WMX TECHNOLOGIES INC, S-1/A, 1995-04-21

WMX TECHNOLOGIES INC
S-1/A, 1995-04-21
REFUSE SYSTEMS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 1995

REGISTRATION NO. 33-44849
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

WMX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4953
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)

36-2660763
(I.R.S. EMPLOYER IDENTIFICATION NO.)

3003 BUTTERFIELD ROAD
OAK BROOK, ILLINOIS 60521
(708) 572-8800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

HERBERT A. GETZ, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
WMX TECHNOLOGIES, INC.
3003 BUTTERFIELD ROAD
OAK BROOK, ILLINOIS 60521
(708) 572-8800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

FILING AMENDED PROSPECTUS AND AMENDING ITEM 16 OF PART II

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- --------------------------------------------------------------------------------
<PAGE>

WMX TECHNOLOGIES, INC.

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

CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM IN FORM S-1 LOCATION IN OR CAPTION IN PROSPECTUS
---------------- ------------------------------------
<S> <C>
1.Forepart of the Registration Statement and Cross Reference Sheet and Cover Page of
Outside Front Cover Page of Prospectus.. Prospectus
2.Inside Front and Outside Back Cover Pages Inside Front Cover Page
of Prospectus...........................
3.Summary Information and Risk Factors...... Summary
4.Use of Proceeds........................... Securities Covered by this Prospectus
5.Determination of Offering Price........... Inapplicable
6.Dilution.................................. Inapplicable
7.Selling Security Holders.................. Cover Page of Prospectus; Securities
Covered by this Prospectus
8.Plan of Distribution...................... Securities Covered by this Prospectus
9.Description of Securities to be Regis- Cover Page of Prospectus; Description of
tered................................... Capital Stock
10.Interests of Named Experts and Counsel.... Inapplicable
11.Information with Respect to the Registrant
(a).......................................... The Company; Business of the Company
(b).......................................... Property and Equipment
(c).......................................... Legal Proceedings
(d).......................................... Market Prices of Common Stock; Dividends
(e).......................................... Consolidated Financial Statements of WMX
Technologies, Inc. and Subsidiaries
(f).......................................... Selected Consolidated Financial Data
(g).......................................... Consolidated Financial Statements Note 15
(h).......................................... Management's Discussion and Analysis
(i).......................................... Inapplicable
(j).......................................... Management
(k).......................................... Management
(l).......................................... Securities Ownership of Management
(m).......................................... Management
12.Disclosure of Commission Position on In- Inapplicable
demnification for Securities Act Liabil-
ities...................................
</TABLE>
<PAGE>

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED APRIL 21, 1995

PROSPECTUS

9,902,117 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 9,902,117 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 April , 1995, 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 $ . See "Market Prices of Common Stock;
Dividends" herein.

--------

THE DATE OF THIS PROSPECTUS IS , 1995.

Printed on recycled paper
LOGO

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
<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
Financial Condition and Results of
Operations................................. 13
Business of the Company..................... 29
General.................................... 29
Solid Waste Management and Related Services 29
Collection................................ 29
Transfer.................................. 30
Recycling and Energy Recovery............. 30
Disposal.................................. 31
Related Services.......................... 32
Hazardous Waste Management and Related
Services.................................. 32
Chemical Waste Management Services........ 33
Low-Level and Other Radioactive Waste
Services................................. 34
Engineering, Construction, Industrial
and Related Services...................... 35
Engineering, Construction and Environmen-
tal and Infrastructure Consulting Servic-
es....................................... 35
Remediation and Other On-Site Industrial
and Related Services..................... 36
Trash-to-Energy, Water Treatment,
Air Quality and Related Services.......... 37
Wheelabrator Clean Energy................. 37
Wheelabrator Clean Water.................. 38
Wheelabrator Clean Air.................... 39
International Waste Management
and Related Services...................... 39
Collection Services....................... 41
Treatment and Disposal Services........... 41
Regulation................................. 42
Solid Waste............................... 44
Hazardous Waste........................... 44
</TABLE>

<TABLE>
<S> <C>
Engineering, Construction, Industrial and
Related Services........................ 45
Trash-to-Energy, Water Treatment,
Air Quality and Related Services........ 46
RCRA..................................... 46
Superfund................................ 47
International Waste Management
and Related Services.................... 48
Competition............................... 48
Insurance................................. 51
Employees................................. 51
Acquisitions and Dispositions............. 52
Property and Equipment..................... 54
Management................................. 56
Directors and Executive Officers.......... 56
Compensation of Executive Officers........ 59
Stock Options............................. 60
Long-Term Incentive Plan Awards........... 61
Pension and Retirement Plans.............. 62
Compensation of Directors................. 63
Outside Directors' Plans.................. 63
Stock Option Plans for Non-Employee
Directors................................ 64
Directors' Charitable Endowment Program... 65
Compensation Committee Interlocks
and Insider Participation................ 65
Certain Transactions...................... 65
Securities Ownership of Management......... 66
Ownership of Company Common Stock......... 66
Ownership of WTI Common Stock............. 68
Ownership of Rust Common Stock............ 69
Ownership of WM International Ordinary
Shares................................... 69
Legal Proceedings.......................... 71
Description of Capital Stock............... 73
Experts.................................... 75
Additional Information..................... 75
Index to Financial Statements.............. F-1
</TABLE>

AVAILABLE INFORMATION

WMX Technologies, 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 and Port-O-Let(R)
portable sanitation services to municipalities and commercial
and special event customers.

Chemical Waste Management, Inc., a wholly 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 56%-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 them 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 processes,
precision profile wire screens for use in groundwater wells
and other industrial and municipal 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 and environmental and infrastructure consulting
services, hazardous and radioactive substances 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.
Rust also has an approximately 40% interest in NSC
Corporation, a publicly traded provider of asbestos abatement
services.

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 ten countries in Europe and in Argentina,
Australia, Brunei, Hong Kong, Indonesia, Malaysia, New
Zealand, Singapore and Taiwan. Waste Management International
also has an approximately 20% interest in Wessex Water Plc, an
English publicly traded company providing water treatment,
water distribution, wastewater treatment and sewerage
services.

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
-----------------------------------------------------------
1990(1) 1991(2) 1992(3) 1993(4) 1994(5)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue................. $ 6,034,406 $ 7,550,914 $ 8,661,027 $ 9,135,577 $10,097,318
Net income.............. $ 684,762 $ 606,323 $ 850,036 $ 452,776 $ 784,381
Earnings per common and
common equivalent
share.................. $ 1.44 $ 1.23 $ 1.72 $ .93 $ 1.62
Total assets............ $10,518,243 $12,572,310 $14,114,180 $16,264,476 $17,538,914
Long-term debt, less
portion payable within
one year............... $ 3,139,623 $ 3,782,973 $ 4,312,511 $ 6,145,584 $ 6,044,411
Dividends per share..... $ .35 $ .42 $ .50 $ .58 $ .60
</TABLE>
- ---------
(1) 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.

(2) 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.

(3) 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 2, 11 and 13 to the Company's Consolidated Financial
Statements.

(4) The results for 1993 include a non-taxable gain of $15,109,000 (before
minority interest) 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 CWM's 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 2 and 13 to the Company's
Consolidated Financial Statements.

(5) The results for 1994 include a charge of $9,200,000 (before tax and
minority interest) recorded by Rust to write off assets and to recognize
costs of exiting certain of Rust's service lines and closing offices in a
consolidation of its engineering and construction groups. See Note 13 to
the Company's Consolidated Financial Statements.

(6) Certain amounts have been restated to conform to 1994 classifications.

Recent
Developments..
On April 19, 1995, the Company announced operating results for
the three months ended March 31, 1995. Net income for the
first quarter of 1995 was $101,245,000, or $.21 per share,
compared to $162,612,000, or $.34 per share, in the same
quarter a year earlier. Revenue in the first quarter of 1995
rose to $2,604,909,000 from $2,284,067,000 in the first
quarter of 1994.

In the first quarter of 1995, CWM recorded a special charge of
approximately $141,000,000 before tax primarily related to a
revaluation of investments in certain hazardous waste
treatment and processing technologies and facilities due to
continued deterioration of the hazardous waste market.

5
<PAGE>

THE COMPANY

WMX Technologies, 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 prospectus the terms
"Company," "WMX" and "WMX Technologies" refer to WMX Technologies, Inc. and its
subsidiaries.

Through Waste Management, 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 collection of such materials from 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 and Port-O-Let(R)
portable sanitation services to municipalities and commercial and special event
customers.

The Company's wholly owned Chemical Waste Management, Inc. subsidiary
(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. The Company's chemical waste management services provided
through CWM, 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. Through CWM, the
Company also furnishes radioactive waste management services, primarily to
electric utilities and governmental entities. Prior to January 24, 1995, the
Company's ownership of CWM was approximately 79%, with the balance being
publicly held. On that date, the Company acquired the publicly held shares of
CWM in a merger of a Company subsidiary into CWM. See "Acquisitions and
Dispositions" below.

Wheelabrator Technologies Inc., an approximately 56%-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 them
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 processes, precision
profile wire screens for use in groundwater wells and other industrial and
municipal 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.

6
<PAGE>

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 and environmental and infrastructure
consulting services, hazardous and radioactive substances 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. Rust
also has an approximately 40% interest in NSC Corporation, a publicly traded
provider of asbestos abatement services ("NSC"). The Company has proposed to
acquire the shares of Rust not owned by CWM and WTI. In addition, Rust has
entered into an agreement to combine its hazardous and radioactive substance
remediation operations with a third party. See "Acquisitions and Dispositions"
herein.

The Company provides comprehensive waste management and related services
internationally, primarily through Waste Management International plc, a
subsidiary owned approximately 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 ten countries in Europe
and in Argentina, Australia, Brunei, Hong Kong, Indonesia, Malaysia, Taiwan,
Singapore and New Zealand. Waste Management International also has an
approximately 20% interest in Wessex Water Plc, an English publicly traded
company providing water treatment, water distribution, wastewater treatment and
sewerage services ("Wessex").

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 then 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 became 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."

7
<PAGE>

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,
-----------------------------------
1992 1993 1994
---------- ---------- -----------
<S> <C> <C> <C>
Solid Waste Management and Related Servic-
es....................................... $4,309,614 $4,702,166 $ 5,117,871
Hazardous Waste Management and Related
Services................................. 755,088 661,860 649,581
Engineering, Construction, Industrial and
Related Services......................... 1,441,050 1,534,465 1,682,907
Trash-to-Energy, Water Treatment, Air
Quality and Related Services............. 928,313 1,142,219 1,324,567
International Waste Management and Related
Services................................. 1,445,734 1,411,211 1,710,862
Eliminations of Intercompany Revenue...... (218,772) (316,344) (388,470)
---------- ---------- -----------
Consolidated Revenue...................... $8,661,027 $9,135,577 $10,097,318
========== ========== ===========
</TABLE>

For information relating to expenses and identifiable assets attributable to
the Company's different industry segments, see Note 12 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 13 to 28 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

8
<PAGE>

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.

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. Due to
the complexity of regulation of the industry and to public pressure,
implementation of existing and future laws, regulations or initiatives by
different levels of government may be inconsistent and difficult to foresee. In
addition, the demand for certain of the Company's services may be adversely
affected by the amendment or repeal or reduction in enforcement of federal,
state and foreign laws and regulations on which the Company's businesses
engaged in providing such services are dependent. The Company makes a
continuing effort to anticipate regulatory, political and legal developments
that might affect its 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, amended, repealed or enforced, or any failure of legislation or
regulations to be enacted or enforced, in the future may affect its operations.

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

9
<PAGE>

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.

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>
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
Second Quarter............................... 29 3/8 22 5/8 .15
Third Quarter ............................... 30 3/8 26 3/8 .15
Fourth Quarter............................... 30 24 1/2 .15
1995
----
First Quarter ............................... $29 5/8 $25 3/4 $.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.

10
<PAGE>

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 twice been extended, most recently through September 1996. During
1992 and 1993, the Company purchased approximately 7,600,000 shares and
8,400,000 shares, respectively, of its common stock under this program. No
Company shares were repurchased in 1994 or during the first quarter of 1995.

During 1994 and the first quarter of 1995, the Company sold put options on
22,600,000 shares of its common stock in conjunction with the repurchase
program. The put options give the holders the right at maturity to require the
Company to repurchase its shares at specified prices. In the event the options
are exercised, the Company may elect to pay the holder in cash the difference
between the strike price and the market price of the Company's shares, in lieu
of repurchasing the stock. Options on 9,000,000 shares expired unexercised in
1994, as the price of the Company's stock was in excess of the strike price at
maturity. Options on 4,700,000 shares were exercised in February 1995, and the
Company elected to settle them for cash. Options on 4,300,000 shares expire in
July and August 1995, at strike prices ranging from $25.588 to $28.833 per
share. The Company sold additional put options in February and March 1995 to
replace those which matured. The new options expire in October and November
1995 at strike prices of $26.11 to $26.58 per share. See Note 10 to the
Company's Consolidated Financial Statements.

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 22, 1995, the Company had approximately 65,000 holders of record of
its common stock.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial information for each of the
five years in the period ended December 31, 1994 is derived from the Company's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, 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)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1990(1) 1991(2) 1992(3) 1993(4) 1994(5)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue................. $ 6,034,406 $ 7,550,914 $ 8,661,027 $ 9,135,577 $10,097,318
Net income.............. $ 684,762 $ 606,323 $ 850,036 $ 452,776 $ 784,381
Earnings per common and
common equivalent
share.................. $ 1.44 $ 1.23 $ 1.72 $ .93 $ 1.62
Total assets............ $10,518,243 $12,572,310 $14,114,180 $16,264,476 $17,538,914
Long-term debt, less
portion
payable within one
year................... $ 3,139,623 $ 3,782,973 $ 4,312,511 $ 6,145,584 $ 6,044,411
Dividends per share..... $ .35 $ .42 $ .50 $ .58 $ .60
</TABLE>
- ----------

(1) 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.

11
<PAGE>

On April 19, 1995, the Company announced operating results for the three
months ended March 31, 1995. Net income for the first quarter of 1995 was
$101,245,000, or $.21 per share, compared to $162,612,000, or $.34 per share,
in the same quarter a year earlier. Revenue in the first quarter of 1995 rose
to $2,604,909,000 from $2,284,067,000 in the first quarter of 1994.

In the first quarter of 1995, CWM recorded a special charge of approximately
$141,000,000 before tax primarily related to a revaluation of investments in
certain hazardous waste treatment and processing technologies and facilities
due to continued deterioration of the hazardous waste market.

12
<PAGE>

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

RESULTS OF OPERATIONS

Consolidated:

Consolidated 1994 revenue of WMX Technologies, Inc. and its subsidiaries was
$10,097,318,000 compared with $9,135,577,000 in 1993 and $8,661,027,000 in
1992.

Consolidated 1994 net income was $784,381,000 or $1.62 per share, compared
with $452,776,000 or $0.93 per share in 1993 and $850,036,000 or $1.72 per
share in 1992.

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

<TABLE>
<CAPTION>
1992 1993 1994
------ ------ -----
<S> <C> <C> <C>
Reported earnings per share.............................. $ 1.72 $ 0.93 $1.62
Gains on stock transactions of subsidiaries.............. (0.42) (0.02) --
Special charges (see Note 13 to Consolidated Financial
Statements)--
CWM asset revaluation and restructuring charge......... -- 0.59 --
Other.................................................. 0.24 -- 0.01
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................. $ 1.68 $ 1.53 $1.63
====== ====== =====
</TABLE>

In addition, the higher U.S. tax rates in effect in 1993 negatively impacted
1993 income by approximately $0.04 per share compared with 1992.

During the three-year period, the Company has invested substantial 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 businesses and
technologies. The formation of Rust on January 1, 1993, 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 faced difficult business conditions,
including changes which have negatively impacted the hazardous waste industry,
as discussed below, and a lengthy U.S. recession which affected operating
results into 1993. The Company has moved to address these developments with a
major restructuring of CWM during 1993 and a reorganization of its WMI solid
waste management organization. During the third quarter of 1994, the Company
undertook a major strategic review of its operations, which is continuing. The
focus of these efforts is to streamline all of the Company's business units,
enhance its management and planning process, reduce operating costs and improve
profitability, enhance customer satisfaction, increase returns on capital and
grow the business.

The Company currently 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,

13
<PAGE>

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. During 1995, the strategic review begun by the
Company in 1994 will continue, focusing on, among other things, the Company's
opportunities and resources, on both a line of business and a geographic basis,
to determine the most effective use of resources to add value to the Company's
core competencies. No conclusions have been reached but the current business
alignment could change in the future as a result of the review.

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, 1994, Rust was owned approximately 56% by CWM and approximately 40% by WTI,
with the remaining ownership held by the public. In February 1995, the Company
offered to acquire the approximately 4% of Rust's shares held by the public;
see "Subsequent Events."

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 comparative
information for 1992 in that analysis is stated on a pro forma basis reflecting
that assumption.

1993 OPERATIONS COMPARED TO 1992

WMI

Revenue for WMI was $4,702,166,000 in 1993 compared with $4,309,614,000 in
1992, an increase of 9.1%. 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
</TABLE>

Volume increases accounted for revenue growth of approximately 6.8%, whereas
acquisitions accounted for approximately 2.8%. Pricing pressure experienced by
the solid waste industry 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 began
implementing selective price increases effective October 1, 1993, as the U.S.
economy improved. For the year, price had a negative impact of approximately
0.5% 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 area 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.

14
<PAGE>

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 during 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 the fourth quarter, in both dollars and as a percentage
of revenue, as a result of reorganization-related expenses including work force
reductions and relocations.

CWM Core Business (Excluding Rust)

Revenue was $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 0.4% 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 off-site treatment and disposal at CWM
facilities, an uncertain regulatory environment regarding 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'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
(revenue from relatively larger, typically non-recurring projects) 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 an effort to respond to changing industry conditions, CWM completed a
study of its business in the third quarter of 1993 and announced a strategic
reconfiguration of its operations to meet then-current market demand. Among the
actions taken as part of a program to reduce costs and improve efficiency were
the elimination of approximately 1,600 positions, consolidation of operations,
sale of selected service centers in marginal service lines and geographies, and
centralization of several functions to improve efficiency. The restructuring
was based on the assumption that future base business revenue growth, if any,
would not keep pace with the economic recovery, and that CWM would not make
investments which would be primarily supported by event business volumes.

In connection with the restructuring, CWM recorded a charge of $550 million
before tax, including $381 million to write down assets, primarily
incinerators, and $169 million for cash expenditures to be made as part of the
program to reduce costs, improve efficiency and structure CWM to meet then-
current market demand.

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 and as a percentage of revenue in 1993. Also, a
large component of CWM's operating expenses in its core business is fixed, and
the 1993 revenue decline caused such expenses to increase as a percentage of
revenue.

15
<PAGE>

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 lower
revenue volume over which to spread such costs.

WTI

1993 revenue increased 23%, to $1,142,219,000, compared with pro forma
revenue of $928,313,000 for the previous year. Approximately 40% of the revenue
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 and
process know-how. Successful project development efforts were responsible for
an additional 30% of the 1993 revenue increase and included the full year
impact of the North Broward County trash-to-energy facility, the third quarter
1993 start of commercial operations at WTI's New York Organic Fertilizer
Company ("NYOFCO") biosolids pelletizer facility, and construction revenue for
the Lisbon, Connecticut trash-to-energy facility being built by WTI for the
Eastern Connecticut Resource Recovery Authority ("ECRRA"). Existing business
growth contributed the remaining 30% of the 1993 revenue increase. 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. Energy businesses represented approximately 52% of
consolidated 1993 revenue, while the water and air businesses accounted for 32%
and 16%, respectively. For 1992, energy, water and air business lines
represented approximately 59%, 30% and 11%, respectively, of consolidated
revenue.

Operating expenses increased to 69.4% of revenue in 1993 from 68.3% in 1992.
This increase reflected 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% from 10.5%. The percentage 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 is a U.K. 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 $1,411,211,000 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>

16
<PAGE>

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 decrease which related primarily to the
transition from the construction phase to the operational phase of a contract
to design, construct and operate a hazardous waste treatment facility in Hong
Kong. Price increases slowed in the second half of 1993 as inflation in Europe
declined. Landfill revenues were constrained by delays in obtaining permits,
particularly in Italy.

A significant portion of WM International's revenue arises 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 revenue grew 15.3% in 1993 compared to 1992. Both the Company and
WM International periodically engage in hedging transactions intended to
mitigate currency translation risk. See "Derivatives."

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 revenue 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 structure, as
well as continuing integration of acquired businesses.

Rust

Rust has 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 for the first four months of 1993. This business
was transferred to 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, revenue increased
16% in 1993 compared with 1992. Revenue by line of business is shown in the
following table ($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. Domestic and international acquisitions completed in 1993 and the latter
part of 1992 accounted for revenue growth of 17%. The 1993 domestic
acquisitions gave Rust a strong presence in the petrochemical and refinery
engineering markets and stronger consulting service capabilities in the
northeast United States. Price/volume increases in 1993 (12%) were the result
of the start-up of several large projects, including one large waste-to-energy
plant and several manufacturing/processing facilities.

Remediation and industrial services revenue grew by 4% in 1993. A decline in
remediation service revenue related to project delays and cancellations by
customers and prospective customers was more than offset by an increase in
industrial services revenue resulting from market share gains in existing
businesses and 1992 and 1993 acquisitions.

Revenue from affiliated 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.

17
<PAGE>

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 higher personnel utilization, and improved operating margins from
international operations.

During 1992, Brand recorded a special charge of approximately $35.2 million
before tax to write down its investment in its asbestos abatement business and
to provide for certain restructuring costs related to the formation of Rust.

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. in the third quarter of 1993.

1994 OPERATIONS COMPARED TO 1993

WMI

WMI's revenue grew 8.8% to $5,117,871,000 in 1994 compared with
$4,702,166,000 in 1993. Revenue growth occurred in all service lines as shown
in the following table:

<TABLE>
<S> <C>
Residential......................................................... 4.6%
Commercial.......................................................... 8.1
Rolloff and industrial.............................................. 11.1
Disposal, transfer and other........................................ 11.8
</TABLE>

Price increases accounted for revenue growth of approximately 1.5%. WMI
continues to focus on pricing on a customer-by-customer basis and to seek
increases when and where appropriate. Pricing in the commercial, rolloff and
industrial lines generally continued the positive trend begun in the fourth
quarter of 1993, while residential work remained extremely competitive and
disposal pricing varied by region but generally improved during the year.
Higher recyclable commodity prices, which can vary significantly from year to
year, also helped 1994 results. Volume increases accounted for revenue growth
of 7.8%, despite the negative impact of the 1993 volume from the contract to
dispose of debris from Hurricane Andrew which did not recur in 1994, and the
loss of a disposal contract for the City of Philadelphia as of July 1. The
increase in disposal, transfer and other revenue was aided by special waste
volume, which increased over 20%, and recycling, which grew 29% (including the
impact of higher commodity prices discussed above). Revenue decreases due to
businesses sold exceeded revenue added from acquisitions by approximately 0.5%
in 1994, primarily the result of the sale during the first quarter of the year
of WMI's Modulaire(R) mobile offices business and certain other under-
performing businesses, and reduced acquisition activity.

Operating margins strengthened throughout the year following the fourth
quarter 1993 reorganization, and were 20.8% of revenue for the year compared
with 20.4% in 1993. This improvement resulted from productivity increases,
particularly in the selling and administrative areas where expenses remained
relatively constant in dollars and declined as a percentage of revenue,
stronger pricing and increased volume, partially offset by higher costs of
operating disposal facilities to comply with more stringent environmental
regulations. Although the costs of complying with environmental regulations
will likely continue to increase, WMI believes it can maintain or improve
margins through price increases and productivity enhancements if the U.S.
economy remains strong.

18
<PAGE>

CWM Core Business (Excluding Rust)

CWM core business revenue continued to decline in 1994, to $649,581,000 from
$661,860,000 in 1993. The following table analyzes core business revenue
changes in 1994 compared to 1993:

<TABLE>
<CAPTION>
PERCENTAGE
INCREASE/(DECREASE)
-------------------
<S> <C>
Price................................................. 2.9%
Volume................................................ (7.2)
Purchased businesses.................................. 2.4
----
Total............................................... (1.9)%
====
</TABLE>

Price and volume increases for low-level radioactive waste services, which
increased core business revenue by 3.1%, were more than offset by a
continuation of the industry conditions which negatively impacted the remainder
of the hazardous waste industry in 1993. The strong results in the low-level
radioactive waste service line resulted from the acceleration of volume
received at CWM's disposal facility in Barnwell, South Carolina, in
anticipation of a state deadline which denied access to that facility to
customers outside an eight-state region in the southeastern United States
("Southeast Compact") after June 30, 1994. South Carolina has adopted
legislation which allows the Barnwell site to continue operating until December
31, 1995, to serve customers located within this region. However, the Barnwell
disposal operations are not expected to contribute to CWM's operating results
in 1995 to the extent they did in 1994. The North Carolina Low Level
Radioactive Waste Management Authority has voted to select a site in that state
for development by CWM as a replacement regional disposal facility for the
Southeast Compact, but CWM is unable to predict when, if ever, its efforts to
develop a replacement site will be successful.

Event business was 9.0% of core business revenue in 1994 compared to 10.6% in
1993. The decline in event business revenue continues to be primarily the
result of reduced off-site disposal from environmental cleanup projects.

During 1994, CWM completed the strategic reconfiguration of its operations
announced in the third quarter of 1993 and discussed previously. Substantially
all anticipated cash expenditures were made. As a result of this program,
overhead, including depreciation and amortization, was reduced in 1994 by
approximately $60 million on an annualized basis.

Operating expenses declined as a percentage of revenue in 1994 to 70.0%
compared to 76.5% in 1993. Benefits from the restructuring were partially
offset by severe weather in the northeast portion of the United States during
the first quarter, which delayed projects and hampered operations, and a shift
in revenue mix toward lower margin services. Selling and administrative
expenses declined $22.3 million in 1994 on an absolute basis and were reduced
from 19.3% of revenue to 16.3%, primarily as a result of the restructuring.

WTI

WTI revenue increased 16% to $1,324,567,000 in 1994. Businesses acquired in
1993 and 1994 contributed approximately 47% of the revenue increase, while
incremental operating and construction revenue from new energy and water
development projects accounted for the remainder. Overall, revenue from
existing businesses was flat in 1994 compared to 1993.

Revenue from energy businesses increased 16% in 1994 as a result of the third
quarter commencement of commercial operations at the Falls Township trash-to-
energy facility in Pennsylvania and the wood waste, scrap tire, and landfill
gas-fired Ridge Generating Station in Florida. A full year of construction
revenue from the Lisbon trash-to-energy facility, as well as a

19
<PAGE>

shift in the mix of tonnage received at trash-to-energy plants from lower-
priced spot tons to generally higher-priced contract tonnage, also favorably
impacted 1994 revenue.

Water business revenue grew 29% in 1994 compared to 1993. Acquisitions
contributed approximately 80% of this growth, and expanded WTI's presence in
the industrial water and wastewater treatment markets, both domestically and
internationally, while increasing the breadth of WTI's technology and product
offerings. The balance of the 1994 revenue increase was attributable to the
full year impact of the NYOFCO biosolids pelletizer facility. Increased 1994
revenue from sales of water process systems and equipment to industrial
customers was offset by a decline in revenue from water, wastewater, and
biosolids contract service operations and curtailed equipment procurement by
municipal customers.

Air-related revenue declined 10% in 1994 compared to 1993, primarily because
of an expected lull in air pollution control retrofit activity by utilities
between Phases I and II of the Clean Air Act Amendments of 1990. In addition,
many industrial customers delayed awards for discretionary equipment purchases
in response to the uncertain economy and to rule-making delays and limited
enforcement activities by the U.S. Environmental Protection Agency. Energy,
water and air business revenue accounted for 52%, 35% and 13%, respectively, of
1994 revenue.

WTI's operating margin increased to 21.9% of revenue in 1994 compared with
21.2% in 1993. Improved operating performance at certain energy facilities and
the addition of the NYOFCO facility were partially offset by competitive
pricing pressures and margin declines in the contract service water business
and air and water product businesses. Selling and administrative expenses
declined as a percentage of revenue from 9.4% to 9.0% as a result of the
integration of acquisitions, ongoing cost containment activities and a larger
revenue base over which to spread the fixed components of such costs.

WM International

Stated in U.S. dollars, WM International revenue grew $299.7 million or 21.2%
to $1,710,862,000 in 1994 compared to $1,411,211,000 in 1993. Components of
revenue change are as follows:

<TABLE>
<CAPTION>
PERCENTAGE
INCREASE
----------
<S> <C>
Price.......................................................... 1.7%
Volume (including start-ups)................................... 8.9
Purchased businesses........................................... 9.4
Foreign currency translation................................... 1.2
----
Total........................................................ 21.2%
====
</TABLE>

Lower inflation and weak economic conditions in many European countries
constrained WM International's ability to increase prices. In Italy, where a
substantial portion of its business is municipal contracts, renewals during
much of 1994 were consistently at reduced prices, a condition which is expected
to persist in 1995. However, a price increase was obtained on the municipal
contract in Buenos Aires, Argentina. The volume increase in 1994 related
primarily to construction activity on the solid waste SENT landfill in Hong
Kong. Economic and competitive pressures caused volume declines in Italy,
France and Germany, which were more than offset by volume increases in other
countries.

Revenue increases from acquisitions slowed in 1994 compared to 1993. While WM
International continued to make acquisitions in 1994 and expects to do so in
1995, it believes it is now well positioned in many of its markets and will be
selective with respect to such acquisitions, focusing particularly

20
<PAGE>

on "tuck-in" acquisitions (small acquisitions in markets where WM International
already has a support staff).

Operating expenses increased to 72.7% of revenue in 1994 compared with 71.5%
in 1993 due to higher labor costs in Italy, pricing pressure in Italy, Germany
and France, and flow control issues and landfill permitting delays in Italy and
France. Selling and administrative expenses decreased to 13.4% of revenue in
1994 compared to 14.1% in 1993 as a result of the impact of "tuck-in"
acquisitions, a higher revenue base to absorb the costs of corporate and
country management and administrative infrastructure, integration of acquired
businesses, and a continued focus on improved productivity and administrative
cost reduction.

Rust

Rust 1994 revenue was $1,682,907,000 compared to $1,534,465,000 in 1993, an
increase of 9.7%. Revenue growth by line of business is shown in the following
table ($000's omitted):

<TABLE>
<CAPTION>
PERCENTAGE
1993 1994 INCREASE
---------- ---------- ----------
<S> <C> <C> <C>
Engineering, construction and consulting
services.................................. $ 798,340 $ 967,671 21.2%
Remediation and industrial services....... 704,360 715,236 1.5
Asbestos abatement........................ 31,765 -- N/A
---------- ----------
Total................................... $1,534,465 $1,682,907 9.7%
========== ==========
</TABLE>

Excluding the effect of the asbestos abatement business, revenue increased
12% in 1994 compared with 1993.

Engineering, construction and consulting services revenue grew by 21.2% in
1994. The full year impact of the 1993 acquisitions and domestic and foreign
1994 acquisitions resulted in revenue growth of 17.7%. The balance came from
increases in existing businesses, primarily the result of work on two pulp and
paper facilities. Backlog in this business line at December 31, 1994, increased
by $437 million from December 31, 1993, to $1.2 billion.

Remediation and industrial services revenue grew by 1.5% in 1994. Growth was
the result of the full-year impact of 1993 acquisitions. Revenue in existing
businesses declined due to severe weather in the first quarter and delays by
scaffolding and industrial customers of scheduled maintenance at their plants.
In addition, the anticipated award of a large federal remediation contract was
delayed. The backlog in this business line at December 31, 1994, decreased by
$26 million from December 31, 1993, to $627 million, including $404 million
related to businesses to be transferred to OHM Corporation ("OHM") in the
transaction discussed in the following paragraph.

In December 1994, Rust signed an agreement with OHM to acquire an
approximately 40% interest in OHM in exchange for Rust's remediation services
business. Subject to approval by OHM shareholders, the transaction is expected
to close in May 1995. For 1994, the business to be transferred had revenue of
$231.1 million and operating income (after operating, selling and
administrative expenses) of $6.0 million. Rust sees this transaction as a
strategic alliance and expects to benefit from being able to concentrate on its
core engineering, construction and industrial services businesses while relying
on OHM to provide remediation services to Rust's customers on a preferred
basis.

The backlog in the two business lines includes approximately $449 million (of
which $227 million will be transferred to OHM) for several Department of
Defense contracts awarded to Rust, including two Total Environmental
Restoration Contracts. There can be no assurance that specific projects

21
<PAGE>

identified and performed pursuant to such contracts will result in aggregate
revenues of $449 million over their remaining terms.

Revenue from affiliated companies was $224 million in 1994 compared with $243
million in 1993.

Excluding the charge discussed in the following paragraph, operating expenses
were 83.3% of revenue in 1994 compared with 81.5% in 1993, partially the result
of severe weather in the first quarter and delayed projects which resulted in
less efficient personnel utilization. In addition, 1994 saw a shift in revenue
mix in favor of lower margin businesses. Selling and administrative expenses
were 10.4% of 1994 revenue compared with 10.2% of 1993 revenue. The increase in
1994 is attributable to the lower revenue base in existing businesses, and
acquisition activity in 1993 and 1994. The level of selling and administrative
expenses associated with acquired companies was higher than that of existing
businesses, but it is anticipated that these expenses will decline as a
percentage of revenue as the acquired companies are integrated into existing
operations.

In 1994, Rust recorded a pretax charge of $9.2 million for the write-off of
assets and the recognition of one-time costs incurred during the fourth quarter
in connection with the discontinuance of its marine construction and dredging
operations, and the closing of offices in a consolidation of the engineering
and construction groups. After tax and minority interest, the charge reduced
the Company's net income by $0.01 per share.

OTHER ITEMS

Gains from Stock Transactions of Subsidiaries

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. In 1992, the Company, CWM and WTI
recognized a nontaxable gain of $240 million (before minority interest) as a
result of the WM International IPO in April of that year.

Interest

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

<TABLE>
<CAPTION>
1992 1993 1994
-------- --------- ---------
<S> <C> <C> <C>
Interest expense.......................... $310,949 $ 401,469 $ 445,320
Interest income........................... (57,693) (41,432) (34,613)
Capitalized interest...................... (87,897) (100,591) (104,512)
-------- --------- ---------
Interest expense, net................... $165,359 $ 259,446 $ 306,195
======== ========= =========
</TABLE>

Net interest expense has increased during the three-year period, partially
the result of a management decision to increase the leverage of the Company.
The impact of 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 million paid to former
stockholders of Brand who elected to receive cash in connection with the merger
of Brand into a wholly-owned subsidiary of Rust. Debt levels remained flat from
December 31, 1993, to December 31, 1994, as an increased emphasis on cash flow
from operations and the disposition of under-performing businesses and assets
generated sufficient funds for capital expenditures and dividends, but interest
expense increased as a result of higher U.S. interest rates and the full year
impact of the 1993 borrowings. Capitalized interest varies, depending upon the
level of capital projects such as solid waste landfills and trash-to-energy
plants that are in process at any point in time. The Company expects
capitalized interest to decline in 1995 as a number of significant capital
projects were completed near the end of 1994.

22
<PAGE>

Minority Interest

The decline in minority interest in 1993 reflected the lower earnings of the
Company's subsidiaries in that year and the minority interest (approximately
$78.6 million) in the special charge recorded by CWM.

Sundry Income, Net

Sundry income relates primarily to earnings recorded on the equity method
from the Company's investments in ServiceMaster Consumer Services Limited
Partnership and Wessex. In addition, CWM recognized a gain in the first quarter
of 1993 on the sale of shares of common stock of WTI it had held for
investment.

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 1993 income tax provision 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 $0.14 per share, for the cumulative effect
of these accounting changes in 1992. Except for the one-time charge, the effect
of these accounting changes on 1992 and subsequent years' earnings was not
significant.

During 1994, the Company was required to adopt FAS No. 112--Employers'
Accounting for Postemployment Benefits--and FAS No. 115--Accounting for Certain
Investments in Debt and Equity Securities. The adoption of FAS 112 did not have
a material impact on the Company's financial statements as its previous
accounting was substantially in compliance with the new standard. Other than
for short-term investments which were previously accounted for in accordance
with FAS No. 115, the Company does not have and does not contemplate acquiring
significant investments of the type covered by that standard.

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

23
<PAGE>

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 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, 1994. 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 ("PRPs"), 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 judgment and experience in remediating such sites
for the Company as well as for unrelated parties, information available from
regulatory agencies as to cost of remediation, and the number, financial
resources and relative degree of responsibility of other PRPs who are jointly
and severally liable for remediation of the specific site, as well as the
typical allocation of costs among PRPs. 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 6 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 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 $24,800,000, $34,800,000 and $58,800,000 on remedial
activities at closed sites in 1992, 1993, and 1994, respectively, and
anticipates expenditures of approximately $40,000,000 in 1995.

24
<PAGE>

The Company has filed several lawsuits against numerous insurance carriers
seeking reimbursement for past and future remedial, defense and tort costs at a
number of sites. The carriers have denied coverage and are vigorously defending
these claims. No amounts have been recognized in the financial statements for
any future 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 1992, 1993 or 1994.

FINANCIAL CONDITION

Liquidity and Capital Resources

The Company is primarily in a service industry and has neither significant
inventory nor seasonal variations in receivables. Accordingly, cash flow from
operating activities is used primarily for the purchase of property and
equipment and acquisition of businesses, and, in 1992 and 1993, for stock
repurchases. The Company had a working capital deficit of $90,887,000 at
December 31, 1994, compared with working capital of $99,958,000 at December 31,
1993. Current debt increased $136,195,000, primarily because the Company
anticipates having cash flow available for debt reduction in 1995 and
accordingly, at the end of 1994, decided not to seek additional committed long-
term borrowing facilities which would have permitted the reclassification of
additional otherwise short-term debt to long-term. Accounts receivable
increased $195,961,000 while accounts payable and accrued expenses increased
$301,760,000, as a result of business growth, acquisitions and the impact of a
weaker U.S. dollar on the translation of foreign currency denominated balance
sheets. Smaller changes in other current asset and current liability accounts
reflect the effects of normal business activities.

Other than for the impact of foreign currency translation, long-term and
short-term debt declined from December 31, 1993, to December 31, 1994. Capital
expenditures and acquisitions were funded by cash flow from operations,
proceeds from the sales of businesses, and improved working capital management.
At December 31, 1994, short-term and long-term debt (excluding WTI project
debt) were 49.4% of short-term debt and total capital (including minority
interest in subsidiaries and put options), compared to 52.5% at December 31,
1993. The Company believes that it has adequate liquidity to meet its current
capital needs and finance anticipated growth. Substantial cash is provided by
operating activities, and management intends to continue its emphasis on
enhancing operating cash flow in 1995. In addition, a major portion of capital
expenditures, including acquisitions and development projects, is discretionary
and could be deferred if necessary.

Derivatives

From time to time, the Company and certain of its subsidiaries use
derivatives to manage currency, interest rate, and commodity (fuel) risk.
Derivatives used are simple agreements which provide for payments based on the
notional amount, with no multipliers or leverage. Gains or losses on such
instruments to date have not been material. While the Company is exposed to
credit loss in the event of non-performance by counterparties to derivatives,
in all cases such counterparties are highly rated financial institutions and
the Company does not anticipate non-performance. See Note 5 to Consolidated
Financial Statements for further discussion of the use of and accounting for
such instruments.

25
<PAGE>

Acquisitions and Capital Expenditures

Capital expenditures, including $330,530,000, $443,535,000 and $56,786,000
for property and equipment of purchased businesses in 1992, 1993 and 1994,
respectively, are shown in the following table ($000's omitted):

<TABLE>
<CAPTION>
1992 1993 1994
---------- ---------- ----------
<S> <C> <C> <C>
Land (primarily disposal sites).......... $ 639,489 $ 660,226 $ 582,287
Buildings and leasehold improvements..... 196,680 195,472 141,164
Vehicles................................. 270,712 373,055 226,005
Containers............................... 168,721 231,586 167,936
Other equipment.......................... 687,593 702,374 395,022
---------- ---------- ----------
Total.................................. $1,963,195 $2,162,713 $1,512,414
========== ========== ==========
</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 1994,
46 businesses were acquired for $172,908,000 in cash and notes, 73,809 shares
of the Company's common stock and 156,124 shares of WTI common stock. The
foregoing acquisition data excludes minor acquisitions where consideration paid
was less than $1 million. The Board of Directors has approved a capital
expenditure budget of $1.275 billion for 1995, including a minimal level of
acquisitions. The Company expects to finance this program, as well as any
unbudgeted acquisition activity, through cash flow from operations. The Company
scaled back its acquisition program in 1994, but continues to seek acquisitions
that promise above average returns or meet strategic objectives, and expects
acquisition activity to increase in 1995. The Company believes it has adequate
capital resources to finance any attractive acquisitions that become available.

Capital Structure

Through 1993, the Company financed capital expenditures and acquisitions
primarily through the use of debt, taking advantage of favorable interest
rates. In 1994, increased emphasis was placed on cash flow and reducing
leverage. This emphasis is expected to continue in 1995. The following table
reflects the impact of these strategies:

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1992 1993 1994
----- ----- -----
<S> <C> <C> <C>
Long-term debt as a percent of total capital............ 38.2% 49.4% 45.6%
Short-term and long-term debt as a percent of
short-term debt and total capital...................... 41.8% 52.5% 49.4%
</TABLE>

The ratios above include minority interest in subsidiaries and put options 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.

While the Company expects 1995 free cash flow from operations, after budgeted
capital expenditures, to be approximately $500 million, the ratios above will
be adversely impacted by the purchase of the public shares of CWM and Rust (see
"Subsequent Events") as these transactions will reduce minority interest and
increase debt.

The Boards of Directors of each of WMX, WTI and Rust 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 1996.
During 1993, WMX repurchased

26
<PAGE>

approximately 8.4 million of its shares, and during 1994 WTI repurchased
approximately 3.3 million shares and Rust repurchased 203,800 shares. Also see
"Subsequent Events."

During 1994, WMX sold put options on 17.9 million shares of its common stock
in conjunction with the repurchase program. The put options give the holders
the right at maturity to require the Company to repurchase its shares at
specified prices. Proceeds of $29,965,000 from the sale of put options were
credited to additional paid-in capital. In the event the options are exercised,
the Company may elect to pay the holder in cash the difference between the
strike price and the market price of the Company's shares, in lieu of
repurchasing the stock.

Options on 9.0 million shares expired unexercised in 1994, as the price of
the Company's stock was in excess of the strike price at maturity. Options on
4.7 million shares were exercised in February 1995, and the Company elected to
settle them for cash in the amount of $12,019,000. The remaining 4.3 million
options expire in July and August 1995, at strike prices ranging from $25.588
to $28.833 per share. The Company sold additional put options in February and
March 1995 to replace those which matured.

During 1994, the Company formed an Employee Stock Benefit Trust and sold 12.6
million shares of treasury stock 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.

Subsequent Events

In January 1995, the holders of a majority of the outstanding CWM shares
(other than those held by WMX) approved a merger transaction which resulted in
WMX acquiring all of the outstanding CWM shares which it did not previously
own, in return for convertible subordinated notes issued by WMX.

In February 1995, the Company offered to acquire the approximately 4% of
Rust's shares held by the public for $14 per share in cash. The transaction is
subject to approval by a special committee of independent directors appointed
by the Rust Board of Directors, but does not require stockholder approval. If
approved, the transaction is expected to be completed during the second quarter
of 1995.

See Note 16 to Consolidated Financial Statements for additional information.

Outlook

The Company's business units enter 1995 in significantly different
situations. WMI has strong momentum. Price and volume are trending up in the
commercial and rolloff segments. Disposal prices appear to have bottomed out
and are beginning to increase in certain areas of the country, although there
is still pressure in spots. Residential pricing pressure continues on contract
rebids, but some price increase will result from existing contracts with
inflation adjustments. The loss of the City of Philadelphia disposal contract
will negatively impact the first six months compared to 1994, but recycling
commodity prices remain strong and recycling volume is increasing. Acquisition
activity is expected to accelerate from 1994 levels. Overall, 1995 margins
should benefit from operating productivity enhancements, price increases and
selling and administrative costs rising more slowly than revenue.

27
<PAGE>

CWM continues to be negatively impacted by the changes in the hazardous waste
industry. In addition, the South Carolina legislation which denies access to
the Barnwell disposal facility to customers outside the Southeast Compact, and
currently requires the site to close December 31, 1995, will reduce the revenue
and profit contributions of the low-level radioactive waste service business
line in 1995. The failure to obtain an operating low-level radioactive waste
disposal site beyond 1995 would have a material adverse impact on CWM's net
income. During 1994, CWM restructured its operations to adapt to market
conditions, and substantially reduced its overhead. However, the chemical waste
services line of business has continued to underperform. Management is
continuing to evaluate alternatives to address this situation. On March 14,
1995, the Board of Directors approved a plan to further reduce the scope of the
chemical waste services business by selling or otherwise eliminating
technologies and/or service locations which are not meeting customer service or
performance objectives. Management is finalizing the details of this plan,
which has resulted in CWM recording an additional restructuring charge of
approximately $141 million (before tax) in the first quarter of 1995.

WTI's existing businesses continue to perform well, but because of slow
growth in domestic trash-to-energy and independent power markets, and a
resulting shift in its business mix to the lower margin air and water markets,
it expects that 1995 earnings growth will not exceed 10%.

Rust continues to focus its resources on service lines which add the greatest
value, and to restructure the company accordingly. During the fourth quarter of
1994, Rust announced the discontinuance of its marine construction and dredging
operations, the closing of offices in a consolidation of the engineering and
construction groups, and the signing of the definitive agreement with OHM under
which OHM will acquire Rust's hazardous waste and nuclear remediation services
businesses in exchange for 40% of the OHM shares outstanding following the
transaction. Rust's backlog has continued to increase, especially with projects
for the pulp and paper industry, and management believes it is well positioned
for improved results in 1995.

The outlook for WM International reflects the economic conditions and
political and regulatory diversity of its markets. Operations in Italy face a
politically uncertain environment, pricing declines on the renewal of municipal
collection contracts, permitting problems at several landfills and rising labor
costs. Operations in Germany are affected by difficult economic conditions and
the need to integrate existing businesses into a base for internal growth.
France remains a problematic market, economically and competitively. WM
International's focus for 1995 will be on resolving these difficulties and
achieving internal growth, cost control and improved returns on its investments
in capital and human resources. Budgets for 1995 include capital expenditures
of 120 million pounds and positive cash flow of 50 million pounds. WM
International believes this strategy should enhance stockholder value in the
long term, but does not anticipate earnings growth of more than 5% in 1995.

The strategic review announced by WMX in the third quarter of 1994 is
continuing, but results to date have reinforced management's commitment to
increasing the Company's return on the assets it has in place and better
leveraging its Company-wide resources. Efforts are now focused on improving
links among the Company's operating and management resources to offer better
service to customers and lower the costs of operations. The completion of the
repurchase of the CWM public shares in January 1995 and the proposed repurchase
of the Rust public shares will enable the Company to simplify its
organizational structure. WMX intends to be a strategic management company,
carefully matching resources to worldwide opportunities. Over time, the Company
hopes to achieve a more balanced combination of revenue growth, return on
assets, and increased cash generation in its core business lines of waste
management, clean water, clean energy and engineering/technology.

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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 and environmental and infrastructure consulting services,
hazardous and radioactive substances remediation services and 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 ten 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, 1994 and, where such information relates
to any period prior to 1994, 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, 1994, Waste Management conducted solid waste management and
related services operations in 48 states, the District of Columbia, four
Canadian provinces and Mexico. During 1992, 1993 and 1994, operations in
California, Florida and Pennsylvania together accounted for approximately 34%,
34% and 30%, respectively, of WMI revenue. No customer accounted for as much as
2% of WMI revenue in 1992 or 1993 or 1% in 1994.

Fees paid to Waste Management by its solid waste collection customers
(including charges paid by such customers for disposal and curbside collection
of recyclable materials) accounted for approximately 77% of WMI revenue in 1992
and 1993 and 76% in 1994. Transfer and disposal services provided to
municipalities, counties and other waste management companies and sales of
recyclable materials accounted for approximately 23% of such revenue in 1992
and 1993 and 24% in 1994.

Collection

Waste Management provides solid waste collection services to approximately
1,009,100 commercial and industrial customers. Collection services are also
provided to approximately 11,779,500 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 1992 and 1993 and
71% in 1994. See "Recycling and Energy 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

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<PAGE>

customer as part of WMI's services. Stationary compactors, which compact 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. Fees are determined by such considerations as market
factors, collection frequency, type of equipment furnished, type and volume or
weight of the waste collected, 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

Waste Management operates 129 solid waste transfer stations. A transfer
station is a facility where solid waste is received from collection vehicles
and then transferred to, and in some cases 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 and improving the efficiency of transporting waste to
final disposal facilities.

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
processing of recyclable materials, the transport distance involved and the
cost of disposal.

Recycling and Energy 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 or other disposition 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, type and volume or weight of the recyclable material, degree of
processing required, distance the recyclable material must be transported and
value of the recyclable material.

As part of its residential solid waste collection services, WMI engages in
curbside collection of recyclable materials from residences in the United
States and Canada, also through its Recycle America(R) and Recycle Canada(R)
programs. Curbside recycling services generally involve the use of specially
designed, compartmentalized vehicles to collect recyclable paper, glass,
plastic and metal

30
<PAGE>

waste materials, which may be separated by residents into different waste
containers or commingled and sorted by the curbside collector. The recyclable
materials are then typically deposited at a local facility where they are
sorted further and processed for resale. The prices received by the Company for
recyclable materials fluctuate substantially depending upon domestic and
foreign demand for such materials, prices for new materials and other factors.

In 1994, WMI provided curbside recycling services to approximately 6,400,000
households pursuant to more than 850 contracts in the United States and Canada.
In 1993, WMI provided such services to more than 5,800,000 households. Waste
Management has approximately 119,000 commercial and industrial recycling
services customers.

Waste Management operates 116 materials recovery facilities for the receipt
and 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 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 1994, the joint ventures processed
approximately 4,100,000 tons of recyclable materials. WMI also provides tire
recycling services.

Energy Recovery

At 33 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
electricity generators. Electricity generated by these facilities is sold,
usually to public utilities under 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."

Disposal

Waste Management operates 134 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. Waste Management also provides yard-waste
composting services at a number of its disposal facilities. 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.

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<PAGE>

Suitable sanitary landfill facilities and permission to expand existing
facilities may be difficult to obtain in some areas because of land scarcity,
local resident opposition and expanding governmental regulation. As its
existing facilities become filled in such areas, 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 or expansion of existing sites and to obtain the necessary permits from
regulatory authorities to construct and 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 expanded or operated. However,
management believes that the facilities currently available to WMI are
sufficient to meet the needs of its current operations in most areas 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 1992, 1993, and 1994 approximately 50%, 52%, and 55%,
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 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 also provides portable sanitation services to municipalities
and commercial customers. The portable sanitation services, which are marketed
under the Port-O-Let(R) trade name, are also used at numerous special events
and 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.

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, 1994, such services accounted
for the following percentages of CWM's hazardous waste management and related
services revenue:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Treatment, resource recovery and disposal............... 68.5% 70.6% 72.6%
Special services........................................ 15.3 18.6 18.2
Transportation.......................................... 16.2 10.8 9.2
</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 and

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<PAGE>

radioactive 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 also owns a majority interest in a subsidiary which
operates a resource recovery facility, a disposal facility and storage
facilities in Mexico.

The hazardous waste services industry (other than the low-level radioactive
waste services industry) currently has substantial excess capacity caused by a
number of factors, including a decline in environmental remediation projects
generating hazardous waste for off-site treatment and disposal, continuing
efforts by hazardous waste generators to reduce volume and to manage it on-
site, and the uncertain regulatory environment regarding hazardous waste
management and remediation requirements. These factors have led to reduced
demand and increased pressure on pricing for non-radioactive hazardous waste
management services, consequences which CWM expects to continue for the
foreseeable future.

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. 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'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

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<PAGE>

containment of such waste. At two 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
contractors retained 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 operates several 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.

CWM provides comprehensive low-level radioactive waste management services in
the United States consisting of disposal, processing and various other special
services. To a lesser extent, it provides services with respect to radioactive
waste that has become mixed with regulated chemical waste.

CWM's radioactive disposal operations 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. 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. The North Carolina Low-Level
Radioactive Waste Management Authority has voted to select a site in that state
for development by CWM as a replacement regional disposal facility for the
Southeast Compact.

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<PAGE>

During 1992, South Carolina adopted legislation allowing the Barnwell site to
continue operating until December 31, 1995, at which time it must close unless
the closure date is extended by the South Carolina legislature, and to continue
receiving waste generated outside the Southeast Compact until June 30, 1994.
Effective June 30, 1994, the Barnwell Facility was required by South Carolina
law to cease accepting waste generated outside the Southeast Compact. The
closure of the Barnwell facility would adversely affect CWM's low-level
radioactive waste disposal operations.

CWM has entered into contracts with the responsible agencies representing
several groups of states to site, license, construct, operate and close new
regional low-level radioactive waste disposal facilities for those groups. 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 proceeded in the manner and on the schedule contemplated by
CWM and such agencies. At this time the Company and CWM are unable to predict
when, if ever, any additional such disposal facility would be completed.

CWM also 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.

ENGINEERING, CONSTRUCTION, INDUSTRIAL AND RELATED SERVICES

Rust is a leading provider, through its subsidiaries, of engineering,
construction and environmental and infrastructure consulting services,
hazardous and radioactive 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 remediation and other on-site industrial and related services provided
by Rust include on-site remediation of hazardous and radioactive substances,
scaffolding, industrial cleaning and maintenance services and nuclear and
utility services and maintenance. In addition, Rust provides engineering and
environmental and infrastructure consulting services to clients in several
countries outside 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.
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

Rust received 43%, 52%, and 57% of its total consolidated revenues in 1992,
1993 and 1994, respectively, from the performance of 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

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<PAGE>

engineering services provided by Rust encompass the following disciplines:
architectural; electrical; control systems; process piping; mechanical;
structural; heating, ventilation and air conditioning ("HVAC"); and civil. The
construction services provided by Rust are generally performed in connection
with projects on which Rust has also provided the design engineering services.
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 dismantling and demolition services.
Rust's engineering services are provided on a stand-alone basis but are also
provided together with its construction services 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; managing solid waste, water and wastewater,
groundwater and air resources; design and construction oversight of
transportation facilities; and photogrammetry. Such services are provided to
private industry, as well as 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, special government agencies and, to some extent, private
industry 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 1992
through 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 Turkey, 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.

Remediation and Other On-Site Industrial and Related Services

Rust received 57%, 48% and 43% of its total consolidated revenues in 1992,
1993 and 1994, respectively, from the performance of hazardous and radioactive
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").

Hazardous and Radioactive 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

36
<PAGE>

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 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 and radioactive substance
remediation and other industrial services to pursue additional comprehensive
federal government environmental services contracts.

Rust has entered into an agreement to combine its hazardous and radioactive
substance remediation business with a third party. See "Acquisitions and
Dispositions" below.

On-Site Industrial and Related Services

Rust provides various on-site industrial and related 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 also performs a
variety of types of other industrial services--water blasting, tank cleaning,
explosives blasting, chemical cleaning, industrial vacuuming, catalyst
handling, specialty chemicals and separation technologies--primarily for
clients in the petrochemical, chemical, and pulp and paper industries,
utilities and, to a lesser extent, the government sector. Rust also provides
on-site plant services, including 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.

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 approximately 850 megawatts of electric
generating capacity, which ranks it among the nation's largest independent
power producers.

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<PAGE>

WTI's trash-to-energy projects utilize proven boiler and grate technology
capable of processing up to 2,250 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
process water and wastewater. Wheelabrator Clean Water provides a range of
biosolids management services to approximately 350 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 human health and the environment.

Wheelabrator Clean Water also develops and operates facilities at which
biosolids are dried and pelletized. WTI has four facilities currently in
operation, including a recently completed facility in Baltimore, Maryland, and
one other facility in the advanced stages of development in Baltimore,
Maryland. WTI has approximately 565 dry-tons-per-day of biosolids drying
capacity either in operation or under construction. 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,

38
<PAGE>

refining process systems, management systems for process control, and plant
diagnostic evaluations and energy audits. WTI also provides specialty
environmental equipment repair and cleaning services for industrial water and
wastewater management. 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.

Through its Wheelabrator Engineered Systems Inc. subsidiary, Wheelabrator
Clean Water engineers and manufacturers a variety of environmental products and
systems. WTI provides single-source, advanced-systems solutions for the
treatment of municipal drinking water, industrial process water and wastewater
and for slurry pumping and high solids dewatering. It 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. WTI
also provides high technology water purification and wastewater treatment
systems which utilize a variety of technologies including demineralizers,
reverse osmosis and vacuum degasification products. In addition, WTI designs
and installs process technology systems utilizing evaporators, crystallizers,
electrodialysis, dialysis, reverse osmosis and ultrafiltration for treating
industrial process wastewater. Through other units, WTI produces profile wire
screen products for groundwater production, hydrocarbon processing, food
processing and coal/mineral processing.

WTI also manufactures a line of nonpolluting materials cleaning systems 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 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, constructs and maintains tall
concrete chimneys and storage silos. 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 controls hazardous gases
and sulfur dioxide emissions, thereby reducing 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 detrimental to
air quality and the environment generally. 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 enforcement of the Clean Air Act Amendments of 1990,
together 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

39
<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 following table
shows the derivation of Waste Management International's revenues for the years
indicated:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Collection Services........................................ 73% 69% 64%
Treatment and Disposal Services............................ 27 31 36
</TABLE>

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 seven years of numerous companies and
interests in Europe in various of its service lines, including 50 acquisitions
in 10 countries in 1994, most of which were small acquisitions which
complemented or expanded existing Waste Management International operations in
various markets. Notable acquisitions in 1992 included a French operator of
solid waste and construction and demolition debris landfills and a provider of
other landfill services; a Swedish hazardous waste company; and a leading solid
waste management company and one other solid waste collection company in
Finland. In 1993, major acquisitions included, in the UK, the acquisition by
the joint venture described below between Waste Management International and
Wessex of a solid waste collection and disposal company; in France, a company
engaged primarily in solid waste collection; 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.

Waste Management International is a party to a joint venture with Wessex to
provide waste management and related services in the United Kingdom. In
accordance with its objective of maintaining a local identity, Waste Management
International, in certain cases, also operates through other companies or joint
ventures in which Waste Management International and its affiliates own less
than a 100% interest.

Because of the size and timing of projects and acquisitions, Waste Management
International's revenue mix by country varies from year to year. Countries
where revenue exceeded 10% of Waste Management International's consolidated
total were: Italy (38%) and Sweden (10%) in 1992, Italy (32%) and The
Netherlands (11%) in 1993, and Italy (26%) and Germany (12%) in 1994.

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" below. 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.

40
<PAGE>

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 International provided collection services as of December 31, 1994
to governmental and private customers in ten European countries, Argentina,
Australia, Brunei, Hong Kong, Indonesia, 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 approximately 280 collection and staging
facilities and approximately 60 waste transfer facilities.

At December 31, 1994, Waste Management International's collection services
encompassed approximately 1,600 separate municipal contracts (the largest
number of which are in Italy) serving nearly 6,600,000 households (including
provision of recycling services to over one million households) and commercial
and industrial collection services to nearly 240,000 solid waste and
approximately 26,000 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, provision of hazardous waste
treatment and site remediation services and construction of treatment or
disposal facilities for third parties. 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,
1994, Waste Management International operated 22 waste treatment facilities, 52
recycling and recyclables processing facilities, 11 incinerators and 57
landfills; 19 of the 22 waste treatment facilities are for hazardous waste and
4 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.

41
<PAGE>

At present, in most countries in which Waste Management International
operates, landfilling is the predominant disposal method employed. Waste
Management International owns or operates solid waste landfills in Hong Kong,
Italy, Sweden, France, Spain, Australia, the United Kingdom, Germany, Denmark,
Argentina and New Zealand. 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 approximately 600,000 in Hamm and nearby towns. Under its current
permits, the facility is able to produce 18 megawatts of steam-generated
electricity and sold approximately 68,000 megawatt hours to the local power
grid in 1994 (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. The facility would be capable of
producing enough electricity to power more than 35,000 homes. Waste Management
International also operates seven small conventional municipal solid and other
waste incineration facilities.

Waste Management International owns or operates hazardous waste treatment
facilities in Italy, Sweden, France, Germany, the United Kingdom, The
Netherlands, Hong Kong, Indonesia, Australia and New Zealand and has entered
into agreements with respect to the development of hazardous waste treatment
facilities in Argentina, Spain and Thailand. 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 site. 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 and sludges and operates a paint waste treatment facility.

REGULATION

42
<PAGE>

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. Many state and local
governments have enacted mandatory or voluntary recycling laws and bans on the
disposal of yard-waste in landfills. The effect of these and similar laws is to
reduce the volume of wastes that would otherwise be disposed in Company
landfills. In addition, municipalities and other governmental entities with
whom the Company contracts to provide solid waste collection or disposal
services, or both, may require the Company as a condition of securing the
business to provide recycling services and operate recycling and composting
facilities, which may cause the Company to incur substantial costs. 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, amended, repealed or enforced, or any failure of legislation or
regulation to 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.

The demand for certain of the services provided by the Company, particularly
its hazardous waste management and remediation services, is dependent on the
existence and enforcement of federal, state and foreign laws and regulations
which govern the discharge of hazardous substances into the environment. Such
businesses will be adversely affected to the extent that such laws or
regulations are amended or repealed, with the effect of reducing the regulation
of, or liability for, such activity or that the enforcement of such laws and
regulations is lessened.

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

43
<PAGE>

records and the recording of costs. Some state and local governments have
similar suspension and debarment laws or regulations.

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, recycling and energy
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 and air
pollution laws and regulations. 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.

The EPA and various states acting pursuant to EPA-delegated authority have
promulgated rules pursuant to RCRA which serve as minimum requirements for land
disposal of municipal wastes. The rules establish more stringent requirements
than previously applied to the siting, construction, operation and closure of
all but the smallest municipal waste landfill facilities. In certain cases, the
failure of some states to adopt the federal requirements may increase costs to
meet inconsistent federal and state laws applicable to the same facility. The
Company does not believe that continued compliance with 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 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

44
<PAGE>

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 United States Nuclear Regulatory
Commission (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 managed during a project. Failure to meet these requirements could
result in termination of contracts, substantial fines and other penalties. 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 and to NRC regulations concerning services provided to
nuclear power plants.

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<PAGE>

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.

In May 1994, the U.S. Supreme Court ruled that residual ash from the
combustion of municipal solid waste is not exempt from federal hazardous waste
regulations. As a result of the Supreme Court's decision, the EPA announced
that ash from the combustion of municipal solid waste is subject to regulation
as a hazardous waste if it exhibits hazardous characteristics. In response to
these developments, WTI installed its patented WES-PHix technology at all of
its trash-to-energy facilities not previously subject to characterization
requirements and, as a result, may properly continue to manage its residual ash
as non-hazardous waste. Incremental expenditures, net of expected contractual
reimbursements from customers, required to treat and test residual ash at the
impacted facilities have not had and are not expected to have a material
adverse impact on WTI.

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 continuing applicability of certain provisions 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-
producing subsidiaries. While the recent changes in Congressional leadership
may increase the likelihood of a repeal or modification of PURPA, it is
unlikely that such action would abrogate the long-term contracts and orders
pursuant to which most of WTI's existing projects sell electricity.
Furthermore, the future growth of WTI's trash-to-energy and other small power
facilities business is not expected to be materially and adversely affected if
the various benefits of PURPA were repealed or substantially reduced on a
prospective basis, due to the passage of the Energy Policy Act of 1992
("EPACT"). EPACT created an alternative ownership mechanism by which
independent power producers can participate in the electricity generation
industry without the burdens of traditional public utility regulation.

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

46
<PAGE>

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.

RCRA also imposes restrictions on land disposal of certain hazardous wastes
and prescribes standards for hazardous waste land disposal facilities. Under
RCRA, land disposal of certain types of untreated hazardous wastes has been
banned except where the EPA has determined that land disposal of such wastes
and treatment residuals should be permitted. The disposal of liquids in
hazardous waste land disposal facilities is also prohibited.

The EPA from time to time considers 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. To the extent such changes are
adopted, they can be expected to adversely affect the demand for CWM's
services.

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" below. 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. Under RCRA regulations, a company must pay
the closure costs for a waste treatment, storage or disposal facility owned by
it upon the closure of the facility and thereafter pay post-closure care costs.
If such a facility is closed prior to its originally anticipated time, it is
unlikely that sufficient funds will have been accrued over the life of the
facility to fund such costs, and the owner of the facility could suffer a
material adverse impact as a result. Consequently, it may be difficult to close
such facilities to reduce operating costs at times when, as is currently the
case in the hazardous waste services industry, excess treatment, storage or
disposal capacity exists.

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 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

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<PAGE>

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. For the federal government's 1995 fiscal year, a maximum of $1.4
billion of Superfund spending has been authorized.

The U. S. Congress may consider reauthorization and revision of the Superfund
statute in 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 may
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. In addition, Congress may consider revision of the
liability imposed by the Superfund law for remediation of contamination caused
prior to a party's acquisition of a contaminated site, which could reduce the
remediation obligations of the Company and others who currently are jointly and
severally liable for remediation obligations under Superfund.

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 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

48
<PAGE>

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 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 and
radioactive 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), 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

49
<PAGE>

territories and possessions, Canada and Mexico) (the "Waste Management
International Allocated Activities"), except with respect to licensing of
technology and minor interests of 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 and
minor investments by the Company in publicly held entities 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 and will not engage 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.

In addition, in connection with the proposed transfer by Rust of its
hazardous and radioactive substance remediation business (see "Acquisitions and
Dispositions" below), the Company, Rust and their respective wholly owned
affiliates would agree with the transferee for a period of seven years
following the close of such transfer not to engage in providing on-site
hazardous and radioactive substance remediation services in North America.

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<PAGE>

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 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.

Although the Company's insurance program includes coverage for sudden and
accidental Environmental Impairment Liability ("EIL") risk, insurance coverage
in large amounts for non-sudden and accidental EIL risk continues to be
unavailable at a cost which management believes is reasonable. The coverage
terms and cost of the limited risk transfer EIL insurance of this type which is
available to the Company are such that the insurance has not been purchased. To
satisfy existing governmental requirements, the Company has secured non-sudden
and accidental EIL insurance coverage in amounts believed to be in compliance
with federal and state law. Under that policy, losses paid by the carrier must
be reimbursed by the Company over a period of years. 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 operation or financial condition.

EMPLOYEES

WMX Technologies and its subsidiaries employ a total of approximately 74,400
persons in their worldwide operations. Of this number, the Company employs
approximately 32,200 persons in its WMI solid waste and related services
operations, including approximately 24,600 persons employed in solid waste
collection, transfer, resource recovery and disposal activities, and
approximately 7,600 persons employed in managerial, executive, sales, clerical,
data processing and other solid waste and related activities.

CWM (excluding Rust) employed approximately 3,600 persons at December 31,
1994. Approximately 230 of CWM's employees were employed as managers or
executives and approximately 2,500 were employed in hazardous waste
transportation, treatment, resource recovery and disposal activities (including
approximately 630 performing technical, analytical or engineering services),
and approximately 870 were employed in sales, clerical, data processing and
other hazardous waste-related activities.

At December 31, 1994, WTI had approximately 4,100 full-time employees. WTI
considers relations with its employees to be satisfactory.

Rust employed approximately 16,400 persons at December 31, 1994, of whom
approximately 5,700 provided technical or engineering services (excluding craft
personnel hired on a temporary basis).

As of December 31, 1994, Waste Management International employed
approximately 18,100 persons. Of this number, Waste Management International
employed approximately 13,700 persons in its collection service operations,
2,100 in its treatment and disposal services operations and 2,300 in
administrative functions.

At December 31, 1994, approximately 6,800 of the Company's employees in North
America were unionized, primarily in the Company's solid waste and related
services operations, under collective bargaining agreements expiring on various
dates through 2000. At December 31, 1994, approximately 13,800 Waste Management
International employees were represented by labor unions. The Company believes
its employee relations are good.

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<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 3 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 1994, 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. Some future acquisitions could be material. The
acquisition of businesses also entails certain inherent risks. Although the
Company reviews 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 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) the Company's provision of certain financial assistance to WTI,
(ii) an option permitting 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 (iv) an agreement (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), (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
became interests in Waste Management International in

52
<PAGE>

1991. Such interests were reduced to 12% as a result of the Waste Management
International initial public offering in 1992. 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. 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,
the Company and OHM Corporation, previously an approximately 70% stockholder of
NSC ("OHM"), 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 a strategic reconfiguration of its
operations to meet then-current market demand. Among the actions taken as part
of this program were the elimination of approximately 1,600 positions,
consolidation of operations, sale of selected service centers in marginal
service lines and geographies, and centralization of several functions to
improve efficiency. The restructuring was based on the assumption that future
base business revenue growth, if any, would not keep pace with the recovery in
the general economy and that CWM would not make investments which would be
primarily supported by non-recurring (event business) volumes. On March 14,
1995, the Company's Board of Directors approved a plan to further reduce the
scope of the chemical waste services business by selling or otherwise
eliminating technologies and service locations which are not meeting customer
service or performance objectives. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Outlook" for further
information.

In March 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 Corporation.

In the fourth quarter of 1994, OHM agreed to acquire Rust's hazardous and
radioactive substance remediation business in exchange for a 40% interest in
OHM. Consummation of the transaction is subject to satisfaction of various
closing conditions, including the approval of OHM's stockholders.

On January 24, 1995, the Company acquired CWM common stock representing the
approximately 21% interest in CWM held at that time by public stockholders. The
acquisition occurred pursuant to a merger (the "Merger") in which all publicly
held shares of CWM common stock were converted into convertible subordinated
notes of the Company due January 24, 2005 and having a principal amount at
maturity of $1,000 per note (the "Notes"), subject to the payment of cash in
lieu of the issuance of fractional Notes. For a description of the terms of the
Notes, see Note 16 to the Company's Consolidated Financial Statements. The
Merger was approved by a committee of independent directors of CWM and by a
majority of the public stockholders of CWM. As a result of the Merger, CWM
became a wholly owned subsidiary of the Company.

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<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, 1994 represented approximately 18%, 6% and 28%, respectively, of
the Company's 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 1995. The Company's subsidiaries lease numerous office and operating
facilities throughout the world. For the year ended December 31, 1994,
aggregate annual rental payments on real estate leased by the Company and its
subsidiaries approximated $130,366,000.

The principal fixed assets of Waste Management consist of vehicles and
equipment (which include, among other items, approximately 18,900 collection
and transfer vehicles, 1,495,000 containers and 20,500 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, 1994, 105
solid waste disposal facilities, aggregating approximately 64,000 total acres,
including approximately 14,080 permitted acres, were owned by Waste Management
in the United States and Canada and 29 facilities, aggregating approximately
14,370 total acres, including approximately 6,040 permitted acres, were leased
from parties not affiliated with Waste Management under leases expiring from
1995 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, 1994, 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
disposed sites aggregated approximately 10,500 acres, including approximately
3,050 permitted acres.

The principal property and equipment of Rust consist of Rust's vehicles,
equipment and scaffolding inventory, which as of December 31, 1994 represented
(including its subsequently sold headquarters buildings) approximately 19% of
Rust's total consolidated assets. The principal fixed assets utilized in Rust's
operations at December 31, 1994 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 its corporate offices in Birmingham, Alabama and numerous office,
warehouse and equipment and scaffolding yard facilities in various locations
throughout the United States.

WTI currently owns, operates or leases 16 trash-to-energy facilities, six
cogeneration and small power production facilities, two coal handling
facilities, four 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.

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<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, 1994 consisted
of vehicles and equipment (which included, among other items, approximately
6,600 collection, transportation, and other route vehicles and approximately
300 pieces of landfill and other heavy equipment), and approximately 280,000
containers, including approximately 3,150 stationary compactors. In addition,
Waste Management International owns approximately 700 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, 1994 consisted of 49 solid
waste landfills owned, leased or operated by Waste Management International
aggregating approximately 3,400 acres, of which 2,470 are permitted, 8
hazardous waste landfills owned or leased by Waste Management International
aggregating approximately 1,120 acres, of which approximately 970 acres are
permitted, and trash-to-energy, other treatment, storage, or disposal and
various other manufacturing, office and warehouse facilities owned, leased or
operated by Waste Management International.

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<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names and ages (at April 1, 1995) of the
Company's executive officers and directors and a nominee for director, 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 1997 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)............... 63 Chairman of the Board and Director
Phillip B. Rooney (1) (3).............. 50 President and Director
James E. Koenig........................ 47 Senior Vice President, Treasurer and
Chief Financial Officer
D. P. Payne............................ 52 Senior Vice President-Corporate and
Public Affairs
Herbert A. Getz........................ 39 Vice President, General Counsel and
Secretary
Thomas C. Hau.......................... 59 Vice President, Controller and
Principal Accounting Officer
Donald A. Wallgren..................... 53 Vice President and Chief
Environmental Officer
H. Jesse Arnelle (2)................... 61 Director
Howard H. Baker, Jr. (4)............... 69 Director
Dr. Pastora San Juan Cafferty (3)...... 54 Director
Jerry E. Dempsey (2)................... 62 Director
Dr. James B. Edwards (5)............... 67 Nominee for Director
Donald F. Flynn (3).................... 55 Director
Peter H. Huizenga (4).................. 56 Director
Peer Pedersen (4)...................... 70 Director
James R. Peterson (3).................. 67 Director
Alexander B. Trowbridge (2)............ 65 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
(5) Nominee to become a Class I member

Dean L. Buntrock has been a director of the Company and 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. From May
1993 to January 1995, Mr. Buntrock was also Chairman of the Board of CWM, a
position he had also held from 1986 to 1991. Mr. Buntrock is also a director of
WTI, Rust, Waste Management International, Boston Chicken, Inc. and First
Chicago Corporation.

Phillip B. Rooney has served as a director of the Company since 1981 and as
its President and Chief Operating Officer since November 1984. Since January
1994, he has also served as Chairman of

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<PAGE>

the Board and Chief Executive Officer of WMI. Mr. Rooney commenced employment
with the Company in 1969 and first became an officer of the Company in 1971.
Since November 1990, he has served as Chairman of the Board and Chief Executive
Officer of WTI, and since January 1993, as Chairman of the Board of Rust. Mr.
Rooney is also a director of Waste Management International, Rust, WTI,
Illinois Tool Works, Inc., Caremark International Inc., Urban Shopping Centers,
Inc., and ServiceMaster Management Corporation, the general partner of
ServiceMaster Limited Partnership.

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 and Rust.

D.P. Payne has been a Senior Vice President of the Company since April 1995,
a position he previously held from August 1990 until May 1993. He has also been
Chairman of the Board of Directors of CWM since March 1995 and served as
President and Chief Executive Officer of CWM from September 1991 to March 1995.
Prior to becoming employed by the Company in 1990, Mr. Payne was Vice President
and Area General Manager of the Midwestern Area of International Business
Machines Corporation. He is also a director of Rust.

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, General Counsel and Secretary of WMI from April 1989 until
December 1993, and Vice President and Secretary of Rust from January 1993 to
May 1994. He served as Vice President, General Counsel and Secretary of WTI
from November 1990 until May 1993. Mr. Getz commenced employment with the
Company in 1983. He is a director of NSC.

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 LLP.

Donald A. Wallgren has been Vice President and Chief Environmental Officer of
the Company since 1992. He held the same position 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, McGee, Willis and Greene, a San Francisco-based
corporate law firm, for more than the past ten years. He also serves as the
Vice Chairman of the Pennsylvania 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, Donelson,
Bearman & Caldwell 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.

Dr. Pastora San Juan Cafferty has served as a Professor since 1985 at the
University of Chicago's School of Social Service Administration where she has
been a member of the faculty since

57
<PAGE>

1971. She was elected a director of the Company in July 1994. Dr. Cafferty also
serves as a director of Kimberly-Clark Corporation and People's Energy
Corporation and on the boards of the Regional Transportation Authority of
Northeastern Illinois, the Rush-Presbyterian-St. Luke's Medical Center, the
Lyric Opera Association and the National Women's Business Council.

Jerry E. Dempsey has served as a director of the Company since 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.

Dr. James B. Edwards has been President of the Medical University of South
Carolina since November 1982. From January 1981 to November 1982, he served as
the United States Secretary of Energy, and previously as Governor of the State
of South Carolina. Dr. Edwards served as a director of CWM from September 1986
to January 1995. Dr. Edwards is also a director of Phillips Petroleum Company,
SCANA Corporation, Wachovia Bank of South Carolina, N.A., South Carolina
National Corporation, Imo Industries Inc., Brendle's, Inc., Encyclopaedia
Britannica and National Data Corporation.

Donald F. Flynn has served as a director of the Company since 1981 and as
Chairman of the Board and President of Flynn Enterprises, Inc., a financial
advisory and venture capital firm, since November 1988. He has also served as
Chairman of the Board and Chief Executive Officer of Discovery Zone, Inc., a
franchisor and operator of indoor entertainment and fitness facilities designed
for children, since July 1992. Mr. Flynn has also served as a consultant to the
Company from January 1991 to December 1994. 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. Mr. Flynn is also a
director of Discovery Zone, Inc., Psychemedics Corporation, WTI and Waste
Management International.

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.
From January 1989 until December 1993, Mr. Huizenga served as a consultant to
the Company. 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 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. and Discovery Zone, Inc. 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 Chemical 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.

58
<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 the Chairman of the
Board and Chief Executive Officer of the Company at December 31, 1994, and each
of the four other most highly compensated executive officers of the Company
serving at December 31, 1994:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ---------------------
AWARDS PAYOUTS
----------- ---------
OTHER SECURITIES ALL
NAME AND ANNUAL UNDERLYING LONG-TERM OTHER
PRINCIPAL COMPEN- OPTIONS INCENTIVE COMPEN-
POSITION YEAR SALARY BONUS SATION(1) (SHARES)(3) PAYOUTS SATION(4)
--------- ---- ---------- ---------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock, 1994 $1,400,000 $1,120,000 $77,420(2) 158,640 $ 0 $ 500
Chairman and Chief 1993 1,400,000 0 78,702(2) 122,449 0 5,217
Executive Officer 1992 1,100,000 550,000 79,854(2) 150,999 0 9,522
Phillip B. Rooney, 1994 1,000,000 1,029,280 -- 113,314 0 500
President and Chief 1993 1,000,000 0 -- 87,464 97,800(5) 5,217
Operating Officer 1992 900,000 382,500 -- 123,545 880,200(5) 9,522
James E. Koenig, 1994 500,000 250,000 -- 42,493 0 500
Senior Vice 1993 500,000 0 -- 32,799 25,808(5) 5,217
President and Chief 1992 440,300 161,500 -- 47,258 232,275(5) 9,522
Financial Officer
J. Steven Bergerson, 1994 345,000 172,500 -- 29,320 0 500
Senior Vice 1993 345,000 0 -- 22,631 0 5,217
President 1992 312,500 115,500 -- 32,360 0 9,522
Herbert A. Getz 1994 330,000 172,500 -- 24,221 0 500
Vice President, 1993 285,000 0 -- 18,695 14,398(5) 5,217
General Counsel and 1992 260,000 56,310 -- 17,291 129,585(5) 9,522
Secretary
</TABLE>
- ----------
(1) 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.
(2) Includes financial planning expenses of $68,000 paid by the Company on
behalf of the named executive officer in 1993 and 1994 and $62,000 in 1992.
(3) 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
Employee Plans. The named officers also serve as directors or executive
officers of direct or indirect subsidiaries of the Company. Accordingly,
during 1993, Messrs. Rooney, Koenig and Getz also received options for
150,000, 20,000 and 20,000 Rust shares, respectively. 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. Getz also received options for
40,000 WM International ordinary shares. In each case, the options were
granted under a plan adopted by the relevant subsidiary.
(4) Amounts of All Other Compensation are amounts contributed by the Company
for fiscal years 1992, 1993 and 1994 under the Company's Profit Sharing and
Savings Plan for the persons named above.
(5) Paid pursuant to WTI's Performance Unit Plan, a long term incentive plan
covering the two-year period ended December 31, 1992.

59
<PAGE>

STOCK OPTIONS

The following table sets forth certain information with respect to stock
options granted to the persons named in the Summary Compensation Table during
the year ended December 31, 1994. No options were granted to the persons named
in the Summary Compensation Table during the year ended December 31, 1994 by
CWM, Rust, WTI or WM International.

COMPANY OPTION GRANTS IN 1994

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
-------------------------------------------------- ----------------------------------
PERCENTAGE
OF TOTAL
NUMBER OF COMPANY
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED(1)(2) IN 1994 (PER SHARE) DATE(3) 0% 5% 10%
- ---- ------------- ---------- -------------- ---------- --- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock 158,640 4.25 $26.475 01/03/04 $ 0 $ 2,641,354 $ 6,693,709
Phillip B. Rooney 113,314 3.04 26.475 01/03/04 0 1,886,676 4,781,208
James E. Koenig 42,493 1.14 26.475 01/03/04 0 707,508 1,792,964
J. Steven Bergerson 29,320 0.79 26.475 01/03/04 0 488,178 1,237,138
Herbert A. Getz 24,221 0.65 26.475 01/03/04 0 403,279 1,021,989
All Stockholders
as a group(5) -- -- 26.475 01/03/04 0 8,049,484,400 20,398,973,889
</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 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 January 3, 1995.
(3) Options have a term of ten years, subject to earlier termination in certain
events related to termination of employment. In March 1994, the term of the
options shown above was extended from seven to ten years.
(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.
(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 $8,049,484,400 and $20,398,973,889, respectively, during the period from
grant date to the January 3, 2004 option expiration date.

60
<PAGE>

The following table sets forth certain information as to each exercise of
stock options during the year ended December 31, 1994 by the persons named in
the Summary Compensation Table and the fiscal year-end value of unexercised
options:

AGGREGATED OPTION EXERCISES IN 1994 AND 1994 YEAR-END OPTION VALUE

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SHARES OPTIONS AT THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1994 DECEMBER 31, 1994(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock
Company Options....... -- -- 296,532 309,817 $ 0 $ 0
CWM Options........... -- -- 358,372 92,727 0 0
WTI Options........... -- -- 33,336 0 194,912 0
WM International Op-
tions................ -- -- 133,334 66,666 0 0
Phillip B. Rooney
Company Options....... -- -- 223,311 228,523 0 0
CWM Options........... -- -- 529,265 75,868 0 0
Rust Options.......... -- -- 50,010 99,990 0 0
WM International Op-
tions................ -- -- 133,334 66,666 0 0
James E. Koenig
Company Options....... -- -- 56,216 64,412 97,307 0
CWM Options........... -- -- 47,422 15,329 14,029 0
WTI Options........... -- -- 120,000 0 701,628 0
Rust Options.......... -- -- 3,334 6,666 0 0
WM International Op-
tions................ -- -- 66,667 33,333 0 0
J. Steven Bergerson
Company Options....... -- -- 62,748 59,515 48,694 0
Herbert A. Getz
Company Options....... -- -- 54,922 44,761 141,133 0
WTI Options........... -- -- 240,000 0 1,403,256 0
Rust Options.......... -- -- 6,668 13,332 0 0
WM International Op-
tions................ -- -- 26,668 13,332 0 0
</TABLE>
- ----------
(1) Market value less exercise price, before payment of applicable income
taxes.

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, 1994 to the persons named in the Summary Compensation
Table:

<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
NUMBER OF OR OTHER UNDER NON-
SHARES, UNITS PERIOD UNTIL STOCK PRICE BASED PLANS(3)
OR OTHER MATURATION -----------------------------
NAME RIGHTS(1) OR PAYOUT(2) THRESHOLD TARGET MAXIMUM
- ---- ------------- ------------ --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Dean L. Buntrock...... -- 3 years $700,000 $700,000 $2,100,000
Phillip B. Rooney..... -- 3 years 500,000 500,000 1,500,000
James E. Koenig....... -- 3 years 200,000 200,000 600,000
J. Steven Bergerson... -- 3 years 138,000 138,000 414,000
Herbert A. Getz....... -- 3 years 132,000 132,000 396,000
</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

61
<PAGE>

payout occurs unless the Company achieves certain threshold performance
objectives. Above the threshold, payouts will be greater than the target
percentage to the extent that the Company's performance exceeds 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 calendar years 1994, 1995 and 1996.
(3) At the end of the performance period, an amount equal to 50% of the
performance award, if any, is to be paid in cash, and the remaining 50% is
to be 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 1994 salaries, assume
that a performance award will be earned at the levels shown, and do not
reflect any possible subsequent increase or decrease in the value of the
portion of the award which would be required to be deferred under the terms
of the 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 five 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, 1994.

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

62
<PAGE>

generally includes all of his or her cash compensation, subject, in 1994, to
the statutory maximum of $150,000. The annual lifetime benefit 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, and both plans provide for reduced payouts in the event of
early retirement.
(2) At December 31, 1994, the credited years of service for Messrs. Buntrock,
Rooney, Koenig, Bergerson and Getz were 39, 26, 18, 22 and 12,
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 the medical and dental expenses of the directors in excess of
the coverage provided by the director's primary health insurance program.

The Company entered into a consulting agreement which terminated on December
31, 1994 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 1994. Benefits commenced under the
supplemental retirement benefit agreement upon the termination of the
consulting agreement. Payments of such benefits are to be made monthly for the
remainder of Mr. Flynn's life. The monthly amount of such benefits is 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

63
<PAGE>

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,
Mr. Buntrock has deferred fees for services rendered as a director 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 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.

64
<PAGE>

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 1994 of Messrs. Pedersen (Chairman), Baker, Peterson
and Dr. Cafferty. 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,
Donelson, Bearman & Caldwell. The Company has utilized, and currently
anticipates that it may continue to utilize, the services of such firms. In
1994, 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.

CERTAIN TRANSACTIONS

When an option is exercised by an optionee under the Employee Plans or 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, 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. 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 1993 by the Company was
extended to December 31, 1994. The largest aggregate amounts of such loans from
the Company, 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, 1994 were as follows: Mr. Dempsey--$108,946 and Mr. Flynn--$176,633.
Such loans have been repaid and no such loans were outstanding as of March 15,
1995.

The Company, WTI and Rust also each makes 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, WTI and Rust in excess of $60,000 which were
outstanding to the directors and executive officers of the Company since
January 1, 1994 were as follows: Donald A. Wallgren--$128,375. Such loan has
been repaid and is not outstanding as of March 15, 1995.

65
<PAGE>

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, 1999
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
current 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, 1994 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 $4,142,580 (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.

SECURITIES OWNERSHIP OF MANAGEMENT

OWNERSHIP OF COMPANY COMMON STOCK

The following table sets forth certain information as of February 1, 1995 as
to the beneficial ownership of common stock of the Company by the directors,
the nominee for director, 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, 1994, and by all directors, the nominee for director, and
persons serving as executive officers of the Company as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
OF COMMON STOCK COMMON STOCK
OF THE COMPANY OF THE
NAME BENEFICIALLY OWNED(1)(2) COMPANY(2)(3)
---- ------------------------ -------------
<S> <C> <C>
Dean L. Buntrock.................... 3,394,323 *
Phillip B. Rooney................... 1,063,260 *
H. Jesse Arnelle.................... 9,300 *
Howard H. Baker, Jr................. 22,000 *
Pastora San Juan Cafferty........... 3,300 *
Jerry E. Dempsey.................... 644,848 *
James B. Edwards.................... 1,766 *
Donald F. Flynn..................... 595,438 *
Peter H. Huizenga................... 8,132,577 1.7
Peer Pedersen....................... 225,586 *
James R. Peterson................... 84,068 *
Alexander B. Trowbridge............. 20,312 *
James E. Koenig..................... 131,804 *
J. Steven Bergerson................. 234,922 *
Herbert A. Getz..................... 102,864 *
All directors, the nominee for di-
rector and executive officers as a
group including persons named above
(17 persons)....................... 14,785,817 3.0
</TABLE>
- ----------
* Less than 1 percent.

66
<PAGE>

(1) Directors, the nominee for director 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, 1995;
(ii) shares held pursuant to the Company's Profit Sharing and Savings Plan;
(iii) Messrs. Edwards, Pedersen, Peterson and Trowbridge, whose shares
listed above include 312, 12,856, 1,668 and 312 shares issuable upon
conversion of the convertible subordinated notes due 2005 of WMX ("WMX
Notes"), respectively; and (iv) Messrs. Bergerson, Buntrock, Dempsey, Getz,
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, 458,161, 263,589, 38,466, 225,144, 36,945,
12,730, 65,568, and 1,102,670 shares, respectively. Such shares shown for
Messrs. Buntrock, Dempsey, 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 Messrs. Bergerson, Getz and Koenig are held jointly
with their respective spouses. Ownership of shares shown for Messrs.
Buntrock, Dempsey, Edwards, Getz, 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, 1995, in the amounts indicated: Mr. Buntrock--
41,365 (held by spouse); Mr. Dempsey--1,000 (held by spouse); Dr. Edwards--
254 (held by spouse with 104 such shares issuable upon conversion of WMX
Notes); Mr. Getz--240 (held by spouse); Mr. Huizenga--680,837 (held by
spouse directly and as trustee); Mr. Rooney--107,047 (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)--
830,822. 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, 1995 had been exercised as follows: Mr. Arnelle--9,000; Mr.
Baker--20,000; Mr. Bergerson--85,448; Mr. Buntrock--558,673; Dr. Cafferty--
3,000; Mr. Dempsey--224,828; Mr. Flynn--87,617; Mr. Getz--61,352; Mr.
Koenig--92,231; Mr. Rooney--511,453; Mr. Trowbridge--20,000; and all
executive officers and directors as a group (including such individuals)--
1,786,846. 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, 1995,
directly owned more than five percent of the Company's outstanding common
stock. The Company, however, received a copy of Schedule 13G for the year
ended December 31, 1994 from the person set forth in the following table.
Pursuant to the aggregation and attribution rules relating to the
beneficial ownership of securities promulgated under the Securities
Exchange Act of 1934, as amended, the person identified below is deemed to
be the beneficial owner of such shares shown because such person is the
parent company of various investment management companies which exercise
discretionary investment management over accounts holding such shares. No
managed account alone owns five percent or more of the Company's common
stock. The information presented in the following table is taken from the
above-referenced Schedule 13G:

<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------ ------------------- -------------------- --------
<C> <S> <C> <C>
Common Stock The Capital Group 24,249,070 5.01%
Companies, Inc.
333 South Hope Street
Los Angeles, California 90071
</TABLE>

67
<PAGE>

OWNERSHIP OF WTI COMMON STOCK

The following table sets forth certain information as of February 1, 1995 as
to the beneficial ownership of WTI common stock by the directors, the nominee
for director, 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, 1994, and by all directors, the nominee for director, and persons
serving as executive officers of the Company as a group:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF WTI PERCENT OF
COMMON STOCK WTI
BENEFICIALLY COMMON
NAME OWNED(1)(2)(3) STOCK(2)(3)
---- -------------- -----------
<S> <C> <C>
Dean L. Buntrock................................. 135,000 *
Phillip B. Rooney................................ 374,769 *
H. Jesse Arnelle................................. 0 *
Howard H. Baker, Jr.............................. 0 *
Pastora San Juan Cafferty........................ 0 *
Jerry E. Dempsey................................. 34,336 *
James B. Edwards................................. 0 *
Donald F. Flynn.................................. 45,245 *
Peter H. Huizenga................................ 0 *
Peer Pedersen.................................... 0 *
James R. Peterson................................ 0 *
Alexander B. Trowbridge.......................... 0 *
James E. Koenig.................................. 121,500 *
J. Steven Bergerson.............................. 0 *
Herbert A. Getz.................................. 240,000 *
All directors, the nominee for director and exec-
utive officers as a group including persons
named above (17 persons)........................ 951,050 *
</TABLE>
- ----------
*Less than 1 percent.
(1) Directors, the nominee for director 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, 1995; (ii) 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; and (iii) Messrs. Dempsey and Koenig, and all executive officers
and directors as a group, who have shared voting and investment power over
24,591, 1,500 and 26,291 WTI shares, respectively. Such shares shown for
Mr. Dempsey are held in a trust over which he shares voting and investment
power, and such shares shown for Mr. Koenig are held jointly with his
spouse. 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. 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, 1995 had
been exercised as follows: Mr. Buntrock--33,336; Mr. Getz--240,000; Mr.
Koenig--120,000 and all executive officers and directors as a group
(including such individuals)--393,336. Such persons and the members of such
group disclaim any beneficial ownership of the shares subject to such
options.

68
<PAGE>

OWNERSHIP OF RUST COMMON STOCK

The following table sets forth certain information as of February 1, 1995 as
to the beneficial ownership of Rust common stock by the directors, the nominee
for director, 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, 1994, and by all directors, the nominee for director, 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........................... 110,005 *
H. Jesse Arnelle............................ 0 *
Howard H. Baker, Jr......................... 0 *
Pastora San Juan Cafferty................... 0 *
Jerry E. Dempsey............................ 0 *
James B. Edwards............................ 0 *
Donald F. Flynn............................. 0 *
Peter H. Huizenga........................... 0 *
Peer Pedersen............................... 0 *
James R. Peterson........................... 0 *
Alexander B. Trowbridge..................... 0 *
James E. Koenig............................. 8,417 *
J. Steven Bergerson......................... 0 *
Herbert A. Getz............................. 13,334 *
All directors, the nominee for director and
executive officers as a group including
persons named above (17 persons)........... 147,156 *
</TABLE>
- ----------
*Less than 1 percent.
(1) Directors, the nominee for director 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, 1995; and (ii) Mr. Koenig, who shares voting and
investment power over 1,750 Rust shares with his spouse, all executive
officers and directors as a group (including Mr. Koenig), who have shared
voting and investment power over 2,150 Rust shares.
(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 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, 1995 had
been exercised as follows: Mr. Getz--13,334; Mr. Koenig--6,667; Mr.
Rooney--100,005; and all executive officers and directors as a group
(including such individuals)--120,006. Such persons and members of such
group disclaim any beneficial ownership of the shares subject to such
options.

OWNERSHIP OF WM INTERNATIONAL ORDINARY SHARES

The following table sets forth certain information as of February 1, 1995 as
to the beneficial ownership of WM International ordinary shares (including
ordinary shares represented by American

69
<PAGE>

Depositary Shares) by the directors, the nominee for director, 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, 1994, and by
all directors, the nominee for director, 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....................... 223,200 *
Phillip B. Rooney...................... 220,000 *
H. Jesse Arnelle....................... 0 *
Howard H. Baker, Jr.................... 1,000 *
Pastora San Juan Cafferty.............. 0 *
Jerry E. Dempsey....................... 2,000 *
James B. Edwards....................... 4,000 *
Donald F. Flynn........................ 300,000 *
Peter H. Huizenga...................... 550,000 *
Peer Pedersen.......................... 10,000 *
James R. Peterson...................... 0 *
Alexander B. Trowbridge................ 600 *
James E. Koenig........................ 104,000 *
J. Steven Bergerson.................... 0 *
Herbert A. Getz........................ 40,000 *
All directors, the nominee for director
and executive officers as a group in-
cluding persons named above (17 per-
sons)................................. 1,495,800 *
</TABLE>
- ----------
*Less than 1 percent.
(1) Directors, the nominee for director 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, 1995; and (ii) Messrs.
Koenig and Trowbridge, and all executive officers and directors as a group
(including such individuals), who have shared voting and investment power
over 4,000, 600 and 5,600 WM International shares, respectively. Such WM
International shares shown for Messrs. Koenig and Trowbridge are held
jointly with their respective spouses. Ownership of shares shown for
Messrs. Buntrock, Dempsey and Huizenga includes WM International shares not
held directly by them but held by or for the benefit of their spouses as to
which they have neither investment power nor voting power. WM International
shares were held by or for the benefit of such spouses of the following
persons at February 1, 1995 in the amounts indicated: Mr. Buntrock--3,000;
Mr. Dempsey--2,000; and Mr. Huizenga--30,000. 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
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, 1995 had been exercised as follows: Messrs. Buntrock, Flynn and
Rooney--200,000 each; Mr. Getz--40,000; and Mr. Koenig--100,000; and all

70
<PAGE>

executive officers and directors as a group (including such individuals)--
780,000. 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, 1994, CWM and its subsidiaries (other than
Rust) were involved in three such governmental proceedings, WTI was involved in
two such proceedings and Rust was involved in one such proceeding (described
below) where it is believed that sanctions involved in each instance may exceed
$100,000.

On October 4, 1994, the United States Department of Justice commenced
litigation against an indirect subsidiary of Rust and others in the United
States District Court for the District of Idaho alleging that the defendants
violated the National Emissions Standards for Hazardous Air Pollutants of the
Clean Air Act while engaged in asbestos removal activities in 1989 and 1990
prior to Rust's acquisition of the subsidiary. The lawsuit sought civil
penalties and injunctive relief. The Department of Justice and the subsidiary
negotiated a resolution of the matter, and on January 26, 1995, the District
Court approved a Consent Decree which conclusively resolved the lawsuit with
respect to the subsidiary. Pursuant to the Consent Decree, the subsidiary paid
a civil penalty of $353,800.

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, 1994, 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

71
<PAGE>

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.

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.

Following an examination of WTI's federal income tax returns for the period
1986-1988, the Internal Revenue Service (the "IRS") in January 1993 proposed a
significant adjustment related to the 1988 sale of a former subsidiary, which
WTI disputed. In March 1994, WTI and the IRS filed a Stipulation of Settlement
with the U.S. Tax Court to resolve the dispute for an aggregate amount of
approximately $70,000,000. On April 15, 1994, WTI paid approximately
$29,800,000, its share of the stipulated settlement liability, and a former
affiliate of WTI paid approximately $19,200,000, to the IRS. The Tax Court
subsequently accepted the stipulation of settlement. Under a tax sharing
agreement between WTI and a second former affiliate of WTI, WTI was to be
indemnified by the second former affiliate for approximately $21,000,000 of the
total stipulated settlement liability beyond the $29,800,000 agreed WTI share.
After the second former affiliate of WTI refused to honor its indemnification
commitment to WTI, WTI instituted suit against it. In December 1994, after
trial, judgment was entered in favor of WTI against the second former
affiliate, requiring it to pay its obligation to WTI, which it did in February
1995.

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

72
<PAGE>

judgment that environmental liabilities asserted against the Company or its
subsidiaries, or that may 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 are contesting 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 future 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.

73
<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

74
<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 LLP, 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 2 and 11 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.

75
<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,
1994.................................................................... F-3
Consolidated balance sheets as of December 31, 1993 and 1994............. F-4
Consolidated statements of stockholders' equity for the three years
ended December 31, 1994................................................. F-6
Consolidated statements of cash flows for the three years ended December
31, 1994................................................................ 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, 1993 and 1994, and the related consolidated
statements of income, cash flows, and stockholders' equity for each of the
three years in the period ended December 31, 1994. 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, 1993 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.

As discussed in Notes 2 and 11 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 LLP

Chicago, Illinois,
February 6, 1995 (except with respect to the matter discussed in Note 17, as to
which the date is March 14, 1995)

F-2
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (000'S OMITTED EXCEPT PER
SHARE AMOUNTS)

<TABLE>
<CAPTION>
1992 1993 1994
---------- ---------- -----------
<S> <C> <C> <C>
Revenue................................... $8,661,027 $9,135,577 $10,097,318
---------- ---------- -----------
Operating Expenses....................... $5,945,762 $6,346,914 $ 7,034,353
Special Charges.......................... 219,900 550,000 --
Goodwill Amortization.................... 77,144 94,391 110,092
Selling and Administrative Expenses...... 1,048,047 1,128,202 1,184,248
Gains from Stock Transactions of
Subsidiaries.............................. (263,489) (15,109) --
Interest Expense......................... 223,052 300,878 340,808
Interest Income.......................... (57,693) (41,432) (34,613)
Minority Interest........................ 156,824 57,986 149,703
Sundry Income, Net....................... (86,932) (95,424) (66,442)
---------- ---------- -----------
Income Before Income Taxes and Cumulative
Effect of Accounting Changes........... $1,398,412 $ 809,171 $ 1,379,169
Provision For Income Taxes............... 477,237 356,395 594,788
---------- ---------- -----------
Income Before Cumulative Effect of
Accounting Changes........................ $ 921,175 $ 452,776 $ 784,381
Cumulative Effect of Accounting Changes,
Net of Minority
Interest in Portion Relating to
Subsidiaries--
Postretirement Benefits, Net of Tax.... (36,579) -- --
Income Taxes........................... (34,560) -- --
---------- ---------- -----------
Net Income................................ $ 850,036 $ 452,776 $ 784,381
========== ========== ===========
Average Common and Common Equivalent
Shares Outstanding....................... 493,948 485,374 484,144
========== ========== ===========
Earnings Per Common and Common Equivalent
Share:
Before Cumulative Effect of Accounting
Changes................................... $1.86 $0.93 $1.62
Cumulative Effect of Accounting Changes--
Postretirement Benefits................. (.07) -- --
Income Taxes............................ (.07) -- --
------ ----- -----
Net Income................................ $1.72 $0.93 $1.62
===== ===== =====
</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, 1993 AND 1994 ($000'S OMITTED EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1993 1994
----------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents........................... $ 92,802 $ 121,918
Short-term investments.............................. 33,580 19,704
Accounts receivable, less reserve of $63,146 in 1993
and $65,536 in 1994............................... 1,762,091 1,958,052
Employee receivables................................ 9,670 10,140
Parts and supplies.................................. 148,022 194,645
Costs and estimated earnings in excess of billings
on uncompleted contracts.......................... 339,364 403,949
Refundable income taxes............................. 54,001 30,713
Prepaid expenses.................................... 337,990 349,723
----------- -----------
Total Current Assets............................. $ 2,777,520 $ 3,088,844
----------- -----------
Property and Equipment, at cost
Land, primarily disposal sites...................... $ 3,625,412 $ 4,162,418
Buildings........................................... 1,223,139 1,372,782
Vehicles and equipment.............................. 6,856,044 7,162,217
Leasehold improvements.............................. 100,262 91,554
----------- -----------
$11,804,857 $12,788,971
Less--Accumulated depreciation and amortization..... (3,035,398) (3,503,219)
----------- -----------
Total Property and Equipment, Net................ $ 8,769,459 $ 9,285,752
----------- -----------
Other Assets
Intangible assets relating to acquired businesses,
net.................................................. $ 3,461,331 $ 3,789,801
Funds held by trustees.............................. 116,949 90,863
Sundry, including other investments................. 1,139,217 1,283,654
----------- -----------
Total Other Assets............................... $ 4,717,497 $ 5,164,318
----------- -----------
Total Assets................................... $16,264,476 $17,538,914
=========== ===========
</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, 1993 AND 1994 ($000'S OMITTED EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1993 1994
----------- -----------
<S> <C> <C>
Current Liabilities
Portion of long-term debt payable within one year... $ 754,491 $ 890,686
Accounts payable.................................... 818,501 1,017,451
Accrued expenses.................................... 863,474 966,284
Unearned revenue.................................... 241,096 305,310
----------- -----------
Total Current Liabilities........................ $ 2,677,562 $ 3,179,731
----------- -----------
Deferred Items
Income taxes........................................ $ 448,706 $ 665,677
Environmental liabilities........................... 745,637 704,015
Other............................................... 738,976 615,606
----------- -----------
Total Deferred Items............................. $ 1,933,319 $ 1,985,298
----------- -----------
Long-Term Debt, less portion payable within one year. $ 6,145,584 $ 6,044,411
----------- -----------
Minority Interest in Subsidiaries.................... $ 1,348,559 $ 1,536,165
----------- -----------
Commitments and Contingencies........................ $ $
----------- -----------
Put Options.......................................... $ -- $ 252,328
----------- -----------
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
authorized; 496,216,829 shares issued in 1993 and
496,386,758 in 1994............................... 496,217 496,387
Additional paid-in capital.......................... 668,470 357,150
Cumulative translation adjustment................... (245,587) (150,832)
Retained earnings................................... 3,693,108 4,181,606
----------- -----------
$ 4,612,208 $ 4,884,311
Less--Treasury stock; 12,763,884 shares in 1993, at
cost................................................. 425,097 --
1988 Employee Stock Ownership Plan................... 27,659 19,729
Employee Stock Benefit Trust (12,386,629 shares)..... -- 323,601
----------- -----------
Total Stockholders' Equity....................... $ 4,159,452 $ 4,540,981
----------- -----------
Total Liabilities and Stockholders' Equity..... $16,264,476 $17,538,914
=========== ===========
</TABLE>

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

F-5
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE YEARS ENDED DECEMBER 31, 1994 ($000'S OMITTED EXCEPT PER SHARE
AMOUNTS)

<TABLE>
<CAPTION>
1988
EMPLOYEE EMPLOYEE
ADDITIONAL CUMULATIVE STOCK STOCK
COMMON PAID-IN TRANSLATION RETAINED TREASURY OWNERSHIP BENEFIT
STOCK CAPITAL ADJUSTMENT EARNINGS STOCK PLAN TRUST
-------- ---------- ----------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1992.................... $493,621 $ 722,351 $ 40,463 $2,917,204 $ -- $40,539 $ --
-------- --------- --------- ---------- --------- ------- --------
Net income for the
year.................... $ -- $ -- $ -- $ 850,036 $ -- $ -- $ --
Cash dividends ($.50
per share).............. -- -- -- (246,050) -- -- --
Stock repurchase
(7,588,300 shares)...... -- -- -- -- 257,950 -- --
Stock issued upon
exercise of stock
options................. 809 (19,000) -- -- (62,432) -- --
Treasury stock received
in connection with
exercise of stock
options............... -- -- -- -- 15,153 -- --
Contribution to 1988
ESOP (303,226 shares)... -- -- -- -- -- (5,551) --
Treasury stock received
as settlement for
claims................ -- -- -- -- 1,717 -- --
Stock issued upon
conversion of LYONs..... 44 (2,200) -- -- (4,546) -- --
Stock issued for
acquisitions............ 1,729 6,462 -- -- (3,352) -- --
Tax benefit of non-
qualified stock
options exercised..... -- 20,303 -- -- -- -- --
Transfer of equity
interests among
controlled
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 ($.58
per share).............. -- -- -- (280,858) -- -- --
Stock repurchase
(8,443,400 shares)...... -- -- -- -- 278,363 -- --
Stock issued upon
exercise of stock
options................. 14 (8,749) -- -- (18,285) -- --
Treasury stock received
in connection with
exercise of stock
options............... -- -- -- -- 357 -- --
Contribution to 1988
ESOP (362,036 shares)... -- -- -- -- -- (7,329) --
Treasury stock received
as settlement for
claims................ -- -- -- -- 3,429 -- --
Stock issued upon
conversion of LYONs..... -- (4,553) -- -- (7,882) -- --
Stock issued for
acquisitions............ -- (4,655) -- -- (35,375) -- --
Tax benefit of non-
qualified stock
options exercised..... -- 2,825 -- -- -- -- --
Transfer of equity
interests among
controlled
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 $ --
-------- --------- --------- ---------- --------- ------- --------
Net income for the
year.................... $ -- $ -- $ -- $ 784,381 $ -- $ -- $ --
Cash dividends ($.60
per share).............. -- -- -- (290,266) -- -- --
Dividends paid to
Employee Stock Benefit
Trust................. -- 5,617 -- (5,617) -- -- --
Stock issued upon
exercise of stock
options................. -- (5,948) -- -- (8,250) -- (5,928)
Treasury stock received
in connection with
exercise of stock
options............... -- -- -- -- 260 -- --
Contribution to 1988
ESOP (375,312 shares)... -- -- -- -- -- (7,930) --
Treasury stock received
as settlement for
claims................ -- -- -- -- 2,741 -- --
Stock issued upon
conversion of LYONs..... 96 1,442 -- -- (56) -- --
Common stock issued for
acquisitions............ 74 1,471 -- -- -- -- --
Tax benefit of non-
qualified stock
options exercised..... -- 1,527 -- -- -- -- --
Temporary equity
related to put options.. -- (252,328) -- -- -- -- --
Proceeds from sale of
put options............. -- 29,965 -- -- -- -- --
Sale of shares to
Employee Stock Benefit
Trust (12,601,609
shares)............... -- (106,327) -- -- (419,792) -- 313,465
Adjustment of Employee
Stock Benefit Trust to
market value.......... -- 16,064 -- -- -- -- 16,064
Transfer of equity
interests among
controlled
subsidiaries.......... -- (2,803) -- -- -- -- --
Cumulative translation
adjustment of foreign
currency statements... -- -- 94,755 -- -- -- --
-------- --------- --------- ---------- --------- ------- --------
Balance, December 31,
1994.................... $496,387 $ 357,150 $(150,832) $4,181,606 $ -- $19,729 $323,601
======== ========= ========= ========== ========= ======= ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 INCREASE (DECREASE) IN
CASH ($000'S OMITTED)

<TABLE>
<CAPTION>
1992 1993 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Income before cumulative effect of
accounting changes...................... $ 921,175 $ 452,776 $ 784,381
Adjustments to reconcile income before
cumulative effect of accounting changes
to net cash provided by operating
activities:
Depreciation and amortization......... 714,069 796,691 880,466
Provision for deferred income taxes... 221,860 154,782 298,564
Minority interest in subsidiaries..... 156,824 57,986 149,703
Interest on Liquid Yield Option Notes
(LYONs)................................. 36,424 37,162 33,551
Gain on sale of property and
equipment, and of investments by
subsidiary.............................. (4,659) (14,061) (14,876)
Contribution to 1988 Employee Stock
Ownership Plan.......................... 5,551 7,329 7,930
Gains from stock transactions of
subsidiaries............................ (263,489) (15,109) --
Special charges, net of tax and
minority interest....................... 116,375 285,300 --
Changes in assets and liabilities,
excluding effects of acquired
companies:
Receivables, net...................... (89,467) (112,489) (133,506)
Other current assets.................. (350,315) 41,038 (110,604)
Sundry other assets................... 39,862 (29,445) (42,195)
Accounts payable...................... 23,155 33,328 155,254
Accrued expenses and unearned revenue. 10,750 (301,039) 41,594
Deferred items........................ (189,599) (24,015) (259,020)
Minority interest in subsidiaries..... (57,825) (2,021) 14,038
----------- ----------- -----------
Net Cash Provided by Operating
Activities.............................. $ 1,290,691 $ 1,368,213 $ 1,805,280
----------- ----------- -----------
Cash flows from investing activities:
Short-term investments................ $ 72,913 $ 35,911 $ 2,755
Capital expenditures.................. (1,632,665) (1,719,178) (1,455,628)
Proceeds from sale of property and
equipment, and of investments by
subsidiary.......................... 95,942 134,169 276,822
Cost of acquisitions, net of cash
acquired................................ (599,045) (551,901) (172,908)
Other investments..................... 66,414 (185,256) (74,446)
Acquisition of minority interests..... (26,343) -- (8,200)
Purchase of Brand stock related to
Rust merger............................. -- (129,524) --
----------- ----------- -----------
Net Cash Used for Investing Activities.. $(2,022,784) $(2,415,779) $(1,431,605)
----------- ----------- -----------
Cash flows from financing activities:
Cash dividends........................ $ (246,050) $ (280,858) $ (290,266)
Proceeds from issuance of
indebtedness............................ 1,274,549 3,407,759 1,710,586
Repayments of indebtedness............ (807,873) (1,712,794) (1,776,845)
Proceeds from exercise of stock
options, net............................ 49,391 12,018 9,497
Proceeds from Waste Management
International plc initial public
offering................................ 700,032 -- --
Contributions from minority interests. 6,484 28,072 22,169
Stock repurchases by Company and
subsidiaries............................ (339,966) (315,302) (49,665)
Preferred stock redemption by
subsidiary.............................. -- (5,000) --
Proceeds from sale of put options..... -- -- 29,965
----------- ----------- -----------
Net Cash Provided by (Used for)
Financing Activities.................... $ 636,567 $ 1,133,895 $ (344,559)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................. $ (95,526) $ 86,329 $ 29,116
Cash and cash equivalents at beginning
of year................................. 101,999 6,473 92,802
----------- ----------- -----------
Cash and cash equivalents at end of
year.................................... $ 6,473 $ 92,802 $ 121,918
=========== =========== ===========
The Company considers cash and cash
equivalents to include currency on
hand, demand deposits with banks and
short-term investments with maturities
of less than three months when
purchased.
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest, net of amounts capitalized.. $ 186,628 $ 263,716 $ 307,257
Income taxes, net of refunds received. $ 246,922 $ 331,803 $ 241,657
Supplemental schedule of noncash
investing and financing activities:
LYONs converted into common stock of
the Company............................. $ 2,390 $ 3,329 $ 1,594
Exchangeable LYONs exchanged for
common stock of CWM owned by the
Company............................. $ 340 $ -- $ --
Liabilities assumed in acquisitions of
businesses.............................. $ 405,558 $ 673,129 $ 244,560
Fair market value of Company and
subsidiary stock issued for acquired
businesses............................ $ 178,885 $ 64,500 $ 4,773
</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 $5,100,000, ($529,000) and ($3,610,000) are
included in the Consolidated Statements of Income for 1992, 1993 and 1994,
respectively.

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 have always been held to maturity,
are carried at cost. Such investments include tax-exempt securities,
certificates of deposit and Eurodollar time deposits.

Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("FAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The adoption of FAS 115 did not have a significant
effect on earnings for 1994, since the Company's accounting prior to adoption
was substantially in compliance with the new standard.

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.

F-8
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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"). 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
("PRPs"), 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, based upon management's judgment
and prior experience, for the Company's best estimate of the liability. Such
estimates are subsequently revised as deemed necessary as additional
information becomes available.

See Note 6 for additional information.

Contracts in Process

Information with respect to contracts in process at December 31, 1993 and
1994 is as follows:

<TABLE>
<CAPTION>
1993 1994
----------- -----------
<S> <C> <C>
Costs and estimated earnings on uncompleted
contracts......................................... $ 3,741,386 $ 3,312,951
Less: Billings on uncompleted contracts........... (3,474,386) (3,042,765)
----------- -----------
Total contracts in process....................... $ 267,000 $ 270,186
=========== ===========

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......................... $ 339,364 $ 403,949
Billings in excess of costs and estimated earnings
on uncompleted contracts (included in unearned
revenue)......................................... (72,364) (133,763)
----------- -----------
Total contracts in process....................... $ 267,000 $ 270,186
=========== ===========
</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, 1994, is $43,895,000, including $7,037,000 that is expected to be
collected after one year. At December 31, 1993, retainage was $44,828,000.

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

F-9
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

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.

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 cell construction cost at December 31, 1993 and
1994 was $146,985,000 and $154,100,000, respectively.

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 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 not more than forty years. The accumulated amortization of intangible
assets amounted to $364,251,000 and $463,855,000 as of December 31, 1993 and
1994, respectively.

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 FAS No. 34.
Amounts capitalized and netted against Interest Expense in the Consolidated
Statements of Income were $87,897,000 in 1992, $100,591,000 in 1993 and
$104,512,000 in 1994.

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.

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

F-10
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

Restatement

Certain amounts in previously issued financial statements have been restated
to conform to 1994 classifications.

NOTE 2. 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 FAS No. 109, "Accounting for Income Taxes." 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 1992 earnings was not significant, except for the
one-time charge.

The following tables set forth income before income taxes, showing domestic
and international sources, and the income tax provision showing the components
by governmental taxing authority, for the years 1992 through 1994:

Income Before Income Taxes
<TABLE>
<CAPTION>
1992 1993 1994
---------- -------- ----------
<S> <C> <C> <C>
Domestic.................................. $1,214,342 $637,636 $1,199,519
International............................. 184,070 171,535 179,650
---------- -------- ----------
$1,398,412 $809,171 $1,379,169
========== ======== ==========

Income Tax Provision (Benefit)

Current tax expense
U.S. Federal............................ $ 159,795 $137,966 $ 217,354
State and local......................... 46,208 30,715 50,476
Foreign................................. 53,376 36,532 30,989
---------- -------- ----------
Total current............................. $ 259,379 $205,213 $ 298,819
---------- -------- ----------
Deferred tax expense
U.S. Federal............................ $ 152,742 $ 92,171 $ 218,953
State and local......................... 38,319 30,284 33,848
Foreign................................. 30,799 32,327 45,763
---------- -------- ----------
Total deferred............................ $ 221,860 $154,782 $ 298,564
---------- -------- ----------
U.S. Federal benefit from amortization of
deferred investment credit............... $ (4,002) $ (3,600) $ (2,595)
---------- -------- ----------
Total provision........................... $ 477,237 $356,395 $ 594,788
========== ======== ==========
</TABLE>

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

F-11
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<S> <C> <C> <C>
Federal statutory rate..................................... 34.0% 35.0% 35.0%
State and local taxes, net of Federal benefit.............. 4.0 4.9 4.0
Amortization of deferred investment credit................. (0.3) (0.4) (0.2)
Amortization of intangible assets relating to
acquired businesses....................................... 1.9 4.1 2.2
Federal tax credits........................................ (0.6) (1.4) (1.0)
Non-taxable gains on issuance of stock by subsidiaries..... (6.4) (0.7) --
Minority interest.......................................... 3.4 2.9 4.2
Adjustment of deferred income taxes due to Omnibus
Budget Reconciliation Act................................. -- 1.7 --
Other, net................................................. (1.9) (2.1) (1.1)
---- ---- ----
Effective tax rate......................................... 34.1% 44.0% 43.1%
==== ==== ====
</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.

Deferred income taxes result from the recognition, in different periods, of
revenue and expense for tax and financial statement purposes. 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 1993 and
1994 deferred tax (assets) liabilities are as follows:

<TABLE>
<CAPTION>
1993 1994
---------- ----------
<S> <C> <C>
Deferred tax assets
Reserves not deductible until paid.................. $ (538,062) $ (494,549)
Deferred revenue.................................... (27,714) (25,708)
Net operating losses and tax credit carryforwards... (43,028) (110,073)
Other............................................... (104,059) (70,281)
---------- ----------
Subtotal......................................... $ (712,863) $ (700,611)
---------- ----------
Deferred tax liabilities
Depreciation and amortization....................... $ 948,024 $1,106,155
Other............................................... 183,655 233,178
---------- ----------
Subtotal......................................... $1,131,679 $1,339,333
---------- ----------
Valuation allowance.................................. $ 29,890 $ 26,955
---------- ----------
Net deferred tax liabilities........................ $ 448,706 $ 665,677
========== ==========
</TABLE>

The Company's subsidiaries have approximately $24 million of alternative
minimum tax credit carryforwards that may be carried forward indefinitely.
Also, various subsidiaries have operating loss carryforwards of approximately
$640 million with expiration dates through the year 2009. Valuation allowances
have been established for uncertainties in realizing the tax benefit of net
operating loss carryforwards and of the basis differences in certain assets. In
1994, the allowance decreased due to the realization of tax benefits on the
disposal of certain assets.

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

F-12
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

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 $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 Chemical Waste Management, Inc. ("CWM") and WTI
in connection with shares issued by Rust International Inc. ("Rust") as part of
The Brand Companies Inc. ("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.

NOTE 3. BUSINESS COMBINATIONS

All significant businesses acquired through December 31, 1994, 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.
Businesses acquired and accounted for as purchases are included in the
financial statements from the date of acquisition. The acquisition data which
follows excludes minor acquisitions where consideration paid was less than
$1,000,000.

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.

During 1994, the Company and its principal subsidiaries acquired 46
businesses for $172,908,000 in cash (net of cash acquired) and notes, 73,809
shares of the Company's common stock and 156,124 shares of common stock of WTI.
These acquisitions were accounted for as purchases.

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 1992, 1993 and
1994 as if they had been acquired as of January 1 of the preceding year
(unaudited):

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

F-13
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
1992 1993 1994
---------- ---------- -----------
<S> <C> <C> <C>
Revenue as reported.................... $8,661,027 $9,135,577 $10,097,318
Revenue of purchased businesses for
period
prior to acquisition as stated above.. 1,000,812 588,496 108,093
---------- ---------- -----------
Pro forma revenue...................... $9,661,839 $9,724,073 $10,205,411
========== ========== ===========
Income before cumulative effect of
accounting
changes as reported................... $ 921,175 $ 452,776 $ 784,381
Net income of purchased businesses for
period
prior to acquisition as stated above.. 30,685 11,325 2,129
Adjustment for interest and goodwill
amortization........................... (59,229) (19,564) (2,591)
---------- ---------- -----------
Pro forma income before cumulative
effect of
accounting changes.................... $ 892,631 $ 444,537 $ 783,919
========== ========== ===========
Earnings per share before cumulative
effect of
accounting changes as reported........ $ 1.86 $ 0.93 $ 1.62
Effect of purchased businesses prior to
acquisition
as stated above....................... (0.05) (0.01) --
---------- ---------- -----------
Pro forma earnings per share before
cumulative
effect of accounting changes.......... $ 1.81 $ 0.92 $ 1.62
========== ========== ===========
</TABLE>

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 environmental 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 and Rust thereby acquired the
publicly-held Brand shares. As of December 31, 1994, Rust was owned
approximately 56% by CWM and approximately 40% by WTI, with the remaining
shares held by the public. In February 1995, the Company offered to acquire the
approximately 4% of Rust's shares held by the public; see Note 16 for
additional information.

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

F-14
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTE 4. DEBT

The details relating to debt (including capitalized leases, which are not
material) as of December 31, 1993 and 1994, are as follows:
<TABLE>
<CAPTION>
1993 1994
---------- ----------
<S> <C> <C>
Commercial Paper, weighted average interest 3.4% and
5.8% at December 31, 1993 and 1994, respectively..... $1,376,197 $ 946,702
Tailored Rate ESOP Notes, interest of 2.79% and 4.81%
at December 31, 1993 and 1994, respectively.......... 50,000 50,000
Debentures, interest 8 3/4%, due 2018................. 249,085 249,085
Notes, interest 4 5/8% to 8 1/4%, due 1995 - 2011..... 2,500,000 2,684,170
Step-Up Notes, interest 6.22% through April 29, 1997
and 8% thereafter, due 2004.......................... -- 150,000
Solid waste disposal revenue bonds, interest 6% to
7.75%,
due 1995 - 2013...................................... 280,685 252,385
Installment loans and notes payable, interest 5.34% to
10.61%,
due 1995 - 2020...................................... 978,691 1,298,436
Project Debt, interest 3.4% to 10.64%, due 1995 -
2010................................................. 810,612 764,859
Other long-term borrowings............................ 35,616 34,320
Liquid Yield Option Notes, zero coupon-subordinated,
interest 9%, due 2001................................ 11,334 10,721
Liquid Yield Option Notes, zero coupon-subordinated,
interest 6%, due 2012................................ 426,005 361,438
Liquid Yield Option Notes, zero coupon-subordinated,
interest 6%, due 2010................................ 181,850 132,981
---------- ----------
Total debt............................................ $6,900,075 $6,935,097
Less--current portion................................. 754,491 890,686
---------- ----------
Long-term portion..................................... $6,145,584 $6,044,411
========== ==========
</TABLE>

The long-term debt as of December 31, 1994, is due as follows:

<TABLE>
<S> <C>
Second year.................................................... $ 929,320
Third year..................................................... 2,423,578
Fourth year.................................................... 374,885
Fifth year..................................................... 257,344
Sixth year and thereafter...................................... 2,059,284
----------
$6,044,411
==========
</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 with the notes (described below) issued in January 1995 and
$1,347,000,000 of committed long-term borrowing facilities which it has
available. The committed facilities provide for unsecured long-term loans at
interest rates of prime or LIBOR plus 30 basis points and commitment fees of
6.5 to 10 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, and are convertible into 34.88 shares of the Company's common
stock per Convertible LYON, subject to adjustment. The Convertible LYONs are
redeemable by the Company at a price equal to the issue price plus accrued
original issue discount to the redemption date. The Convertible LYONs will be
purchased for cash by the Company at the option of the holder on June 30, 1995,
and on each June 30 thereafter prior to maturity, at a price determined in the
manner described above. During 1993 and 1994, 6,582 and 2,822 Convertible LYONs
were converted into 229,561 and 97,793 shares of the Company's common stock,
respectively. As of December 31, 1994, there were 18,266 Convertible LYONs
outstanding with a maturity value amounting to $18,266,000.

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, 1995, and on each
June 30 thereafter prior to maturity, at a price determined in the manner
described above. As of December 31, 1994, there were 1,003,981 Exchangeable
LYONs outstanding with a maturity value amounting to $1,003,981,000.

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 LYONs are redeemable
by CWM at a price equal to the issue price plus accrued original issue discount
to the redemption date. The CWM LYONs will be purchased for cash by CWM at the
option of the holder on June 30, 1995, and on each June 30 thereafter prior to
maturity, at a price determined in the manner described above. As of December
31, 1994, there were 334,923 CWM LYONs outstanding with a maturity value of
$334,923,000.

In connection with the acquisition of the CWM minority interest discussed in
Note 16, the exchange and conversion features of the Exchangeable LYONs and the
CWM LYONs were adjusted and the Company assumed CWM's obligation in respect of
the CWM LYONs. See Note 16 for additional information.

During 1993, the Company issued (a) $250,000,000 of 4 7/8% Notes due July 1,
1995, at a price of 99.75%, (b) $200,000,000 of 4 5/8% Notes due April 14,
1996, at a price of 99.516%, (c) $300,000,000 of 4 7/8% Notes due June 15,
1996, at a price of 99.628%, and (d) $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.

- --------------------------------------------------------------------------------
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F-16
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

In May 1994, the Company issued, at par, $150,000,000 of ten-year Step-Up
Notes due April 30, 2004. The holders may elect to have the Step-Up Notes or
any portion thereof repaid on April 30, 1997 at 100% of their principal amount
together with accrued interest. The interest rate on the Step-Up Notes is 6.22%
through April 29, 1997, and 8% thereafter. In November 1994, the Company issued
$200,000,000 of 8 1/4% Notes due November 15, 1999, at a price of 99.925%.
Neither of these issues is redeemable at the option of the Company prior to
maturity.

In January 1995, the Company issued $250,000,000 of 8 1/8% Notes due February
1, 1998, at a price of 99.671%. The Notes are not redeemable prior to maturity.

NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, the Company uses derivatives to manage currency, interest
rate and commodity risk. The portfolio of such instruments (which are held for
purposes other than trading) at December 31, 1994, is set forth in the
paragraphs which follow.

Interest Rate Agreements

Certain of the Company's subsidiaries have entered into interest rate swap
agreements to reduce the impact of changes in interest rates on underlying
borrowings. The agreements are contracts to exchange fixed and floating
interest rate payments periodically over the term without the exchange of the
underlying notional amounts. The notional amounts of such agreements are used
to measure interest to be paid or received and do not represent the amount of
exposure to credit loss. The agreements provide only for the exchange of
interest on the notional amounts at the stated rates, with no multipliers or
leverage.

While the subsidiaries are exposed to market risk to the extent that receipts
and payments under interest rate agreements are affected by market interest
rates, such agreements are entered into as a hedge against interest rate
exposure on existing debt. Accordingly, differences paid or received under the
agreements are recognized as part of interest expense over the life of the
agreements. The impact of swap agreements on consolidated interest expense and
on the effective interest rate on consolidated debt was immaterial. As of
December 31, 1994, interest rate agreements in notional amounts and with terms
as set forth in the following table were outstanding:

<TABLE>
<CAPTION>
NOTIONAL
CURRENCY AMOUNT DURATION OF AGREEMENT
-------- -------- ---------------------
<S> <C> <C>
Sterling..................................... 50,000 Feb. 1994 - Feb. 1995
Sterling..................................... 20,000 Feb. 1995 - Feb. 1999
Hong Kong dollar............................. 250,000 Feb. 1994 - Feb. 1995
Hong Kong dollar............................. 250,000 Apr. 1994 - Apr. 1997*
Hong Kong dollar............................. 250,000 Feb. 1995 - Feb. 1997
Australian dollar............................ 25,000 Feb. 1994 - Feb. 1995
Australian dollar............................ 20,000 Mar. 1994 - Mar. 1996
U.S. dollar.................................. 25,000 Jan. 1988 - Dec. 1995
</TABLE>
- ----------
*This agreement was terminated subsequent to December 31, 1994.

- --------------------------------------------------------------------------------
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F-17
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

From time to time, the Company and certain of its subsidiaries use foreign
currency derivatives to mitigate the impact of translation on foreign earnings
and income from foreign investees. Typically these have taken the form of
purchased put options or offsetting put and call options with different strike
prices. The Company receives or pays, based on the notional amount of the
option, the difference between the average exchange rate of the hedged currency
against the base currency and the average (strike price) contained in the
option. Complex instruments involving multipliers or leverage are not used.
While the Company may be required to make a payment in connection with these
agreements, it will recognize an offsetting increase in the translation of
foreign earnings or income from foreign investees. Although the purpose for
using such derivatives is to mitigate currency risk, they do not qualify for
hedge accounting under generally accepted accounting principles and
accordingly, must be adjusted to market value at the end of each accounting
period. Gains and losses on currency derivatives to date have not been
material.

As of December 31, 1994, the Company was party to the following average rate
currency options (all options settle at expiration):

<TABLE>
<CAPTION>
CURRENCY
----------------------------
NOTIONAL AMOUNT HEDGED AGAINST
--------------- ------------------- --------
<S> <C> <C> <C>
Collars, structured as
offsetting puts and calls with
different strike prices,
covering the period January 1
to December 31, 1995.......... 40,000 French Franc Sterling
120,000 Swedish Krona Sterling
Put options purchased, expiring
December 31, 1995............. 36,000 Deutschemark Sterling
42,000 French Franc Sterling
13,500 Netherlands Guilder Sterling
60,000 Swedish Krona Sterling
</TABLE>

In addition, subsidiaries have sold currencies forward for delivery in 1995
to hedge foreign exchange exposure on specific transactions. The amounts
involved are not material to the consolidated financial statements, and any
gains or losses on the hedges will be included in the measurement of the
identified transaction. Also in 1995, WMX has purchased and will continue to
purchase put options on the pound sterling to hedge the risk of a decline in
value of that currency on the reported earnings of WM International. Premiums
paid will not be significant.

Significant foreign currency contracts outstanding during 1993 and 1994 were
as follows:

<TABLE>
<CAPTION>
CURRENCY
-----------------------
AVERAGE AMOUNT HEDGED AGAINST
-------------- -------------- --------
<S> <C> <C> <C>
1993.................................. 150,000 Sterling Dollar
9,300 Deutschemark Dollar
6,000 Finland Markka Sterling
</TABLE>

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F-18
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENCY
--------------------------
AVERAGE AMOUNT HEDGED AGAINST
-------------- ------------- ------------
<S> <C> <C> <C>
1994............................... 85,000 Deutschemark Sterling
132,000 French Franc Sterling
184,000 Swedish Krona Sterling
20,000,000 Lira Sterling
10,000,000 Lira Deutschemark
23,000 Deutschemark Dollar
141,000 Sterling Dollar
</TABLE>

Commodity Agreements

The Company utilizes collars, calls and swaps to mitigate the risk of price
fluctuations on the fuel used by its vehicles. Quantities hedged equate to
committed fuel purchases or anticipated usage and accordingly, gains and losses
are deferred and recognized as fuel is purchased. The following table
summarizes the Company's positions in commodity derivatives as of December 31,
1994:

<TABLE>
<CAPTION>
TYPE COMMODITY QUANTITY EXPIRATION
---- ----------- ------------ ----------
<S> <C> <C> <C>
Swaps.................................. Heating oil 128,500 gal. 1995
Collars................................ Gas oil 40 tons 1995
Swaps.................................. Crude oil 4,000 bbls. 1996
Collars................................ Crude oil 300 bbls. 1996
Swaps.................................. Crude oil 2,000 bbls. 1997
Collars................................ Crude oil 350 bbls. 1997
Collars................................ Crude oil 200 bbls. 1998
Collars................................ Crude oil 100 bbls. 1999
</TABLE>

In addition, the Company has sold swaptions on 2,000,000 barrels of crude oil
with maturities in 1998. Such swaptions give the counterparty the option, at
some future date, to enter into a swap which would require the Company to pay
at the strike price set forth in the agreement in exchange for a floating crude
oil reference price. Until exercised, such contracts do not qualify for hedge
accounting under generally accepted accounting principles and accordingly, must
be marked to market each accounting period. To date, gains and losses on such
contracts have not been material.

The Company is exposed to credit loss in the event of non-performance by
counterparties on interest rate, currency and commodity derivatives, but in all
cases such counterparties are highly rated financial institutions and the
Company does not anticipate non-performance. Maximum credit exposure is
represented by the fair value of contracts with a positive fair value at
December 31, 1994.

NOTE 6. ENVIRONMENTAL COSTS AND LIABILITIES

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 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

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

F-19
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

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.

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 on management's judgment 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
PRPs who are jointly and severably liable for remediation of a specific site,
as well as the typical allocation of costs among PRPs. These estimates are
sometimes 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. 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 could be at the high end of such ranges, which would be
approximately $175 million higher in the aggregate than the estimate that has
been recorded in the financial statements as of December 31, 1994.

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 $169 million at December 31, 1994.

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 $1.15 billion of closure and post-closure costs, including
accretion for the discount recognized to date.

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

F-20
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
1993 1994
---------- ----------
<S> <C> <C>
Current portion, included in Accrued Expenses......... $ 130,863 $ 108,750
Non-current portion................................... 745,637 704,015
---------- ----------
Total recorded...................................... $ 876,500 $ 812,765
Amount to be provided over remaining life of active
sites, including discount of $154 million in 1993 and
$169
million in 1994...................................... 987,000 1,149,617
---------- ----------
Expected aggregate undiscounted environmental
liabilities........................................... $1,863,500 $1,962,382
========== ==========
</TABLE>

Anticipated payments of environmental liabilities at December 31, 1994, are
as follows:

<TABLE>
<S> <C>
1995............................................................ $ 108,750
1996............................................................ 128,120
1997............................................................ 93,429
1998............................................................ 77,233
1999............................................................ 47,643
Thereafter...................................................... 1,507,207
----------
$1,962,382
==========
</TABLE>

The increase in the expected aggregate undiscounted amount results primarily
from additional airspace.

The Company has also filed several lawsuits against numerous insurance
carriers seeking reimbursement for past and future remedial, defense and tort
claim costs at a number of sites. The carriers have denied coverage and are
vigorously defending these claims. No amounts have been recognized in the
financial statements for any future insurance recoveries.

NOTE 7. 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.

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

F-21
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

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, 11,000,000 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.

The status of the plans (including predecessor plans under which options
remain outstanding) during the three years ended December 31, 1994, was as
follows:

<TABLE>
<CAPTION>
SHARES OPTION PRICE
------ --------------
<S> <C> <C>
January 1, 1992--
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>

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

F-22
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OPTION PRICE
------ --------------
<S> <C> <C>
1994--
Granted................................................... 3,729 $24.33--$29.03
Exercised................................................. 462 $ 4.33--$25.72
Cancelled--
1982 Plan................................................ 312 $14.72--$41.80
Current plans............................................ 826 $ 8.57--$41.80
Additional shares reserved for future grant............... 6,000 --
------
December 31, 1994--
Outstanding.............................................. 13,811 $ 7.20--$41.80
Available for future grant............................... 15,290 --
======
</TABLE>

Options were exercisable with respect to 7,209,846 shares at December 31,
1994.

Subsequent to December 31, 1994, in connection with the acquisition of the
CWM minority interest (see Note 16), outstanding CWM options were exchanged for
options to acquire 2,867,061 Company shares at prices of $21.97 to $63.33 per
share.

NOTE 8. 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"), 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.

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

F-23
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTE 9. 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>
1993 1994
------- -------
<S> <C> <C>
Common shares issued, net of treasury shares in 1993
and Employee Stock Benefit Trust shares in 1994,
per Consolidated Balance Sheets.......................... 483,453 484,000
Effect of shares issuable under stock options after
applying the "treasury stock" method..................... 489 396
Effect of using weighted average common shares
outstanding during the year.............................. 1,432 (252)
------- -------
Common shares used in computing earnings per share........ 485,374 484,144
======= =======
</TABLE>

NOTE 10. 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 $195,092,000 in 1992, $181,168,000 in 1993 and $203,576,000
in 1994. 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, 1994, are due as follows:

<TABLE>
<S> <C>
First year...................................................... $ 161,754
Second year..................................................... 145,728
Third year...................................................... 134,065
Fourth year..................................................... 125,022
Fifth year...................................................... 118,372
Sixth through tenth years....................................... 498,942
Eleventh year and thereafter.................................... 415,086
----------
$1,598,969
==========
</TABLE>

During 1994, the Company sold put options on 17.9 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.
Proceeds of $29,965,000 from the sale of put options were credited to
additional paid-in capital. The amount the Company would be obligated to pay to
repurchase shares of its common stock if all outstanding put options were
exercised has been reclassified to a temporary equity account. In the event the
options are exercised, the Company may elect to pay the holder in cash the
difference between the strike price and the market price of the Company's
shares, in lieu of repurchasing the stock.

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

F-24
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

Options on 9.0 million shares expired unexercised in 1994, as the price of
the Company's stock was in excess of the strike price at maturity. Options on
4.7 million shares were exercised in February 1995, and the Company elected to
settle them for cash at a total cost of $12,019,000. The remaining 4.3 million
options expire in July and August 1995, at strike prices ranging from $25.588
to $28.833 per share. The Company sold additional put options in February and
March 1995 to replace those which matured. The new options expire in October
and November 1995 at strike prices of $26.11 to $26.58 per share.

Although the Company's insurance program includes coverage for sudden and
accidental Environmental Impairment Liability ("EIL") risk, insurance coverage
in large amounts for non-sudden and accidental EIL risk continues to be
unavailable at a cost which management believes is reasonable. The coverage
terms and cost of the limited risk transfer EIL insurance of this type which is
available to the Company are such that the insurance has not been purchased. To
satisfy existing government requirements, the Company has secured non-sudden
and accidental EIL insurance coverage in amounts believed to be in compliance
with federal and state law. The Company must reimburse the carrier for losses
incurred under coverage of this policy. In the event the Company continues not
to 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 3,015 bank letters of
credit, performance bonds and other guarantees. Such financial instruments
(averaging approximately $606,000 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.

In February 1994, a Connecticut Superior Court judge issued a decision on
appeals of the Connecticut Department of Environmental Protection's ("DEP")
issuance of WTI's permit to construct the $92 million Lisbon, Connecticut
trash-to-energy facility. In the 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 continues to construct the
facility as it pursues a favorable resolution of this permit remand through
appropriate judicial and regulatory proceedings. As of December 31, 1994, the
facility was approximately 60 percent complete. 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 a
consequence may 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.
Although the impact on the Company would be mitigated by the minority interest
in WTI, it could nonetheless be material to results of operations for a
particular quarter or year.

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 judgments being assessed against
the Company which, from time to time, may have an impact on earnings for a
particular

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

F-25
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The Company was a party to a lawsuit that alleged 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. In February 1995, the lawsuit was certified as a
class action and dismissed as to all defendants.

During the third quarter of 1994, several putative class action lawsuits were
filed by CWM stockholders in the Chancery Court of the State of Delaware in and
for New Castle County which seek unspecified money damages against the Company,
CWM and the individual directors of CWM in connection with the Company's
acquisition of all of the shares of CWM's common stock which it did not own.
These suits have since been consolidated for all purposes into a single action
captioned In re Chemical Waste Management, Inc. Shareholders Litigation.
Discovery is ongoing in the consolidated action. The Company believes that its
actions and those of CWM and its Board of Directors (including a Special
Committee thereof consisting of independent directors) in connection with the
transaction which is the subject of the litigation have been in accordance with
Delaware law. The Company and CWM have agreed with the plaintiffs to settle the
lawsuit as to all parties under terms which will not have a material adverse
impact on the Company. The proposed settlement is subject to certain
conditions, including the negotiation and execution of a definitive settlement
agreement and related documents, and approval by the Court.

NOTE 11. BENEFIT PLANS

The Company has a defined benefit pension plan for all eligible non-union
domestic employees of WMX, CWM and Waste Management, Inc. ("WMI"). 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 1992, 1993 and 1994, based on discount rates
of 8.75%, 8.50% and 8.50%, respectively, included the following components:

<TABLE>
<CAPTION>
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Service cost--benefits
earned during the year.. $12,922 $10,785 $11,075
Interest cost on
projected benefit
obligation.............. 9,320 9,507 11,532
Expected return on plan
assets.................. (12,547) (11,055) (12,335)
Net amortization and
deferral................ (813) (1,451) (1,310)
------- ------- -------
Net periodic pension
expense................. $ 8,882 $ 7,786 $ 8,962
======= ======= =======
</TABLE>

Assumptions as of December 31, which are used to determine the plan's funded
status at the respective dates, are as follows:

<TABLE>
<CAPTION>
1993 1994
----- ----
<S> <C> <C>
Discount rate................................................... 7.25% 8.5%
Rate of increase in compensation levels......................... 4.0% 4.0%
Expected long-term rate of return on assets..................... 9.0% 9.0%
</TABLE>

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

F-26
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

The following table sets forth the plan's funded status and the amount
recognized in the Company's Consolidated Balance Sheets at December 31, 1993
and 1994 for its pension plan:

<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including
vested benefits of $118,597 and $120,881 at
December 31, 1993 and 1994, respectively........... $(136,830) $(136,713)
========= =========
Projected benefit obligation......................... $(164,094) $(156,609)
Plan assets at fair value, primarily common stocks,
bonds and real estate................................ 136,244 136,740
--------- ---------
Plan assets less than projected benefit obligation.... $ (27,850) $ (19,869)
Unrecognized net loss................................. 36,530 39,304
Unrecognized overfunding at date of adoption
(January 1, 1985) of FAS No. 87, net of amortization,
being recognized over 15 years....................... (9,317) (8,727)
--------- ---------
Pension cost included in prepaid (accrued) expenses... $ (637) $ 10,708
========= =========
</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 $19,913,000, $13,821,000 and
$14,648,000 were made and charged to income in 1992, 1993 and 1994,
respectively.

The Company and its principal subsidiaries adopted FAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" 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 effect of this accounting change, except for the one-time
charge, on 1992 earnings was not significant.

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

F-27
<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, 1993 and 1994:

<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Accumulated Postretirement Benefit Obligations:
Retirees.................................................. $57,395 $57,216
Other fully eligible participants......................... 24,400 10,960
Other active participants................................. 5,463 9,478
------- -------
$87,258 $77,654
Unrecognized:
Prior service cost........................................ 347 627
Gain/(loss)............................................... (2,658) 9,501
------- -------
$84,947 $87,782
======= =======
</TABLE>

For measurement purposes, a 9.0% annual rate of increase in the per capita
cost of covered health care claims was assumed for 1995; the rate was assumed
to decrease by 0.5% per year to 6.0% 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, 1994 by approximately $4,114,000, and the
aggregate of the service and interest cost components of net postretirement
health care cost for 1994 by approximately $301,000. The weighted-average
discount rate used in determining the accumulated postretirement benefit
obligation for 1993 and 1994 was 7.25% and 8.5%, respectively.

The expense for postretirement health care benefits was $7,600,000 in 1992,
$7,300,000 in 1993 and $4,668,000 in 1994. The service and interest components
of the expense were $2,900,000 and $4,700,000, respectively, in 1992,
$3,000,000 and $4,300,000, respectively, in 1993 and $1,049,000 and $3,619,000,
respectively, in 1994.

The Company has an Employee Stock Ownership Plan ("1988 ESOP") for all
eligible non-union United States and Canadian employees of WMX, CWM and WMI.
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>
1992 1993 1994
------ ------ ------
<S> <C> <C> <C>
Expense recorded (contribution)......................... $5,551 $7,329 $7,930
====== ====== ======
Interest expense on 1988 ESOP debt...................... $1,765 $1,510 $1,965
====== ====== ======
Dividends on unallocated 1988 ESOP shares
used by the 1988 ESOP.................................. $ 983 $ 964 $ 780
====== ====== ======
</TABLE>

The Company has a Profit Sharing and Savings Plan ("PSSP") available to
certain employees of WMX, CWM and WMI. 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. Charges to operations
for the PSSP were $24,830,000 in 1992, $11,589,000 in 1993 and

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

F-28
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

Effective January 1, 1994, the Company and its principal subsidiaries adopted
FAS No. 112, "Employers' Accounting for Postemployment Benefits." This new
statement established accounting standards for employers who provide benefits
to former or inactive employees after employment but before retirement. The
adoption of FAS 112 did not have a significant effect on earnings for 1994,
because the Company's accounting prior to adoption was substantially in
compliance with the new standard.

During 1994, the Company established an Employee Stock Benefit Trust and sold
12.6 million shares of treasury stock 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. The shares of common stock issued to the Trust are
not considered to be outstanding in the computation of earnings per share until
the shares are utilized to fund obligations for which the trust was
established.

NOTE 12. 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 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.

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

F-29
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

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 operations, the
Company considers WM International to be a discrete segment. Following is an
analysis of the Company's operations by major segment.

<TABLE>
<CAPTION>
TRASH-TO-
ENGINEERING, ENERGY, WATER
CONSTRUCTION, TREATMENT, INTERNATIONAL
INDUSTRIAL AIR QUALITY WASTE CORPORATE
SOLID HAZARDOUS AND RELATED AND RELATED MANAGEMENT AND
WASTE WASTE SERVICES SERVICES SERVICES ELIMINATIONS(1) CONSOLIDATED
---------- ---------- ------------- ------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
administrative
expenses.............. 494,300 115,913 145,405 97,920 210,891 (16,382) 1,048,047
---------- ---------- ---------- ---------- ---------- ---------- -----------
Income from operations. $ 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
amortization expense.. $ 422,793 $ 65,918 $ 36,425 $ 58,410 $ 113,670 $ 16,853 $ 714,069
========== ========== ========== ========== ========== ========== ===========
Capital
expenditures(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
administrative
expenses.............. 547,413 128,058 155,753 107,276 198,969 (9,267) 1,128,202
---------- ---------- ---------- ---------- ---------- ---------- -----------
Income from operations. $ 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
amortization expense.. $ 461,963 $ 63,971 $ 52,300 $ 75,323 $ 121,050 $ 22,084 $ 796,691
========== ========== ========== ========== ========== ========== ===========
Capital
expenditures(2)......... $1,139,004 $ 157,786 $ 132,683 $ 310,839 $ 403,326 $ 19,075 $ 2,162,713
========== ========== ========== ========== ========== ========== ===========
1994
Revenue................ $5,117,871 $ 649,581 $1,682,907 $1,324,567 $1,710,862 $(388,470) $10,097,318
Operating expenses
including goodwill
amortization............ 3,502,445 454,765 1,407,794 915,237 1,244,597 (380,393) 7,144,445
Selling and
administrative
expenses.............. 549,608 105,736 177,978 119,380 230,014 1,532 1,184,248
---------- ---------- ---------- ---------- ---------- ---------- -----------
Income from operations. $1,065,818 $ 89,080 $ 97,135 $ 289,950 $ 236,251 $ (9,609) $ 1,768,625
========== ========== ========== ========== ========== ========== ===========
Identifiable assets.... $7,388,766 $1,375,341 $1,771,655 $3,282,471 $4,037,922 $ (317,241) $17,538,914
========== ========== ========== ========== ========== ========== ===========
Depreciation and
amortization expense.. $ 479,333 $ 59,381 $ 67,409 $ 95,254 $ 154,575 $ 24,514 $ 880,466
========== ========== ========== ========== ========== ========== ===========
Capital
expenditures(2)......... $ 950,383 $ 57,983 $ 63,570 $ 115,082 $ 304,999 $ 20,397 $ 1,512,414
========== ========== ========== ========== ========== ========== ===========
</TABLE>
- ---------
(1)Includes corporate office expenses, corporate charges and elimination of
intercompany transactions.
(2)Includes property and equipment of purchased businesses.

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

F-30
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

In addition to the markets served by WM International, the Company has
foreign operations in Canada and Mexico and CWM, WTI and Rust derive revenue
from outside the United States. The information relating to the Company's
foreign operations is set forth in the following table:

<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE FOREIGN CONSOLIDATED
----------- ---------- --------- ------------
<S> <C> <C> <C> <C>
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
=========== ========== ======== ===========
1994
Revenue........................... $ 7,946,920 $1,504,154 $646,244 $10,097,318
=========== ========== ======== ===========
Income from operations............ $ 1,496,039 $ 198,251 $ 74,335 $ 1,768,625
=========== ========== ======== ===========
Identifiable assets............... $12,884,724 $3,731,393 $922,797 $17,538,914
=========== ========== ======== ===========
</TABLE>

No single customer accounted for as much as 3% of consolidated revenue in
1992, 4% in 1993 and 3% in 1994.

NOTE 13. SPECIAL GAINS AND CHARGES

The Company's 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. Although
the facility was never operated, funds had been expended to develop site
infrastructure and prepare for trial burns.

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

F-31
<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
cash expenditures. Substantially all of the cash expenditures were made as of
December 31, 1994. As a result of this program, overhead, including
depreciation and amortization, was reduced in 1994 by approximately $60,000,000
on an annualized basis.

Results for 1993 include a non-taxable gain of $15,109,000 (before minority
interest) relating to the second quarter issuance of shares by Rust in the
Brand merger.

In 1994, Rust recorded a charge of $9,200,000 (before tax and minority
interest) for the writeoff of assets and the recognition of one-time costs
incurred during the fourth quarter in connection with the discontinuance of its
marine construction and dredging operations, and the closing of offices in a
consolidation of the engineering and construction groups. This charge is
included in Operating Expenses ($6,600,000) and Selling and Administrative
Expenses ($2,600,000) in the Consolidated Statement of Income.

NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of FAS 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 judgment 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, 1993, and December 31, 1994.
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.

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

F-32
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1994
--------------------- ----------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Nonderivatives--
Assets--
Cash and cash equivalents...... $ 92,802 $ 92,802 $ 121,918 $ 121,918
Receivables.................... 1,771,761 1,771,761 1,968,192 1,968,192
Investments.................... 33,580 33,580 19,704 19,704
Liabilities--
Commercial paper............... 1,376,197 1,376,106 946,702 944,837
Project debt................... 810,612 977,800 764,859 828,320
Liquid Yield Option Notes...... 619,189 611,121 505,140 500,410
Other borrowings............... 4,094,077 4,247,543 4,718,396 4,586,522
Derivatives relating to debt.... -- (1,900) -- 1,653
Other derivatives carried as--
Assets (in Other Assets)....... -- -- 307 307
Liabilities (in Accrued
Expenses)....................... -- -- (1,105) (16,245)
Letters of credit, performance
bonds
and guarantees................. -- -- -- --
</TABLE>

Cash, Receivables and Investments

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

Liabilities

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.

Derivatives

The fair value of derivatives generally reflects the estimated amounts that
the Company would receive or pay to terminate the contracts at December 31,
thereby taking into account unrealized gains and losses. Dealer quotes are
available for most of the Company's derivatives. Deferred gains and losses are
shown as assets and liabilities, as offsetting such amounts against the related
nonderivative instrument is permitted only pursuant to a right of setoff or
master netting agreement.

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

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

F-33
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is an analysis of certain items in the Consolidated Statements
of Income by quarter for 1993 and 1994.
<TABLE>
<CAPTION>
NET EARNINGS
GROSS INCOME/ (LOSS) PER
REVENUE PROFIT (LOSS) SHARE(1)
1993 ----------- ---------- -------- -----------
<S> <C> <C> <C> <C>
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
=========== ========== ======== =====
1994
First Quarter...................... $ 2,284,067 $ 659,945 $162,612 $ .34
Second Quarter..................... 2,551,722 757,112 203,117 .42
Third Quarter...................... 2,603,110 765,849 212,885 .44
Fourth Quarter..................... 2,658,419 769,967 205,767 .42
----------- ---------- -------- -----
$10,097,318 $2,952,873 $784,381 $1.62
=========== ========== ======== =====
</TABLE>
- --------
(1) The sum of the quarterly per share amounts does not equal the annual amount
in 1993 due to rounding.

See Note 13 to Consolidated Financial Statements for a discussion of the
special gains and charges affecting the 1993 second and third quarter and full
year results and the 1994 fourth quarter and full year results.

NOTE 16. ACQUISITION OF SUBSIDIARIES' STOCK

CWM Transaction

On January 24, 1995, the Company acquired all of the outstanding shares of
CWM which it did not already own. WMX previously owned approximately 78.6% of
the outstanding CWM shares. The transaction provided for the CWM public
shareholders to receive a convertible subordinated WMX note due 2005, with a
principal amount at maturity of $1,000, for every 81.1 CWM shares held with
cash paid for fractional notes. The notes are subordinated to all existing and
future indebtedness of WMX. Each note bears cash interest from the date the
merger was consummated at the rate of two percent per annum of the $1,000
principal amount at maturity, payable semi-annually. The difference between the
principal amount at maturity of $1,000 and the $717.80 stated issue price of
each note represents the stated discount which, together with the cash interest
payable on the notes, will accrue at a rate of 5.75 percent per annum
(determined on a semi-annual bond equivalent basis) for purposes of determining
the prices at which WMX may purchase or redeem notes, as described below. At
the option of the holder, each note will be purchased for cash by WMX on March
15, 1998, and March 15,

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

F-34
<PAGE>

WMX TECHNOLOGIES, INC. AND SUBSIDIARIES

As of December 31, 1994, the CWM LYONs and the Exchangeable LYONs (together
with the CWM LYONs, the "LYONs") were convertible into (in the case of the CWM
LYONs) or exchangeable for (in the case of the Exchangeable LYONs) CWM shares.
Upon consummation of the merger, the LYONs became convertible into the number
of notes discussed in the preceding paragraph to which the holders would have
been entitled had they converted or exchanged the LYONs immediately prior to
the merger approval. Outstanding CWM options were exchanged for options to
acquire 2,867,061 Company shares at prices of $21.97 to $63.33 per share.

Rust Transaction

In February 1995, the Company offered to acquire the approximately 4% of
Rust's shares held by the public for $14 per share in cash. The transaction is
subject to approval by a special committee of independent directors appointed
by the Rust Board of Directors, but does not require shareholder approval. If
approved, the transaction is expected to be completed during the second quarter
of 1995.

NOTE 17. SUBSEQUENT EVENT

Although CWM restructured its operations in 1994 to adapt to market
conditions, and substantially reduced its overhead, its chemical waste services
line of business has continued to underperform, and management is continuing to
evaluate alternatives to address this situation. On March 14, 1995, the Board
of Directors approved a plan to further reduce the scope of the chemical waste
services business by selling or otherwise eliminating technologies and/or
service locations which are not meeting customer service or performance
objectives. Management is finalizing the details of this plan, which is
expected to result in an additional restructuring charge of approximately $140
million pretax in the first quarter of 1995.

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

F-35
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

A list of exhibits included as part of this registration statement is set
forth in the Exhibit Index appearing elsewhere herein, and is hereby
incorporated by reference herein.

(b) FINANCIAL STATEMENT SCHEDULES.

The following information included in Item 14 of the registrant's 1994 annual
report on Form 10-K and Arthur Andersen LLP's report thereon are hereby
incorporated by reference herein:

Schedule II--Reserves.

All other schedules have been omitted because the required information is not
applicable.

S-1
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT, OR AMENDMENT THERETO, TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN OAK BROOK,
ILLINOIS ON APRIL 21, 1995.

WMX Technologies, Inc.

/s/ Dean L. Buntrock
By___________________________________
Dean L. Buntrock,
Chairman of the Board and
Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT, OR AMENDMENT THERETO, HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ Dean L. Buntrock
- ------------------------------------
Dean L. Buntrock Director, Chairman of the
Board and Chief Executive
Officer
/s/ Jerry E. Dempsey
- ------------------------------------
Jerry E. Dempsey Director
/s/ Phillip B. Rooney
- ------------------------------------
Phillip B. Rooney Director
/s/ Donald F. Flynn
- ------------------------------------
Donald F. Flynn Director
/s/ Peter H. Huizenga
- ------------------------------------
Peter H. Huizenga Director
/s/ Peer Pedersen
- ------------------------------------
Peer Pedersen Director
/s/ James R. Peterson
- ------------------------------------
James R. Peterson Director April 21, 1995
/s/ Alexander B. Trowbridge
- ------------------------------------
Alexander B. Trowbridge Director
/s/ Howard H. Baker, Jr.
- ------------------------------------
Howard H. Baker, Jr. Director
/s/ H. Jesse Arnelle
- ------------------------------------
H. Jesse Arnelle Director
/s/ Thomas C. Hau
- ------------------------------------
Thomas C. Hau Vice President, Controller and
Principal Accounting Officer
/s/ James E. Koenig
- ------------------------------------
James E. Koenig Senior Vice President,
Treasurer and Principal
Financial Officer
/s/ Pastora San Juan Cafferty
- ------------------------------------
Pastora San Juan Cafferty Director
</TABLE>

S-2
<PAGE>

WMX TECHNOLOGIES, INC.

EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S>
1. Inapplicable
2. Inapplicable
3.1(a) Restated Certificate of Incorporation of registrant, as amended as of
May 24, 1985 (incorporated by reference to Exhibit 4.1 to registrant's
report on Form 10-Q for the quarter ended June 30, 1985)
3.1(b) Certificate of Amendment of Restated Certificate of Incorporation of
registrant, recorded May 23, 1986 (incorporated by reference to
Exhibit 4(c) to registrant's registration statement on Form S-8,
Registration No. 33-6265)
3.1(c) Certificate of Designation of Preferred Stock of registrant, filed
January 30, 1987 (incorporated by reference to Exhibit 3.1(c) to
registrant's 1986 annual report on Form 10-K)
3.1(d) Certificate of Amendment of Restated Certificate of Incorporation of
registrant, recorded May 15, 1987 (incorporated by reference to
Exhibit 4.5(d) to registrant's registration statement on Form S-4,
Registration No. 33-15518)
3.1(e) Certificate of Amendment of Restated Certificate of Incorporation of
registrant, filed May 19, 1989 (incorporated by reference to Exhibit
3(e) to registrant's registration statement on Form S-3, Registration
No. 33-30190)
3.1(f) Certificate of Amendment of Restated Certificate of Incorporation of
registrant, filed May 18, 1990 (incorporated by reference to Exhibit
4(h) to registrant's registration statement on Form S-8, Registration
No. 33-35936)
3.1(g) Certificate of Amendment of Restated Certificate of Incorporation of
registrant, filed May 14, 1993 (incorporated by reference to Exhibit
4(a) to registrant's report on Form 8-K dated May 14, 1993)
3.1(h) Conformed copy of Certificate of Incorporation of registrant, as
amended (incorporated by reference to Exhibit 4(b) to registrant's
report on Form 8-K dated May 14, 1993)
3.2 By-laws of registrant, as amended and restated as of January 28, 1995
(incorporated by reference to Exhibit 3.2 to registrant's 1994 annual
report on Form 10-K)
4.1(a) Rights Agreement dated as of February 6, 1987, between the registrant
and Harris Trust and Savings Bank, which includes as Exhibit A the
form of Certificate of Designation of Preferred Stock, as Exhibit B,
the form of Rights Certificate and, as Exhibit C, the Summary of
Rights (incorporated by reference to Exhibit 4 to registrant's report
on Form 8-K dated January 26, 1987)
4.1(b) Certificate of Adjustment relating to April 1987 stock split pursuant
to Section 12 of the Rights Agreement (incorporated by reference to
Exhibit 4.3(b) to registrant's registration statement on Form S-1,
Registration No. 33-13839)
4.1(c) Certificate of Adjustment relating to December 1989 stock split
pursuant to Section 12 of the Rights Agreement (incorporated by
reference to Exhibit 4.3(c) to registrant's 1989 annual report on Form
10-K)
4.2 Trust Indenture for Liquid Yield Option Notes due 2012 (incorporated
by reference to Exhibit 4(a) to registrant's registration statement on
Form S-3, Registration No. 33-24615)
</TABLE>

EX-1
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S>
4.3(a) Trust Indenture dated as of August 1, 1989 (incorporated by reference
to Exhibit 4.3(a) to registrant's 1990 annual report on Form 10-K)
4.3(b) First Supplemental Indenture dated as of December 1, 1990
(incorporated by reference to Exhibit 4.3(b) to registrant's 1990
annual report on Form 10-K)
4.3(c) Trust Indenture dated as of June 1, 1993 (incorporated by reference to
Exhibit 4 to the registrant's current report on Form 8-K dated July
15, 1993)
5. Opinion of Herbert A. Getz (incorporated by reference to Exhibit 5 to
registrant's registration statement on Form S-1, Registration No. 33-
44849)
6. None
7. None
8. None
9. None
10.1 1981 Stock Option Plan for Non-Employee Directors of registrant
(incorporated by reference to Exhibit 19 to registrant's report on
Form 10-Q for the quarter ended June 30, 1982)
10.2 WMX Technologies, Inc. 1982 Stock Option Plan, as amended to March 11,
1988 (incorporated by reference to Exhibit 10.3 to registrant's 1988
annual report on Form 10-K)
10.3 Deferred Director's Fee Plan, as amended (incorporated by reference to
Exhibit 10.3 to registrant's 1990 annual report on Form 10-K)
10.4 Director's Phantom Stock Plan (incorporated by reference to Exhibit
10.9 to registrant's 1984 annual report on Form 10-K)
10.5 Employment Agreement, dated as of September 1, 1986, by and between
the registrant and Phillip B. Rooney (incorporated by reference to
Exhibit 19.4 to registrant's report on Form 10-Q for the quarter ended
September 30, 1986)
10.6 WMX Technologies, Inc. Corporate Incentive Bonus Plan (incorporated by
reference to Exhibit B to registrant's Proxy Statement for its 1995
Annual Meeting of Stockholders)
10.7 WMX Technologies, Inc. Supplemental Executive Retirement Plan, as
amended and restated as of May 14, 1993 (incorporated by reference to
Exhibit 10 to registrant's current report on Form 8-K dated July 15,
1993)
10.8 WMX Technologies, Inc. Long Term Incentive Plan, as amended and
restated as of January 26, 1995 (incorporated by reference to Exhibit
A to registrant's Proxy Statement for its 1995 Annual Meeting of
Stockholders)
10.9 Supplemental Retirement Benefit Agreement, dated as of January 1,
1989, by and between the registrant and Peter H. Huizenga
(incorporated by reference to Exhibit 10.16 to Post-Effective
Amendment No. 2 to registrant's registration statement on Form S-1,
Registration No. 33-13839)
10.10 Chemical Waste Management, Inc. 1986 Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.1 to Chemical Waste
Management, Inc.'s 1989 annual report on Form 10-K)
10.11 WMX Technologies, Inc. Director's Charitable Endowment Plan
(incorporated by reference to Exhibit 10.20 to registrant's 1989
annual report on Form 10-K)
</TABLE>

EX-2
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S>
10.12 Supplemental Retirement Benefit Agreement dated as of January 1, 1991 by
and between registrant and Donald F. Flynn (incorporated by reference to
Exhibit 10.17 to registrant's 1990 annual report on Form 10-K)
10.13 Restricted Unit Plan for Non-Employee Directors of Wheelabrator
Technologies Inc. as amended through June 10, 1991 (incorporated by
reference to Exhibit 19.03 to the report on Form 10-Q of Wheelabrator
Technologies Inc. for the quarter ended June 30, 1991)
10.14 1988 Stock Plan for Executive Employees of Wheelabrator Technologies
Inc. and its subsidiaries (the "WTI 1988 Stock Plan") (incorporated by
reference to Exhibit 28.1 to Amendment No. 1 to the registration
statement of Wheelabrator Technologies Inc. on Form S-8, Registration
No. 33-31523)
10.15 Amendments dated as of September 7, 1990 to the WTI 1988 Stock Plan
(incorporated by reference to Exhibit 19.02 to the 1990 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
10.16 Amendment dated as of November 1, 1990 to the WTI 1988 Stock Plan
(incorporated by reference to Exhibit 19.04 to the 1990 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
10.17 1986 Stock Plan for Executive Employees of Wheelabrator Technologies
Inc. and its subsidiaries (the "WTI 1986 Stock Plan") (incorporated by
reference to Exhibit 28.2 to Amendment No. 1 to the registration
statement of Wheelabrator Technologies Inc. on Form S-8, Registration
No. 33-31523)
10.18 Amendment dated as of November 1, 1990 to the WTI 1986 Stock Plan
(incorporated by reference to Exhibit 19.03 to the 1990 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
10.19 Description of consulting agreement between registrant and Alexander B.
Trowbridge (incorporated by reference to Exhibit 10.22 to registrant's
1989 annual report on Form 10-K)
10.20 WMX Technologies, Inc. 1992 Stock Option Plan (incorporated by reference
to Exhibit 10.31 to registrant's registration statement on Form S-1,
Registration No. 33-44849)
10.21 WMX Technologies, Inc. 1992 Stock Option Plan for Non-Employee Directors
(incorporated by reference to Exhibit 10.32 to registrant's registration
statement on Form S-1, Registration No. 33-44849)
10.22 Chemical Waste Management, Inc. 1992 Stock Option Plan (incorporated by
reference to Exhibit 10.19 to the 1991 annual report on Form 10-K of
Chemical Waste Management, Inc.)
10.23 Wheelabrator Technologies Inc. 1992 Stock Option Plan (incorporated by
reference to Exhibit 10.45 to the 1991 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
10.24 Deferred Director's Fee Plan of Wheelabrator Technologies Inc. adopted
June 10, 1991 (incorporated by reference to Exhibit 19.02 to the report
on Form 10-Q of Wheelabrator Technologies Inc. for the quarter ended
June 30, 1991)
10.25 Waste Management International plc Share Option Plan (incorporated by
reference to Exhibit 10.1 to the registration statement on Form F-1 of
Waste Management International plc, Registration No. 33-46511)
10.26 Amendment dated as of December 6, 1991 to the WTI 1986 Stock Plan
(incorporated by reference to Exhibit 19.01 to the 1991 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
</TABLE>

EX-3
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S>
10.27 Amendment dated as of December 6, 1991 to the WTI 1988 Stock Plan
(incorporated by reference to Exhibit 19.02 to the 1991 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
10.28 Amendment dated as of December 6, 1991 to the Restricted Unit Plan for
Non-Employee Directors of Wheelabrator Technologies Inc. (incorporated
by reference to Exhibit 19.05 to the 1991 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
10.29 Rust International Inc. 1993 Stock Option Plan (incorporated by
reference to Exhibit 10.41 to registrant's 1992 annual report on Form
10-K)
10.30 Rust International Inc. 1993 Stock Option Plan for Non-Employee
Directors (incorporated by reference to Exhibit 10.42 to registrant's
1992 annual report on Form 10-K)
10.31 First Amended and Restated International Business Opportunities
Agreement by and among registrant, Chemical Waste Management, Inc.,
Wheelabrator Technologies Inc., Waste Management International, Inc.,
Waste Management International plc and Rust International Inc., dated as
of January 1, 1993 (incorporated by reference to Exhibit 28 to the
registration statement on Form S-3 of Wheelabrator Technologies Inc.,
Registration No. 33-59606)
10.32 Amendment Agreement dated as of January 28, 1994 relating to the
International Business Opportunities Agreement (incorporated by
reference to Exhibit 10.19 to the 1993 annual report on Form 10-K of
Chemical Waste Management, Inc.)
10.33 Consulting Agreement dated as of February 9, 1995 between the registrant
and J. Steven Bergerson (incorporated by reference to Exhibit 10.35 to
registrant's 1994 annual report on Form 10-K)
11. None
12. None
13. Inapplicable
14. None
15. None
16. None
17. Inapplicable
18. Inapplicable
19. Inapplicable
20. Inapplicable
21. List of subsidiaries of registrant (incorporated by reference to Exhibit
21 to registrant's 1994 annual report on Form 10-K)
22. Inapplicable
23.1 Consent of Independent Public Accountants
23.2 Consent of Person About to Become a Director
24. None
25. None
</TABLE>

EX-4
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND
DESCRIPTION
OF EXHIBIT*
-----------
<C> <S>
26. None
27. None
28. None
99. None
</TABLE>
- ----------

*In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act
is 1-7327, Chemical Waste Management, Inc.'s file number under that Act was
1-9253 and Wheelabrator Technologies Inc.'s file number under that Act is 0-
14246.

EX-5

<PAGE>

EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports dated February 6, 1995 (except with respect to the matter discussed in
Note 17, as to which the date is March 14, 1995), to all references to our Firm
in Post-Effective Amendment No. 4 to this Registration Statement on Form S-1
and to the incorporation by reference of such reports in WMX Technologies,
Inc.'s previously filed Registration Statements on Form S-8 (Registration Nos.
33-7201, 33-17447, 33-26733 and 33-35936).

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Chicago, Illinois April 20, 1995

<PAGE>

EXHIBIT 23.2

WMX TECHNOLOGIES, INC.

CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR

The undersigned hereby consents to being named by WMX Technologies, Inc. (the
"Company") as a person about to become a director of the Company in the
Company's Registration Statement (No. 33-44849) on Form S-1 and any amendment
thereto, filed with the Securities and Exchange Commission by the Company.

/s/ James B. Edwards
------------------
James B.
Edwards

Dated: April 6, 1995