDER'S FINANCIAL CONDITION
This Bidder agrees to provide for any subsidiary and parent firm, and hereto attaches a
current or the most recent audited financial Statement(s) including as a minimum the
firms opinions, notes, revenue/expense statements, conditions of cash, etc; The attached ·
statement provided includes: ~s~- ~ ,o/%,.~ ~.~ g'~. 4~.j er - ~. M'¢,%
Accounting Firm Name
Address
Financial Period .,~ out, To 2 ~'~
Statement Date T~ eo p~4e,,~,~ea
The bidder certifies that he currently has an available line of credit in the amount of
$ . A supporting documentary evidence attached to this
form is supplied by: 4- o ~ t_~ w
Name
Date
The undersigned Bidder certifies to the validity of statement and agrees to furnish any
other information upon request that may be required by the Town of Southold, New
York. }/~, ]~
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 1 of 2
51
iNFORMATION SCHEDULE E - (continued)
The undersigned hereby authorizes and requests any person, finn or corporation to furnish any
information requested by Town of Southold, New York in verification of the firms financial
condition. T~-:~
Dated at ~ )~ ?~' This ~a +~day of°~'~ ,2063c
Name of Bidder
Title
State of New York, County of
being duly sworn deposes and saws that he
Title Name of Organizatiofl
and that the answers to the foregoing questions and all statement therein contained are tree and
correct.
/
Sworn to me this //~ ~ day of
My Commission expires:
NOTE: (1)
Notary Public
HELEN LAMNECK
Noisy Publio State of New Yo~
No. 5017015
(Bidder may submit additional information desired as Schedule ~E
attachments.)
(2) If blank not applicable, fill in with N/A
Bidder's Financial Condition
BID (PROPOSAL) FORM
Schedule 5.0.E
Page 2 of 2
52
Winters Br s.
waste systems, thC.
Winters Sros Recycling Corp
Winters Bros Tlansfer Station Corp
Winters Waste Services of New York,
Winters Brothers Recycling East End, 1nc
Winters HoltsviHe Transfer Station. LLC
Exc¢ Recycling, LLC
Phone: 6_31 491-4923
Fax: 631 491-9022
Jane 11, 2007
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, NY 11971
Re: Winters Bros. Recycling Corp. Bid
Dear Gentlemen:
As the Chief Financial Officer of Winters Bros. Recycling Corp and its parent Winters Bros. Waste
Systems, Inc., I certify that Winters Bros. Recycling Corp. has the financial and operational capability to
meet the requirements outlined in this bid.
Winters Bros. Waste Systems, Inc. is the largest waste services provider on Long Island. The Winters
family which owns and operates the Company were bom and raised on Long Island and they have deep
ties to this community. Over the past forty years, the Company has grown the business to its current size
of over $150 million in annual revenues. We service over 20,000 Long Island businesses and homes and
Winters employs over 400 Long Islanders.
In addition, Winters Bros. Waste Systems, Inc. has long term relationships with all our key financial
relationships: Comerica Bank, our lead lending institution; Haggett Longohardi, our auditor, Evergreen
National Indemnity, our bonding company; and Clairvest Equity Partners, our equity investor. Each will
act as a reference and each is willing to sign a letter establishing that Winters Bros. is in good standing on
all terms and covenants.
Winters Bros. has the organizational experience and financial capacity to successfully meet the
commitments included~n our proposals2 There are no material lawsuits that could impair our ability to
transport and dispose of the waste stream covered under this bid. So we enter into this agreement with
full confidence we will be able to meet your needs.
We are happy to release more financial information if necessary upon the signing of a confidentiality
agreement or provide access to a third party reviewer subject to a confidentiality agreement.
We look forward to the opportunity to serve you.
winters Bros~stems, Inc.
107 Mahan Street · West Babylon1 New York 11704
INFORMATION SCHEDULE F
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and
that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the
Bidder offers the following related information and references in order that the Town may
evaluate the Bidder's qualifications and experience.
1. Bidder's Legal Name:
2. Business Address:
Street'
City State Zip
State incorporated: rq j Year incorp.:
New York State; Business License No.:
5. No. Years in contracting business under above name: ~ years.
6. Has firm ever defaulted on a contract? Yes No fi/
7. Gross Value - work under current contract: $ ~ ~'~ ~, e~, 0~'~. ~
8. Number of Current Contracts:
9. Brief description general work performed by firm:
10. Has Finn ever failed to complete work awarded? Yes No d
If yes, attach supporting statement as to circumstances.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 1 of 3
53
11.
11.1
11.2
iNFORMATION SCHEDULE F - (continued)
Related Experience Reference (within previous 5 years)
Project Title:
Owner's Name:
Address:
En~neer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value:
Brief Project Description:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value:
Brief Project Description: P
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 2 of 3
54
11.3
Owner's Name: 7~/ c~ ~Xcit
Address:
Engineer:
Address:
Project Initial Start Date:
Project Acceptance Date:
Initial Bid Value: $
Final Complete Project Value:
Brief Project Description: f.
12.
Principal Firm Members' Background/Experience (3 members minimum). Attach current
resumes as Schedule 5.0.F supplement or give concise description by individual.
Name of Bidder: ~d, ~rr ~ta[
By: ]/~ ~-. Date:
(Authorized Signature)
NOTE:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.F, and shall be properly integrated into this Bid Form.
If blank not applicable, fill in with N/A.
Qualifications Summary
BID (PROPOSAL) FORM
Schedule 5.0.F
Page 3 of 3
55
WidOw.s roso
JOSEPH WINTERS
CEO & PRESIDENT
WINTERS BROS. WASTE SYSTEMS, INC.
EXPERIENCE/DATES/RESPONSIBILITIES (WINTERS BROS.)
Joe Winters literally grew up in the waste business; starting under the tutelage of his father, who
founded, owned and operated a Long Island waste company beginning in the 1950's. In 1993,
Joe, with the support of his brothers, orchestrated the acquisition of Allcycle, a Vermont hauling
company. At the time of the acquisition, Allcycle generated $3 million in revenues with
approximately $250,000 in operating losses. Joe and his brothers grew that business to $11
million in three years through a successful combination of sales and acquisitions. In 1998, Joe
and his brothers sold Allcycle to Casella Waste Systems, Inc. for $23 million. He currently
oversees all company functions and is highly active in all commercial matters including sales and
marketing. Joe Winters is held in very high regard by the industry, the marketplace as well as
with the state and local regulators. He has extensive experience in all aspects of waste
management and has successfully identified, negotiated and closed on over 25 acquisitions
during his illustrious 23 year waste career.
SEAN WINTERS
SENIOR VICE PRESIDENT
WINTERS BROS. WASTE SYSTEMS, INC.
EXPERIENCE/DATES/RESPONSIBILITIES (WINTERS BROS.)
Sean Winters entered the waste business in his pre-teen years when he worked at his father's
company. Upon receiving his driver's license at the age of 16, he began his waste industry
education in route management. He currently oversees all aspects of transfer station functions
and is involved in managing haulage dispatch operations as the company installs a more
sophisticated dispatch system. He leads the planning, construction and related system
development of the Excel transfer station project in Medford. Sean maintains close relationships
with the union 'rank and file' and remains active in all aspects of labor relations including the
hiring of hourly personnel. He is highly respected by all the employees with his lead by example
work ethic and is always 'the first to show and last to go' for each work day. Sean plays an
active role in all strategic decisions including acquisition candidate selection and post closing
acquisition integration.
roso
K~ VIN NOZ,A.N
VICE PRESIDENT- OPERA TIONS
WINTERS BROS. WASTE SYSTEMS, INC.
EXPERIENCE/DATES/RESPONSIBILITIES (WINTERS BROS.)
Kevin Nolan began his career in the waste business as a teenager. Learning the business from
the bottom up under his father's tutelage, Kevin has become a seasoned executive with multiple
years of experience in both privately owned and publicly owned waste businesses. Twelve of
Kevin's twenty six years of experience were spent at ReSource NE, a privately owned family
business that at the time of sale to Waste Management in 1996 was generating $120 million in
annual revenue. Kevin served as the hauling division General Manager at the tinie of sale. Kevin
has held numerous senior management positions with several publicly traded companies over his
career including Waste Management, USA Waste Services and Eastern Environmental Services.
Kevin has also played significant roles related to acquisitions at all of these companies from
sourcing to integration. He is currently the Vice President of Operations at Winters Bros. and
oversees all aspects of operations for the company.
EXPERIENCE/DATES/RESPONSIBILITIES (OTHER FIRMS)
From 1999 to 2005 Kevin was the Vice President of Operations for Northstar Waste. In addition
to managing the day to day operation, Kevin was responsible for the growth and profit of the
company through sales and acquisitions, integration and operational efficiencies. From 1998 to
1999 Kevin was the General Manager for Eastern Environmental where he was responsible for
the growth and profit of the company through sales and acquisitions, integration and operational
efficiencies. From 1996 to 1998 he was the District Manager for USA Waste of New York City
where he was responsible for the entire NYC District hauling and transfer station operations.
From 1985 to 1996 he was the General Manager for Resource / Waste Management of New
York City. At Resource Kevin was responsible for the hauling division of the company which he
positioned as the industry leader at the time of acquisition by Waste Management.
ALI RAMALIU
EAST A R~A TRANSFER MANAGER
WINTERS BROS. WASTE SYSTEMS, INC.
EXPERIENCE/DATES/RESPONSIBILITIES (WINTERS BROS.)
Ali Ramaliu has over 28 years of experience in the waste management industry. He has recently
rejoined Winters Brothers after owning his own company, 1st Response Rail Service a company
dedicated to the repair and movement of waste by rail. Mr. Ramaliu is currently the East Area
Transfer Manager responsible for the day to day operations of three transfer stations, which are
our Medford, Yaphank and Holtsville facilities. He is also responsible for ongoing rail
operations as well design and installation of all recycling systems.
EXPERIENCE/DATES/RESPONSIBILITIES (OTHER FIRMS)
From 2004-2006 he owned Response Rail Service. From 1994-2004 he worked as a site manager
for Winters Brothers West Babylon Transfer Station operations. From 1996-1997 he was the
General Manager for McDonald Sullivan, a 40 trailer transportation operation for MSW & C&D
material. From 1993-1996 he worked for Star Recycling (a premier NYC C&D / MSW transfer
station facility which was purchased by Waste Management as their introduction into the NYC
market) as a site manager. From 1983-1993 he was the Vice President for Cousins Metal, a scrap
metal and rubbish processing company. From 1979-1983 he worked for Francis A. Lee as an
ironworker foreman and heavy equipment operator, handling the repair and installations of
recycling equipment.
INFORMATION SCHDULE G
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul
sub-contractors on this project. /~/~
2.
3.
4.
5.
6.
7.
8.
9.
10.
Sub-Contractor/
Contract Trade/
Individual Address Phone # Specialties
NOTE:
Name of Bidder:,~) ~o, ~, r3ro~
By: ~/V/~ Date:
(Authorized Signature)
If blank not applicable, fill in with N/A
Subcontractors
BID (PROPOSAL) FORM
Schedule 5.0.G
56
IFORMATION SCHEDULE H
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder states that it owns the following pieces of equipment that are available for use on the
project, if awarded the agreement. ~'Q~ ~,-, c~0~
Proposed Current
Equipment Item Project Use Equipment Location
NOTE:
Name.of Bidder: bq'"r'lbtvs ~rox_
By: ~ Date:
Any supplemental attachments or modifications to this form shall be labeled
Schedule 5.0.H and shall be properly integrated into the Bid Form.
If blank not applicable, fill in with N/A
Construction Equipment
BID (PROPOSAL) FORM
Schedule 5.0.H
57
W BAB 1002 1 m l ag 11716m033357 Tractor 31937TR 2006 3 MACK
w BAR 1003 1xp5db9x0xn507630 Tractor 30493TR 1999 13 PETER
A_~_~_~ 1004 1 xkwdb0x81 j871039 Tractor 30491TR 2001 13 KW
1005 1xkwdb0x41j872088 Tractor 84666PA 2001 13 KW
w BAR 1006 1hswxaxr04j019008 Tractor 84484PA 2004 3 INTER
w BAR 1007 1hswxaxr24j019009 Tractor 25295TR 2004 19 INTER
w BAR 1008 1 m 1 ag 11 yx6m039741 Tractor 31935TR 2006 17 MACK
W BAR 1009 1M1AT04YX7M005379 Tractor 84782PA 2007 3 MACK
w BAR 1012 1M1AT04Y67MO05380 Tractor 84781 PA 2007 1 MACK
w BAR 1013 1M1AT04Y87M005378 Tractor 85017PA 2007 1 MACK
w BAR 1014 1 M1AK06Y 16N008664 Tractor 86661 PA 2006 8 MACK
W BAR 1015 1M1AK06Y57N022228 Tractor 86663PA 2007 6 MACK
w BAR 1016 1M1AK06Y77N022229 Tractor 86665PA 2007 6 MACK
w BAR 1017 1M1AK06Y37N022230 Tractor 86662PA 2007 3 MACK
w BAR 1018 1M1AK06Y57N022231 Tractor 86664PA 2007 3 MACK
w BAR 1019 1 M1AK06Y77N022232 Tractor 86666PA 2007 1 MACK
Medford 1001 1 m 1 ad61 ygxw002708 Tractor 17382JT 1999 20 MACK
Medford 1010 lmlagl 1y16m039742 Tractor 31938TR 2006 8 MACK
Medford 1011 lmlagl 1y36m033358 Tractor 31936TR 2006 1 MACK
W BAR 2000 S12E8484R0363619 TRAILER AM59396 1994 0 STRICK
W BAR 2001 s8a14521 x0010104 TRAILER AF23738 1999 0 SUMMIT
~,~ BAR 2002 s9war259r 1252214 TRAILER AF23739 1994 0 STECO
~BAB 2003 lh9dmkld9x1322040 TRAILER AF23737 1999 1 HILL
W BAR 2004 numt28z1 xmaa 1348 TRAILER AF23736 1999 0 BENSON
w BAR 2005 numt28z6ymaa0536 TRAILER AF23735 2000 0 BENSON
W BAR 2006 numt28z8ymaa0537 TRAILER AF23734 2000 0 BENSON
W BAB 2008 1s8a14525sO008977 TRAILER AL42187 1995 0 SUMMIT
w BAR 2009 1s8a1452xtO009351 TRAILER AK64202 1996 11 SUMMIT
W BAR 2010 1s8a1452xsO008974 TRAILER AK64201 1995 1 SUMMIT
w BAR 2011 1elulx284pra14228 TRAILER AM59547 1993 2 EAST
w BAR 2014 iEWWA482061254109 TRAILER AR55858 2006 13 STECO
W BAR 2015 iEWWA452361254108 TRAILER AR55859 2006 8 STECO
W BAB 2016 iEWWA482561254056 TRAILER AR55900 2006 8 STECO
w BAR 2017 5EWWA482571254110 TRAILER AS27880 2007 7 STECO
w BAR 2018 iEWWA482471254258 TRAILER AS27878 2007 7 STECO
W BAR 2019 '5EWWA482671254259 TRAILER AS27577 2007 12 STECO
W BAB 2020 5EWWA482271254260 TRAILER AS27879 2007 11 STECO
W BAB 2021 5EWWA482471254261 TRAILER AS27876 2007 12 STECO
W BAB 2022 5EWWA482671254262 TRAILER AS27875 2007 14 STECO
W BAB 2023 1H9D1 K1 D121322020 TRAILER AR59264 2002 1 HILL
Medford 2007 ls8a14521tO009027 TRAILER AN20995 1996 0 SUMMIT
2012 2K9WF1L286H035425 TRAILER AP81938 2006 13 TITAN
'~ '~ 1 s'T"~5~ TRAILER AR51867 2005 8 J&M
INFORMATION SCHEDULE I
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
The Bidder hereby states that it will be prepared to dispose of up to the following Maximum
Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement
Contract Year
.
Maximum Tons per Contract Year
Name of Bidder: b~, ;~ ~r-r
Date:
Maximum Specified Capacity
BID (PROPOSAL) FORM
Schedule 5.0.1
58
INFORMATION SCHEDULE J
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
NOTE:
IF A BIDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE
DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE
COMPLETED FOR EACH DISPOSAL SITE.
The following is information on the undersigned Bidder's Solid Waste Disposal Site:
I. GENERAL
Disposal Site I~ocation
Name: ~'J i ~t:~r $
Address: A ,5,~ oco o~.
Phone:
Disposal Site mailing address (if different than I)
Address:
II. CURRENT OPERATIONS
Operations Permit
1. Permittee:
2. No.: I
3. State:
4. Date of Issue:
5. Date of Expiration:
6. Copy Enclosed: Yes:
No:
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 1 of 7
59
INFORMATION SCHEDULE J - (continued)
Hours of Operations
1. What are the PERMITTED operating hours?
DAY A.M.
Monday to
Tuesday to
Wednesday to
Thursday to
Friday to
Saturday to
Sunday to
PoMo
Are there any PERMITTED closure periods stipulated?
1'4 ·
What are the ACTUAL operating hours?
DAY A.M.
Monday ~ ~ ~ to
Tuesday ~: ~ to
Wednesday ~ ~ to
Thursday ~ i o, to
Friday ~,: o~ to
Saturday 6: ~ to
Sunday to
PoM,
What holiday or other period is the Disposal Site typically closed?
DAY Y~S
New Year's to
Memorial 4 to
Independence to
Labor ~ to
Thanksgiving --'J to
Christmas -~ to
Other (specify) to
NO
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL)FORM
Schedule 5.0.J
Page 2 of 7
60
INFORMATION SCHEDULE J - (continued)
Will the ACTUAL operating hours be extended up to the PERMITTED
operating hours in Question II.B.I in order to accommodate Town of
Southold solid waste?
Yes 7¢'~'" a~) No
Are there any local agreements, ordinances, etc. which would prohibit
extending the ACTUAL operating hours in Question II.B.3 up to the
PERMITTED operating hours in Question II.B. 1 ?
Yes No J
What is the PERMITTED annual capacity in tons?
At the PERMITTED levels in Question II.C., what is the projected useful life in
years? LQ/¢,0~ ~qro '{"~- fit.,,.., d~ ~,~ ~ ~
What is the annual RECEIVING6 level today?.
At the RECEWING levels in Question II.E, what is the projected useful life in
Years?
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 3 of 7
61
INFORMATION SCHEDULE J - (continued)
How much of the RECEIVING level in Question II.E is committed to under
contract in tons?
2004
20
20o~
20 t~
20 ~
Does the Disposal Site have special waste restrictions?
1. Construction/Demolition
2. Asbestos
3. Wastewater Treatment
Sludge
4. Hazardous Waste
t
Gate
Yes No Fee ($)
d
d
Are there any existing agreements with local municipalities which prohibit:
Item
Routing to site
Weight limits between
state coeds and site
Number of vehicles
Vehicle size
Solid waste importation
outside jurisdictional area
Host Community Benefits
Yes
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 4 of 7
62
INFORMATION SCHEDULE J - (Continued)
III.
EXPANSION PLANS
A. Application Permit
1. Permitee:
2. No.:
3.
4.
5.
6.
State:
Date of Submission:
Copy Enclosed: Yes No
Submission Stares: ~r/~
a. Expansion of current site or new site
Local Citizenry Reaction
Regulatory agency
d. Litigation
e. Likelihood to succeed
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 5 of 7
63
iNFORMATION SCHEDULE J - (Continued)
If you are successful in Question III.A., what is the additional annual DESIGN
capacity in tons (do not include figures from Question II.C.)? p/t}kfi
20
20
20
20
At the annual DESIGN levels in Question III.B, what would be the projected
useful life in years? )re
Would you be willing to share with the Town of Southold engineering reports
utilized for the preparation of the Operating Permits on Expansion Application?
Yes No ,P~/t~
Bidder's Disposal Site(s) Engineer of Record
Finn's Name
Finn's Address
Project Engineer
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 6 of 7
64
iNFORMATION SCHEDULE J - (Continued)
Are you willing to meet/with the Town of Southold to discuss your short and long term
disposal capabilities? Yes ~] No
The undersigned hereby certifies that services, material, equipment to be furnished as a
result of this bid will be in accordance with Town of Southold specifications applying thereto
unless exceptions are indicated above and an explanation attached.
Bidding Company
Address
City
State Zip
Signature
Phone No.
(Pl~se Print or Type) NAME AND TITLE
Date 6 ],s?,z~
CORPORATE SEAL
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 7 of 7
65
INFORMATION SCHEDULE J
Town of Southold Bid Project
Solid Waste Haul-Disposal Services
NOTE:
IF A BiDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE
DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE
COMPLETED FOR EACH DISPOSAL SITE.
The following is information on the undersigned Bidder's Solid Waste Disposal Site:
I. GENERAL
Disposal Site Location
Address:
Phone:
,",, ,/ I / ?"'-/2
/
Disposal Site mailing address (if different than I)
Address: ! O :~ r~I ~ t4,~ *'t. ~
II. CURRENT OPERATIONS
Operations Permit
1. Permittee: ~'~'~'~'~'~'~'~'~'~ ¢',~-/-c -h~.~,,~ L-rox~;,~ [t~.~,
2. No.: 1~22 oo~f~ oo, eJ
3. State: ~ 7~¢k
4. Date of Issue: ~ ~ l, ] o ~
5. Date of Expiration: toil)/ ~o
6. Copy Enclosed: Yes: ~ No:
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 1 of 7
59
INFORMATION SCHEDULE J - (continued)
Hours of Operations
1. What are the PERMITTED operating hours?
DAY A.M.
Monday [' o~ to
Tuesday b~ o~ to
Wednesday 6: o~ to
Thursday ~ :v, to
Friday c; ,o to
Saturday I: ~, to
Sunday to
PoM.
Are there any PERMITTED closure periods stipulated?
What are the ACTUAL operating hours?
DAY A.M. P.M.
Monday ~ ', ~' to ¢ ~
Tuesday ~-'- ~' to ~ '~
Wednesday ~.e, to ~ r~
Thursday ~: ~ to ~:
Friday 6 .'~ to 6:~
Sa~day ~: ~ to 2 '.
S~day to
What holiday or other period is the Disposal Site typically closed?
DAY Y~
New Year's to
Memorial to
Independence Cf to
Labor f to
Thanksgiving ~__ to
Christmas to
Other (specify) to
NO
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL)' FORM
Schedule 5.0.J
Page 2 of 7
60
Bo
INFORMATION SCHEDULE J - (continued)
Will the ACTUAL operating hours be extended up to the PERMITTED
operating hours in Question II.B.1 in order to accommodate Town of
Southold solid waste?
Yes d No
Are there any local agreements, ordinances, etc. which would prohibit
extending the ACTUAL operating hours in Question II.B.3 up to the
PERMITTED operating hours in Question II.B.1 ?
Yes No \/
What is the PERMITTED annual capacity in tons?
20 o3-
20 o~ 9)3,~
20 0~ 9 :}.~ ~
20 J0 )¢5. ~
At the PERMITTED levels in Question II.C., what is the projected useful life in
years?
E. What is the annual RECEWING6 leYel today?. ~E) ! :~I, g ~
At the RECEIVING levels in Question II.E, what is the projected useful life in
Years?
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 3 of 7
61
INFORMATION SCHEDULE J - (continued)
How much of the RECEIVING level in Question II.E is committed to under
contract in tons?
20
20 o~
20 I~
Does the Disposal Site have special waste restrictions?
1. Construction/Demolition
2. Asbestos
3. Wastewater Treatment
Sludge
4. Hazardous Waste
Gate
Yes No Fee ($)
j
J
I. Are there any existing agreements with local municipalities which prohibit:
o
Routing to site
Weight limits between
state coeds and site
Number of vehicles
Vehicle size
Solid waste importation
outside jurisdictional area
Host Community Benefits
Yes
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 4 of 7
INFORMATION SCHEDULE J - (Continued)
III.
EXPANSION PLANS
A. Application Permit
1. Permitee: ~
2. No.:
3. State:
4. Date of Submission:
5. Copy Enclosed: Yes No
6. Submission Status:
a. Expansion of current site or new site
Local Citizenry Reaction
Regulatory agency
d. Litigation
e. Likelihood to succeed
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 5 of 7
63
iNFORMATION SCHEDULE J - (Continued)
If you are successful in Question III.A, what is the additional annual DESIGN
capacity in tons (do not include figures from Question II.C.)? P//?~
20
20 D/
20
20
At the annual DESIGN levels in Question III.B., what would be the projected
useful life in years? f4 ~ p
Would you be willing to share with the Town of Southold engineering reports
utilized for the preparation of the Operating Permits on Expansion Application?
Yes No /v//q
E. Bidder's Disposal Site(s) Engineer of Record
Firm's Name
Finn's Address
Project Engineer
Bidder Solid Waste Disposal Site(s)
BID (PROPOSAL) FORM
Schedule 5.0.J
Page 6 of 7
64
INFORMATION SCHEDULE J - (Continued)
Are you willing to meet ~vith the Town of Southold to discuss your short and long term
disposal capabilities? Yes L/ No
The undersigned hereby certifies that services, material, equipment to be furnished as a
result of this bid will be in accordance with Town of Southold specifications applying thereto
unless exceptions are indicated above and an explanation attached.
Bidding Company ~4~d~{r~ ~3~. f{,~c/Oi~] (o~f
Address ) 0---~ I'D f/t4~o~ £~r*x4-
City State Zip
Signature
Phone No.
(PleCse Print or Type)
NAME AND TITLE
Date
CORPORATE SEAL
Bidder Solid Waste Disposal Site(s)
BiD (PROPOSAL) FORM
Schedule 5.0.J
Page 7 of 7
65
INFORMATION SCHEDULE K
FORM OF BID BOND
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned,
as Principal, and
as Surety, are hereby held and firmly bound unto
Owner in the sum of
for the payment of which, will
and truly be made, we hereby jointly and severally bind ourselves, our heirs, executors,
administrators, successors and assigns. Signed this__ day of ~ 20
. ~T~ ~_cgndition of the above ob!igatign is such that whereas the prin~!pal has submitted to the
Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into a
contract in writing, for the hauling and disposal of solid waste;
NOW, THEREFORE,
(a) If said Bid shall be rejected or in the alternate,
If said Bid shall be accepted, and the Principal shall execute and deliver an
Agreement in the form off the Sample Operating Agreement attached hereto
(properly completed in accordance with said Bid) and shall furnish certificates of
insurance and a bond for this faithful performance of said Agreement, and for the
payment of all persons performing labor or furnishing materials in connection
therew/th, and shall in all other respects perform the Agreement created by the
acceptance of said Bid, then this obligation shall be void, otherwise the same shall
remain in force and effect; it being expressly understood and agreed that the
liability of the Surety for any and all claims hereunder shall, in no event, exceed
the penal amount of this obligation as herein stated.
The Surety, for value received, hereby stipulates and agrees that the obligations of
said Surety and its bond shall be in no way impaired or affected by any extension
of the time within which the Owner may accept such Bid; and said Surety does
hereby waive notice of any such extension.
Form of Bid Bond
BID (PROPOSAL) FORM
Schedule 5.0.K
Page 1 of 3
66
1N WII~NESS WHEREOF, the Principal and the Surety have hereunto set their hands and seats,
and such of them as are corporations have caused their corporate seals to be hereto affixed and
these presents to be signed by their proper officers, the day and year first set forth above.
(L.S.)
Principal
STATE OF:
COUNTY:
On this
Surety
By:
Address of Surety:
SE~ .......
(ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION)
)
) SSN:
day of ,20__
and say that he resides in
., to me known, who being duly sworn, did depose
before me personally came
; that he is the
of the
corporation described in and which executed the foregoing instrument; that he knows the seal of
corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by
the order of the Board of Directors of the corporation; and that he signed his name thereto by like
order.
Notary Public
Form of Bid Bond
BID (PROPOSAL) FORM
(ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP)
Schedule 5.0.K
Page 2 of 3
67
STATE OF: )
COUNTY: ) SSN:
On this day of ,20__ before me personally came
, to me known, and known to me to be a member of the firm
of ~ and known to me to be an individual described in, and
who executed the foregoin~ 5;stmment in the firm name of ~
and he duly acknowledged ~o me that he executed the same for and in the behalf of said firm for
the uses and purposes men:i~ned therein.
Notary Public
(ACKNOWLEDGEMENT 5Y INDIVIDUAL CONTRACTOR)
STATE OF: )
COUNTY: ) SSN:
On this day of _ ., 20__ before me personally came
__, to me know, and known to be the person described in and
who executed the foregoin..i' strument and duly acknowledged that he executed the same.
Notary Public
Form of Bid Bond
Bm (PROPOSAL) FORM
Schedule 5.0.K
Page 3 of 3
68
INFORMATION SCBEDULE L
PERFORMANCE BOND
Bond No.
KNOW ALL MEN BY THESE PRESENTS, that
(hereinafter called the "principal") and
(hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter
called the "Owner") in the full and just sum of dollars
($ ) good and lawful money of the United States of America, for the
payment of which sum of money, well and truly to be made and done, the Principal binds
himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors
and assigns, jointly and severally, firmly by these presents.
_ WHEREAS, the Principal has entered into a certain written Agreement bearing date on
the day of ,20 __) with the Owner for the Town of
Southold Solid Waste Haul-Disposal Services, a copy of which Agreement is annexed to and
hereby made part of this bond as though herein set forth in full.
NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his
or its representatives or assigns, shall well and faithfully comply with and perform all the terms,
covenants and conditions of said Agreement or his (their, its) part to be kept and performed and
all modifications, amendments, additions and alterations thereto that may hereafter be made,
according to the tree intent and meaning of said Agreement, and shall fully indemnify and save
harmless the Owner fi:om all cost and damage which it may suffer by reason of failure so to do,
and shall fully reimburse and repay the Owner for all outlay and expense which the Owner may
incur in making good any such default, and shall protect the said Owner against, and pay any and
all amounts, damages, costs and judgments which may or shall be recovered against said Owner
or its officers or agents or which the said Owner may be called upon to pay to any person or
corporation by reason of any damages arising or growing out of the doing of said work, or the
repair of maintenance thereof, or the manner of doing the same, or the neglect of the said
Principal, or his (their, its) agents or servants or the improper performance of the said work by
the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent
rights by reason of the use of any materials furnished or work done as aforesaid or otherwise,
then this obligation shall be null and void, otherwise to remain in full force and effect;
Performance Bond
BID (PROPOSAL) FORM
Schedule 5.0.L
Page 1 of 2
69
PROVIDED HOWEVER, the Surety, for the value received, hereby stipulates and
agrees, if requested to do so by the Owner, to fully perform and complete the work mentioned
and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for
any cause the Principal fails or neglects to so fully perform and complete such work and the
Surety further agrees to commence such work of completion within ten (10) calendar days after
written notice thereof from the Owner and to complete such work within ten (10) calendar days
from the expiration of the time allowed the Principal in the Agreement for the completion
thereof; and further
PROVIDED HOWEVER, the Surety, for value received, for itself, and its successors and
assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no
may impaired or affected by an extension of time, modification, work to be performed
thereunder, or by any payment thereunder before the time required herein, or by any waiver of
any provisions thereof or by any assignment, subletting or other transfer of any work to be
performed or any monies due or to become due thereunder; and said Surety does hereby waive
notice of any and alt of such extensions, modifications, omissions, additions, changes, payments,
waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that
any and all things done and omitted to be done by and in relation co assignees, subcontractors,
and other transferees shall have the same effect as to said Surety as though done or omitted to be
done by or in relation to said Principal.
1N WITNESS WHEREOF, the Principal has hereunto sec his (their, its) hand and seal
and the Surety has caused this instrument to be signed by its
and its corporate seal to be hereunto affixed this day of ,20
(If Corporation add
Seal and Attestation)
Principal
By:
Attest:
Add Corporate Seal
By:
Attest:
Address of Surety:
Surety
Performance Bond
BID (PORPOSAL) FORM
Schedule 5.0.L
Page 2 of 2
7O
IN'FORMATION SCHEDULE M
OPERATIONAL PLAN -- nCo,~ ~c4ke, ~d{ t .,
The Bidder hereby states that it proposes to implernent the following operational plan to haul and
dispose of Municipal Solid Waste (MSW) from the Town of Southold Landfill if awarded an
Agreement.
I. Haul
Snmmarize the manpower and equipment you will make available to perform under th/s
It. Disposal
Snmmar/ze the identity and location of the primary and secondary sites you plan to use for
disposal of the solid waste. Describe the arrangements between your company and the disposal
site for use of the site. Describe any treatment the MSW will undergo during transport or upon
arrival at the disposal site. Attach copies of the permits to construct and perm/ts to operate the
disposal site.
Site No. 1
Operational Plan Schedule 5.0.M
BID (PROPOSAL) FORM Page 1 of 2
71
Site No. 2
Operational Plan
BID (PROPOSAL) FOPdVl
Schedule 5.0.M
Page 2 of 2
72
OPERATIONAL PLAN
HAUL:
Winters Bros. Recycling Corp. will provide 3 to 4 empty walking-floor type
waste transfer trailers to the Town of Southold for the purpose of loading,
tarping and staging by Town of Southold employees under the terms of this bid.
When the staged trailers are ready for transport, Winters Bros. Recycling Corp.
will provide its own driver, tractor and extra empty trailers to switch with the
loaded trailers. The driver will check the loaded trailer to make sure that the load is
secured for the safe transport of the Town of Southold's MSW; he will then
scale the loaded trailer and transport the load to be disposed of at one of our
two Facilities listed below.
DISPOSAL:
Following is a detailed description of the Facilities to be used for the
acceptance of the Town of Southold's MSW.
SITE NO. 1:
NAME: Winters Holtsville Transfer Station DBA Winters Yaphank Transfer Station.
ADDRESS: 82A Old Dock Rd., Yaphank, NY 11980
CONTACT PERSON: Ali Ramiliu PHONE: 631-289-3335
Winters Holtsville Transfer Station DBA Winters Yaphank Transfer Station has
sufficient capacity to accept the Town of Southold's MSW (as reflected in the
included Facility permit).
The Facility is permitted to operate Monday through Saturday between the hours of 6:00 am
and 6:00pm for the acceptance of waste.
The Facility has sufficient tonnage capacity to accept the Town of Southold's entire MSW
Stream. The Facility tonnage capacity is reflected in the included permit.
Useful life of the Facility: The Facility permit is set to expire 9/14/2009. In keeping with
Winters Bros. Recycling Corp.'s foremost reputation in the Waste Management Industry, the
permit will be renewed in a timely fashion.
SITE NO. 2:
NAME: Winters Holtsville Transfer Station
ADDRESS: 971 Waverly Ave. Holtsville, NY 11742
CONTACT PERSON: Ali Ramiliu PHONE: 631-289-3335
Winters Holtsville Transfer Station has sufficient capacity to accept the Town of
Southold's MSW (as reflected in the included Facility permit).
The Facility is permitted to operate Monday through Saturday between the hours of 6:00 am
and 6:00pm for the acceptance of waste.
The Facility has sufficient tonnage capacity to accept the Town of Southold's entire MSW
Stream. The Facility tonnage capacity is reflected in the included permit.
Useful life of the Facility: The Facility permit is set to expire 10/31/2010. In keeping with
Winters Bros. Recycling Corp.'s foremost reputation in the Waste Management Industry, the
permit will be renewed in a timely fashion.
Winters Br os.
waste systems, inc.
Winters F3ros Recycling Corp
Winters Elms Transfer Station Corp
Winters Waste Services ol New York, Inc
Winters Brothers Recycling East End, Inc
Winters Holtsv lie Transfer Station, LLC
Excel Recy¢ling. LLC
Phone: 631 491-4923
Fax: 631 491-9022
June 11,2007
Office of the Town Clerk
Southold Town Hall
53095 Main Road
Southold, NY 11971
Re: Winters Bros. Recycling Corp. Bid
Dear Gentlemen:
As the Chief Financial Officer of Winters Bros. Recycling Corp and its parent Winters Bros. Waste
Systems, Inc., I certify that Winters Bros. Recycling Corp. has the financial and operational capability to
meet the requirements outlined in this bid.
Winters Bros. Waste Systems, Inc. is the largest waste services provider on Long Island. The Winters
family which owns and operates the Company were born and raised on Long Island and they have deep
ties to this community. Over the past forty years, the Company has grown the business to its current size
of over $150 million in annual revenues. We service over 20,000 Long Island businesses and homes and
Winters employs over 400 Long Islanders.
In addition, Winters Bros. Waste Systems, Inc. has long term relationships with all our key financial
relationships: Comerica Bank, our lead lending institution; Haggett Longobardi, our auditor, Evergreen
National Indemnity, our bonding company; and Clairvest Equity Partners, our equity investor. Each will
act as a reference and each is willing to sign a letter establishing that Winters Bros. is in good standing on
all terms and covenants.
Winters Bros. has the organizational experience and financial capacity to successfully meet the
commitments included in our proposals~ There are no material lawsuits that could impair our ability to
transport and dispose of the waste stream covered under this bid. So we enter into this agreement with
full confidante we will be able to meet your needs.
We are happy to release more financial information if necessary upon the signing of a confidentiality
agreement or provide access to a third party reviewer subject to a confidentiality agreement.
We look forward to the opportunity to serve you.
winters 15rosystems, Inc.
107 Mahan Street · West Babylon, New York 11704
REV YORE STATE DEPARTNENT'OF ENVIRONMENTAL CONSERVATION
FACI L( TY/PROGRA~
PERMIT
under the ErrAronemnteL
EFFECTIVE DATE
May 1A~ ZOO&,
EXPIRATION DATE(E)
september 14, 2009
· Modification [] Permit to construct [] Permit to Operate I I
TYPE OF PERMIT r'l N., · Renewal
ArticLe 15, TitLe 5: Protection
of Weters
O Article 15, TitLe 15: Water
SuppLy
[] Article 15, Title Z?: wild,
6NYCRR 608: Weter,OueLity
Certification
[] Article 17, Titles ?, E: iPDES
[] ArticLe 19: Air Pollution
Control
[] Article Z3, lit[e 27: Mined
Land Rec(amtion
· Article 27, Title 7; 6H~CRR
360: Solid Waste Manegemeflt
[] Article 27, TitLe 9; 6NYCRR
373: Hazardous Waste Management
[] ArticLe )&: Coastal Erosion
Management
D ArticLe )6: FLoodpLain
#anagement
[] ArticLes 1, $, 17, 19, 27, 37;
6NTCHR )O0: Radiation Control
0 Other:
PERMIT iSSUED TO
ALL ZsLendOemOlition Recycling
ADDRESS OF PERMITTEE
A6Z OLd Dock Road
YephonkI NY 11980
CONTACT PER$OR FOR PERMITTED WORK
John Benecletto - ALL Island Demolition ReCycling
A82 OLd Dock Ro~df Yophenk NY 11980
HAME AND ADDRESS OF PROJECT/FACILITY
ALL island Dml~lition Recycling
A82 OLd Dock Rood
LOCATION OF PROJECT/FACILITY
TELEPHONE MUI4BER
C5163 923-2~26
ITELEPHONE NUMBER
(5163 923-2&26
Yephank
COUNTY TOWN I WATERCOURSE HYT# COORDINATES
SuffoLk Brookhaven I N/A
DESCRIPTLON OF AUTHORIZED ACTIVITY
Operate e solid waste management facility authorized to process 1,000 cubic yards of construction ar~ demolition debris,
~nd &85 tons per day of n~nicipeL solid ueste. Facility shall operate in accordance with the Engineering Report prepared
by Gannett FLeming Engineers~ P,C. dated April
ECL, ell applicable regulations, the General Conditions specified (see page Z) and any Special conditions included as part
PER~IT ADMINISTRATOR:
Roger Evans CAF
SIGNATURE
ADDRESS
Bldg. LO, SUNY, Room 219, Stony Brook. NY 11790-Z356
DATE
Nay 1~,
6/~'c~ ~t~9££S~:01 O~bTSO~T£gT S0~8 S~BINIM:WO~ ~Z£:80 £00~-6-~k~w
· ' I~EW Yr~rATE DEPARTMENT OF. ENVIRONMENTAL CONSERVA~ ..
I. ~, ~ NOTIFI'~TION OF OTHER PERMII I "" OBLIGA ~ mm;~
tern A: Permittee AcceptS Legal Reeponelbtt ty and'Agrees to Indemnification
; The ermtteeexprass~yagreest~indemnifyandh~dharm`~`e~s"sthe~"Department~fE~ir~nmenta~C~nservati~n~fthe
State :3~New York, its representatives, employees, and'agents (.DEC) for all claims, suits, actions, and damages, to the
extent atlributable to the permittee's acts or omissions in connection with the permittse's undertaking of activities in
connection with, or operation and maintenance of, the facility or facilities authorized by the permit whether in compliance
or not in compliance with the terms and conditions of the permit. This indemnification does not extend to any claims,
suits, actions, or damages to the extent attributable to DEC's own negligent or intentional acts or omissions, or to any
claims, suits, or actions naming the DEC and arising under article 78 of the New York Civil Practice Laws and Rules or
any citizen suit or civil rights provision under federal or state laws.
Item B: Permittee's Contractors to Comply with Permit
The permittoe is responsible for informing its independent contractors, employees, agents and assigns of their
responsibility to comply with this permit, including all special conditions while acting as the permittee's agent with respect
to the permitted activities, and such persons shall be subject to the same sanctions for violations of the Environmental
Conservation Law as those prescribed for the permittee.
Item C: Permlttee Responsible for Obtaining Other Required PermitS
The permittae is responsible for obtaining any other permits, approvals, lands, easements and rights, of-way that may
be required to carry out the activities that are authorized by this permit.
Item D: No Right to Trespass or Interfere with Riparian Rights
This permit does not convey to the permittee any right to trespass upon the lands or interfere with the dpadan rights
of others in order to perform the permitted work nor does it authorize the impairment of any rights, title, or interest in real
or personal property held or vested in a person not a party to the permit.
GENERAL CONDITIONS
General Condition 1: Facility Inspection by the Department
The permitted site or facility, including relevant records, is subject to inspection at reasonable hours and intervals by
an authorized representative of the Department of Environmental Conservation (the Department) to determine whether
the permittee is complying with this permit and the ECL. Such representative may order the work suspended riursuant
to ECL 71-0301 and SAPA 401 (3).
The permittee shall provide a person to accompany the Department's ~eprasentative during an inspection to the permit
area when requested by the Department.
A copy of this permit, including all referenced maps, drawings and special conditions, must be available for inspection
by the Department at all times at the project site or facility. Failure to produce a copy of the permit upon request by a
Department representative is a violation of this permit.
General Condition 2: Relationship of this Permit to Other Department Orders and Determinations
Unless expressly provided for by the Department, issuance of this permit does not modify, supersede or rescind any
order or determination previously issued by the Department or any of the terms, conditions or requirements contained
in such order or determination.
General Condition 3: Applications for Permit Renewals or Modifications
The permittee must submit a separate written application to the Department for renewal, modification or transfer of this
permit Such application must Include any forms or supplemental information the Department requires. Any renewal,
modification or transfer granted by the Depadment must be in writing.
The permittae must submit a renewal application at least:
a) 180 days before expiration of permits for State Pollutant Discharge Elimination System (SPDES), Hazardous
Waste Management Facilities (HWMF), major Air Pollution Control (APC) and Solid Waste Management
Facilities (SWMF); and
b} :~0 days before expiration of all other permit types.
Submission of applications for permit renewal or modification are to be submitted to:
NYSDEC Regional Permit Administrator, Region 1, SUNY Bidg #40, Stony Brook NY 11790-2356
General Condition 4: Permit Modifications, Suspensions and Revocations by the Department
The Department reserves the right to modify, suspend or revoke this permit in accordance with 6 NYCRR Part 621.
The grounds for modification, suspension or revocation include:
a) materially false or inaccurate statements in the permit application or supporting papers;
b) failure by the permittee to comply with any terms or conditions of the permit;
c) exceeding the scope of the project as described in the permit application;
d) newly discovered material information or a material change in environmental c°nditions, relevant techn°l°gY
or applicable law or regulations since the issuance of the existing permit;
e) noncompliance with previously issued permit conditions, orders of the commissioner, any provisions of the
Environmental Conservation Law or regulations of the Department related to the permitted activity.
DECPERMITNUMBER 1-4722-00765100004 [ I PAGE 2 OF7
6,£'d 8~g££S8:0i 08~IS0~I£9I S0~8 S~BINIM:WO~ ~8£:80 100e-G-i~W
1. The ?¢rmittee, Waste Management of NY, LLC, must strictly conform to the provisions
of this Permit; 6'NYCRR Part 360, effective Dece~nber 31, 1988, revised November 24,
1999; and the Engineering Report dated April 16, 2004 and prepared by Gannett Fleming
Engineer~, P.C.
2. The Permittee is authorized to receive and process up to 1,000 cubic yards (500 tons) per
day of construction and demolition debris (C&D) and 485 tons per day of municipal solid
per day averaged over a two week period.
waste (MSW), not to exceed a total of 990 tons AT ALL TIMES. No
THE TWO WASTE STREAMS SHALL BE KEPT SEPARATE
more than 1,000 cubic yards of material may remain on site at any one time. At the end
of each workday, no MSW will remain on the tipping floor. Overnight storage of MSW
is strictly prohibited.
3. Solid waste to be acecpted by the facility shall be limited to construction and demolition
debris (C&D) and municipal solid waste (MSW). Liquid wastes are prohibited.
Hazardous wastes, including but not limited to, infectious wastes and asbestos are strictly
prohibited.
4. Hours and days of operation shall be limited to between 6:00 AM and 6:00 PM, Monday
through Saturday. In addition, the facility may perform maintenance and cleanup
operations until 8:00 PM. Facility hours of operation must not conflict with local zoning
ordinance limits.
5. Operating hours for the week of June 13, 2004 shall be extended from 6:00 PM to
6:00 AM for the purpose of providing waste collection services to the US Open Oolf
Tournament at the Shinnecock Hills Oolf Club, located in the Town of Southampton.
Waste management collection services during this lime period shall comply with the
following; Only Waste Management mlcks delivering waste col~t2iners from the gOff
tournament are allowed access to the facility, the transfer statlun shall be closed to all
other vehicle traffic during these extended hours of operation; l~ack weightS will be
recorded during these hours and added to the daily volumo calculations being maintained
by the facility; no processing of waste or loading of lon§ haul trucks shall occur during
these extended operating hours; this extension of operating hours shall expire once the
conh-act with the US (}olf Tournament has ended.
6. The PermJttce shall post sign(s) showing hours and days of operation, and the fact that
liquid and hazardous wastes are prohibited from being accepted at the facility. All sign(s)
shall be located such that they are visible to any vehicle approaching the facility entrance.
DEC PERMIT NUMBER
1-4722-00765/00004
PAGE 3 OF 7
7. Thc ?ennittcc shall operate in a manner that will, at all t~nes, cont~o the generation of
odor(s) and nnisc. Facility operations and maintenance shall, to the greatest extent
practicable, minimize vector potential. Additionally, off site noise levels shall not cxcced
local zoning ord'in, ance limits.
8. The Permittee shall maintain adequate fire protection equipment at all times, in
accordance with local authorities.
9. All facility activities related to the rccyclables handling and transfer of solid waste,
included but not limited to tipping, sorting, crushing, etc., shall be performed inside the
building. No solid waste shall be placed on the ground outside the buikling for any
reason.
10. At the end of each workday, all areas used for thc proccssing of solid wastc shall bc swept
clean of any and all dcbris. No water or cleaning fluids shall bc uscd to facilitate daily
cleanup operations.
11. A supervising attendant shall be on duty during all hours of operation. The attendant
shall inspect all vehicles entering the facility and shall reject any loads containing
unauthorized materials.
12. In the event that any unauthorized materials are received at the facility, the supervising
attendant shall immediately containerize thc material, secure it, and separate it f~om the
othcr solid wastes on site. The attendant shall then retain a 6NYCRR Part 364 permitted
transporter to properly remove and dispose of the material. A wfiRen report oftbe event
shall be submitted to the Department within five (5) business days. All correspondence
shall be directed to:
13.
Regional Solid Waste Engineer
New York State Department of Environmental Conservation
Bldg. 40, SUNY
Stony Brook, NY 11790-2356
(516) 444-0375
The facility must maintain material on site to aid in containing small leaks and spills. At
a minimum, the Permittee shall have on hand the following items:
(4) empty 55 gallon drums
(50) lbs of boric acid
(50) lbs of sodium bicarbonate
(100) lbs ofoil absorbent
DEC PERMIT NUMBER
1-.4722-00765100004
PAGE 4 OF 7
6/g'd ~9££S~:01 O~TS~T£9T S0~8 S~±NIM:WO~ ~6£:80 £00~-6-A~W
14.
15.
NEW ~ STATE OEPAR1MEHT OF EHVIRC;*;M~.'TAL CONSERVA~)H
~ SPECIAL CONDITIONS W
(c)
(d)
16.
(a)
The Permittee shall notify the Department ~ithin twenty four (24) hours of thc
occurrence of any event which causes the facility to cease operation for a period of forty
eight (48) hours or more. A written report oftbe event shall b~ submitted to the
Department within five (5) business days. All verbal and/or written correspondence shall
be directed to the Regional Solid Waste Engineer at the edckess specified previously.
OPERATIONAL RECORDS AND REPORTING
A daily log must be maintained by the Pennittec at the facility. THE DALLY LOG INS
SUBJECT TO REVIEW BY A DEC ENVIRONMENTAL MONITOR AS PART OF
THE INSPECTION PROCESS AND MUST BE MADE AVAILABLE UPON
REQUEST. At a minimum, the daily log shall include the following information:
e 't and ori 'n of solid waste received;
~ of all recyclables shipped off site;
gttt!=~lZ~a~ll~ of all non-rccyclables and residuals transported for
disposai ;
a o~ which indicates that the Permitte¢ has confirmed receipt of and/or
delive~ of all shipments entered into the daily log.
The ~ of solid waste shall be one of the two wastes the Permittee is authorized
to receive. The quantiW shall be expressed in units of either cubic ~rds or tons.
The ~ri~zin shall be a listing o clients or customers (if solid waste is received f~om
multiple sites along a pickup route, the daily log shall indicate as such via a route
designation name or number). The destination shall be the name and location of
either a secondary vendor or of a disposal location. The Permittee shall maintain
the daily log for seven (7) years after their creation.
The Permittec shall maintain, at the facility, all weight tickets, disposal receipts,
etc. to support the entries made into the daily log. AS WITH THE DALLY LOO,
ALL WEIGHT TICKETS, DISPOSAL RECEIPTS, ETC., ARE SUBJECT TO
REVIEW BY A DEC ENVIRONMENTAL MONITOR AND MUST BE MADE
AVAILABLE UPON REQUEST.
ENVIRONMENTAL MONITORING REOUIREMENTS
An account to fund environmental monitoring compliance activities shall be
established with the Department as follows:
The Environmental Monitor Account which was established in Schedule A of the
Order on Consent/Stipulation effective April 21, 1993 shall remain in full force
and effect with the sum remaining at Twenty Five Thousand Dollars ($25,000).
6/9'd ~9£££~:0i O~b~g0~£9~ S0~8 S~B±NIM:WO~ ~6£:80 100~-6-A~W
This sum is based on an estimate of the first year costs for such,acti.vities and is
subject to quarterly revision. Subsequent quarterly invoicea shall be sabmitted to
the Permittee for the duration of this agreement to maintain an account balance
sufficient to meet the next nine months' projected expenses. This nine months
advance account shall be maintained and'~he quarterly payments shall be made for
the duration of this permit in accordenee with the following provisions:
(1)
Quarterly invoice costs to be covered by this fund include.'
Direct personal services costs and fxinge benefits of the environmental monitor(s)
and full time monitor supervisor(s), including the cost of replacement personnel
for the person(s) regularly assigned to these positions.
(2)
Direct non-personal services costs, including but not limited to thc purchase or
lease of a vehicle and it's full operating costs, equipment, travel, ~alning, supplies
and materials, and any appropriate chemical sampling and laboratorY analysis
fees.
(3)
(4)
(5)
Inflation increases and negotiated salary increases.
Overhead or indirect support costs at the annually calculated indirect cost rate.
As noted, the Depa~hnent may revise the required quarterly amount due to include
all costs of monitoring to the Department. The quarterly revision may take into
account factors such as inflation, salary increases, accrued interest to be applied to
the balance, changes in operating hours and procedures, the need for additional
on-site monitors and supervision of such monitors by full time monitor
supervisors.
(6)
Within thirty (30) days of receipt of a quarterly smtementJinvoice from the
Depa~h~ent, payment shall be forwarded to the Depa~h.¢nt payable to the
NYSDEC. Payment shall be sent to:
lgYSDEC
50 Wolf Road, Room 608
Albany, NY 12233-1510
Atto: Director, Environmental Monitors
Payments are to be in advance of the period in which they will be expended.
'-~ PAGE6 OF7
NEW yg~&~TATE DEPARTMENT OF ENVIRC;;,¥,~;; TAL CONSERVATIDN
SPECIAL CONDITIONS
(7)
(8)
17.
Upon termination of this permit and the payment of any outstanding costs and
expenses, the Department shall return the unexpended balance, including interest,
to the Permir~ee.
Failure to submit timely payments may be considered a violation of this permit.
The Department may take appropriate action to enforce payment provisions.
As per 6NYCRR part 360-12.4(c)(1) &(2), the Permittec shall file with the
Department annual reports. Said reports shall include monthly breakdowns of
total throughput and recyclables recovered, by catego~t. Ail reports shall be
submitted, in triplicate, to the Regional Solid Waste Engineer at the address
specified previously.
'L
OEG PERMff NUMBER
1,-4722-00765/00004
PAGE 7 OF 7
S0~8 S~BINIM:NO~3 00~:80
· '" ' New Y'orl~ State Depart t of Envirdnmen~;ai Conse oh
'\ 'Division of Environmental Permits, R6gion One'
, ,Building 40 - SUNY, Stony Brook, New Y@rk 1179g-2356.
Phone: (631)444-0365 · FAX: (631)444-0360
Webslte: www'.dec.state.ny.us
AMENDMENT TO PERMIT
Erin M. Cm~
Commissioner
Waste Management of NY
82A Old Dock Road
Yaphank, NY 11980
April 24, 2001
Re: Permit #1-4722-00765/00004
Dear Sirs: .~
Your recent request to modify and renew the above permit has been reviewed pursuant to
6NYCRR Part 621. It has been determined that the proposed modifications will not
substantially.change the scope of the permitted actions or the existing permit conditions.
Therefore, the permit is renewed to September 8, 2004 and amended to authorize:
The construction of an outdoor shed for the storage of alternate daily cover material
screenings (ADCM) and the installation* of truck scales, with the following conditions.
1 ) A maximum of 4000 c~bic yards of ADCM screenings may be stored for a period not to
exceed 21 calendar days.
2) This approval is conditional on the permittee following all regulations pertaining to the
production and handling of ^DCM, including but not limited to, testing protocols, material
segregation, and protection of the material from the elements.
3) The ADCM screenings must be stored under cover and segregated from all other materials,
including screenings that were not included in the sample for testing.
4) Copies of the test results must be forwarded to the DEC directly from the testing laboratory.
Any screening material that should fail the ADCM testing requirements must be reclassified
and disposed of appropriately after notification to this Department.
This letter is an amendment to the original permit, and as such, shall be available at the job
site whenever authorized work is in progress.
6.~6
S0~8 S~BINIH:WO~ ~T~:80
100E-6-~UW
. New ,York State Department of Environmental Conservation
Division of Environmental Permits
Building 40 - SUNY, Stony Brook, New York 11790-2356
Telephone (631}
Facsimile {631) ~.~?.-0360
'~.~,~ Websita: www.dec.state.ny.us
Denise M. Sh
Commi~ione
July 19, 2006
Island Waste Services, Ltd.
971 Waverly Avenue
- Holtsville, NY 1 i742
RE: Permit No.: 1-4722-00699/00002
Facility/Program No.: 52-T-83
Dear Permittee:
In conformance with the requirements of the state Uniform Proce&]res Act
(Article 70, ECL) and its implementing regulations (6 NYCR_R,'Part 621),-we are
enclosing your permit. Please read all conditions carefully.
If you are unable to comply with any conditions, pleaSe contact us at the above
address.
Enclosure
Sincerely,
R6ger Evans
Permit Administrator
DEC PERMIT NUMBER
- I 1-4722-00699100002
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
FACILITY/PROGRAM NUMBER(S)
52 T 83
PE MIT
Under the Environmental
Conservation Law
EFFECTIVE DATE
November 1, 2005
EXPIRATION DATE(S)
October 31, 2010
J TYPE OF PERMIT D New · Renewal · Modification D Permit to Construct · Permit to Operate
[] Article 15. Title 5: Protection
of Waters
Article 15, 'I-[tie 15: Water
Supply
[] AdJcie 15, 'Frae 15: Water
Transport
[] Artic. Je 15, T'rae 15:'Long
Island Wel/s
[] ArtJcle 15, 'i-Ne 27: Wild,
Scenic and Recreational PJvers
O 6NYCRR 608: Water Quality
Certification
[] Article 17, T'Kdes 7, 8: SPDES
D ArficJe 19: ~r Pollution
[] Article 23, T'~le 27: Mined Land
Reclamation
[] ArticJe 24: Freshwater WeOands
[] Article 25: 33dal Wetlands
· At, cie 27, Title 7; 6NYCRR
360: Solid Waste Management
E] Article 27, Titleg; 6NYCRR
373: HmTmrdous Waste Manage~
[3 ArticJe 34: Coastal Erosion
Management
[] Article 36: Floodplain
Management
E] Aracles 1, 3, ~17, 19, 27, 37;
6NYCP, R 380: Radiation control
D Other.
PERMIT ISSUED TO TELEPHONE NUMBER
Island Waste Services, LTD. (63'1) 475-4635
ADDRESS OF PERM~ I I ~-E
971 WaverlyAve., Holtaville, NY' 1~1742
· ~ CONTACT PERSON FOR PERMITTED WORK TFI FPHONE NUMBER
Michael Rut, Site Manager (631) 475-4635
NAME AND ADDRESS OF PROJECT/FACILITY
"island Waste Services, LTD., 971 Waverly Ave., Holtsville, NY
LOCATION OF PROJECT/FACILITY
East side of Waverly Ave. at aarretts Ave. intersection, Holtsville
COUNTY TOWN WATERCOURSE J NYTM COOP-.DINATES
Suffolk Brookhaven N/A
DESCRIPTION OF AUTHORIZED ACTIVITY:
Operation of a transfer station including materials separation, recovery and recycling of up to 875 tons per day of
municipal solid waste (MSW) and 2900 cubic yards per day of construction and demol~on debris (C&D) based on an
average monthly flow. AJI separation, sorting and recovery activities shall be conducted inside the Department
approved buildings with MSW in one building and C&D in the other building.
By acceptance of this permit, the permittee agrees that the permit is contingent upon s~ct compliance with the ECL, ail applicable regulafiol
heGeneral Conditions specJfied (see page 2) and any Special Conditions included as par~ of this permit.
-PEPJVlJT ADMINIS'i"P~TOF~ ADDRESS
~oger Evans Bldg. #40, SUNY, Stony Brook, NY 11790-2356
~_,~._ ~ June 19. 2006
NEW YORK STATE DEPARTI~NT OF ENVIRONMENTAL CONSERVATION
NOTIFICATION OF OTHER PERMITI'EE OBLIGATIONS
Item A: Permittee Accepts Legal Responsibility and Agrees to Indemnification
The perrnittee expressly agrees to indemnif7 and hold harmless the Department of Environmental Conserv
of the State of New York, its representatives, employees, agents, and assigns for all claims, suits, actions, dam~
and costs of every name and description, arising out of or resulting from the permittee's undertaking of activiti~
operation and maintenance of the facility or facilities authorized by the permit in compliance or non-comptiance wit
terms and conditions of the permit.
Item B: Permittee's Contractors to Comptywith Permit
The permittee is responsible for informing its independent contractors, employees, agents and assigns of
responsibilityto comply with this permit, including all special conditions while acting as the permittee's agent with res
to the permitted activities, and such persons shall be subject to the same sanctions for violations of the EnviranmE
Conservation Law as those prescribed for the permittae.
Item C: Permittee Responsible for Obtaining Other Required Permits
The permittee is responsible for obtaining any other permits, approvals, lands, easements and rights-of-way
may be required to carry out the activities that are author[zed by this permit.
Item D: No Right to Trespass or Interfere with Riparian Rights
This permit does not convey to the permittee any right to trespass upon the lands or interfere with the riparian ri(.
of others in order to perform the permitted work nor does it authorize the impairment of any rights, title, or interest in
or personal property held or vested in a person not a.p~rty tn the permit.
GENERAL CONDITIONS
General Condition 1: Facility Inspection by the Depar'bnent
The permitted site or facility, including relevant records, is subject to inspection at reasonable hours and inter~
by an authorized representative of the Department of Environmental Conservation (the Department) to determ
whether the permittee is complying with this permit and the ECL. Such representat'rve may order the work suspen(
pursuant to ECL 71-0301 and SAPA 401(3).
The permittee shall provide a person to accompany the Department's representative dudng an inspection to
permit area when requested by the Department.
A copy of this permit, including all referenced maps, drawings and special conditions, must be available
inspection by the Department at all times at the project site or facility. Failure to produce a copy of the permit
request by a Department representative is a violation of this permiL
General Condition 2: Relationship of this Permit to Other Department Orders and Determinations
Unless expressly provided for by the Department, issuance of this permit does not modify, supersede or rescl
any order or determination previously issued by the Department or any of the terms, conditions or requiremer
contained in such order or determination.
General Condition 3: Applications for Permit Renewals or Modifications
The permittee must submit a separate written application to the Department for renewal, mediflcation or transl
of this permit. Such application must include any forms or supplemental information the Department requires.
rerlewal, modification or transfer granted by the Department must be in writing.
The perrnittee must submit a renewal application at least:
a) 180 days before expiration of permits for State Pollutant Discharge Elimination System (SPDEE
Hazardous Waste Management Facilities (HWMF), major Air Pollution Control (APC) and Solid Was
Management Facilities (SWMF); and
b) 30 days before expiration of all other permit types.
Submission of applications for permit renewal or modification are to be submitted to:
NYSDEC Regional Permit Administrator, Region 1, SUNY Bldg ~!40, Stony Brook, NY 11790-2356
General Condition 4: Permit Modifications, Suspensions and Re_vocati_ons by the Department
The Department reserves the right to modify, suspend or revoke this permit. The grounds for modificatior
suspension or revocation include:
a) the scope of the permitted activity is exceeded or a violation of any condition of the permit or provision
of the ECL and pertinent regulations is found;
b.) the permit was obtained by misrepresentation or failure to disclose relevant facts;
c) new material information is discovered; or
d) environmental conditions, relevant technology, or applicable law or regulation have materially
changed since the permit was issued.
DEC PERMIT NUMBER I 52 T 83 J PAGE 2 OF 7
NEW YORK STATE D EPARTr~__NT OF ENVIRONMENTAL CONSERVA'rlON
General
SPECIAL CONDITIONS
The Permittee, Island Waste Services LTD, must strictly conform to:
a. The provisions of this Permit
b. 6 NYCRR Part 360, effective March 1,2003
c. The Engineering Report, and Operations and Maintenance (O&M) Manual, both dated January
24, 2006, prepared by Galli Engineering, P.C
d. Order on Consent 20051205-264, executed February 28, 2006
In the event that the Perm/flee will modify the 'facility, the Perm/flee shall submit to the Department the
proposed plans to ensure that the plans will be acceptable to the Department. The Permittee must address
any comments made by the Department, and shall not modify the facility without Department approval
Based on the proposed changes, the Permittee shall revise the site plan, O&M Manual, and/or Engineering
Report as determined by the Department.
Authorized Activities
The Permittee is authorized to receive and process up to 875 tons per day of Municipal Solid Waste (MSW),
and 2900 cubic yards of Construction and Demolition Debris (C&D), based on an average monthly
throughput. The two waste streams shall be kept separate at all times.
The Permiitee is prohibited from accepting any waste that is industrial waste, regulated medical waste,
asbestos waste, ha;'~rdous waste, or liquid waste.
Solid Waste Stora,qe and Processin,q
All facility operations involving MSW, C&D, and recyciables, including, but not limited to, crushing, soi'ting,
processing, transferring shall be performed 'inside the approved buildings. The amount ofMSW onsite shall
not exceed 1000 cubic yards. The amount of C&D onsite shall not exceed 1200 cubic yards. No solid
waste shall be placed outside the enclosed buildings for any purpose, Unless it meets one of the follov~ng
requirements:
ao
The outside storage of a maximum of 360 cubic yards of recyclables in roll-off containers or
compactor containers. Containers being used to store recyclables that are not self-enclosed shall
be covered with a waterproof material.
The outside storage of a maximum of 600 self-contained bales of MSW wrapped with HDPE (or
other Department approved) shrink wrap on all sides, top and bottom to prevent odors, leaching,
vectors, and other nuisances. The storage of partially wrapped or unwrapped bales is not
perm/fled.
c. The storage of a maximum of 3000 cubic yards of Alternate Daily Cover Material (aka: ADCM, C&D
screenings) located in the approved storage bunkers.
Recovered recyclables may be stored onsite for up to 60 calendar days from receipt, sail--contained bales
may be stored for up to 60 calendar days from production, and ADCM may be stored for up to 30 calendar
days from production.
At the close of each business day, the MSW tipping floor shall be free from waste and swept clean.
Overnight storage of C&D inside the C&D processing building, is acceptable, provJd, e.d it is done in a
problem free manner that does not cause odor, dust, or other nuisances. The Per'm/flee shall ensure that
C&D does not remain onsite for more than10 calendar days from the date o~ receipt. Machines shall be
placed in their storage areas and the site shall be swept clean of all solid waste. Any solid waste gathered
shall be placed in the proper dedicated storage containers and removed from the site for subsequent
transfer to an approved disposal facility.
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
SPECIAL CONDITIONS
Additional Requirements for Alternate Daily Cover Material (ADCM)
The Permittee must conform to all application regulations in the production and handling of ADCM material
including but not limited to, analytical sampling, materials segregation and storage requirements. The
ADCM material must be stored in an area that protects the ADCM from the weather and segregated
from all other materials. This includes keeping untested and tested ADCM segregated.
Copies of the analytical results must be forwarded to the Division of Solid & H~7~rdous Materials at the
address in Special Condition 6(c). Any material that fails to meet the requirements for ADCM must be
reclassified, and disposed of appropriately, after notifying the Department.
Operational Requirements
Hours and days of operation shall not conflict with local ordinances. The Permittee shall limit the
hours and days of operation from 6:00 am to midnight, Monday through Saturday, with no incoming
loads after 6:00 pm each day. Site clean-up is permitted from midnight to 4:00 am following a day
of facility operations, excluding Saturday. No operations of any kind are permitted on Sunday.
From April 1 thru September 30, prior to a regular workday, between the hours of 5:00 am and
6:00 am, incoming waste may be accepted at the facility, however baling, screening or other
processing is strictly prohibited during this time.
The Perrnittee shall post signs showing the hours and days of operations, a list of materials the
facQity is authorized to accept, and a list of materials the facility is expressly prohibited from
accepting. All signs shall be visible to any vehicle approaching the facility entrance.
Odors, vectors, dust, and noise shall be controlled at all times; the Permittee shall immediately
implement any controls required by the Department, including cessation of any facility operations.
Offsite noise levels generated dudng operation shall not exceed limits set by local zoning
ordinances as well as those set forth in 6 NYCRR Part 360-1.14(p). If noise is deemed by the
Depa~ b,ent to be excessive, the Permiffee shall mod'[fy the facility and/or equipment to rectify the
situation.
do
A supervising attendant shall be on duty during all hours of operation. The attendant shall inspect
all vehicles entering the facility and shall reject any loads containing unauthorized end/or suspicious
materials.
6. Continqency Planninq
In the event that any hazardous wastes, industrial wastes, medical wastes, or other regulated
wastes not expressly allowed under this Permit are accepted by the facility they shall be contained
propedy and secured immediately. The owner/operator of the facility shall verbally notify the
Department and the Suffolk County Department of Health Services within 24 hours of the event.
The waste material shall be removed by a waste transporter authorized under 6NYCRR Part 364 to
tTansport such waste. A written report of the event shall be submitted to the Deparb~nent within 5
business days.
The Permittee shall verbally notify the Department within 18 hours of any occurrence of any event
which causes the facility to cease operation for a period of 48 hours or more. Such an event would
include a fire, spill, equipment breakdown or other similar events. A written report shall be
submitted to the Department within 5 business days of the event.
c. The required notifications stated above shall be directed to the following offices:
NYSDEC
Division of Solid & Hazardous Materials
Building 40 - SUNY
Stony Brook, New York 11790-2356
(631) d,! d-0375
NEW YORK STATE DEPARTfdENT OF ENVIRONMENTAL CONSERVATION
ii.
SPECIAL CONDITIONS
Office of Pollution Control
Suffolk County Department of Health Services
15 Horseblock Place
Farmingville, New York 11738
(631) 854-2537
d. Equipment and materials used to contain small spills must be available at the facility. These
materials shalt be stored in an appropriate Emergency Response Material Storage/Containment
Area_ At a minimum, the Permiffee shall have on site the following items:
i. four empty 55 gallon drums
ii. 400 lbs. of absorbent material (e.g. Speedi-Dri)
iii.spill cleanup kits (e.g. absorbent pads)
iv. assorted shovels and brooms
e. The Permit-tee shall maintain Fire Protection Equipment in accordance with Local Laws and Ordinances
7. Recordkeepin,q and Reportinq Requirements
bo
A daily log shall be maintained by the Permittee at the facility. The daily log is subject to review by a
NYSDEC Onsite Environmental Monitor as part of the inspection process and must be made
available upon request. At a minimum, the daily log shall include the following information:
i. Quantity, type and origin of all selid waste received or transported.
ii. Quantity and destination of all recyclables and residuals transported from fhe site.
iii. Permittee shall-maintain a log of all collector/transporters which deliver waste to the facility and
the date and time of day of each such delivery and the amount of waste so delivered.
iv. A notation that the Permit'tee has confirmed that each shipment of waste has in fact been
received and accepted at a destination Solid Waste Management Facility, authorized to accept
such wastes.
The quantity shall be expressed in units of either cubic yards or tons. The type of solid waste shall
be one of the wastes the Permittee is authorized to receive. The origin shall be a listing of clients or
customers (if solid waste is received from multiple sites along a pickup route, the daily log shall
indicate as such via a route destination name or number). The destination shall be the name and
location of either a secondary vendor or disposal site.
The Permittee shall maintain at the facility:
i. Weight/~,~)lume tickets and disposal receipts for each shipment of material transported off-site.
Such tickets or receipts shall be used to support the daily log; and
ii. The waste tracking document authorized by the Department for materials leaving the facility as
per 6NYCRR Part 360,16.4(1 ).
The Permittee shall maintain the daily logs and the waste tracking documents for seven years ~_fter
their creation and shall make the daily logs, and all records used to support the daily logs, available
to the Department immediately upon request.
The Permittee shall submit annual reports to the Department each year by March 1 on forms
provided by or otherwise acceptable to ~he Department.
DEC PEP. MIT NUMBER
Financial Assurance
NEW' YORK STATi= DEPARTi~NT ~F ENViR~NME~AL CONSERVATION"
SPECIAL CONDITIONS
The Permittee shall continue to maintain an acceptable form of financial assurance in the amount of
$750,000 for a proper Part 360 closure of the facility. In subsequent years, the Department may modify thi:
amount based on an annual review.
The Permittee shall not accept any solid waste, if an acceptable form of financial assurance is not in place.
The Permittee must continue to remove solid waste from the site in compliance wi~ the storage time
limitations outlined by this Permit.
9. On. Site Environmental Monitor (OEM)
The Permittee shall fund environmental monitoring services to be performed by the Department for
operations directly related to island Waste Services, LTD. and Allied Waste Industries, Inc. These
monitoring services will include, but not be limited to, the following:
1. Monitoring of solid waste operations to ensure operations are in compliance with appropriate regula.
tions.
2. Provide inspections and compliance monitoring to the Permittee's facility, including construction
inspections.
3. Provide monitoring to the surrounding area to monitor for facility impacts to the sun-ounding area.
4. Respond to complaints.
5. Offer technical assistance to the Permittee, and answer questions from the public.
6. Maintain files and databases.
7. Review annual reports, permit applications, permit modifications, and other submittals to the Depart-
ment.
8. Prepare documentation for enforcement actions.
Funds necessary to support the monitoring services and requirements for the coming year shall be
provided to the Department by the Permittee on an annual basis. The sum to be provided is based on
annual environmental monitoring service costs of the Department and 'is subject to annual revision.
Subsequent annual payments shall be made for the duration of this Permft or until the monitoring
requirement no longer exists, whichever comes first.
The Permittee shall be billed annually for each fiscal year beginning on April 1. If this Permit is to first
become effective subsequent to Apdl 1,,the initial payment may be for an amount sufficient to meet the
anticipated cost of the monitoring through the end of the current fiscal year.
]-he Deparb'nent may revise the required payment on an annual basis to include all of the Department's
costs associated with the monitoring services. The annual revision may take into account such factors as
inflation, salary increases, changes in operating hours and procedures, increase or decrease in the amour
of monitoring necessary, and increase or decrease in the number of OEM and/or OEM supervisors
necessary. Upon written requestby the Permittee, the Department sl"lEill provide the pert~lttLr-e wP,.h a
written explanation of the basis for any revision or modification. If such a revision is required, the
Department will notify the Permittee of such a revision no later than 60 days in advance of such revision.
Prior to making its annual payment, the Permiftee will receive, and have an opportunity to review, an
annual work plan that the Department will undertake during the year.
Payments are to be in advance of the period in which they will be expended.
NEW YORK STATE DEPARTM~.t,~' OF ENVIRONMENT. A/_ CONSERVATION
SPECIAL CONDITIONS
Divestiture
The Permittee shall comply with the following divestiture requirements:
ao
Salvatore Avellino, Jr. is prohibited, individually and as an owner, officer, director, stockholder or
employee of a company, from having any direct or indirect involvement with the Permittee, includ
but not limited to any (1) ownership interest; (2) economic interests; (3) stock ownership; (4)
investment interest; (5) equipment ownership; (6) property ownership; (7) management
involvement; (8) authority to direct officers or employees of the Permittee; (9) interest as a landlo~
supplier, creditor or debtor of the Permittee; (10) interest as owner of the property upon which the
Permittae's facility is located; (11) having a direct or indirect interest or any involvement in the
operation of any and all business activities at or near 971 Wavedy Avenue, Holtsville, New York;
(12) physical presence at or near 971 Wavedy Avenue, Holtsville, New York.
Additionally, Salvatere Avellino; Jr. is prohibited, individually and as an owner, officer, director,
stockholder or employee of a company, from having any business relationship with the Permittee
any kind, including but not limited to any acceptance of money or other consideration from the
revenues of the Permittee.
The Permittee shall prevent any direct or indirect involvement or interest whatsoever by Salvatore
Avellino, Jr. in the Permittee or its facility, including but not limited to those interests tisied in
subparagraph (a) of this paragraph.
Compliance with Federal Court Stipulation and Content Judqement
The Permittee hereby acknowledges its agreement to the Stipulation of Settlement and Consent Judgeme
issued by Judge F. Leo Glaser on February 28, 1994 in United States v. Private Sanitation Industry
Association of Nassau/Suffolk Inc., et. at., No. CV-89-1848 with regard to Permittee and related individuals
and entities, and will comply with the terms and conditions of said Stipulation and Consent Judgement as ~
relates to Permiffee's operations under this Permit. Compliance shall be determined as provided for in sai,
Stipulation and Consent Judgement..