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Exhibit 5Covanta Holding CorporationReconciliation of Net Income to Adjusted EBITDA Three Months Twelve Months Ended Ended December 31, December 31, ---------------- ---------------- Full Year 2012 2011 2012 2011 Estimated 2013 ------- ------- ------- ------- ---------------- (Unaudited, in millions)Net Income from Continuing Operations Attributable to Covanta Holding Corporation $ 82 $ 27 $ 116 $ 79 $53 - $66Operating loss related to insurance subsidiaries (a) 1 1 10 2 (5) - 0Depreciation and amortization expense 50 51 195 193 220 - 210Debt service: Net interest expense on project debt 5 7 27 31 Interest expense 27 17 94 67 Non-cash convertible debt related expense 6 5 25 25 Investment income (1) -- (1) (1) ------- ------- ------- -------Subtotal debt service 37 29 145 122 171 - 155Income tax expense (b) (4) 25 26 52 40 - 65Reversal of uncertain tax positions related to pre-emergence tax matters(b) -- -- -- (24)Contractual liability to pre-petition creditors (b) -- -- -- 15Write-off of intangible liability (c) -- -- (29) --Write-off of renewable fuels project (d) -- -- 16 --Development costs (e) -- 5 11 5Net gain related to lease termination (f) (44) -- (44) --Pension plan settlement expense (g) 11 -- 11 --Loss on extinguishment of debt (h) 1 -- 3 1Gain on the sale of business -- (8) -- (9)Net income loss attributable to noncontrolling interests in subsidiaries 1 2 2 5 3 - 8Other adjustments: Debt service billings in excess of revenue recognized 3 1 9 22 Non-cash compensation expense 4 5 17 18 Other non-cash items (i) 1 9 4 13 ------- ------- ------- -------Subtotal other adjustments 8 15 30 53 18 - 26 ------- ------- ------- -------Total adjustments 61 120 376 415 ------- ------- ------- ------- ----------------Adjusted EBITDA $ 143 $ 147 $ 492 $ 494 $500 - $530 ======= ======= ======= ======= ================(a) For additional information, see Exhibit 4A - Note (a) of this Press Release.(b) Income tax expense for 2011 is adjusted for the reversal of uncertain tax positions related to pre-emergence tax matters. For additional information, see Exhibit 4A - Note (i) of this Press Release.(c) For additional information, see Exhibit 4A - Note (b) of this Press Release.(d) For additional information, see Exhibit 4A - Note (c) of this Press Release.(e) For additional information, see Exhibit 4A - Note (d) of this Press Release.(f) For additional information, see Exhibit 4A - Note (e) of this Press Release.(g) For additional information, see Exhibit 4A - Note (f) of this Press Release.(h) For additional information, see Exhibit 7A - Note (a) - (b) of this Press Release.(i) Includes certain non-cash items that are added back under the definition of Adjusted EBITDA in Covanta Energy Corporation's credit agreement. Exhibit 6Covanta Holding CorporationReconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow Three Months Twelve Months Ended Ended December 31, December 31, ---------------- ---------------- Full Year 2012 2011 2012 2011 Estimated 2013 ------- ------- ------- ------- ---------------- (Unaudited, in millions)Cash flow provided by operating activities from continuing operations $ 74 $ 84 $ 342 $ 360 $325 - $360Plus: Cash flow used in (provided by) operating activities from insurance subsidiaries 1 (2) 5 2 5 - 10Less: Maintenance capital expenditures (a) (18) (19) (85) (80) (80) - (90) ------- ------- ------- ------- ----------------Free Cash Flow $ 57 $ 63 $ 262 $ 282 $250 - $280 ======= ======= ======= ======= ================Weighted Average Diluted Shares Outstanding 132 137 133 142Uses of Free Cash FlowInvestments: Acquisition of businesses, net of cash acquired $ (94) $ -- $ (94) $ (10) Property insurance proceeds 8 1 8 1 Non-maintenance capital expenditures (b) (14) (8) (41) (38) Acquisition of land use rights (b) -- -- (1) (8) Other growth investments (b) (2) -- (2) (14) Other investing activities, net (c) (6) 7 (9) 1 ------- ------- ------- -------Total investments $ (108) $ -- $ (139) $ (68) ------- ------- ------- -------Return of capital to stockholders: Cash dividends paid to stockholders $ (39) $ (10) $ (90) $ (32) Common stock repurchased (5) (26) (88) (229) ------- ------- ------- -------Total return of capital to stockholders $ (44) $ (36) $ (178) $ (261) ------- ------- ------- -------Capital raising activities: Net proceeds from issuance of corporate debt (d) $ 328 $ -- $ 1,001 $ -- Net proceeds from issuance of project debt -- -- -- 15 Net proceeds from asset sales -- 12 -- 12 Other financing activities, net 16 2 19 (1) ------- ------- ------- -------Net proceeds from capital raising activities $ 344 $ 14 $ 1,020 $ 26 ------- ------- ------- -------Debt repayments: Net cash used for scheduled principal payments on corporate debt $ (1) $ (2) $ (26) $ (7) Net cash used for scheduled principal payments on project debt (e) (64) (23) (121) (99) Optional repayment of corporate debt (f)(g) -- -- (621) (32) Net cash used for optional repayment of project debt (h) (238) -- (238) -- ------- ------- ------- -------Total debt repayments $ (303) $ (25) $(1,006) $ (138) ------- ------- ------- -------Borrowing activities - Revolving credit facility, net $ 40 $ -- $ 60 $ --Short-term borrowing activities - Financing of insurance premiums, net $ -- $ 10 $ (10) $ 10Distributions to partners of noncontrolling interests in subsidiaries $ -- $ (1) $ (1) $ (6)Effect of exchange rate changes on cash and cash equivalents $ (1) $ 3 $ -- $ 1 ------- ------- ------- -------Net change in cash and cash equivalents from continuing operations $ (15) $ 28 $ 8 $ (154) ======= ======= ======= =======(a) Purchases of property, plant and equipment are also referred to as capital expenditures. Capital expenditures that primarily maintain existing facilities are classified as maintenance capital expenditures. The following table provides the components of total purchases of property, plant and equipment: Three Months Twelve Months Ended Ended December 31, December 31, ---------------- ---------------- 2012 2011 2012 2011 ------- ------- ------- -------Maintenance capital expenditures $ (18) $ (19) $ (85) $ (80)Capital expenditures associated with construction -- (1) -- (16)Capital expenditures associated with technology development and organic growth initiatives (9) (4) (27) (10)Capital expenditures - other (5) (3) (14) (12) ------- ------- ------- -------Total purchases of property, plant and equipment $ (32) $ (27) $ (126) $ (118) ======= ======= ======= =======(b) Investments in our various growth opportunity areas, including organic growth initiatives, technology, business development, and other similar expenditures, excluding acquisitions of businesses. Non maintenance capital expenditures also includes amounts associated with insurable events. These expenditures are not considered growth investments. These expenditures were $4 million and $1 million for the three months ended December 31, 2012 and 2011, respectively, and $13 million and $1 million for the twelve months ended December 31, 2012 and 2011, respectively.(c) Other investing activities is primarily comprised of net payments from the purchase/sale of investment securities and business development expenses.(d) For additional information, see Exhibit 7A - Note (a) of this Press Release. Excludes borrowings under Revolving Credit Facility. Calculated as follows:Proceeds from borrowings on long- term debt $ 335 $ -- $ 1,034 $ --Less: Financing costs related to issuance of long-term debt (7) -- (33) -- ------- -------- ------- --------Net proceeds from issuance of corporate debt. $ 328 $ -- $ 1,001 $ -- ======= ======== ======= ========(e) Calculated as follows:Total scheduled principal payments on project debt $ (100) $ (54) $ (146) $ (137)Decrease in related restricted funds held in trust 36 31 25 38 ------- ------- ------- -------Net cash used for principal payments on project debt $ (64) $ (23) $ (121) $ (99) ======= ======= ======= =======
