WMX TECHNOLOGIES INC, 424B2, 1994-05-10

WMX TECHNOLOGIES INC
424B2, 1994-05-10
REFUSE SYSTEMS

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<PAGE>

PROSPECTUS
REGISTRATION NO. 33-44849
FILED PURSUANT TO RULE 424(B)(2)

10,159,092 SHARES

LOGO

WMX TECHNOLOGIES, INC.

COMMON STOCK

$1 PAR VALUE

------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------

The 10,159,092 shares of common stock, $1 par value, covered by this
prospectus may be offered and issued from time to time in connection with
acquisitions of other businesses, properties or securities in business
combination transactions in accordance with Rule 415(a)(1)(viii) of Regulation
C under the Securities Act of 1933, as amended (the "1933 Act"). See
"Securities Covered by this Prospectus" herein.

This prospectus has also been prepared for use, with the Company's prior
consent, by persons who have received or will receive shares in connection with
such acquisitions and who wish to offer and sell such shares under
circumstances requiring or making desirable its use. See "Securities Covered by
this Prospectus" herein, and see the inside back cover page hereof for the
identity of such individuals, if any.

On May 2, 1994, the reported closing sale price for the Company's common
stock on the New York Stock Exchange Composite Tape as reported in The Wall
Street Journal (Midwest Edition) was $26. See "Market Prices of Common Stock;
Dividends" herein.

------------

THE DATE OF THIS PROSPECTUS IS MAY 3, 1994.

Printed on
recycled paper
LOGO
<PAGE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY WMX TECHNOLOGIES, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER
TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Summary..................................... 3
The Company................................. 6
Securities Covered by this Prospectus....... 9
Market Prices of Common Stock; Dividends.... 10
Selected Consolidated Financial Data........ 11
Management's Discussion and Analysis of Fi-
nancial Condition and Results of Opera-
tions...................................... 12
Business of the Company..................... 25
General.................................... 25
Solid Waste Management and Related Services 25
Collection................................ 26
Transfer.................................. 26
Recycling and Resource Recovery........... 27
Disposal.................................. 28
Related Services.......................... 28
Hazardous Waste Management and Related
Services.................................. 29
Chemical Waste Management Services........ 29
Low-Level and Other Radioactive Waste
Services................................. 30
Engineering, Construction, Industrial and
Related Services.......................... 32
Engineering, Construction and Environmen-
tal and Infrastructure Consulting Servic-
es....................................... 32
Remediation and Other On-Site Industrial
and Related Services..................... 33
Trash-to-Energy, Water Treatment, Air Qual-
ity and Related Services.................. 34
Wheelabrator Clean Energy................. 34
Wheelabrator Clean Water.................. 35
Wheelabrator Clean Air.................... 36
International Waste Management and Related
Services.................................. 36
Collection Services....................... 37
Treatment and Disposal Services........... 38
Regulation................................. 40
Solid Waste............................... 41
Hazardous Waste........................... 41
</TABLE>
<TABLE>
<S> <C>
Engineering, Construction, Industrial and
Related Services........................ 42
Trash-to-Energy, Water Treatment, Air
Quality and Related Services............ 43
RCRA..................................... 44
Superfund................................ 44
International Waste Management and Re-
lated Services.......................... 45
Competition............................... 45
Insurance................................. 47
Employees................................. 48
Acquisitions and Dispositions............. 49
Property and Equipment..................... 51
Management................................. 53
Directors and Executive Officers.......... 53
Compensation of Executive Officers........ 56
Stock Options............................. 57
Long-Term Incentive Plan Awards........... 61
Pension and Retirement Plans.............. 61
Compensation of Directors................. 62
Outside Directors' Plans.................. 63
Stock Option Plans for Non-Employee Direc-
tors..................................... 63
Directors' Charitable Endowment Program... 64
Compensation Committee Interlocks and In-
sider Participation...................... 64
Certain Transactions...................... 65
Securities Ownership of Management......... 66
Ownership of Company Common Stock......... 66
Ownership of CWM Common Stock............. 67
Ownership of WTI Common Stock............. 69
Ownership of Rust Common Stock............ 70
Ownership of Waste Management Interna-
tional Ordinary Shares................... 71
Legal Proceedings.......................... 72
Description of Capital Stock............... 74
Experts.................................... 76
Additional Information..................... 76
Index to Financial Statements.............. F-1
</TABLE>

AVAILABLE INFORMATION
WMX Technologies, Inc. (formerly named Waste Management, Inc.) (the
"Company") is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at the public reference facilities maintained by the regional offices of
the Commission at Seven World Trade Center, New York, New York 10048; and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Company's common stock is listed on the New York Stock Exchange and the Chicago
Stock Exchange, and such reports, proxy statements and other information
concerning the Company can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005 and at the offices of
the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605.

2
<PAGE>

SUMMARY

The Company.... WMX Technologies, Inc.

Location....... The Company's executive offices are located at:
3003 Butterfield Road
Oak Brook, Illinois 60521
(708) 572-8800

Business....... The Company is a leading international provider of
environmental, engineering and construction, industrial and
related services.

Through Waste Management, Inc., a wholly owned subsidiary of
the Company, the Company provides integrated solid waste
management services in North America, consisting of
collection, transfer, resource recovery and disposal, to
commercial, industrial, municipal and residential customers,
as well as to other waste management companies. The Company's
solid waste management services include Recycle America(R) and
Recycle Canada(R) paper, glass, plastic and metal recycling
services; recovery of methane gas from sanitary landfills for
use in electricity generation; and medical and infectious
waste management services. The Company also provides street
sweeping and parking lot cleaning services, portable fencing
and power pole services and Port-O-Let(R) portable sanitation
services to municipalities and commercial customers.

Chemical Waste Management, Inc., an approximately 79%-owned
subsidiary of the Company ("CWM"), is a leading provider of
hazardous waste management services in the United States. Its
chemical waste management services, including transportation,
treatment, resource recovery and disposal, are furnished to
commercial and industrial customers, as well as to other waste
management companies and to governmental entities. CWM also
furnishes radioactive waste management services, primarily to
electric utilities and governmental entities.

Wheelabrator Technologies Inc., an approximately 55%-owned
subsidiary of the Company ("WTI"), provides a wide array of
environmental products and services in North America and
abroad. WTI's clean energy group is a leading developer of
facilities and systems for, and provider of services to, the
trash-to-energy, energy, and independent power markets.
Through the clean energy group, WTI develops, arranges
financing for, operates and owns facilities that dispose of
trash and other waste materials in an environmentally
acceptable manner by recycling it into energy in the form of
electricity and steam. WTI's clean water group is principally
involved in the design, manufacture and operation of
facilities and systems used to purify water, to treat
municipal and industrial wastewater, to treat and manage
biosolids resulting from the treatment of wastewater by
converting them into useful fertilizers, and to recycle
organic wastes into compost material useable for horticultural
and agricultural purposes. The clean water group also designs
and manufactures various products and systems used in water
and wastewater treatment facilities and industrial facilities,
precision profile wire screens for use in groundwater wells
and other industrial applications, and certain other
industrial equipment. WTI's clean air group designs,
fabricates and installs technologically advanced air pollution
emission control and measurement systems and equipment,
including systems which remove pollutants from the emissions
of WTI's trash-to-energy facilities as well as power plants
and other industrial facilities.

3
<PAGE>

Rust International Inc., a subsidiary owned approximately 56%
by CWM and 40% by WTI ("Rust"), furnishes engineering,
construction, environmental and infrastructure consulting,
hazardous substance remediation and a variety of other on-site
industrial and related services primarily to clients in
government and in the chemical, petrochemical, nuclear,
energy, utility, pulp and paper, manufacturing, environmental
services and other industries.

The Company provides comprehensive waste management and
related services internationally, primarily through Waste
Management International plc, a subsidiary owned 56% by the
Company, 12% by Rust and 12% by WTI ("Waste Management
International"). Waste Management International provides a
wide range of solid and hazardous waste management services
(or has interests in projects or companies providing such
services) in various countries in Europe and in Argentina,
Australia, Brunei, Hong Kong, Indonesia, Malaysia, New
Zealand, Singapore and Taiwan.

On January 1, 1993, CWM and WTI formed Rust and acquired 58%
and 42%, respectively, of Rust's outstanding shares. Rust was
created to serve the engineering, construction, environmental
and infrastructure consulting, hazardous substance remediation
and on-site industrial and related services markets, which the
managements of CWM, WTI and The Brand Companies, Inc.
("Brand") believed could be served more effectively by
organizing the Company's several business units serving those
markets into a single integrated company. WTI contributed
primarily its engineering and construction and environmental
and infrastructure consulting services businesses and its
recently formed international engineering unit based in
London. CWM contributed primarily its hazardous substance
remediation services business, its approximately 56% ownership
interest in Brand, and its 12% ownership interest in Waste
Management International. On May 7, 1993, Brand was merged
into a subsidiary of Rust, and shares of Brand (other than
those owned by Rust or exchanged for cash in the merger) were
converted, on a one-for-one basis, into shares of Rust. As a
result of such merger, Brand is now a wholly owned subsidiary
of Rust.

4
<PAGE>

FINANCIAL INFORMATION
(SEE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY BEGINNING ON PAGE F-1)
(000'S OMITTED IN TABLE, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------------
1989(1) 1990(2) 1991(3) 1992(4) 1993(5)
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue................. $4,413,742 $ 6,034,406 $ 7,550,914 $ 8,661,027 $ 9,135,577
Net income.............. $ 562,135 $ 684,762 $ 606,323 $ 850,036 $ 452,776
Earnings per common and
common equivalent
share.................. $ 1.22 $ 1.44 $ 1.23 $ 1.72 $ .93
Total assets............ $6,405,209 $10,518,243 $12,572,310 $14,114,180 $16,264,476
Long-term debt, less
portion payable within
one year............... $1,503,817 $ 3,139,623 $ 3,782,973 $ 4,312,511 $ 6,145,584
Dividends per share..... $ .29 $ .35 $ .42 $ .50 $ .58
</TABLE>
- ---------
(1) The results for 1989 include a non-taxable gain of $70,826,000 resulting
from the public offering of 5,000,000 shares of common stock of CWM in
October 1989 and special charges of $112,000,000 before tax.

(2) The results for 1990 include an extraordinary charge of $24,547,000, or
$.05 per share, representing the Company's percentage interest in the
writedown by WTI of WTI's investment in the stock of The Henley Group, Inc.
and Henley Properties Inc. to market value.

(3) The results for 1991 include a special charge of $296,000,000, before tax
and minority interest, primarily to reflect then current estimates of the
environmental remediation liabilities at waste disposal sites previously
used or operated by the Company and its subsidiaries or their predecessors.
See Note 11 to the Company's Consolidated Financial Statements.

(4) The results for 1992 include a non-taxable gain of $240,000,000 (before
minority interest) resulting from the initial public offering of Waste
Management International; special charges of $219,900,000, before tax and
minority interest, primarily related to writedowns of the Company's medical
waste business, CWM incinerators in Chicago, Illinois and Tijuana, Mexico
and Brand's investment in its asbestos abatement business and certain
restructuring costs incurred by Brand and CWM related to the formation of
Rust, and one time after-tax charges aggregating $71,139,000, or $.14 per
share, related to the cumulative effect of adopting two new accounting
standards. See Notes 1, 9 and 11 to the Company's Consolidated Financial
Statements.

(5) The results for 1993 include an non-taxable gain of $15,109,000 relating to
the issuance of shares by Rust, as well as the Company's share of a special
asset revaluation and restructuring charge of $550,000,000, before tax and
minority interest, recorded by CWM related primarily to a revaluation of
its thermal treatment business, and a provision of approximately
$14,000,000 to adjust deferred income taxes resulting from the 1993 tax law
change. See Notes 1 and 11 to the Company's Consolidated Financial
Statements.

(6) Certain amounts have been restated to conform to 1993 classifications.

Recent
Developments..
On April 19, 1994, the Company announced operating results for
the three months ended March 31, 1994. Net income for the
first quarter of 1994 was $162,612,000, or $.34 per share,
compared to $199,285,000, or $.41 per share, in the same
quarter a year earlier. Revenue in the first quarter of 1994
rose to $2,284,067,000 from $2,135,341,000 in the first
quarter of 1993.

5
<PAGE>

THE COMPANY

WMX Technologies, Inc. (formerly named Waste Management, Inc.) is a leading
international provider of environmental, engineering and construction,
industrial and related services. Unless the context indicates to the contrary,
as used in this report the terms "Company" and "WMX Technologies" refer to WMX
Technologies, Inc. and its subsidiaries.

Through Waste Management, Inc. (formerly named Waste Management of North
America, Inc.), a wholly owned subsidiary of the Company (referred to herein,
together with its subsidiaries and certain affiliated companies providing solid
waste management and related services, as "Waste Management" or "WMI"), the
Company provides integrated solid waste management services in North America to
commercial, industrial, municipal and residential customers, as well as to
other waste management companies. These services consist of solid waste
collection, transfer, resource recovery and disposal services. As part of these
services, the Company is engaged in providing, through its Recycle America(R)
and Recycle Canada(R) programs, paper, glass, plastic and metal recycling
services to commercial and industrial operations and curbside recycling
services for such materials to residences; in removing methane gas from
sanitary landfill facilities for use in electricity generation; and in
providing medical and infectious waste management services to hospitals and
other health care and related facilities. In addition, through WMI the Company
provides street sweeping and parking lot cleaning services, portable fencing
and power pole services and Port-O-Let(R) portable sanitation services to
municipalities and commercial customers.

Chemical Waste Management, Inc., an approximately 79%-owned subsidiary of the
Company (referred to herein, together with its subsidiaries other than Rust (as
defined below), as "CWM"), is a leading provider of hazardous waste management
services in the United States. Its chemical waste management services,
including transportation, treatment, resource recovery and disposal, are
furnished to commercial and industrial customers, as well as to other waste
management companies and to governmental entities. CWM also furnishes
radioactive waste management services, primarily to electric utilities and
governmental entities.

Wheelabrator Technologies Inc., an approximately 55%-owned subsidiary of the
Company (referred to herein, together with its subsidiaries, as "WTI"),
provides a wide array of environmental products and services in North America
and abroad. WTI's clean energy group is a leading developer of facilities and
systems for, and provider of services to, the trash-to-energy, energy, and
independent power markets. Through the clean energy group, WTI develops,
arranges financing for, operates and owns facilities that dispose of trash and
other waste materials in an environmentally acceptable manner by recycling it
into energy in the form of electricity and steam. WTI's clean water group is
principally involved in the design, manufacture and operation of facilities and
systems used to purify water, to treat municipal and industrial wastewater, to
treat and manage biosolids resulting from the treatment of wastewater by
converting them into useful fertilizers, and to recycle organic wastes into
compost material useable for horticultural and agricultural purposes. The clean
water group also designs and manufactures various products and systems used in
water and wastewater treatment facilities and industrial facilities, precision
profile wire screens for use in groundwater wells and other industrial
applications, and certain other industrial equipment. WTI's clean air group
designs, fabricates and installs technologically advanced air pollution
emission control and measurement systems and equipment, including systems which
remove pollutants from the emissions of WTI's trash-to-energy facilities as
well as power plants and other industrial facilities.

Rust International Inc., a subsidiary owned approximately 56% by CWM and 40%
by WTI (referred to herein, together with its subsidiaries, as "Rust"),
furnishes engineering, construction, environmental and infrastructure
consulting, hazardous substance remediation and a variety of other on-site
industrial and related services primarily to clients in government and in the
chemical, petrochemical, nuclear, energy, utility, pulp and paper,
manufacturing, environmental services and other industries.

6
<PAGE>

The Company provides comprehensive waste management and related services
internationally, primarily through Waste Management International plc, a
subsidiary owned 56% by the Company, 12% by Rust and 12% by WTI (referred to
herein, together with its subsidiaries, as "Waste Management International" or
"WM International"). Waste Management International provides a wide range of
solid and hazardous waste management services (or has interests in projects or
companies providing such services) in various countries in Europe and in
Argentina, Australia, Brunei, Hong Kong, Indonesia, Malaysia, New Zealand,
Singapore and Taiwan.

On January 1, 1993, CWM and WTI formed Rust and acquired 58% and 42%,
respectively, of Rust's outstanding shares. Rust was created to serve the
engineering, construction, environmental and infrastructure consulting,
hazardous substance remediation and on-site industrial and related services
markets, which the managements of CWM, WTI and The Brand Companies, Inc.
(referred to herein as "Brand") believed could be served more effectively by
organizing the Company's several business units serving those markets into a
single integrated company. WTI contributed primarily its engineering and
construction and environmental and infrastructure consulting services
businesses and its recently formed international engineering unit based in
London. CWM contributed primarily its hazardous substance remediation services
business, its approximately 56% ownership interest in Brand, and its 12%
ownership interest in Waste Management International. On May 7, 1993, Brand was
merged into a subsidiary of Rust, and shares of Brand (other than those owned
by Rust or exchanged for cash in the merger) were converted into shares of
Rust. As a result of such merger, Brand is now a wholly owned subsidiary of
Rust.

The Company also owns an approximately 28% interest in ServiceMaster Consumer
Services L.P., a provider of lawn care, pest control and other consumer
services. The remaining ownership interest is held indirectly by ServiceMaster
Limited Partnership.

Through the end of 1992, the Company categorized its operations into four
industry segments-solid waste management and related services; hazardous waste
management and related services; energy, environmental and industrial projects
and systems; and international waste management and related services
(consisting of comprehensive waste management and related services provided
outside the United States, Canada and Mexico). Beginning in 1993, the Company
categorized the operations of Rust, which was formed from businesses
contributed by CWM and WTI, as a fifth industry segment--engineering,
construction, industrial and related services--and modified the name of its
energy, environmental and industrial projects and systems segment to "trash-to-
energy, water treatment, air quality and related services."

The following table shows the respective revenues of these segments for the
Company's last three years, presented as if the above-described Rust
transaction had occurred prior to the periods presented:

<TABLE>
<CAPTION>
(000'S OMITTED)
YEAR ENDED DECEMBER 31
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Solid Waste Management and Related
Services.................................. $3,961,111 $4,309,614 $4,702,166
Hazardous Waste Management and Related
Services.................................. 720,048 755,088 661,860
Engineering, Construction, Industrial and
Related Services.......................... 1,236,979 1,441,050 1,534,465
Trash-to-Energy, Water Treatment, Air
Quality and Related Services.............. 746,042 928,313 1,142,219
International Waste Management and Related
Services.................................. 1,075,070 1,445,734 1,411,211
Eliminations of Intercompany Revenue....... (188,336) (218,772) (316,344)
---------- ---------- ----------
Consolidated Revenue....................... $7,550,914 $8,661,027 $9,135,577
========== ========== ==========
</TABLE>

7
<PAGE>

For information relating to expenses and identifiable assets attributable to
the Company's different industry segments, see Note 10 to the Company's
Consolidated Financial Statements appearing elsewhere in this prospectus. For
interim periods, the revenues and net income of certain of the Company's
businesses may fluctuate for a number of reasons, including there being for
some businesses less activity during the winter months.

Regulatory or technological developments relating to the environment may
require companies engaged in environmental services businesses, including the
Company, to modify, supplement or replace equipment and facilities at costs
which may be substantial. Because certain of the businesses in which the
Company is engaged are intrinsically connected with the protection of the
environment and the potential discharge of materials into the environment, a
material portion of the Company's capital expenditures is, directly or
indirectly, related to such items. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" set forth on pages 12 to 25 of
this prospectus for a review of property and equipment expenditures by the
Company for the last three years. The Company does not expect such
expenditures, which are incurred in the ordinary course of business, to have a
materially adverse impact on its and its subsidiaries' combined earnings or its
or its subsidiaries' competitive position in the foreseeable future because the
Company's businesses are based upon compliance with environmental laws and
regulations and its services are priced accordingly.

Although the Company strives to conduct its operations in compliance with
applicable laws and regulations, the Company believes that in the existing
climate of heightened legal, political and citizen awareness and concerns,
companies in the environmental services industry, including the Company, will
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend funds for remedial work and related activities
with respect to waste treatment, disposal and trash-to-energy facilities. Where
the Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Such estimates are subsequently revised, as necessary,
as additional information becomes available. While the Company does not
anticipate that the amount of any such revision will have a material adverse
effect on the Company's operations or financial condition, the measurement of
environmental liabilities is inherently difficult and the possibility remains
that technological, regulatory or enforcement developments, the results of
environmental studies, or other factors could materially alter this expectation
at any time. Such matters could have a material adverse impact on earnings for
one or more fiscal quarters or years.

8
<PAGE>

The Company was incorporated in Delaware in 1968 and subsequently succeeded
to certain businesses owned by its organizers and others. The Company's common
stock is listed on the New York Stock Exchange under the trading symbol "WMX"
and is also listed on the Frankfurt Stock Exchange, the London Stock Exchange,
the Chicago Stock Exchange and the Swiss Stock Exchanges in Basle, Zurich and
Geneva.

SECURITIES COVERED BY THIS PROSPECTUS

The shares of common stock of the Company covered by this prospectus are
available for use in connection with acquisitions of other businesses,
properties or securities in business combination transactions, which may relate
to businesses similar or dissimilar to the Company's environmental services and
other operations. The consideration offered by the Company in such
acquisitions, in addition to any shares of common stock offered by this
prospectus, may include cash, debt or other securities (which may be
convertible into shares of common stock of the Company covered by this
prospectus), or assumption by the Company of liabilities of the business being
acquired, or a combination thereof. The terms of acquisitions are typically
determined by negotiations between the Company and the owners of the
businesses, properties or securities (including newly issued securities) to be
acquired, with the Company taking into account the quality of management, the
past and potential earning power and growth of the businesses, properties or
securities to be acquired, and other relevant factors. Shares of common stock
issued to the owners of the businesses, properties or securities to be acquired
normally are valued at a price reasonably related to the market value of the
common stock either at the time the terms of the acquisition are tentatively
agreed upon or at or about the time or times of delivery of the shares.

With the consent of the Company, this prospectus may also be used by persons
who have received or will receive from the Company common stock covered by this
prospectus or by prospectuses under other registration statements in connection
with acquisitions and who may wish to sell such stock under circumstances
requiring or making desirable its use. The Company's consent to such use may be
conditioned upon such persons' agreeing not to offer more than a specified
number of shares following amendments to this prospectus, which the Company may
agree to use its best efforts to prepare and file at certain intervals. The
Company may require that any such offering be effected in an organized manner
through securities dealers. Sales by means of this prospectus may be made from
time to time privately at prices to be individually negotiated with the
purchasers, or publicly through transactions on the New York or Chicago Stock
Exchanges (which may involve crosses and block transactions), or in the over-
the-counter market, at prices reasonably related to market prices at the time
of sale or at negotiated prices. Broker-dealers participating in such
transactions may act as agent or as principal and, when acting as agent, may
receive commissions from the purchasers as well as from the sellers (if also
acting as agent for the purchasers). The Company may indemnify any broker-
dealer participating in such transactions against certain liabilities,
including liabilities under the 1933 Act. Profits, commissions and discounts on
sales by persons who may be deemed to be underwriters within the meaning of the
1933 Act may be deemed underwriting compensation under that Act.

Stockholders may also offer shares of stock issued in past and future
acquisitions by means of prospectuses under other available registration
statements or pursuant to exemptions from the registration requirements of the
1933 Act, including sales which meet the requirements of Rule 145(d) under that
Act, and stockholders should seek the advice of their own counsel with respect
to the legal requirements for such sales.

See the inside back cover page of this prospectus for the identity of any
persons who have received stock in connection with acquisitions by the Company
and with respect to whom the Company has consented to the use of this
prospectus in connection with sales of such stock.

9
<PAGE>

MARKET PRICES OF COMMON STOCK; DIVIDENDS

The following table shows the per share high and low sales prices of the
common stock of WMX Technologies on the New York Stock Exchange Composite Tape
for the periods indicated, as reported by The Wall Street Journal (Midwest
Edition), and also shows the cash dividends declared per share during such
periods:

<TABLE>
<CAPTION>
MARKET
PRICE CASH DIVIDENDS
------------ DECLARED PER
HIGH LOW SHARE
---- ---- --------------
<S> <C> <C> <C>
1992
----
First Quarter ............................... $46 5/8 $37 3/4 $.11
Second Quarter............................... 41 1/4 32 7/8 .13
Third Quarter................................ 36 7/8 32 .13
Fourth Quarter............................... 41 5/8 34 .13
1993
----
First Quarter ............................... $40 1/4 $33 5/8 $.13
Second Quarter............................... 36 3/8 29 1/4 .15
Third Quarter ............................... 33 1/8 29 1/2 .15
Fourth Quarter............................... 30 5/8 23 .15
1994
----
First Quarter ............................... $30 3/4 $ 23 $.15
</TABLE>

See the cover page of this prospectus for a recent sale price of WMX
Technologies' common stock.

Due in part to the high level of public awareness of the business in which
the Company is engaged, regulatory enforcement proceedings or other unfavorable
developments involving the Company's operations or facilities, including those
in the ordinary course of business, may be expected to engender substantial
publicity which could from time to time have an adverse impact upon the market
price for the Company's common stock.

In September 1990, the Company announced its authorization to purchase up to
25,000,000 shares of its common stock from time to time over the following 24-
month period in the open market or in privately negotiated transactions. This
program has been extended through September 1996. During 1992, the Company
purchased approximately 7.6 million shares of its common stock under this
program. During 1993 and the first quarter of 1994, the Company purchased an
aggregate of approximately 8.4 million shares of its common stock under this
program. In addition, during the first quarter of 1994, the Company sold put
options on 4.3 million shares of its common stock. The put options give the
holders the right at maturity to require the Company to repurchase shares of
its common stock at specified prices. The Company may from time to time
purchase additional shares of its common stock, including pursuant to the
exercise of put options, and write additional put options.

The Board of Directors of WMX Technologies intends to consider the payment of
dividends on a quarterly basis, but the declaration of future dividends will
necessarily be dependent upon business conditions, the earnings and financial
position of WMX Technologies and such other matters as the Board deems
relevant.

At March 23, 1994, the Company had approximately 71,250 holders of record of
its common stock.

10
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial information for each of the
five years in the period ended December 31, 1993 is derived from the Company's
Consolidated Financial Statements, which have been audited by Arthur Andersen &
Co., independent public accountants, whose report thereon appears elsewhere in
this prospectus. The information below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements, and the
related Notes, and the other financial information included elsewhere in this
prospectus.

(000'S OMITTED IN TABLE, EXCEPT PER SHARE AMOUNTS)

(1) The results for 1989 include a non-taxable gain of $70,826,000 resulting
from the public offering of 5,000,000 shares of common stock of CWM in
October 1989 and special charges of $112,000,000 before tax.

(5) The results for 1993 include a non-taxable gain of $15,109,000 relating to
the issuance of shares by Rust, as well as the Company's share of a special
asset revaluation and restructuring charge of $550,000,000, before tax and
minority interest, recorded by CWM related primarily to a revaluation of
its thermal treatment business, and a provision of approximately
$14,000,000 to adjust deferred income taxes resulting from the 1993 tax law
change. See Notes 1 and 11 to the Company's Consolidated Financial
Statements.
(6) Certain amounts have been restated to conform to 1993 classifications.

11
<PAGE>

On April 19, 1994, the Company announced operating results for the three
months ended March 31, 1994. Net income for the first quarter of 1994 was
$162,612,000, or $.34 per share, compared to $199,285,000, or $.41 per share,
in the same quarter a year earlier. Revenue in the first quarter of 1994 rose
to $2,284,067,000 from $2,135,341,000 in the first quarter of 1993.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

Consolidated

Consolidated 1993 revenue of WMX Technologies and its subsidiaries was
$9,135,577,000 compared with $8,661,027,000 in 1992 and $7,550,914,000 in 1991.

Consolidated 1993 net income was $452,776,000 or $.93 per share, compared
with $850,036,000 or $1.72 per share in 1992 and $606,323,000 or $1.23 per
share in 1991.

Earnings per share for all three years were impacted by special charges and
gains from stock transactions of subsidiaries; in 1992 by changes in accounting
principles; and in 1993 by an increase in U.S. tax rates. The following table
reconciles reported earnings per share to earnings excluding such items:

<TABLE>
<CAPTION>
1991 1992 1993
------ ------ ------
<S> <C> <C> <C>
Reported earnings per share............................ $ 1.23 $ 1.72 $ 0.93
Gains on stock transactions of subsidiaries............ (0.03) (0.42) (0.02)
Special charges (see Note 11 to Consolidated Financial
Statements)--
CWM asset revaluation and restructuring charge....... -- -- 0.59
Provision for estimated environmental liabilities.... 0.37 -- --
Other................................................ -- 0.24 --
Adjustment to deferred income taxes resulting from 1993
tax law change........................................ -- -- 0.03
Changes in accounting principles....................... -- 0.14 --
------ ------ ------
Earnings per share excluding above items............... $ 1.57 $ 1.68 $ 1.53
====== ====== ======
</TABLE>

In addition, the higher U. S. tax rates in effect in 1993 negatively impacted
1993 income by approximately $.04 per share compared with 1992 and 1991.

During the three-year period, the Company has invested substantial financial
resources and senior management time in an aggressive expansion into new
service lines and geographic markets. Waste Management International
successfully completed an initial public offering ("IPO") and has expanded
rapidly, particularly in the Far East. WTI has broadened its business lines
through targeted acquisitions of water, wastewater and air pollution control
technologies. The formation of Rust on January 1, 1993, as discussed below,
created a leading environmental and infrastructure engineering, consulting,
remediation and industrial services company. These efforts have positioned WMX
as a leader in the global environmental services market. At the same time, core
North American solid and hazardous waste operations have faced difficult
business conditions, including a lengthy recession. During 1993, the Company
moved to address these developments, first with a major restructuring of CWM.
As a result of that effort, CWM has streamlined its business and is
concentrating on generating increased returns from the markets in which it
participates.

12
<PAGE>

During the fourth quarter of 1993, the Company turned its attention to its
Waste Management, Inc. (formerly Waste Management of North America, Inc.) North
American solid waste subsidiary. A new corporate management team was formed and
the organization was returned to its nine-group management structure. The
reorganization is intended to focus the senior management of WMI on division-
level operations and profitability, operating cost reductions, improved returns
on capital and business growth.

The Company provides comprehensive environmental, engineering and
construction, industrial and related services through five principal
subsidiaries, each of which operates in a relatively discrete portion of the
environmental services industry or geographic area. WMI provides integrated
solid waste services and CWM provides hazardous waste collection,
transportation, treatment and disposal services in North America. WM
International provides these services, as well as trash-to-energy services,
outside North America. WTI is involved in trash-to-energy and independent power
projects, water and wastewater treatment, including biosolids management, and
air quality control, primarily in North America. Rust serves the engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation and on-site industrial and related services markets in the United
States and a number of foreign countries.

Rust was formed on January 1, 1993, through the contribution by CWM of its
hazardous substance remediation services business, its approximately 56%
ownership in Brand, and its 12% ownership interest in WM International,
together with certain other assets, and the contribution by WTI of its
engineering and construction and environmental and infrastructure consulting
businesses, its London-based international engineering unit, and certain other
assets. Brand was subsequently merged into a subsidiary of Rust. At December
31, 1993, Rust was owned approximately 56% by CWM and approximately 40% by WTI,
with the remaining ownership held by the public.

Following is an analysis of operating results by principal subsidiary. The
analysis comparing 1993 to 1992, with respect to CWM, WTI and Rust, assumes
that the formation of Rust had occurred as of January 1, 1992, and the
comparative information for 1992 in that analysis is stated on a pro forma
basis reflecting that assumption.

1992 OPERATIONS COMPARED TO 1991

WMI

WMI revenues were $4,309,614,000 in 1992 compared with $3,961,111,000 in
1991, an increase of 8.8%. Revenue growth by business line is shown in the
following table:

<TABLE>
<S> <C>
Residential......................................................... 10.9%
Commercial.......................................................... 8.5
Rolloff and industrial.............................................. 8.1
Disposal, transfer and other........................................ 7.9
Total........................................................... 8.8%
</TABLE>

Revenue growth in 1992 was attributable in approximately equal proportions to
volume and acquisitions. Price increases were nominal. Solid waste collection
and disposal pricing during the year were under pressure from low inflation,
depressed volumes and, in some markets, excess disposal capacity. Volumes per
customer in the commercial and industrial sectors, particularly in certain
industries, declined due to the weak U.S. economy. WMI was able to offset this
impact through increased market share and special waste volume.

13
<PAGE>

Operating margins (after operating, selling and administrative expenses and
goodwill amortization, but before special charges) were 21.0% of revenue in
1992 compared with 22.5% in 1991. Operating expenses in 1992 were under upward
pressure in the domestic solid waste industry due to shifting public attitudes
and legislative and regulatory mandates. These factors increased disposal costs
while diverting portions of the waste stream away from land disposal to
alternatives such as recycling, which has lower margins. Competition for the
remaining waste volumes, which were depressed by economic conditions, put
additional pressure on margins. Selling and administrative expenses as a
percentage of revenue were 11.5% in 1992 and 1991. Benefits of an aggressive
administrative cost reduction program begun in 1989 and the ability to spread
fixed costs over a larger revenue base were offset by an inability to increase
prices and by the cost in 1992 of a substantial investment in the sales and
marketing organization.

CWM

Revenues for CWM were $1,519,000,000 in 1992, compared with $1,358,000,000 in
1991, an increase of 11.8%. Price accounted for revenue growth of approximately
1.9%, volume 6.3%, and purchased businesses 3.6%.

Although revenues were adversely affected by the sluggish economy, a
reduction of hazardous waste taxes in Alabama and Louisiana in the latter part
of 1992 aided revenue growth. Base business revenue increased 10% in 1992 from
1991, and event business revenue (revenue from relatively larger, typically
non-recurring projects) increased 22%, although disposal volume from
environmental cleanups began to decline in the 1992 fourth quarter and this
trend continued into 1993. Revenue during the first half of 1992 was helped by
disposal volume accelerating ahead of a regulatory land-ban of certain waste
categories which became effective in May of that year.

Operating expenses (excluding special charges) as a percentage of revenue
were 69.8% in 1992 compared with 70.0% in 1991. The slight improvement in 1992
resulted from a shift in revenue mix to treatment, resource recovery and
disposal services, which have better margins, from on-site remediation, which
has lower margins. Selling and administrative expenses were 13.6% of revenue in
1992, compared with 14.5% in 1991. The decline resulted from continued emphasis
on cost reduction, and revenue growth (excluding acquisitions) providing a
larger base over which to spread the fixed portion of these costs.

WTI

During 1992 and 1991, WTI operated in two primary business segments. The
Environmental Operations segment included trash-to-energy and independent power
facility operations, water and wastewater treatment services, composting,
biosolids management, and air quality control systems. The Environmental and
Infrastructure Engineering Services segment provided environmental engineering,
architectural, scientific and photogrammetric services, as well as industrial
process design and engineering and project management services, and
substantially comprised the operations transferred to Rust effective January 1,
1993. Revenue by business segment is summarized as follows ($000's omitted):

<TABLE>
<CAPTION>
1991 1992
---------- ----------
<S> <C> <C>
Environmental operations........................... $ 775,673 $ 928,313
Environmental and infrastructure engineering
services.......................................... 397,776 554,741
---------- ----------
Total.......................................... $1,173,449 $1,483,054
========== ==========
</TABLE>

14
<PAGE>

1992 revenues in the Environmental Operations segment increased 20% compared
with 1991. Air and water quality control businesses acquired in 1991 and 1992
contributed approximately 40% of this revenue growth. These acquisitions
provided WTI with an operating base and necessary technical expertise to
address the biosolids management requirements of municipal and industrial
customers and broadened its air quality product offerings. Trash-to-energy
revenues increased in 1992 as a result of a full year of operations at one of
two 2,250 ton-per-day facilities in Broward County, Florida, which commenced
operations in 1991, as well as commencement of commercial operations in early
1992 at a second Broward County facility and an 800 ton-per-day plant in
Spokane, Washington. WTI's energy, water and air lines of business represented
approximately 59%, 30% and 11%, respectively, of total 1992 segment revenue,
compared with 63%, 32% and 5%, respectively, in 1991.

Environmental and Infrastructure Engineering Services revenue increased,
primarily due to the acquisition and formation of the SEC Donohue, Inc.
environmental consulting business. Partially offsetting this increase was a
decline in process engineering revenue as a result of the economic conditions
impacting engineering and construction activity generally in the United States.
The shift in business toward Environmental Operations resulted in a decline of
operating expenses as a percentage of revenue from 77% in 1991 to 75% in 1992.
Selling and administrative expenses increased in dollar terms in 1992 primarily
as a result of acquisitions. As a percentage of revenue, these expenses were
flat in 1992, compared to 1991.

WM International

WM International is a UK corporation which prepares its financial statements
in pounds sterling under accounting principles prevailing in the United
Kingdom. Such accounting principles differ in certain respects from those
generally accepted in the United States ("US GAAP"). The discussion and
analysis of WM International is based on US GAAP financial statements with
pounds sterling translated to U.S. dollars at the rates used to translate WM
International financial statements for inclusion in the Company's consolidated
financial statements.

WM International revenue was $1,445,734,000 in 1992 compared with
$1,075,070,000 in 1991. Components of revenue growth were as follows:

<TABLE>
<S> <C>
Price increases..................................................... 5.5%
Volume (including start-ups)........................................ 10.9
Purchased businesses................................................ 16.1
Foreign currency translation........................................ 2.0
----
Total........................................................... 34.5%
====
</TABLE>

The volume increase in 1992 relates to the construction of the Hong Kong
Chemical Waste Treatment Facility, various new contracts, and construction of a
landfill in Brisbane, Australia. Growth from acquisitions relates to the full-
year impact of businesses acquired in 1991 as well as additional acquisitions
in 1992.

Income from operations was 14.0% of revenue in 1991 and 13.9% in 1992. WM
International reduced operating expenses as a percent of revenue by initiating
efficiencies at acquired businesses, as well as by spreading fixed costs over
greater volumes. These efforts were partially offset by deteriorating economic
conditions in many of its markets. In addition, selling and administrative
expenses increased to 14.6% of revenue in 1992 compared to 14.1% in 1991, as a
result of enhancing country management organizations, as well as the corporate
headquarters group, to more efficiently manage and control the business.

15
<PAGE>

1993 OPERATIONS COMPARED TO 1992

WMI

Revenues for WMI were $4,702,166,000 in 1993 compared with $4,309,614,000 in
1992. 1993 revenue growth by line of business is analyzed in the following
table:

<TABLE>
<S> <C>
Residential......................................................... 9.2%
Commercial.......................................................... 7.1
Rolloff and industrial.............................................. 10.1
Disposal, transfer and other........................................ 10.7
Total........................................................... 9.1%
</TABLE>

Volume increases accounted for revenue growth of approximately 6.8%, whereas
acquisitions accounted for approximately 2.8%. Pricing pressures experienced by
the solid waste industry in the United States in 1992 persisted in 1993. Prior
to the fourth quarter of 1993, prices in general had not increased in twelve to
eighteen months, and had deteriorated slightly in the latter portion of the
period. WMI implemented selective price increases effective October 1, 1993,
but the ability to sustain or expand the scope of such price increases remains
uncertain. For the year, price had a negative impact of about .5% on 1993
revenue growth. Volume increases in 1993 came from continued growth in special
waste and increased market share as a result of a substantial investment in the
sales and marketing areas during the third and fourth quarters of 1992.
Disposal volume in 1993 was also helped by a contract to dispose of debris from
Hurricane Andrew in Florida.

While the slow recovery from the recent recession is believed to have been a
significant factor in WMI's results, there is some evidence that the real rate
of growth in the generation of solid waste in the United States is slowing. In
addition, a greater percentage of the waste is being recycled than was the case
ten years ago, and recycling is anticipated to continue growing for the next
several years. The result is that landfill volumes are tending to remain
relatively constant and may even decline slightly. As a consequence, WMI's
revenue growth is expected to slow and pressure on disposal margins is expected
to continue.

Operating margins (after operating, selling and administrative expenses, and
goodwill amortization, but before special charges) were 20.4% of revenue in
1993 compared to 21.0% in 1992. Operating expenses as a percentage of revenue
benefited from increased volumes to absorb the fixed portion of such costs as
well as WMI's progress in internalizing disposal volume, but price weakness
largely offset these gains. Selling and administrative expenses at the
beginning of the year reflected the significant 1992 investment in the sales
and marketing areas discussed above, but moved downward steadily as a
percentage of revenue through the first three quarters of 1993, as personnel
were trained and became more productive and administrative cost reduction
programs were implemented. Both operating and selling and administrative
expenses increased, in both dollars and as a percentage of revenue, in the
fourth quarter as a result of reorganization-related expenses, including
workforce reductions and relocations. While it is anticipated that such
increased costs will carry over into 1994, management believes that when
completed, the reorganization will improve efficiency and enhance margins.

CWM Core Business (Excluding Rust)

Revenues were $661,860,000 in 1993 compared with $755,088,000 on a pro forma
basis for 1992. The 12.3% net decrease in 1993 revenue was attributable
approximately .4% to price and 14.2% to volume, partially offset by a 2.3%
increase related to acquisitions. Price decreases in chemical waste services
were partially offset by price increases in low-level radioactive waste
services. Volume declines resulted from a decline in environmental remediation
projects generating hazardous waste for offsite treatment and disposal at CWM
facilities, an uncertain regulatory environment regarding

16
<PAGE>

hazardous waste management, Superfund and other special cleanup requirements
for industry, the effects of the sluggish economy on CWM's customers, and
softness in the commercial hazardous waste incineration market, leading to
reduced pricing. CWM believes that there is currently excess capacity in the
incineration marketplace and that this situation will continue for the
foreseeable future. CWM's results were also impacted by reduced activity
resulting from the change in Federal government administration and unusual
weather in some western and eastern states in the first quarter of 1993 as well
as continuing efforts by American industry to reduce waste and manage it on
site. 1992 revenue was helped by disposal volume accelerating ahead of a
regulatory land-ban of certain waste categories which became effective in May
of that year.

Base business revenue declined approximately 7% and event business revenue
declined approximately 41% in 1993 compared with 1992. Event business accounted
for 10.6% of revenue in 1993 compared with 15.8% in 1992.

In the third quarter of 1993, CWM completed a study of its business and
announced a strategic reconfiguration of its operations to meet current market
demand. Among the actions CWM is taking as part of its program to reduce costs
and improve efficiency are elimination of approximately 1,200 positions by
year-end 1994, consolidation of operations in its treatment and land disposal
group, restructuring of its sales and service regions, sale of selected service
centers in marginal service lines and geographies, seeking of one or more joint
venture partners and consideration of other strategic alternatives for its Port
Arthur, Texas incinerator, and centralization of several functions to improve
efficiencies. CWM is restructuring its operations on the assumption that future
base business revenue growth, if any, will not keep pace with the economic
recovery, and it will not make investments which are primarily supported by
event business volumes.

In connection with the restructuring, CWM recorded a charge of $550,000,000
before tax, including $381,000,000 to write down assets, primarily
incinerators, and $169,000,000 for probable cash expenditures (the majority of
which will be made by the end of 1994 except for closure, post-closure and
related costs at facilities closed or to be closed) related to actions CWM has
taken or plans to take as part of its program to reduce costs, improve
efficiency and structure the company to meet the current market demand. CWM
expects that the cash expenditures will be primarily funded by cash flow from
operations and income tax refunds. CWM estimates that the full impact of the
restructuring will reduce overhead, including depreciation and amortization, by
approximately $60 million annually.

Operating expenses (excluding special charges) as a percentage of revenue
were 76.5% in 1993 compared with 56.3% in 1992. The shift in revenue mix toward
an increased percentage of treatment revenue, which has lower margins, compared
to direct disposal services revenue, which has higher margins, increased
operating expenses in dollars as well as a percentage of revenue in 1993. Also,
a large component of operating expenses in the core business is fixed and, as
1993 revenue decreased, such expenses increased as a percentage of revenue.

Selling and administrative expenses as a percentage of revenue were 19.3% in
1993 compared with 15.4% in 1992. The increase is due primarily to the decline
in revenue.

WTI

Revenues for 1993 increased 23%, to $1,142,219,000, compared with pro forma
revenue of $928,313,000 for the previous year. Approximately 40% of this growth
came from air and water quality control companies acquired during 1992 and
1993. Businesses acquired during 1993 significantly expanded WTI's capability
to meet the water and wastewater management needs of industrial customers and
provided entry into certain regional biosolids and air quality equipment
markets, as well as additional wastewater treatment technology. Successful
project development

17
<PAGE>

efforts are responsible for an additional 30% of the 1993 revenue increase and
include the full year impact of the North Broward County trash-to-energy
facility, the third quarter 1993 start of commercial operations at WTI's NYOFCO
biosolids pelletizer facility located in New York City, and construction
revenue from the Lisbon, Connecticut trash-to-energy facility being built by
WTI for the Eastern Connecticut Resource Recovery Authority ("ECRRA").
Construction began in the third quarter of 1993 on the Lisbon facility, which
will be operated by WTI under a long-term contract with ECRRA following
scheduled facility completion in late 1995. Existing business growth
contributed the remaining 30% of revenue growth in 1993 compared with 1992.
Major factors in this internal growth were higher revenues from air quality
control system construction and installation, and greater tonnage at certain
trash-to-energy facilities with related increases in trash disposal and
electrical generation revenue. Pricing for non-contract, or spot, trash
disposal remained, on average, at approximately 1992 levels. Energy businesses
represented approximately 52% of consolidated 1993 revenue, while the water and
air businesses accounted for 32% and 16%, respectively.

On February 16, 1994, a Connecticut Superior Court judge issued his decision
on appeals of the Connecticut Department of Environmental Protection's ("DEP")
issuance of a permit to construct the Lisbon, Connecticut trash-to-energy
facility currently being built by WTI. In his ruling, the judge agreed with
WTI's position on all issues raised in the appeals but remanded the permit back
to the DEP for further proceedings on an uncontested permit condition that
requires the Lisbon facility to dispose of only Connecticut waste. WTI intends
to pursue aggressively favorable resolution of this permit remand through
appropriate judicial and regulatory procedures. Although WTI believes that the
probability of an adverse determination as a result of the judge's remand order
is remote, such a determination could result in the permanent termination of
facility construction. Through a guarantee agreement with ECRRA, the facility's
owner, such consequences might require WTI to redeem the debt issued to finance
the facility. In the unlikely event this were to occur, the resulting payments
could have a material adverse impact on WTI's financial condition and results
of operations. The impact on the Company's consolidated financial condition and
results of operations, although adverse, would not likely be material.

Operating expenses increased to 69.4% of revenue in 1993 from 68.3% in 1992.
This increase reflects primarily the effects, including the amortization of
goodwill associated with acquisitions, of changes in business mix brought about
by the growth of air and water operations. In part because they are less
capital intensive, these businesses typically have lower gross margins than
WTI's energy operations. Selling and administrative expenses increased in
absolute terms in 1993 compared with pro forma 1992 levels but decreased as a
percent of revenue to 9.4% for 1993 compared with 10.5% the previous year. The
decline is attributable to the integration of acquired companies into existing
businesses and to continuing company-wide administrative cost containment
efforts.

WM International

WM International revenue was $1,411,211,000 in 1993 compared with
$1,445,734,000 in 1992. Components of revenue change are as follows:

<TABLE>
<CAPTION>
PERCENTAGE
INCREASE/(DECREASE)
-------------------
<S> <C>
Price increases....................................... 3.7 %
Volume (including start-ups).......................... (6.2)
Purchased businesses.................................. 17.7
Foreign currency translation.......................... (17.6)
-----
Total............................................. (2.4)%
=====
</TABLE>

WM International was able to achieve revenue growth (excluding currency
translation) despite a depressed economy in Europe, which accounts for roughly
80% of total revenue, and the volume

18
<PAGE>

decrease which relates primarily to the transition of the Hong Kong Chemical
Waste Treatment Facility from the construction phase of the project to the
operational phase in the first quarter of 1993. Price increases slowed in the
second half of 1993 as inflation declined. Landfill revenues were constrained
by delays in obtaining permits, particularly in Italy. While WM International
continues to pursue attractive acquisitions, it believes that it is now well
positioned in many of its markets, and intends to be more selective with
respect to acquisitions.

WM International is also focusing on certain markets, particularly in the
developing countries of Asia, which offer few attractive acquisition targets
but present opportunities in environmental infrastructure projects which WM
International is pursuing. Growth in these markets will be dependent on the
ability of WM International to win and to finance such projects.

A significant portion of WM International's revenues arise in currencies
other than pounds sterling (its reporting currency) or U.S. dollars. As a
result, foreign currency movement has had and will continue to have an impact
on reported revenue, expenses and net income. Stated in pounds sterling, WM
International's revenue grew 15.3% in 1993 compared to 1992.

Operating expenses were 71.5% of revenue in both 1993 and 1992. Ongoing
improvements in operating efficiency and the effect of changes in country and
business mix of revenues were offset by increased goodwill amortization.
Selling and administrative expenses were 14.1% of revenue in 1993 compared with
14.6% in 1992. The improvement results from an expanded revenue base to absorb
the investment in country and corporate management and administrative
infrastructure, as well as the continuing integration of acquired businesses.

Rust

Rust is an engineering and construction company with two broad lines of
business: engineering, construction and environmental and infrastructure
consulting services, and environmental remediation and other on-site industrial
services. Rust also operated an asbestos abatement business through the first
four months of 1993. This business was transferred to NSC Corporation ("NSC")
in May 1993, in exchange for a 41% equity interest in NSC and NSC's ownership
interest in two industrial services businesses.

Excluding the effect of the asbestos abatement business, revenues increased
16% in 1993 compared with 1992. Revenue by line of business is shown in the
following tables ($000's omitted):

<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
Engineering, construction and consulting services. $ 619,096 $ 798,340
Remediation and industrial services............... 677,444 704,360
Asbestos abatement................................ 144,510 31,765
---------- ----------
Total......................................... $1,441,050 $1,534,465
========== ==========
</TABLE>

Engineering, construction and consulting services revenue grew by 29% in
1993. Acquisitions accounted for 17%, the result of domestic and international
acquisitions completed in 1993 and in the latter part of 1992. Price/volume
increases in 1993 (12%) were the result of the start-up of several large
projects, including one waste-to-energy plant and several
manufacturing/processing facilities. Backlog in this business line increased by
$219 million, to $719 million at December 31, 1993.

Remediation and industrial services revenue grew by 4% in 1993 compared with
1992. A decline in revenue related to project delays and cancellations of
remedial projects by customers and prospective customers as a result of poor
economic conditions was more than offset by an increase in industrial services
revenues due to market share gains in existing businesses and 1992 and 1993
acquisitions. Backlog in this business line at December 31, 1993, was $653
million, an increase of $251 million from December 31, 1992.

19
<PAGE>

Revenue from the WMX family of companies increased $117 million in 1993, to
$243 million for the year. Approximately $86 million of this increase related
to engineering design and construction projects, with the balance coming from
consulting services.

Operating expenses as a percentage of revenue were 81.5% in 1993 compared
with 85.3% in 1992. The improvement resulted from a shift in revenue mix in
favor of industrial services and environmental and infrastructure consulting
services and projects, which have relatively lower operating costs,
improvements in the profitability of the environmental and infrastructure
consulting businesses as a result of synergies realized by combining offices
with a resulting higher utilization of personnel, and improved operating
margins from Rust's international operations.

During 1992, Brand recorded a special charge of approximately $35.2 million
pretax to write down its investment in its asbestos abatement business and
provide for certain restructuring costs related to the formation of Rust. Rust
had no special charges in 1993.

Selling and administrative expenses were 10.2% of revenue in 1993 compared
with 10.1% in 1992. The increase is primarily due to acquisitions, particularly
the acquisition of EnClean, Inc. ("EnClean") in the third quarter of 1993.
Acquisitions tend to increase selling and administrative expenses as a
percentage of revenue initially but this reverses as the acquired businesses
are integrated into existing operations.

OTHER ITEMS

Gains from Stock Transactions of Subsidiaries and Exchange of Exchangeable
Lyons

Gains from stock transactions of subsidiaries arise when common stock is
issued by any of the Company's subsidiaries for acquisitions, public offerings,
or the exercise of employee stock options. Gains from the exchange of
Exchangeable LYONs arise when the holders of such securities exchange them for
common stock of CWM owned by the Company.

The significant increase in gains from stock transactions of subsidiaries in
1992, compared with the 1991 and 1993 amounts, results from the gain
($240,000,000) recognized by the Company, CWM and WTI as a result of the WM
International IPO in April of that year. Gains from the exchange of
Exchangeable LYONs have declined as the market price of CWM shares has dropped
below the point at which an exchange creates an economic benefit to the holder
of the LYONs.

Gains on stock transactions of subsidiaries and the exchange of Exchangeable
Lyons may recur in the future; however, the amount or timing of any future
gains is largely dependent upon the future market price of the stock of the
respective subsidiary. As such gains are recorded by the Company, the minority
interest in the related subsidiary will increase.

Interest

The following table sets forth the components of consolidated interest
expense, net ($000's omitted):

<TABLE>
<CAPTION>
1991 1992 1993
-------- -------- --------
<S> <C> <C> <C>
Interest expense............................ $279,941 $310,949 $401,469
Interest income............................. (55,800) (57,693) (41,432)
Capitalized interest........................ (111,383) (87,897) (100,591)
-------- -------- --------
Interest expense, net................... $112,758 $165,359 $259,446
======== ======== ========
</TABLE>

Net interest expense has increased during the three-year period, partially as
a result of a management decision, initially made in 1988, to increase the
leverage of the Company. The impact of

20
<PAGE>

that decision was mitigated in 1992 by lower U.S. interest rates and by the use
of the proceeds of the WM International IPO to repay debt. Debt levels
increased in 1993 to fund stock repurchase programs, acquisitions and capital
expenditures, and approximately $130,000,000 paid to former stockholders of
Brand who elected to receive cash in connection with the Brand-Rust merger.
Capitalized interest varies, depending upon the level of capital projects such
as solid waste landfills, hazardous waste incineration facilities and trash-to-
energy plants, that are in process at any point in time.

Minority Interest

Minority interest increased in 1992 compared with 1991 primarily as a result
of the minority share of the gain recognized by CWM and WTI on the WM
International IPO, and the minority interest in WM International following the
IPO, as well as higher earnings from CWM and WTI. The decline in 1993 reflects
the lower earnings of subsidiaries in that year and the minority interest
(approximately $78.6 million) in the special charge recorded by CWM.

Sundry Income, Net

Sundry income was basically flat between 1991 and 1992 and increased in 1993
as a result of a gain recognized in the first quarter by CWM on the sale of
shares of common stock of WTI it had held for investment, as well as the
Company's increased equity in ServiceMaster Consumer Services Limited
Partnership ("ServiceMaster") and Wessex Water Plc ("Wessex").

Income Taxes

In August 1993, the U.S. Congress passed and the President signed the Omnibus
Budget Reconciliation Act of 1993, which, among other things, increased U.S.
Federal income taxes for the Company and its domestic subsidiaries, retroactive
in certain cases to January 1, 1993. The provision for income taxes for 1993 is
approximately $34 million higher than would have been the case under the 1992
tax law, as a result of the requirement to adjust deferred income taxes in
accordance with Statement of Financial Accounting Standards ("FAS") No. 109,
and to apply the higher tax rate effective January 1, 1993.

ACCOUNTING PRINCIPLES

Effective January 1, 1992, the Company, CWM and WTI adopted FAS No. 106 and
FAS No. 109 issued by the Financial Accounting Standards Board ("FASB"). FAS
No. 106 requires that the expected costs of certain future postretirement
benefits other than pensions be charged to expense during the years in which
the employees render service. Previously, the companies recognized these costs
on a cash basis. FAS No. 109 required a change in the method of accounting for
income taxes to an asset and liability approach.

As permitted by the FASB, the Company recorded a charge, after tax and
minority interest, of $71,139,000 or $.14 per share, for the cumulative effect
of these accounting changes. The pro forma effect of these accounting changes
on 1991 and, except for the one-time charge, on 1992 earnings was not
significant.

The FASB has issued FAS No. 112--Employers' Accounting for Postemployment
Benefits--and FAS No. 115--Accounting for Certain Investments in Debt and
Equity Securities. The Company and its subsidiaries will be required to adopt
both Statements in the first quarter of 1994. Based upon its analysis to date,
the Company does not believe the adoption of FAS No. 112 will have a material
impact on its financial statements as its current accounting is substantially
in compliance with the new standard. Other than for short-term investments
which are currently accounted for in accordance with the new statement, the
Company does not have and does not contemplate acquiring significant
investments of the type covered in FAS No. 115.

21
<PAGE>

ENVIRONMENTAL MATTERS

The majority of the businesses in which the Company is engaged are
intrinsically connected with the protection of the environment. As such, a
significant portion of the Company's operating costs and capital expenditures
could be characterized as costs of environmental protection. While the Company
is faced, in the normal course of its business, with the need to expend funds
for environmental protection and remediation, it does not expect such
expenditures to have a material adverse effect on its financial condition or
results of operations because its business is based upon compliance with
environmental laws and regulations and its services are priced accordingly.
Such costs may increase in the future as a result of legislation or regulation;
however, the Company believes that in general it benefits from increased
government regulation, which increases the demand for its services, and that it
has the resources and experience to manage environmental risk.

As part of its ongoing operations, the Company provides for estimated closure
and post-closure monitoring costs over the operating life of disposal sites as
airspace is consumed. Such costs include a final cap and cover on the site,
methane gas and leachate management, and groundwater monitoring. The accrual
for closure and post-closure monitoring costs covers expenditures to be
incurred after a facility ceases to accept waste; to the extent similar costs
are incurred during the active life of a site, they are expensed as incurred as
normal operating costs of a disposal site.

The Company has also established procedures to evaluate potential remedial
liabilities at closed sites which it owns or operated, or to which it
transported waste, including 104 sites listed on the Superfund National
Priority List ("NPL") as of December 31, 1993. In the majority of situations,
the Company's connection with NPL sites relates to allegations that its
subsidiaries (or their predecessors) transported waste to the facilities in
question, often prior to the acquisition of such subsidiaries by the Company.
The Company routinely reviews and evaluates sites requiring remediation,
including NPL sites, giving consideration to the nature (e.g., owner, operator,
transporter or generator), and the extent (e.g., amount and nature of waste
hauled to the location, number of years of site operation by the Company, or
other relevant factors) of the Company's alleged connection with the site, the
accuracy and strength of evidence connecting the Company to the location, the
number, connection and financial ability of other named and unnamed potentially
responsible parties ("PRP's"), and the nature and estimated cost of the likely
remedy. Where the Company concludes that it is probable that a liability has
been incurred, provision is made in the financial statements. Cost estimates
are based upon management's judgement and experience in remediating such sites
for the Company as well as for unrelated parties, information available from
regulatory agencies as to costs of remediation, and the number, financial
resources and relative degree of responsibility of other PRP's who are jointly
and severably liable for remediation of a specific site, as well as the typical
allocation of costs among PRP's. These estimates sometimes involve a range of
possible outcomes. In such cases, the Company provides for the amount within
the range which constitutes its best estimate. If no amount within the range
appears to be a better estimate than any other amount, then the Company
provides for the minimum amount within the range, in accordance with FAS No. 5.
See Note 4 to the Consolidated Financial Statements for additional details
regarding the Company's environmental liabilities.

Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of
remediation require a number of assumptions and are inherently difficult, and
the ultimate outcome may differ from current estimates. However, the Company
believes that its extensive experience in the environmental services business,
as well as its involvement with a large number of sites, provides a reasonable
basis for estimating its aggregate liability. As additional information becomes
available, estimates are adjusted as necessary. While the Company does not
anticipate that any such adjustment would be material to its financial
statements, it is reasonably possible that technological, regulatory or
enforcement developments, the results of

22
<PAGE>

environmental studies or other factors could alter this expectation and
necessitate the recording of additional liabilities which could be material.
The impact of such future events cannot be estimated at the current time.

The Company spent $26,100,000, $24,800,000 and $34,800,000 on remedial
activities at closed sites in 1991, 1992 and 1993, respectively, and
anticipates expenditures of approximately $51,700,000 in 1994.

In 1991, the Company recorded a charge of $296,000,000 before tax and
minority interest, to reflect its then-current estimate of environmental
remediation liabilities arising as a result of the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), at disposal sites
previously used or operated by the Company and its North American subsidiaries
or their predecessors. Amounts charged to income in 1992 and 1993 for
remediation liabilities were not material.

The Company has filed several lawsuits against approximately 160 insurance
carriers seeking reimbursement for past and future remedial, defense and tort
claim costs at approximately 130 sites. The past cost portion of these claims
currently aggregates in excess of $200 million. The carriers have denied
coverage and are vigorously defending these claims. No amounts have been
recognized in the financial statements for any potential insurance recoveries.

The Company also becomes involved, in the normal course of business, in
judicial and administrative proceedings related to alleged violations of
licenses, permits, laws or regulations, or differing interpretations of
applicable requirements. From time to time, the Company pays fines and
penalties as a result of such proceedings. Such fines and penalties were not
material to the Consolidated Statements of Income for 1991, 1992 or 1993.

FINANCIAL CONDITION

Liquidity and Capital Resources

The Company is in a service industry and has neither significant inventory
nor seasonal variation in receivables. Accordingly, cash flow from operating
activities is used primarily for the purchase of property and equipment and
acquisitions of businesses. The Company had working capital of $99,958,000 at
December 31, 1993, compared to $128,800,000 at December 31, 1992. Current debt
increased $156,817,000, a result of the financing requirements discussed below.
Accounts receivable increased by $180,567,000 while accounts payable and
accrued expenses increased $105,121,000, both results of business growth and
acquisitions. Smaller changes in other current asset and current liability
accounts represent the balance of the decrease in working capital.

Long-term and short-term debt increased approximately $1.99 billion from
December 31, 1992 to December 31, 1993. Proceeds from the additional borrowings
were used to fund acquisitions (including increased equity investments in
ServiceMaster and Wessex), capital expenditures, the Brand shares acquired for
cash in connection with the Brand-Rust merger, and stock repurchases by the
Company and CWM.

At December 31, 1993, short-term and long-term debt (excluding WTI project
debt) were 52.5% of short-term debt and total capital (including minority
interest in subsidiaries). In October 1993, Standard and Poor's Corporation
announced that it had lowered its rating on the Company's long-term debt from
AA to AA-. The Company's short-term debt ratings were not affected. Moody's
Investors Service retained the Company's debt rating of A-1. The Company
believes its current debt ratings are among the best in its industry and that
it is well positioned and has adequate liquidity to meet its current capital
needs and finance anticipated growth. In addition, substantial cash is provided
by operating activities and a major portion of capital expenditures, including
acquisitions and development projects, is discretionary and could be deferred
if necessary. Management intends to place increased emphasis on generating
positive cash flows in 1994.

23
<PAGE>

Acquisitions and Capital Expenditures

Capital expenditures, including $165,038,000, $330,530,000 and $443,535,000
for property and equipment of purchased businesses in 1991, 1992 and 1993,
respectively, are shown in the following table ($000's omitted):

<TABLE>
<CAPTION>
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Land (primarily disposal sites).......... $ 564,610 $ 639,489 $ 660,226
Buildings and leasehold improvements..... 187,024 196,680 195,472
Vehicles................................. 293,805 270,712 373,055
Containers............................... 159,153 168,721 231,586
Other equipment.......................... 382,226 687,593 702,374
---------- ---------- ----------
Total................................ $1,586,818 $1,963,195 $2,162,713
========== ========== ==========
</TABLE>

During 1993, the Company and its principal subsidiaries acquired 97
businesses for $551,901,000 in cash and notes, 1,046,801 shares of the
Company's common stock and 1,635,471 shares of WTI common stock. During 1992,
118 businesses were acquired for $599,045,000 in cash and notes, 1,826,450
shares of the Company's common stock and 6,886,594 shares of common stock of
WTI. The Company intends to continue its acquisition program in 1994, but with
many of its strategic goals achieved, the emphasis will be on businesses that
promise above-average returns or meet remaining strategic objectives. The Board
of Directors has approved a capital expenditure budget of $1.55 billion,
including intangible assets relating to acquired businesses, for 1994. The
Company expects to finance this through cash flow from operations.

Capital Structure

During 1988, the Company made the decision to finance capital expenditures
and acquisitions primarily by increasing leverage. During 1991, 1992 and 1993
the Company continued to finance these transactions primarily through the use
of debt, taking advantage of favorable interest rates.

In April 1992, WM International sold 75 million newly issued ordinary shares,
representing 20% of the post-offering outstanding shares of WM International,
to the public. Subsequent to this offering, the Company, CWM and WTI owned 56%,
12% and 12% respectively, of the outstanding shares of WM International.
Proceeds of the offering, net of commissions and expenses, amounted to
approximately $700 million and were used to retire then outstanding third party
debt of WM International and to repay advances from the Company. In connection
with the formation of Rust on January 1, 1993, CWM transferred its ownership in
WM International to Rust.

The following table reflects the increased leveraging of the Company's
capital structure due to financing capital expenditures and acquisitions
primarily with debt (except for the WM International IPO discussed above):

<TABLE>
<CAPTION>
DECEMBER 31
----------------
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
Long-term debt as a percent of total capital........... 35.8% 38.2% 49.4%
Short-term debt and long-term debt as a percent of
short-term debt and total capital..................... 39.6% 41.8% 52.5%
</TABLE>

The ratios shown above include Minority Interest in Subsidiaries as part of
total capital, and exclude project debt of WTI. A significant portion of WTI's
debt is project debt, the interest and principal of which is expected to be
paid by cash generated from operations of specific projects. The Company
believes that its percentage of debt to total capital can be supported by the
net cash provided by operating activities.

24
<PAGE>

The Boards of Directors of each of WMX, CWM and WTI have authorized their
respective companies to repurchase shares of their own common stock in the open
market or in privately negotiated transactions. The programs extend into 1994
in the case of CWM and 1996 in the case of WTI and WMX. During 1993, WMX
repurchased approximately 8.4 million of its shares and CWM repurchased
approximately 3.3 million of its shares. During 1992, WMX repurchased
approximately 7.6 million shares, WTI approximately 4.2 million shares and CWM
approximately 1.5 million shares.

Subsequent to December 31, 1993, the Company formed an Employee Stock Benefit
Trust and sold the 12.8 million shares of treasury stock held at year end to
the Trust in return for a 30-year, 7.33% note with interest payable quarterly
and principal due at maturity. The Company has agreed to contribute to the
Trust each quarter funds sufficient, when added to dividends on the shares held
by the Trust, to pay interest on the note as well as principal outstanding at
maturity. At the direction of an administrative committee comprised of Company
officers, the trustee will use the shares or proceeds from the sale of shares
to pay employee benefits, and to the extent of such payments by the Trust, the
Company will forgive principal and interest on the note.

During the first quarter of 1994, WMX sold put options on 4.3 million shares
of its common stock. The put options give the holders the right at maturity to
require the Company to repurchase a share of its common stock at specified
prices, which range from $24.375 to $24.841 per share. The options mature in
November 1994. The proceeds ($8,747,000) from the sale of the put options were
credited to additional paid-in capital.

BUSINESS OF THE COMPANY

GENERAL

WMX Technologies provides environmental, engineering and construction,
industrial and related services to commercial, industrial, and municipal and
other governmental customers. Through WMI, the Company provides integrated
solid waste management and related services in North America. Through CWM, the
Company provides hazardous waste management services, including radioactive
waste management services. Through Rust, the Company furnishes engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation and a variety of other on-site industrial and related services.
Through WTI, the Company develops facilities and systems for, and provides
services to, the trash-to-energy, energy and independent power markets. Through
Waste Management International, the Company also conducts waste management and
related services (or has interests in projects or companies providing such
services) in various European countries and in Argentina, Australia, Brunei,
Hong Kong, Indonesia, Malaysia, New Zealand, Singapore and Taiwan.

Unless the context indicates to the contrary, all statistical and financial
information under the captions "Business of the Company" and "Property and
Equipment" is given as of December 31, 1993 and, where such information relates
to any period prior to 1993, it is presented as if Rust had been in existence
throughout such period. Statistical and financial data appearing under the
caption "Solid Waste Management and Related Services" relate only to the
Company's WMI group of subsidiaries and do not include any data relating to
CWM, Rust, WTI or Waste Management International. See "Hazardous Waste
Management and Related Services," "Engineering, Construction, Industrial and
Related Services," "Trash-to-Energy, Water Treatment, Air Quality and Related
Services" and "International Waste Management and Related Services."

SOLID WASTE MANAGEMENT AND RELATED SERVICES

At December 31, 1993, Waste Management conducted solid waste management and
related services operations in 49 states, the District of Columbia and five
Canadian provinces. During 1991, 1992 and 1993, operations in California,
Florida and Pennsylvania together accounted for approximately 35%, 34% and 34%,
respectively, of WMI revenue. No customer accounted for as much as 2% of WMI
revenue in 1991, 1992 or 1993.

25
<PAGE>

Fees paid to Waste Management by its solid waste collection customers
(including charges paid by such customers for disposal) accounted for
approximately 78% of WMI revenue in 1991 and 77% in 1992 and 1993. Transfer and
disposal services provided to municipalities, counties and other waste
management companies accounted for approximately 22% of such revenue in 1991
and 23% in 1992 and 1993.

Collection

Waste Management provides solid waste collection services to approximately
1,004,100 commercial and industrial customers. Collection services are also
provided to approximately 11,276,700 homes and apartment units. Waste
Management's revenue from commercial, industrial and apartment collection
services (including revenues from recycling services) accounted for
approximately 70% of its solid waste collection revenue in 1991, 1992 and 1993.
See "Recycling and Resource Recovery--Recycling" for a description of recycling
services.

Commercial and Industrial

Many of Waste Management's commercial and industrial customers utilize
containers to store solid waste. These containers, ranging from 1 to 45 cubic
yards in size, are usually provided to the customer as part of WMI's services.
Stationary compactors, which reduce the volume of the stored waste prior to
collection, are frequently installed on the premises of large volume customers
and are usually provided to these customers in conjunction with WMI's
collection services. Containerization enables Waste Management to service most
of its commercial and industrial customers with collection vehicles operated by
a single employee. Compaction serves to decrease the frequency of collection.

Commercial and industrial collection services (which include containerized
service to apartment buildings) are generally performed under one- to three-
year service agreements, and fees are determined by such considerations as
market factors, collection frequency, type of equipment furnished, the type and
volume or weight of the waste collected, the distance to the disposal facility
and cost of disposal.

Residential

Most of Waste Management's residential solid waste collection services are
performed under contracts with, or franchises granted by, municipalities giving
WMI exclusive rights to service all or a portion of the homes in their
respective jurisdictions. Such contracts or franchises usually range in
duration from one to five years. The fees received by Waste Management are
based primarily on market factors, frequency and type of service, the distance
to processing or disposal facilities and cost of processing or disposal.
Residential collection fees are either paid by the municipalities out of tax
revenues or service charges or are paid directly by the residents receiving the
service.

Transfer

In order to reduce costs of transportation from collection points to disposal
sites, Waste Management operates 117 solid waste transfer stations. A transfer
station is a facility where solid waste is received from collection vehicles
and then transferred to and compacted in large, specially constructed trailers
for transportation to disposal or resource recovery facilities. This procedure
reduces costs by improving utilization of collection personnel and equipment.

The services of these facilities are provided to municipalities or counties
and in most instances are also used by Waste Management and by other collection
companies. Fees are generally based upon such considerations as market factors,
the type and volume or weight of the waste transferred, the extent of
recycling, the transport distance involved and the cost of disposal.

26
<PAGE>

Recycling and Resource Recovery

Recycling

Waste Management provides recycling services in the United States and Canada
through its Recycle America(R) and Recycle Canada(R) programs. Recycling
involves the removal of reusable materials from the waste stream for processing
and sale for use in various applications. Participating commercial and
industrial operations use containers to separate recyclable paper, glass,
plastic and metal wastes for collection, processing and sale by WMI. Fees are
determined by such considerations as market factors, frequency of collection,
the type and volume or weight of the recyclable material, the distance the
recyclable material must be transported and the value of the recyclable
material.

As part of its residential solid waste collection services,WMI provides
curbside recycling services to municipalities in the United States and Canada,
also through its Recycle America and Recycle Canada programs. Curbside
recycling services involve the use of specially designed, compartmentalized
vehicles to collect recyclable paper, glass, plastic and metal waste materials
which may be separated by residents into different waste containers provided to
them for such purpose. The recyclable materials are then typically deposited at
a local facility where they are sorted further and processed for resale.

In 1993,WMI provided curbside recycling services to approximately 5.8 million
households pursuant to more than 750 contracts in the United States and Canada.
In 1992, WMI provided such services to more than 5.2 million households.

Waste Management operates 113 materials recovery facilities for the
processing of recyclable materials. Such processing consists of separating
recyclable materials according to type and baling or otherwise preparing the
separated materials for sale.

Waste Management also participates in joint ventures with Stone Container
Corporation and American National Can Corporation to engage, respectively, in
the businesses of marketing paper fibre and aluminum, steel, and glass
containers for recycling. In each case WMI sells to the joint venture, or has
the joint venture market, the paper fibre or containers collected by WMI. The
joint ventures sell or market the materials to Stone Container, American
National Can or other parties who will process them for reuse. The joint
venture with American National Can also owns and operates three glass
processing facilities. During 1993, the joint ventures processed approximately
3.7 million tons of recyclable materials. WMI also provides tire recycling and
yard waste composting services.

Energy Recovery

At 31 WMI-owned or -operated sanitary landfill facilities, Waste Management
is engaged in methane gas recovery operations. These operations involve the
installation of a gas collection system into a sanitary landfill facility.
Through the gas collection system, gas generated by decomposing solid waste is
collected and transported to a gas-processing facility at the landfill site.
Through physical processes methane gas is separated from contaminants. The
processed methane gas is then either (i) sold directly to industrial users or
(ii) sold to an affiliate of the Company which uses it as a fuel to power an
electricity-generation facility. Electricity generated by the facility is sold,
usually to public utilities. WMI or an affiliate of WMI typically enters into
long-term sales contracts, often under terms or conditions which are subject to
approval by regulatory authorities.

WMX Technologies also engages in other resource recovery activities through
WTI's trash-to-energy and independent power operations and Waste Management
International's operations. See "Trash-to-Energy, Water Treatment, Air Quality
and Related Services" and "International Waste Management and Related
Services."

27
<PAGE>

Disposal

Waste Management operates 133 solid waste sanitary landfill facilities. Of
this number, 105 are owned by Waste Management and the remainder are leased
from, or operated under contract with, others. Additional facilities are in
various stages of development. All of the sanitary landfill facilities are
subject to governmental regulation. See "Regulation--Solid Waste."

A sanitary landfill site must have geological and hydrological properties and
design features which limit the possibility of water pollution, directly or by
leaching. Sanitary landfill operations, which include carefully planned
excavation, continuous spreading and compacting of solid waste and covering of
the waste, are designed to maintain sanitary conditions, insure optimum
utilization of the airspace and prepare the site for ultimate use for other
purposes.

Suitable sanitary landfill facilities have become increasingly difficult to
obtain because of land scarcity, local resident opposition and expanding
governmental regulation. As its existing facilities become filled, the solid
waste disposal operations of Waste Management are and will continue to be
materially dependent on its ability to purchase, lease or obtain operating
rights for additional sites and obtain the necessary permits from regulatory
authorities to operate them. To develop a new facility, WMI must expend
significant time and capital resources without any certainty that a permit will
ultimately be issued for such facility. In addition, there can be no assurance
that additional sites can be obtained or that existing facilities can continue
to be operated. However, management believes that the facilities currently
available to WMI are sufficient to meet the needs of its current operations for
the foreseeable future.

In varying degrees, Waste Management utilizes its own sanitary landfill
facilities to accommodate its disposal requirements for collection and transfer
operations. In 1991, 1992, and 1993 approximately 48%, 50%, and 52%,
respectively, of the solid waste collected by WMI was disposed of in sanitary
landfill facilities operated by it. Usually these facilities are also used by
other companies and government agencies on a noncontract basis for fees
determined by such considerations as market factors and the type and volume or
weight of the waste.

Related Services

Waste Management also provides several types of services which are compatible
with its solid waste collection operations. Included in these operations are
medical and infectious waste management services, portable fencing and power
pole services, portable sanitation services and street sweeping and parking lot
cleaning services.

Waste Management's medical and infectious waste management services consist
of collecting, transporting, treating and disposing of medical and infectious
waste generated by hospitals, pharmaceutical manufacturers, medical clinics,
physician and dentist offices and other sources.

Waste Management provides portable fencing and power pole services to
construction sites, port facilities and industrial and governmental customers.
Rental rates vary depending on the type and size of the fencing or power poles
provided to the customer, the duration of the rental period and local market
conditions. Waste Management also provides portable sanitation services to the
same types of customers. The portable sanitation services, which are marketed
under the Port-O-Let(R) trade name, are also used at numerous public
gatherings.

These related services are marketed and performed primarily by employees
operating out of WMI's solid waste operations facilities who also may have
responsibility for some phase of solid waste marketing or operations.

28
<PAGE>

HAZARDOUS WASTE MANAGEMENT AND RELATED SERVICES

CWM's principal business (excluding Rust) is to provide hazardous waste
management services consisting of chemical and radioactive waste
transportation, treatment, resource recovery and disposal services. For each of
the three years in the period ended December 31, 1993, such services accounted
for the following percentages of CWM's hazardous waste management and related
services revenue:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Treatment, resource recovery and disposal............ 63.2% 68.5% 70.6%
Special services..................................... 21.4 15.3 18.6
Transportation....................................... 15.4 16.2 10.8
</TABLE>

Until December 31, 1992, CWM also provided environmental and industrial
specialty contracting services through a group of regional and local companies
owned by Brand, as well as hazardous substance remediation services, which
businesses were contributed to Rust on January 1, 1993. See "The Company."

Chemical Waste Management Services

In the United States, most chemical wastes generated by industrial processes
are handled "on-site" at the generators' facilities. Since the mid-1970's,
public awareness of the harmful effects of unregulated disposal of chemical
wastes on the environment and health has led to extensive and evolving federal,
state and local regulation of chemical waste management activities. The major
federal statutes regulating the management of chemical wastes include the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the Toxic
Substances Control Act ("TSCA") and the Comprehensive Environmental Response,
Compensation and Liabilities Act of 1980, as amended ("CERCLA" or "Superfund"),
all primarily administered by the United States Environmental Protection Agency
("EPA"). CWM's business is heavily dependent upon the extent to which
regulations promulgated under these or similar state statutes and their
enforcement over time effectively require wastes to be managed in facilities of
the type owned and operated by CWM. See "Regulation--Hazardous Waste," "--RCRA"
and "--Superfund."

The chemical wastes handled by CWM include industrial by-products and
residues that have been identified as "hazardous" pursuant to RCRA, as well as
other materials contaminated with a wide variety of chemical substances. CWM
operates chemical waste treatment, storage and disposal facilities in 18 states
and is able to service customers in most parts of the country through this
network of facilities. Additionally, certain chemical wastes, such as
polychlorinated biphenyls ("PCBs"), are transported greater distances because
they can be accepted only at a limited number of treatment or disposal
facilities. CWM also owns a majority interest in a subsidiary which operates a
resource recovery facility, a disposal facility and storage facilities in
Mexico.

The ongoing chemical waste management services provided by CWM are typically
performed pursuant to nonexclusive service agreements that obligate CWM to
accept from the customer chemical wastes conforming to the provisions of the
agreement. Fees are determined by such factors as the chemical composition and
volume or weight of the wastes involved, the type of transportation or
processing equipment utilized and distance to the processing or disposal
facility. CWM periodically reviews and adjusts the fees charged for its
services.

Treatment, Resource Recovery and Disposal

CWM's treatment and resource recovery operations involve processing chemical
wastes through the use of thermal, physical, chemical or other treatment
methods at one or more of CWM's facilities.

29
<PAGE>

The residual material produced by these interim processing operations is either
disposed of by burial in a secure disposal cell or by deep well injection, or
it may be managed through one of CWM's resource recovery programs.

Thermal treatment refers primarily to processes that use incineration as the
principal mechanism for waste destruction. Physical treatment methods include
distillation, evaporation and separation, all of which basically result in the
separation or removal of solid materials from liquids. Chemical treatment
methods include chemical oxidation and reduction, chemical precipitation of
heavy metals, hydrolysis and neutralization of acid and alkaline wastes and
essentially involve the transformation of wastes into inert materials through
one or more chemical reaction processes. CWM has developed a program of
reclamation and reuse of certain chemical wastes, particularly solvent-based
wastes, that are generated by certain industrial cleaning operations and metal
finishing and other industrial processes.

CWM's secure land disposal facilities either have interim status or have been
issued permits under RCRA. See "Regulation--RCRA." In general, CWM's secure
land disposal facilities have received the necessary permits and approvals to
accept chemical wastes, although some of such sites may accept only certain
chemical wastes. Only chemical wastes in a stable, solid form which meet
applicable regulatory requirements may be buried in CWM's secure disposal
cells. These land disposal facilities are sited, constructed and operated in a
manner designed to provide long-term containment of such waste.

At three of its locations, CWM isolates treated chemical wastes in liquid
form by injection into deep wells. Deep well technology involves drilling wells
in suitable rock formations far below the base of fresh water and separated
from it by other substantial geological confining layers.

Transportation

Chemical waste may be collected from customers and transported by CWM or
delivered by customers to CWM's facilities. Chemical waste is transported by
CWM primarily in specially constructed tankers and semi-trailers, including
stainless steel and rubber or epoxy-lined tankers and vacuum trucks, or in
containers or drums on trailers designed to comply with applicable regulations
and specifications of the U.S. Department of Transportation ("DOT") relating to
the transportation of hazardous materials. CWM's chemical waste transportation
fleet includes approximately 400 tractors and 920 trailers. CWM may utilize the
services of subcontractors to transport waste in some circumstances. CWM
operates 35 transportation centers from which its fleet is dispatched or at
which fleet maintenance operations are conducted. CWM also operates several
facilities at which waste collected from or delivered by customers may be
analyzed and consolidated prior to further shipment.

Low-Level and Other Radioactive Waste Services

Radioactive wastes with varying degrees of radioactivity are generated by
nuclear reactors and by medical, industrial, research and governmental users of
radioactive material. Radioactive wastes are generally classified as either
high-level or low-level. High-level radioactive waste, such as spent nuclear
fuel and waste generated during the reprocessing of spent fuel from nuclear
reactors, contains substantial quantities of long-lived radionuclides and is
the ultimate responsibility of the federal government. Low-level radioactive
waste, which decays more quickly than high-level waste, largely consists of dry
compressible wastes (such as contaminated gloves, paper, tools and clothing),
resins and filters which have removed radioactive contaminants from nuclear
reactor cooling water, solidified wastes from power plants which have become
contaminated with radioactive substances and irradiated hardware.

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CWM provides comprehensive low-level radioactive waste management services in
the United States consisting of disposal, processing and various other special
services, and transportation. To a lesser extent, it provides services with
respect to radioactive waste that has become mixed with regulated chemical
waste. CWM generally enters into long-term service agreements with its
customers. A particular agreement may include all or part of the services
performed by CWM.

Disposal

CWM's radioactive disposal operations currently involve low-level radioactive
waste only. Its Barnwell, South Carolina facility is one of two licensed
commercial low-level radioactive waste disposal facilities in the United States
and has been in operation since 1971.

Fees for burial are set by CWM based upon volume, level of radioactivity and
handling considerations. A trust has been established and funded to pay the
estimated cost of decommissioning the Barnwell facility. A second fund, for the
extended care of the facility, is funded by a surcharge on each cubic foot of
waste received. CWM may be liable for additional costs if the extra charges
collected to restore and maintain the facility are insufficient to cover the
cost of restoring or maintaining the site after its closure (which CWM has no
reason to expect).

Eight southeastern states have joined together to form the Southeast
Interstate Low-Level Radioactive Waste Management Compact (the "Southeast
Compact"). The Southeast Compact initially designated the Barnwell site as the
disposal facility to receive all low-level radioactive waste generated in the
eight-state compact region through 1992, and designated North Carolina as the
next state to host the regional disposal facility. Federal law allows continued
access to the Barnwell facility by generators located outside the compact
region. In exchange for such continued access, generators outside of the
Southeast Compact region pay surcharges to the State of South Carolina for each
cubic foot of waste disposed by CWM. Federal law also establishes milestones
for states that are not part of a compact region with an operating disposal
facility. If the development of new facilities does not progress in accordance
with such milestones, penalties may be imposed in the form of higher surcharges
for disposal at the Barnwell facility and, ultimately, denial of access to the
Barnwell facility. During 1992, South Carolina adopted legislation allowing the
Barnwell site to continue operating until December 31, 1995, and to continue
receiving waste generated outside the Southeast Compact until June 30, 1994.
The Southeast Compact subsequently increased the surcharges payable by
generators located outside the compact region. CWM has advised the Company that
CWM expects the South Carolina legislature to consider extending to December
31, 1995 the date the Barnwell site must stop accepting waste generated outside
the Southeast Compact, but there can be no assurance that such extension will
be obtained.

During the third quarter of 1989, CWM entered into contracts with the
responsible agencies for the Southeast Compact and the Central Midwest Low-
Level Radioactive Waste Compact (whose member states are Illinois and Kentucky)
(the "Central Midwest Compact") to site, license, construct, operate and close
new regional low-level radioactive waste disposal facilities for those
Compacts, which facilities are intended to be located in North Carolina and
Illinois, respectively. During the third quarter of 1990, CWM also entered into
a similar contract for the Appalachian States Low-Level Radioactive Waste
Compact (whose member states are Pennsylvania, West Virginia, Maryland and
Delaware). The terms of these contracts range from 20 to 30 years. Because of
the difficulties associated with the process of siting and licensing such
facilities, their development has not in each case proceeded in the manner and
on the schedule contemplated by the respective Compact authorities. For
example, in October 1992, a special state commission which had been examining
the siting of the proposed disposal facility in Illinois declined to approve
it, as a consequence of which the timetable for establishing such a facility is
uncertain. CWM was subsequently directed to stop certain of its work under its
contract with the Central Midwest Compact.

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At this time the Company and CWM are unable to predict the effect which these
developments might have upon CWM's business.

Special Services

CWM processes low-level radioactive waste at its customers' plants to enable
such waste to be shipped in dry rather than liquid form to meet the
requirements for receipt at disposal facilities and to reduce the volume of
waste that must be transported. Processing operations include solidification,
demineralization, dewatering and filtration.

Other services offered by CWM include decommissioning nuclear facilities,
which involves dismantling buildings and equipment (projects that typically are
nonrecurring), providing electro-chemical, abrasive and chemical removal of
radioactive contamination, and providing management services for spent nuclear
fuel storage pools.

Transportation

Most low-level radioactive waste is transported by truck to burial sites.
CWM's transportation fleet consists of 25 tractors and 85 heavy-duty trailers,
including specialty trailers such as shielded vans, drop decks and lowboys.
Transportation terminals are located in South Carolina and Illinois.

Low-level radioactive waste requiring additional shielding must be
transported in shipping casks licensed by the U. S. Nuclear Regulatory
Commission ("NRC"). CWM owns 60 such casks, as well as a variety of other
containers designed to meet the varying needs of the nuclear industry.

ENGINEERING, CONSTRUCTION, INDUSTRIAL AND RELATED SERVICES

Rust is a leading provider, through its subsidiaries, of engineering,
construction and environmental and infrastructure consulting services,
hazardous substance remediation services and other on-site industrial and
related services, primarily to clients in government and in the chemical,
petrochemical, nuclear, energy, utility, pulp and paper, manufacturing,
environmental services and other industries. The types of engineering,
construction and environmental and infrastructure consulting services provided
by Rust include process and design engineering, plant, facility and related
infrastructure construction, project and construction management and oversight
services, site analyses, remedial investigations, feasibility studies,
environmental assessments, and architectural services. The types of hazardous
substance remediation and other on-site industrial and related services
provided by Rust include on-site remediation of hazardous substances,
scaffolding, industrial cleaning and maintenance and nuclear and utility
services and maintenance. In addition, Rust provides engineering and
environmental and infrastructure consulting services to clients in several
countries outside of North America.

Until May 1993, Brand engaged in the asbestos abatement business. In May
1993, Brand sold substantially all of its asbestos abatement business to NSC
Corporation ("NSC"). See "Acquisitions and Dispositions." As a result of that
transaction Rust has an approximately 40% interest in NSC, of which the
remaining ownership interests are held approximately 40% by OHM Corporation and
20% by the public.

Engineering, Construction and Environmental and Infrastructure Consulting
Services

The industrial engineering services provided by Rust are of two general
types, process engineering and facility design engineering. Process engineers
create the processes by which facilities operate, such as chemical,
petrochemical, energy and pulp and paper plants. Design engineering services
provided by Rust encompass the following disciplines: architectural;
electrical; control systems; process piping; mechanical; structural; heating,
ventilation and air conditioning

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("HVAC"); and civil. The construction services provided by Rust include
primarily the new construction and retrofitting of power generation and
industrial facilities, including chemical, petrochemical, pulp and paper, food
and beverage, iron and steel, automotive, utility and industrial power and
other manufacturing facilities. Rust also requisitions and procures equipment
and construction materials for clients and performs quality assurance and
quality control oversight of vendor manufacturing practices and provides
infrastructure and marine construction, dredging, underwater diving and
dismantling and demolition services. Rust's engineering and construction
services are provided on a stand-alone basis but are also provided together
under engineering, procurement and construction contracts which include
engineering services, procurement of facility equipment and materials and
construction services.

Rust's environmental and infrastructure consulting services provide
alternative solutions for client problems relating to removing and disposing of
hazardous and toxic substances, and managing solid waste, water and wastewater,
groundwater and air resources. Such services are provided primarily to private
industry and also to federal, state and local governments, including the
Department of Defense (the "DOD") and the Department of Energy (the "DOE"). The
services include performing remedial investigations for the purpose of
characterizing hazardous waste sites, preparing feasibility studies setting
forth recommended alternative remedial actions, and providing engineering
design and construction oversight services for remediation projects. The
services provided also include the siting, permitting, design and construction
oversight of solid and hazardous waste landfills and related facilities. Study,
design and construction oversight services are also provided, primarily to
municipalities, in connection with wastewater collection and treatment, potable
water supply treatment and distribution, stormwater management and the building
of streets, highways, airports, bridges, waterways and rail services.
Additional services provided through Rust include environmental assessment
services, the design of systems to properly and safely store, convey, treat and
dispose of industrial, hazardous and radioactive materials and consulting
services regarding disposal, waste minimization methods and techniques, air
quality regulation and industrial hygiene and safety.

Through a series of acquisitions completed during the period from late 1992
through February 1994, Rust has developed an international engineering and
consulting business performing projects in 24 countries. In Europe, Rust has
offices in the United Kingdom, Germany, Sweden and Italy, and in the Asia-
Pacific region, in Australia, Hong Kong, China, Singapore, Malaysia and
Indonesia. Rust also has an office in Dubai, U.A.E. Rust's foreign subsidiaries
provide process and design engineering services, environmental and
infrastructure engineering services and construction management services to
national, regional and local governments and to clients in the utility and
industrial power and general manufacturing industries. In addition, Rust
provides engineering and consulting services to Waste Management International
worldwide.

Rust received 45%, 43%, and 52% of its total consolidated revenues in 1991,
1992 and 1993, respectively, from the performance of engineering, construction
and environmental and infrastructure consulting services.

Remediation and Other On-Site Industrial and Related Services

Hazardous Substance Remediation Services

Rust performs on-site hazardous chemical and radioactive substance
remediation services for clients in the chemical, petrochemical, automotive and
other manufacturing industries and for federal, state and local government
entities, including the DOD and the DOE in connection with such projects as the
remediation of military bases and other government installations, the EPA in
connection with CERCLA projects and various state environmental agencies. Rust
treats hazardous substances on-site using a variety of methods and
technologies, including, among others, mobile incineration technology, thermal
desorption to separate organic contaminants from soils or solids for

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subsequent treatment of the organic vapor stream, sludge drying, soil washing,
stabilization and, to a lesser extent, bioremediation, which involves the
breakdown of hazardous substances with microorganisms. Rust's hazardous
substance remediation services also include the containment and closure of
contaminated sites and the cleaning, relining and sealing of liquid containment
and treatment ponds, lagoons, and other surface impoundments.

Hazardous substance remediation services provided to Rust's private industry
clients often involve the implementation of "records of decision" promulgated
by the EPA in response to results of EPA environmental analysis and
investigation. In connection with the remediation of military bases and other
government installations, the DOD and DOE are experimenting with awarding
multi-disciplined remediation contracts to a single company capable of
providing the management services necessary to oversee the entire project. The
company selected is, in effect, the project's general contractor. In August
1993, the U.S. Army Corps of Engineers awarded to Rust two such contracts under
which Rust could be paid up to $350 million over a ten-year period. Under such
contracts, Rust will perform work pursuant to individual delivery orders
negotiated on a project-by-project basis, and there can be no assurance that
the delivery orders ultimately issued or successfully negotiated and performed
by Rust will aggregate $350 million in fees. Rust intends to utilize its
integrated approach to providing a full range of engineering, construction,
environmental consulting, on-site hazardous substance remediation and other
industrial services to pursue additional comprehensive federal government
environmental services contracts.

On-Site Industrial and Related Services

Rust provides various on-site industrial and related services. Such services
consist primarily of scaffolding, industrial cleaning, catalyst handling, plant
and nuclear and utility services. Rust provides scaffolding services primarily
to the chemical, petrochemical and utilities industries, as well as other
clients. In most cases, the scaffolding services are provided in conjunction
with periodic, routine cleaning and maintenance of refineries, chemical plants
and utilities, although such services are also performed in connection with new
construction projects. Rust performs four types of industrial cleaning
services--water blasting, chemical cleaning, vacuuming and water filtration--
primarily for clients in the petrochemical, chemical, and pulp and paper
industries, utilities and, to a lesser extent, the government sector. Rust's
catalyst handling services include the unloading, screening, classifying for
reuse, disposing and reloading of catalyst, primarily to customers in the
refining, petrochemical, chemical and gas processing industries using solid
catalyst in reactors to convert, through chemical reactions, various
hydrocarbon substances into higher grades or specific products and to remove
unwanted byproducts. Rust's on-site plant services include providing personnel
to perform mechanical and electrical services, equipment installation, welding,
HVAC, warehousing and inventory management services and technical support in
the area of industrial hygiene and safety training. Rust assists clients in the
nuclear and utility industries in solving electrical, mechanical, engineering
and related technical services problems. Rust also provides spent fuel storage
(rerack) services to the nuclear power industry.

Rust received 55%, 57% and 48% of its total consolidated revenues in 1991,
1992 and 1993, respectively, from the performance of hazardous substance
remediation and other on-site industrial and related services (including
asbestos abatement services until the May 1993 transfer of that business, as
described in "Acquisitions and Dispositions").

TRASH-TO-ENERGY, WATER TREATMENT, AIR QUALITY AND RELATED SERVICES

Wheelabrator Clean Energy

WTI, through Wheelabrator Environmental Systems Inc. and its subsidiaries, is
a leading developer, operator and owner of trash-to-energy and independent
power facilities in the United States. These facilities, either owned, operated
or under construction, give WTI nearly 800 megawatts of electric generating
capacity, which ranks it among the nation's largest independent power
producers.

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WTI's trash-to-energy projects utilize proven boiler and grate technology
capable of processing up to 3,000 tons of trash per day per facility. The heat
from this combustion process is converted into high-pressure steam, which
typically is used to generate electricity for sale to public utility companies
under long-term contracts.

WTI's trash-to-energy development activities involve a number of contractual
arrangements with a variety of private and public entities, including
municipalities (which supply trash for combustion), utilities or other power
users (which purchase the energy produced by the facility), lenders, public
debtholders, joint venture partners and equity investors (which provide
financing for the project) and the contractors or subcontractors responsible
for building the facility. In addition, WTI often identifies and acquires sites
for the facility and for the disposal of residual ash produced by the facility
and obtains necessary permits and licenses from local, state and federal
regulatory authorities.

WTI also develops, operates and, in some cases, owns independent power
projects, which either cogenerate electricity and thermal energy or generate
electricity alone for sale to utilities. Cogeneration is a technology which
allows the consecutive use of two or more useful forms of energy from a single
primary fuel source, thus providing a more efficient use of a fuel's total
energy content.

Wheelabrator Clean Water

Through its Wheelabrator Clean Water group ("Wheelabrator Clean Water"), WTI
develops projects that purify water, treat wastewater, treat and manage
biosolids, and compost organic wastes. WTI also provides technologies and
services used to treat drinking water as well as industrial and municipal water
and wastewater. Wheelabrator Clean Water provides a range of biosolids
management services to over 400 communities, including land application,
drying, pelletizing, stabilization and composting of non-hazardous biosolids.
Wheelabrator Clean Water typically enters into multi-year contracts with
biosolids generators under which WTI is paid by the generator to beneficially
reuse the biosolids.

Land application involves the application of non-hazardous biosolids as a
natural fertilizer on farmland pursuant to rigorous site-specific permits
issued by applicable state authorities. Biosolids are also used in land-
reclamation projects such as strip mines. Regulations governing sludge
management were issued by the EPA in December 1992 under the Clean Water Act.
The regulations encourage the beneficial use of municipal sewage sludge by
recognizing the resource value of biosolids as a fertilizer and soil
conditioner, and establish requirements for land application designed to
protect health and the environment.

Wheelabrator Clean Water also develops and operates facilities at which
biosolids are dried and pelletized. WTI has three facilities currently in
operation, including a recently completed facility in New York City, and two
other facilities, one under construction and the other in the late stages of
development, in Baltimore, Maryland. WTI has approximately 565 dry-tons-per-day
of biosolids drying capacity either in operation, under construction or in
advanced stages of development. Sludge which has been dried is generally used
as fertilizer by farmers, commercial landscapers and nurseries and as a bulking
agent by fertilizer manufacturers. Development of dryer facilities generally
involves various contractual arrangements with a variety of private and public
entities, including municipalities (which generate the biosolids), lenders,
contractors and subcontractors which build the facilities, and end-users of the
fertilizer generated from the treatment process.

Wheelabrator Clean Water is also a leading provider of a comprehensive range
of water and wastewater treatment services to municipalities throughout the
United States, including water and wastewater treatment plant start-up
assistance, plant operations and maintenance planning and management, training
of plant supervisors, operators and laboratory and maintenance personnel,

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<PAGE>

refining process systems, management systems for process control, and plant
diagnostic evaluations and energy audits. Wheelabrator Clean Water also designs
and supplies enclosed automated composting systems which recycle organic wastes
into beneficial products which are used by commercial landscapers, nurseries
and fertilizer manufacturers.

Though its Wheelabrator Engineered Systems Inc. subsidiary ("WES"),
Wheelabrator Clean Water engineers and manufacturers a variety of environmental
products and systems. WES provides single-source, advanced-systems solutions
related to drinking water, industrial process water, wastewater, slurry pumping
and high solids dewatering. WES also provides systems designed to remove solids
from liquid streams through the use of self-cleaning bar/filter screens,
grinders, macerators, conveyors and compactor systems. WES provides high
technology water purification and wastewater treatment systems which utilize a
variety of technologies including demineralizers, reverse osmosis and vacuum
degasification products. WES also designs and installs process technology
systems utilizing evaporators, crystallizers, electrodialysis, dialysis,
reverse osmosis and ultrafiltration for treating industrial process wastewater.
Through its Johnson Screen unit, WES produces profile wire screen products for
groundwater production, hydrocarbon processing, food processing and
coal/mineral processing.

WTI also manufactures Wheelabrator machines, a line of nonpolluting materials
cleaning equipment for use by a variety of industrial customers, including
foundries, steel processors, automobile producers and rubber and plastics
producers, in cleaning and finishing metal and other materials. WTI also
manufactures high-alloy combustion grates used in the high-temperature furnaces
of its trash-to-energy facilities.

Wheelabrator Clean Air

WTI's Wheelabrator Clean Air group ("Wheelabrator Clean Air") designs,
fabricates and installs advanced air pollution emission control and measurement
technologies. WTI offers electrostatic precipitators, flue-gas desulfurization
systems (scrubbers), fabric-filter systems (baghouses) and nitrogen oxide
("NOx") control systems, which remove pollutants from the emissions of WTI's
trash-to-energy systems, as well as power plants and other industrial
facilities. Wheelabrator Clean Air also designs and constructs tall concrete
chimneys and silos to help utilities and industrial companies meet
environmental requirements. Wheelabrator Clean Air's activities involve both
custom and pre-engineered systems for emission control. The custom engineering
division licenses a patented process for the removal of hydrogen sulfide from
gaseous and liquid streams. The process prevents the formation of sulfur
dioxide emissions, thereby controlling acid rain and odor problems.
Wheelabrator Clean Air also provides a full range of technologies and services
for destroying or recycling volatile organic compounds ("VOCs") from air and
liquid sources and NOx from air sources. Both VOCs and NOx are major
contributors to the creation of smog. WTI's VOC and NOx control systems are
utilized by customers in a variety of industries, including oil refineries,
chemical plants and automobile production facilities. Complementing the
emission control divisions is a measurement division which designs and installs
continuous emissions monitoring systems ("CEMs") for the utility, trash-to-
energy, industrial furnace and petrochemical industries, all of which are
affected by regulations requiring the continuous monitoring of stack emissions.
WTI anticipates that the Clean Air Act Amendments of 1990, along with existing
and proposed regulations issued thereunder, will generate additional business
opportunities for its expertise in VOC and NOx control systems and scrubbers,
as well as additional applications for CEMs. See "Regulation--Trash-to-Energy,
Water Treatment, Air Quality and Related Services."

INTERNATIONAL WASTE MANAGEMENT AND RELATED SERVICES

The Company is a leading provider of comprehensive waste management and
related services internationally, primarily through Waste Management
International, which conducts essentially all

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<PAGE>

of the waste management operations of the Company located outside North
America. The operations of Waste Management International are managed on a
country by country basis and are divisible into two broad categories:
collection services and treatment and disposal services.

The Company has had international operations since the mid-1970's. However,
the bulk of the Company's international operations and revenues are derived
from the acquisition over the last six years of numerous companies and
interests in Europe in various of its service lines. In 1993, the Company
completed numerous acquisitions including, among others: in the U. K., the
acquisition by the joint venture company formed in 1992 by Waste Management
International and Wessex Water Plc ("Wessex") (an English publicly traded
company providing water distribution, wastewater treatment and sewerage
services, in which Waste Management International acquired a 15% interest in
1991, which was increased to 20% in February 1993) of Waste Management Limited,
a solid waste collection and disposal company, and related business and assets;
in France, a company engaged in solid waste collection in industrial cleaning;
in The Netherlands, a company engaged in the collection and transportation of
solid waste and the sorting of demolition waste; and in Germany, a group of
companies providing waste collection services and recyclables sorting. In 1993,
Waste Management International also acquired other businesses in the U. K.,
Germany, France, The Netherlands, Finland, Italy, Denmark, Sweden, Austria,
Australia, New Zealand and Taiwan.

In accordance with its objective of maintaining a local identity, Waste
Management International, in certain cases, operates through companies or joint
ventures in which Waste Management International and its affiliates own less
than a 100% interest.

Because of the timing, number and size of Waste Management International's
Italian acquisitions, the portion of Waste Management International's revenues
in 1991, 1992 and 1993 derived from Italian operations was 46%, 38% and 32%,
respectively. During 1991 and 1992, revenues from Sweden were also 10% or more
of Waste Management International's revenues. Revenues from The Netherlands
were more than 10% of Waste Management International's revenues in 1993.

While Waste Management International has considerable experience in
mobilizing for and managing foreign projects, its operations continue to be
subject generally to such risks as currency fluctuations and exchange controls,
the need to recruit and retain suitable local labor forces and to control and
coordinate operations in different jurisdictions, changes in foreign laws or
governmental policies or attitudes concerning their enforcement, political
changes, local economic conditions and international tensions. In addition,
price adjustment provisions based on certain formulas or indices may not
accurately reflect the actual impact of inflation on the cost of performance.

In August 1991, each of CWM and WTI acquired a 15% fully diluted interest in
a predecessor of Waste Management International from a subsidiary of the
Company pursuant to the exercise of previously granted options. See
"Acquisitions and Dispositions." In April 1992, Waste Management International
sold 75,000,000 ordinary shares (20% of the post-offering outstanding shares)
in an initial public offering. The proceeds of the offering, approximately
$700,000,000, were used to retire third party debt and to repay advances from
the Company. Immediately following the public offering, Waste Management
International was owned 56%, 12% and 12% by the Company, WTI and CWM,
respectively. CWM subsequently transferred its interest in Waste Management
International to Rust in connection with the formation of Rust in January 1993.

Collection Services

Collection services include collection and transportation of solid, hazardous
and medical wastes and recyclable material from residential, commercial and
industrial customers. The residential solid waste collection process, as well
as the commercial and industrial solid and hazardous waste collection process,
is similar to that utilized by the Company in the United States. Waste
Management

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<PAGE>

International provides collection services as of the date of this report to
governmental and private customers in ten European countries, Argentina,
Australia, Brunei, Malaysia, New Zealand and Taiwan. Business is obtained
through public bids or tenders, negotiated contracts, and, in the case of
commercial and industrial customers, direct contracts. Waste Management
International operates 76 waste transfer facilities, 15 of which are for
hazardous waste, 58 of which are for solid waste and three of which are for
both types of waste.

At December 31, 1993, Waste Management International's collection services
encompassed approximately 1,700 separate municipal contracts (the largest
number of which are in Italy) serving over 6.3 million households (including
provision of recycling services to over one million households) and commercial
and industrial collection services to more than 140,000 solid waste and
approximately 29,600 hazardous waste customers, as well as related services.
The size, specifications, provisions and duration of municipal contracts vary
substantially, with some such contracts also covering landfill disposal or
street-sweeping or other cleaning services. Pricing for municipal contracts is
generally based on volume of waste, number and frequency of collection pick-ups
and disposal arrangements. Longer-term contracts typically have formulas for
periodic price increases or adjustments.

Street, industrial premises, office, parking lot and port cleaning services
are also performed by Waste Management International, along with portable
sanitation/toilet services for such occasions as outdoor concerts and special
events.

Waste Management International's commercial and industrial solid and
hazardous waste collection services are generally contracted for by individual
establishments. In addition to solid waste collection customers, customers
include small quantity waste generators, as well as larger petrochemical,
pharmaceutical and other industrial customers, which may seek collection of
hazardous, chemical or medical wastes or residues. Contract terms and prices
vary substantially between jurisdictions and types of customer.

Treatment and Disposal Services

Treatment and disposal services include processing of recyclable materials,
operation of both solid and hazardous waste landfills, operation of municipal,
trash-to-energy and hazardous waste incinerators, and provision of hazardous
waste treatment and site remediation services and water treatment services. The
operation of solid waste landfills is currently Waste Management
International's most significant treatment and disposal service. Treatment and
disposal services are provided under contracts which may be obtained through
public bid or tender or direct negotiation, and are also provided directly to
other waste service companies. At December 31, 1993, Waste Management
International operated 23 waste treatment facilities, 32 recycling and
recyclables processing facilities, 11 incinerators and 57 landfills; three of
the 11 incinerators are hazardous waste incinerators.

Once collected, solid wastes may be processed in a recyclables processing
facility. Unprocessed solid wastes, or the portion of the waste stream
remaining after recovery of recyclable materials, require disposal, which may
be accomplished through incineration (in connection with which the energy value
may be recovered in a trash-to-energy facility) or through disposal in a solid
waste landfill. The relative use of landfills versus incinerators differs from
country to country and will depend on many factors, including the availability
of land, geological and hydrological conditions, the availability and cost of
technology and capital, and the regulatory environment. The main determinant of
disposal method is generally the disposal cost per cubic meter at local
landfills, as incineration is generally more expensive.

At present, in most countries in which Waste Management International
operates, landfilling is the predominant disposal method employed. Waste
Management International owns or operates

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landfills in Italy, Sweden, France, Spain, Australia, the United Kingdom,
Germany, Denmark, Argentina and New Zealand. The Company is also constructing a
solid waste landfill in Hong Kong. Landfill disposal agreements may be separate
contracts or an integrated portion of collection or treatment contracts. In
addition, landfills may accept waste on a reserved space or per load basis.
Waste Management International believes it has access to sufficient solid waste
landfill capacity to meet its current needs.

Demand for solid waste incineration is affected by landfill disposal costs
and government regulations. The incineration process for non-hazardous solid
waste has also been influenced by two significant factors in recent years: (i)
increasingly strict control over air emissions from incinerators; and (ii)
increasing emphasis on trash-to-energy incinerators, which utilize heat
produced by incinerators to generate electricity and other energy. Incineration
generates approximately 30% residue (by weight), which is either landfilled or,
where permitted, recycled for use as a road base or in other construction uses.

Waste Management International's trash-to-energy incinerator in Hamm is a
German-designed plant and the only privately operated trash-to-energy facility
in Germany. It is among the first trash-to-energy facilities to fully comply
with that country's stringent new air pollution requirements. The facility
serves the household and commercial solid waste incineration needs of a
population of over 550,000 in Hamm and nearby towns. Under its current permits,
the facility is able to produce 18 megawatts of steam-generated electricity and
sold approximately 69,000 megawatt hours to the local power grid in 1993
(enough power for about 17,000 homes). In 1992, Waste Management International
entered into a contract with the County of Gutersloh, Germany to design,
construct, own and operate a trash-to-energy facility. The facility is being
designed with a capacity of converting 268,000 metric tons per year of
municipal waste and sewage sludge into energy and the County has guaranteed to
provide to the facility at least 205,000 metric tons of waste and sewage sludge
per year. The facility would be capable of producing enough electricity to
power more than 35,000 homes. Waste Management International also operates five
small conventional municipal solid waste incinerators in Italy and one small
plant in each of Sweden and New Zealand.

Waste Management International owns or operates hazardous waste treatment
facilities in Finland, Italy, Sweden, France, Germany, the United Kingdom, The
Netherlands, Hong Kong and New Zealand, has nearly completed the construction
of a hazardous waste treatment facility in Indonesia, and has entered into
agreements with the governments of Argentina and Venezuela to develop hazardous
waste treatment facilities in those countries. The Brescia hazardous waste
treatment plant in Italy reduces and stabilizes waste through a number of
treatment processes, including physical-chemical treatment, biological
treatment, filtration and sludge stabilization, prior to final landfilling at
Waste Management International's nearby secure hazardous waste landfill or
other permitted disposal. The facility has a modern laboratory for analyzing
waste streams. The SAKAB facility in Norrtorp, Sweden is the largest hazardous
waste treatment facility in Sweden and utilizes physical-chemical treatment,
incineration and landfilling technologies. Waste Management International's ATM
facility in Moerdijk, which is near Rotterdam in The Netherlands, handles a
broad range of chemical wastes, polluted liquids (including wastewater
associated with ship cleaning services) and contaminated soils. A paint waste
treatment facility began operation at Waste Management International's ATM
facility in 1992. In Hong Kong, a comprehensive hazardous waste treatment
facility (including a hazardous waste incinerator) began commercial operation
in June 1993.

In addition, Waste Management International believes that water and
wastewater treatment offer future opportunities. In Europe, higher
environmental standards, particularly for wastewater discharges have expanded
demand for upgrading and refurbishing as well as for new facilities. In the
developing nations of Asia and South America, the major growth in demand is for
greenfield projects to provide secure sources of clean water and to ensure the
safe treatment of industrial wastewater. In 1993, Waste Management
International established, in connection with Wessex, one

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of the United Kingdom's leading water companies, a new central organization to
jointly develop activities in this sector outside of England and Wales. Waste
Management International believes it is well equipped to take advantage of
these opportunities, particularly in conjunction with the design, construction
and operating expertise of WTI and Rust.

REGULATION

While in general the Company's environmental services businesses have
benefited substantially from increased governmental regulation, the
environmental services industry itself has become subject to extensive and
evolving regulation by federal, state, local and foreign authorities. In
particular, the regulatory process requires firms in the Company's industries
to obtain and retain numerous governmental permits to conduct various aspects
of their operations, any of which may be subject to revocation, modification or
denial. As a result of governmental policies and attitudes relating to the
industries, which are subject to reassessment and change, the Company believes
that its ability to obtain applicable permits from governmental authorities on
a timely basis, and to retain such permits, could be impaired. The Company is
not in a position at the present time to assess the extent of the impact of
such potential changes in governmental policies and attitudes on the permitting
processes, but it could be significant. In particular, adverse decisions by
governmental authorities on permit applications submitted by the Company may
result in abandonment of projects, premature closure of facilities or
restriction of operations, which could have a material adverse effect on the
Company's earnings for one or more fiscal quarters or years.

Federal, state, local and foreign governments have also from time to time
proposed or adopted other types of laws, regulations or initiatives with
respect to the environmental services industry. Included among them are laws,
regulations and initiatives to ban or restrict the international, interstate or
intrastate shipment of wastes, impose higher taxes on out-of-state waste
shipments than in-state shipments, reclassify certain categories of hazardous
wastes as non-hazardous and regulate disposal facilities as public utilities.
Certain state and local governments have promulgated "flow control"
regulations, which attempt to require that all waste generated within the state
or local jurisdiction must go to certain disposal sites. The United States
Congress has from time to time considered legislation that would enable or
facilitate such bans, restrictions, taxes and regulations. Due to the
complexity of regulation of the industry and to public pressure, implementation
of existing or future laws, regulations or initiatives by different levels of
government may be inconsistent and difficult to foresee. The Company makes a
continuing effort to anticipate regulatory, political and legal developments
that might affect operations but is not always able to do so. The Company
cannot predict the extent to which any legislation or regulation that may be
enacted or enforced in the future may affect its operations. Such matters could
have a material adverse impact on the Company's financial condition or earnings
for one or more fiscal quarters or years.

In addition to environmental laws and regulations, federal government
contractors, including the Company, are subject to extensive regulation under
the Federal Acquisition Regulation and numerous statutes which deal with the
accuracy of cost and pricing information furnished to the government, the
allowability of costs charged to the government, the conditions under which
contracts may be modified or terminated, and other similar matters. Various
aspects of the Company's operations are subject to audit by agencies of the
federal government in connection with its performance of work under such
contracts as well as its submission of bids or proposals to the government.
Failure to comply with contract provisions or other applicable requirements may
result in termination of the contract, the imposition of civil and criminal
penalties against the Company, or the suspension or debarment of all or a part
of the Company from federal government work, which could have a material
adverse impact upon the Company's financial condition or earnings for one or
more fiscal quarters or years. Among the reasons for debarment are violations
of various statutes, including those related to employment practices, the
protection of the environment, the accuracy of records and the recording of
costs. Some state and local governments have similar suspension and debarment
laws or regulations.

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Because of heightened public awareness of environmental issues, companies in
the environmental service business, including the Company, may in the normal
course of their business be expected periodically to become subject to judicial
and administrative proceedings. Governmental agencies may seek to impose fines
on the Company or revoke, deny renewal of, or modify the Company's operating
permits or licenses. The Company is also subject to actions brought by private
parties or special interest groups in connection with the permitting or
licensing of its operations, alleging violations of such permits and licenses,
or other matters. In addition, increasing governmental scrutiny of the
environmental compliance records of the Company, CWM, WTI, Rust, Waste
Management International or their affiliates could cause a private or public
entity seeking environmental services to disqualify the Company from competing
for one or more projects, on the grounds that these records display inadequate
attention to environmental compliance.

Solid Waste

Operating permits are generally required at the state and local level for
landfills, transfer stations and collection vehicles. Operating permits need to
be renewed periodically and may be subject to revocation, modification, denial
or non-renewal for various reasons, including failure of the Company to satisfy
regulatory concerns. With respect to solid waste collection, regulation takes
such forms as licensing of collection vehicles, truck safety requirements,
vehicular weight limitations and, in certain localities, limitations on rates,
area, time and frequency of collection. With respect to solid waste disposal,
regulation covers various matters, including landfill location and design,
groundwater monitoring, gas control, liquid runoff and rodent, pest, litter and
traffic control. Zoning and land use requirements and limitations are
encountered in the solid waste collection, transfer, resource recovery and
disposal phases of the Company's business. In almost all cases the Company is
required to obtain conditional use permits or zoning law changes in order to
develop transfer station, resource recovery or disposal facilities. In
addition, the Company's disposal facilities are subject to water pollution laws
and regulations. Air and noise pollution laws and regulations may also affect
the Company's operations. Governmental authorities have the power to enforce
compliance with these various laws and regulations and violators are subject to
injunctions, fines and revocation of permits. Private individuals may also have
the right to sue to enforce compliance. Safety standards under the Occupational
Safety and Health Act ("OSHA") are also applicable.

In September 1991, the EPA promulgated rules pursuant to RCRA amendments
adopted in 1984 which will serve as minimum requirements for land disposal of
municipal wastes. States seeking delegation of EPA's authority to regulate the
local disposal of municipal waste programs were required to adopt rules that
meet the minimum federal requirements by October 1993. The federal regulations
require many states to adopt more stringent requirements than previously
applied to the siting, construction, operation and closure of municipal waste
landfill facilities. Failure by states to adopt more stringent minimum
requirements resulted in the imposition of such requirements by law in October
1993 as to all but the smallest landfills. States without delegation of
authority to administer their programs in lieu of the federal programs under
the new requirements may not issue permits for new facilities or for the
expansion of existing facilities in certain circumstances in certain areas. In
addition, the failure of states to receive delegation of authority to
administer programs may increase costs to meet inconsistent federal and state
laws applicable to the same facility. The Company does not believe that the
adoption of the more stringent minimum requirements will have a material
adverse effect on the Company's operations. See also "RCRA" and "Superfund"
below for additional regulatory information.

Hazardous Waste

CWM is required to obtain federal, state, local and foreign governmental
permits for its chemical waste treatment (including resource recovery), storage
and disposal facilities. Such permits are difficult to obtain, and in most
instances extensive geological studies, tests and public hearings are

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<PAGE>

required before permits may be issued. CWM's chemical waste treatment, storage
and disposal facilities are also subject to siting, zoning and land use
restrictions, as well as to regulations (including certain requirements
pursuant to federal statutes) which may govern operating procedures and water
and air pollution, among other matters. In particular, CWM's operations in the
United States are subject to the Safe Drinking Water Act (which regulates deep
well injection), TSCA (pursuant to which the EPA has promulgated regulations
concerning the disposal of PCBs), the Clean Water Act (which regulates the
discharge of pollutants into surface waters and sewers by municipal, industrial
and other sources) and the Clean Air Act (which regulates emissions into the
air of certain potentially harmful substances). In its transportation
operations, CWM is subject to the jurisdiction of the Interstate Commerce
Commission and regulated by the DOT and by regulatory agencies in each state.
Employee safety and health standards under OSHA are also applicable.

Of CWM's chemical waste treatment, resource recovery or disposal facilities
in the United States, all but three have been issued permits under RCRA. Such
facilities without RCRA permits continue to have interim status. Final permits
are to be issued jointly by authorized states, subject to EPA oversight, and by
the EPA. The regulations governing issuance of permits contain detailed
standards for hazardous waste facilities on matters such as waste analysis,
security, inspections, training, preparedness and prevention, emergency
procedures, reporting and recordkeeping. Once issued, a final permit has a
maximum fixed term of 10 years, and such permits for land disposal facilities
are required to be reviewed five years from the date of issuance. The issuing
agency (either the EPA or an authorized state) may review or modify a permit at
any time during its term.

The Company believes that CWM maintains each of its operating treatment,
storage or disposal facilities in substantial compliance with the applicable
requirements promulgated pursuant to RCRA, and CWM expects that each facility
with interim status ultimately can qualify to be issued a RCRA permit. It is
possible, however, that the issuance of a permit could be made conditional upon
the initiation or completion of modifications or corrective actions at
facilities, which might involve substantial additional capital expenditures on
the part of CWM. Although the Company is informed that CWM anticipates the
reauthorization of each permit at the end of its term if the facility's
operations are in compliance with applicable requirements, there can be no
assurance that such will be the case.

The radioactive waste services of CWM are also subject to extensive
governmental regulation. Due to the extensive geological and hydrological
testing and environmental data required, and the complex political environment,
it is difficult to obtain permits for radioactive waste disposal facilities.
Various phases of CWM's low-level radioactive waste management services are
regulated by various state agencies, the NRC and the DOT. Regulations
applicable to CWM's operations include those dealing with packaging, handling,
labeling and routing of radioactive materials, and prescribe detailed safety
and equipment standards and requirements for training, quality control and
insurance, among other matters. Employee safety and health standards under OSHA
are also applicable.

See also "RCRA" and "Superfund" below for additional regulatory information.

Engineering, Construction, Industrial and Related Services

RCRA, state law analogues, TSCA and other environmental statutes and
regulations impose strict operational requirements on the performance of
certain aspects of hazardous substances remedial work. These requirements
specify complex methods for identification, storage, treatment and disposal of
wastes generated during a project. Failure to meet these requirements could
result in termination of contracts, substantial fines and other penalties. In
addition, when Rust's remedial activities at any site involve the treatment,
storage or disposal of hazardous waste, it must adhere to the permitting and
substantive requirements of these regulations. The cost and complexity of
permit

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or license applications for remedial work can be considerable; frequently, such
applications must undergo significant and time-consuming redrafting before
being deemed complete by the regulatory agency. Furthermore, Rust may not
receive the necessary permits at the end of this application process, for any
of a variety of reasons such as perceived compliance problems, the permitting
authority's judgment that the application, even if complete, fails to meet
technical or regulatory requirements and community opposition to the project.
Any of these reasons can also cause significant delays in the issuance of
necessary permits. It is also possible that the liability imposed by Superfund
could, under certain limited factual circumstances, apply to activities of
Rust. See also "RCRA" and "Superfund" below for additional regulatory
information.

The practice of engineering and architecture is regulated by state statutes.
All states require architects and engineers to be registered by their
respective state registration boards as a condition to offering or rendering
professional services. Many states also require companies offering or rendering
professional services, such as Rust, to obtain certificates of authority.
Rust's businesses are also subject to OSHA and to DOT regulations concerning
the transportation of hazardous materials.

Trash-To-Energy, Water Treatment, Air Quality and Related Services

WTI's business activities are subject to environmental regulation under
federal, state and local laws and regulations, including the Clean Air Act, the
Clean Water Act and RCRA. The Company believes that WTI's business is conducted
in an environmentally responsible manner in material compliance with applicable
laws and regulations. The Company does not anticipate that WTI's maintaining
compliance with current requirements will result in any material decrease in
earnings. There can be no assurance, however, that such requirements will not
change so as to require significant additional expenditures. In particular,
pursuant to the Clean Air Act Amendments of 1990 it is probable that the air
pollution control systems at certain trash-to-energy projects owned or operated
by WTI's subsidiaries will be required to be modified by the end of the decade
to comply with the more stringent regulations promulgated thereunder. Although
the expenditures related to such modifications, if required, will likely be
significant, they are not expected to have a material adverse effect on WTI's
liquidity or results of operations. While WTI frequently obtains the right to
pass on to the long-term contract users of its facilities increased capital and
operating costs resulting from changes in law, there can be no assurance that
in such event WTI would be able to recover, for each project, all such
increased costs from its customers. Moreover, it is possible that future
developments, such as increasingly strict requirements of environmental laws,
and enforcement policies thereunder, could affect the manner in which WTI
operates its projects and conducts its business, including the handling,
processing or disposal of the wastes, by-products and residues generated
thereby. The Clean Air Act Amendments of 1990 specifically prohibit the EPA
from regulating ash generated from trash-to-energy facilities as a hazardous
waste under RCRA for a two-year period following enactment. Whether or not such
ash may be regulated as a hazardous waste under RCRA has been the subject of
conflicting court decisions. Although WTI does not anticipate that regulation
of such ash, if and when it occurs, will adversely affect WTI in any material
manner, any such development could require significant additional expenditures
to achieve compliance with such requirements or policies. There can be no
assurance that in such event WTI would be able to recover all such costs from
its customers.

WTI's businesses are also subject to the provisions of various energy-related
laws and regulations, including the Public Utility Regulatory Policies Act of
1978 ("PURPA"). The ability of WTI's trash-to-energy and small power production
facilities to sell power to electric utilities on advantageous terms and
conditions and to avoid burdensome public utility regulation depends, in part,
upon the continuance in effect of PURPA, which generally exempts WTI from state
and federal regulatory control over electricity prices charged by, and the
finances of, WTI and its energy-

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<PAGE>

producing subsidiaries. While most of WTI's existing projects sell electricity
pursuant to long-term contracts or rate orders, which WTI believes would not be
affected by the repeal or modification of PURPA, the future growth of WTI's
trash-to-energy and other small power facilities business and the legal status
of its existing projects could be materially and adversely affected if the
various benefits of PURPA were repealed or substantially reduced.

RCRA

Pursuant to RCRA, the EPA has established and administers a comprehensive,
"cradle-to-grave" system for the management of a wide range of industrial by-
products and residues identified as "hazardous" wastes. States that have
adopted hazardous waste management programs with standards at least as
stringent as those promulgated by the EPA may be authorized by the EPA to
administer their programs in lieu of RCRA.

Under RCRA and federal transportation laws, a transporter must deliver
hazardous waste in accordance with a manifest prepared by the generator of the
waste and only to a treatment, storage or disposal facility having a RCRA
permit or interim status under RCRA. Every facility that treats or disposes of
hazardous wastes must obtain a RCRA permit from the EPA or an authorized state
and must comply with certain operating standards. The RCRA permitting process
involves applying for interim status and also for a final permit. Under RCRA
and the implementing regulations, facilities which have obtained interim status
are allowed to continue operating by complying with certain minimum standards
pending issuance of a permit.

Amendments to RCRA enacted in 1984 expanded its scope by, among other things,
adding certain wastes to the hazardous category and providing for the
regulation of hazardous wastes generated in quantities greater than 100
kilograms per month. Additionally, the amendments impose restrictions on land
disposal of certain hazardous wastes and prescribe more stringent standards for
hazardous waste land disposal facilities. Land disposal of certain types of
untreated hazardous wastes was banned except where the EPA determined that land
disposal of such wastes and treatment residuals should be permitted. In
accordance with the amendments, the disposal of liquids in hazardous waste land
disposal facilities was prohibited in 1985.

The EPA currently is considering a number of fundamental changes to its
regulations under RCRA that could facilitate exemptions from hazardous waste
management requirements, including policies and regulations that could
implement the following changes: redefine the criteria for determining whether
wastes are hazardous; prescribe treatment levels which, if achieved, could
render wastes non-hazardous; encourage further recycling and waste
minimization; reduce treatment requirements for certain wastes to encourage
alternatives to incineration; establish new operating standards for combustion
technologies; and indirectly encourage on-site remediation.

In addition to the foregoing provisions, RCRA regulations require the Company
to demonstrate financial responsibility for possible bodily injury and property
damage to third parties caused by both sudden and nonsudden accidental
occurrences. See "Insurance." Also, RCRA regulations require WMI and CWM to
provide financial assurance that funds will be available when needed for
closure and post-closure care at their waste treatment, storage and disposal
facilities, the costs of which could be substantial. Such regulations allow the
financial assurance requirements to be satisfied by various means, including
letters of credit, surety bonds, trust funds, a financial (net worth) test and
a guarantee by a parent corporation.

Superfund

Superfund provides for EPA-coordinated response and removal actions to
releases of hazardous substances into the environment, and authorizes the
federal government either to clean up facilities

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at which hazardous substances have created actual or potential environmental
hazards or to order persons responsible for the situation to do so. Superfund
assigns liability for these response and other related costs to parties
involved in the generation, transfer and disposal of such hazardous substances.
Superfund has been interpreted as creating strict, joint and several liability
for costs of removal and remediation, other necessary response costs and damage
to natural resources. Liability extends to owners and operators of waste
disposal facilities (and waste transportation vehicles) from which a release
occurs, persons who owned or operated such facilities at the time the hazardous
substances were disposed, persons who arranged for disposal or treatment of a
hazardous substance at or transportation of a hazardous substance to such a
facility, and waste transporters who selected such facilities for treatment or
disposal of hazardous substances, as well as to generators of such substances.
Liability may be trebled if the responsible party fails to perform a removal or
remedial action ordered under the law. For additional information concerning
potential Superfund liability, see "Legal Proceedings" below.

Superfund created a revolving fund to be used by the federal government to
pay for the cleanup efforts. In late 1990, federal Superfund spending through
the end of the government's 1994 fiscal year was authorized to a maximum of
$5.1 billion.

The U. S. Congress is expected to reauthorize and revise the Superfund
statute in 1994 or 1995. In addition to possible changes in the statute's
funding mechanisms and provisions for allocating cleanup responsibility, it is
possible that Congress also will fundamentally alter the statute's provisions
governing the selection of appropriate site cleanup remedies. For example,
Congress is expected to consider whether to continue Superfund's current
reliance on stringent technology standards issued under other statutes (such as
RCRA) to govern removal and treatment of remediation wastes or to adopt new
approaches such as national or site-specific risk based standards. This and
other potential policy changes could significantly affect the stringency and
extent of site remediation, the types of remediation techniques that will be
employed, and the degree to which permitted hazardous waste management
facilities will be used for remediation wastes.

International Waste Management and Related Services

Waste Management International's operations are subject to the general
business and environmental laws and regulations of the countries where the
services are performed and, in Europe, to European Union regulations and
directives. In general, environmental laws and regulations and enforcement
thereof outside the United States are not as stringent as in the United States,
with certain exceptions. However, such laws and regulations vary markedly from
country to country and are evolving rapidly. The treaty on European Union,
signed in December 1991, came into force in November 1993 and will in the
future further strengthen the development and enforcement of European Union
environmental law. Increased privatization of solid waste services, increased
public awareness of the potentially harmful effects of unregulated disposal of
hazardous wastes on the environment and human health, and technological
advances have led to extensive and evolving national and European Union
regulation of waste management activities. While Waste Management International
believes that its waste management and related services operations are in
substantial compliance with applicable laws and regulations, Waste Management
International is unable to predict the course of development of such laws and
regulations.

COMPETITION

Waste Management is the largest provider of comprehensive solid waste
management services in North America and CWM is a leading provider of
comprehensive hazardous waste management services in the United States.

Waste Management encounters intense competition, primarily in the pricing and
rendering of services, from various sources in all phases of its solid waste
management and related operations. In

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the solid waste collection phase, competition is encountered, for the most
part, from national, regional and local collection companies as well as from
municipalities and counties (which, through use of tax revenues, may be able to
provide such services at lower direct charges to the customer than can Waste
Management) and some large commercial and industrial companies which handle
their own waste collection. In the solid waste transfer, resource recovery and
disposal phases of its operations, competition is encountered primarily from
municipalities, counties, local governmental agencies, other national or
regional waste management companies and certain large corporations not
primarily involved in the solid waste management services business. The Company
also encounters intense competition in pricing and rendering of services in its
medical and infectious waste management, portable fencing and power pole,
portable sanitation and street sweeping and parking lot cleaning services
businesses from numerous large and small competitors.

CWM encounters competition from a number of sources, including several
national or regional firms specializing primarily in chemical waste management,
local waste management concerns and, to a much greater extent, generators of
chemical wastes which seek to reduce the volume of or otherwise process and
dispose of such wastes themselves. The basis of competition is primarily
technical expertise and the price, quality and reliability of service.

The service industries in which Rust competes are highly competitive. Rust
encounters intense competition, primarily in pricing, quality and reliability
of services from various sources in all aspects of its engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation, and on-site industrial and related services operations.

WTI experiences substantial competition in all aspects of its business. It
competes with a large number of firms, both nationally and internationally some
of which may have substantially greater financial and technical resources than
WTI. The principal competitive factors with respect to its project development
activities include technological performance, service, technical know-how,
price and performance guarantees. Competing for selection as a project
developer may require commitment of substantial resources over a long period of
time, without any certainty of being ultimately selected. Competition for
attractive development opportunities is intense, as there are a number of
competitors in the industry interested in such opportunities.

Waste Management International encounters intense competition from local
companies and governmental entities in particular countries, as well as from
major international companies. Pricing, quality of service and type of
equipment utilized are the primary methods of competition for collection
services, and proximity of suitable treatment or disposal facilities, technical
expertise, price, quality and reliability of services are the primary methods
of competition for treatment and disposal services.

Pursuant to the First Amended and Restated International Business
Opportunities Agreement, dated January 1, 1993, by and among CWM, WTI, Waste
Management International, Inc., Waste Management International, Rust and the
Company (as amended, the "IBOA"), which agreement is also a successor to
certain prior agreements among certain of the parties, each of CWM, WTI and
Rust has agreed that, until the later of July 1, 2000 or the date on which the
Company ceases to beneficially own a majority of the outstanding voting equity
interests of such subsidiary or ceases to beneficially own a majority of the
outstanding voting equity interests of Waste Management International, and in
each case no longer has an option to obtain such ownership, such subsidiary
will not engage in waste management services; design, development, construction
and operation of trash-to-energy facilities; collection, storage, processing,
treatment or disposal of hazardous wastes (including hazardous substance
remediation services); or design, engineering and construction (where the
customer is seeking third-party operation), and maintenance of water,
wastewater and sewage treatment facilities (including facilities for treating
hazardous waste streams whether or not the customer is seeking third-party
operation) outside North America (i.e., the United States, its territories and
possessions, Canada and Mexico) (the "Waste Management International Allocated

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Activities"), except with respect to licensing of technology and minor
interests by CWM, WTI or Rust in publicly held entities. WTI may engage outside
North America in the design, engineering, construction, operation and
maintenance of chimneys and air pollution control facilities (the "WTI
Allocated Activities"). Rust may engage outside North America in activities
relating to (i) architectural services, (ii) engineering and design services
and procurement, construction and construction management services (including
marine construction and dredging), other than those relating to the Waste
Management International Allocated Activities and the WTI Allocated Activities,
(iii) scaffolding services, (iv) demolition and dismantling services, (v)
environmental consulting services, and (vi) industrial facility and power plant
maintenance services (the "Rust Allocated Activities"). Each of CWM, WTI, Rust
and the Company have agreed that, until the later of (x) July 1, 2000 or (y)
the date on which the Company ceases to beneficially own a majority of the
outstanding voting equity interests of Waste Management International
(including ordinary shares owned by Rust and WTI, if majority-owned by the
Company), and no longer has an option to obtain such ownership, it and its
affiliated entities shall not participate outside North America in the Waste
Management International Allocated Activities except through Waste Management
International. Sales by the Company of recyclables, licensing of technology,
minor investments by the Company in publicly held entities and the interest of
the Company in an existing city cleaning business in Venezuela are also
permitted activities of the Company outside North America. Waste Management
International has agreed that for the same time periods as are applicable to
CWM, WTI, Rust and the Company above in this paragraph, it will not engage in
North America in the type of activities included within the Waste Management
International Allocated Activities outside North America, in the WTI Allocated
Activities or the Rust Allocated Activities. Businesses or assets acquired by a
party to the IBOA which are in the domain of another party thereto (according
to the allocations described above) must be offered for sale to the other party
at fair market value.

By agreement among the parties, the Company is responsible for determining
business allocations among CWM, WTI, Rust, the Company and Waste Management
International which are not controlled by the allocations set forth in the
preceding paragraph. In this connection CWM, WTI, Rust, the Company and Waste
Management International have agreed that in order to minimize the potential
for conflicts of interest among various subsidiaries under the common control
of the Company and for so long as the Company shall have beneficial ownership
of a majority of the outstanding voting equity interests of such subsidiary (or
an option to obtain such ownership), the Company has the right to direct future
business opportunities to the Company or the Company-controlled subsidiary
which, in the Company's reasonable and good faith judgment, has the most
experience and expertise in that line of business, provided that the Company
may not allocate a business opportunity to a particular subsidiary if such
business opportunity would involve the subsidiary in a breach of its agreement
not to compete as described in the immediately preceding paragraph.
Opportunities outside North America relating to the provision of future waste
management services are generally to be allocated to Waste Management
International, except that opportunities outside North America relating to the
WTI Allocated Activities and the Rust Allocated Activities are generally to be
allocated to WTI and Rust, as the case may be. Environmental opportunities
other than waste management activities are to be allocated in the Company's
good faith judgment. No party is liable for consequential damages, except for
lost profits, for any breach of the IBOA. Until such time as the Company ceases
to control a majority of the shares of CWM, the Company has also agreed not to
engage directly or indirectly in the storage, processing, treatment or disposal
of certain radioactive or hazardous waste in the United States, Canada or
Mexico, except through CWM.

INSURANCE

While the Company believes it operates professionally and prudently, its
business exposes it to risks such as the potential for harmful substances
escaping into the environment and causing

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damage or injuries, the cost of which could be substantial. The Company
currently maintains liability insurance coverage for occurrences under various
environmental impairment, primary casualty and excess liability insurance
policies. The Company believes that its policies comply with applicable
environmental regulatory financial responsibility requirements.

The market for non-sudden environmental impairment liability insurance is
still constricted, with only a few insurance companies currently offering
coverage and with coverage entailing limited amounts with restrictive terms and
high premium costs. Consequently, the Company has determined to maintain
coverage under only one non-sudden environmental impairment liability insurance
policy. Under that policy, losses paid by the carrier must be reimbursed by the
Company over a period of years, subject to a requirement that the Company make
advance deposits with the carrier for such purpose. A claim under such an
insurance policy which does not transfer risk, if successful and of sufficient
magnitude, could have a material adverse effect on the Company's business,
results of operations or financial condition.

EMPLOYEES

WMX Technologies and its subsidiaries employ a total of approximately 72,600
persons in their worldwide operations. Of this number, the Company employs
approximately 32,100 persons in its WMI solid waste and related services
operations, including approximately 24,000 persons employed in solid waste
collection, transfer, resource recovery and disposal activities, and
approximately 8,100 persons employed in managerial, executive, sales, clerical,
data processing and other solid waste and related activities. At December 31,
1993, approximately 5,260 of Waste Management's employees in its solid waste
and related services operations were represented by various labor unions under
collective bargaining agreements expiring on various dates through 1998.
Agreements covering an aggregate of approximately 1,670 employees expire in
1994. Waste Management has not experienced a significant work stoppage and
considers its employee relations to be good.

CWM (excluding Rust) employed approximately 4,400 persons at December 31,
1993. Approximately 200 of CWM's employees were employed as managers or
executives, approximately 3,200 were employed in hazardous waste
transportation, treatment, resource recovery and disposal activities (including
approximately 900 performing technical, analytical or engineering services),
and approximately 1,000 were employed in sales, clerical, data processing and
other hazardous waste-related activities. At December 31, 1993, approximately
250 of CWM's employees were represented by various labor unions under
collective bargaining agreements expiring on various dates through 1997. Five
collective bargaining agreements will expire in 1994. CWM has not experienced a
significant work stoppage and considers its employee relations to be good.

At December 31, 1993, WTI had approximately 3,800 full-time employees. WTI
considers relations with its employees to be good.

Rust employed approximately 15,900 persons at December 31, 1993, of whom
approximately 5,100 provided technical or engineering services (excluding craft
personnel hired on a temporary basis). At that date, approximately 2,100 of
Rust's employees were represented by various labor unions. Rust believes its
employee relations are good.

As of December 31, 1993, Waste Management International employed
approximately 16,400 persons. Of this number, Waste Management International
employed approximately 12,900 persons in its collection service operations,
1,400 in its treatment and disposal services operations and 2,100 in
administrative functions. At December 31, 1993, approximately 12,700 Waste
Management International employees were represented by labor unions. Waste
Management International considers its employee relations to be good.

48
<PAGE>

ACQUISITIONS AND DISPOSITIONS

Since August 1971, the Company has acquired a number of companies, and
certain assets of other companies, engaged in various phases of the
environmental services industry. See Note 2 to the Company's Consolidated
Financial Statements. The amounts and types of consideration generally have
been determined by direct negotiations with the owners of the businesses
acquired. In most instances, the owners of the acquired businesses were few in
number, and often certain key former owners have continued to operate the
businesses following acquisition by the Company. During 1993, the Company
continued to acquire additional operations in the environmental services
industry.

Acquisitions have historically contributed significantly to the Company's
growth. The Company's growth prospects may be affected by the availability of
additional business acquisitions at reasonable prices and the Company's ability
to finance such acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a discussion of capital
expenditures by the Company, including acquisitions. Other well-capitalized
companies also compete intensely for businesses available to be acquired. The
Company is continually engaged in the process of considering and negotiating
additional acquisitions, although with many of the Company's strategic goals
achieved, the emphasis will be on businesses that promise above-average returns
or meet remaining strategic objectives. Some future acquisitions could be
material. The acquisition of businesses also entails certain inherent risks.
Although the Company generally performs an investigation of businesses to be
acquired, because of the nature of the liabilities involved in these
businesses, there can be liabilities which will not become known until after
the transactions are consummated. The Company seeks to minimize the impact of
these liabilities and expenditures by obtaining indemnities and warranties from
the seller which may be supported by deferring payment of a portion of the
purchase price. These indemnities and warranties, if obtained, may not,
however, fully cover the liabilities due to their limited scope, amount, or
duration, the financial limitations of the indemnitor or warrantor, or other
reasons. Businesses purchased may require expenditures to make up for deferred
maintenance and to improve the quality or quantity of assets acquired. In
certain cases, the Company establishes reserves in respect of the anticipated
costs of remediation for acquired sites.

In September 1988, CWM acquired newly issued common and convertible preferred
shares from Brand equivalent to a 49% ownership interest in Brand. Most of the
consideration was paid in cash, with the balance consisting of CWM's asbestos
abatement businesses which were transferred to Brand and CWM's agreement, among
other matters, to furnish certain services to Brand. In October 1990, CWM
exercised options increasing its ownership of Brand capital stock to a majority
interest. In January 1993, CWM contributed its Brand shares to Rust.

In September 1990, the Company engaged in a merger transaction whereby WTI
became a majority-owned subsidiary of the Company. In the transaction, each
share of WTI common stock (other than those held by the Company, WTI or their
respective affiliated companies) was converted into the right to receive .574
of a share of WTI common stock and .469 of a share of common stock of the
Company, which resulted in the Company's issuance of a total of 14,855,341
shares of its common stock. Prior to the merger, the Company owned
approximately 22% of the outstanding shares of common stock of WTI. The
Company's 22% interest in WTI was acquired as the result of the Company's
contribution of certain businesses to a subsidiary of WTI in 1988.

As part of the merger, the Company, WTI and CWM also entered into certain
ancillary agreements. The principal elements of the ancillary agreements
include (i) an agreement of the Company to use all reasonable efforts to assist
WTI in obtaining and maintaining a rating of "A" or better for WTI's debt
securities (and in connection with which the Company may be required to
purchase up to $200 million of WTI subordinated debt or preferred stock), (ii)
an option permitting

49
<PAGE>

WTI to purchase the Company's medical waste disposal business at a 15% discount
from the fair market value of such business, (iii) provisions for the joint
development by WTI and the Company of recycling services and technology, and
including the grant to WTI of royalty-free licenses to certain recycling and
gas-recovery technology owned by the Company, and (iv) an agreement (as amended
and restated effective as of July 1, 1993) (A) pursuant to which the Company
will make various services available to WTI, WTI will lend its excess cash to
the Company, the Company will fund WTI's capital requirements (subject to a
limit of the amount of funds loaned by WTI to the Company plus, until September
1995, $100 million) and the Company will assist WTI in procuring insurance and
surety bonds, (B) which provided for the allocation of business opportunities
among the Company and its majority-owned subsidiaries (such provisions having
been superseded by the arrangements described above under "Competition") and
(C) which includes an option enabling the Company to maintain its majority
ownership of WTI.

The ancillary agreements also included certain options whereby in August
1991, CWM and WTI each acquired a 15% fully diluted equity interest in newly
issued common stock of a predecessor of Waste Management International, which
predecessor then held substantially all of the waste management and related
services business interests of the Company outside North America. CWM financed
the purchase by issuing a 10-year, convertible subordinated debenture to the
Company in the amount of $168,974,000 with interest payable at 6% per year. In
December 1992, the debenture was converted in accordance with its terms into
8,046,380 shares of CWM common stock. WTI acquired the Waste Management
International shares by issuing approximately 12,000,000 shares (as adjusted
for a two-for-one stock split) of its common stock to the Company. Each of the
interests acquired by CWM and WTI in the option exercise was converted into a
15% equity interest in Waste Management International in 1991, which became 12%
as a result of the Waste Management International initial public offering in
April 1992. In January 1993, CWM contributed its interest in Waste Management
International to Rust.

In May 1993, pursuant to an agreement (the "NSC Purchase Agreement") by and
among NSC, NSC's wholly owned subsidiary, NSC Industrial Services Corp., Brand,
WMX and OHM Corporation, previously an approximately 70% stockholder of NSC,
Brand transferred its asbestos abatement business to NSC in exchange for an
approximately 41% interest in NSC Corporation and two industrial services
companies of NSC. Rust assumed the rights and obligations of Brand under the
NSC Purchase Agreement upon consummation of the merger of Brand into a
subsidiary of Rust.

In August 1993, Rust acquired EnClean, Inc., an industrial and environmental
services business providing hydroblasting, industrial vacuuming, chemical
cleaning, separation technology, site remediation and catalyst handling
services. The acquisition expanded Rust's presence primarily in the Gulf Coast
area and added chemical cleaning and catalyst handling to the services already
provided by Rust.

In September 1993, CWM announced plans to, among other things, eliminate
approximately 1,200 positions by year-end 1994, consolidate operations in its
treatment and land disposal group, restructure its sales and service regions,
sell selected service centers in marginal service lines and geographies, seek
joint venture partners and review other strategic alternatives for its Port
Arthur, Texas incinerator and centralize additional functions. CWM is
restructuring its hazardous waste management and related services operations on
the assumption that future base business revenue growth, if any, will not keep
pace with the recovery in the general economy, and plans not to make
investments which are primarily supported by non-recurring (event business)
volumes.

During 1994, the Company sold its Modulaire(R) mobile office services
business to the GE Modular Space Division of Transport International Pool,
Inc., a subsidiary of General Electric Co.

50
<PAGE>

The Company has also acquired numerous companies and interests in companies
internationally through Waste Management International or its predecessors. See
"International Waste Management and Related Services."

PROPERTY AND EQUIPMENT

The principal property and equipment of the Company consists of land
(primarily disposal sites), buildings and waste treatment or processing
facilities (other than disposal sites), and vehicles and equipment, which as of
December 31, 1993 represented approximately 18%, 6% and 30%, respectively, of
the Company's and its subsidiaries' total consolidated assets. The Company
believes that its vehicles, equipment and operating properties are well
maintained and suitable for its current operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for a
discussion of property and equipment expenditures by the Company for the last
three years and the capital budget for 1994. The Company's subsidiaries lease
numerous office and operating facilities throughout the world. For the year
ended December 31, 1993, aggregate annual rental payments on real estate leased
by the Company and its subsidiaries approximated $117,296,000.

The principal fixed assets of Waste Management consist of vehicles and
equipment (which include, among other items, approximately 18,200 collection
and transfer vehicles, 1,453,000 containers and 18,000 stationary compactors in
the United States and Canada). WMI owns or leases real property in most states
and Canadian provinces in which it is doing business. At December 31, 1993, 105
solid waste disposal facilities, aggregating approximately 65,700 total acres
including approximately 15,745 permitted acres, were owned by Waste Management
in the United States and Canada and 28 facilities, aggregating approximately
11,640 total acres including approximately 6,530 permitted acres, were leased
from parties not affiliated with Waste Management under leases expiring from
1994 to 2085.

The principal fixed assets of CWM (excluding Rust) consist of its network of
transportation, treatment, storage and disposal facilities and its fleet of
transportation vehicles. At December 31, 1993, CWM owned or leased in the
United States a total of 20 treatment, resource recovery or disposal
facilities. At such date, CWM's chemical waste facilities with secure land
disposal sites aggregated approximately 10,500 acres, including approximately
3,050 permitted acres. CWM believes that, at current rates of utilization, the
permitted and other potentially useable acres included in such total have
sufficient capacity to enable CWM to conduct secure land disposal operations
for more than 30 years, although not all of CWM's facilities have such
capacity.

The principal property and equipment of Rust consist of Rust's headquarters
buildings, vehicles, equipment and scaffolding inventory, which as of December
31, 1993 represented approximately 20% of Rust's total consolidated assets. The
principal fixed assets utilized in Rust's operations at December 31, 1993
consisted of vehicles and equipment (which included, among other items, air
monitoring equipment, decontamination trailers, mobile laboratory trailers,
vacuum trucks, office trailers, pieces of heavy excavating machinery, mobile
waste treatment units and scaffolding inventory). Rust believes that its
vehicles, equipment and scaffolding inventory are well maintained and suitable
for its current operations. Rust leases numerous office, warehouse and
equipment and scaffolding yard facilities in various locations throughout the
United States.

WTI currently owns, operates or leases 14 trash-to-energy facilities, five
cogeneration and small power production facilities, two coal handling
facilities, three biosolids drying and pelletizing facilities and various other
manufacturing, office and warehouse facilities. Facilities leased or operated
(but not owned) by WTI are under leases or agreements having terms expiring
from the years 1996 to 2011, subject to renewal options in certain cases.

51
<PAGE>

The principal property and equipment of Waste Management International
consist of land (primarily disposal sites), buildings and other waste treatment
or processing facilities (other than disposal sites), vehicles and equipment.
Waste Management International believes that its vehicles, equipment, and
operating properties are well maintained and suitable for its current
operations, although, due to its many recent acquisitions, vehicles are not
standardized. The principal fixed assets utilized in Waste Management
International's collection services operations at December 31, 1993 consisted
of vehicles and equipment (which included, among other items, approximately
6,300 collection, transportation, and other route vehicles and approximately
280 pieces of landfill and other heavy equipment), approximately 270,000
containers, and approximately 2,300 stationary compactors. In addition, Waste
Management International owns approximately 690 pieces of hazardous waste
equipment, consisting predominately of containers and collection vehicles. The
principal fixed assets utilized in Waste Management International's treatment
and disposal services operations at December 31, 1993 consisted of (i) 16 solid
waste landfills, aggregating approximately 1,200 total acres including
approximately 1,060 permitted acres, owned by Waste Management International,
(ii) 14 solid waste landfills, aggregating approximately 890 total acres
including approximately 860 permitted acres, leased from parties not affiliated
with Waste Management International under leases expiring from 1995 to 2015,
(iii) seven secure hazardous waste landfills owned or leased by Waste
Management International aggregating approximately 830 acres including
approximately 520 permitted acres, and (iv) owned, operated or leased trash-to-
energy facilities, other treatment, storage, or disposal facilities and various
other manufacturing, office and warehouse facilities. Waste Management
International also operates 20 other solid waste landfills.

52
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names and ages (at April 1, 1994) of the
Company's executive officers and directors, the positions they hold with the
Company, and (because the Board of Directors is classified into three classes--
Class I, expiring at the 1995 annual stockholders meeting, Class II, expiring
at the 1996 annual stockholders meeting and Class III, expiring at the 1994
annual stockholders meeting) the classification of the Board to which they
belong. All directors hold their positions until the annual meeting of
stockholders at which their terms expire or until their respective successors
are elected and qualify. Executive officers are selected by the Board of
Directors and serve at the discretion of the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Dean L. Buntrock (1) (4)............... 62 Chairman of the Board and Director
Phillip B. Rooney (1) (3).............. 49 President and Director
J. Steven Bergerson.................... 51 Senior Vice President--Law and
Compliance
James E. Koenig........................ 46 Senior Vice President, Treasurer and
Chief Financial Officer
Herbert A. Getz........................ 38 Vice President, General Counsel and
Secretary
Thomas C. Hau.......................... 58 Vice President, Controller and
Principal Accounting Officer
Donald A. Wallgren..................... 52 Vice President and Chief
Environmental Officer
H. Jesse Arnelle (2)................... 60 Director
Howard H. Baker, Jr. (4)............... 68 Director
Jerry E. Dempsey (2)................... 61 Director
Donald F. Flynn (3).................... 54 Director
Peter H. Huizenga (4).................. 55 Director
Peer Pedersen (3)...................... 69 Director
James R. Peterson (2).................. 66 Director
Alexander B. Trowbridge (2)............ 64 Director
</TABLE>
- ----------
(1) Member of the Executive Committee of the Board of Directors
(2) Class I member
(3) Class II member
(4) Class III member

Dean L. Buntrock has served as Chairman of the Board and Chief Executive
Officer of the Company since 1968. From September 1980 to November 1984, he
also served as President. Since May 1993, Mr. Buntrock has also been Chairman
of the Board of CWM, a position he previously held from 1986 to September 1991.
Mr. Buntrock is also a director of WTI, Rust, Waste Management International,
Boston Chicken, Inc., Stone Container Corporation and First Chicago
Corporation.

Phillip B. Rooney has been President and Chief Operating Officer of the
Company since November 1984. Mr. Rooney first became an officer of the Company
in 1971, and from March 1978 to November 1984, he served as Senior Vice
President of the Company. Since November 1990, he has served as Chairman of the
Board and Chief Executive Officer of WTI, and since January 1993 he has served
as Chairman of the Board of Rust. Mr. Rooney is also a director of CWM, Waste
Management International, Illinois Tool Works, Inc., Caremark International
Inc., Urban Shopping Centers, Inc. and ServiceMaster Management Corporation
(the general partner of ServiceMaster Limited Partnership).

53
<PAGE>

J. Steven Bergerson has been Senior Vice President-Law and Compliance, since
August 1992. He has been a Vice President of the Company since 1984 and was
General Counsel of the Company from 1974 until August 1992. Mr. Bergerson has
been employed by the Company since 1973.

James E. Koenig has been a Senior Vice President of the Company since May
1992, Treasurer of the Company since 1986 and its Chief Financial Officer since
1989. Mr. Koenig first became a Vice President of the Company in 1986. From
1984 to 1986, Mr. Koenig was Staff Vice President and Assistant to the Chief
Financial Officer of the Company. Mr. Koenig has been employed by the Company
since 1977. Mr. Koenig also served as Vice President, Chief Financial Officer
and Treasurer of WTI from November 1990 to May 1993. He also serves as a
director of WTI, Waste Management International, Rust and CWM.

Herbert A. Getz has been a Vice President of the Company since May 1990 and
General Counsel since August 1992. He has also been Secretary of the Company
since January 1988. He also served as Assistant General Counsel of the Company
from December 1985 until August 1992. Mr. Getz has also held the offices of
Vice President, Secretary and General Counsel at WMI from April 1989 until
December 1993, and Vice President and Secretary at Rust since January 1993. He
served as Vice President, Secretary and General Counsel of WTI from November
1990 until May 1993. He is a director of NSC. Mr. Getz commenced employment
with the Company in 1983.

Thomas C. Hau has been a Vice President and the Controller and Principal
Accounting Officer of the Company since he commenced employment with the
Company in September 1990. From 1971 until his employment by the Company, Mr.
Hau was a partner of Arthur Andersen & Co.

Donald A. Wallgren has been Vice President and Chief Environmental Officer of
the Company since January 1994. From 1993 to January 1994, Mr. Wallgren was
Vice President--Environmental Management of the Company's former corporate
service subsidiary, WMX Technology and Services, Inc. He held the same position
at the Company from 1992 to 1993 and at WMI from 1989 to May 1990. From 1990 to
1992 he served as Vice President--Recycling, Development and Environmental
Management of WMI. Mr. Wallgren has been employed by the Company since 1979.

H. Jesse Arnelle has been a director of the Company since 1992 and senior
partner of Arnelle & Hastie, a San Francisco-based corporate law firm, for more
than the past five years. He also serves as the Vice Chairman of the Penn State
University Board of Trustees. Mr. Arnelle is currently a director of Florida
Power & Light (FPL Group), Eastman Chemical Corporation, Textron Corporation,
Wells Fargo & Company and Wells Fargo Bank N.A.

Howard H. Baker, Jr. has been a member of the law firm of Baker, Worthington,
Crossley, Stansberry & Woolf for more than the past five years. From March 1987
to July 1988, Mr. Baker held the position of Chief of Staff to the President of
the United States. Mr. Baker served three terms as a member of the United
States Senate from 1967 to 1985. Mr. Baker is also a director of Federal
Express Corporation, Pennzoil Company and United Technologies Corp. Mr. Baker
has served as a director of the Company since 1989.

Jerry E. Dempsey has served as a director of the Company since April 1984,
and since September 1993, as Chairman and Chief Executive Officer of PPG
Industries, Inc., a glass, coatings and chemicals company. From April 1984 to
May 1988, he served as Vice Chairman of the Board of the Company. From May 1988
to June 1993, Mr. Dempsey was Senior Vice President of the Company. From July
1985 to September 1991, he also was President and Chief Executive Officer of
CWM. From September 1991 to May 1993, Mr. Dempsey served as Chairman of the
Board of CWM. Mr. Dempsey is also a director of Navistar International Corp.
and PPG Industries, Inc.

54
<PAGE>

Donald F. Flynn has served as Chairman of the Board and Chief Executive
Officer of Discovery Zone, Inc., a franchisor and operator of indoor fun and
fitness centers for children, since July 1992. He has also served as Chairman
of the Board and President of Flynn Enterprises, Inc., a financial advisory and
venture capital firm since February 1988. Mr. Flynn was a Senior Vice President
of the Company from May 1975 to January 1991. He also served as the Company's
Chief Financial Officer from March 1972 to December 1989 and the Company's
Treasurer from May 1979 to December 1986. He is also a director of CWM and
served as its Chief Financial Officer from September 1986 to November 1987. Mr.
Flynn also serves as a director of Blockbuster Entertainment Corporation,
Psychemedics Corporation, WTI and Waste Management International. Mr. Flynn has
served as a director of the Company since 1981.

Peter H. Huizenga has been President of Huizenga Capital Management, an
investment management firm, since October 1990. He has also been of counsel to
the law firm of Hlustik, Huizenga & Williams for more than the past five years.
Mr. Huizenga served as Vice President and Secretary of the Company from May
1975 and September 1968, respectively, until his retirement from those
positions on January 1, 1988. Mr. Huizenga is also a director of CWM. Mr.
Huizenga has served as a director of the Company since 1968.

Peer Pedersen has been Chairman of the Board of the law firm of Pedersen &
Houpt, P.C. for more than the past five years. Mr. Pedersen is also a director
of Aon Corporation, Boston Chicken, Inc., Discovery Zone, Inc., Mallard Coach
Company, Inc. and CWM. Mr. Pedersen has served as a director of the Company
since 1979.

James R. Peterson was a director and President and Chief Executive Officer of
The Parker Pen Company from January 1982 to January 1985. The Parker Pen
Company was principally involved in the manufacture and distribution of writing
instruments and in providing temporary help services. Mr. Peterson is also a
director of The Dun & Bradstreet Corporation. Mr. Peterson has served as a
director of the Company since 1980.

Alexander B. Trowbridge has been President of Trowbridge Partners, Inc., a
consulting services firm, since January 1990. He was President of the National
Association of Manufacturers, Washington, D.C., from January 1980 to January
1990. Mr. Trowbridge also served as U.S. Secretary of Commerce in 1967 and 1968
and as Vice Chairman of Allied Signal Corp. from 1976 to 1980. Mr. Trowbridge
has served as a consultant to the Company since 1991. He also serves as
director of New England Mutual Life Insurance Co., PHH Corp., The Rouse Co.,
Sun Resorts International Ltd., Harris Corp., Sun Co. Inc., The Gillette Co.,
Warburg-Pincus Counsellors Fund and Icos Corp. Mr. Trowbridge has served as a
director of the Company since 1985.

55
<PAGE>

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth certain information with respect to
compensation for services in all capacities paid by the Company and its
subsidiaries for the past three years, to or on behalf of (i) the Chairman of
the Board and Chief Executive Officer of the Company at December 31, 1993, (ii)
each of the four other most highly compensated executive officers of the
Company serving at December 31, 1993 and (iii) each of two individuals who
ceased to be executive officers of the Company during 1993 but whose reportable
salary and bonus would have placed them in the group of the four other most
highly compensated executive officers of the Company:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------- ---------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LONG-TERM ALL OTHER
PRINCIPAL COMPEN- OPTIONS INCENTIVE COMPEN-
POSITION YEAR SALARY BONUS SATION(1)(2) (SHARES)(4) PAYOUTS SATION(1)
--------- ---- ---------- -------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock, 1993 $1,400,000 $ 0 $78,702(3) 122,449 $ 0 $5,217
Chairman and Chief 1992 1,100,000 550,000 79,854 150,999 0 9,522
Executive Officer 1991 1,100,000 0 -- 93,122 261,250 --
Phillip B. Rooney, 1993 1,000,000 0 -- 87,464 97,800(5) 5,217
President and Chief 1992 900,000 382,500 -- 123,545 880,200(5) 9,522
Operating Officer 1991 800,000 0 -- 67,725 192,500 --
James E. Koenig, 1993 500,000 0 -- 32,799 25,808(5) 5,217
Senior Vice 1992 440,300 161,500 -- 47,258 232,275(5) 9,522
President 1991 360,000 0 -- 25,397 57,968 --
J. Steven Bergerson, 1993 345,000 0 -- 22,631 0 5,217
Senior Vice 1992 312,500 115,500 -- 32,360 0 9,522
President 1991 285,000 0 -- 18,095 57,200 --
Thomas C. Hau, 1993 300,000 0 -- 13,120 0 5,217
Vice President 1992 290,000 72,500 -- 19,905 0 9,522
1991 275,000 0 -- 11,640 5,051 --
William P. Hulligan, 1993 425,000 0 -- 27,879 0 5,217
Former Vice 1992 425,000 170,000 -- 46,298 0 9,522
President(6) 1991 400,000 0 -- 28,219 68,811 --
D. P. Payne, 1993 400,000 0 -- 0 0 5,217
Former Senior Vice 1992 380,000 76,000 -- 22,727 0 9,522
President(7) 1991 340,000 0 -- 21,587 10,047 --
</TABLE>
- ----------
(1) In accordance with the revised rules on executive officer and director
compensation disclosure adopted by the Securities and Exchange Commission,
amounts of Other Annual Compensation and All Other Compensation are
excluded for the Company's 1991 fiscal year. Amounts of All Other
Compensation are amounts contributed by the Company (or CWM with respect to
Mr. Payne) for fiscal years 1992 and 1993 under the Company's Profit
Sharing and Savings Plan for the persons named above.
(2) Excludes perquisites and other benefits, unless the aggregate amount of
such compensation is at least the lesser of either $50,000 or 10 percent of
the total annual salary and bonus reported for the named executive officer.

56
<PAGE>

(3) Includes financial planning expenses of $68,000 paid by the Company on
behalf of the named executive officer.
(4) The numbers shown in the table above represent options for the purchase of
shares of the Company's common stock granted to the named persons under the
Company's 1982 and 1992 Stock Option Plans (collectively, the "Employee
Plans"). The named officers also serve as directors or executive officers
of direct or indirect subsidiaries of the Company. Accordingly, during
1993, Mr. Rooney also received options for 150,000 Rust shares; Mr. Koenig
also received options for 20,000 Rust shares; and Mr. Payne received
options for 62,696 CWM shares and 20,000 Rust shares. During 1992, Mr.
Buntrock also received options for 213,098 CWM shares and 200,000 WM
International ordinary shares; Mr. Rooney also received options for 174,352
CWM shares and 200,000 WM International ordinary shares; Mr. Koenig also
received options for 63,876 CWM shares, 200,000 WM International ordinary
shares and 12,500 Rust shares and Mr. Payne received options for 73,616 CWM
shares. During 1991, Mr. Buntrock also received options for 127,536 CWM
shares and 12,500 Rust shares; Mr. Rooney also received options for 92,754
CWM shares and 12,500 Rust shares; Mr. Koenig also received options for
25,043 CWM shares; and Mr. Payne also received options for 100,000 CWM
shares. In each case, the options were granted under a plan adopted by the
relevant subsidiary.
(5) Paid pursuant to WTI's Performance Unit Plan, a long term incentive plan
covering the two-year period ended December 31, 1992.
(6) Mr. Hulligan served as Vice President of the Company until May 1993. He
currently serves as President--Midwest Group of Waste Management.
(7) Mr. Payne served as Senior Vice President of the Company until May 1993. He
currently serves as President of CWM.

STOCK OPTIONS

The following tables set forth certain information with respect to stock
options granted to the persons named in the Summary Compensation Table during
the year ended December 31, 1993. No options were granted to the persons named
in the Summary Compensation Table during the year ended December 31, 1993 by
WTI or WM International.

COMPANY OPTION GRANTS IN 1993

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENTAGE
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE
OF COMPANY AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(4)
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION ----------------------------------
NAME GRANTED(1)(2) IN 1993 (PER SHARE) DATE(3) 0% 5% 10%
- ------------------- ------------- ---------- -------------- ---------- --- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock 122,449 4.14 $34.30 04/01/03 $ 0 $ 2,641,358 $ 6,693,719
Phillip B. Rooney 87,464 2.96 34.30 04/01/03 0 1,886,693 4,781,252
James E. Koenig 32,799 1.11 34.30 04/01/03 0 707,510 1,792,969
J. Steven Bergerson 22,631 0.77 34.30 04/01/03 0 488,175 1,237,132
Thomas C. Hau 13,120 0.44 34.30 04/01/03 0 283,013 717,210
William P. Hulligan 27,879 0.94 34.30 04/01/03 0 601,380 1,524,016
D. P. Payne -- -- -- -- -- -- --
All Stockholders as
a group(5) -- -- 34.30 04/01/03 0 10,523,529,484 26,668,689,881
</TABLE>
- --------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of the Company's common stock, and to have
shares withheld to satisfy tax withholding requirements in connection with
the exercise of options. Such options become immediately

57
<PAGE>

exercisable upon a Change in Control of the Company, as defined in the
option plan. Options are non-transferable other than by will or the laws of
descent and distribution.
(2) Options become exercisable in three equal cumulative annual installments
commencing April 1, 1994.
(3) Options have a term of ten years, subject to earlier termination in certain
events related to termination of employment.
(4) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's stock. Such amounts are based on the
assumption that the named persons hold the options granted for their full
term. The actual value of the options will vary in accordance with the
market price of the Company's common stock. The column headed "0%" is
included to demonstrate that the options were granted at fair market value
and optionees will not recognize any gain without an increase in the stock
price, which increase benefits all stockholders commensurately. The Company
did not use an alternative formula to attempt to value options at the date
of grant, as management is not aware of any formula which determines with
reasonable accuracy a present value of options of the type granted to the
optionees.
(5) Based upon the price of the Company's stock and the total shares
outstanding as of the date of grant, if the price of the Company's common
stock increased at the 5% or 10% rates shown in the table above,
stockholders as a group would realize aggregate gains (excluding dividends)
of $10,523,529,484 and $26,668,689,881, respectively, during the period
from grant date to the April 1, 2003 option expiration date.

CWM OPTION GRANTS IN 1993

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
-------------------------------------------- ---------------------
PERCENTAGE
OF TOTAL
NUMBER OF CWM
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO PRICE
OPTIONS EMPLOYEES (PER EXPIRATION
NAME GRANTED(1)(2) IN 1993 SHARE) DATE(3) 0% 5% 10%
- ----------- ------------- ---------- -------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
D. P. Payne 62,696 3.86 $15.95 04/01/00 0 $407,101 $948,718
</TABLE>
- ----------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of CWM's common stock, and to have shares
withheld to satisfy tax withholding requirements in connection with the
exercise of options. Such options become immediately exercisable upon a
Change in Control of CWM, as defined in the option plan. Options are non-
transferable other than by will or the laws of descent and distribution.
(2) Options become exercisable in three equal cumulative annual installments
commencing April 1, 1994.
(3) Options were granted for a term of seven years, subject to earlier
termination in certain events related to termination of employment.
(4) See footnote (4) to the "Company Option Grants in 1993" table above.

58
<PAGE>

RUST OPTION GRANTS IN 1993

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(3)
----------------------------------------------------------------- ------------------------------
NUMBER PERCENTAGE
OF OF TOTAL
SECURITIES RUST OPTIONS
UNDERLYING GRANTED TO MARKET
OPTIONS EMPLOYEES EXERCISE PRICE PRICE AT GRANT EXPIRATION
NAME GRANTED(1) IN 1993 (PER SHARE)(2) (PER SHARE)(2) DATE 0% 5% 10%
- ----------------- ---------- ------------ -------------- -------------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phillip B. Rooney 150,000(4) 11.45 $16.7625 $18.625 03/09/00(6) $279,375 $1,416,712 $2,929,853
James E. Koenig 20,000(4) 1.53 16.7625 18.625 03/09/00(6) 37,250 188,895 390,647
D. P. Payne 20,000(5) 1.53 16.7625 18.625 03/08/03(7) 37,250 271,513 630,919
</TABLE>
- ----------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of Rust's common stock, and to have shares
withheld to satisfy tax withholding requirements in connection with the
exercise of options. Such options become immediately exercisable upon a
Change in Control of Rust, as defined in the option plan. Options are non-
transferable other than by will or the laws of descent and distribution.
(2) The exercise price per share is equal to 90% of the average of the closing
price of common stock of The Brand Companies, Inc. ("Brand") on the
National Association of Securities Dealers Automated Quotation System for
each of the five trading days commencing on April 19, 1993. Rust common
stock did not publicly trade until May 10, 1993, the first trading day
after Brand was merged into a subsidiary of Rust and shares of Brand (other
than those owned by Rust or exchanged for cash in the merger) were
converted, on a one-for-one basis, into shares of Rust.
(3) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of Rust's stock. Such amounts are based on the
assumption that the named persons hold the options granted for their full
term. The actual value of the options will vary in accordance with the
market price of Rust's common stock.
(4) Options become exercisable in three equal cumulative annual installments
commencing March 9, 1994.
(5) Options become exercisable in five equal cumulative annual installments
commencing September 8, 1993.
(6) Options were granted for a term of seven years, subject to earlier
termination in certain events related to termination of employment.
(7) Options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of directorship.

59
<PAGE>

The following table sets forth certain information as to each exercise of
stock options during the year ended December 31, 1993 by the persons named in
the Summary Compensation Table and the fiscal year-end value of unexercised
options:

AGGREGATED OPTION EXERCISES IN 1993 AND 1993 YEAR-END OPTION VALUE

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
SHARES UNEXERCISED OPTIONS AT MONEY OPTIONS AT DECEMBER 31,
ACQUIRED DECEMBER 31, 1993 1993(1)(2)
ON VALUE ------------------------- ------------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock
Company Options....... -- $ -- 183,948 263,761 $ 0 $ 0
CWM Options........... -- -- 255,678 195,421 0 0
WTI Options........... -- -- 33,336 0 294,920 0
Rust Options.......... 5,000 2,188 0 0 0 0
WM International
Options.............. -- -- 66,667 133,333 (Pounds)51,000 (Pounds)102,000
Phillip B. Rooney
Company Options....... -- -- 138,261 200,259 $ 0 $ 0
CWM Options........... -- -- 449,108 156,025 0 0
WTI Options........... 533,336 4,284,475 0 0 0 0
Rust Options.......... -- -- 0 150,000 0 898,125
WM International
Options.............. -- -- 66,667 133,333 (Pounds)51,000 (Pounds)102,000
James E. Koenig
Company Options....... -- -- 80,395 75,880 $ 202,425 $ 0
CWM Options........... -- -- 69,890 55,615 8,483 0
WTI Options........... -- -- 240,000 0 2,123,256 0
Rust Options.......... -- -- 0 20,000 0 119,750
WM International
Options.............. -- -- 66,667 133,333 (Pounds)51,000 (Pounds)102,000
J. Steven Bergerson
Company Options....... -- -- 40,548 52,395 $ 50,883 $ 0
Thomas C. Hau
Company Options....... -- -- 38,129 31,536 $ 0 $ 0
WM International
Options.............. -- -- 13,333 26,667 (Pounds)10,200 (Pounds) 20,400
William P. Hulligan
Company Options....... -- -- 54,595 70,933 $ 0 $ 0
WTI Options........... 60,000 703,313 40,000 0 353,876 0
D. P. Payne
Company Options....... -- -- 56,968 22,346 $ 0 $ 0
CWM Options........... -- -- 87,460 148,852 0 0
Rust Options.......... -- -- 4,000 16,000 23,950 95,800
</TABLE>
- ----------
(1) Market value less exercise price, before payment of applicable income
taxes.
(2) Amounts shown for WM International options are expressed in Pounds
Sterling.

60
<PAGE>

LONG TERM INCENTIVE PLAN AWARDS

The following table sets forth certain information as to awards under the WMX
Technologies, Inc. Long Term Incentive Plan (the "LTIP") with respect to the
year ended December 31, 1993 to the persons named in the Summary Compensation
Table:

<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER
PERIOD ESTIMATED FUTURE PAYOUTS
NUMBER OF UNTIL UNDER NON-STOCK PRICE BASED
SHARES, UNITS MATURATION PLANS(3)
OR OTHER OR -----------------------------
NAME RIGHTS(1) PAYOUT(2) THRESHOLD TARGET MAXIMUM
- ---- ------------- ----------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Dean L. Buntrock....... -- 2.6 years $350,000 $700,000 $2,100,000
Phillip B. Rooney...... -- 2.6 years 250,000 500,000 1,500,000
James E. Koenig........ -- 2.6 years 100,000 200,000 600,000
J. Steven Bergerson.... -- 2.6 years 69,000 138,000 414,000
Thomas C. Hau.......... -- -- -- -- --
William P. Hulligan.... -- 2.6 years 85,000 170,000 510,000
D. P. Payne(4)......... -- 2.6 years 80,000 160,000 480,000
</TABLE>
- ----------
(1) Awards consist of the designation of target percentages of annual salary at
the end of the performance period to be paid if the Company achieves
certain performance objectives. No payout occurs unless the Company
achieves certain threshold performance objectives. Above the threshold,
payouts may be greater or less than the target percentage to the extent
that the Company's performance exceeds or fails to meet the target
objectives specified in the plan. Payouts under the LTIP are based on the
rank of the Company's total stockholder return (stock price appreciation
plus reinvested dividends) among the total stockholder returns of the
companies that comprise the Dow Jones Industrial Average over the
performance period.
(2) The performance period includes seven months of calendar year 1993 and
calendar years 1994 and 1995.
(3) At the end of the performance period, an amount equal to 50% of the
performance award, if any, is paid in cash, and the remaining 50% is deemed
to be invested in common stock of the Company. The participant is entitled
to receive the value of such deemed investment on the date three years
after the end of the performance period; provided that the participant is
an officer of the Company or one of its subsidiaries on that date.
Estimated future payouts were calculated using 1993 salaries and reflect
the total performance award without accounting for any increase or decrease
in the value of the deferred portion of the award.
(4) Mr. Payne is a participant in CWM's LTIP, which contains terms
substantially similar to the Company's LTIP. The amounts shown in the table
above as estimated future payouts for Mr. Payne are calculated pursuant to
CWM's LTIP.

PENSION AND RETIREMENT PLANS

The following table sets forth estimated annual benefits payable upon
retirement under the Company's Pension Plan and its Supplemental Executive
Retirement Plan ("SERP") to employees of the Company in specified remuneration
and years of service classifications. For purposes of the following table, it
is assumed that the seven present and former executive officers named in the
cash compensation table are eligible for the SERP benefits and that each such
officer's annualized Final Average Compensation (as defined below) will be
equal to his average annual compensation for the three years ended December 31,
1993.

61
<PAGE>

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE(2)(3)
---------------------------------------------------------
REMUNERATION(1) 15 20 25 30 35 40
--------------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000....... $ 90,000 $120,000 $150,000 $180,000 $ 210,000 $ 240,000
500,000....... 112,500 150,000 187,500 225,000 262,500 300,000
600,000....... 135,000 180,000 225,000 270,000 315,000 360,000
700,000....... 157,500 210,000 262,500 315,000 367,500 420,000
800,000....... 180,000 240,000 300,000 360,000 420,000 480,000
900,000....... 202,500 270,000 337,500 405,000 472,500 540,000
1,000,000....... 225,000 300,000 375,000 450,000 525,000 600,000
1,100,000....... 247,500 330,000 412,500 495,000 577,500 660,000
1,200,000....... 270,000 360,000 450,000 540,000 630,000 720,000
1,300,000....... 292,500 390,000 487,500 585,000 682,500 780,000
1,400,000....... 315,000 420,000 525,000 630,000 735,000 840,000
1,500,000....... 337,500 450,000 562,500 675,000 787,500 900,000
1,600,000....... 360,000 480,000 600,000 720,000 840,000 960,000
1,700,000....... 382,500 510,000 637,500 765,000 892,500 1,020,000
1,800,000....... 405,000 540,000 675,000 810,000 945,000 1,080,000
1,900,000....... 427,500 570,000 712,500 855,000 997,500 1,140,000
2,000,000....... 450,000 600,000 750,000 900,000 1,050,000 1,200,000
</TABLE>
- ----------
(1) Upon normal retirement at age 65 or after completing five years of
participation in the Company's Pension Plan, whichever is later, a
participant is entitled to a pension based on the average of the
participant's eligible compensation for the highest five consecutive years
out of his or her last 10 years of service. For this purpose, a
participant's eligible compensation generally includes all of his or her
cash compensation, subject to certain statutory maximums. The annual
benefit, payable for a participant's life only, is equal to (i) 1% of
average eligible compensation, multiplied by (ii) the number of his or her
years of service, and, for a participant retiring at age 65 with 10 years
of service, may not be less than $100 per month. Under the SERP, eligible
participants who retire following age 60 or retire with at least 30 years
of service are entitled to a monthly benefit equal to (i) 1.5% of the
participant's Final Average Compensation per year of service (Final Average
Compensation is the monthly average compensation of such participant for
the highest three consecutive calendar years out of his or her last 10
calendar years of service), reduced by (ii) the amount of such
participant's monthly benefit under the Pension Plan. Compensation used for
calculating benefits under the SERP includes only the participant's salary
and annual incentive bonus. Eligible participants are those officers who
have served in such capacities for at least 10 years at the time of
retirement. Payment of benefits under the SERP is made on the same basis as
payments under the Pension Plan.
(2) At December 31, 1993, the credited years of service for Messrs. Buntrock,
Rooney, Koenig, Bergerson, Hau, Hulligan and Payne were 38, 25, 17, 21, 3,
15 and 3, respectively.
(3) Benefits shown are computed on a straight-life annuity basis at normal
retirement age. Provision is made for payment of pensions in joint and
survivor form and in various other forms and at other times, on an
actuarially equivalent basis. Benefits are not subject to reduction for
social security benefits.

COMPENSATION OF DIRECTORS

Each member of the Board of Directors of the Company who is not an employee
or former officer of the Company currently being compensated by the Company
under a consulting agreement is paid an annual fee of $45,000. Such directors
also receive $1,000 for each meeting they attend of each committee of the Board
of which such directors are members. The Company maintains a major medical
expense insurance policy which is available to all directors of the Company.
The policy covers

62
<PAGE>

the medical and dental expenses of the directors in excess of the coverage
provided by the director's primary health insurance program.

The Company has entered into a consulting agreement and a supplemental
retirement benefit agreement with Donald F. Flynn, who is a director of the
Company and until January 1, 1991 was a Senior Vice President of the Company.
Under the consulting agreement, Mr. Flynn was paid an annual fee of $300,000
for calendar year 1993, and he will be paid an annual fee of $300,000 for
calendar year 1994. Benefits will commence under the supplemental retirement
benefit agreement upon the later of Mr. Flynn's 55th birthday or the
termination of the consulting agreement. After commencement, payments of such
benefits will be made monthly for the remainder of Mr. Flynn's life. The
monthly amount of such benefits will be equal to (i) 1.5% of Mr. Flynn's
average monthly compensation for the three consecutive calendar years in which
his aggregate salary and bonus was the highest out of his last ten calendar
years of service reduced by (ii) the amount of the monthly benefit he receives
under the Pension Plan.

OUTSIDE DIRECTORS' PLANS

The Company has two unfunded deferred compensation plans for non-employee
members of its Board of Directors. Under the Deferred Directors' Fee Plan, such
directors may make an irrevocable election to defer receipt of all or a portion
of the directors' fees payable to them until termination of their membership on
the Board of Directors. Such deferred amounts are deemed to be invested in the
Company's common stock or, at the election of the director, in the common stock
of any of the Company's majority-owned public subsidiaries, and during the
period of deferral, such deferred amounts are credited with the dividends or
stock splits that would be received had such investment actually been made.
Upon termination of the director's service, the common stock deemed reflected
by his or her deferred account is deemed to be sold, and the deemed proceeds of
such sale (or an amount equal to the amount originally deferred, if greater)
will be distributed to the director in cash, in a lump sum or installments.
Under a similar plan maintained by WTI, Messrs. Buntrock and Hulligan have
deferred fees for services rendered as directors of WTI prior to the Company's
acquisition of a majority interest of WTI in September 1990.

Under the Directors' Phantom Stock Plan, certain non-employee directors
received a one-time grant of 5,000 Phantom Shares at the time of adoption of
such plan or at the time they first became directors. Each of such Phantom
Shares was initially deemed to be equal in value to one share of the Company's
common stock at the time of award. Phantom Shares are credited to a bookkeeping
account which is adjusted to reflect stock (but not cash) dividends or stock
splits which would be received with respect to an equivalent number of shares
of the Company's common stock. Upon termination of the director's service, the
director is paid an amount in cash, in a lump sum or installments, for each
Phantom Share then credited to his or her account, equal to the then difference
between the market price of the Company's common stock at the time of award and
the average closing prices of one share of the Company's common stock on the
New York Stock Exchange Composite Tape for the most recent 10 consecutive
trading days immediately preceding such termination. In 1991, the Company's
Board of Directors terminated its authority to make additional grants under the
Directors' Phantom Stock Plan.

STOCK OPTION PLANS FOR NON-EMPLOYEE DIRECTORS

The 1992 Stock Option Plan for Non-Employee Directors (the "Directors Plan")
of the Company provides for the awards of options covering an aggregate of
150,000 shares of the Company's common stock. Each director of the Company who
is neither an officer nor full-time employee of the Company or any of its
subsidiaries, upon election or appointment to the Board of Directors, is
granted an option to purchase a total of 15,000 shares of the Company's common
stock at the fair market value of the stock at the time of grant. All options
under the Directors Plan are for a term of 10

63
<PAGE>

years from the date of grant and become exercisable with respect to 20% of the
total number of shares subject to the option six months after the date of grant
and with respect to an additional 20% at the end of each 12-month period
thereafter on a cumulative basis during the succeeding four years.

Under the Directors Plan, in the event that the Company's shares of common
stock are changed by a stock dividend, split or combination of shares, or a
merger, consolidation or reorganization with another company in which holders
of the Company's common stock receive other securities, or any other relevant
change in the capitalization of the Company, a proportionate or equitable
adjustment will be made in the number or kind of shares subject to unexercised
options or available for options and in the purchase price for shares. If an
option expires or is terminated or cancelled unexercised as to any shares, such
released shares may again be optioned (including a grant in substitution for a
cancelled option). Shares subject to options may be made available from
unissued or reacquired shares of common stock.

Options are not transferable by the optionee otherwise than by will or the
laws of descent and distribution. Options terminate if the optionee ceases to
be a director of the Company for any reason other than death, permanent
disability, resignation or retirement. In the event of termination of
employment because of death or permanent disability, the optionee or his heirs,
legatees or legal representative may exercise the option in full at any time
during its term within three months after the date of termination. In the event
of resignation or retirement, an option may be exercised by the optionee (or if
he dies within three months after such termination, by his heirs, legatees or
legal representative) at any time during its specified term prior to three
months after the date of such resignation or retirement, but only to the extent
it was exercisable at the date of such resignation or retirement.

Prior to January 1, 1992, upon election to the Board of Directors non-
employee directors received options for 10,000 shares under the Company's 1981
Stock Option Plan for Non-Employee Directors (the "1981 Plan"), the terms of
which are substantially similar to the Directors Plan. No person who is the
holder of an option granted under the 1981 Plan or the Employee Plans or who
has purchased shares upon the exercise of such an option is eligible for a
grant of options under the Directors Plan.

DIRECTORS' CHARITABLE ENDOWMENT PROGRAM

The Company maintains the Directors' Charitable Endowment Program pursuant to
which the Company has purchased life insurance policies on members of the Board
of Directors. Under the program, death benefits will be paid to the Company,
and the Company in turn will donate such death benefits (up to $100,000 for
each year of service on the Company's Board of Directors, subject to a
$1,000,000 limit) to one or more charitable organizations recommended by the
director. Directors derive no financial benefit from this program because all
charitable deductions accrue solely to the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation and Stock Option Committee of the Company's Board of
Directors consisted during 1993 of Messrs. Pedersen (Chairman), Baker and
Peterson. Mr. Pedersen is Chairman of the Board of the law firm of Pedersen &
Houpt, P. C. Mr. Baker is a member of the law firm of Baker, Worthington,
Crossley, Stansberry & Woolf. The Company has utilized, and currently
anticipates that it will continue to utilize, the services of such firms. In
1993, Mr. Buntrock served on the Compensation Committees of the Boards of
Directors of CWM, WTI and Rust. Mr. Rooney, who is an executive officer of WTI
and Rust, serves as a director of the Company.

64
<PAGE>

CERTAIN TRANSACTIONS

When an option is exercised by an optionee under the Employee Plans or
CWM's, WTI's or Rust's stock option plans at a time when the fair market value
of the underlying stock exceeds the option exercise price, the difference is
treated as ordinary income to the optionee for income tax purposes and the
company which issued the options is entitled to a deduction equal to such
amount. The Internal Revenue Service has indicated that it will disallow such
a deduction unless the employer withholds the tax payable by the optionee by
reason of such exercise. To facilitate an optionee's purchase of stock upon
exercise of such options and to assure itself of the deductions, the Company,
CWM, WTI and Rust have each adopted a policy of making available interest-free
loans, in an amount up to the equivalent of all applicable tax withholding
requirements, to optionees whose exercise of options results in ordinary
income to them in excess of $10,000. Sufficient shares are withheld from the
shares issued to the optionee to fully secure the loan. All such loans
normally are required to be repaid not later than April 15 in the year
following the year in which such loans were made, unless otherwise extended.
The due date for such loans made in 1992 and 1993 by the Company and CWM was
extended to May 31, 1993 and December 31, 1994, respectively. The largest
aggregate amounts of such loans from the Company, CWM, WTI and Rust in excess
of $60,000 pursuant to such policy which were outstanding to the directors and
executive officers of the Company since January 1, 1993 were as follows: Mr.
Dempsey-$1,420,569; Mr. Flynn-$516,785; Herbert A. Getz-$117,025; Mr.
Hulligan-$132,115; and Mr. Koenig-$309,797. The amounts of such loans
outstanding as of March 15, 1994 were as follows: Mr. Dempsey-$0; Mr. Flynn-
$176,633; Mr. Getz-$49,314; Mr. Hulligan-$0; and Mr. Koenig-$0.

The Company, CWM, WTI and Rust also each make available to optionees
interest-free loans for a period not to exceed 15 days to facilitate the
exercise of options and the sale of the underlying stock. The largest
aggregate amounts of such loans from the Company, CWM, WTI and Rust in excess
of $60,000 which were outstanding to the directors and executive officers of
the Company since January 1, 1993 were as follows: Mr. Dempsey-$787,340; Mr.
Flynn-$593,518; Mr. Getz-$195,819; Mr. Hulligan-$735,237; and Mr. Wallgren-
$235,269. All of such loans have been repaid, and no such loans are
outstanding as of March 15, 1994.

The Company has entered into an employment agreement with Phillip B. Rooney
under which Mr. Rooney will be paid a minimum annual salary of $425,000 as
President of the Company. Mr. Rooney also is eligible to receive annual
bonuses and all benefits generally available to executives of the Company. The
term of Mr. Rooney's employment under the agreement continues through August
31, 1988 and is automatically extended on each anniversary date for a period
of five years from such anniversary date unless either party gives written
notice of termination prior to the anniversary date. Upon the death or
permanent disability of Mr. Rooney, the Company will pay annually 100% of his
then present annual salary (including bonuses) for the balance of the term of
the agreement. If the Company breaches or terminates the agreement or reduces
the nature and scope of Mr. Rooney's authority and duties, it will continue to
pay him for five years unless the termination was for cause, in which case its
obligations under the agreement cease. In the event of a change in control of
the Company, Mr. Rooney may elect to terminate the agreement and receive a
lump sum payment of three times his average annual compensation (including
bonuses) over the immediately preceding five years, which amount will be
increased should an excise tax be imposed on him because of the payment. Were
a change in control of the Company to have occurred on December 31, 1993 and
if Mr. Rooney's employment with the Company were terminated as provided in the
employment agreement, it is estimated that Mr. Rooney would have been eligible
to receive $4,178,580 (assuming no increase for any excise tax). During the
term of the agreement, Mr. Rooney has agreed not to compete with the Company
or its subsidiaries.

65
<PAGE>

SECURITIES OWNERSHIP OF MANAGEMENT

OWNERSHIP OF COMPANY COMMON STOCK

The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of common stock of the Company by the directors,
the Chairman of the Board and Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of December 31, 1993,
by each of two individuals who ceased to be executive officers of the Company
during 1993 but whose reportable salary and bonus would have placed them in the
group of the four other most highly compensated executive officers of the
Company, and by all directors and persons serving as executive officers of the
Company as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
OF THE COMPANY COMMON
BENEFICIALLY STOCK OF HE
NAME OWNED(1)(2) COMPANY(2)(3)
---- ---------------- --------------
<S> <C> <C>
Dean L. Buntrock............................ 3,073,992 *
Phillip B. Rooney........................... 742,239 *
H. Jesse Arnelle............................ 6,100 *
Howard H. Baker, Jr......................... 22,000 *
Jerry E. Dempsey............................ 540,393 *
Donald F. Flynn............................. 1,012,526 *
Peter H. Huizenga........................... 8,131,130 1.7
Peer Pedersen............................... 212,381 *
James R. Peterson........................... 82,400 *
Alexander B. Trowbridge..................... 20,000 *
James E. Koenig............................. 192,786 *
J. Steven Bergerson......................... 218,820 *
Thomas C. Hau............................... 49,880 *
William P. Hulligan......................... 212,770 *
D. P. Payne................................. 71,939 *
All directors and executive officers as a
group
including persons named above (17 persons). 14,735,281 3.0
</TABLE>
- ----------
* Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over shares listed, except (i) shares
covered by options granted under the Company's stock option plans which
were exercisable within 60 days of February 1, 1994; (ii) shares held
pursuant to the Company's Profit Sharing and Savings Plan; and (iii)
Messrs. Bergerson, Buntrock, Huizenga, Koenig, Pedersen and Rooney, and all
executive officers and directors as a group (including such individuals),
who have shared voting and investment power over 850, 132,888, 224,394,
82,428, 12,381, 30,074 and 519,827 shares, respectively. Such shares shown
for Messrs. Buntrock, Huizenga, Pedersen and Rooney are held in trusts or
foundations over which such individuals share voting and investment power
with other co-trustees or directors of such trusts and foundations. Such
shares shown for Mr. Bergerson are held jointly with his spouse, and such
shares shown for Mr. Koenig are held jointly with his former spouse.
Ownership of shares shown for Messrs. Buntrock, Dempsey, Huizenga and
Rooney, and for all executive officers and directors as a group, includes
shares of common stock of the Company not held directly by them but held by
or for the benefit of (i) their spouses or (ii) their minor children and
other children residing with them, as to which they have neither investment
power nor voting power. Shares were held by or for the benefit of such
spouses or children of the following persons and the executive officers and
directors as a group at February 1, 1994, in the amounts indicated: Mr.

66
<PAGE>

Buntrock-40,314 (held by spouse); Mr. Dempsey-1,000 (held by spouse); Mr.
Huizenga-680,598 (held by spouse directly and as trustee); Mr. Rooney-
104,643 (held directly by adult child and by spouse directly and as trustee
for children); and all executive officers and directors as a group
(including such individuals)-826,872. Additionally, ownership of shares
shown for Mr. Koenig includes 1,200 shares held by him as trustee of a
family trust in which Mr. Koenig has no pecuniary interest. Each of the
above named persons and the members of such group disclaim any beneficial
ownership of such shares.
(2) The numbers and percentages of shares shown in the table above are based on
the assumption that currently outstanding stock options covering shares of
the Company's common stock which were exercisable within 60 days of
February 1, 1994 had been exercised as follows: Mr. Arnelle-6,000; Mr.
Baker-20,000; Mr. Bergerson-59,506; Mr. Buntrock-282,122; Mr. Dempsey-
120,373; Mr. Flynn-29,893; Mr. Hau-49,852; Mr. Hulligan-81,766; Mr. Koenig-
107,767; Mr. Payne-71,739; Mr. Rooney-211,521; Mr. Trowbridge-20,000; and
all executive officers and directors as a group (including such
individuals)-1,162,261. Such persons and the members of such group disclaim
any beneficial ownership of the shares subject to such options.
(3) The Company does not know of any person who, as of February 1, 1994, owned
more than five percent of the Company's outstanding common stock.

OWNERSHIP OF CWM COMMON STOCK

The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of CWM common stock by the directors, the Chairman
of the Board and Chief Executive Officer and the four other most highly
compensated executive officers of the Company as of December 31, 1993, by each
of two individuals who ceased to be executive officers of the Company during
1993 but whose reportable salary and bonus would have placed them in the group
of the four other most highly compensated executive officers of the Company,
and by all directors and persons serving as executive officers of the Company
as a group:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF CWM
COMMON STOCK PERCENT OF
BENEFICIALLY CWM COMMON
NAME OWNED(1)(2)(3) STOCK(2)(3)
---- -------------- -----------
<S> <C> <C>
Dean L. Buntrock................................. 614,033 *
Phillip B. Rooney................................ 627,105 *
H. Jesse Arnelle................................. 0 *
Howard H. Baker, Jr.............................. 0 *
Jerry E. Dempsey................................. 400,934 *
Donald F. Flynn.................................. 300,668 *
Peter H. Huizenga................................ 170,516 *
Peer Pedersen.................................... 40,000 *
James R. Peterson................................ 5,200 *
Alexander B. Trowbridge.......................... 1,000 *
James E. Koenig.................................. 89,021 *
J. Steven Bergerson.............................. 900 *
Thomas C. Hau.................................... 45 *
William P. Hulligan.............................. 10,164 *
D. P. Payne...................................... 123,530 *
All directors and executive officers as a group
including persons named above (17 persons)...... 2,383,216 1.1
</TABLE>
- ----------
*Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over CWM shares listed, except (i) CWM
shares covered by options exercisable within 60

67
<PAGE>

days of February 1, 1994; (ii) CWM shares issuable upon exchange of Liquid
Yield Option Notes due 2012 ("Exchangeable LYONs"); (iii) CWM shares held
pursuant to the Company's Profit Sharing and Savings Plan; and (iv) Messrs.
Koenig and Trowbridge, and all executive officers and directors as a group
(including such individuals), who have shared voting and investment power
over 1,203, 1,000 and 2,303 CWM shares, respectively. Such CWM shares shown
for Mr. Koenig are held jointly with his former spouse, and such CWM shares
shown for Mr. Trowbridge are held jointly with his spouse. Ownership of
shares shown for Messrs. Dempsey and Huizenga, and for all executive
officers and directors as a group, includes CWM shares not held directly by
them but held by or for the benefit of (i) their spouses or (ii) their minor
children and other children residing with them, as to which they have
neither investment power nor voting power. CWM shares were held by or for
the benefit of such spouses or children of the following persons and the
directors and executive officers as a group at February 1, 1994, in the
amounts indicated: Mr. Dempsey--2,000 (held by spouse); Mr. Huizenga--9,142
(including 345 shares issuable upon exchange of Exchangeable LYONs (held by
spouse as custodian for children)); and all executive officers and directors
as a group (including such individuals)--11,142 (including 345 shares
issuable upon exchange of Exchangeable LYONs). Each of the above named
persons and the members of such group disclaim any beneficial ownership of
such shares.
(2) Excludes an aggregate of 164,278,417 CWM shares beneficially owned by the
Company that may be deemed to be beneficially owned by Messrs. Buntrock and
Rooney because each such person may be deemed to be an affiliate of the
Company. Each such person disclaims any beneficial ownership of such CWM
shares.
(3) The numbers and percentages of CWM shares shown in the table above are
based on the assumption that currently outstanding stock options covering
CWM shares which were exercisable within 60 days of February 1, 1994 had
been exercised as follows: Mr. Buntrock--342,099; Mr. Dempsey--295,649; Mr.
Flynn--163,384; Mr. Koenig--87,818; Mr. Payne--123,530; Mr. Rooney--
515,951; and all executive officers and directors as a group (including
such individuals)--1,528,431. Such numbers and percentages also assume that
344 CWM shares were issued to Mr. Huizenga upon exchange of Exchangeable
LYONs. Such persons and the members of such group disclaim any beneficial
ownership of the CWM shares subject to such options or issuable upon
exchange of Exchangeable LYONs.

68
<PAGE>

OWNERSHIP OF WTI COMMON STOCK

The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of WTI common stock by the directors, the Chairman
of the Board and Chief Executive Officer and the four other most highly
compensated executive officers of the Company as of December 31, 1993, by each
of two individuals who ceased to be executive officers of the Company during
1993 but whose reportable salary and bonus would have placed them in the group
of the four other most highly compensated executive officers of the Company,
and by all directors and persons serving as executive officers of the Company
as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WTI COMMON PERCENT OF
STOCK BENEFICIALLY WTI COMMON
NAME OWNED(1)(2)(3) STOCK(2)(3)
---- ------------------ -----------
<S> <C> <C>
Dean L. Buntrock............................. 135,000 *
Phillip B. Rooney............................ 274,769 *
H. Jesse Arnelle............................. 0 *
Howard H. Baker, Jr.......................... 0 *
Jerry E. Dempsey............................. 34,336 *
Donald F. Flynn.............................. 80,245 *
Peter H. Huizenga............................ 0 *
Peer Pedersen................................ 0 *
James R. Peterson............................ 0 *
Alexander B. Trowbridge...................... 0 *
James E. Koenig.............................. 243,000 *
J. Steven Bergerson.......................... 0 *
Thomas C. Hau................................ 0 *
William P. Hulligan.......................... 40,000 *
D. P. Payne.................................. 0 *
All directors and executive officers as a
group
including persons named above (17 persons).. 1,047,550 *
</TABLE>
- ----------
*Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over WTI shares listed, except (i) WTI
shares covered by options exercisable within 60 days of February 1, 1994;
(ii) Mr. Koenig, and all executive officers and directors as a group
(including Mr. Koenig), who have shared voting and investment power over
3,000 and 3,200 WTI shares, respectively (such WTI shares shown for Mr.
Koenig are held jointly with his former spouse); and (iii) 10,000 WTI
shares deemed to be beneficially owned by each of Messrs. Buntrock, Flynn
and Rooney as a result of restricted units granted pursuant to WTI's
Restricted Unit Plan for Non-Employee Directors. Such persons disclaim any
beneficial ownership of the WTI shares subject to such restricted units.
(2) Excludes an aggregate of 104,621,810 WTI shares beneficially owned by the
Company that may be deemed beneficially owned by Messrs. Buntrock and
Rooney because each such person may be deemed to be an affiliate of the
Company. Excludes an aggregate of 1,025,724 WTI shares beneficially owned
by CWM that may be deemed beneficially owned by Messrs. Koenig and Payne
because each such person may be deemed to be an affiliate of CWM. Each such
person disclaims any beneficial ownership of such WTI shares.
(3) The numbers and percentages of WTI shares shown in the table above are
based on the assumption that currently outstanding stock options covering
WTI shares which were exercisable within 60 days of February 1, 1994 had
been exercised as follows: Mr. Buntrock--33,336; Mr. Dempsey--33,336; Mr.
Hulligan--40,000; Mr. Koenig--240,000 and all executive officers and
directors as a group (including such individuals)--586,672. Such persons
and the members of such group disclaim any beneficial ownership of the
shares subject to such options.

69
<PAGE>

OWNERSHIP OF RUST COMMON STOCK

The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of Rust common stock by the directors, the Chairman
of the Board and Chief Executive Officer and the four other most highly
compensated executive officers of the Company as of December 31, 1993, by each
of two individuals who ceased to be executive officers of the Company during
1993 but whose reportable salary and bonus would have placed them in the group
of the four other most highly compensated executive officers of the Company,
and by all directors and persons serving as executive officers of the Company
as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF RUST COMMON PERCENT OF
STOCK BENEFICIALLY RUST COMMON
NAME OWNED(1)(2)(3) STOCK(2)(3)
---- ------------------ -----------
<S> <C> <C>
Dean L. Buntrock............................. 15,000 *
Phillip B. Rooney............................ 60,010 *
H. Jesse Arnelle............................. 0 *
Howard H. Baker, Jr.......................... 0 *
Jerry E. Dempsey............................. 0 *
Donald F. Flynn.............................. 0 *
Peter H. Huizenga............................ 0 *
Peer Pedersen................................ 0 *
James R. Peterson............................ 0 *
Alexander B. Trowbridge...................... 0 *
James E. Koenig.............................. 10,168 *
J. Steven Bergerson.......................... 0 *
Thomas C. Hau................................ 0 *
William P. Hulligan.......................... 0 *
D. P. Payne.................................. 4,000 *
All directors and executive officers as a
group
including persons named above (17 persons).. 96,246 *
</TABLE>
- ----------
* Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over Rust shares listed, except (i) Rust
shares covered by options exercisable within 60 days of February 1, 1994;
and (ii) Mr. Koenig, and all executive officers and directors as a group
(including Mr. Koenig), who have shared voting and investment power over
3,500 and 3,900 Rust shares, respectively. Such Rust shares shown for Mr.
Koenig are held jointly with his former spouse.
(2) Excludes an aggregate of 79,898,091 Rust shares beneficially owned by the
Company that may be deemed beneficially owned by Messrs. Buntrock and
Rooney because each such person may be deemed to be an affiliate of the
Company. Excludes an aggregate of 46,682,031 Rust shares beneficially owned
by CWM that may be deemed beneficially owned by Messrs. Koenig and Payne
because each such person may be deemed to be an affiliate of CWM, and
excludes an aggregate of 33,216,060 Rust shares beneficially owned by WTI
that may be deemed beneficially owned by Mr. Koenig because he may be
deemed to be an affiliate of WTI. Each such person disclaims any beneficial
ownership of such Rust shares.
(3) The numbers and percentages of Rust shares shown in the table above are
based on the assumption that currently outstanding stock options covering
Rust shares which were exercisable within 60 days of February 1, 1994 had
been exercised as follows: Mr. Koenig--6,668; Mr. Payne--4,000; Mr.
Rooney--50,010; and all executive officers and directors as a group
(including such individuals)--67,346. Such persons and members of such
group disclaim any beneficial ownership of the shares subject to such
options.

70
<PAGE>

OWNERSHIP OF WM INTERNATIONAL ORDINARY SHARES

The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of WM International ordinary shares (including
ordinary shares represented by American Depositary Shares) by the directors,
the Chairman of the Board and Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of December 31, 1993,
by each of two individuals who ceased to be executive officers of the Company
during 1993 but whose reportable salary and bonus would have placed them in the
group of the four other most highly compensated executive officers of the
Company, and by all directors and persons serving as executive officers of the
Company as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WM INTERNATIONAL PERCENT OF
ORDINARY SHARES WM INTERNATIONAL
BENEFICIALLY ORDINARY
NAME OWNED(1)(2)(3) SHARES (2)(3)
---- ------------------- ----------------
<S> <C> <C>
Dean L. Buntrock....................... 156,534 *
Phillip B. Rooney...................... 153,334 *
H. Jesse Arnelle....................... 0 *
Howard H. Baker, Jr.................... 1,000 *
Jerry E. Dempsey....................... 2,000 *
Donald F. Flynn........................ 333,334 *
Peter H. Huizenga...................... 550,000 *
Peer Pedersen.......................... 10,000 *
James R. Peterson...................... 0 *
Alexander B. Trowbridge................ 600 *
James E. Koenig........................ 143,334 *
J. Steven Bergerson.................... 0 *
Thomas C. Hau.......................... 26,667 *
William P. Hulligan.................... 20,000 *
D. P. Payne............................ 1,000 *
All directors and executive officers as
a group including persons named above
(17 persons).......................... 1,425,470 *
</TABLE>
- ----------
*Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over WM International shares listed, except
(i) WM International shares covered by options exercisable within 60 days
of February 1, 1994; and (ii) Messrs. Koenig, Payne and Trowbridge, and all
executive officers and directors as a group (including such individuals),
who have shared voting and investment power over 8,000, 1,000, 600 and
10,600 WM International shares, respectively. Such WM International shares
shown for Mr. Koenig are held jointly with his former spouse, and such WM
International shares shown for Messrs. Payne and Trowbridge are held
jointly with their respective spouses. Ownership of shares shown for
Messrs. Buntrock, Dempsey, Huizenga and Koenig includes WM International
shares not held directly by them but held by or for the benefit of (i)
their spouses or (ii) their minor children, as to which they have neither
investment power nor voting power. WM International shares were held by or
for the benefit of such spouses or children of the following persons at
February 1, 1994 in the amounts indicated: Mr. Buntrock--3,000 (held by
spouse); Mr Dempsey--2,000 (held by spouse), Mr. Huizenga--30,000 (held by
spouse); and Mr. Koenig--2,000 (held by child). Each of the above named
persons disclaim any beneficial ownership of such shares.
(2) Excludes an aggregate of 300,000,000 WM International shares beneficially
owned by the Company that may be deemed beneficially owned by Messrs.
Buntrock and Rooney because each such person may be deemed to be an
affiliate of the Company. Excludes an aggregate of 90,000,000 WM
International shares beneficially owned by WTI and Rust that may be deemed

71
<PAGE>

beneficially owned by Mr. Koenig because he may be deemed to be an affiliate
of WTI and Rust. Each such person disclaims any beneficial ownership of such
WM International shares.
(3) The numbers and percentages of WM International shares shown in the table
above are based on the assumption that currently outstanding stock options
covering WM International shares which were exercisable within 60 days of
February 1, 1994 had been exercised as follows: Messrs. Buntrock, Flynn,
Koenig and Rooney--133,334 each; Mr. Hau--26,667; and all executive
officers and directors as a group (including such individuals)--586,670.
Such persons and members of such group disclaim any beneficial ownership of
the shares subject to such options.

LEGAL PROCEEDINGS

Some of the businesses in which the Company is engaged are intrinsically
connected with the protection of the environment and the potential for the
unintended or unpermitted discharge of materials into the environment. In the
ordinary course of conducting its business activities, the Company becomes
involved in judicial and administrative proceedings involving governmental
authorities at the federal, state and local level including, in certain
instances, proceedings instituted by citizens or local governmental authorities
seeking to overturn governmental action where governmental officials or
agencies are named as defendants together with the Company or one or more of
its subsidiaries, or both. In the majority of the situations where proceedings
are commenced by governmental authorities, the matters involved relate to
alleged technical violations of licenses or permits pursuant to which the
Company operates or is seeking to operate or laws or regulations to which its
operations are subject or are the result of different interpretations of the
applicable requirements. From time to time the Company pays fines or penalties
in environmental proceedings relating primarily to waste treatment, storage or
disposal facilities. At December 31, 1993, CWM and its subsidiaries (other than
Rust) were involved in three governmental proceedings and WTI and Rust were
each involved in one such proceeding where it is believed that sanctions
involved in each instance may exceed $100,000.

The Company or certain of its subsidiaries have been identified as
potentially responsible parties in a number of governmental investigations and
actions relating to waste disposal facilities which may be subject to remedial
action under Superfund. The majority of these proceedings are based on
allegations that certain subsidiaries of the Company (or their predecessors)
transported hazardous substances to the facilities in question, often prior to
acquisition of such subsidiaries by the Company.
Such proceedings arising under Superfund typically involve numerous waste
generators and other waste transportation and disposal companies and seek to
allocate or recover costs associated with site investigation and cleanup, which
costs could be substantial.

As of December 31, 1993, the Company or its subsidiaries had been notified
that they are potentially responsible parties in connection with 104 locations
listed on the Superfund National Priority List ("NPL"). Of the 104 NPL sites at
which claims have been made against the Company, 19 are sites which the Company
has come to own over time. All of the NPL sites owned by the Company were
initially sited by others as land disposal facilities. At each of the 19 owned
facilities, the Company is working in conjunction with the government to
characterize or to remediate identified site problems. In addition, at these 19
facilities the Company has either agreed with other legally liable parties on
an arrangement for sharing the costs of remediation or is pursuing resolution
of an allocation formula. The 85 NPL sites at which claims have been made
against the Company and which are not owned by the Company are at different
procedural stages under Superfund. At some, the Company's liability is well
defined as a consequence of a governmental decision as to the appropriate
remedy and an agreement among liable parties as to the share each will pay for
implementing that remedy. At others, where no remedy has been selected or the
liable parties have been unable to agree on an appropriate allocation, the
Company's future costs are substantially uncertain.

72
<PAGE>

The Company periodically reviews its role, if any, with respect to each such
location, giving consideration to the nature of the Company's alleged
connection to the location (e.g., owner, operator, transporter or generator),
the extent of the Company's alleged connection to the location (e.g., amount
and nature of waste hauled to the location, number of years of site operation
by the Company or other relevant factors), the accuracy and strength of
evidence connecting the Company to the location, the number, connection and
financial ability of other named and unnamed potentially responsible parties at
the location, and the nature and estimated cost of the likely remedy. Where the
Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Sites subject to state action under state laws similar
to the federal Superfund statute are treated by the Company in the same way as
NPL sites.

The Company's estimates are subsequently revised, as deemed necessary, as
additional information becomes available. While the Company does not anticipate
that the amount of any such revisions will have a material adverse effect on
the Company's operations or financial condition, the measurement of
environmental liabilities is inherently difficult and the possibility remains
that technological, regulatory or enforcement developments, the results of
environmental studies, or other factors could materially alter this expectation
at any time. Such matters could have a material adverse impact on financial
condition or earnings for one or more fiscal quarters or years.

The Company and certain of its subsidiaries are currently involved in civil
litigation and governmental proceedings relating to the conduct of their
business. While the outcome of any particular lawsuit or governmental
investigation cannot be predicted with certainty, the Company believes that
these matters will not have a material adverse effect on its results of
operations or financial condition.

On September 17, 1993, H. Peter Kriendler, a stockholder of CWM, filed suit
in the U. S. District Court for the Northern District of Illinois, Eastern
Division, alleging that CWM had violated Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Two
similar suits were filed in that Court on September 30, 1993 and October 13,
1993, and on October 29, 1993 the Court and the parties agreed to consolidate
them with the first action. These lawsuits allege that CWM violated federal
securities laws by engaging in misrepresentations of, or failures to disclose,
material information concerning primarily (i) alleged overvaluation of certain
of CWM's assets, principally its incineration facilities, (ii) alleged
overstatement of CWM's earnings for 1992 and the first quarter of 1993 due to
failure to write down the value of such assets and other matters and (iii) the
alleged existence of certain adverse hazardous waste treatment and disposal
industry conditions and trends. The lawsuits also allege, among other things,
liability on the part of the Company for the above-described alleged
violations. The lawsuits seek to represent a class of persons consisting of all
purchasers of CWM's common stock during the period of February 4, 1993 through
September 3, 1993 and to recover compensation for damages allegedly suffered by
such class due to the above-described alleged violations. The Company and CWM
believe that they have meritorious defenses to these lawsuits and intend to
contest the lawsuits vigorously.

The Company has brought suit against a substantial number of insurance
carriers in an action entitled Waste Management, Inc. et al. v. The Admiral
Insurance Company, et al. pending in the Superior court in Hudson County, New
Jersey. In this action the Company is seeking a declaratory judgment that
environmental liabilities asserted against the Company or its subsidiaries, or
that may

73
<PAGE>

be asserted in the future, are covered by insurance policies purchased by the
Company or its subsidiaries. The Company is also seeking to recover defense
costs and other damages incurred as a result of the assertion of environmental
liabilities against the Company or its subsidiaries for events occurring over
at least the last 25 years at approximately 130 sites and the defendant
insurance carriers' denial of coverage of such liabilities. The defendants have
denied liability to the Company and have asserted various defenses, including
that environmental liabilities of the type for which the Company is seeking
relief are not risks covered by the insurance policies in question. The
defendants have indicated that they intend to contest these claims vigorously.
Discovery is currently underway in this proceeding and is expected to continue
for several years. No trial date has been set. The Company is unable at this
time to predict the outcome of this proceeding. No amounts have been recognized
in the Company's financial statements for any potential recoveries.

DESCRIPTION OF CAPITAL STOCK

The following summary of the common stock and preferred stock of the Company
is qualified by reference to the Company's Restated Certificate of
Incorporation, as amended, a copy of which has been incorporated by reference
as an exhibit to the registration statement of which this prospectus is a part.

The Company's authorized capital stock consists of 1,500,000,000 shares of
common stock, $1 par value per share, and 50,000,000 shares of preferred stock,
$1 par value per share. Subject to any prior right of the preferred stock, if
and when issued, the holders of shares of common stock of the Company will be
entitled to receive such dividends as the Board of Directors of the Company in
its discretion may from time to time declare out of funds legally available
therefor and, upon liquidation, would be entitled to share ratably in any
assets of the Company legally available for distribution to holders of shares
of common stock. Each outstanding share of common stock is entitled to one vote
on any matter submitted to a vote of stockholders, with no cumulative voting
rights. There are no conversion, redemption or sinking fund provisions
applicable to the common stock. All of the issued and outstanding shares of the
Company are, and the shares of common stock offered by the Company hereby, when
issued, will be, fully paid and nonassessable. Neither the preferred stock nor
the common stock has any preemptive rights.

The shares of preferred stock may be issued in connection with future
acquisitions or other proper corporate purposes, although there are no present
plans or arrangements for their issuance, other than any issuance which may
occur pursuant to the exercise of preferred stock purchase rights described
below. The Board of Directors is authorized without further stockholder
authorization, to create and issue the preferred stock in series and to
establish the voting powers, designations, preferences and relative
participating, optional or other special rights and any qualifications,
limitations, or restrictions thereof relating to any such series. In January
1987, the Board of Directors designated a series of preferred stock consisting
of 2,500,000 shares of Series A Preferred Stock, $1 par value (the "Preferred
Stock"), issuable in connection with the dividend of preferred stock purchase
rights described below.

The Company's Restated Certificate of Incorporation contains provisions which
prevent "greenmail" payments by the Company, establish safeguards in connection
with certain business transactions, provide that only designated officers and
the Board of Directors may call special meetings of stockholders, require
stockholders to take action only at a formal meeting and provide for a
classified Board of Directors. In addition, the Restated Certificate of
Incorporation requires the concurrence of the holders of shares representing at
least 80% of the outstanding shares of common stock for the alteration,
amendment or repeal of, or the adoption of any provision inconsistent with, any
of the preceding provisions.

74
<PAGE>

In January 1987, the Company declared a dividend of one right (a "Right") for
each outstanding share of common stock, $1 par value, of the Company. Each
Right entitles the registered holder to purchase from the Company one four-
hundredth of a share of Preferred Stock at a price of $68.75 (the "Exercise
Price"), subject to adjustment. The description and terms of the Rights are set
forth in the Rights Agreement (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent.

The Rights are evidenced by and transferred with and only with the common
stock until the earlier to occur of (i) ten days following a public
announcement that a person or group, including any affiliates or associates of
such person or group, acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the Company's outstanding voting stock (such person
or group being hereinafter known as an "Acquiring Person") or (ii) ten days
following the commencement of, or first public announcement of the intent to
commence (which intent to commence is not withdrawn within five business days),
a tender offer or exchange offer if, upon consummation thereof, the offeror
would be the beneficial owner of 30% or more of the Company's outstanding
voting stock (the earlier of such dates being called the "Distribution Date").
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights will be mailed to holders of record of the common stock
as of the close of business on the Distribution Date. The Rights are not
exercisable until the Distribution Date and will expire on February 6, 1997,
unless earlier redeemed by the Company as described below. The Exercise Price
payable per Right, and the number of Rights or the number of shares of
Preferred Stock or other securities or property issuable upon exercise of the
Rights are subject to adjustment in certain events from time to time to prevent
dilution.

Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will have a minimum preferential
quarterly dividend rate of $5 per share, but will be entitled to not less than
an aggregate dividend of 400 times the dividend declared on the common stock.
In the event of liquidation, the holders of the Preferred Stock will receive a
preferential liquidation payment equal to the greater of $100 or 400 times the
payment made per share of common stock. Each share of Preferred Stock will have
400 votes, voting together with the common stock. In addition, the Preferred
Stock contains class vote provisions paralleling the class vote requirements
for the Company's common stock which prevent "greenmail" payments by the
Company and establish safeguards in connection with certain business
transactions. Finally, in the event of any merger, consolidation or other
transaction in which common stock is exchanged, each share of Preferred Stock
will be entitled to receive 400 times the amount received per share of common
stock. These rights are protected by customary antidilution provisions. Because
of the nature of the Preferred Stock's dividend, liquidation and voting rights,
the value of one four-hundredth interest in a share of Preferred Stock
purchasable upon exercise of each Right is intended to approximate the value of
one share of common stock.

In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its assets or earning power are sold
in one transaction or a series of transactions, proper provision shall be made
so that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current Exercise Price of the Right, that
number of shares of common stock of the acquiring company (or, in the event
there is more than one acquiring company, the acquiring company receiving the
greatest portion of the assets or earning power transferred) which at the time
of such transaction would have a market value of two times the Exercise Price
of the Right. In the event that the Company is the surviving corporation in a
merger and the common stock is not changed or exchanged, or in the event that
an Acquiring Person engages in one of a number of self-dealing transactions
specified in the Rights Agreement, proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, upon exercise
thereof at the then current Exercise Price, that number of shares of Preferred
Stock having a market value of two times the Exercise Price of the Right. Upon
the occurrence of any of the transactions

75
<PAGE>

referred to in this paragraph, any Rights that are or were at any time
beneficially owned by an Acquiring Person engaging in any of such transactions
or receiving the benefits thereof on or after the time the Acquiring Person
became such shall become void.

With certain exceptions, no adjustment in the Exercise Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Exercise Price. No fractional shares need be issued (other than fractions which
are integral multiples of one one-hundredth of a share of Preferred Stock) and,
in lieu thereof, an adjustment in cash may be made based on the market price of
the Preferred Stock on the last trading date prior to the date of exercise.

At any time prior to ten days following a public announcement that an
Acquiring Person exists, the Company may redeem the Rights in whole, but not in
part, at a price of $.0125 per Right (the "Redemption Price"). Immediately upon
the action of the Board of Directors of the Company electing to redeem the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.

Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company as a result of the ownership of the Right,
including, without limitation, the right to vote or to receive dividends.

A copy of the Rights Agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part. A copy of the Rights
Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement.

The transfer agent and registrar for the common stock is Harris Trust and
Savings Bank, Chicago, Illinois.

The Company furnishes its stockholders quarterly reports (including unaudited
summary financial information) and annual reports (including audited financial
statements).

EXPERTS

The audited financial statements included in this prospectus and the
schedules incorporated by reference elsewhere in the registration statement
have been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their reports with respect thereto, and are included or
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports. Reference is made to
said report, which includes an explanatory paragraph with respect to the
Company's change in its methods of accounting for income taxes and
postretirement benefits other than pensions, effective January 1, 1992, as
discussed in Notes 1 and 9 to the Company's Consolidated Financial Statements.

ADDITIONAL INFORMATION

The Company has filed a registration statement with the Commission under the
1933 Act with respect to the securities offered hereby. This prospectus does
not contain all the information included in the registration statement, certain
portions of which have been omitted pursuant to the rules and regulations of
the Commission. The registration statement, including the exhibits filed
therewith, may be examined at the office of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, or copies thereof may be obtained upon request to
the Commission on payment of the charge stipulated by the Commission.

Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete and reference is made
to the copy of such contract or other document as is filed as an exhibit to the
registration statement of which this prospectus forms a part or as incorporated
by reference as an exhibit thereto, each such statement being qualified in all
respects by such reference.

76
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
WMX Technologies, Inc. and Subsidiaries--
Report of independent public accountants................................. F-2
Consolidated statements of income for the three years ended December 31,
1993.................................................................... F-3
Consolidated balance sheets as of December 31, 1992 and 1993............. F-4
Consolidated statements of cash flows for the three years ended December
31, 1993................................................................ F-6
Consolidated statements of stockholders' equity for the three years ended
December 31, 1993....................................................... F-7
Notes to consolidated financial statements............................... F-8
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and the Board of Directors of WMX Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of WMX
Technologies, Inc. (formerly Waste Management, Inc.) (a Delaware corporation)
and Subsidiaries as of December 31, 1992 and 1993, and the related consolidated
statements of income, cash flows, and stockholders' equity for each of the
three years in the period ended December 31, 1993. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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
all material respects, the financial position of WMX Technologies, Inc. and
Subsidiaries as of December 31, 1992 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.

As discussed in notes 1 and 9 to the consolidated financial statements,
effective January 1, 1992, the Company changed its methods of accounting for
income taxes and postretirement benefits other than pensions.

ARTHUR ANDERSEN & CO.

Chicago, Illinois,
February 16, 1994

F-2
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(000'S OMITTED EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue.................................... $7,550,914 $8,661,027 $9,135,577
---------- ---------- ----------
Operating Expenses........................ $5,165,319 $5,945,762 $6,346,914
Special Charges........................... 296,000 219,900 550,000
Selling and Administrative Expenses....... 910,935 1,048,047 1,128,202
Goodwill Amortization..................... 61,682 77,144 94,391
Gains from Stock Transactions of Subsidi-
aries.................................... (38,046) (263,489) (15,109)
Gains from Exchange of Exchangeable LYONs. (15,470) (191) --
Interest Expense.......................... 168,558 223,052 300,878
Interest Income........................... (55,800) (57,693) (41,432)
Minority Interest......................... 111,496 156,824 57,986
Sundry Income, Net........................ (81,659) (86,741) (95,424)
---------- ---------- ----------
Income Before Income Taxes and Cumulative
Effect of
Accounting Changes....................... $1,027,899 $1,398,412 $ 809,171
Provision For Income Taxes................ 421,576 477,237 356,395
---------- ---------- ----------
Income Before Cumulative Effect of Ac-
counting Changes......................... $ 606,323 $ 921,175 $ 452,776
Cumulative Effect of Accounting Changes,
Net of Minority Interest in Portion Re-
lating to Subsidiaries--
Postretirement Benefits, Net of Tax..... -- (36,579) --
Income Taxes............................ -- (34,560) --
---------- ---------- ----------
Net Income................................. $ 606,323 $ 850,036 $ 452,776
========== ========== ==========
Average Shares and Equivalent Shares Out-
standing.................................. 493,167 493,948 485,374
========== ========== ==========
Earnings (Loss) Per Common and Common
Equivalent Share:
Before Cumulative Effect of Accounting
Changes.................................. $1.23 $1.86 $0.93
Cumulative Effect of Accounting Changes--
Postretirement Benefits.................. -- (.07) --
Income Taxes............................. -- (.07) --
---------- ---------- ----------
Net Income................................. $1.23 $1.72 $0.93
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 1992 AND 1993
($000'S OMITTED EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1992 1993
----------- -----------
<S> <C> <C>
Current Assets
Cash................................................ $ 6,473 $ --
Short-term investments.............................. 61,599 126,382
Accounts receivable, less reserve of $57,493 in 1992
and $63,146 in 1993................................ 1,574,798 1,762,091
Employee receivables................................ 16,396 9,670
Parts and supplies.................................. 126,594 148,022
Costs and estimated earnings in excess of billings
on uncompleted
contracts.......................................... 379,841 339,364
Refundable income taxes............................. 35,084 54,001
Prepaid expenses.................................... 307,587 337,990
----------- -----------
Total Current Assets........................... $ 2,508,372 $ 2,777,520
----------- -----------
Property and Equipment, at cost
Land, primarily disposal sites...................... $ 3,048,834 $ 3,625,412
Buildings........................................... 1,101,827 1,223,139
Vehicles and equipment.............................. 6,141,322 6,856,044
Leasehold improvements.............................. 90,692 100,262
----------- -----------
$10,382,675 $11,804,857
Less--Accumulated depreciation and amortization..... (2,624,472) (3,035,398)
----------- -----------
Total Property and Equipment, Net.............. $ 7,758,203 $ 8,769,459
----------- -----------
Other Assets
Intangible assets relating to acquired businesses,
net................................................ $ 2,779,616 $ 3,461,331
Funds held by trustees for acquisition or construc-
tion............................................... 153,803 116,949
Sundry, including other investments................. 914,186 1,139,217
----------- -----------
Total Other Assets............................. $ 3,847,605 $ 4,717,497
----------- -----------
Total Assets................................. $14,114,180 $16,264,476
=========== ===========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-4
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 1992 AND 1993
($000'S OMITTED EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1992 1993
----------- -----------
<S> <C> <C>
Current Liabilities
Portion of long-term debt payable within one year... $ 597,674 $ 754,491
Accounts payable.................................... 724,418 818,501
Accrued expenses.................................... 852,436 863,474
Unearned revenue.................................... 205,044 241,096
----------- -----------
Total Current Liabilities...................... $ 2,379,572 $ 2,677,562
----------- -----------
Deferred Items
Income taxes........................................ $ 375,316 $ 448,706
Investment credit................................... 30,606 27,006
Other............................................... 1,417,643 1,457,607
----------- -----------
Total Deferred Items........................... $ 1,823,565 $ 1,933,319
----------- -----------
Long-Term Debt, less portion payable within one year. $ 4,312,511 $ 6,145,584
----------- -----------
Minority Interest in Subsidiaries.................... $ 1,278,887 $ 1,348,559
----------- -----------
Commitments and Contingencies........................ $ $
----------- -----------
Stockholders' Equity
Preferred stock, $1 par value (issuable in series);
50,000,000 shares
authorized; none outstanding during the years...... $ -- $ --
Common stock, $1 par value; 1,500,000,000 shares au-
thorized; 496,203,373 shares issued in 1992 and
496,216,829 in 1993................................ 496,203 496,217
Additional paid-in capital.......................... 708,296 668,470
Cumulative translation adjustment................... (166,566) (245,587)
Retained earnings................................... 3,521,190 3,693,108
----------- -----------
$ 4,559,123 $ 4,612,208
Less--Treasury stock; 6,026,274 shares in 1992 and
12,763,884 in 1993, at cost.................... 204,490 425,097
1988 Employee Stock Ownership Plan................ 34,988 27,659
----------- -----------
Total Stockholders' Equity..................... $ 4,319,645 $ 4,159,452
----------- -----------
Total Liabilities and Stockholders' Equity $14,114,180 $16,264,476
=========== ===========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-5
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
INCREASE (DECREASE) IN CASH
($000'S OMITTED)

<TABLE>
<CAPTION>
1991 1992 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Income before cumulative effect of ac-
counting changes...................... $ 606,323 $ 921,175 $ 452,776
Adjustments to reconcile income before
cumulative effect of accounting
changes to net cash provided by oper-
ating activities:
Depreciation and amortization........ 592,788 714,069 796,691
Deferred income taxes and investment
credit.............................. 97,132 233,791 278,088
Interest on Liquid Yield Option Notes
(LYONs)............................. 34,804 36,424 37,162
Gain on sale of property and equip-
ment, and of investments by subsidi-
ary................................. (4,486) (4,659) (14,061)
Contribution to 1988 Employee Stock
Ownership Plan...................... 3,231 5,551 7,329
Gains from stock transactions of sub-
sidiaries........................... (38,046) (263,489) (15,109)
Gains from exchange of Exchangeable
LYONs............................... (15,470) (191) --
Special charges, net of tax and mi-
nority interest..................... 181,112 116,375 285,300
Changes in assets and liabilities, net
of effects of acquired companies:
Receivables.......................... (100,023) (89,467) (112,489)
Other current assets................. (14,588) (350,315) 41,038
Sundry other assets.................. (96,269) 39,862 (29,445)
Accounts payable..................... 10,057 23,155 33,328
Accrued expenses and unearned reve-
nue................................. (26,253) 10,750 (301,039)
Deferred other items................. 33,853 (201,530) (147,321)
Minority interest in subsidiaries.... 211,480 79,140 84,037
----------- ----------- -----------
Net cash provided by operating activi-
ties................................... $ 1,475,645 $ 1,270,641 $ 1,396,285
----------- ----------- -----------
Cash flows from investing activities:
Short-term investments................. $ 18,996 $ 72,913 $ (56,891)
Capital expenditures................... (1,409,780) (1,632,665) (1,719,178)
Proceeds from sale of property and
equipment, and of investments by sub-
sidiary............................... 66,991 95,942 134,169
Cost of acquisitions, net of cash ac-
quired................................ (459,812) (599,045) (551,901)
Other investments...................... (140,387) 66,414 (185,256)
Purchase of Brand stock related to Rust
merger................................ -- -- (129,524)
----------- ----------- -----------
Net cash used for investing activities.. $(1,923,992) $(1,996,441) $(2,508,581)
----------- ----------- -----------
Cash flows from financing activities:
Cash dividends paid.................... $ (206,427) $ (246,050) $ (280,858)
Proceeds from issuance of indebtedness. 943,511 1,274,549 3,407,759
Repayments of indebtedness............. (261,808) (807,682) (1,712,794)
Proceeds from exercise of stock op-
tions, net............................ 27,507 49,391 12,018
Proceeds from Waste Management Interna-
tional plc initial public offering.... -- 700,032 --
Stock repurchases by Company and sub-
sidiaries............................. (45,950) (339,966) (315,302)
Preferred stock redemption by subsidi-
ary................................... -- -- (5,000)
----------- ----------- -----------
Net cash provided by financing activi-
ties................................... $ 456,833 $ 630,274 $ 1,105,823
----------- ----------- -----------
Net increase (decrease) in cash......... $ 8,486 $ (95,526) $ (6,473)
Cash at beginning of year............... 93,513 101,999 6,473
----------- ----------- -----------
Cash at end of year..................... $ 101,999 $ 6,473 $ --
=========== =========== ===========
The Company considers cash to include
currency on hand and demand deposits
with banks.
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest, net of amounts capitalized.. $ 133,754 $ 186,628 $ 263,716
Income taxes, net of refunds received. $ 355,556 $ 246,922 $ 331,803
Supplemental schedule of noncash invest-
ing and financing activities:
LYONs converted into common stock of
the Company........................... $ 2,753 $ 2,390 $ 3,329
Exchangeable LYONs exchanged into com-
mon stock of CWM owned by the
Company............................... $ 21,976 $ 340 $ --
Liabilities assumed in acquisitions of
businesses............................ $ 346,388 $ 405,558 $ 673,129
Fair market value of Company and sub-
sidiary stock issued for acquired
businesses............................ $ 168,331 $ 178,885 $ 64,500
</TABLE>
The accompanying notes are an integral part of these statements.

F-6
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE YEARS ENDED DECEMBER 31, 1993
($000'S OMITTED)

<TABLE>
<CAPTION>
1988
CUMULATIVE EMPLOYEE
ADDITIONAL TRANSLATION STOCK
COMMON PAID-IN ADJUSTMENT RETAINED TREASURY OWNERSHIP
STOCK CAPITAL GAIN/(LOSS) EARNINGS STOCK PLAN
-------- ---------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1991................... $488,665 $675,963 $ 34,851 $2,517,308 $ -- $43,770
-------- -------- --------- ---------- -------- -------
Net income for the
year.................. $ -- $ -- $ -- $ 606,323 $ -- $ --
Cash dividends......... -- -- -- (206,427) -- --
Stock issued upon exer-
cise of stock options. 1,371 12,813 -- -- (12,277) --
Treasury stock received
in connection with ex-
ercise of stock op-
tions................. -- -- -- -- 11,821 --
Contribution to 1988
ESOP (238,384 shares). -- -- -- -- -- (3,231)
Treasury stock received
as settlement for
claims................ -- -- -- -- 456 --
Common stock issued
upon conversion of
LYONs................. 226 2,527 -- -- -- --
Common stock issued for
acquisitions.......... 3,359 30,371 -- -- -- --
Tax benefit of non-
qualified stock op-
tions exercised....... -- 12,867 -- -- -- --
Transfer of equity in-
terests among con-
trolled subsidiaries.. -- (12,190) -- -- -- --
Cumulative translation
adjustment of foreign
currency statements... -- -- 5,612 -- -- --
-------- -------- --------- ---------- -------- -------
Balance, December 31,
1991................... $493,621 $722,351 $ 40,463 $2,917,204 $ -- $40,539
-------- -------- --------- ---------- -------- -------
Net income for the
year.................. $ -- $ -- $ -- $ 850,036 $ -- $ --
Cash dividends......... -- -- -- (246,050) -- --
Stock repurchase
(7,588,300 shares).... -- -- -- -- 257,950 --
Stock issued upon exer-
cise of stock options. 809 (19,000) -- -- (62,432) --
Treasury stock received
in connection with ex-
ercise of stock op-
tions................. -- -- -- -- 15,153 --
Contribution to 1988
ESOP (303,226 shares). -- -- -- -- -- (5,551)
Treasury stock received
as settlement for
claims................ -- -- -- -- 1,717 --
Stock issued upon con-
version of LYONs...... 44 (2,200) -- -- (4,546) --
Stock issued for acqui-
sitions............... 1,729 6,462 -- -- (3,352) --
Tax benefit of non-
qualified stock op-
tions exercised....... -- 20,303 -- -- -- --
Transfer of equity in-
terests among con-
trolled subsidiaries.. -- (19,620) -- -- -- --
Cumulative translation
adjustment of foreign
currency statements... -- -- (207,029) -- -- --
-------- -------- --------- ---------- -------- -------
Balance, December 31,
1992................... $496,203 $708,296 $(166,566) $3,521,190 $204,490 $34,988
-------- -------- --------- ---------- -------- -------
Net income for the
year.................. $ -- $ -- $ -- $ 452,776 $ -- $ --
Cash dividends......... -- -- -- (280,858) -- --
Stock repurchase
(8,443,400 shares).... -- -- -- -- 278,363 --
Stock issued upon exer-
cise of stock options. 14 (8,749) -- -- (18,285) --
Treasury stock received
in connection with ex-
ercise of stock op-
tions................. -- -- -- -- 357 --
Contribution to 1988
ESOP (362,036 shares). -- -- -- -- -- (7,329)
Treasury stock received
as settlement for
claims................ -- -- -- -- 3,429 --
Stock issued upon con-
version of LYONs...... -- (4,553) -- -- (7,882) --
Stock issued for acqui-
sitions............... -- (4,655) -- -- (35,375) --
Tax benefit of non-
qualified stock op-
tions exercised....... -- 2,825 -- -- -- --
Transfer of equity in-
terests among con-
trolled subsidiaries.. -- (24,694) -- -- -- --
Cumulative translation
adjustment of foreign
currency statements... -- -- (79,021) -- -- --
-------- -------- --------- ---------- -------- -------
Balance, December 31,
1993................... $496,217 $668,470 $(245,587) $3,693,108 $425,097 $27,659
======== ======== ========= ========== ======== =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-7
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(000'S OMITTED IN ALL TABLES EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NOTE 1. SUMMARY OF ACCOUNTING POLICIES

Revenue Recognition

The Company recognizes revenue from long-term engineering and construction
contracts on the percentage-of-completion basis with losses recognized in full
when identified. Other revenues are recognized when the services are performed.

Principles of Consolidation

The Company's financial statements are prepared on a consolidated basis and
include the Company and its majority-owned subsidiaries. All significant
intercompany transactions and balances are eliminated.

Foreign Currency

Certain foreign subsidiaries' assets and liabilities are translated at the
rates of exchange at the balance sheet date while income statement accounts are
translated at the average exchange rates in effect during the period. The
resulting translation adjustments are charged or credited directly to
stockholders' equity. Foreign exchange gains (losses) (net of related income
taxes and minority interest) of ($2,634,000), $5,100,000 and ($529,000) are
included in the Consolidated Statements of Income for 1991, 1992 and 1993,
respectively.

Income Taxes

Effective January 1, 1992, the Company and its principal subsidiaries changed
their method of accounting for income taxes as a result of the early adoption
of Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). The 1992 cumulative effect of this change, after minority
interest in the portion relating to Wheelabrator Technologies Inc. ("WTI"), was
a charge of $34,560,000, or $.07 per share. The cumulative charge resulted
primarily from increasing deferred taxes previously discounted, a method not
permitted under FAS 109, valuation allowances against deferred tax assets and
adjustments for rate differences. The proforma effect of this accounting change
on previously reported 1991 and, except for the one-time charge, on 1992
earnings was not significant.

In accordance with FAS 109, the Company recorded an increase in the tax
provision of $14,000,000 in the third quarter of 1993 for the impact of the
Omnibus Budget Reconciliation Act of 1993 on deferred taxes.

The following tables set forth income before income taxes, showing domestic
and international sources, and the income tax provision indicating amounts
relating to the respective governmental entities shown, for the years
indicated:

Income Before Income Taxes

<TABLE>
<CAPTION>
1991 1992 1993
---------- ---------- --------
<S> <C> <C> <C>
Domestic...................................... $ 879,807 $1,214,342 $637,636
International................................. 148,092 184,070 171,535
---------- ---------- --------
$1,027,899 $1,398,412 $809,171
========== ========== ========
</TABLE>

F-8
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
1991 1992 1993
-------- -------- --------
<S> <C> <C> <C>
Current tax expense
U. S. Federal............................... $276,988 $159,795 $137,966
State and local............................. 58,701 46,208 30,715
Foreign..................................... 49,730 53,376 36,532
-------- -------- --------
Total current................................. $385,419 $259,379 $205,213
-------- -------- --------
Deferred tax expense
U. S. Federal............................... $ 21,262 $152,742 $ 92,171
State and local............................. 3,318 38,319 30,284
Foreign..................................... 15,494 30,799 32,327
-------- -------- --------
Total deferred................................ $ 40,074 $221,860 $154,782
-------- -------- --------
U. S. Federal benefit from amortization of de-
ferred investment credit..................... $ (3,917) $ (4,002) $ (3,600)
-------- -------- --------
Total provision............................... $421,576 $477,237 $356,395
======== ======== ========

The Federal statutory tax rate in 1991, 1992 and 1993 is reconciled to the
effective tax rate as follows:

Federal statutory rate........................ 34.0% 34.0% 35.0%
State and local taxes, net of Federal benefit. 4.0 4.0 4.9
Amortization of deferred investment credit.... (0.4) (0.3) (0.4)
Amortization of intangible assets relating to
acquired businesses.......................... 2.0 1.9 4.1
Federal tax credits........................... (0.8) (0.6) (1.4)
Non-taxable gains on issuance of stock by sub-
sidiaries.................................... (1.3) (6.4) (0.7)
Non-deductible minority interest.............. 4.0 3.4 2.9
Adjustment of deferred income taxes due to Om-
nibus Budget Reconciliation Act.............. -- -- 1.7
Other, net.................................... (0.5) (1.9) (2.1)
-------- -------- --------
Effective tax rate............................ 41.0% 34.1% 44.0%
======== ======== ========
</TABLE>

The Company uses the "deferral method" of accounting for investment credit,
whereby the credit is recorded in income over the composite life of the related
equipment.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-9
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

Deferred income taxes result from the recognition, in different periods, of
revenue and expense for tax and financial statement purposes. For 1991, the
primary components were the tax over financial statement depreciation and the
future tax benefits of the special charges discussed in Note 11. The adoption
of FAS 109 required a change in the method of accounting for income taxes to an
asset and liability approach. The primary components that comprise the 1992 and
1993 deferred tax (assets) liabilities are as follows:

<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
Reserves not deductible until paid................... $ (484,778) $ (538,062)
Deferred revenue..................................... (28,352) (27,714)
Net operating losses and tax credit carryforwards.... (20,176) (43,028)
Other................................................ (172,272) (104,059)
Valuation allowance.................................. 35,637 29,890
---------- ----------
Subtotal........................................... $ (669,941) $ (682,973)
---------- ----------
Property and equipment............................... $ 845,420 $ 948,024
Other................................................ 199,837 183,655
---------- ----------
Subtotal........................................... $1,045,257 $1,131,679
---------- ----------
Net deferred tax liabilities......................... $ 375,316 $ 448,706
========== ==========
</TABLE>

The Company's subsidiaries have approximately $21 million of alternative
minimum tax credit carryforwards that may be carried forward indefinitely.
Also, various subsidiaries have operating loss carryforwards of approximately
$225 million with expiration dates through the year 2008. Valuation allowances
have been established for uncertainties in realizing the tax benefit of certain
net loss carryforwards and tax benefits attributed to the basis differences in
certain assets. In 1993, the valuation allowance decreased as a result of
changes in legislation regarding tax amortization of intangibles, partially
offset by increases due to uncertainty of certain state and foreign tax
benefits.

The Company has concluded that development and expansion of its foreign
business requires that the undistributed earnings of its foreign subsidiaries
be reinvested indefinitely outside the United States. If the reinvested
earnings were to be remitted, the U.S. income taxes due under current tax law
would not be material.

The gain of $38,046,000 before minority interest in 1991 resulting from the
issuance of shares by Chemical Waste Management, Inc. ("CWM"), WTI and The
Brand Companies Inc. ("Brand"), the gain of $240,000,000 before minority
interest in 1992 resulting from the initial public offering of 75,000,000
ordinary shares of Waste Management International plc ("WM International") and
the gain of $15,109,000 before minority interest recognized by CWM and WTI in
connection with shares issued by Rust International Inc. ("Rust") as part of
the Brand merger in 1993 were non-taxable events. The Company intends to
control its investments in CWM and WTI, and the Company, WTI and CWM intend to
control their investments in WM International and Rust to maintain the non-
taxable status of the gains; therefore, deferred income taxes have not been
provided.

Short-Term Investments

The Company's short-term investments primarily consist of securities having
an investment grade of not less than A and a term to maturity generally of less
than one year, and because the investments are always held to maturity, are
carried at cost. Such investments include, but are not limited to, tax-exempt
securities, certificates of deposit and Euro-dollar time deposits.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-10
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The Financial Accounting Standards Board ("FASB") has issued Statement No.
115--Accounting for Certain Investments in Debt and Equity Securities ("FAS
115"). The Company and its subsidiaries will be required to adopt this
statement in the first quarter of 1994. Other than the short-term investments
discussed above, which are accounted for in compliance with FAS 115, the
Company does not have and does not contemplate acquiring significant
investments of the type covered in FAS 115.

Cell Development Cost

Preparation costs for individual secure land disposal cells are recorded as
prepaid expenses and amortized as the airspace is filled. Significant costs
capitalized for such cells include excavation and grading costs, costs relating
to the design and construction of liner systems and gas collection and leachate
collection systems. Unamortized prepaid cell construction cost at December 31,
1992 and 1993, was $124,638,000 and $146,985,000, respectively.

Environmental Liabilities

The Company provides for estimated closure and post-closure monitoring costs
over the operating life of disposal sites as airspace is consumed. Such costs
for U.S. landfills are estimated based on the technical requirements of the
Subtitle C and D Regulations of the U.S. Environmental Protection Agency or the
applicable state requirements, whichever are stricter, and the proposed air
emissions standards under the Clean Air Act, and include such items as final
cap and cover on the site, methane gas and leachate management, and groundwater
monitoring. Substantially the same standards are applied to estimate costs for
foreign sites, even though current regulations in some foreign jurisdictions
are less strict. The accrual for closure and post-closure costs relates to
expenditures to be incurred after a facility ceases to accept waste; to the
extent similar costs are incurred during the active life of the site, they are
expensed as incurred.

See Note 4 for additional information.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-11
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

Contracts in Process

Information with respect to contracts in process at December 31, 1992 and
1993 is as follows:

<TABLE>
<CAPTION>
1992 1993
----------- -----------
<S> <C> <C>
Costs and estimated earnings on uncompleted con-
tracts........................................... $ 3,924,029 $ 3,741,386
Less: Billings on uncompleted contracts........... (3,586,419) (3,474,386)
----------- -----------
Total contracts in process...................... $ 337,610 $ 267,000
=========== ===========

Contracts in process are included in the Consolidated Balance Sheets under the
following captions:

Costs and estimated earnings in excess of billings
on uncompleted contracts......................... $ 379,841 $ 339,364
Billings in excess of costs and estimated earnings
on uncompleted contracts (included in unearned
revenue)......................................... (42,231) (72,364)
----------- -----------
Total contracts in process...................... $ 337,610 $ 267,000
=========== ===========
</TABLE>

All contracts in process are expected to be billed and collected within five
years.

Accounts receivable includes retainage which has been billed, but which is
not due pursuant to contract provisions until completion. Such retainage at
December 31, 1993, is $44,828,000, including $7,601,000 that is expected to be
collected after one year. At December 31, 1992, retainage was $26,897,000.

Property and Equipment

Property and equipment (including major repairs and improvements) are
capitalized and stated at cost. Items of an ordinary maintenance or repair
nature are charged directly to operations. Disposal sites are carried at cost
and to the extent this exceeds end use realizable value, such excess is
amortized over the estimated life of the disposal site. Disposal site
improvement costs are capitalized and charged to operations over the shorter of
the estimated usable life of the site or the improvement.

Depreciation and Amortization

The cost, less estimated salvage value, of property and equipment is
depreciated over the estimated useful lives on the straight-line method as
follows: buildings--10 to 40 years; vehicles and equipment--3 to 20 years;
leasehold improvements--over the life of the applicable lease.

Intangible Assets

Intangible assets relating to acquired businesses as of December 31, 1992 and
1993, consist primarily of the cost of purchased businesses in excess of market
value of net assets acquired ("goodwill"). Such goodwill is being amortized on
a straight-line basis over a period of forty years. The accumulated
amortization of intangible assets amounted to $284,508,000 and $364,251,000 as
of December 31, 1992 and 1993, respectively.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-12
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

On an ongoing basis, the Company measures realizability of goodwill by the
ability of the acquired business to generate current and expected future
operating income in excess of annual amortization. If such realizability is in
doubt, an adjustment is made to reduce the carrying value of the goodwill. Such
adjustments have not historically been material to the Company's financial
statements.

Capitalized Interest

Interest has been capitalized on significant landfills, trash-to-energy
plants and other projects under development in accordance with Statement of
Financial Accounting Standards No. 34. Amounts capitalized and netted against
Interest Expense in the Consolidated Statements of Income were $111,383,000 in
1991, $87,897,000 in 1992 and $100,591,000 in 1993.

Gain Recognition on Sale of Subsidiaries' Stock

It is the Company's policy to record in income gains from the sale or other
issuance of previously unissued stock by its subsidiaries.

Restatement

Certain amounts in previously issued financial statements have been restated
to conform to 1993 classifications.

NOTE 2. BUSINESS COMBINATIONS

All significant businesses acquired through December 31, 1993, and treated as
poolings of interests have been included retroactively in the financial
statements as if the companies had operated as one entity since inception. All
businesses acquired through December 31, 1993, and accounted for as purchases
are included in the financial statements from the date of acquisition.

During 1991, the Company and its principal subsidiaries acquired 94
businesses for $459,812,000 in cash (net of cash acquired) and notes, 3,359,041
shares of the Company's common stock, 1,429,490 shares of Brand common stock
and 3,162,476 shares of WTI common stock. In addition, in March 1991, CWM
exercised an option to acquire an additional 660,806 shares of Brand. Thirty-
two of the aforementioned 1991 acquisitions, which otherwise met pooling of
interests criteria, were not significant in the aggregate and, consequently,
prior period financial statements were not restated. The remaining acquisitions
were accounted for as purchases.

During 1992, the Company and its principal subsidiaries acquired 118
businesses for $599,045,000 in cash (net of cash acquired) and notes, 1,826,450
shares of the Company's common stock and 6,886,594 shares of common stock of
WTI. Twenty-seven of the aforementioned 1992 acquisitions, which otherwise met
pooling of interests criteria, were not significant in the aggregate and,
consequently, prior period financial statements were not restated. The
remaining acquisitions were accounted for as purchases.

During 1993, the Company and its principal subsidiaries acquired 97
businesses for $551,901,000 in cash (net of cash acquired) and notes, 1,046,801
shares of the Company's common stock and 1,635,471 shares of common stock of
WTI. These acquisitions were accounted for as purchases.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-13
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The following summarizes the pro forma effect of businesses acquired and
accounted for as purchases (including those which otherwise met pooling of
interests criteria but were not significant in the aggregate) in 1991, 1992 and
1993 as if they had been acquired as of January 1 of the preceding year
(Unaudited):

<TABLE>
<CAPTION>
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue as reported..................... $7,550,914 $8,661,027 $9,135,577
Revenue of purchased businesses for pe-
riod prior to acquisition as stated
above.................................. 892,947 1,000,812 290,613
---------- ---------- ----------
Pro forma revenue....................... $8,443,861 $9,661,839 $9,426,190
========== ========== ==========
Income before cumulative effect of ac-
counting changes as reported........... $ 606,323 $ 921,175 $ 452,776
Net income of purchased businesses for
period prior to acquisition as stated
above.................................. 25,391 30,685 3,429
Adjustment for interest and goodwill am-
ortization............................. (52,752) (59,229) (13,417)
---------- ---------- ----------
Pro forma income before cumulative ef-
fect of
accounting changes..................... $ 578,962 $ 892,631 $ 442,788
========== ========== ==========
Earnings per share before cumulative ef-
fect of
accounting changes as reported......... $ 1.23 $ 1.86 $ 0.93
Effect of purchased businesses prior to
acquisition as stated above............ (.06) (.05) (.02)
---------- ---------- ----------
Pro forma earnings per share before cu-
mulative effect of accounting changes.. $ 1.17 $ 1.81 $ 0.91
========== ========== ==========
</TABLE>

In August 1991, CWM and WTI each acquired a 15% fully-diluted equity interest
in WM International, a corporation which holds substantially all of the waste
management and related service business interests of the Company outside of
North America. WTI acquired the shares by issuing approximately 12,000,000
shares of its common stock to the Company. CWM financed the purchase by issuing
a 10-year, convertible subordinated debenture to the Company in the amount of
$168,974,000 with interest payable at 6% per year. The debenture was converted,
in accordance with its terms, into 8,046,380 shares of CWM common stock on
December 31, 1992.

In April 1992, WM International sold 75,000,000 newly issued ordinary shares,
representing 20% of the post-offering outstanding shares of that company, to
the public. Following the offering, the Company, CWM and WTI owned 56%, 12% and
12%, respectively, of the outstanding shares of WM International.

Rust was formed on January 1, 1993, through the contribution by CWM of its
hazardous substance remediation services business, its approximately 56%
ownership in Brand and its 12% ownership interest in WM International, together
with certain other assets, and the contribution by WTI of its engineering and
construction and environment and infrastructure consulting businesses, its
London-based international engineering unit and certain other assets. On May 7,
1993, Brand was merged into a subsidiary of Rust. As of December 31, 1993, Rust
was owned approximately 56% by CWM and approximately 40% by WTI, with the
remaining shares held by the public.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-14
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTE 3. DEBT

The details relating to debt (including capitalized leases, which are not
material) as of December 31, 1992 and 1993, are as follows:

<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
Commercial Paper, interest 3.19% to 3.58%............. $ 837,733 $1,376,197
Tailored Rate ESOP Notes, interest 2.68% to 2.87%..... 50,000 50,000
Debentures, interest 8 3/4%, due 2018................. 250,000 249,085
Notes, interest 4 5/8% to 7.875%, due 1995-2011....... 1,074,500 2,200,000
Step-Up Notes, interest 4.1% through September 30,
1994 and 7.7% thereafter, due 2002................... 300,000 300,000
Solid waste disposal revenue bonds, interest 6% to
9.75%, due
1994-2013............................................ 284,720 280,685
Installment loans and notes payable, interest 6% to
9.4%, due
1994-2020............................................ 555,439 978,691
Project Debt, interest 2.5% to 13 7/8%, due 1994-2010. 894,970 810,612
Other long-term borrowings............................ 37,129 35,616
Liquid Yield Option Notes, zero coupon--subordinated,
interest 9%, due 2001................................ 13,618 11,334
Liquid Yield Option Notes, zero coupon--subordinated,
interest 6%, due 2012................................ 409,216 426,005
Liquid Yield Option Notes, zero coupon--subordinated,
interest 6%, due 2010................................ 202,860 181,850
---------- ----------
Total debt............................................ $4,910,185 $6,900,075
Less--current portion................................. 597,674 754,491
---------- ----------
Long-term portion..................................... $4,312,511 $6,145,584
========== ==========
</TABLE>

The long-term debt as of December 31, 1993, is due as follows:

<TABLE>
<S> <C>
Second year................................................... $ 982,945
Third year.................................................... 2,557,849
Fourth year................................................... 667,204
Fifth year.................................................... 148,138
Sixth year and thereafter..................................... 1,789,448
----------
$6,145,584
==========
</TABLE>

Certain of the Company's borrowings are redeemable at the option of the
holders prior to maturity. Such amounts and certain other borrowings which
would otherwise be classified as current liabilities have been classified as
long-term debt because the Company intends to refinance such borrowings on a
long-term basis and has available $1,805,000,000 of committed long-term
borrowing facilities. The committed facilities provide for unsecured long-term
loans at interest rates of prime, Federal funds to Federal funds plus one-half
percent, money market rate, or LIBOR plus one-quarter to one-half percent and
commitment fees of 10 to 12.5 basis points per annum. There are no compensating
balance requirements or any informal arrangements in connection with loans
which would be made under these facilities.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-15
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

In April 1985, the Company issued and sold Convertible Liquid Yield Option
Notes ("Convertible LYONs") in the principal amount at maturity of $840,000,000
due in 2001. The Convertible LYONs, which are zero-coupon notes subordinated to
all existing and future senior debt, were originally priced to yield 9% if held
to maturity, are convertible into 34.88 shares of the Company's common stock
per Convertible LYON, subject to adjustment, and are redeemable at the option
of the individual noteholders. During 1992 and 1993, 5,054 and 6,582
Convertible LYONs were converted into 176,257 and 229,561 shares of the
Company's common stock, respectively. As of December 31, 1993, there were
21,088 Convertible LYONs outstanding with a maturity value amounting to
$21,088,000.

In November 1988, the Company issued and sold $1,620,000,000 principal amount
at maturity of Exchangeable Liquid Yield Option Notes ("Exchangeable LYONs")
due in April 2012. The Exchangeable LYONs, which are zero-coupon notes
subordinated to all existing and future senior debt, will yield 6% if held to
maturity and are exchangeable at the option of the holder at any time, at the
rate per Exchangeable LYON of 17.218 shares of CWM common stock owned by the
Company, subject to adjustment. The Exchangeable LYONs are redeemable by the
Company at a price equal to the issue price plus accrued original issue
discount to the redemption date. The Exchangeable LYONs will be purchased for
cash by the Company at the option of the holder on June 30, 1994, and on each
June 30 thereafter prior to maturity, at a price determined in the manner
described above. As of December 31, 1993, there were 1,255,395 Exchangeable
LYONs outstanding with a maturity value amounting to $1,255,395,000.

In August 1990, CWM issued and sold Convertible Liquid Yield Option Notes
("CWM LYONs") in the principal amount at maturity of $575,000,000, due in
August 2010. The CWM LYONs, which are zero-coupon notes subordinated to all
existing and future senior debt of CWM, will yield 6% if held to maturity, and
are convertible at the option of the holder at any time into 11.676 shares of
CWM common stock per CWM LYON, subject to adjustment. The CWM Convertible LYONs
are redeemable by CWM at a price equal to the issue price plus accrued original
issue discount to the redemption date. The CWM Convertible LYONs will be
purchased for cash by CWM at the option of the holder on June 30, 1994, and on
each June 30 thereafter prior to maturity, at a price determined in the manner
described above. As of December 31, 1993, there were 485,800 CWM LYONs
outstanding with a maturity value of $485,800,000.

In July 1992, the Company issued $250,000,000 of 6.375% Notes due July 1,
1997 at a price of 98.85%. In October 1992, the Company issued $300,000,000 of
Step-Up Notes, at par, due October 1, 2002, the holders of which may elect to
have the Step-Up Notes or any portion thereof repaid on October 1, 1994, at
100% of their principal amount together with accrued interest. The interest
rate on the Step-Up Notes is 4.1% through September 30, 1994, increasing to
7.7% through maturity. Neither of these two issues of debt securities is
redeemable at the option of the Company prior to maturity.

In December 1992, the Michigan Strategic Fund issued and sold $35,000,000 of
6 5/8% Limited Obligation Revenue Bonds (Waste Management, Inc. Project),
Series 1992, maturing December 1, 2012, and loaned the proceeds to the Company.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-16
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

In January 1993, the Company issued $250,000,000 of 4 7/8% Notes due July 1,
1995, at a price of 99.75%. In April 1993, the Company issued $200,000,000 of 4
5/8% Notes due April 14, 1996 at a price of 99.516%. In June 1993, the Company
issued $300,000,000 of 4 7/8% Notes due June 15, 1996 at a price of 99.628%. In
December 1993, the Company issued $500,000,000 of 6 3/8% Notes due December 1,
2003 at a price of 99.875%. These Notes are not redeemable prior to maturity.

In November 1993, the Michigan Strategic Fund issued and sold $35,000,000 of
6% Limited Obligation Revenue Bonds (WMX Technologies, Inc. Project), Series
1993, maturing December 1, 2013, and loaned the proceeds to the Company. The
unexpended bond proceeds held by the trustee at December 31, 1993, amounted to
$18,336,000 and were invested in Euro-dollar time deposits.

The Company intends to refinance portions of the long-term debt due in 1995
and thereafter and, if necessary, other borrowings which are redeemable at the
option of the holders prior to maturity, using long-term facilities which are
available at the time.

Subsequent to December 31, 1993, WM International entered into interest rate
swap agreements, interest rate collars, forward interest rate agreements,
interest rate swap options and arrears swap agreements to reduce the impact of
changes in interest rates on its underlying investments and variable rate
borrowings. These agreements have been made with several commercial banks in
five currencies and have a total notional principal amount of $295,000,000.
While WM International is exposed to market risk to the extent that receipts
and payments under interest rate agreements are affected by market interest
rates, any such fluctuations will be offset by changes to interest receipts or
payments made on variable rate investments and borrowings. WM International is
also exposed to credit loss in the event of nonperformance by the other parties
to the interest rate swap agreements. However, WM International does not
anticipate nonperformance by the counterparties. The termination dates for
these agreements range from 1994 to 1999.

NOTE 4. ENVIRONMENTAL COSTS AND LIABILITIES

The Company is in the environmental services industry and the majority of its
operations are involved with the protection of the environment. As a result, a
material portion of consolidated revenue, operating expenses and capital
expenditures is directly or indirectly related to such matters. While the
Company is faced, in the normal course of its business, with the need to expend
funds for environmental protection and remediation, it does not expect such
expenditures to have a material adverse effect on its financial condition or
results of operations because its business is based upon compliance with
environmental laws and regulations and its services are priced accordingly.

The Company provides for closure and post-closure monitoring costs over the
operating life of disposal sites as airspace is consumed. The accrual for
closure and post-closure costs relates to expenditures to be incurred after a
facility ceases to accept waste. Similar costs incurred during the active life
of a site are charged to expense as incurred.

The Company also provides for its estimated share of the cost of necessary
remediation at sites which it owns or operated or to which it transported
waste. Cost estimates are based upon

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-17
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
management's judgement and experience in remediating such sites for the Company
as well as for unrelated parties, information available from regulatory
agencies as to costs of remediation, and the number, financial resources and
relative degree of responsibility of other PRP's who are jointly and severably
liable for remediation of a specific site, as well as the typical allocation of
costs among PRP's. These estimates sometimes are a range of possible outcomes.
In such cases, the Company provides for the amount within the range which
constitutes its best estimate. If no amount within the range appears to be a
better estimate than any other amount, then the Company provides for the
minimum amount within the range in accordance with Statement of Financial
Accounting Standards No. 5 ("FAS 5"). The Company believes that it is
"reasonably possible", as that term is defined in FAS 5 ("more than remote but
less than likely"), that its potential liability at the high end of such ranges
would be approximately $150 million higher in the aggregate than the current
estimate as of December 31, 1993.

As of December 31, the Company had recorded liabilities for closure and post-
closure monitoring and environmental remediation costs as follows:

<TABLE>
<CAPTION>
1992 1993
-------- --------
<S> <C> <C>
Current portion, included in Accrued Expenses.............. $157,931 $130,863
Non-current portion, included in Other Deferred Items...... 718,991 745,637
-------- --------
Total.................................................... $876,922 $876,500
======== ========
</TABLE>

The reduction in the current portion from 1992 to 1993 is primarily
attributable to the settlement of a portion of the Company's liability at a
Superfund site.

Where the Company believes that both the amount of a particular environmental
liability and the timing of the payments are reliably determinable, the cost in
current dollars is inflated at 3% until expected time of payment and then
discounted to present value at 7%. Had the Company not discounted any portion
of its liability, the amount recorded would have been increased by
approximately $154 million at December 31, 1993.

The Company's active landfill sites have estimated remaining lives ranging
from one to over 100 years based upon current site plans and anticipated annual
volumes of waste. During this remaining site life, the Company will provide for
an additional $937,000,000 of closure and post-closure costs, including
accretion for the discount recognized to date.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-18
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The Company has filed several lawsuits against approximately 160 insurance
carriers seeking reimbursement for past and future remedial, defense and tort
claims costs at approximately 130 sites. The past cost portion of these claims
currently aggregates in excess of $200 million. The carriers have denied
coverage and are vigorously defending these claims. No amounts have been
recognized in the financial statements for any potential insurance recoveries.

NOTE 5. STOCK OPTIONS

The Company has four stock option plans currently in effect: the 1992 Stock
Option Plan (the "1992 Plan"), the 1992 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan"), the Replacement Stock Option Plan (the
"Replacement Plan") and the 1990 ServiceShares Stock Option Plan (the
"ServiceShares Plan").

Options granted under the 1992 Plan and the ServiceShares Plan are generally
exercisable in equal cumulative installments over a three- to five-year period
beginning one year after the date of grant. Options granted under the
Directors' Plan become exercisable in five equal annual installments beginning
six months after the date of grant.

Under the 1992 Plan, non-qualified stock options may be granted at a price
equal to 100% of the market value on the date of grant, for a term of not less
than five years nor more than ten years. Twelve million five hundred thousand
shares of the Company's common stock were initially reserved for issuance under
this plan.

Pursuant to the Directors' Plan, 150,000 shares of the Company's common stock
were initially reserved. Options for 15,000 shares are to be granted, at the
time of election to the board, to each person who is not an officer or full-
time employee of the Company or any of its subsidiaries.

Under the Replacement Plan, the Compensation and Stock Option Committee of
the Board of Directors ("Committee") may, until August 1, 1997, grant options
for a total of not more than 1,000,000 shares of the Company's common stock to
eligible individuals in connection with acquisitions. The purchase price and
exercise dates of options granted under the Replacement Plan are determined by
the Committee. It is anticipated that the options will be granted by the
Committee on economic terms which will match the acquired companies' options
being replaced.

Under the ServiceShares Plan, 5,000,000 shares of the Company's common stock
have been reserved for issuance upon exercise of non-qualified options. Options
may be granted at a price equal to 100% of the market value on the date of
grant, for a term of not less than five years nor more than ten years.
Generally, full-time employees who are not represented by a bargaining unit,
have three years of service with the Company and are not covered by another
Company option plan are eligible to participate in this plan.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-19
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The status of the plans (including predecessor plans under which options
remain outstanding) during the three years ended December 31, 1993, was as
follows:

<TABLE>
<CAPTION>
SHARES OPTION PRICE
------ --------------
<S> <C> <C>
January 1, 1991--
Outstanding............................................. 8,063 $ .76--$41.63
Available for future grant.............................. 12,136 --
1991-- --
Granted.................................................. 2,497 $33.44--$39.50
Exercised................................................ 1,677 $ .76--$35.44
Cancelled................................................ 240 $ 3.20--$41.63
Reduction in shares available under the Replacement Plan. 3,000 --
------
December 31, 1991--
Outstanding............................................. 8,643 $ 3.20--$41.63
Available for future grant.............................. 6,879 --
------
1992--
Granted.................................................. 4,003 $33.44--$41.80
Exercised................................................ 2,562 $ 3.20--$35.44
Cancelled................................................ 301 $ 7.95--$41.80
Shares cancelled upon expiration of the 1982 Plan........ 4,154 --
Additional shares reserved for future grant under 1992
plans................................................... 15,799 --
------
December 31, 1992--
Outstanding............................................. 9,783 $ 3.46--$41.80
Available for future grant.............................. 14,822 --
------
1993--
Granted.................................................. 2,957 $30.90--$38.45
Exercised................................................ 551 $ 3.46--$35.44
Cancelled--
1982 Plan............................................... 179 $18.84--$41.80
Current plans........................................... 328 $30.69--$41.80
------
December 31, 1993--
Outstanding............................................. 11,682 $ 4.33--$41.80
Available for future grant.............................. 12,193 --
======
</TABLE>

Options were exercisable with respect to 5,584,959 shares at December 31,
1993.

NOTE 6. CAPITAL STOCK

The Board of Directors has the authority to create and issue up to 50,000,000
shares of $1 par preferred stock at such time or times, in such series, with
such designations, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof as it
may determine. No shares of the preferred stock have been issued.

Pursuant to a plan adopted by the Company in January 1987, each share of the
Company's common stock carries the right (referred to herein as a "Right") to
purchase one four-hundredth (subject to adjustment) of a share of Series A
Preferred Stock, $1.00 par value ("Preferred Stock"),

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-20
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
at a price of $68.75 (subject to adjustment). The Rights are tradeable only
with the Company's common stock until they become exercisable. The Rights
become exercisable ten days after the earlier of a public announcement that a
person has acquired 20% or more of the Company's outstanding voting stock or a
person's commencement or announcement of a tender or exchange offer that would
result in his owning 30% or more of the Company's outstanding voting stock. The
Rights are subject to redemption by the Company at a price of $.0125 per Right,
subject to certain limitations, and will expire on February 6, 1997. The
Preferred Stock carries certain preferential dividend and liquidation rights
and certain voting and other rights.

If the Company or its assets are acquired in certain merger or other
transactions after a person acquires Company voting stock or commences or
announces an offer as provided above, each holder of a Right may purchase at
the exercise price of the Right, shares of common stock of the acquiring
company having a market value of two times the exercise price of the Right. If
the Company is the survivor in certain merger transactions or in the event of
certain other "self-dealing" transactions, each holder of a Right may purchase
at the exercise price of the Right, shares of Preferred Stock having a market
value of twice the exercise price of the Right. Rights held by an acquiring
person become void upon the occurrence of such events.

NOTE 7. EARNINGS PER SHARE

Earnings per share are computed on the basis of the weighted average number
of common and common equivalent shares outstanding during each year. Common
stock equivalents relate to the impact of options outstanding under the
Company's stock option plans.

The following table reconciles the number of common shares shown as
outstanding in the Consolidated Balance Sheets with the number of common shares
used in computing earnings per share:

<TABLE>
<CAPTION>
1992 1993
------- -------
<S> <C> <C>
Common shares issued, net of treasury shares, per
Consolidated Balance Sheets................................ 490,177 483,453
Effect of shares issuable under stock options after applying
the "treasury stock" method................................ 1,414 489
Effect of using weighted average common shares outstanding
during the year............................................ 2,357 1,432
------- -------
Common shares used in computing earnings per share.......... 493,948 485,374
======= =======
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-21
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTE 8. COMMITMENTS AND CONTINGENCIES

The Company leases several of its operating and office facilities for various
terms. Rents charged to costs and expenses in the Consolidated Statements of
Income amounted to $189,112,000 in 1991, $195,092,000 in 1992 and $181,168,000
in 1993. These amounts include rents under long-term leases, short-term
cancellable leases and rents charged as a percentage of revenue, but are
exclusive of financing leases capitalized for accounting purposes.

The long-term rental obligations as of December 31, 1993, are due as follows:

<TABLE>
<S> <C>
First year.................................................... $ 145,394
Second year................................................... 137,569
Third year.................................................... 123,750
Fourth year................................................... 115,143
Fifth year.................................................... 109,779
Sixth through tenth years..................................... 498,937
Eleventh year and thereafter.................................. 468,860
----------
$1,599,432
==========
</TABLE>

Subsequent to December 31, 1993, WMX sold put options on 4.3 million shares
of its common stock. The put options give the holders the right at maturity to
require the Company to repurchase a share of its common stock at specified
prices, which range from $24.375 to $24.841 per share. The options mature in
November 1994. The proceeds ($8,747,000) from the sale of the put options were
credited to additional paid-in capital.

Insurance coverage in large amounts for non-sudden and accidental
Environmental Impairment Liability ("EIL") risk continues to be unavailable at
a cost which management believes is reasonable. The coverage terms and cost of
the limited EIL insurance which is available to the Company are such that
insurance has not been purchased. To satisfy existing government requirements,
the Company has secured EIL insurance coverage in amounts believed to be in
compliance with Federal and state law. The Company must either prefund or
reimburse the carrier for losses incurred under coverage of this policy. In the
event the Company continues to not purchase risk-transfer EIL insurance
coverage, the Company's net income could be adversely affected in the future if
uninsured losses were to be incurred.

The Company has issued or is a party to approximately 2,700 bank letters of
credit, performance bonds and other guarantees. Such financial instruments
(averaging approximately $552,000 each), including those provided for
affiliates and not otherwise recorded, are given in the ordinary course of
business. Because virtually no claims have been made against these financial
instruments in the past, management does not expect these guarantees will have
a material adverse effect on the consolidated financial position or results of
operations of the Company.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-22
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEP for further proceedings on an uncontested permit condition that requires
the Lisbon facility to dispose of only Connecticut waste. WTI intends to pursue
aggressively favorable resolution of this permit remand through appropriate
judicial and regulatory procedures. Although WTI believes that the probability
of an adverse determination as a result of the judge's remand order is remote,
such a determination could result in the permanent termination of facility
construction. Through a guarantee agreement with the Eastern Connecticut
Resource Recovery Authority, the facility's owner, such consequences might
require WTI to redeem the debt issued to finance the facility. In the unlikely
event this were to occur, the resulting payments could have a material adverse
impact on WTI's financial condition and results of operations. The impact on
the Company's consolidated financial condition and results of operations,
although adverse, would not likely be material.

In the ordinary course of conducting its business, the Company becomes
involved in lawsuits, administrative proceedings and governmental
investigations, including antitrust and environmental matters. Some of these
proceedings may result in fines, penalties or judgements being assessed against
the Company which, from time to time, may have an impact on earnings for a
particular quarter or year. The Company does not believe that these
proceedings, individually or in the aggregate, are material to its business or
financial condition.

The Company is a party to a lawsuit that alleges that it and CWM violated
Federal securities laws by engaging in misrepresentations of, or failing to
disclose, material information concerning primarily the overvaluation of
certain of CWM's assets, principally its incineration facilities, and the
existence of certain adverse hazardous waste treatment and disposal industry
conditions and trends, and overstating CWM's and the Company's earnings for
1992 and the first quarter of 1993 due to failure to write down the value of
such assets and other matters. The suit seeks to represent a class of persons
and to recover compensation for damages suffered by those purchasing CWM's
common stock during the period February 4 through September 3, 1993, due to the
previously described alleged violations. The Company and CWM believe that they
have meritorious defenses to this lawsuit and intend to contest it vigorously.

NOTE 9. BENEFIT PLANS

The Company has a defined benefit pension plan for all eligible non-union
domestic employees. The benefits are based on the employee's years of service
and compensation during the highest five consecutive years out of the last ten
years of employment. The Company's funding policy is to contribute annually the
minimum required amount determined by its actuaries.

Net periodic pension expense for 1991, 1992 and 1993, based on discount rates
of 10.0%, 8.75% and 8.5%, respectively, included the following components:

<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Service cost--benefits earned during the year.... $12,070 $12,922 $10,785
Interest cost on projected benefit obligation.... 8,367 9,320 9,507
Expected return on plan assets................... (10,627) (12,547) (11,055)
Net amortization and deferral.................... (1,218) (813) (1,451)
------- ------- -------
Net periodic pension expense..................... $ 8,592 $ 8,882 $ 7,786
======= ======= =======
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-23
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

Assumptions as of December 31, which are used to determine the plan's funded
status at the respective dates and to compute pension expense for the following
year, are as follows:

<TABLE>
<CAPTION>
1992 1993
---- ----
<S> <C> <C>
Discount rate.................................................... 8.5% 7.25%
Rate of increase in compensation levels.......................... 4.0% 4.0%
Expected long-term rate of return on assets...................... 9.0% 9.0%
</TABLE>

The following table sets forth the plan's funded status and the amount
recognized in the Company's Consolidated Balance Sheets at December 31, 1992
and 1993 for its pension plan:

<TABLE>
<CAPTION>
1992 1993
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including vested
benefits of $77,749 and $118,597 at December 31,
1992 and 1993,
respectively....................................... $ (92,929) $(136,830)
========= =========
Projected benefit obligation......................... $(121,594) $(164,094)
Plan assets at fair value, primarily common stocks,
bonds and real estate............................... 123,137 136,244
--------- ---------
Plan assets in excess of (less than) projected bene-
fit obligation...................................... $ 1,543 $ (27,850)
Unrecognized net loss................................ 16,248 36,530
Unrecognized overfunding at date of adoption (Janu-
ary 1, 1985)
of Statement of Financial Accounting Standards No.
87, net of amortization, being recognized over 15
years............................................. (10,642) (9,317)
--------- ---------
Prepaid (accrued) pension cost included in prepaid
(accrued) expenses................................ $ 7,149 $ (637)
========= =========
</TABLE>

The Company participates in various multi-employer pension plans covering
certain employees not covered under the Company's pension plan, pursuant to
agreements between the Company and collective bargaining units who are members
of such plans. These plans are generally defined benefit plans; however, in
many cases, specific benefit levels are not negotiated with, or known by the
employer-contributors. Contributions of $17,188,000, $19,913,000 and
$25,579,000 were made and charged to income in 1991, 1992 and 1993,
respectively.

The Company and its principal subsidiaries adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" ("FAS 106") on the immediate recognition basis,
effective as of January 1, 1992. This Standard requires that the expected cost
of future benefits be charged to expense during the years in which the
employees render service. Previously, the Company recognized these costs, which
relate primarily to health care costs and were not material, on a cash basis.

The cumulative effect of this accounting change was to decrease income for
1992 by $77,837,000 ($36,579,000, or $.07 per share, after tax and minority
interest), representing the amount of the unfunded obligation measured as of
January 1, 1992. The pro forma effect of this accounting change on previously
reported 1991 earnings and, except for the one-time charge, on 1992 earnings,
was not significant.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-24
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The following table analyzes the obligation included in other deferred items
on the Consolidated Balance Sheets as of December 31, 1992 and 1993:

<TABLE>
<CAPTION>
1992 1993
------- -------
<S> <C> <C>
Accumulated Postretirement Benefit Obligations:
Retirees................................................... $55,579 $57,395
Other fully eligible participants.......................... 21,935 24,400
Other active participants.................................. 5,055 5,463
------- -------
$82,569 $87,258
Unrecognized:
Prior service cost......................................... -- 347
Gain/(loss)................................................ -- (2,658)
------- -------
$82,569 $84,947
======= =======
</TABLE>

For measurement purposes, a 12.0% annual rate of increase in the per capita
cost of covered health care claims was assumed for 1992; the rate was assumed
to decrease by 0.5% per year to 7.5% in 2001 and remain at that level
thereafter. Increasing the assumed health care cost trend by one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1993 by approximately $7,643,000, and the
aggregate of the service and interest cost components of net postretirement
health care cost for 1993 by approximately $541,000. The weighted-average
discount rate used in determining the accumulated postretirement benefit
obligation for 1992 and 1993 was 8% and 7.25%, respectively.

The expense for postretirement health care benefits was $258,000 in 1991,
$7,600,000 in 1992 and $7,300,000 in 1993. The service and interest components
of the expense for 1992 and 1993 were $2,900,000 and $4,700,000, respectively,
in 1992 and $3,000,000 and $4,300,000, respectively, in 1993.

The Company has an Employee Stock Ownership Plan ("1988 ESOP") for all
eligible non-union United States and Canadian employees. The benefits are based
on the employee's years of service and compensation. The Company contributes
each year an amount, if any, determined by the Board of Directors of the
Company.

Information concerning the 1988 ESOP is as follows:

<TABLE>
<CAPTION>
1991 1992 1993
------ ------ ------
<S> <C> <C> <C>
Expense recorded (contribution)........................ $3,231 $5,551 $7,329
====== ====== ======
Interest expense on 1988 ESOP debt..................... $2,749 $1,765 $1,510
====== ====== ======
Dividends on unallocated 1988 ESOP shares used by the
1988 ESOP............................................. $ 926 $ 983 $ 964
====== ====== ======
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-25
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The Company has a Profit Sharing and Savings Plan ("PSSP") available to
certain employees. The terms of the PSSP call for annual contributions by the
Company as determined by a specific formula as well as a match of employee
contributions up to $500 per employee. Information concerning charges to
operations for the PSSP is as follows:

<TABLE>
<CAPTION>
1991 1992 1993
------ ------- -------
<S> <C> <C> <C>
Company Contribution--
profit sharing....................................... $ -- $15,031 $ --
====== ======= =======
Company Contribution--
401(k)
matching............................................ $8,139 $ 9,799 $11,589
====== ======= =======
</TABLE>

Rust and WTI also sponsor several non-contributory and contributory defined
contribution plans covering both salaried and hourly employees. Contributions
are generally based upon fixed amounts of eligible compensation and amounted to
$12,900,000, $16,300,000 and $33,000,000, during 1991, 1992 and 1993,
respectively.

In November 1992, the FASB issued Statement No. 112, "Employers' Accounting
for Postemployment Benefits" ("FAS 112"). This new statement establishes
accounting standards for employers who provide benefits to former or inactive
employees after employment but before retirement. The Company is required to
adopt the new statement no later than 1994. The Company does not believe that
the adoption of FAS 112 will have a material impact on its financial statements
as its current accounting is substantially in compliance with the new standard.

NOTE 10. COMPANY'S OPERATIONS IN DIFFERENT INDUSTRIES AND GEOGRAPHICAL AREAS

The Company provides comprehensive environmental, engineering and
construction, industrial and related services through five principal
subsidiaries, each of which operates in a relatively discrete portion of the
environmental services industry or geographic area. Waste Management, Inc.
("WMI"), formerly Waste Management of North America, Inc., provides integrated
solid waste services and CWM provides hazardous waste collection,
transportation, treatment and disposal services in North America. WM
International provides these services, as well as trash-to-energy services
outside North America. WTI is involved in trash-to-energy and independent power
projects, water and wastewater treatment, including biosolids management, and
air quality control, primarily in North America. Rust serves the engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation and on-site industrial and related services markets.

Rust was formed on January 1, 1993 through the contribution by CWM of its
hazardous substance remediation services business, its approximately 56%
ownership in Brand, and its 12% ownership interest in WM International,
together with certain other assets, and the contribution by WTI of its
engineering and construction and environmental and infrastructure consulting
businesses, its London-based international engineering unit, and certain other
assets.

Whereas solid waste, hazardous waste and trash-to-energy operations are
performed by three distinct organizations in North America, these services are
provided internationally by a single management organization. Because of this
and the different business environment for international

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-26
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
TRASH-
ENGINEERING, TO-ENERGY, INTERNATIONAL
CONSTRUCTION, WATER TREATMENT WASTE
SOLID HAZARDOUS INDUSTRIAL AND AIR QUALITY AND MANAGEMENT CORPORATE AND
WASTE WASTE RELATED SERVICES RELATED SERVICES SERVICES ELIMINATIONS(1) CONSOLIDATED
---------- ---------- ---------------- ---------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1991
Revenue.............. $3,961,111 $ 720,048 $1,236,979 $ 746,042 $1,075,070 $(188,336) $ 7,550,914
Operating expenses
including goodwill
amortization........ 2,612,787 405,038 1,066,888 517,076 772,794 (147,582) 5,227,001
Special charges...... 260,000 36,000 -- -- -- -- 296,000
Selling and adminis-
trative expenses.... 455,146 121,522 111,196 86,438 151,661 (15,028) 910,935
---------- ---------- ---------- ---------- ---------- --------- -----------
Income from opera-
tions............... $ 633,178 $ 157,488 $ 58,895 $ 142,528 $ 150,615 $ (25,726) $ 1,116,978
========== ========== ========== ========== ========== ========= ===========
Identifiable assets.. $5,108,814 $1,405,632 $ 828,032 $2,535,678 $2,563,379 $ 130,775 $12,572,310
========== ========== ========== ========== ========== ========= ===========
Depreciation and am-
ortization expense.. $ 371,898 $ 62,702 $ 24,951 $ 35,776 $ 77,227 $ 20,234 $ 592,788
========== ========== ========== ========== ========== ========= ===========
Capital expendi-
tures(2)............ $ 973,294 $ 157,511 $ 82,548 $ 157,057 $ 182,742 $ 33,666 $ 1,586,818
========== ========== ========== ========== ========== ========= ===========
1992
Revenue.............. $4,309,614 $ 755,088 $1,441,050 $ 928,313 $1,445,734 $(218,772) $ 8,661,027
Operating expenses
including goodwill
amortization........ 2,911,971 425,359 1,228,749 633,614 1,033,263 (210,050) 6,022,906
Special charges...... 96,000 76,000 35,200 -- -- 12,700 219,900
Selling and adminis-
trative expenses.... 494,300 115,913 145,405 97,920 210,891 (16,382) 1,048,047
---------- ---------- ---------- ---------- ---------- --------- -----------
Income from opera-
tions............... $ 807,343 $ 137,816 $ 31,696 $ 196,779 $ 201,580 $ (5,040) $ 1,370,174
========== ========== ========== ========== ========== ========= ===========
Identifiable assets.. $5,771,464 $1,651,206 $1,167,495 $2,619,635 $2,792,803 $ 111,577 $14,114,180
========== ========== ========== ========== ========== ========= ===========
Depreciation and am-
ortization expense.. $ 422,793 $ 65,918 $ 36,425 $ 58,410 $ 113,670 $ 16,853 $ 714,069
========== ========== ========== ========== ========== ========= ===========
Capital expendi-
tures(2)............ $1,066,863 $ 197,567 $ 132,228 $ 263,187 $ 264,761 $ 38,589 $ 1,963,195
========== ========== ========== ========== ========== ========= ===========
1993
Revenue.............. $4,702,166 $ 661,860 $1,534,465 $1,142,219 $1,411,211 $(316,344) $ 9,135,577
Operating expenses
including goodwill
amortization........ 3,193,183 506,264 1,249,908 792,719 1,009,145 (309,914) 6,441,305
Special charge....... -- 550,000 -- -- -- -- 550,000
Selling and adminis-
trative expenses.... 547,413 128,058 155,753 107,276 198,969 (9,267) 1,128,202
---------- ---------- ---------- ---------- ---------- --------- -----------
Income from opera-
tions............... $ 961,570 $ (522,462) $ 128,804 $ 242,224 $ 203,097 $ 2,837 $ 1,016,070
========== ========== ========== ========== ========== ========= ===========
Identifiable assets.. $6,912,271 $1,498,631 $1,625,413 $3,090,278 $3,315,621 $(177,738) $16,264,476
========== ========== ========== ========== ========== ========= ===========
Depreciation and am-
ortization expense.. $ 461,963 $ 63,971 $ 52,300 $ 75,323 $ 121,050 $ 22,084 $ 796,691
========== ========== ========== ========== ========== ========= ===========
Capital expendi-
tures(2)............ $1,139,004 $ 157,786 $ 132,683 $ 310,839 $ 403,326 $ 19,075 $ 2,162,713
========== ========== ========== ========== ========== ========= ===========
</TABLE>
- ---------
(1) Includes corporate office expenses, corporate charges and elimination of
intercompany transactions.
(2) Includes property and equipment of purchased businesses.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-27
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

In addition to the markets served by WM International, the Company has
foreign operations in Canada and Mexico in its consolidated financial
statements, and CWM, WTI and Rust derive an immaterial amount of revenue from
outside the United States. The information relating to the Company's foreign
operations is set forth in the following tables:

<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE FOREIGN CONSOLIDATED
----------- ---------- -------- ------------
<S> <C> <C> <C> <C>
1991
Revenue........................ $ 6,250,710 $ 882,936 $417,268 $ 7,550,914
=========== ========== ======== ===========
Income from operations......... $ 942,060 $ 125,621 $ 49,297 $ 1,116,978
=========== ========== ======== ===========
Identifiable assets............ $ 9,806,024 $2,133,249 $633,037 $12,572,310
=========== ========== ======== ===========
1992
Revenue........................ $ 6,973,822 $1,143,496 $543,709 $ 8,661,027
=========== ========== ======== ===========
Income from operations......... $ 1,161,365 $ 150,910 $ 57,899 $ 1,370,174
=========== ========== ======== ===========
Identifiable assets............ $11,124,070 $2,326,877 $663,233 $14,114,180
=========== ========== ======== ===========
1993
Revenue........................ $ 7,483,316 $1,241,811 $410,450 $ 9,135,577
=========== ========== ======== ===========
Income from operations......... $ 788,524 $ 184,412 $ 43,134 $ 1,016,070
=========== ========== ======== ===========
Identifiable assets............ $12,676,240 $2,955,078 $633,158 $16,264,476
=========== ========== ======== ===========
</TABLE>

No single customer accounted for as much as 2% of consolidated revenue in 1991,
3% in 1992 and 4% in 1993.

NOTE 11. SPECIAL GAINS AND SPECIAL CHARGES

The Company's results of operations for 1991 include a special charge of
$296,000,000 before tax and minority interest, primarily to reflect then
current estimates of the environmental remediation liabilities at waste
disposal sites previously used or operated by the Company and its subsidiaries
or their predecessors. Results of operations for 1991 also include a pretax
gain of approximately $47,000,000 realized by WTI on the sale of its French
abrasives business.

Results for 1992 include a non-taxable gain of $240,000,000 (before minority
interest) resulting from the initial public offering by WM International in
April 1992, of 75,000,000 newly issued ordinary shares, representing 20 percent
of the post-offering outstanding shares.

During the second quarter of 1992, the Company recorded special charges of
$159,700,000 before tax and minority interest, primarily related to a writedown
of the Company's medical waste business and CWM incinerators in Chicago,
Illinois, and Tijuana, Mexico.

The writedown of the medical waste business resulted from a study by an
independent consultant commissioned by WTI in connection with WTI's ultimate
decision not to exercise its option to purchase this business. The WTI purchase
option was subsequently extended five years.

The CWM charges related in part to an agreement with the Illinois
Environmental Protection Agency concerning the Chicago incinerator. CWM also
revised its plans for a mobile hazardous waste incinerator in Tijuana following
a decision by the Mexican government requiring the unit's relocation.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-28
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

During the fourth quarter of 1992, the Company recorded a special charge of
$60,200,000 before tax and minority interest as a result of charges by Brand
and CWM to reflect a writedown of Brand's investment in its asbestos abatement
business and certain restructuring costs incurred by Brand and CWM related to
the formation of Rust.

During the third quarter of 1993, the Company recorded a special charge of
$550,000,000 before tax and minority interest as a result of CWM recording a
special asset revaluation and restructuring charge. The charge consisted of
$381,000,000 to write down assets, primarily incinerators, and $169,000,000 for
the probable cash expenditures (the majority of which will be made by the end
of 1994 except for closure, post-closure and related costs at facilities closed
or to be closed) related to actions CWM has taken or plans to take as part of
its program to reduce costs, improve efficiency and structure CWM to meet
current market demand. CWM estimates that the full impact of the restructuring
will reduce overhead, including depreciation and amortization, by approximately
$60 million annually.

The Company's results for 1993 include a gain of $15,109,000 (before minority
interest) relating to the issuance of shares by the Company's Rust subsidiary
in the second quarter.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

F-29
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments." The estimated fair value amounts have been determined by the
Company, using available market information and commonly accepted valuation
methodologies. However, considerable judgement is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company or holders of the instruments could realize in a current
market exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
The fair value estimates presented herein are based on information available to
management as of December 31, 1992 and December 31, 1993. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been revalued since those dates, and
current estimates of fair value may differ significantly from the amounts
presented herein.

<TABLE>
<CAPTION>
DECEMBER 31, 1992
---------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Liabilities--Debt:
Commercial paper..................................... $ 837,733 $ 838,164
Tailored rate ESOP notes............................. 50,000 50,000
Debentures and notes................................. 1,624,500 1,669,520
Solid waste disposal revenue bonds................... 284,720 306,730
Installment loans and notes payable.................. 555,439 549,618
Project debt......................................... 894,970 1,042,843
Other long-term borrowings........................... 37,129 37,320
Liquid Yield Option Notes............................ 625,694 680,099
<CAPTION>
DECEMBER 31, 1993
---------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Liabilities--Debt:
Commercial paper..................................... $1,376,197 $1,376,106
Tailored rate ESOP notes............................. 50,000 50,000
Debentures and notes................................. 2,749,085 2,864,222
Solid waste disposal revenue bonds................... 280,685 305,303
Installment loans and notes payable.................. 978,691 991,118
Project debt......................................... 810,612 977,800
Other long-term borrowings........................... 35,616 36,900
Liquid Yield Option Notes............................ 619,189 611,121
</TABLE>

Cash and Short-Term Investments

The carrying amounts of these items are a reasonable estimate of their fair
value.

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F-30
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
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Debt

For debt issues that are publicly traded, fair values are based on quoted
market prices or dealer quotes. Due to the short-term nature of the ESOP notes,
their carrying value approximates fair value. Interest rates that are currently
available to the Company for issuance of debt with similar terms and remaining
maturities are used to estimate fair value for debt issues that are not quoted
on an exchange.

Off-Balance Sheet Financial Instruments

In the normal course of business, the Company is a party to financial
instruments with off-balance-sheet risk, such as bank letters of credit,
performance bonds and other guarantees, which are not reflected in the
accompanying balance sheets. Such financial instruments are to be valued based
on the amount of exposure under the instrument and the likelihood of
performance being required. In the Company's past experience, virtually no
claims have been made against these financial instruments. Management does not
expect any material losses to result from these off-balance-sheet instruments
and, therefore, is of the opinion that the fair value of these instruments is
zero.

NOTE 13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is an analysis of certain items in the Consolidated Statements
of Income by quarter for 1992 and 1993.

<TABLE>
<CAPTION>
INCOME
BEFORE EPS BEFORE
CUMULATIVE CUMULATIVE EARNINGS
EFFECT OF EFFECT OF (LOSS)
GROSS ACCOUNTING ACCOUNTING PER SHARE
REVENUE PROFIT CHANGES CHANGES ("EPS")
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1992
First Quarter........ $2,020,078 $ 594,274 $192,094 $ .39 $ .25
Second Quarter....... 2,175,179 508,967 329,530 .66 .66
Third Quarter........ 2,262,690 693,613 216,746 .44 .44
Fourth Quarter....... 2,203,080 621,367 182,805 .37 .37
---------- ---------- -------- ----- -----
$8,661,027 $2,418,221 $921,175 $1.86 $1.72
========== ========== ======== ===== =====
</TABLE>

<TABLE>
<CAPTION>
NET
GROSS INCOME
REVENUE PROFIT (LOSS) EPS(1)
---------- ---------- -------- ------
<S> <C> <C> <C> <C>
1993
First Quarter....................... $2,135,341 $ 635,484 $199,285 $ .41
Second Quarter...................... 2,290,582 687,447 217,724 .45
Third Quarter....................... 2,322,745 139,081 (127,156) (.26)
Fourth Quarter...................... 2,386,909 682,260 162,923 .34
---------- ---------- -------- -----
$9,135,577 $2,144,272 $452,776 $ .93
========== ========== ======== =====
</TABLE>
- ----------
(1) The sum of the quarterly per share amounts does not equal the annual amount
due to rounding.

See Note 11 to Consolidated Financial Statements for a discussion of the
special gain and special charges affecting the 1992 second and fourth quarter
and full year results, and the special gain and the special charge affecting
the 1993 second and third quarter and full year results.

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F-31