Covanta Holding (CVA) 8-K Results of Operations and Financial Condition

Exhibit 99.1

DANIELSON HOLDING CORPORATION
REPORTS 2005 SECOND QUARTER RESULTS
AND ANNOUNCES EARNINGS CALL

FAIRFIELD, NJ, August 9, 2005– Danielson Holding Corporation (AMEX: DHC) today filed its Form 10-Q for the quarter ended June 30, 2005 with the Securities and Exchange Commission. Attached is the second quarter summary information:

• Business segment summary income statements

• Operating cash flow generated and available to service corporate debt of Covanta Energy Corporation (“Covanta”), Danielson’s subsidiary comprising its Waste and Energy Services segment

• Covanta Adjusted EBITDA for the twelve months ended June 30, 2005

For the quarter ended June 30, 2005, Danielson reported Consolidated Net Income of $5.9 million, or $0.05 per diluted share. Further, Total Covanta Operating Revenues were $195.3 million and Total Insurance Operating Revenues were $3.8 million for the second quarter of 2005. Danielson’s results include six days of results related to American Ref-Fuel which was acquired by Covanta on June 24, 2005.

“The highlight of this quarter was our completion of the American Ref-Fuel acquisition,” stated Anthony J. Orlando, President and Chief Executive Officer of Danielson. “In addition to completing the acquisition of American Ref-Fuel, I’m pleased that we were able to deliver another solid quarter of operating results in line with our expectations.” Orlando continued, “We continue to work diligently to assure that the ongoing transition and integration efforts remain on track. We are confident in our ability to deliver the synergies we previously announced and we look forward to taking advantage of opportunities presented by this strategic acquisition.”

Of the Total Covanta Operating Revenues Danielson reported for the second quarter of 2005, $158.9 million were attributable to Covanta’s domestic operations and $36.3 million were attributable to international operations. For the same period, Covanta’s operating income totaled $28.6 million, with domestic providing $25.8 million and international providing $2.8 million. For the second quarter of 2004, of the Total Covanta Operating Revenues Danielson reported, $145.9 million were attributable to Covanta’s domestic operations and $33.9 million were attributable to international operations. For the same period in 2004, Covanta operating income totaled $31.7 million, with domestic providing $26.7 million and international providing $5.0 million.

Non-GAAP Financial Measures

Attached are calculations of the following metrics, both of which are measurements not in accordance with generally accepted accounting principles: (i) cash flow generated and available for Covanta’s corporate long-term debt and letter of credit fees, which Danielson believes is a useful measure of the sufficiency of Covanta’s cash to pay its obligations under its new financing arrangements, after all other obligations are paid, and (ii) Covanta’s Adjusted EBITDA, the measurement of which relates to a material financial covenant in Covanta’s new financing arrangements and is presented to indicate Covanta’s ability to comply with this covenant.

For the quarter ended June 30, 2005, after-tax cash generated for Covanta’s corporate long-term debt and letter of credit fees was $31.7 million, of which $18.9 million was generated by domestic (including cash generated by American Ref-Fuel) and $12.8 million by international. Overall, the after-tax cash generated for Covanta’s corporate long-term debt and letter of credit fees was better than the prior year, largely due to cash generated by American Ref-Fuel. For the quarter ended June 30, 2004, after-tax cash generated for Covanta’s corporate long-term debt and letter of credit fees was $17.6 million, with domestic generating $7.7 million and international generating $9.9 million.

Covanta’s Adjusted EBITDA for the twelve months ended June 30, 2005 totals $235.7 million. Excluding the six days of American Ref-Fuel operations, Covanta’s adjusted EBITDA is slightly lower than the twelve months ended March 31, 2005. The decrease can be attributed largely to scheduled maintenance expenses that occurred in the second quarter offset by higher revenues during the period.

Conference Call Information

Danielson will host a conference call to discuss its second quarter results on Tuesday, August 16, 2005 at 2:00 pm Eastern time. A question and answer session will follow prepared remarks. To participate, please dial 1-800-946-0783 at least 10 minutes prior to the scheduled start of the call. The conference call will also be webcast live on the Company’s website atwww.danielsonholding.com. A replay of the conference call will be available from 5:00 pm (Eastern) Tuesday, August 16, 2005 through midnight (Eastern) Tuesday, August 23, 2005. To access the replay, please dial 719-457-0820 or 888-203-1112 and use the confirmation code: 3459366. The Danielson Holding Corporation Quarterly Report on Form 10-Q is currently available on the Investor Relations page of the company’s website under SEC Filings.

About Danielson

Danielson Holding Corporation is an American Stock Exchange listed company, engaging in waste disposal, energy services and specialty insurance through its subsidiaries. Danielson’s subsidiary, Covanta Energy Corporation, is an internationally recognized owner and operator of waste-to-energy and power generation projects. Covanta’s waste-to-energy facilities convert municipal solid waste into renewable energy for numerous communities, predominantly in the United States.

NOTE: Danielson’s charter contains restrictions that prohibit parties from acquiring 5% or more of Danielson’s common stock without its prior consent.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this communication 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, 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 Danielson Holding Corporation (“Danielson”) and its subsidiaries, 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-looking statements. Forward looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “project”, “may”, “will”, “would”, “could”, “should”, “seeks”, or “scheduled to”, or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Danielson cautions investors that any forward-looking statements made by Danielson are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Danielson, include, but are not limited to, the risks and uncertainties affecting their businesses described in Item 1 of Danielson’s Annual Report on Form 10-K for the year ended December 31, 2004, and in other securities filings by Danielson.

Although Danielson 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. Danielson’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this communication are made only as of the date hereof and Danielson does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

Contact: Elizabeth O’Melia
973-882-4193

Danielson Holding Corporation

Business Segment Summary Income Statements
For the Three Months Ended June 30, 2005 and 2004
{In thousands of dollars, except per share amounts}

	Covanta			Covanta			Total
	Waste and			Waste and			Covanta
	Energy			Energy			Waste and
	Services -			Services -			Energy
	Domestic			International			Services			Insurance		Parent			Consolidated
For the Three Months Ended June 30, 2005
Operating Revenues	$	158,932		$	36,324		$	195,256		$	3,836	$	113		$	199,205
Expenses		133,154			33,496			166,650			3,628		—			170,278
Operating Income		25,778			2,828			28,606			208		113			28,927
Other Interest (Expense) — Net		(15,696	)		(1,454	)		(17,150	)		—		—			(17,150	)
Gain on derivative instrument, unexercised warrant													500			500
Income before Equity in Net Income of Unconsolidated Investments, Income Taxes, and Minority Interests		10,082			1,374			11,456			208		613			12,277
Equity in Net Income of Unconsolidated Investments		194			3,910			4,104			—		—			4,104
Income Taxes		(4,033	)		(984	)		(5,017	)		—		142			(4,875	)
Minority Interests		(4,484	)		(1,095	)		(5,579	)		—		(10	)		(5,589	)
Net Income	$	1,759		$	3,205		$	4,964		$	208	$	745		$	5,917
												Earnings Per Share:			$	0.05
												{Fully Diluted}
For the Three Months Ended June 30, 2004
Operating Revenues	$	145,969		$	33,853		$	179,822		$	5,056	$	185		$	185,063
Expenses		119,264			28,899			148,163			5,012		946			154,121
Operating Income (Loss)		26,705			4,954			31,659			44		(761	)		30,942
Other Interest (Expense) — Net		(8,379	)		(1,623	)		(10,002	)		—		(4,945	)		(14,947	)
Income (Loss) before Equity in Net Income of Unconsolidated Investments, Income Taxes, and Minority Interests		18,326			3,331			21,657			44		(5,706	)		15,995
Equity in Net Income of Unconsolidated Investments		757			4,495			5,252			—		99			5,351
Income Taxes		(8,388	)		(3,493	)		(11,881	)		—		7,463			(4,418	)
Minority Interests		(786	)		(947	)		(1,733	)		—		—			(1,733	)
Net Income	$	9,909		$	3,386		$	13,295		$	44	$	1,856		$	15,195
												Earnings Per Share:			$	0.18
												{Fully Diluted}

Non-GAAP Financial Measure — Operating Cash Flow Generated and Available for Covanta Debt and Letters of Credit Fees

The following summarizes unaudited non-GAAP financial measures for Covanta. Certain items are included in the table below that are not measured under GAAP and are not intended to supplant other information provided in accordance with GAAP. Furthermore, these measures may not be comparable to those used by other companies. The following information should be read in conjunction with the audited consolidated financial statements of Danielson Holding Corporation and the notes thereto as filed in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2004, and the unaudited financial statements and notes thereto as filed in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005.

Covanta must generate substantial cash flow from operations, upon which it depends as an important source of liquidity to pay project operating and capital expenditures, project debt, taxes, corporate operating expenses and debt and letters of credit fees. Management believes that a useful measure of the sufficiency of Covanta’s cash generated from operations is that amount available to pay debt service and letters of credit fees under its Senior Secured Credit Facilities, after all other obligations are paid.

The following table provides additional information with respect to cash available to pay Covanta’s debt and letters of credit fees under its Senior Secured Credit Facilities for the period April 1, 2005 through June 30, 2005.

COVANTA CASH FLOW GENERATED AND AVAILABLE
FOR CORPORATE LONG-TERM DEBT⁽¹⁾ AND LETTERS OF CREDIT FEES
FOR THE QUARTER ENDED JUNE 30, 2005

(Dollars in Thousands)				COVANTA
	DOMESTIC(2)			INTERNATIONAL			CONSOLIDATED
Operating income	$	25,778		$	2,828		$	28,606
Depreciation and amortization		15,613			2,217			17,830
Change in unbilled service receivables		2,949			—			2,949
Project debt principal repaid		(56,610	)		(4,842	)		(61,452	)
Borrowings for facilities		41,920			527			42,447
Premium received on refinancing of debt		1,862			—			1,862
Change in restricted funds held in trust		5,304			3,526			8,830
Change in restricted funds related to intermediate debt		12,042			—			12,042
Payment of principal on Intermediate debt		(6,000	)		—			(6,000	)
Change in other assets and liabilities		(15,666	)		3,522			(12,144	)
Distributions to minority partners		(1,008	)		(3,863	)		(4,871	)
Distributions from investees and joint ventures		—			10,053			10,053
Amortization of premium and discount		(2,873	)		—			(2,873	)
Investments in facilities		(2,259	)		(215	)		(2,474	)
Corporate and foreign income taxes paid		(2,139	)		(865	)		(3,004	)
Less: cash flow generated attributable to minority partners		(46	)		(24	)		(70	)
Cash flow generated for Corporate Long-Term debt(1) and letters of credit fees		18,867			12,864			31,731
Less: changes in cash flow held at subsidiary levels(3)		(12,234	)		3,617			(8,617	)
Cash flow generated and available for Corporate Long-Term debt(1) and letters of credit fees		6,633			16,481			23,114
Cash Balance, Beginning of Period:
Cash Balance — Covanta’s share — Available for Corporate Long-Term debt(1) and letters of credit fees		47,831			2,022			49,853
Cash Balance — Covanta’s share — Held at subsidiary levels(3)		—			7,987			7,987
Cash Balance — Minority partners		—			172			172
Total Cash, Beginning of Period		47,831			10,181			58,012
Corporate Long-Term debt(1) interest and letters of credit fees paid — Net		(9,869	)		(1,535	)		(11,404	)
Corporate Long-Term debt(1)principal paid		(233,514	)		(77,407	)		(310,921	)
Intercompany		(65,998	)		65,998			-
New borrowings		675,000			—			675,000
Prepaid financing costs new loan agreement		(34,574	)		—			(34,574	)
Contribution of capital by parent		384,954			—			384,954
Entities purchased, less cash acquired		(684,860	)		—			(684,860	)
Change in funds held in escrow		9,722			—			9,722
Adjustments to reconcile to consolidated cash:
Cash flow generated attributable to minority partners		46			24			70
Changes in cash flow held at subsidiary levels(3)		12,234			(3,617	)		8,617
Cash Balance, End of Period:
Cash Balance — Covanta’s share — Available for Corporate Long-Term debt(1) and letters of credit fees		68,122			5,559			73,681
Cash Balance — Covanta’s share — Held at subsidiary levels(3)		39,405			4,370			43,775
Cash Balance — Minority partners		78			196			274
Cash Balance, End of Period	$	107,605		$	10,125		$	117,730

(1) Corporate Long-Term debt consists of the Term Loans extended under the First and Second Lien Credit
Facilities in the initial amounts of $275,000,000 and $400,000,000, respectively.
(2) Includes six days of operations for American Ref-Fuel Holdings and its Subsidiaries.
(3) Certain subsidiary level unrestricted cash amounts are not immediately available to Covanta due to subsidiary
level debt covenants or timing of cash transfers to Covanta.

Reconciliation of cash generated for Corporate Long-Term debt⁽¹⁾ and letters of credit fees to cash provided by operating activities for the period April 1, 2005 through June 30, 2005 (in thousands of dollars):

	CONSOLIDATED
Cash flow generated for Corporate Long-Term debt(1) and letters of credit fees
for the period 4/01/05 through 6/30/05:	$	31,731
Investment in Facilities		2,474
Distributions to minority partners		4,871
Change in restricted funds held in trust		(8,830	)
Change in restricted funds related to intermediate debt		(12,042	)
Borrowings for facilities		(42,447	)
Premium received on refinancing		(1,862	)
Payment of project debt		61,452
Payment of principal on Intermediate debt		6,000
Recourse debt service and LOC fees paid-net		(11,404	)
All other		47
Cash provided by operating activities from April 1, 2005 through June 30, 2005	$	29,990

Non-GAAP Financial Measure — Adjusted EBITDA for the Twelve Months Ended June 30, 2005

The following summarizes an unaudited non-GAAP financial measure for Covanta, which is used in calculating compliance with certain of Covanta’s financial covenants in its financing arrangements entered into on June 24, 2005. Certain items are included in the table below that are not measured under GAAP and are not intended to supplant other information provided in accordance with GAAP. Furthermore, these measures may not be comparable to those used by other companies. The following information should be read in conjunction with the audited consolidated financial statements of Danielson Holding Corporation and the notes thereto as filed in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2004, and the unaudited financial statements and notes thereto as filed in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005. Adjusted EBITDA means, for any period, EBITDA plus additional items deducted from, or added to, net income, as defined in Covanta’s credit agreements. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of Covanta’s performance or any other measures of performance derived in accordance with GAAP. Adjusted EBITDA is a material covenant in Covanta’s credit agreement and is presented to show Covanta’s ability to comply with this covenant. Adjusted EBITDA for the period set forth below is reconciled to net income, which is believed to be the most directly comparable measure of GAAP.

Covanta Trailing Twelve Months Adjusted EBITDA
For the Period July 1, 2004 Through June 30, 2005

(Dollars in Thousands)	Trailing
	12 Months
	Ended
	June 30, 2005
Net Income	$	29,006
Depreciation and amortization		69,397
Net interest expense on project debt		39,322
Interest expense		50,446
Interest income		(3,518	)
Income taxes		18,582
Minority interests		11,976
Change in unbilled service receivable		15,101
Acquisition-related charges		1,389
Restructuring charges		2,655
Gain on sale of business		(245	)
Non-cash compensation		2,179
Gain on refinancing		(1,711	)
Other non-cash operating expense		1,099
Total adjustments		206,672
Adjusted EBITDA	$	235,678