EARNINGS PER SHARE ("EPS")

6 Months Ended

Jun. 30, 2011

EARNINGS PER SHARE ("EPS")

NOTE 4. EARNINGS PER SHARE (“EPS”)

Per share data is based on the weighted average number of outstanding shares of our common stock, par value $0.10 per share, 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 awards, restricted stock units and warrants 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).

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Net income (loss) from continuing operations	$	16,942	$	15,479	$	3,301	$	(534	)
Net income from discontinued operations		1,198		10,310		148,332		19,090
Net income attributable to Covanta Holding Corporation	$	18,140	$	25,789	$	151,633	$	18,556
Basic earnings per share:
Weighted average basic common shares outstanding		143,970		154,377		145,415		154,139
Continuing operations	$	0.12	$	0.10	$	0.02	$	—
Discontinued operations		0.01		0.07		1.02		0.12
Covanta Holding Corporation	$	0.13	$	0.17	$	1.04	$	0.12
Diluted earnings per share:
Weighted average basic common shares outstanding		143,970		154,377		145,415		154,139
Dilutive effect of stock options		706		386		640		—
Dilutive effect of restricted stock		262		263		268		—
Dilutive effect of convertible debentures		—		—		—		—
Dilutive effect of warrants		—		—		—		—
Weighted average diluted common shares outstanding		144,938		155,026		146,323		154,139
Continuing operations	$	0.12	$	0.10	$	0.02	$	0.00
Discontinued operations		0.01		0.07		1.02		0.12
Covanta Holding Corporation	$	0.13	$	0.17	$	1.04	$	0.12
Securities excluded from the weighted average dilutive common shares outstanding because their inclusion would have been antidilutive:
Stock options		1,653		1,886		1,684		2,323
Restricted stock		—		—		—		231
Restricted stock units		—		—		—		25
Warrants		27,226		24,803		27,226		24,803

In 2007, we issued 1.00% Senior Convertible Debentures due 2027 (the “Debentures”). The Debentures are convertible under certain circumstances if the closing sale price of our common stock exceeds a specified conversion price before February 1, 2025. The conversion rate for the Debentures is 38.9883 shares of our common stock per $1,000 principal amount of Debentures, which is equivalent to a conversion price of $25.65 per share. As of June 30, 2011, the Debentures did not have a dilutive effect on earnings per share because the average market price during the periods presented was below the strike price.

In 2009, we entered into privately negotiated warrant transactions in connection with the issuance of 3.25% Cash Convertible Senior Notes due 2014 (the “3.25% Notes”). These warrants could have a dilutive effect to the extent that the price of our common stock exceeds the applicable strike price of $23.24. As of June 30, 2011, the warrants did not have a dilutive effect on earnings per share because the average market price during the periods presented was below the strike price.