WHEELABRATOR TECHNOLOGIES INC /DE/, POS AM, 1994-04-28

WHEELABRATOR TECHNOLOGIES INC /DE/
POS AM, 1994-04-28
AIRCRAFT PARTS & AUXILIARY EQUIPMENT, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1994

REGISTRATION NO. 33-47575
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

WHEELABRATOR 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)

22-2678047
(I.R.S. EMPLOYER IDENTIFICATION NO.)

LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
(603) 929-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

STEPHEN P. STANCZAK, SECRETARY AND ASSOCIATE GENERAL COUNSEL
WHEELABRATOR 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>

WHEELABRATOR TECHNOLOGIES INC.

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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
---------------- ------------------------------------
<C> <S> <C>
1. Forepart of the Registra-
tion Statement and Outside
Front Cover Page of Pro- Cross Reference Sheet and Cover Page of
spectus................... Prospectus
2. Inside Front and Outside
Back Cover Pages of Pro-
spectus................... Inside Front Cover Page
3. Summary Information, Risk
Factors and Ratio of Earn-
ings to Fixed Charges..... Summary; Risk Factors
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 Cov-
ered by this Prospectus
8. Plan of Distribution....... Securities Covered by this Prospectus
9. Description of Securities Cover Page of Prospectus; Description of
to be Registered.......... 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)........................ Properties
(c)........................ Legal Proceedings
(d)........................ Market for Common Stock and Related Stock-
holder Matters
(e)........................ Consolidated Financial Statements of
Wheelabrator Technologies Inc. and Consol-
idated Financial Statements of Rust Inter-
national Inc.
(f)........................ Selected Historical Financial Data
(g)........................ Wheelabrator Technologies Inc. Consolidated
Financial Statements Note 10 and Rust In-
ternational Inc. Consolidated Financial
Statements Note 15
(h)........................ Management's Discussion and Analysis of Re-
sults of Operations and Financial Condi-
tion
(i)........................ Inapplicable
(j)........................ Management
(k)........................ Management
(l)........................ Principal Stockholder; Management
(m)........................ Management; Certain Transactions and Other
Matters
12. Disclosure of Commission
Position on Indemnifica-
tion for Securities Act
Liabilities............... Inapplicable
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED APRIL 28, 1994

PROSPECTUS

11,139,319 SHARES

LOGO

COMMON STOCK

$0.01 PAR VALUE

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

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

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

The 11,139,319 shares of common stock, $0.01 par value (the "Common Stock"),
covered by this Prospectus may be offered and issued from time to time by
Wheelabrator Technologies Inc. (the "Company" or "WTI") in connection with
future 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"). This
Prospectus has also been prepared for use, with the Company's prior consent, by
persons or entities who have received or will receive such 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" and see the inside back cover page hereof for the identity of
such persons, if any.

The Common Stock is listed on the New York Stock Exchange under the symbol
"WTI." On , 1994, the closing sale price of the Common Stock on the New
York Stock Exchange Composite Tape as reported in The Wall Street Journal
(Midwest Edition) was $ per share. See "Market for Common Stock and Related
Stockholder Matters."

PROSPECTIVE PURCHASERS SHOULD CONSIDER THE FACTORS SPECIFIED UNDER "RISK
FACTORS."

All references to numbers of shares of Common Stock, or options for shares of
Common Stock, and all references to market and option prices per share, and
income per share in this Prospectus have been adjusted to reflect all stock
dividends of the Company.

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

The date of this Prospectus is , 1994.
<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 THE COMPANY. 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>
<CAPTION>
PAGE
----
<S> <C>
Available Information.............. 2
Summary............................ 3
The Company........................ 6
Risk Factors....................... 8
Securities Covered by this Prospec-
tus............................... 10
Market for Common Stock and Related
Stockholder Matters............... 11
Selected Historical Financial Data. 12
Recent Developments................ 13
Management's Discussion and Analy-
sis of Results of Operations and
Financial Condition............... 13
Business of the Company............ 20
General.......................... 20
Services and Products............ 20
Regulations...................... 24
Competition...................... 25
Research and Development......... 26
Patents, Trademarks, Licenses and
Other Agreements................ 26
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Backlog............................................................. 28
Raw Materials....................................................... 28
Employees........................................................... 29
Financing Capabilities and Funding Support Agreements............... 29
Properties............................................................ 33
Legal Proceedings..................................................... 36
Management............................................................ 36
Directors and Executive Officers.................................... 36
Securities Ownership of Management.................................. 40
Compensation........................................................ 42
Principal Stockholder................................................. 47
Certain Transactions and Other Matters................................ 47
Description of Capital Stock.......................................... 57
Experts............................................................... 60
Additional Information................................................ 60
Index to Financial Statements......................................... F-1
</TABLE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, 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 may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, 75 Park Place, New York, N.Y. 10007; and Chicago Regional Office,
Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Common Stock is listed on the New York Stock
Exchange and such material may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, N.Y. 10005.

2
<PAGE>

SUMMARY

The Company....... Wheelabrator Technologies Inc.

Location.......... The Company's executive offices are located at:
Liberty Lane
Hampton, New Hampshire 03842
Telephone: 603/929-3000

Business..........
The Company provides a wide array of environmental
products and services in North America and abroad
through three principal business lines. The Company's
energy group ("Wheelabrator Clean Energy") 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 subsidiaries
comprising Wheelabrator Clean Energy, the Company
develops, arranges financing for, operates and owns
facilities that dispose of trash and other waste
materials in an environmentally acceptable manner by
recycling it into energy in the form of electricity and
steam.

The Company's water group ("Wheelabrator Clean Water")
is comprised of several subsidiaries 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.
Wheelabrator Clean Water also designs and manufactures
various products and systems used in water and
wastewater treatment facilities and industrial
facilities, precision profile wire screens for use in
groundwater wells and other industrial applications,
and certain other industrial equipment.

The Company's air group ("Wheelabrator Clean Air")
designs, fabricates and installs technologically-
advanced air pollution emission control and measurement
systems and equipment, including systems which remove
pollutants from the emissions of the Company's trash-
to-energy facilities as well as power plants and other
industrial facilities. Through its subsidiaries,
Wheelabrator Clean Air also provides technologies and
systems designed to treat air streams which contain
nitrogen oxide ("Nox") and volatile organic compounds
("VOCs"), the major contributors to the creation of
smog.

Approximately 55% of the outstanding Common Stock is
owned by WMX Technologies, Inc. ("WMX").

The Company holds a 40% equity interest in Rust
International Inc. ("Rust"), a leading provider of
engineering, construction and environmental and
infrastructure consulting services, hazardous substance
remediation services and other on-site industrial and
related services, primarily to clients in government
and in the chemical, petrochemical, energy, nuclear,
utility, pulp and paper,

3
<PAGE>

manufacturing, environmental services and other
industries. Rust was created on January 1, 1993
pursuant to an agreement among the Company, Chemical
Waste Management, Inc. ("CWM") and The Brand Companies,
Inc. ("Brand").

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

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

SELECTED HISTORICAL FINANCIAL INFORMATION

(SEE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY BEGINNING ON PAGE F-2)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1989 1990 1991 1992 1993(1)
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<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues................ $1,006,964 $1,151,873 $1,173,449 $1,483,054 $1,142,219
Income before extraordi-
nary item and
accounting changes..... 58,481 47,406 126,059 176,382(2) 163,102
Net income (loss)....... 58,481 (70,190)(3) 126,059(4) 134,152(5) 163,102(6)
Earnings (loss) per com-
mon share:
Before extraordinary
item and
accounting
changes(7)........... 0.37 0.30 0.73 0.94 0.86
Net income (loss)(7).. 0.37 (0.44) 0.73 0.71 0.86
Weighted average common
shares outstanding(7).. 156,400 158,400 172,400(8) 188,200(8) 188,900
Dividends declared per
share(7)............... -- -- -- 0.04 0.08
FINANCIAL CONDITION (AT
YEAR-END):
Total assets............ $2,249,652 $2,325,818 $2,743,830 $2,997,073 $3,090,278
Working capital......... 197,804 265,363 516,084 251,464 5,570
Long-term project debt.. 945,282 987,949 987,058 857,625 776,858
Stockholders' equity.... 577,487 545,978 891,351(9) 1,039,343(9) 1,286,838(9)
</TABLE>
- --------

(1) Beginning in 1993, the Company no longer consolidates the financial results
of certain businesses contributed to form, in part, Rust. Revenues from the
contributed businesses amounted to approximately $380.4 million, $423.8
million, $397.8 million and $554.7 million in 1989, 1990, 1991 and 1992,
respectively. Beginning in 1993, the Company's share of Rust's net income
is included in equity in earnings of affiliates. See Note 2 of Notes to
Consolidated Financial Statements.

(2) 1992 income before extraordinary item and accounting changes includes a $47
million nontaxable gain relating to the initial public offering of shares
by WM International. See Note 2 of Notes to Consolidated Financial
Statements.

(3) The 1990 loss of $70.2 million, or $0.44 per share, reflects a
restructuring charge, an unrealized loss on investments in common stock and
the cumulative effect of a change in accounting method.

(4) 1991 net income includes a $47 million pretax gain on the sale of certain
foreign equity investments.

(5) 1992 net income includes one-time charges of $42 million relating to the
adoption of two new financial accounting standards. See Note 1 of Notes to
Consolidated Financial Statements.

4
<PAGE>

(6) 1993 income includes a $7.7 million nontaxable gain related to issuance of
stock by Rust and a $6.5 million increase in the tax provision due to the
revaluing of deferred taxes as a result of the August enactment of the
Omnibus Budget Reconciliation Act of 1993. See Notes 2 and 3 of Notes to
Consolidated Financial Statements.

(7) Share and per share data for all periods reflect the two-for-one stock
split effected on January 7, 1993. See Note 1 of Notes to Consolidated
Financial Statements.

(8) The increases in weighted average shares outstanding in 1991 and 1992 are
due primarily to shares issued in connection with acquisitions. See Note 2
of Notes to Consolidated Financial Statements.

(9) The increases in stockholders' equity at December 31, 1991 and 1992
primarily reflect income for each year and the effect of acquisitions. The
increase in stockholders' equity at December 31, 1993 primarily reflects
income for the year, the effects of acquisitions and the January 1, 1993
formation of Rust. See Note 2 of Notes to Consolidated Financial
Statements.

Recent On April 18, 1994, the Company announced operating
Developments...... results for the three months ended March 31, 1994.
Revenue for the first quarter was $281.3 million,
versus $245.5 million in the period a year earlier. The
Company's first quarter revenues increased 15 percent
compared with revenues for the year earlier quarter.
Net income was $40.1 million in the first quarter of
1994, compared with $33.4 million in the first quarter
of 1993, an increase of 20 percent. The Company
reported earnings per share of $0.21, approximately 17
percent above first quarter 1993 earnings of $0.18 per
share.

In connection with a settlement finalized during the
first quarter of 1994 relating to certain outstanding
tax liabilities of the Company, the Company has
commenced litigation to collect approximately $21
million owed to the Company by a former affiliate of
the Company pursuant to an indemnification agreement.
See "Recent Developments."

5
<PAGE>

THE COMPANY

GENERAL

Wheelabrator Technologies Inc. provides a wide array of environmental
products and services in North America and abroad through three principal
business lines. Wheelabrator Clean Energy 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 subsidiaries comprising Wheelabrator
Clean Energy, the Company develops, arranges financing for, operates and owns
facilities that dispose of trash and other waste materials in an
environmentally acceptable manner by recycling it into energy in the form of
electricity and steam.

Wheelabrator Clean Water is comprised of several subsidiaries 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. Wheelabrator
Clean Water also designs and manufactures various products and systems used in
water and wastewater treatment facilities and industrial facilities, precision
profile wire screens for use in groundwater wells and other industrial
applications, and certain other industrial equipment.

Wheelabrator Clean Air designs, fabricates and installs technologically-
advanced air pollution emission control and measurement systems and equipment,
including systems which remove pollutants from the emissions of the Company's
trash-to-energy facilities as well as power plants and other industrial
facilities. Through its subsidiaries, Wheelabrator Clean Air also provides
technologies and systems designed to treat air streams which contain Nox and
VOCs, the major contributors to the creation of smog.

The majority of the businesses of the Company have been managed together as a
group since the early 1980s. The Company's predecessor companies and
subsidiaries have been active in project development for approximately 20
years, and in related activities since the turn of the century. Unless the
context indicates to the contrary, as used in this report, the terms "Company"
and "WTI" refer to Wheelabrator Technologies Inc. and its subsidiaries.

HISTORY

The Company (then known as The Henley Group, Inc.) was incorporated in
Delaware in December 1985 by Allied-Signal Inc. ("Allied-Signal") to operate
approximately 35 former businesses of Allied-Signal (including many of the
businesses that now comprise WTI) and for the purpose of effecting the
distribution, in May 1986, of the Company's common stock, par value $.01 per
share, to the stockholders of Allied-Signal.

In 1988, WMX acquired an interest in a publicly traded subsidiary of the
Company then known as Wheelabrator Technologies Inc. ("Old WTI"), in
consideration of the contribution to Old WTI of WMX's existing trash-to-energy
business and certain related assets (the "1988 Transaction"). See "Certain
Transactions and Other Matters--Transactions Between WTI and WMX." On December
31, 1988, the Company separated its businesses into two separate public
companies by (a) contributing the greater portion of its businesses and assets
to a new company and retaining an approximately 60% interest in Old WTI,
together with certain related assets and liabilities, and (b) distributing
approximately 90% of the equity of the new company to the Company's
stockholders (the "Old Henley Distribution"). In connection with the Old Henley
Distribution, the name of the Company was changed to The Wheelabrator Group
Inc. and the name of the new company was changed to The Henley Group, Inc.
("Old Henley").

On August 24, 1989, the stockholders of Old WTI and the Company approved a
transaction in which Old WTI was merged (the "1989 Merger") with and into Resco
Holdings Inc., a wholly-owned subsidiary of the Company ("Resco"), with Resco
continuing as the surviving company. In the 1989 Merger, each share of common
stock of Old WTI held by stockholders of Old WTI (other than Resco) became 3.38
shares of common stock of the Company. Immediately following the 1989 Merger,
the outstanding common stock of

6
<PAGE>

the Company was reclassified so that each four shares of common stock became
one share of such common stock (the "Reclassification"). Upon consummation of
the 1989 Merger and the Reclassification, the Company changed its name from
The Wheelabrator Group Inc. to Wheelabrator Technologies Inc. After giving
effect to the 1989 Merger, WMX owned approximately 22% of the Company's common
stock.

On September 7, 1990, the stockholders of the Company approved an Agreement
and Plan of Merger, as amended (the "1990 Merger Agreement"), dated March 30,
1990, as amended as of July 24, 1990, among the Company, WMX and a wholly-
owned subsidiary of WMX ("Merger Sub"). Under the 1990 Merger Agreement,
Merger Sub was merged (the "1990 Merger") with and into the Company, with the
Company continuing as the surviving corporation. As a result of the 1990
Merger, each share of common stock of the Company held by stockholders of the
Company (other than Merger Sub, WMX and its affiliates) was converted into (i)
.574 of a share of Common Stock and (ii) .469 of a share of common stock of
WMX. Each outstanding share of the Company's common stock held by Merger Sub,
WMX or any WMX affiliate (or by the Company and its affiliates) was converted
into one share of Common Stock. In addition, all of the outstanding shares of
common stock of Merger Sub were converted into an aggregate of 27,000,000
shares of Common Stock. Immediately following the 1990 Merger, WMX owned
approximately 55% of the Common Stock.

ORGANIZATION OF RUST INTERNATIONAL INC.

On December 31, 1992, WTI entered into an Organizational Agreement (the
"Organizational Agreement") with CWM and Brand, which as of that date was an
approximately 56%-owned subsidiary of CWM, pursuant to which WTI and CWM
agreed to organize Rust and to acquire newly issued shares of Rust in exchange
for contributing certain of their respective businesses and assets to Rust.
Pursuant to the Organizational Agreement, on January 1, 1993 WTI contributed
100% of the stock of its engineering, design, construction and environmental
consulting subsidiaries, 100% of the stock of its international engineering
unit based in London, certain disposal credits for use at facilities owned or
operated by subsidiaries of WMX (see "Certain Transactions and Other Matters--
Transactions Between WTI and WMX--Second Amended and Restated Airspace
Dedication Agreement"), and cash, prefunded acquisition costs and promissory
notes having an aggregate value of approximately $68 million. CWM contributed
its hazardous substances remediation services business and all of its shares
of Brand, as well as its 12% interest in the ordinary shares of WM
International and approximately $141 million in indebtedness due to CWM from
Brand. On May 7, 1993, Brand merged into a subsidiary of Rust. Pursuant to
such merger, Brand stockholders (other than Rust) received one share of common
stock of Rust or, at the option of each Brand stockholder, $18.75 in cash for
each share of Brand common stock. As a result of such merger, Rust is owned
approximately 40% by WTI, 56% by CWM, and 4% by public stockholders. Through
its equity ownership of Rust, the Company will continue to have an interest in
that company's engineering, construction and environmental and infrastructure
consulting businesses, as well as the hazardous substance remediation and
other on-site industrial and related businesses operated by Rust. The business
of Rust is discussed below under "Business of the Company--Equity
Investments--Rust International Inc."

7
<PAGE>

RISK FACTORS

The following are certain risk factors or investment considerations which
should be considered in evaluating an investment in the Company.

IMPACT OF MAJORITY STOCKHOLDER ON MARKET PRICE AND LIQUIDITY OF COMMON STOCK

The Common Stock is listed on the New York Stock Exchange. The prices at
which the Common Stock trades are determined by the marketplace and may be
influenced by many factors, including, among others, the depth and liquidity of
the market for Common Stock, investor perception of WTI and the industries in
which WTI participates, WTI's dividend policy and general economic and market
conditions. The market price of the Common Stock may also be significantly
affected by WMX's position as a controlling stockholder and by certain anti-
takeover provisions contained in the Company's Restated Certificate of
Incorporation (the "WTI Charter") and the Company's By-Laws (the "WTI By-
Laws").

POTENTIAL CONFLICTS OF INTEREST

WMX currently owns approximately 55% of the issued and outstanding shares of
Common Stock and four of the eight current directors of WTI are also directors
or officers of WMX. As a result of its majority stock ownership, WMX controls
the Board of Directors and business and affairs of WTI. Such control will
continue as long as WMX owns a majority of the Common Stock and effective
control could exist even at somewhat lower ownership levels. In addition, so
long as WMX holds more than 20% of the Company's issued and outstanding voting
stock, it will be able to prevent certain actions that, under the WTI Charter
and the WTI By-Laws, require the affirmative vote of at least 80% of the
Company's outstanding voting stock.

Certain conflicts of interest may arise between WMX and the Company. Such
conflicts could arise, for example, with respect to business dealings between
the companies and similar corporate matters. As a matter of corporate policy,
however, WMX and WTI anticipate that WTI's directors unaffiliated with WMX will
review transactions where any significant potential for conflicts of interest
exist. WMX has advised WTI that, as long as there are public stockholders of
WTI and WMX is a majority stockholder of WTI, WMX will maintain at least three
directors on the Board of Directors of the Company who are not employees or
officers of WMX.

The Company, WMX, CWM, WM International and Rust have entered into an amended
International Business Opportunities Agreement providing for, among other
things, the allocation of certain corporate opportunities among WMX's
controlled subsidiaries, including WTI. See "Business of the Company--
Competition."

ANTI-TAKEOVER EFFECT OF MAJORITY STOCKHOLDER AND RELATED MATTERS

WMX's ownership of approximately 55% of the Common Stock makes the
acquisition of the Company by a third party virtually impossible without WMX's
consent. As a result of its majority ownership, WMX will be able to control the
Company's Board of Directors (as discussed above under "Risk Factors--Potential
Conflicts of Interest"), and will be able to approve or disapprove any
corporate transactions requiring stockholder approval. In addition, effective
control could exist even at somewhat lower ownership levels, and for so long as
WMX holds more than 20% of the Company's issued and outstanding voting stock it
will be able to prevent certain actions that, under the WTI Charter and the WTI
By-Laws, require the affirmative vote of at least 80% of the Company's
outstanding voting stock. These actions include changing the number of
directors by stockholder vote, removal of directors and amendment of certain
provisions of the WTI Charter and the WTI By-Laws (including the provisions
relating to the number, term, removal and classification of directors and the
calling of special meetings). Also, should WMX cease to control the Company,
the WTI Charter and the WTI By-Laws contain several other provisions that may
make the

8
<PAGE>

acquisition of control of WTI by a third party more difficult, such as the
classification of WTI's Board of Directors and the elimination of stockholder
action by written consent. The foregoing provisions are described under the
caption "Description of Capital Stock--Certain Charter and By-Law Provisions."

Such provisions and the approximately 55% ownership of WMX have the overall
effect of making it virtually impossible without the approval of WMX to acquire
and exercise control over WTI and to remove incumbent officers and directors,
thus providing such officers and directors with enhanced ability to retain
their positions, and could also have the effect of discouraging third party
tender offer or merger transactions involving a purchase price premium over
market price, thereby potentially limiting the possibility of stockholders
other than WMX receiving such a premium. Even if WMX ceased to own a majority
of the Common Stock, such provisions might also limit opportunities for
stockholder participation in certain types of transactions even though such
transactions might be favored by a majority of the stockholders. In addition,
certain aspects of the Company's stock option plans which permit, upon certain
events which may involve a change in control of WTI, the accelerated exercise
of options thereunder, could have an anti-takeover effect. Certain aspects of
the Restated Funding Agreement (described below under the caption "Business of
the Company--Financing Capabilities and Funding Support Agreements"), relating
to voting rights associated with preferred stock issuable by the Company, might
also have such effect in the future.

CAPITAL REQUIREMENTS OF PROJECTS

WTI develops, manages, arranges financing for, operates and, in some cases,
owns projects that convert trash and other fuels into energy, handle coal, dry
and pelletize biosolids and treat water and wastewater. Such projects often
involve substantial financing requirements. Capital requirements for WTI
projects currently in development range from approximately $10 million up to
$400 million. Historically, WTI and its predecessors have financed such capital
requirements through a variety of financing structures and WTI anticipates
using similar structures to raise capital for its future projects. In addition,
pursuant to the Development Agreement between Resco and a subsidiary of WMX,
WMX has agreed to provide funding support for certain of the Company's trash-
to-energy projects under development and, pursuant to the Restated Funding
Agreement among WMX, WTI and Resco, WMX has agreed to provide certain
additional credit support to WTI. See "Business of the Company--Financing
Capabilities and Funding Support Agreements--Restated Funding Agreement" and
"Certain Transactions and Other Matters--Transactions Between WTI and WMX--
Development Agreement."

The Company believes that, based on the existing arrangement referred to
above and its past success in obtaining financing for its projects, the Company
will be able to obtain financing for its projects on competitive terms. There
can be no assurance, however, that the Company will be able to obtain financing
in the amounts required for all of its projects or that the terms on which such
financing is available will be acceptable. In the event WTI is unable to
arrange financing for particular projects on acceptable terms, it may have to
defer or forego such project development opportunities and, as a consequence,
the growth potential of its project development business may be adversely
affected.

IMPACT OF ENVIRONMENTAL AND OTHER REGULATIONS ON BUSINESSES OF WTI

WTI's business activities are subject to environmental regulations under
federal, state and local laws and regulations, including the Clean Air Act, the
Clean Water Act, and the Resource Conservation and Recovery Act ("RCRA"). There
can be no assurance that such laws and requirements (and enforcement policies
thereunder) will not change so as to require significant expenditures or that
WTI's businesses would not be materially and adversely affected. WTI's
businesses are also subject to the provisions of various other laws and
regulations, including the Public Utility Regulatory Policies Act of 1978
("PURPA"). The future growth of WTI's trash-to-energy and other small power
facilities business and the legal status of its existing projects could be
materially and adversely affected if the various benefits of such act were
repealed or substantially reduced. See "Business of the Company--Regulations."

9
<PAGE>

SECURITIES COVERED BY THIS PROSPECTUS

The shares of Common Stock covered by this Prospectus are available for use
in future acquisitions of other businesses, properties or securities in
business combination transactions, which may relate to businesses similar or
dissimilar to the Company's current businesses. The consideration offered by
the Company in such acquisitions, in addition to the shares of Common Stock
offered by this Prospectus, may include cash, debt, other securities or rights
(which may be convertible into or exercisable for shares of Common Stock
covered by this Prospectus), or assumption by the Company of liabilities of the
business being acquired, or a combination thereof. It is contemplated that the
terms of acquisition will be determined by negotiations between the Company and
the management or the owners of the businesses or properties to be acquired or
the owners of the 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. It is anticipated that
shares of Common Stock issued in acquisitions will be 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
or entities who have received or will receive Common Stock covered by this
Prospectus or by prospectuses under other registration statements in connection
with acquisitions of businesses, properties or securities 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 or entities
agreeing not to offer more than a specified number of shares following
amendments or supplements 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 by persons other than the Company may be
made from time to time privately at prices to be individually negotiated with
the purchasers, or publicly through transactions on the New York Stock Exchange
(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 the 1933 Act.

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

10
<PAGE>

MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Common Stock is traded on the New York Stock Exchange under the symbol
"WTI." The following table sets forth by quarter, for the periods indicated,
the high and low sale prices of the Common Stock on the New York Stock Exchange
Composite Tape 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(1)
------------------- CASH DIVIDENDS
1992 HIGH LOW DECLARED PER SHARE(1)
---- --------- --------- ---------------------
<S> <C> <C> <C>
First Quarter................. $18 5/16 $14 15/16 $0.01
Second Quarter................ 15 15/16 13 0.01
Third Quarter................. 17 1/8 13 0.01
Fourth Quarter................ 19 1/2 15 5/16 0.01
<CAPTION>
1993
----
<S> <C> <C> <C>
First Quarter................. $23 1/2 $18 1/8 $0.02
Second Quarter................ 21 1/4 17 5/8 $0.06
Third Quarter................. 20 14 3/4 --
Fourth Quarter................ 18 1/8 14 5/8 --
<CAPTION>
1994
----
<S> <C> <C> <C>
First Quarter................. $21 1/4 $17 1/4 $ --
</TABLE>
- --------

(1) All per share prices and dividends have been adjusted to reflect the two-
for-one stock split in the form of a 100% stock dividend distributed in
January 1993.

See the cover page of this Prospectus for a recent sale price of the Common
Stock.

The approximate number of holders of record of Common Stock as of April 1,
1994 was 22,490. In January 1993, the Company effected a two-for-one stock
split paid in the form of a 100% stock dividend. During 1993, the Board of
Directors declared and the Company paid total dividends on the Common Stock in
the amount of $.08 per share. In May 1993, the Board of Directors announced its
intention to thereafter consider the payment of an annual dividend in lieu of
quarterly dividends. Future cash dividends will be considered by the Board of
Directors based upon the Company's earnings and financial position and such
other business considerations as the Board of Directors considers relevant.

On March 15, 1994, WTI announced that the Board of Directors had authorized
the repurchase of up to 3,800,000 shares of Common Stock from time to time over
the following 24-month period in the open market or in privately negotiated
transactions. Under a similar program initiated in 1992, the Company
repurchased a total of approximately 4,160,000 shares of Common Stock over a
period of two years.

11
<PAGE>

SELECTED HISTORICAL FINANCIAL DATA

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

(3) The 1990 loss of $70.2 million, or $0.44 per share, reflects a
restructuring charge, an unrealized loss on investments in common stock and
the cumulative effect of a change in accounting method.

(4) 1991 net income includes a $47 million pretax gain on the sale of certain
foreign equity investments.

(5) 1992 net income includes one-time charges of $42 million relating to the
adoption of two new financial accounting standards. See Note 1 of Notes to
Consolidated Financial Statements.

(7) Share and per share data for all periods reflect the two-for-one stock
split effected on January 7, 1993. See Note 1 of Notes to Consolidated
Financial Statements.

(8) The increases in weighted average shares outstanding in 1991 and 1992 are
due primarily to shares issued in connection with acquisitions. See Note 2
of Notes to Consolidated Financial Statements.

12
<PAGE>

RECENT DEVELOPMENTS

On April 18, 1994, the Company announced operating results for the three
months ended March 31, 1994. Revenue for the first quarter was $281.3 million,
versus $245.5 million in the period a year earlier. The Company's first quarter
revenues increased 15 percent compared with revenues for the year earlier
quarter. Net income was $40.1 million in the first quarter of 1994, compared
with $33.4 million in the first quarter of 1993, an increase of 20 percent. The
Company reported earnings per share of $0.21, approximately 17 percent above
first quarter 1993 earnings of $0.18 per share.

In March 1994, the Company settled with the Internal Revenue Service ("IRS")
a tax issue regarding the tax treatment of the 1988 sale of a former
subsidiary. As described below under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources," WTI and Koll Real Estate Group, Inc. ("KREG") are parties
to a tax sharing agreement which covers periods ending prior to December 31,
1988, during which the Company, KREG, The Henley Group, Inc. ("Henley") and
their respective affiliates were included in the same consolidated group for
federal income tax purposes. Under the tax sharing agreement, KREG agreed to
indemnify WTI for certain pre-1989 tax liabilities (which includes the
liability resulting from the 1994 tax settlement) in excess of $50 million.
KREG is in turn indemnified for such liabilities to the extent they exceed $25
million pursuant to a separate tax sharing agreement between KREG and Henley.
The obligations of Henley under that agreement have been assumed by Abex Inc.
("Abex") following a 1992 reorganization of Henley.

On April 15, 1994, the Company paid its share of the stipulated tax liability
and Abex paid its share pursuant to its indemnity obligations to KREG. KREG,
however, advised the Company and Abex in April 1994 that it will not pay its
approximately $21 million share of the settlement liability. Accordingly, the
Company and Abex have filed a lawsuit against KREG seeking to require KREG to
honor its obligations under the tax sharing agreement. Although the Company may
be obligated to initially pay the portion of the liability attributable to
KREG, the Company does not believe the ultimate resolution of this matter will
have a material effect on its financial condition or results of operations.

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

Prior to January 1, 1993, the Company conducted business in two industry
segments: Environmental Operations and Environmental and Infrastructure
Engineering Services. The businesses within the Environmental Operations
segment are principally involved in providing clean energy through trash-to-
energy and independent power facility ownership and operation, providing clean
water products and services including municipal water and wastewater treatment
facility operation, biosolids management and industrial water and wastewater
management, and providing clean air through a broad range of air quality
control systems designed for industrial and utility applications.

Pursuant to an agreement with CWM and Brand, effective January 1, 1993, WTI
contributed the businesses that constituted its Environmental and
Infrastructure Engineering Services segment along with certain other assets to
form, in part, Rust, a new engineering and construction company. In early May
1993, Brand was merged into a subsidiary of Rust. The Brand merger involved
issuance of additional shares of Rust common stock to acquire certain
outstanding Brand shares and reduced WTI's ownership of Rust from the
approximately 42 percent originally held by the Company to approximately 40
percent. (See Note 2 of the Notes to Consolidated Financial Statements.)

The Rust transaction has no effect on WTI's 1992 and prior historical
financial statements. The Company accounts for its investment in Rust using the
equity method, which results in a reduction of revenue, operating expenses and
selling and administrative costs for 1993 compared to prior years. WTI's share
of Rust's 1993 net income is included in equity in earnings of affiliates.

RESULTS OF OPERATIONS

The discussion and analysis of the Company's results of operations that
follows focuses on the operating results of WTI's current lines of business
and, as such, is based on historical Environmental Operations segment results
for 1991, proforma results for 1992 that assume the Rust transaction had
occurred on January 1, 1992, and historical 1993 results. Environmental
Operations segment information for 1991 and proforma information for 1992 is
set forth in Notes 9 and 2, respectively, of the Notes to Consolidated
Financial Statements.

13
<PAGE>

Comparative information for Environmental Operations is summarized below (in
millions):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1991 1992 1993
-------------------------
<S> <C> <C> <C>
Revenue........................................ $ 775.7 $ 928.3 $ 1,142.2
Operating expenses............................. 541.0 633.6 792.7
Selling and administrative expenses............ 92.5 97.9 107.3
------- ------- ---------
Income from operations......................... $ 142.2 $ 196.8 $ 242.2
======= ======= =========
</TABLE>

1992 Compared with 1991

Proforma 1992 revenue increased 20 percent versus comparable 1991
Environmental Operations segment revenue. Air and water quality control
businesses acquired in 1991 and 1992 contributed approximately 40 percent of
this revenue growth. These acquisitions provided WTI with an operating base and
necessary technical expertise to address the biosolids management requirements
of municipal and industrial customers and also broadened the Company's air
quality product offerings to include VOCs and odor control systems as well as
continuous emissions monitoring equipment. An additional 25 percent of the
revenue increase is attributable to commencing operations at two new 2,250 ton
per day trash-to-energy facilities in Broward County, Florida and an 800 ton
per day trash-to-energy facility in Spokane, Washington. The South Broward
County facility began commercial operations in the third quarter of 1991, and
the North Broward facility began commercial operations in the second quarter of
1992. Partially offsetting the revenue increases from the Broward facilities
was the late 1991 transition of the Spokane facility, which is owned by the
City of Spokane, from construction to long-term contract operation. Existing
businesses were responsible for the balance of 1992's revenue growth. Increases
in trash receipts and electrical generation at operating energy facilities and
higher activity at the Company's Air Pollution Control unit were primarily
responsible. The Company's energy, water and air businesses represented
approximately 59 percent, 30 percent and 11 percent, respectively, of total
proforma 1992 revenue compared with 63 percent, 32 percent, and five percent,
respectively, of total 1991 Environmental Operations segment revenue.

Gross margins improved from 30.3 percent in 1991 to 31.7 percent in 1992,
principally due to operating cost efficiencies realized within the Company's
energy facilities. Gross margins in the air and water businesses decreased
slightly during 1992 and reflect the impact, including goodwill amortization,
of acquisitions made during 1991 and 1992 as well as competitive pressures in
municipal water and wastewater service and utility air quality markets.
Increases in selling and administrative expenses for 1992 compared to 1991
relate to acquired businesses, which typically increase these costs until the
acquisitions are integrated into existing operations. As a percentage of
revenue, however, selling and administrative expenses declined from 11.9
percent in 1991 to 10.5 percent in 1992.

Interest expense, which relates almost entirely to project debt associated
with the Company's trash-to-energy facilities, increased compared with 1991
primarily because of the commencement of operations at the two Broward County
facilities. Interest costs for these facilities were capitalized during their
construction periods. Interest income decreased versus 1991 due to lower
investment earnings on lower cash balances. WTI's equity in the earnings of its
WM International affiliate increased in 1992 as a result of growth in that
company's operations. On a proforma basis, in 1992 the Company would have
recognized $13.4 million of equity income from Rust's net operating earnings,
compared with 1991 historical net earnings of approximately $4.2 million from
the Environmental and Infrastructure Engineering Services industry segment.

During 1992, the Company recognized a nontaxable gain of $47.0 million
associated with the initial public offering ("IPO") of shares by WM
International. Proforma 1992 results also include a $19.5 million nonoperating
gain related to WTI's equity interest in a similar gain recognized by Rust in
connection with WM International's IPO.

14
<PAGE>

Excluding the effects of the WM International IPO gains and the 1991 gain on
the sale of equity interests in certain foreign manufacturing operations,
proforma 1992 income before accounting changes was $125.5 million, or $0.67 per
share, compared with 1991 historical net income of $97.2 million, or $0.56 per
share.

Net income for 1992 reflects one-time charges relating to the adoption,
effective January 1, 1992, of two new accounting standards: Statements of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions ("FAS 106"), and No. 109,
Accounting for Income Taxes ("FAS 109"). Adopting FAS 106 resulted in a one-
time cumulative after-tax charge of approximately $29.0 million, or $0.16 per
share. The adoption of FAS 109 resulted in a one-time cumulative charge of
approximately $13.2 million, or $0.07 per share. The FAS 109 charge resulted
primarily from increasing previously discounted deferred taxes, a method not
permitted under FAS 109. Operating results for 1992 were not significantly
impacted by these two accounting changes. (See Notes 1 and 3 of the Notes to
Consolidated Financial Statements.)

1993 Compared with 1992

Revenues for 1993 increased 23 percent compared to proforma revenues for the
previous year. Approximately 40 percent of this growth came from air and water
quality control companies acquired during 1992 and 1993. The businesses
acquired during 1993 significantly expanded WTI's capabilities to meet the
water and wastewater management needs of industrial customers and provided
entry into certain regional biosolids and air quality equipment markets as well
as additional wastewater treatment technology. Successful project development
efforts are responsible for an additional 30 percent of the 1993 revenue
increase and include the full year impact of the North Broward County trash-to-
energy facility, the third quarter 1993 start of commercial operations at the
Company's New York Organic Fertilizer Company ("NYOFCO") biosolids pelletizer
facility located in New York City and construction revenues from the Lisbon,
Connecticut trash-to-energy facility being built by WTI for the Eastern
Connecticut Resource Recovery Authority ("ECRRA"). Construction began in the
third quarter of 1993 on the Lisbon facility, which will be operated by the
Company under a long-term contract with ECRRA following scheduled facility
completion in late 1995. Existing businesses contributed the remaining 30
percent of revenue growth in 1993 versus 1992. The major factors in this
internal growth were higher revenue 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
revenues. Pricing for non-contract, or spot, trash disposal remained, on
average, at approximately 1992 levels. Energy businesses represented
approximately 52 percent of consolidated 1993 revenue, while the water and air
businesses accounted for 32 percent and 16 percent, respectively.

WTI's overall gross margin decreased to 30.6 percent in 1993 from proforma
1992's 31.7 percent level. This decline primarily reflects the effects,
including the amortization of goodwill associated with acquisitions, of changes
in the Company's ongoing business mix brought about by the rapid growth of air
and water operations. In part because they are less capital intensive, these
businesses typically have lower gross margins than the Company's energy
operations. Selling and administrative expenses increased in absolute terms
compared with proforma 1992 levels but decreased as a percentage of revenue to
9.4 percent for 1993 compared to 10.5 percent the previous year. This decline
is attributable to the integration of acquired companies into existing
businesses and to continuing Company-wide administrative cost containment
efforts.

Interest expense decreased in 1993 despite the full year impact of interest
costs associated with the North Broward County trash-to-energy facility, due to
the early retirement of certain outstanding above-market rate long-term debt,
including approximately $75.2 million in the third quarter of 1992 associated
with the Company's Saugus, Massachusetts trash-to-energy facility and an
additional $40.0 million in the first quarter of 1993 associated with its
trash-to-energy facility in Westchester County, New York. The decline in 1993
interest earnings results from lower cash balances and interest rates when
compared to the prior year. WTI's equity in the operating earnings of its WM
International and Rust affiliates increased compared to proforma prior year
results due to earnings growth at Rust. As a result of adverse foreign currency
translation effects, WM International's contribution to equity earnings
declined versus 1992 despite substantially increased local currency earnings.

15
<PAGE>

The Company recognized a $7.7 million nontaxable gain in 1993 related to
Rust's issuance of additional shares in connection with the Brand merger. (See
Note 2 of the Notes to Consolidated Financial Statements.) Prior year results
include a similar nontaxable gain of $47.0 million associated with the WM
International IPO. Proforma 1992 results also include a $19.5 million
nonoperating gain related to WTI's equity interest in a similar gain recognized
by Rust in connection with WM International's IPO.

The Company's 1993 tax provision includes a $6.5 million increase in deferred
taxes in accordance with FAS 109 as a result of the August enactment of the
Omnibus Budget Reconciliation Act of 1993. (See Note 3 to the Notes to
Consolidated Financial Statements.)

Excluding the above-mentioned 1992 and 1993 nonoperating gains from affiliate
stock transactions and the 1993 deferred tax provision adjustment, net income
for 1993 increased 29 percent to $161.9 million, or $0.86 per share, compared
with proforma 1992 income before accounting changes of $125.5 million, or $0.67
per share. Net income for 1992 reflects one-time charges totaling $42.2
million, or $0.23 per share, relating to the adoption, effective January 1,
1992, of two new accounting standards: FAS 106 and FAS 109. More detail on
these charges is provided as part of the "1992 Compared with 1991" section of
this discussion.

The U.S. Supreme Court heard oral arguments in December 1993 in a case
challenging the constitutionality of the Town of Clarkstown, New York's solid
waste flow control ordinance. Flow control typically involves a municipality
specifying the disposal site for all solid waste generated within its borders.
In January 1994, the U.S. Supreme Court also heard arguments in another case to
determine whether ash from the combustion of municipal solid waste should be
exempt from federal hazardous waste regulations. Decisions on both cases are
expected in the spring. Regardless of the court's decisions on these two cases,
the Company does not believe the outcomes will have a material adverse impact
on the Company's financial condition or results of operations.

The majority of the businesses in which the Company is engaged are
intrinsically connected with the protection of the environment and involve the
potential for discharge of regulated materials into the environment. In
addition, the Company 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. WTI has instituted procedures to periodically evaluate
potential environmental exposures. When the Company concludes it is probable
that a liability has been incurred, provision is made in the financial
statements for the Company's best estimate of the liability. These estimates
are adjusted as necessary when additional information becomes available. To
date, such provisions have not been material.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal uses of capital during the past several years relate
to investments in new projects, acquisitions and repayments of long-term
project debt. WTI currently has several projects in various stages of
construction, as discussed in more detail below, and has additional projects
under development. The Company also intends to continue its diversification
through select acquisitions into air and water quality control markets, both
domestically and internationally.

WTI believes it has access to sufficient capital resources to finance its
development and construction projects along with future acquisitions. Operating
cash flows or borrowings from WMX pursuant to the Master Intercorporate
Agreement between the Company and WMX may be utilized to meet short-term
funding requirements. WTI may borrow up to $100 million until September 1995
pursuant to this agreement, plus the amount of cash invested with WMX. The
Company currently anticipates meeting its needs for any external long-term
capital by permanently financing certain projects.

Generally, WTI provides long-term financing for its projects through a
combination of project debt and equity investments by the Company. WTI will
retain ownership of and make equity investments in projects

16
<PAGE>

where the Company's tax position and available financing terms make retention
of ownership tax benefits desirable. Sale and leasebacks or other financing
techniques may be used where the tax benefits will produce lower overall
financing costs and potentially greater returns.

During 1993 construction was completed on the $120 million NYOFCO biosolids
pelletizer facility in New York City, which began commercial operations in
August after successfully completing its acceptance tests. Construction
continued on a $192 million, 1,500 ton-per-day trash-to-energy facility and
associated recycling center in Falls Township, Pennsylvania, as did work on the
Company's $78 million wood waste and scrap tire power generating facility in
Polk County, Florida. Both of these facilities are expected to begin commercial
operations in mid-1994. Additionally, the Company is approximately 60 percent
through construction on a $36 million biosolids pelletizer facility in
Baltimore, Maryland, and a $5 million biosolids composting facility in
Rochester, New Hampshire began start-up at year end. To date, funding for the
above projects has been provided from the Company's available cash. Capital
expenditures for new project construction totalled $114.4 million, $81.3
million, and $262.2 million in 1991, 1992 and 1993, respectively, and are
anticipated to require approximately $120 million of capital in 1994.

Standard and Poor's Corporation affirmed the Company's debt rating as a
provisional "A" in 1993, which should enable WTI to provide certain guarantees
of financial performance on future projects without the cost of third party
credit support. Favorable implied debt ratings received from Standard and
Poor's Corporation and Moody's Investors Service, Inc. in 1991 have already
allowed WTI to significantly reduce the cost of third party credit support for
certain trash-to-energy and independent power facilities owned or leased by the
Company.

The Company acquired in 1993 seven businesses engaged in providing water and
air quality-related environmental products and services as well as independent
power in exchange for approximately 1.6 million shares of WTI common stock and
$15.0 million of cash. The Company purchased three businesses in 1991 and 17
businesses during 1992 that provided environmental engineering, biosolids
management and various clean air technologies. Nine of the 1991 and 1992
acquisitions serve the air and water quality control markets, while the other
eleven were included in the businesses contributed to the formation of Rust.
WTI paid cash and issued common stock of approximately $37.7 million and 15.2
million shares and $115.5 million and 6.8 million shares, respectively, for the
1991 and 1992 acquisitions. The proforma effect of the Environmental Operations
segment acquisitions made in 1991, 1992 and 1993 on the Company's results of
operations is not material. (See Note 2 of the Notes to Consolidated Financial
Statements.)

In April 1993, the Company filed with the Securities and Exchange Commission
an updated "shelf" registration statement covering 12.8 million shares of the
Company's common stock for issuance in connection with future acquisitions.

WTI has continued to refinance at lower interest rates, or repay prior to
maturity, certain of its existing project debt. In 1991 the Company completed a
transaction that resulted in the refinancing in the first quarter of 1993 of
approximately $154.3 million of long-term project debt underlying the sale
leaseback financing of its Baltimore, Maryland trash-to-energy facility. The
benefit of this refunding, which reduced the interest rate on the debt from
approximately ten percent to seven percent, will be recognized through lower
lease payments over the remaining life of the operating lease term. In the
third quarter of 1992 approximately $75.2 million of project debt relating to
its Saugus, Massachusetts trash-to-energy facility was retired. During the
first quarter of 1993, WTI retired early, at par value, letter of credit backed
debt of approximately $40.0 million relating to its Westchester County, New
York trash-to-energy facility. An additional $13.0 million of the Westchester
facility's project bonds have been retired early since that bond issue became
callable in 1992.

In March 1994, the Company completed the refinancing of the remaining $113.0
million of project debt associated with the Westchester County facility. The
refinancing decreased the interest rate on this debt from approximately 10.25
percent to 5.6 percent. In conjunction with this transaction, the Company
agreed to

17
<PAGE>

share one-half of the interest rate savings with Westchester County in exchange
for certain agreements relating to the County's involvement in the retrofit of
the facility to meet the requirements of the Clean Air Act Amendments of 1990
(the "CAAA") and a five-year extension of the solid waste disposal agreement
with the County. Additionally, the County has agreed, subject to certain
regulatory requirements and other conditions, to finance 80 percent of the cost
of the retrofit and, in turn, the Company has agreed to provide the funds
necessary to pay the remaining costs for the retrofit. The benefits of the
refinancing will begin to be realized in 1994, while the costs associated with
the facility retrofit are not expected to be incurred until the latter part of
this decade. Taken together, these activities are not expected to have a
material impact on the Company's liquidity or results of operations.

Before the turn of the century, the air pollution control systems at certain
other trash-to-energy facilities owned or leased by WTI will be required to be
modified to comply with more stringent air pollution control standards such as
those in the CAAA. Required compliance dates for affected facilities, including
Westchester County, are not yet known because the U.S. Environmental Protection
Agency has not issued the final emission regulations and timetables required by
the CAAA. Although the expenditures related to such modifications will likely
be significant, they are not expected to have a material adverse effect on the
Company's liquidity or results of operations because provisions in the impacted
facilities' long-term waste supply agreements allow the Company to recover from
customers the great majority of incremental capital and operating costs.

In September 1993, the two regional solid waste districts that together form
the major customer of the Company's 200 ton-per-day trash-to-energy facility in
Claremont, New Hampshire filed for bankruptcy under Chapter 9 of the Federal
Bankruptcy Code. WTI filed a motion to dismiss the bankruptcy in the belief
that the districts' actions were an attempt to avoid settling a long-standing
contract payment dispute and were otherwise without merit. In a ruling issued
in February 1994, the United States Bankruptcy Court for the District of New
Hampshire agreed with the Company's position and dismissed the districts'
bankruptcy petition. This ruling has been appealed by the districts. WTI has
made provision in its financial statements for the expected cost of these legal
proceedings as well as the settlement of amounts in dispute. Further, even if
the districts are successful, the impact on the Company's financial condition
and results of operations will not be material.

On February 16, 1994, a Connecticut Superior Court judge issued a decision on
appeals of the Connecticut Department of Environmental Protection's ("DEP")
issuance of a permit to construct the Lisbon, Connecticut trash-to-energy
facility currently being built by WTI. In the ruling, the judge agreed with the
Company'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. The Company
intends to pursue aggressively favorable resolution of this permit remand
through appropriate judicial and regulatory procedures. Although WTI believes
that the probability of an adverse determination as a result of the judge's
remand order is remote, such a determination could result in the permanent
termination of facility construction. Through a guarantee agreement with ECRRA,
the facility's owner, such a consequence may require the Company 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 the Company's
financial condition and results of operations.

WTI effected a two-for-one stock split through the issuance on January 7,
1993, of one additional share of common stock for each share outstanding on
December 23, 1992. All share and per share amounts in this report have been
adjusted to reflect the split for the periods presented. On January 7, 1993,
the Company also paid a cash dividend of $0.01 per common share that was
declared in November 1992. On April 1, 1993, WTI paid a cash dividend in the
amount of $0.02 per common share. Additionally, in May 1993 the Board of
Directors declared an annual cash dividend in the amount of $0.06 per common
share that was paid on July 1, 1993, to stockholders of record on June 17,
1993. This brought the total dividends declared by the Board of Directors in
1993 to $0.08 per share, a 100% increase over the dividends declared in 1992.

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The Company is authorized to repurchase up to a total of 8.0 million shares
of its common stock through March 1996 on the open market or in privately
negotiated transactions, provided market conditions make it attractive to do
so. During 1992 approximately 4.2 million shares were repurchased at an
aggregate cost of approximately $57.6 million. No shares were repurchased in
1993.

WTI and KREG (formerly The Bolsa Chica Company) are parties to a tax sharing
agreement covering periods during which WTI, KREG, Henley and their respective
affiliates were included in the same consolidated group for federal income tax
purposes. Pursuant to a recapitalization of Henley in 1992, Abex has assumed
certain of Henley's obligations to KREG under a similar tax sharing agreement.
(See Note 3 of the Notes to Consolidated Financial Statements.) In January
1993, the IRS completed an examination of WTI's consolidated federal income tax
returns for the period 1986-1988. Pursuant to the settlement of agreed issues
with the IRS, the Company made a payment of approximately $61.7 million for
taxes and interest, the liability for which had previously been recorded.
Adjusted for the current tax benefit to WTI of the interest paid and certain
tax benefits realizable by the Company in years after 1988, the Company's $50.0
million tax sharing obligation with KREG was reduced approximately $28.8
million by this payment. In the only material unresolved issue arising from the
1986-1988 examination, the IRS proposed a significant adjustment related to the
1988 sale of a former subsidiary. Abex, KREG and WTI disputed the position
taken by the IRS in an action filed before the U.S. Tax Court. In March 1994,
WTI and the IRS filed a Stipulation of Settlement with the U.S. Tax Court
resolving the treatment of this disputed issue. Subject to the $21.2 million
remaining balance of the $50.0 million tax sharing obligation described above,
WTI is indemnified by KREG and Abex from the liability assessed with regard to
this issue. Although the Company is responsible for the initial payment of tax,
plus interest, KREG and Abex have confirmed to the Company their respective
indemnification obligations.

FINANCIAL CONDITION

WTI's financial condition at December 31, 1993, compared to that at December
31, 1992, primarily reflects the impact of the Rust transaction. The net impact
of the transaction was not material to the Company's overall balance sheet, as
contributed net assets were replaced by an equity investment in the new
company. Several individual line items, however, were affected by the
transaction. Total current assets were reduced by $188.8 million primarily as a
result of contributed net receivables of $93.2 million, costs and earnings in
excess of billings of $64.8 million and other current assets of $28.3 million.
Net property, plant and equipment declined $72.8 million as a result of the
transaction, and cost in excess of net assets of acquired businesses declined
$76.1 million. Other assets also fell, reflecting the contribution of $30.0
million in waste disposal credits to Rust. Contribution of construction
business trade payables, accrued liabilities and advance payments on contracts
reduced liabilities approximately $133.2 million. (See Note 2 to the Notes to
Consolidated Financial Statements.)

After giving effect to the Rust transaction, the change in the Company's
financial position reflects normal operating activities as well as the uses of
capital discussed above.

ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued Statements of Financial
Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits
("FAS 112"), and No. 115, Accounting for Certain Debt and Equity Securities
("FAS 115"). The Company is required to adopt both of these new standards
during the first quarter of 1994. Based upon its analysis to date, WTI does not
believe the adoption of FAS 112 will have a material impact on its financial
statements since its current accounting is substantially in compliance with the
new standard. The Company does not have and does not contemplate acquiring
significant investments of the type covered in FAS 115.

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BUSINESS OF THE COMPANY

GENERAL

The Company provides a wide array of environmental products and services in
North America and abroad through three principal business lines. Wheelabrator
Clean Energy 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 subsidiaries comprising Wheelabrator Clean Energy, the Company
develops, arranges financing for, operates and owns facilities that dispose of
trash and other waste materials in an environmentally acceptable manner by
recycling it into energy in the form of electricity and steam.

The majority of the businesses of the Company have been managed together as a
group since the early 1980s. The Company's predecessor companies and
subsidiaries have been active in project development for approximately 20
years, and in related activities since the turn of the century. Unless
otherwise indicated, all statistical and financial information under the
caption "Business of the Company" is given as of December 31, 1993.

SERVICES AND PRODUCTS

Prior to January 1, 1993, the Company's operations were categorized into two
business segments--environmental operations and environmental and
infrastructure engineering services. Environmental operations accounted for 66%
of the Company's total consolidated revenue in 1991, 63% in 1992 and 100% in
1993. Environmental and infrastructure engineering services accounted for 34%
of the Company's total consolidated revenue in 1991 and 37% in 1992. The
operations which comprised the environmental and infrastructure engineering
services were contributed to Rust on January 1, 1993. Thus, the Company did not
realize any revenue from such operations in 1993. See "Business of the
Company--Equity Investments--Rust International Inc." For information relating
to revenues, operating profit and identifiable assets attributable to the
Company's segments, see Note 9 to the Company's Consolidated Financial
Statements. For 1993, the Company reports in a single segment with three lines
of business: Wheelabrator Clean Energy, Wheelabrator Clean Water and
Wheelabrator Clean Air.

Wheelabrator Clean Energy

The Company, through Wheelabrator Environmental Systems Inc. ("WESI") 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 854 megawatts of
electric generating capacity, which ranks it among the nation's largest
independent power producers. WTI's trash-to-energy projects utilize proven
boiler and grate technology capable of processing up to 3,000 tons of trash per
day per facility. The heat from this combustion process is converted into high-
pressure steam, which typically is used to generate electricity for sale to
public utility companies under long-term contracts.

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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, the Company 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.

The Company 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. These power systems use waste wood, waste tires, waste
coal or natural gas as fuel, and employ state-of-the-art technology, such as
fluidized-bed combustion, to insure the efficient burning of fuel with reduced
emission levels.

One of the most significant costs of developing and operating the Company's
energy and biosolids projects may be debt service or lease rentals payable in
connection with financing for the project. See "Business of the Company--
Services and Products--Wheelabrator Clean Water." Financing structures vary
substantially from transaction to transaction. The amount of annual financing
cost is directly related to the capital cost of the facility, which may vary
greatly from plant to plant, even with regard to similarly sized plants, due to
a number of factors. These include the type of technology utilized, the amount
of site preparation required and, where applicable, the form of energy
generated and the proximity to the energy delivery point. For a description of
some of the methods used to finance WTI's facilities, see "Business of the
Company--Financing Capabilities and Funding Support Agreements."

A description of Wheelabrator Clean Energy projects in operation or under
construction which are owned, leased or operated under long-term operating
agreements by the Company's subsidiaries or affiliates is contained under the
caption "Properties." In addition to the projects described under the caption
"Properties," the Company has a number of projects in development that, in most
cases, are subject to contingencies, many of which are beyond WTI's control.
Such contingencies include, without limitation, obtaining required permits or
approvals, obtaining equity and/or debt financing and consummating required
project agreements.

Wheelabrator Clean Water

Through Wheelabrator Clean Water, the Company develops projects that purify
water, treat wastewater, treat and manage biosolids, and compost organic
wastes. The Company also provides technologies and services used to treat
drinking water as well as industrial and municipal process water and
wastewater.

The Company offers generators of biosolids, consisting of the non-hazardous
sludges resulting from treatment of industrial and municipal wastewater,
alternatives to landfilling or ocean dumping. Wheelabrator Clean Water provides
a range of biosolids management services to over 400 communities, including
land application, drying, pelletizing, stabilization and composting of non-
hazardous biosolids. See "Business of the Company--Regulations--Environmental
Regulations." Wheelabrator Clean Water typically enters into multi-year
contracts with biosolids generators under which the Company is paid by the
generator to beneficially use the biosolids. Regulations governing sludge
management were issued by the Environmental Protection Agency ("EPA") in
December 1992 under the Clean Water Act. The regulations encourage the
beneficial use of municipal sewage sludge by recognizing the resource value of
biosolids as a fertilizer and soil conditioner, and establish requirements for
land application designed to protect health and the environment. These new
regulations are expected to expand opportunities available to the Company.

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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. Land-applied sludges are often
stabilized prior to application using proprietary technology. Wheelabrator
Clean Water also develops and operates facilities at which biosolids are dried
and pelletized. The Company has three facilities currently in operation,
including a recently completed facility in New York City, and two other
facilities, one under construction and the other in the late stages of
development, in Baltimore, Maryland. These facilities incorporate a variety of
biosolids drying and emission control technologies, some proprietary and some
licensed to the Company under exclusive licensing arrangements. See "Business
of the Company--Patents, Trademarks, Licenses and Other Agreements." The
Company has approximately 565 dry-tons-per-day of biosolids drying capacity
either in operation, under construction or in advanced stages of development.
Biosolids which have been dried are 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. See "Business of the Company--Financing
Capabilities and Funding Support Agreements." A description of dryer projects
in operation or under construction which are owned or operated by Wheelabrator
Clean Water under long-term operating agreements is contained under the caption
"Properties."

Wheelabrator Clean Water is also a leading provider of a comprehensive range
of water and wastewater treatment services to municipalities throughout the
United States. The Company provides services pursuant to approximately 30
contracts, 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, refining
process systems, management systems for process control, and plant diagnostic
evaluations and energy audits. During 1993, Wheelabrator Clean Water
geographically expanded its operations by obtaining contracts to operate two
industrial wastewater treatment facilities in Canada. Plant maintenance and
operation agreements generally range in length from 3 to 10 years and often
provide the owner of the facility with renewal options. The majority of the
contracts are fixed price or lump sum contracts. During 1993, the Company
continued negotiations with a municipality towards the privatization of a
publicly-owned water and wastewater treatment system pursuant to an Executive
Order issued in 1992 intended to facilitate the privatization of municipally-
owned facilities. In addition, during 1993 the Company commenced negotiations
with several industrial concerns towards the development, ownership and
operation of wastewater treatment facilities adjacent to existing industrial
facilities. Because development of such facilities will generally involve a
variety of contractual arrangements, as with development of the Company's other
projects, there can be no assurance that such discussions will result in the
development of any such facilities.

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.
These composting systems, which consist of a series of parallel concrete bays
through which organic waste is advanced and agitated during the composting
process, are sold to municipalities and landfill operators, among others. The
Company has provided its proprietary and automated in-vessel composting
technology to 17 facilities in operation, eight more under construction, and
three additional facilities in development that it will own and operate.

Through its Wheelabrator Engineered Systems Inc. subsidiary ("WES"),
Wheelabrator Clean Water engineers and manufactures a variety of environmental
products and systems. WES provides single-source, advanced-systems solutions
related to drinking water, industrial process water, wastewater, slurry pumping
and high solids dewatering. WES also provides systems designed to remove solids
from liquid streams through the use of self-cleaning bar/filter screens,
grinders, macerators, conveyors and compactor systems. WES

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provides high technology water purification and wastewater treatment systems
which utilize a variety of technologies including demineralizers, reverse
osmosis and vacuum degasification. WES also designs and installs process
technology systems utilizing evaporators, crystallizers, electrodialysis,
dialysis, reverse osmosis and ultrafiltration for treating industrial process
wastewater. Through its Johnson Screen unit, WES produces profile wire screen
products for groundwater production, hydrocarbon processing, food processing
and coal/mineral processing.

The Company's engineered products are provided to municipal and industrial
customers. In most situations, the Company will provide assistance to help the
end-user select the appropriate technology for a given application. Turnkey
systems provided by the Company range in value from $250,000 to over $30
million, and are typically designed and installed within 12 months following
acceptance of a customer order. On such projects, the Company typically enters
into lump-sum contracts under which the Company receives payments throughout
the contract term based upon a predetermined schedule.

The Company also manufactures Wheelabrator machines, a line of nonpolluting
materials cleaning equipment for use by a variety of industrial customers,
including foundries, steel processors, automobile producers and rubber and
plastics producers, in cleaning and finishing metal and other materials. The
Company manufactures portable, fully-enclosed Wheelabrator systems for cleaning
surfaces such as ship decks and hulls and other difficult-to-clean surfaces.
These systems capture the emissions particulate generated by such operations,
preventing contamination of the environment. In addition, spare parts for
materials cleaning systems are produced. The Company also manufactures high-
alloy combustion grates used in the high-temperature furnaces of its trash-to-
energy facilities.

Wheelabrator Clean Air

Wheelabrator Clean Air designs, fabricates and installs advanced air
pollution emission control and measurement technologies. The Company offers
electrostatic precipitators, flue-gas desulfurization systems (scrubbers),
fabric-filter systems (baghouses) and Nox control systems, which remove
pollutants from the emissions of WTI's trash-to-energy facilities, as well as
power plants and other industrial facilities. Wheelabrator Clean Air also
designs and constructs tall concrete chimneys and silos to help utilities and
industrial companies meet environmental requirements. The Company's expertise
in air pollution control technologies and chimney design and construction, as
well as the expertise in mechanical construction and process engineering of the
Company's Rust affiliate, are used in the design and construction of the
Company's trash-to-energy and biosolids facilities. These capabilities
strengthen WTI's competitive position, while reducing its exposure to risk in
the management of large-scale projects, by providing greater ability to ensure
quality control and timely completion.

Wheelabrator Clean Air's activities involve both custom and pre-engineered
systems for emissions control. The custom engineering division licenses a
patented process for the removal of hydrogen sulfide from gaseous and liquid
streams. The process prevents the formation of sulfur dioxide emissions,
thereby controlling acid rain and odor problems. Wheelabrator Clean Air also
provides a full range of technologies and services for destroying or recycling
VOCs from air and liquid sources and Nox from air sources. Both VOCs and Nox
are major contributors to the creation of smog. The Company'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, waste-to-energy, industrial furnace and petrochemical industries, all
of which are affected by regulations requiring the continuous monitoring of
stack emissions.

WTI anticipates that the Clean Air Act Amendments of 1990, along with
existing and proposed regulations issued thereunder, will generate additional
business opportunities to apply its expertise in VOC and Nox control systems
and scrubbers, as well as additional applications for CEMs. Pursuant to the
Clean Air Act Amendments, the EPA has issued a list of hazardous chemicals,
over half of which are VOCs

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requiring the implementation of maximum available control technology ("MACT")
to limit emissions. The existing MACT rules, as well as those in development
for specific industries, will require compliance from both new and existing VOC
emissions sources. The "acid rain" provisions of the Clean Air Act Amendments
require additional controls for Nox emissions from a variety of sources. See
"Business of the Company--Regulations--Environmental Regulations."

REGULATIONS

Environmental Regulations

The Company's business has benefitted in general from increased governmental
regulation relating to solid waste, wastewater, air pollution and other
environmental concerns, including increasingly stringent air and water quality
regulations (which in turn benefit its air pollution control and water and
biosolids treatment businesses). WTI's own business activities are also subject
to environmental regulation under the same federal, state and local laws and
regulations which apply to the Company's customers, including the Clean Air
Act, the Clean Water Act, and RCRA.

WTI believes that it conducts its businesses in an environmentally
responsible manner and believes itself to be in material compliance with
applicable laws and regulations. WTI does not anticipate that 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 it is probable that the air pollution
control systems at certain trash-to-energy projects owned or operated by the
Company's subsidiaries will be required to be modified by the end of the decade
to comply with the more stringent regulations promulgated thereunder. The
Company has already completed a retrofit of the air pollution control systems
at its oldest trash-to-energy facility located in Saugus, Massachusetts.
Although the expenditures related to such modifications, to the extent
required, will likely be significant, they are not expected to have a material
adverse effect on the Company's liquidity or results of operations. WTI
frequently obtains the right to pass on to the long-term contract users of its
trash-to-energy facilities increased capital and operating costs resulting from
changes in law. There can be no assurance, however, 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. See "Legal Proceedings--
Regulatory." Regulations issued by the EPA in December 1992 under the Clean
Water Act may affect the Company's ability to market pellets derived from its
drying and pelletizing facilities as fertilizer without first obtaining
additional permits for their use. The Company anticipates that the EPA may
suspend enforcement of certain provisions of such regulations for a period of
three years pending additional study. The Company does not believe, however,
that implementation of these regulations in their original form would have a
material adverse effect on the Company's operations or financial position.

During 1992, the U.S. Court of Appeals for the Seventh Circuit issued a
ruling in a case in which the Company was not a party, finding that the ash
generated by a trash-to-energy facility could be subject to regulation as a
hazardous waste. The Seventh Circuit decision was contrary to an earlier
decision issued by the U.S. Court of Appeals for the Second Circuit, upholding
a District Court determination in a case involving a subsidiary of the Company.
In that case, the Court determined that the residual ash generated at the
Company's facility is not subject to regulation as a hazardous waste within the
provisions of RCRA. In late 1992, the Supreme Court vacated the Seventh Circuit
decision and ordered the Seventh Circuit to reconsider the case in light of an
EPA interpretation of RCRA stating that ash from trash-to-energy facilities is
not subject to regulation as a hazardous waste. Upon reconsideration, the
Seventh Circuit reaffirmed its original decision. The parties each filed a writ
of certiorari with the U.S. Supreme Court. The Court granted the writs and
heard oral arguments in the case in January 1994. A decision is pending. WTI
does not believe

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that a decision upholding the Seventh Circuit's earlier ruling would adversely
affect the Company in any material manner, primarily because of the patented
Wes-Phix(R) technology utilized by the Company. Wes-Phix(R) immobilizes certain
constituents in the ash which thereby enables it to be disposed of as non-
hazardous waste. Any such development could, however, require significant
additional expenditures to achieve compliance with such requirements or
policies. There can be no assurance that, in such event, the Company would be
able to recover all such costs from its customers.

Public Utility Regulatory Policies Act

Wheelabrator Clean Energy's business is subject to the provisions of various
energy-related laws and regulations, including PURPA. The ability of WTI's
trash-to-energy and small power production facilities to sell power to electric
utilities on advantageous terms and conditions and to avoid burdensome public
utility regulation depends, in part, upon the continuance in effect of PURPA,
which generally exempts WTI from state and federal regulatory control over
electricity prices charged by, and the finances of, WTI and its energy
producing subsidiaries. While most of WTI's existing projects sell electricity
pursuant to long-term contracts or rate orders, which management believes would
not be affected by the repeal or modification of PURPA, the future growth of
the Company's trash-to-energy and other small power production facilities
business and the legal status of its existing projects could be materially and
adversely affected if the various benefits of PURPA were repealed or
substantially reduced.

COMPETITION

WTI experiences substantial competition in all aspects of its business. It
competes with a number of firms, both nationally and internationally, some of
which may have greater financial and technical resources than WTI. The
principal competitive factors with respect to its Wheelabrator Clean Water and
Wheelabrator Clean Energy 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 trash-to-energy,
biosolids management and water and wastewater treatment industries interested
in such opportunities. The Company believes that its comprehensive project
development capabilities, operating experience, financing capabilities and,
through its affiliation with Rust, engineering and turnkey construction
experience, will enable it to continue to compete effectively.

In the air pollution control business, the Company competes with a relatively
small group of large national and international firms. The primary competitive
factors in the air pollution control industry are price, technological
capabilities and service. In its biosolids handling and treatment and
composting businesses, the Company competes with several large national and
regional firms and numerous competitors who provide service in local markets.
In the biosolids and composting markets, the principal competitive factors are
price, availability of sites for beneficial reuse of biosolids and technical
experience. See "Business of the Company--Patents, Trademarks, Licenses and
Other Agreements."

At the time of the 1990 Merger, the Company was granted an option to acquire
an equity interest in WMX's international waste services operations, now
conducted through WM International. In connection with the acquisition of an
equity interest in WM International in 1991, the Company agreed that it would
not conduct waste management services operations or engage in the operation and
maintenance of water and wastewater treatment facilities outside of North
America, other than through its ownership interest in WM International, until
the later of (i) July 1, 2000 and (ii) the date on which WMX ceases to
beneficially own a majority of the outstanding shares of Common Stock or a
majority of all outstanding voting equity interests of WM International.

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In connection with the initial public offering of ordinary shares of WM
International, the Company, WM International, CWM and WMX entered into an
International Business Opportunities Agreement, which incorporates certain
previously existing agreements among certain of the parties thereto which were
made in connection with the 1990 Merger. The International Business
Opportunities Agreement was amended and restated in connection with the
organization of Rust, described above under "The Company--Organization of Rust
International Inc.," and Rust became a party thereto. Under the Amended and
Restated International Business Opportunities Agreement, the parties agreed
that in order to minimize the potential for conflicts of interest among various
subsidiaries under the common control of WMX, WMX has the right to direct
business opportunities to the WMX controlled subsidiary which, in the
reasonable and good faith judgment of WMX, has the most experience and
expertise in the particular line of business involved. Opportunities in North
America relating to (i) the manufacture or assembly of well screens, materials
cleaning equipment, pumps and packaged water and wastewater treatment
facilities; (ii) the operation and maintenance and, with respect to item (c)
below, design, engineering and construction, of (a) municipal trash-to-energy
facilities, (b) water, wastewater and sewage treatment facilities (excluding
facilities designed to treat hazardous waste streams), (c) chimneys and air
pollution control equipment and facilities, and (d) small power projects and
independent power generation facilities (except for landfill gas recovery
facilities which are covered under the Intellectual Property Licensing
Agreement described under "Business of the Company--Patents, Trademarks,
Licenses and Other Agreements"); and (iii) facilities which treat or otherwise
stabilize ash residues from trash-to-energy facilities, have been allocated to
the Company. The Agreement allocates certain business opportunities, some of
which were previously allocated to WTI, to Rust in connection with the transfer
of WTI's engineering, environmental consulting and construction businesses to
Rust.

RESEARCH AND DEVELOPMENT

The Company undertakes research and development in numerous areas of its
operations, including energy generation, environmental control and the handling
and recovery of waste materials and waste gases, water, wastewater and
industrial process water technologies, and VOC catalyst and control
technologies. WTI spent approximately $3.9 million, $2.6 million and $4.1
million on research and development during 1991, 1992 and 1993, respectively.
In addition, WTI receives significant benefits from technological advances
realized in connection with specific projects undertaken on its own behalf or
under contracts with customers. Significant technological benefits are also
realized through WTI's experience in operating its existing projects.

PATENTS, TRADEMARKS, LICENSES AND OTHER AGREEMENTS

The Company owns or licenses a number of patents and patent applications or
other proprietary technology that are important to various aspects of its
business. While certain of such licenses or patented technology may be material
to the development of a given project, the Company believes that its overall
business depends primarily on such factors as project development capability,
engineering skill, and research and production techniques rather than on patent
protection.

Pursuant to a long-standing arrangement between WTI and von Roll Ltd. ("von
Roll"), WTI has an exclusive license in the United States and Mexico to use
certain combustion-grate technology owned by von Roll. WTI uses this technology
in its trash-to-energy projects. The license agreement runs through December
31, 1995, subject to additional three-year-term renewals unless either party
gives 12 months' written notice of termination to the other. Either party to
the license agreement may also terminate the contract upon one year's written
notice and payment of a termination fee.

WTI has an agreement (the "Boiler Purchase Agreement") with Babcock & Wilcox
Company ("B&W"), whereby B&W has agreed to provide, and WTI has agreed to
purchase, certain boilers suitable for use in WTI's trash-to-energy facilities
having a combustion capacity equal to or greater than 250 tons-per-day. In
addition, B&W agrees to maintain the confidentiality of the Company's
proprietary information incorporated in the boiler design, and not to use such
information except for the purpose of manufacturing boilers for sale

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to WTI or its affiliates. The confidentiality provisions will survive the
termination of the Boiler Purchase Agreement. The Boiler Purchase Agreement
will remain in effect until June 30, 1994, subject to additional three-year
term renewals unless either party gives 12 months written notice of termination
to the other. Neither party has provided such notice. Accordingly, the Boiler
Purchase Agreement will automatically renew as of July 1, 1994 for a three-year
term ending June 30, 1997.

The Company possesses foreign and domestic patents on various biosolids
treatment processes. The Company has a license agreement with Seghers
Engineering N.V. of Bruges, Belgium, granting Wheelabrator Clean Water the
exclusive right to use and market the Seghers Zerofuel sludge incineration
system, including the Seghodryer indirect multi-stage dryer for sludge, within
the United States and Canada. The license agreement was renegotiated in April
1993 to remain in effect through the year 2011 provided that Wheelabrator Clean
Water meets specified levels of equipment orders or makes certain minimum
payments under the agreement. The new agreement also gives Wheelabrator Clean
Water additional options with respect to pricing and manufacturing, and
includes a future option allowing Wheelabrator Clean Water to acquire the
unrestricted right to use the Seghers technology within the United States and
Canada. In addition, Wheelabrator Clean Water holds several patents relating to
the processing of biosolids through an indirect biosolids dryer system.

In 1988, the Company entered into a Land Option Agreement, amended as of June
1, 1992, with Waste Management of North America, Inc., now known as Waste
Management, Inc. ("WMI"), a wholly-owned subsidiary of WMX, providing WTI with
the right, subject to certain restrictions and payment of a $10 million option
renewal fee after 10 years, to acquire or lease sites for future trash-to-
energy, biosolids management, organic waste composting or, subject to certain
pre-conditions, medical waste incineration and autoclave facilities at any of
WMI's existing or future landfills in the United States and Canada. In
addition, in 1988 the Company entered into an Airspace Dedication Agreement
(the "ADA") with WMI permitting WTI, for a period ending August 12, 2008, and
subject to certain conditions and restrictions, to reserve capacity at WMI
landfills for the disposal of ash residue ("Ash Residue") from the Company's
trash-to-energy facilities, to dispose of such residues and waste at such
landfills for fees generally on terms at least as favorable as those charged to
other customers, and granting disposal credits aggregating $70 million to be
credited against future Ash Disposal fees (of which $30 million in disposal
credits were transferred to Rust on January 1, 1993). In 1992, the ADA was
amended and restated to expand the types of waste covered by the ADA to include
non-hazardous biosolids, by-pass waste from facilities owned or operated by WTI
and special wastes removed from third-party sites being remediated by WTI or
any of its affiliates (the "Other Waste"). In addition, the definition of Ash
Residue was expanded to include, under certain circumstances, ash residue from
medical waste incineration facilities. As amended and restated, the ADA also
provides for disposal credits to be applied against disposal fees paid by WTI
and its subsidiaries under separately negotiated disposal arrangements with
WMI. Under the ADA, as amended and restated, WTI may reserve not more than a
total of 35% of the airspace available for the disposal of the type of waste
proposed for disposal at any disposal site at a price-per-ton rate that will
generally not be greater than the most favorable per ton price charged by the
disposal site to customers other than WTI.

In connection with the 1990 Merger, the predecessor of WM International,
Waste Management International, Inc. ("WMII"), and WMI entered into an
Intellectual Property Licensing Agreement with WTI. WM International has
succeeded to the rights and obligations of WMII under the Intellectual Property
Licensing Agreement as well as certain other agreements to which WTI and WMII
were parties. Pursuant to the Intellectual Property Licensing Agreement: (i) WM
International granted WTI a 10-year, non-exclusive, royalty-free license, with
two successive 5-year renewal options, to the "BRINI" recycling and composting
technology owned by WM International; (ii) WMI granted WTI a 10-year, non-
exclusive, royalty-free license, with two successive 5-year renewal options, to
the Recycle America(R) and Recycle Canada(R) trademarks and logos and the
related materials separation and processing technology of WMI for use in
conjunction with recycling operations at or adjacent to any WTI facility; (iii)
WMI agreed to use reasonable efforts to enable WTI to sell recyclable materials
to joint ventures or other markets developed by WMI; (iv) WMI agreed, to

27
<PAGE>

the extent consistent with its business plans, to use good faith efforts to
develop its curbside recycling programs and free-standing recyclable materials
recovery facilities to also support WTI facilities; (v) WTI agreed to designate
WMI as the provider of recyclable collection services for WTI facilities to the
extent possible, before offering such opportunity to any third party; (vi) WMI
granted WTI a 10-year, non-exclusive, royalty-free license, with two successive
5-year renewal options, to all of WMI's proprietary technology and know-how in
the area of landfill gas recovery and the conversion of such gas to energy
(such license does not extend to the use by WTI of technology and know-how at
sanitary landfill sites owned, operated or maintained by WMI or its
subsidiaries and affiliates, other than WTI and its subsidiaries); and (vii)
WMI agreed that only WTI, and not WMI, may develop the business of designing,
constructing, operating and maintaining landfill gas recovery facilities for
governmental, industrial and third party customers. To the extent WTI develops
landfill gas recovery technology and know-how during the period of its license
(and renewals) from WMI, it will share such technology and know-how with WMI on
a similar royalty-free basis. WTI may waive its rights to develop landfill gas
recovery systems on a case-by-case basis in those situations in which financial
objectives specified by the Company's Board of Directors can not be achieved by
WTI through development of such projects. Projects waived by WTI may be
developed by WMI.

The licenses and related rights and obligations to conduct business granted
under the Intellectual Property Licensing Agreement terminate, as to facilities
not already operational, contractually committed or the subject of, or
contemplated by, a bid or other submission previously made by the Company or
WMI, as the case may be, at the earlier of the termination of the stated
license periods, the expiration of any patent licensed under the agreement, or
the date on which the Company is no longer a majority-owned subsidiary of WMX.

WTI, WMX, CWM, Rust and WM International are also parties to a First Amended
and Restated Master License Agreement which was modified on January 1, 1993 to
add Rust as a party to the existing Master License Agreement originally entered
into in connection with the public offering of ordinary shares of WM
International. Under the Master License Agreement, as amended, each of WTI,
WMX, Rust and CWM, on the one hand, and WM International, on the other, is
granted the right to license, on a non-exclusive basis, certain proprietary
rights of the other. The consideration for any such license will be based upon
the fair market value of a license for the licensed technology at the time of
grant, but may not exceed the most favorable price charged an unaffiliated
licensee for a comparable license.

BACKLOG

WTI's backlog was $11.7 billion and $11.4 billion as of December 31, 1992 and
1993, respectively. WTI expects that approximately $912 million, or 8%, of the
December 1993 backlog will be executed during 1994. Approximately $11.0 billion
of this backlog relates to long-term contracts associated with trash-to-energy,
cogeneration, biosolids drying and pelletizing and coal-handling services at
facilities operated by WTI, of which approximately $589 million, or 5%, will be
executed during 1994. Approximately $358 million of backlog at December 31,
1992 related to the businesses contributed by WTI to Rust on January 1, 1993.

RAW MATERIALS

Raw materials used by the Company, including fuel for its projects (such as
trash, waste wood, waste tires, waste coal and natural gas) and construction
materials, are generally readily available from many different suppliers.
Substantially all of the solid waste disposed at the Company's energy projects
is commonly obtained through long-term supply contracts with solid waste
disposal authorities and municipalities under which minimum disposal fees are
fixed and which generally provide for escalation in accordance with various
price indexes. With respect to WTI's manufacturing businesses, the principal
raw materials are carbon steel, steel alloy plate, stainless steel wire and
plate and scrap metals. The raw materials necessary to each of the Company's
businesses are readily available from a variety of sources and the Company does
not anticipate any difficulty in obtaining such materials.

28
<PAGE>

EMPLOYEES

As of December 31, 1993, the Company had approximately 3,800 full-time
employees. WTI considers relations with its employees to be satisfactory.

FINANCING CAPABILITIES AND FUNDING SUPPORT AGREEMENTS

Financing Capabilities

Each trash-to-energy, cogeneration, and biosolids drying and pelletizing
project developed by the Company requires substantial amounts of capital that
generally range from $10 million to $400 million. Historically, such capital
requirements have been financed through the issuance of project debt and the
investment of internal funds and outside equity. The debt has primarily
consisted of long-term tax-exempt or taxable bonds secured by a pledge of
project revenues and assets, with certain additional security being provided,
in some cases, directly or indirectly, by WTI, WMX or another project support
entity. WTI has also used partnership, joint venture and sale and leaseback
structures to bring third-party equity into its project financings. The Company
expects to finance its working capital requirements with its available cash. To
the extent required, the Company has additional cash available to it pursuant
to the Restated Funding Agreement described below or through the working
capital program established between the Company and WMX described below under
"Master Intercorporate Agreement." Certain agreements with respect to the
Company's financing capabilities and funding support are described below.

Restated Funding Agreement

Pursuant to a Restated Funding Agreement between WMX and WTI, WMX agreed to
use reasonable efforts to assist WTI, at WTI's request, in obtaining and
maintaining a credit rating of "A" or better from Standard & Poor's Corporation
or Moody's Investors Service for WTI's long-term unsecured debt securities.
WMX's obligations under the Restated Funding Agreement, which terminate on
August 12, 2008, may involve anything from contingent credit support
obligations to and including WMX's purchase from WTI of up to $200 million
principal amount of WTI securities, which may be either debt, equity or a
combination thereof (the "Securities"). WMX's obligations will be deemed
satisfied by the purchase of such Securities, even if the purchase of all of
the Securities does not enable WTI to obtain an "A" rating. In addition, the
obligation to purchase any of the Securities will be suspended if WTI does not
reasonably demonstrate its ability to pay interest or cash dividends, as the
case may be, on the Securities. WMX's obligations will also be suspended during
any period in which WTI obtains and maintains an "A" rating and will be reduced
to the extent that the purchase of a lesser amount of Securities will allow WTI
to obtain or maintain such a rating. Any Securities issued to WMX will be
subject to mandatory repayment or redemption in equal annual installments
during the twenty-five years following their date of issuance, and they may be
prepaid or redeemed by WTI, at its option, if the directors of WTI not
otherwise affiliated with WMX or WTI conclude that such repayment or redemption
is in the best interests of the Company and its stockholders. Any Securities
redeemed or prepaid prior to August 12, 2008 will restore availability under
the $200 million purchase obligation referred to above. WTI has an implied "A"
credit rating from Standard & Poor's Corporation and an implied "A3" credit
rating from Moody's Investors Service. The attainment of such ratings did not
involve the sale of any Securities to WMX.

Master Support Agreement

Under a Master Support Agreement between Resco and Allied-Signal, Resco is
required to reimburse Allied-Signal for any credit support payments Allied-
Signal is required to make under various credit support agreements with respect
to trash-to-energy projects of Resco. In addition, Resco is required to
maintain its Consolidated Tangible Net Worth (as defined in the Master Support
Agreement) at an amount which, as of December 31, 1993, equalled $547.3
million, and which is automatically increased (but not decreased) to 90% of
Resco's Consolidated Tangible Net Worth at the end of each quarter. As of
December 31, 1993, Resco

29
<PAGE>

was in compliance with this provision. Resco is prohibited from paying cash
dividends or acquiring any shares of its capital stock if its Consolidated
Tangible Net Worth is, or would as a consequence of such payment or acquisition
be, less than the required amount. The Master Support Agreement also restricts
the ability of Resco to subject its property or the properties of its
subsidiaries to liens securing indebtedness for money borrowed or similar
indebtedness and may require Resco, under certain circumstances, to refinance
indebtedness of trash-to-energy projects for which Allied-Signal's credit
support is provided. Allied-Signal is providing credit support in respect of
two of the Company's trash-to-energy facilities pursuant to the Master Support
Agreement.

Master Intercorporate Agreement

In connection with the 1990 Merger, WTI, WMX and CWM entered into a Master
Intercorporate Agreement. Among other things, WTI and WMX agreed to implement a
cash management and working capital program under the agreement. The agreement
was amended and restated in 1993 to modify certain aspects of the cash
management program established thereunder. Subject to certain restrictions
specified in the agreement, WMX agreed to fund WTI's working capital
requirements at rates equal to or lower than those WTI would otherwise be able
to obtain on the open market. The Company may borrow up to $100 million from
WMX until September 1995 pursuant to the Master Intercorporate Agreement, plus
the amount of cash invested by WTI with WMX. Except for the $100 million
funding commitment which expires in September 1995, the remaining obligations
of WMX under the Master Intercorporate Agreement will terminate at the time
that both (i) WMX does not own a majority of the capital stock of WTI and (ii)
WMX does not exercise, prior to its expiration, the option to maintain majority
ownership of the capital stock of WTI (as provided in the Master Intercorporate
Agreement). Additional terms of the Master Intercorporate Agreement are
discussed under the caption "Certain Transactions and Other Matters--
Transactions Between WTI and WMX--Master Intercorporate Agreement."

ACQUISITIONS

During 1993, the Company acquired a number of businesses engaged in providing
various environmentally-related services. The amounts and types of
consideration generally have been determined by direct negotiations with the
owners of the businesses acquired. The acquisitions involved several businesses
engaged in providing water and air quality-related environmental products and
services as well as independent power.

EQUITY INVESTMENTS

Rust International Inc.

The Company owns approximately 40% of the outstanding common stock of Rust.
Approximately 56% of Rust's common stock is held by CWM and the remaining 4% is
held by public stockholders.

Rust is a leading provider, through its subsidiaries, of engineering,
construction and environmental and infrastructure consulting services,
hazardous substance remediation services and other on-site industrial and
related services, primarily to clients in government and in the chemical,
petrochemical, nuclear, energy, utility, pulp and paper, manufacturing,
environmental services and other industries. In addition, Rust provides
engineering and environmental and infrastructure consulting services to clients
in several countries outside of North America.

Rust's engineering, construction and environmental and infrastructure
consulting services business provides process and design engineering,
construction, marine construction, dismantling and demolition services,
architectural, automation, environmental and infrastructure engineering
services and project management services to clients in federal, state and local
governments, to municipalities and utilities and to clients in the chemical,
petrochemical, pulp and paper, automotive, iron and steel, aerospace, food and
beverage, tobacco, mining, utility and industrial power and general
manufacturing industries.

30
<PAGE>

The industrial engineering services provided by Rust are of two general
types--process engineering and facility design engineering. Process engineers
create the processes by which facilities operate, such as chemical,
petrochemical, energy and pulp and paper plants. Design engineering services
provided by Rust encompass the following disciplines: architectural;
electrical; control systems (which involves developing the logic and
instrumentation necessary to control, for instance, a plant's electrical
system); process piping; mechanical (equipment layout); structural; heating,
ventilation and air conditioning ("HVAC"); and civil (site work, grading and
draining).

Rust's construction services include primarily the new construction and
retrofitting of power generation facilities including coal-fired powerplants,
nuclear power plants, gas turbine and cogeneration plants, industrial
facilities, including chemical, petrochemical, pulp and paper, food and
beverage, iron and steel, automotive, utility and industrial power and other
manufacturing facilities. Rust also provides infrastructure and marine
construction services, which include building, maintaining and repairing
infrastructure such as highways, airports, ports, major civil work, piers,
wharves and bridges. In addition, the Company provides dredging and underwater
diving services to its clients. Rust also provides dismantling and demolition
services.

Rust's environmental and infrastructure consulting services provide
alternative solutions for client problems relating to removing and disposing of
hazardous and toxic substances and managing solid waste, water and wastewater,
groundwater and air resources. Rust provides such services primarily to private
industry but also to federal, state and local governments, including the
Department of Defense ("DOD") and Department of Energy ("DOE"). Rust's services
include performing remedial investigations for the purpose of characterizing
hazardous waste sites and preparing feasibility studies setting forth
recommended remedial actions.

Rust also provides services in connection with the siting, permitting, design
and construction oversight (including construction quality assurance) of solid
and hazardous waste landfills and related facilities such as leachate
collection and disposal and gas recovery and electric generation systems.
Study, design and construction oversight services are also provided, primarily
to municipalities 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. In addition, Rust designs
systems required to properly and safely store, convey, treat and dispose of
industrial, hazardous and radioactive materials and provides consulting
services to its clients regarding disposal and waste minimization methods and
techniques.

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 DOE in connection with such projects as the
remediation of military bases and other government installations, the
Environmental Protection Agency in connection with Superfund projects, and
various state environmental agencies. 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.

Rust provides scaffolding services primarily to the refinery, chemical,
petrochemical and electric utility industries, and to a lesser extent, pulp and
paper plants, nuclear facilities and general commercial clients. In most cases,
Rust's scaffolding services are provided in conjunction with periodic, routine
cleaning and maintenance of refineries, chemical plants and utilities, although
such services are also performed in connection with new construction projects.

Rust performs four types of industrial cleaning services--water blasting,
chemical cleaning, vacuuming and water filtration--primarily for clients in the
petrochemical, chemical, and pulp and paper industries, utilities, and to a
lesser extent, the government sector. Rust provides additional on site plant
services to the chemical, petrochemical, and pulp and paper industries as well
as to general commercial and industrial clients, including mechanical and
electrical services, equipment installation, welding, HVAC, warehousing

31
<PAGE>

and inventory management. 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. In addition, Rust also designs and provides to its
clients other nuclear and utility maintenance service-related products,
including fire protection seals, nozzle dams and manway cover elevator systems.

Waste Management International plc

The Company owns approximately 12% of the outstanding ordinary shares of WM
International. Approximately 56% of WM International's outstanding ordinary
shares are held indirectly by WMX, and an additional 12% of such shares are
held by Rust, in which the Company owns a 40% equity interest. The remaining
outstanding ordinary shares of WM International are held by public
stockholders. WM International is a leading international provider of
comprehensive waste management and related services and conducts essentially
all of the waste management operations located outside of North America of WMX
and its affiliates. The operations of WM International are managed on a country
by country basis and are divisible into two broad categories: collection
services and treatment and disposal services.

Collection services provided by WM International include collection and
transportation of solid, hazardous and medical wastes and recyclable material
from residential, commercial and industrial customers. Through its
subsidiaries, WM International provides collection services to governmental and
private customers in nine European countries, Argentina, Australia, Brunei,
Malaysia, New Zealand and Taiwan. Business is obtained through public bids or
tenders, negotiated contracts, and, in the case of commercial and industrial
customers, direct contracts. WM International's collection services encompassed
approximately 1,700 separate municipal contracts (the largest number of which
are in Italy) serving over 6.3 million households and commercial and industrial
collection services to more than 140,000 solid waste customers and
approximately 29,600 hazardous waste customers, as well as related services.
The size, specifications, provisions and duration of municipal contracts vary
substantially, with some such contracts also covering landfill disposal or
street-sweeping or other cleaning services. Pricing for municipal contracts is
generally based on volume of waste, number and frequency of collection pick-ups
and disposal arrangements. Longer-term contracts typically have formulae for
periodic price increases or adjustments.

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

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

At present, in most countries in which WM International operates, landfilling
is the predominant disposal method employed. WM International owns or operates
landfills in Italy, Sweden, France, Spain, Australia, the United Kingdom,
Germany, Denmark, Argentina and New Zealand. WM International is also
constructing a solid waste landfill in Hong Kong. Landfill disposal agreements
may be separate contracts or an integrated portion of collection or treatment
contracts. In addition, landfills may accept waste on a reserved space or per
load basis. WM International believes it has access to sufficient solid waste
landfill capacity to meet its current needs.

32
<PAGE>

WM International's trash-to-energy incinerator in Hamm is a German-designed
plant and the only privately operated trash-to-energy facility in Germany. It
is among the first trash-to-energy facilities to fully comply with that
country's stringent new air pollution requirements. The facility serves the
household and commercial solid waste incineration needs of a population of over
550,000 in Hamm and nearby towns. WM International also operates five small
conventional municipal solid waste incinerators in Italy and one small plant in
each of Sweden and New Zealand.

WM International owns or operates hazardous waste treatment facilities in
Finland, Italy, Sweden, Germany, the United Kingdom, The Netherlands, Hong Kong
and New Zealand, has nearly completed construction of a hazardous waste
treatment facility in Indonesia, and has entered into agreements with the
governments of Argentina and Venezuela to develop hazardous waste treatment
facilities in those countries.

While WM 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.

WM International records and reports its earnings in pounds sterling.
Currency fluctuations affecting the pounds sterling exchange rates will cause
the Company's earnings from WM International to fluctuate. The Company may from
time to time engage in hedging transactions in order to mitigate the effect of
such exchange fluctuations.

PROPERTIES

The Company's principal executive offices are located at Liberty Lane,
Hampton, New Hampshire 03842. These offices also serve as the headquarters of
the Company's Wheelabrator Clean Energy Group. The Company believes that its
property and equipment are generally well maintained, in good operating
condition and adequate for its present needs. The inability to renew any short-
term real property lease by the Company or any of its subsidiaries would not
have a material adverse effect on its results of operations. WTI regularly
upgrades and modernizes facilities and equipment and expands its facilities as
necessary.

The following tables set forth the Company's principal facility locations in
operation or under construction and their use (including those operated by the
Company for others under long-term contracts or similar arrangements).

DESCRIPTION OF OWNED, LEASED AND/OR LONG-TERM OPERATED PROJECTS

Set forth below is a description of projects in operation or under
construction which are owned, leased or operated under long-term operating
agreements by WTI subsidiaries, partnerships or joint ventures controlled by
WTI subsidiaries. Unless indicated to the contrary below, each project is owned
by subsidiaries or affiliates of the Company. While WTI exercises, or will
exercise, operating control over each such project, WTI has no ownership
interest in certain of the projects.

Projects in Operation

<TABLE>
<CAPTION>
DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
------- ------ --------- --------
<S> <C> <C> <C>
1. Amarillo, Texas...... N/A 3,500,000
Coal Handling Facil- TPY Owned and operated since 1976 by WTI
ity and its predecessors.
2. Anderson, California. 60mW 210 TPD
Wood Waste Owned and operated by WTI since mid-
Cogeneration Facility 1993.
</TABLE>

33
<PAGE>

<TABLE>
<CAPTION>
DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
------- ------ --------- --------
<S> <C> <C> <C>
3. Baltimore, Maryland.. 60mW 2,250 TPD
Trash-to-Energy Fa- Owned and operated by WTI from 1985
cility to 1988. Operated by WTI since 1988
Owner: Ford Motor under a long-term leasing expiring
Credit Company ("Ford in 2007, with certain renewal and
Credit") purchase option.
4. Bridgeport, Connecti- 70mW 2,250 TPD
cut.................. Operated since 1988 by WTI under a
Trash-to-Energy Fa- long-term lease expiring in 2008,
cility with certain renewal and purchase
Owner: Ford Credit options.
5. Broward County, Flor- 70mW 2,250 TPD Owned and operated by WTI since mid-
ida.................. 1991.
South Site
Trash-to-Energy Fa-
cility
6. Broward County, Flor- 70mW 2,250 TPD Owned and operated by WTI since
ida.................. early 1992.
North Site
Trash-to-Energy Fa-
cility
7. Claremont, New Hamp- 5mW 200 TPD Owned and operated by WTI since
shire................ 1987.
Trash-to-Energy Fa-
cility
8. Cobb County, Georgia. N/A 35 DTPD
Biosolids Dryer and
Pelletizer Operated by WTI since October 1992
Owner: Cobb County, under a subcontract expiring in
Georgia 1996, with a renewal option.
9. Concord, New Hamp- 14mW 575 TPD Owned and operated by WTI since
shire................ 1989.
Trash-to-Energy Fa-
cility
10. Earth, Texas......... N/A 3,500,000 Owned and operated since 1982 by WTI
Coal Handling Facil- TPY and its predecessors.
ity
11. Frackville, Pennsyl- 47mW 1,700 TPD Owned and operated by WTI since
vania................ 1989.
Anthracite Culm
Cogeneration Facility
12. Hagerstown, Maryland. N/A 16 DTPD Operated by WTI since October 1992
Biosolids Dryer and under a lease expiring in 1998, with
Pelletizer a renewal option.
Owner: Hagerstown,
Maryland
13. Gloucester County, 14mW 575 TPD Owned and operated by WTI since
New Jersey........... 1990.
Trash-to-Energy Fa-
cility
14. Millbury, Massachu- 45mW 1,500 TPD Operated since 1987 by WTI under a
setts................ long-term lease expiring in 2007,
Trash-to-Energy Fa- with certain renewal and purchase
cility options.
Owner: Ford Credit
15. New York, New York... N/A 300 DTPD Owned and operated by WTI since mid-
Biosolids Dryer and 1993.
Pelletizer
16. North Andover, Massa- 40mW 1,500 TPD Owned and operated since 1985 by
chusetts............. WTI.
Trash-to-Energy Fa-
cility
17. Norwalk, California.. 28mW 5,600 MCF Operated by WTI since 1988 under a
Gas Cogeneration Fa- per day lease expiring May 1, 2008, with an
cility option to buy, subject to prior
Owner: Signal Capital rights of the State of California to
Corporation purchase the lease and the facility
after 2003.
</TABLE>

34
<PAGE>

<TABLE>
<CAPTION>
DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
------- ------ --------- --------
<S> <C> <C> <C>
18. Pinellas County, 75mW 3,000 TPD Operated by WTI since 1983 under a
Florida.............. long-term contract expiring in 2003.
Trash-to-Energy Fa-
cility
Owner: Pinellas Coun-
ty, Florida
19. Saugus, Massachu- 40mW 1,500 TPD Operated since 1975 by WTI; wholly-
setts................ owned by WTI since 1987.
Trash-to-Energy Fa-
cility
20. Shasta County, Cali- 49mW 2,400 TPD Operated by WTI since 1988 under a
fornia............... long-term lease expiring December
Wood Waste Small 30, 2007, with renewal and purchase
Power options.
Production Facility
Owner: Ford Credit
21. Sherman Station, 18mW 800 TPD Operated by a partnership in which
Maine................ WTI has a 60% interest. Leased by
Wood Waste WTI under a long-term contract
Cogeneration Facility expiring December 30, 2006, with
Owner: Chrysler Fi- renewal and purchase options.
nancial Corporation
22. Spokane, Washington.. 26mW 800 TPD Operated by WTI since late 1991
Trash-to-Energy Fa- under a contract expiring in 2011.
cility
Owner: City of Spo-
kane, Washington
23. Tampa, Florida....... 20mW 1,000 TPD Operated by WTI since 1988 under a
Trash-to-Energy Fa- long-term contract expiring in 2005.
cility
Owner: City of Tampa,
Florida
24. Westchester County, 60mW 2,250 TPD Owned and operated since 1984 by
New York............. Westchester Resco Company L.P.
Trash-to-Energy Fa- ("Westchester Resco") (1)
cility

Projects Under Construction

1. Baltimore County, N/A 110 DTPD Construction financing provided by
Maryland.............. WTI from available cash;
Biosolids Dryer and construction expected to be
Pelletizer completed in mid-1994.
2. Falls Township, Penn- 53mW 1,500 TPD Construction financing provided by
sylvania.............. WTI from available cash;
Trash-to-Energy Proj- construction expected to be
ect completed in mid-1994.
3. Lisbon, Connecticut... 13mW 500 TPD
Trash-to-Energy Facil- Construction expected to be
ity completed in late 1995. Will be
Owner: Eastern Con- operated by WTI under a long-term
necticut contract expiring 25 years from
Resource Recovery Au- commencement of principal
thority operations.
4. Polk County, Florida.. 40mW 1,000 TPD Construction financing provided by
Urban Waste-To-Energy WTI from available cash;
Project construction expected to be
completed in 1994. Owned by a
partnership in which WTI has an 81%
interest.
</TABLE>

<TABLE>
<S> <C> <C>
KEY: mW--Megawatts DTPD--Dry Tons Per Day TPD--Tons Per Day
</TABLE>
TPY--Tons Per Year MCF--Thousands of Cubic Feet

- --------
(1) Westchester Resco is a limited partnership, 75% held by WTI, and 25% held
indirectly by John Hancock Mutual Life Insurance Co. as a limited partner.

35
<PAGE>

Non-Project Related Facilities

Set forth below is a list of all of the non-project related facilities owned
by the Company, and each of the principal plants and offices leased by the
Company. Such list does not purport to be a complete list of all of the
Company's leased properties.

<TABLE>
<CAPTION>
LOCATION SITE USE NATURE OF INTEREST
-------- -------- -----------------------
<S> <C> <C>
Annapolis, Maryland..... Offices Lease
Altrincham, United King-
dom.................... Manufacturing facility and office space Own
Billerica, Massachu-
setts.................. Manufacturing facility and office space Lease
Commerce, California.... Manufacturing facility and office space Lease
Chatelleurault, France.. Manufacturing facility Own
Dublin, Ireland......... Manufacturing facility Own
Hampton, New Hampshire.. Offices Lease
LaGrange, Georgia....... Manufacturing facility and office space Own
Largo, Florida.......... Manufacturing facility Lease
Moorpark, California.... Manufacturing facility and office space Lease
New Brighton, Minnesota. Manufacturing facility and office space Own
Naperville, Illinois.... Offices Lease
Parker, Arizona......... Carbon regeneration facility Own building/lease site
Pittsburgh, Pennsylva-
nia.................... Offices Lease
</TABLE>

LEGAL PROCEEDINGS

Regulatory

The business in which the Company is engaged is intrinsically connected with
the protection of the environment and the potential for the 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 in which 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. At
December 31, 1993, the Company was involved in one such proceeding relating to
activities at its Westchester, New York trash-to-energy facility. The EPA has
alleged that the facility exceeded its emission limits of sulphur dioxide
("SO/2/"). The EPA and the Company are negotiating a consent order which is
expected to include the installation of a sorbent injection system (to reduce
the SO/2/ emissions) and sanctions in an amount which may exceed $100,000.

Other

In addition, there are other routine lawsuits and claims pending against WTI
and its subsidiaries incidental to their businesses. In the opinion of the
Company's management, the ultimate liability, if any, with respect to the
above proceedings and such other lawsuits and claims will not have a material
adverse effect on the business and properties of the Company, taken as a
whole, or its financial position or results of operations.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names and ages as of March 31, 1994 of the Company's
executive officers and directors, the positions they hold with the Company and
with WMX and its affiliates, and (because the Board

36
<PAGE>

of Directors is classified into three classes) the class 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. Experience shown with WTI includes experience with Old
WTI prior to the 1989 Merger. Executive officers are elected by the Board of
Directors and serve at the discretion of the Board of Directors. Certain of the
executive officers of WTI are also executive officers of WMX and its
affiliates. While such executive officers will devote less than all of their
working time to the Company's business, the Company anticipates that such
executive officers will devote sufficient time to the Company's business as
reasonably may be required to fulfill the duties of their offices.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Phillip B. Rooney(1)....... 49 Chairman of the Board, Chief Executive
Officer and
Director
John M. Kehoe, Jr.......... 60 President and Chief Operating Officer
John D. Sanford............ 40 Vice President, Chief Financial Officer and
Treasurer
John T. Dowd............... 56 Senior Vice President and General Manager of
Wheelabrator Clean Water Systems Inc. and
Wheelabrator Clean Air Systems Inc.
James F. Wood.............. 51 Senior Vice President and General Manager of
Wheelabrator Environmental Systems Inc.
Mark P. Paul............... 44 Vice President and General Counsel
Richard S. Haak, Jr........ 39 Controller
Dean L. Buntrock(2)........ 61 Director
William M. Daley(1)........ 44 Director
Donald F. Flynn(3)......... 53 Director
James E. Koenig(2)......... 46 Director
Paul M. Montrone(1)........ 51 Director
Manuel Sanchez(3).......... 45 Director
Lt. Gen. Thomas P.
Stafford(2)............... 62 Director
</TABLE>
- --------
(1) Term expires at the 1995 annual meeting of stockholders.
(2) Term expires at the 1994 annual meeting of stockholders.

(3) Term expires at the 1996 annual meeting of stockholders.

Phillip B. Rooney has been a director of WTI or Old WTI since September 1988.
Mr. Rooney has been Chairman of the Board and Chief Executive Officer of WTI
since November 1990. He has also been President and Chief Operating Officer of
WMX since November 1984 and, since January 1994, Chairman of the Board and
Chief Executive Officer of WMI. Since January 1993, Mr. Rooney has also served
as Chairman of the Board of Rust. Mr. Rooney is also a director of WMX, CWM,
Illinois Tool Works Inc., WM International, Caremark International Inc., Urban
Shopping Centers, Inc. and ServiceMaster Management Corporation, the general
partner of ServiceMaster L.P.

John M. Kehoe, Jr. has been President and Chief Operating Officer of WTI
since January 1993. Prior thereto, Mr. Kehoe was Vice President of WTI from
December 1991 until December 1992 and was Managing Director of WTI from June
1988 to November 1990. He has been President of WESI since November 1990.

John D. Sanford has been Vice President, Chief Financial Officer and
Treasurer of WTI since May 1993. Prior thereto he was Staff Vice President-
Finance of WTI from February 1993 to May 1993. Mr. Sanford served as Vice
President and Chief Financial Officer of WESI from August 1987 to May 1993.

37
<PAGE>

John T. Dowd has been Senior Vice President and General Manager of
Wheelabrator Clean Water Systems Inc. and Wheelabrator Clean Air Systems Inc.
since November 1992. Prior thereto he served as Vice President and General
Manager of Wheelabrator Clean Water Systems Inc. from August 1991 to November
1992. From January 1989 to August 1991 he served as Vice President-Business
Development of WESI.

James F. Wood has been Senior Vice President and General Manager of WESI
since November 1992. He served as Vice President-Plant Operations of WESI from
September 1990 to November 1992 and Managing Director of WTI from April 1989 to
September 1990. Since prior to 1989 he was Vice President-Plant Services of
WESI.

Mark P. Paul has been Vice President and General Counsel of WTI since May
1993. From February 1993 to May 1993 he was Associate General Counsel and Staff
Vice President of WTI. From September 1987 to May 1993 he served as Vice
President and General Counsel of WESI.

Richard S. Haak has been Controller of WTI since November 1993. He served as
Vice President and Controller-Operations of WESI from September 1987 until
November 1993.

Dean L. Buntrock has been a director of WTI or Old WTI since September 1988.
Mr. Buntrock has been Chairman of the Board and Chief Executive Officer of WMX
since 1968 and was President of WMX from September 1980 to November 1984. Since
May 1993, Mr. Buntrock has also been Chairman of the Board of CWM, a position
he previously held from 1986 to September 1991. Mr. Buntrock is also a director
of Boston Chicken, Inc., First Chicago Corporation, Stone Container
Corporation, WM International and Rust.

William M. Daley has been a director of WTI since December 1993. Prior
thereto he served as a director of WTI from August 1992 until August 1993, at
which time he resigned to serve as Special Counsel to the President for the
North American Free Trade Agreement. Mr. Daley has been a partner of the
Chicago law firm of Mayer, Brown & Platt from May 1993 until the present,
excluding a three month leave to serve as Special Counsel to the President for
the North American Free Trade Agreement; and prior thereto, from 1985 to 1989.
Mr. Daley served as President and Chief Operating Officer of Amalgamated Bank
of Chicago from October 1990 to May 1993. From January 1993 to May 1993 Mr.
Daley also served as President of AmalgaTrust Co., Inc. From October 1989 until
October 1990 he served as the Vice Chairman of Amalgamated Bank of Chicago. Mr.
Daley is also a director of the Federal National Mortgage Association. WTI has
utilized and anticipates that it will continue to utilize the services of
Mayer, Brown & Platt.

Donald F. Flynn has been a director of WTI or Old WTI since September 1988.
Since July 1992, Mr. Flynn has served as the Chairman of the Board and Chief
Executive Officer of Discovery Zone, Inc., a franchisor and operator of indoor
fun and fitness centers for children. He has also served as Chairman of the
Board and President of Flynn Enterprises, Inc., a financial advisory and
venture capital firm since February 1988. He was Senior Vice President of WMX
from 1975 to January 1991. He also served as Chief Financial Officer of WMX
from March 1972 to December 1989 and was Treasurer of WMX from May 1979 to
December 1986. He has been a director of CWM since September 1986 and was Chief
Financial Officer of CWM from September 1986 to November 1987. Since January 1,
1991, Mr. Flynn has served as a consultant to WMX. Mr. Flynn also serves as a
director of WMX, Blockbuster Entertainment Corporation, Psychemedics
Corporation and WM International.

James E. Koenig has been a director of WTI since September 1990. Mr. Koenig
served as Vice President, Chief Financial Officer and Treasurer of WTI from
November 1990 to May 1993. Mr. Koenig has also served as Vice President and
Treasurer of WMX since December 1986, Chief Financial Officer of WMX since
December 1989 and Senior Vice President of WMX since May 1992. Mr. Koenig is
also a director of CWM, Rust and WM International.

Paul M. Montrone has been a director of WTI or Old WTI since prior to 1989.
He also served as Chairman of the Board and Chief Executive Officer of WTI from
prior to 1989 until November 1990. Since

38
<PAGE>

December 1991, Mr. Montrone has been President, Chief Executive Officer and a
director of Fisher Scientific International Inc. ("Fisher Scientific"), a
manufacturer of laboratory equipment and supplies. He has also been Vice
Chairman of the Board of Abex, a designer and manufacturer of engineered
components for aerospace, defense, industrial and commercial markets, or its
predecessors since 1992. Since prior to 1989, Mr. Montrone has also been
President of The General Chemical Group, Inc., a chemical company. From prior
to 1989 until 1992 he served as the Managing Director--President of Henley.

Manuel Sanchez has been a director of WTI since August 1992. Mr. Sanchez is a
co-founder and has been a partner of the Chicago law firm of Sanchez & Daniels
since April 1987. From 1981 to 1987 he was a partner at the law firm of
Hinshaw, Culbertson, Moelmann, Hoban & Fuller. WTI has utilized and anticipates
that it will continue to utilize the services of Sanchez & Daniels.

Lt. Gen. Thomas P. Stafford has been a director of WTI or Old WTI since
September 1987. Lt. Gen. Stafford has been a consultant with General Technical
Services, Inc. (consulting) since 1984. He is co-founder and has been Vice
Chairman of Stafford, Burke and Hecker, Inc., a Washington-based consulting
firm, since 1982. After serving as an astronaut for a number of years, he
retired in 1979 from the U.S. Air Force as Deputy Chief of Staff for Research,
Development and Acquisition and became Vice Chairman of Gibraltar Exploration
Limited, an oil and gas exploration and production company. Lt. Gen. Stafford
is Chairman of the Board of the Omega Watch Corporation of America, and is a
director of Tremont, Inc., Seagate Technologies, Inc., CMI, Inc., Pacific
Scientific Company, Allied-Signal, Fisher Scientific and Wackenhut, Inc.

39
<PAGE>

SECURITIES OWNERSHIP OF MANAGEMENT

Ownership of WTI Common Stock

The following table sets forth certain information, as of February 1, 1994
(except for Mr. Daley, which is as of March 9, 1994), as to the beneficial
ownership of common stock of WTI by the directors, the Chairman of the Board
and Chief Executive Officer, and the four other most highly compensated
executive officers of WTI as of December 31, 1993, and by all directors and
persons serving as executive officers of WTI as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WTI COMMON STOCK PERCENT OF WTI
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK(2)
---- ------------------------ ---------------
<S> <C> <C>
Dean L. Buntrock.................. 135,000(3) *
William M. Daley.................. 1,000 *
Donald F. Flynn................... 80,245 *
James E. Koenig................... 243,000 *
Paul M. Montrone.................. 406,000 *
Phillip B. Rooney................. 274,769(3) *
Manuel Sanchez.................... 12,000 *
Lt. Gen. Thomas P. Stafford....... 30,212 *
John T. Dowd...................... 30,399 *
John M. Kehoe, Jr................. 266,220 *
John D. Sanford................... 100,248 *
James F. Wood..................... 26,378 *
All directors and executive offi-
cers as a group including persons
named above (14 persons)......... 1,713,581 *
</TABLE>
- --------

*Less than one percent.

(1) The above named persons and members of such group have sole voting power
and sole investment power over WTI shares listed, except (i) WTI shares
covered by options exercisable within 60 days of February 1, 1994; (ii) WTI
shares held pursuant to WTI's Savings and Retirement Plan; (iii) 3,000 WTI
shares over which Mr. Koenig has shared voting and investment power with
his former spouse; (iv) 1,000 WTI shares over which Mr. Daley has shared
voting and investment power with his spouse; and (v) 10,000 WTI shares that
may be deemed to be beneficially owned by each of Messrs. Buntrock, Flynn
and Rooney as a result of restricted units granted pursuant to WTI's
Restricted Unit Plan for Non-Employee Directors. Such restricted units are
the only restricted units remaining outstanding under such plan, and no
further restricted units will be granted under such plan. At the time any
of Messrs. Buntrock, Flynn or Rooney cease to be a member of the Board,
such person will receive 10,000 shares of WTI common stock or, at the
discretion of the Board, the cash equivalent thereof. Such persons disclaim
any beneficial ownership of the WTI shares subject to such restricted
units.

(2) The numbers and percentages of WTI shares owned by the above named persons
and the members of such group assume, in each case, that currently
outstanding stock options covering WTI shares which were exercisable within
60 days of February 1, 1994 had been exercised by that person or group as
follows: Mr. Buntrock--33,336; Mr. Kehoe--251,639; Mr. Koenig--240,000; Mr.
Dowd--21,354; Mr. Montrone--406,000; Mr. Sanchez--12,000; Mr. Sanford--
60,023; Lt. Gen. Stafford--30,000; Mr. Wood--23,290; and all executive
officers and directors as a group (including such individuals)--1,181,827.
Such persons and the members of such group disclaim any beneficial
ownership of the WTI shares subject to such options.

(3) Excludes an aggregate of 104,621,810 shares that may be deemed to be
beneficially owned by Messrs. Buntrock and Rooney because each such person
may be deemed to be an affiliate of WMX (See "Principal Stockholder"). Each
such person disclaims any beneficial ownership of such WTI shares.

40
<PAGE>

Ownership of WMX Common Stock

The following table sets forth certain information, as of February 1, 1994,
as to the beneficial ownership of WMX common stock by the directors, the
Chairman of the Board and Chief Executive Officer, and the four other most
highly compensated executive officers of WTI as of December 31, 1993, and by
all directors and persons serving as executive officers of WTI as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WMX COMMON STOCK PERCENT OF WMX
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK(2)
---- ------------------------ ---------------
<S> <C> <C>
Dean L. Buntrock.................. 3,073,992 *
William M. Daley.................. 1,000 *
Donald F. Flynn................... 1,012,526 *
James E. Koenig................... 192,786 *
Paul M. Montrone.................. 0 *
Phillip B. Rooney................. 742,239 *
Manuel Sanchez.................... 0 *
Lt. Gen. Thomas P. Stafford....... 0 *
John T. Dowd...................... 1,180 *
John M. Kehoe, Jr................. 22,079 *
John D. Sanford................... 184 *
James F. Wood..................... 251 *
All directors and executive offi-
cers as a group including persons
named above (14 persons)......... 5,046,470 1.0
</TABLE>
- --------

*Less than one percent.

(1) The above named persons and members of such group have sole voting power
and sole investment power over WMX shares listed, except (i) WMX shares
covered by options granted under WMX's stock option plans which were
exercisable within 60 days of February 1, 1994; (ii) WMX shares held
pursuant to WMX's Profit Sharing and Savings Plan and WTI's Savings and
Retirement Plan; and (iii) Messrs. Buntrock, Daley, Koenig and Rooney, and
all executive officers and directors as a group (including such
individuals), who have shared voting and investment power over 132,888,
1,000, 82,428, 30,074 and 246,390 WMX shares, respectively. Such WMX shares
shown for Messrs. Buntrock 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 WMX shares
shown for Mr. Daley are held jointly with his spouse, and such WMX shares
shown for Mr. Koenig are held jointly with his former spouse. Ownership of
WMX shares shown for Messrs. Buntrock, Dowd and Rooney, and for all
officers and directors as a group, includes WMX shares not held directly by
them but held by or for the benefit of (i) their spouses or (ii) their
minor children and other children residing with them, as to which they have
neither investment power nor voting power. WMX shares were held by or for
the benefit of such spouses or children of the following directors and all
executive officers and directors as a group at February 1, 1994, in the
amounts indicated: Mr. Buntrock--40,314 (held by spouse); Mr. Dowd--23
(held by spouse for child); and Mr. Rooney--104,603 (held by adult child
and by spouse directly and as trustee for children); and all executive
officers and directors as a group (including such individuals)--144,951.
Additionally, ownership of shares shown for Mr. Koenig includes 1,200 WMX
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 WMX shares.

(2) The numbers and percentages of WMX shares owned by the above named persons
and the members of such group assume that currently outstanding stock
options covering WMX shares which were exercisable within 60 days of
February 1, 1994 had been exercised as follows: Mr. Buntrock--282,122; Mr.
Flynn--29,893; Mr. Koenig--107,767; Mr. Rooney--211,521; and all executive
officers and directors as a group (including such individuals)--631,303.
Such persons and the members of such group disclaim any beneficial
ownership of the WMX shares subject to such options.

41
<PAGE>

COMPENSATION

The following table sets forth certain information with respect to cash
compensation for services in all capacities paid or accrued by WTI and its
subsidiaries for the past three years, to or on behalf of (i) the Chairman of
the Board and Chief Executive Officer of WTI at December 31, 1993, and (ii)
each of the four other most highly compensated executive officers of WTI at
December 31, 1993:

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ---------------------
AWARDS PAYOUTS
---------- ----------
SECURITIES LONG-TERM ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING INCENTIVE COMPENSA-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2)(3) OPTIONS PAYOUTS(4) TION(2)
------------------ ---- -------- -------- ------------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip B. Rooney, 1993 $ 0 $ 0 0 0 $ 97,800 $ 0
Chairman of the Board and 1992 0 0 0 0 880,200 0
Chief Executive Officer(1) 1991 0 0 -- 0 0 --
John M. Kehoe, Jr., 1993 $300,000 $240,000 0 32,688 $ 12,569 $40,340
President and Chief 1992 254,176 145,225 0 15,874 113,116 41,973
Operating Officer 1991 225,000 110,240 -- 18,908 0 --
John D. Sanford 1993 $174,555 $ 69,950 0 11,622 $ 5,191 $18,113
Vice President, Chief Finan- 1992 134,670 59,308 0 8,254 46,723 18,457
cial Officer and Treasurer 1991 125,838 38,000 -- 10,084 0 --
James F. Wood 1993 $191,226 $146,300 0 13,801 $ 1,191 $24,865
Senior Vice President and 1992 190,008 24,168 0 12,064 117,935 26,033
General Manager 1991 188,591 75,740 -- 15,966 0 --
Wheelabrator Environmen-
tal Systems Inc.
John T. Dowd 1993 $181,154 $ 69,372 0 13,075 $ 2,629 $13,825
Senior Vice President 1992 140,348 61,556 0 8,888 23,665 17,614
and General Manager 1991 130,195 39,210 -- 11,068 0 --
Wheelabrator Clean Air Systems Inc.
Wheelabrator Clean Water Systems
Inc.
</TABLE>
- --------

(1) Mr. Rooney is compensated by WMX in his capacity as an employee of WMX and
received no cash compensation from WTI for his services, except that Mr.
Rooney received compensation from WTI for services rendered to the Company
under a long term incentive compensation plan covering the two-year period
ended December 31, 1992.

(2) In accordance with the revised rules on executive officer and director
compensation disclosure adopted by the Securities and Exchange Commission,
amounts of Other Annual Compensation and All Other Compensation are
excluded for the Company's 1991 fiscal year. Amounts shown under All Other
Compensation are amounts contributed by the Company for fiscal years 1992
and 1993 under the Company's Savings and Retirement Plan and non-qualified
excess benefit plan. Pursuant to the non-qualified excess benefit plan,
each participant's account is credited with the amount of the contribution,
if any, that would have been made on behalf of such participant to the
Savings and Retirement Plan but for certain limitations on such
contributions imposed by the Internal Revenue Code of 1986, as amended. All
such Company contributions are fully vested.

(3) Excludes perquisites and other benefits unless the aggregate amount of such
compensation equals at least the lesser of $50,000 and 10 percent of the
total annual salary and bonus reported for the named executive officer.

(4) Amounts shown were paid pursuant to the Company's Performance Unit Plan, a
long term incentive plan covering the two-year period ended December 31,
1992.

42
<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, 1993:

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM(4)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------------
NAME GRANTED(1)(2) IN FISCAL YEAR PER SHARE DATE(3) 0% 5% 10%
---- ------------- -------------- --------- ---------- -- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip B. Rooney....... 0 -- -- -- -- -- --
John M. Kehoe, Jr....... 32,688 4.9% $20.65 3/8/2000 $0 $ 274,796 $ 640,391
John D. Sanford......... 11,622 1.7% $20.65 3/8/2000 $0 $ 97,702 $ 227,687
James F. Wood........... 13,801 2.1% $20.65 3/8/2000 $0 $ 116,020 $ 270,376
John T. Dowd............ 13,075 2.0% $20.65 3/8/2000 $0 $ 109,917 $ 256,152
All Stockholders(5)..... -- -- $20.65 3/8/2000 $0 $1,570,055,582 $3,658,897,155
</TABLE>
- --------

(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of WTI'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 March 8, 1994.

(3) Options were granted for a term of seven years, subject to earlier
termination in certain events related to termination of employment.

(4) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's common stock. Such amounts are based
on the assumption that the named persons hold the options granted for their
full seven year 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 that the optionees will not recognize any gain
without an increase in the stock price, which increase benefits all
stockholders commensurately. The Company did not use an alternative formula
to attempt to value options at the date of grant as management is not aware
of any formula which determines with reasonable accuracy a present value of
options of the type granted to the optionees.

(5) Based upon the market price of the Company's common stock and the total
shares outstanding at the date of grant, if the market 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 $1,570,055,582 or $3,658,897,155, respectively, during the
period from grant date to expiration date for the options expiring March 8,
2000.

43
<PAGE>

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

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Phillip B. Rooney....... 533,336 $4,284,475 -- / -- $ 0/$ 0
John M. Kehoe, Jr....... 0 $ 0 229,148/49,570 $2,212,931/$58,027
John D. Sanford......... 0 $ 0 50,034/20,486 $ 453,522/$30,672
James F. Wood........... 0 $ 0 9,346/27,163 $ 39,182/$47,214
John T. Dowd............ 5,140 $ 75,182 10,342/22,689 $ 49,089/$33,435
</TABLE>
- --------

(1) Market value less exercise price, before payment of applicable federal and
state taxes.

Long Term Incentive Plan Awards

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

LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE BASED
NUMBER OF SHARES, OTHER PERIOD PLANS(3)
UNITS OR OTHER UNTIL MATURATION ---------------------------
NAME RIGHTS(1) OR PAYOUT(2) THRESHOLD TARGET MAXIMUM
---- ----------------- ---------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John M. Kehoe, Jr....... -- 2.6 years $60,000 $120,000 $360,000
</TABLE>
- --------

(1) Awards consist of the designation of target percentages of annual salary at
the end of the performance period to be paid if the Company achieves
certain performance objectives. No payout occurs unless the Company
achieves certain threshold performance objectives. Above the threshold,
payouts may be greater or less than the target percentages to the extent
that the Company's performance exceeds or fails to meet target objectives
specified. 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 Standard & Poor's 500 Stock Index over the performance period.

(2) The performance period includes seven months of calendar year 1993 and
calendar years 1994 and 1995.

(3) At the end of the performance period, an amount equal to 50% of the
performance award, if any, is paid in cash, and the remaining 50% is deemed
to be invested in Company common stock. 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 affiliates on that date. The estimated
future payouts were calculated using Mr. Kehoe's 1993 salary and reflect
the total performance award without accounting for any increase or decrease
in the value of the deferred portion of the award.

Annual Compensation of Non-Employee Directors

Each member of the Board of Directors who is not an employee of WTI or an
employee or director of WMX is paid an annual fee of $45,000. In addition,
during 1993, each such person received a fee of $8,000 for service as a member
of a Special Committee of the Board of Directors formed to act upon the Rust
Transaction (as described under the caption "Certain Transactions and Other
Matters--Rust Transaction"), except that Mr. Montrone received a fee of $10,000
for his services as Chairman of such Special Committee.

44
<PAGE>

Deferred Compensation Plan for Non-Employee Directors

WTI maintains a Deferred Director's Fee Plan under which non-employee
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
WTI's common stock and during the period of deferral such deferred amounts are
credited with the dividends or stock splits, if any, that would be received had
such investment actually been made. Upon termination of the director's service,
the common stock reflected by the 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, either in a
lump sum or installments.

Retirement Plan for Non-Employee Directors

The Retirement Plan for Non-Employee Directors (the "Directors' Retirement
Plan") was amended by the Board of Directors on June 10, 1991 to limit
participation in such plan to those non-employee directors and former non-
employee directors who were covered by the plan as of such date. No person who
becomes a non-employee member of the Board of Directors after June 10, 1991
will be eligible for retirement benefits under the Directors' Retirement Plan.
As amended, the Directors' Retirement Plan provides that any non-employee
director elected to the Board of Directors in connection with the 1989 Merger
or at any time thereafter prior to June 10, 1991 who retires from the Board of
Directors with at least five years of service as a non-employee director of WTI
(or Old WTI or certain other predecessor companies) is eligible for an annual
retirement benefit for the remainder of the director's lifetime equal to 50% of
the director's fee in effect at the director's retirement. The annual
retirement benefit will be increased by 10% of such fee for each additional
year of eligible service, up to 100% of such fee for 10 or more years of
service as a non-employee director or for directors who retire at age 72, the
mandatory retirement age for directors. The benefit payable by WTI to a retired
non-employee director will be reduced by the amount of any retirement benefit
payable to such director under the Retirement Plan for Non-Employee Directors
of Old WTI or certain other predecessor companies, but in no event below the
amount that would be payable by taking into account only service as a non-
employee director of WTI.

Stock Option Plan for Non-Employee Directors

The 1991 Stock Option Plan for Non-Employee Directors (the "Directors Plan")
covers 300,000 shares of WTI's common stock. Each director of WTI who is
neither an officer nor full-time employee of WTI or any of its subsidiaries and
who is neither an officer, employee or director of WMX or any of its
subsidiaries, other than WTI and WTI's subsidiaries, upon election or
appointment to the Board of Directors, is granted an option under the Directors
Plan to purchase a total of 15,000 shares of WTI's common stock at the fair
market value (as defined in the Directors Plan) of the stock of WTI 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 WTI'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 WTI's
common stock receive other securities, or any other relevant change in the
capitalization of WTI, 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 WTI for any reason other than death,

45
<PAGE>

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 after retirement by his heirs, legatees or legal representative) at any
time during its term within three months after the date of retirement, but only
to the extent it was exercisable on the date of retirement.

Compensation Committee Interlocks and Insider Participation

At various times during 1993, Messrs. Buntrock (Chairman), Montrone and Daley
served as members of the Compensation Committee of WTI's Board of Directors.

Mr. Montrone served as Managing Director-Chairman of the Board and Chief
Executive Officer of WTI from September 1987 until November 1990, and as Vice
Chairman of the Board of WTI from November 1990 to June 1991. On March 22,
1990, WTI entered into a Lease Agreement with Exeter Oak Realty Company, Ltd.
("Exeter Oak"), under which WTI leased approximately 78,000 square feet in an
office building located in Hampton, New Hampshire. Prior to this time the
building was leased by Exeter Oak to an unrelated third party upon
substantially similar financial terms. Exeter Oak is 50%-owned by Mr. Montrone.
The lease was considered and approved by a Special Committee of the Board of
Directors of WTI, composed solely of disinterested directors. The lease, which
is a net lease, provides for an initial term of eight years, commencing on
April 1, 1990, at a flat annual rental of $1.8 million, which is not subject to
escalation. WTI has an option to extend the lease for two successive five-year
periods, in each case at the same $1.8 million annual rental. In addition, WTI
has an option under the lease to purchase the building, exercisable at the end
of the fourth, eighth, thirteenth and eighteenth year of the lease. The first
such option period commenced on February 1, 1994 and was scheduled to end on
March 31, 1994. Exeter Oak agreed to extend the term of the option period
through May 1994 in order to allow WTI to evaluate whether to purchase the
building. Under the lease, WTI may purchase the building by giving notice of
its intention to exercise its option in which case the purchase price will be
the fair market value of the building and surrounding grounds at the time such
option was exercised, as determined by independent appraisal. The Company is
currently evaluating whether to exercise its option to acquire the building,
but expects to give notice of its intention to do so prior to the end of the
option period.

In connection with the separation of WTI's businesses in the Old Henley
Distribution, WTI entered into a number of agreements with KREG for the purpose
of defining their ongoing relationship and providing for an orderly transition
following such transaction. Certain of the rights and obligations of KREG under
such agreements were subsequently assigned to, and assumed by, Henley. Included
among these arrangements was a Transition Agreement, subsequently amended by
the Modification Agreement (described under the caption "Certain Transactions
and Other Matters--Transactions between WTI and WMX--Modification Agreement"),
pursuant to which Henley agreed to provide WTI with certain corporate support
services until December 31, 1992 in return for an annual payment of $500,000.
In addition, WTI agreed to pay Mr. Montrone and two other former executive
officers of WTI who were also executive officers of Henley annual base
compensation of $500,000 in the aggregate for services rendered to WTI.
Effective December 31, 1991, the corporate support and management services and
compensation provisions of the Transition Agreement were terminated, thereby
eliminating WTI's obligation to make further payments. In connection with the
foregoing amendments, WTI agreed to reduce by $500,000 Henley's obligation (now
assumed by Abex in connection with the recapitalization described under the
caption "Management's Discussion and Analysis of Results of Operations and
Financial Condition--Liquidity and Capital Resources") to reimburse WTI under
the Transition Agreement for the deductible portion of certain pre-1986
insurance claims.

Mr. Daley is a partner in the law firm of Mayer, Brown & Platt, the services
of which the Company has utilized and anticipates that it will continue to
utilize. Mr. Rooney, WTI's Chairman and Chief Executive Officer, is a member of
the Board of Directors of WMX. Mr. Buntrock is the Chairman of the Board and

46
<PAGE>

Chief Executive Officer of WMX. In 1991, 1992 and 1993, WTI was paid
approximately $19 million, $76 million and $32.4 million for goods and services
provided to WMX and its subsidiaries (other than the Company and its
subsidiaries). The various transactions between WTI and WMX and their
respective subsidiaries are described under the caption "Certain Transactions
and Other Matters--Transactions Between WTI and WMX."

PRINCIPAL STOCKHOLDER

The following table sets forth, as of March 31, 1994, information concerning
ownership of shares of Common Stock by WMX. Except as set forth below,
management knows of no person who, as of March 31, 1994, owned more than 5% of
WTI's outstanding capital stock.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
TITLE OF NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS
- ------------ ------------------------- -------------------- -------
<S> <C> <C> <C>
Common Stock WMX Technologies, Inc. 104,621,810 55.4%
3003 Butterfield Road
Oak Brook, Illinois 60521
</TABLE>
- --------

(1) WMX has sole voting and investment power over 99,796,086 shares. WMX owns
approximately 79% of the outstanding common stock of CWM and, therefore,
WMX may be deemed to share voting and investment power with CWM over
1,025,724 shares owned by CWM. WMX disclaims any beneficial ownership of
the shares owned by CWM. WMX shares voting and investment power with a
wholly-owned subsidiary of WMX over an additional 3,800,000 shares. WTI and
WMX have entered into various agreements relating to certain restrictions
on disposition by WMX of Common Stock owned by WMX, WMX's right to purchase
shares of Common Stock, and registration rights (both demand and
participation). Additional information regarding the relationships between
WTI and WMX is set forth below under the caption "Certain Transactions and
Other Matters--Transactions Between WTI and WMX."

(2) Messrs. Buntrock and Rooney may be deemed to beneficially own the shares of
Common Stock beneficially owned by WMX and shown in the table above because
each such person may be deemed to be an affiliate of WMX. Each such person
disclaims any beneficial ownership of such shares.

CERTAIN TRANSACTIONS AND OTHER MATTERS

TRANSACTIONS BETWEEN WTI AND WMX

WTI and certain of its subsidiaries are parties to agreements with WMX and
certain of its subsidiaries which, among other things, govern the ongoing
relationships between the various members of the WMX family of companies. A
number of such agreements, some of which are described below, were entered into
in connection with the 1988 Transaction, in which WMI (then known as Waste
Management of North America, Inc.) acquired a 22% interest in WTI, and the
subsequent 1990 Merger which resulted in WMX acquiring ownership of a majority
of WTI's Common Stock. A number of additional agreements were entered into in
connection with WTI's acquisition of an equity interest in WM International in
1991 and the formation of Rust in January 1993, each of which transactions is
described below.

Due to the complexity of the various relationships between WTI and WMX
(including their respective subsidiaries), there can be no assurance that each
of such agreements, or the transactions provided for therein, considered
separately, has been or will be effected on terms no less favorable to WTI than
could have been obtained from unaffiliated third parties. It has, however, been
the intention of both WTI and WMX that such agreements and transactions, taken
as a whole, should accommodate their respective interests in a manner that is
fair to all parties, while continuing certain mutually beneficial joint
arrangements. Additional

47
<PAGE>

or modified arrangements and transactions may be entered into by WTI, WMX and
their respective subsidiaries. While any such future arrangements and
transactions are expected to be determined through negotiation between them,
there can be no assurance that conflicts of interest will not occur. The
Company intends to seek the approval of its independent directors for any
agreement which management or any independent director of the Company believes
to be of material importance to the Company and to involve a significant
conflict of interest with WMX and its affiliated companies.

Land Option Agreement

Pursuant to a Land Option Agreement entered into at the time of the 1988
Transaction, Resco, as the successor by merger to Old WTI, was granted an
exclusive option (the "Land Option") to purchase, lease or sublease parcels of
real estate at or adjacent to landfill facilities located in the United States
or Canada owned or leased by WMI or its affiliates or subsidiaries, for the
purpose of constructing, financing and operating trash-to-energy facilities at
such sites, subject to certain restrictions and limited rights of WMI to delay
the exercise of the Land Option. In June 1992, the Land Option Agreement was
amended to expand the potential uses for option parcels to include sludge
management and organic waste composting facilities and, should WTI exercise its
option under the Medical Waste Option Agreement described below, medical waste
incineration and autoclave facilities. The Land Option Agreement has an initial
term of 10 years, subject to Resco's right to extend the term an additional 15
years upon payment of $10 million to WMI prior to the expiration of the initial
term. The per-acre purchase price of any parcel purchased pursuant to the Land
Option Agreement will be equal to the greater of (i) $40,000, as adjusted for
inflation, and (ii) the book value per acre on the books of WMI for such
parcel. If Resco elects to lease or sublease a parcel, and the parties are
unable to agree on a fair market rental for the parcel, the rent payable under
the lease or sublease will be a percentage (based upon a market rate of return)
of the purchase price of such parcel, as calculated in the manner described
above. The Company is currently constructing a trash-to-energy facility on a
parcel of property in Falls Township, Pennsylvania acquired from WMI in 1988
under the Land Option Agreement.

Second Amended and Restated Airspace Dedication Agreement

Pursuant to the original Airspace Dedication Agreement (the "ADA") entered
into in connection with the 1988 Transaction, WMI agreed to dedicate airspace
at landfill sites owned, leased or operated by subsidiaries or affiliates of
WMI (a "Disposal Site") for the disposal of ash residue ("Ash Residue")
generated at or from facilities owned or operated by Resco. In June 1992, WMI
and Resco entered into an Amended and Restated Airspace Dedication Agreement
which expanded the types of waste covered by the ADA to include non-hazardous
biosolids and by-pass waste from facilities owned or operated by Resco ("Other
Waste"). In addition, the definition of Ash Residue was expanded to include ash
residue from medical waste incineration facilities in the event WTI exercises
its right to acquire WMI's medical waste business pursuant to the Medical Waste
Option Agreement described below. In December 1992, the agreement was again
amended and restated in connection with the formation of Rust, described below
under the "Rust Transaction," to expand the definition of Other Waste to
include special wastes removed from third-party sites being remediated by Resco
or any of its affiliates. The Second Amended and Restated Airspace Dedication
Agreement (the "Second Amended and Restated ADA") was executed in connection
with the assignment by Resco to Rust of $30 million of disposal credits.

Under the Second Amended and Restated ADA, Resco may reserve dedicated
airspace at any one or more Disposal Sites for a term ending August 12, 2008,
subject to extension in certain circumstances involving an event of force
majeure. Such reservations of airspace must be at Disposal Sites properly
permitted to dispose of the type of waste proposed for disposal, and may not
exceed a total of 35% of the airspace available for the type of waste proposed
for disposal at any such Disposal Site. The price-per-ton that will be charged
Resco by WMI to dispose of waste covered by the Second Amended and Restated ADA
at any Disposal Site will generally be not greater than the most favorable per
ton price charged by the Disposal Site to customers other than Resco for the
acceptance and disposal of similar quantities and types of waste on similar
terms

48
<PAGE>

and conditions excluding, however, charges to disposal customers who pay a
premium for long-term guaranteed waste disposal. Under the original ADA, WMI
granted Resco disposal credits totalling $70 million ("Disposal Credits"), to
be applied against the aggregate cost of disposing of Ash Residue at the rate
of 20% of the applicable disposal price described above. The availability of
the Disposal Credits was extended to cover all waste eligible for disposal
under the Second Amended and Restated ADA. As amended and restated, the ADA
also provides for Disposal Credits to be applied against disposal fees paid by
Resco and its subsidiaries under separately negotiated disposal arrangements
with WMI, such as the arrangement described below under "Disposal Agreement".
In 1992 and 1993, Resco paid WMI $5.9 million and $8.7 million, respectively,
for disposal of waste pursuant to the Second Amended and Restated ADA, and used
$1.5 million and $1.9 million, respectively, in Disposal Credits, all of which
related to the Disposal Agreement described below. No waste eligible for the
Disposal Credit was disposed by Resco with WMI prior to 1992. On January 1,
1993, as a part of the consideration paid by WTI in the transaction described
below under the "Rust Transaction," Resco transferred $30 million in unused
Disposal Credits to Rust. The transfer of Disposal Credits was made pursuant to
a provision of the ADA allowing Resco to sell all or any part of the unused
portion of the Disposal Credits to any third party, subject to WMI's right of
first refusal with respect to each such sale.

Disposal Agreement

In 1989, Waste Management Inc. of Florida, a subsidiary of WMI, entered into
a Disposal Agreement with a Resco subsidiary for the disposal of ash residue
and bypass waste from the 2,250 ton-per-day trash-to-energy facility owned and
operated by such subsidiary in Broward County, Florida (the "North Broward
Project"). The disposal fee for ash residue, established at $30 per ton in
1990, will be escalated at a rate of not less than 5% per year. The disposal
fee was $32, $34 and $41 per ton of ash residue in 1991, 1992 and 1993,
respectively. For disposal of bypass waste, the North Broward Project will be
charged the same rates as other users of the landfill. During 1991, the year in
which the North Broward Project began test operations, WTI paid approximately
$2.3 million in ash disposal fees to WMI. Pursuant to the Second Amended and
Restated ADA, described above, the amount paid by the North Broward Project for
disposal of ash residue and bypass waste since June 1, 1992 has been reduced by
Disposal Credits available thereunder. During 1992 and 1993, the North Broward
Project paid approximately $5.9 million and $8.7 million, respectively, in ash
disposal fees to WMI, net of Disposal Credits.

Development Agreement

Resco and WMI are parties to a Development Agreement pursuant to which WMI is
obligated to make payments to Resco to cover development costs (the
"Development Payments") incurred prior to August 12, 1994 with respect to
certain development projects undertaken by Resco. In June 1992, the Development
Agreement was amended to extend the term of the agreement to August 12, 1994
(the "Termination Date"). The 1992 amendment also allowed for the carry-forward
from year-to-year of any unused portion of WMI's payment obligation and
expanded the range of development projects for which Development Payments could
be charged by WTI to include, in addition to trash-to-energy facilities (as
originally provided), water and wastewater treatment facilities, biosolids
treatment facilities, composting facilities and recycling or reclamation
facilities developed by Resco (the "Proposed Facilities"). The terms of the
Development Agreement provide that the aggregate amount of Development Payments
will not exceed $46 million. In addition, Resco is obligated to pay WMI,
promptly after obtaining an equivalent amount of construction financing for any
Proposed Facility as to which Resco has applied any Development Payments, a
success fee in an amount equal to 112% of the aggregate amount of the
Development Payments paid by WMI in respect of such Proposed Facility. During
1991 and 1993, WMI was charged approximately $10 million and $6.9 million,
respectively, under the Development Agreement. During 1992, Resco paid WMI a
success fee in the amount of $5.2 million in respect of the trash-to-energy
facility currently being constructed by a Resco subsidiary in Falls Township,
Pennsylvania, all in accordance with the terms of the Development Agreement.

49
<PAGE>

Restated Funding Agreement

Pursuant to a Funding Agreement between WMX and Resco, WMX provided funding
support for the North Broward Project, and also agreed for a term of 20 years
following the 1988 Transaction to enter into funding agreements obligating WMX,
subject to certain conditions, to provide funding upon the occurrence of
certain contingencies with respect to future trash-to-energy projects developed
by Resco. WMX's obligation under this agreement for future projects was
replaced in connection with the 1990 Merger by the obligations under the
Restated Funding Agreement. See "Business of the Company--Financing
Capabilities and Funding Support Agreements--Restated Funding Agreement."

Medical Waste Option Agreement

In connection with the 1990 Merger, a Medical Waste Option Agreement was
entered into between WMI and WTI which provides, among other things, that
during the period when WTI's option referred to below is exercisable, WMI will
continue to own, operate and develop all medical waste incineration facilities
and autoclave projects owned, operated or under development by WMI
(individually a "WMI Medical Facility" and collectively the "WMI Medical
Facilities") prior to the 1990 Merger. The Medical Waste Option Agreement
grants WTI the option to purchase the WMI Medical Facilities and all medical
waste collection and transportation businesses and related assets operated as
an adjunct to any specific WMI Medical Facility. WTI's option became
exercisable on January 1, 1991 and was scheduled to expire on December 31,
1992. The expiration date of the Medical Waste Option Agreement was extended by
five years pursuant to an amendment dated June 1, 1992. The extension was
agreed upon following WTI's notification to WMI that, based upon an independent
evaluation of the medical waste business conducted at WTI's request by A.D.
Little & Co., WTI did not intend to exercise its option to purchase the WMI
Medical Facilities.

The purchase price payable upon exercise of the option will equal 85% of the
then current fair market value of the WMI Medical Facilities. In the event WTI
does not exercise its option prior to December 31, 1997, WMI will then
immediately have an option to purchase, for cash, the stand-alone medical waste
disposal facilities and medical waste collection and transportation services of
WTI, at a cost of 85% of their then current fair market value. WMI's option
will expire on the first anniversary of the initial date on which such option
becomes exercisable. WTI does not currently own any such facilities or provide
such collection and transportation services. In the event WMI or WTI exercises
its acquisition option, the other party will not compete with the medical waste
disposal business of the exercising party, subject to certain exceptions, so
long as both WMI and WTI remain majority-owned subsidiaries of WMX. If neither
WMI nor WTI exercises its option, each shall be free to pursue the medical
waste incineration, collection, transportation and autoclave business, and WTI
may pursue the medical waste collection and transportation business in
connection with medical waste incineration or autoclave facilities owned or
operated by it.

Medical Waste Operating and Maintenance Agreements

At the request of WMI, and in recognition of WTI's significant experience in
operating and maintaining incineration facilities, WMI and a subsidiary of WTI
entered into a Management Services Contract in June 1991 related to the WMI
Medical Facilities. The contract, which was originally to expire on December
31, 1991, was extended by mutual agreement to December 31, 1992, on which date
it expired by its terms. Under the Management Services Contract, WTI agreed to
perform, through a subsidiary, a comprehensive review and analysis of nine WMI
Medical Facilities and develop a plan detailing operational and maintenance
recommendations for each such facility. In return for providing the review and
analysis, WTI was reimbursed for all out-of-pocket expenses incurred in the
performance of its duties. In addition, WMI reimbursed WTI for the direct labor
costs of its personnel involved in providing services, plus an additional
percentage to cover payroll taxes, employee benefits and overhead. WTI charged
WMI approximately $219,000 and $1,133,000 in connection with the services
performed under the Management Services Contract in 1991 and 1992,
respectively.

50
<PAGE>

The Management Services Contract contemplated that, unless and until WTI
exercised its option to acquire the WMI Medical Facilities, WMI and WTI would
negotiate mutually acceptable Operation and Maintenance Agreements pursuant to
which WTI would assume day-to-day managerial control of certain facilities
covered under the Management Services Contract, with a long-term goal of
implementing WTI's operating systems and controls at such facilities. During
1992, WMI and WTI negotiated five such Operation and Maintenance Agreements for
WMI Medical Facilities, two of which were terminated on December 31, 1992 and
three of which were terminated during 1993. During 1992 and 1993, WTI charged
WMI approximately $1.1 million and $531,000, respectively, in connection with
the services performed under the Operation and Maintenance Agreements. Such
fees were based on reimbursement of all out-of-pocket expenses incurred, all
direct labor costs of WTI personnel operating the facilities plus a fee equal
to 5% of budgeted costs.

On January 1, 1993, WTI and WMI executed a new Technical Support Services
Agreement pursuant to which WTI agreed to provide technical engineering
assistance to all of the WMI Medical Facilities on an as-needed basis. WTI will
be reimbursed for all direct and indirect costs in providing such services.
During 1993, WTI received approximately $177,000 in connection with services
performed under the Technical Support Services Agreement.

Intellectual Property Licensing Agreement

In connection with the 1990 Merger, an Intellectual Property Licensing
Agreement was entered into among WTI, WM International and WMI. The terms of
the Intellectual Property Licensing Agreement are described under the caption
"Business of the Company--Patents, Trademarks, Licenses and Other Agreements."

Master Intercorporate Agreement

In connection with the 1990 Merger, a Master Intercorporate Agreement among
WMX, CWM and WTI was entered into which provides, among other things, that WTI
invest its excess cash in WMX obligations (so long as such investments would
not be a material factor in affecting the ability of WTI to obtain or maintain
an "A" long-term debt rating) having maturities selected by WTI of up to four
years. In 1991, the Company's Board of Directors authorized WTI to lend excess
funds to WMX under the terms of the Master Intercorporate Agreement for terms
of up to ten years. Under the Master Intercorporate Agreement, WMX was required
to fund WTI's working capital requirements on an unsecured basis (but with
rights of set-off) with the maturity of any advance to be selected by WTI (not
to exceed 270 days), and with the aggregate outstanding advances not to exceed
at any time the amount of WTI excess cash then invested with WMX (the
"Compensating Balance Facility"), plus (until September 1995 and to the extent
not prohibited by agreements with third parties) $100 million (the "$100
Million Facility"). WMX charged WTI interest on such advances at an interest
rate equal to WMX's then current cost of commercial paper having a term equal
to the maturity for such advance. The Master Intercorporate Agreement was
amended and restated in November 1993 to allow WTI more flexibility in
selecting the maturities of advances made by WMX to WTI. Under the Amended and
Restated Master Incorporate Agreement (the "Amended Intercorporate Agreement"),
WTI may now borrow funds from WMX on open account under both the $100 Million
Facility and the Compensating Balance Facility at floating interest rates that
will match WMX's 30-day commercial paper rate plus WMX's cost of providing
funds. WTI may at its option also borrow funds for fixed terms of up to ten
years under the Compensating Balance Facility (however the maturities of such
borrowings may not extend beyond the date on which WTI's deposits with WMX come
due) and for fixed terms of up to 270 days under the $100 Million Facility. The
interest rate for any fixed or term loan borrowing by WTI will be WMX's total
effective cost for borrowings of a comparable maturity. To the extent that WTI
can demonstrate the availability to it of lower short-term borrowing rates, or
higher rates of return on short-term investments involving risks comparable to
those inherent in investments in short-term debt instruments of WMX, it is
entitled to pay such rates on amounts borrowed from WMX or receive such rates
on amounts invested with WMX, as the case may be. As of December 31, 1991 and
1992, the aggregate amount of WMX obligations

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outstanding (including principal and accrued but unpaid interest) bearing
simple interest at rates between 4.2% and 7.9%, and 3.1% and 7.9%,
respectively, totalled approximately $537 million and $222 million,
respectively. As of December 31, 1993, the net amount of WMX obligations
outstanding to WTI (including principal and accrued but unpaid interest)
bearing simple interest at rates between 3.3% and 7.9% totalled approximately
$413.5 million. The largest amount of such obligations outstanding in 1991,
1992 and 1993 was approximately $570 million, $551 million and $603 million,
respectively. As of December 31, 1991, no amounts were due to WMX from WTI. As
of December 31, 1992 and 1993, approximately $175 million and $398.6 million,
respectively, was due to WMX from WTI bearing simple interest at rates between
3.6% and 4.1% and 3.3% and 3.4%, respectively. The largest amount of such
amounts due to WMX from WTI during 1992 and 1993 was approximately $195 million
and $542 million, respectively.

Under the Amended Intercorporate Agreement, WMX agreed to make available to
WTI various corporate and support services, including, among other things, the
services of WMX's transportation, federal and state government affairs, legal
and environmental audit departments. The Amended Intercorporate Agreement also
requires WMX to make available to WTI the services of WMX's corporate risk
management department for purposes of administering WTI's insurance and risk
management programs. Such corporate support and risk management services are
supplied by WMX on a cost reimbursement basis. WTI paid WMX approximately
$400,000, $500,000 and $1.4 million for these and related services in 1991,
1992 and 1993, respectively.

Pursuant to the Amended Intercorporate Agreement, WMX and CWM designated WTI
as the preferred vendor to WMX and CWM for all engineered products of the types
then being manufactured or assembled by WTI and for air pollution control
systems and equipment provided by WTI. WTI's status as a preferred vendor of
industrial process design, engineering, construction and construction
management services was modified pursuant to the Rust Intercorporate Services
Agreement, described below under the "Rust Transaction." During 1991, 1992 and
1993, WTI charged WMX and its subsidiaries approximately $1.9 million, $63
million and $11.8 million, respectively, for such products and services. The
amounts charged for such services were determined on an arms-length basis and
are believed to approximate the market value thereof.

The Amended Intercorporate Agreement also provides that WMX has the
cumulative, continuing right to purchase from WTI for cash or cash equivalents
such number of shares of WTI capital stock as may be necessary for WMX to
continue to own a majority of WTI's outstanding voting stock. WMX's rights
under this option will expire in the event that such option is exercisable as
of the end of any calendar year and is not exercised by April 30 of the
immediately following year. The purchase price for the shares of WTI capital
stock will be the then current fair market value of such shares. WTI is
required to maintain a sufficient number of shares of authorized but unissued
capital stock, together with any treasury stock, to permit WMX to exercise its
option, and will take such reasonable steps as WMX may request to cause such
shares to be listed upon issuance and to be subject to the registration rights
currently held by WMX with respect to shares of WTI stock already held by it,
as described below under "Modification Agreement."

The Amended Intercorporate Agreement will terminate at the time of the
termination of WMX's option to maintain WTI as a majority-owned subsidiary of
WMX.

Modification Agreement

Pursuant to the terms of a Modification Agreement by and among WTI, Bolsa
Chica (then known as The Henley Group, Inc.), WMI and Resco, WMX (through an
assignment from WMI of its rights under the Modification Agreement) had an
option, exercisable in the event that WTI issued new shares (including pursuant
to employee benefit plans), to purchase from WTI, at fair market value, at any
time within one year after receipt of notice of such issuance, newly issued
shares in an amount required to preserve an approximately 23% equity position
in WTI after giving effect to such issuances to third parties. Such option
expired on June 30, 1992.

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The Modification Agreement also affords WMX registration rights with respect
to the shares of Common Stock held by it. The registration rights so granted
include up to three demand registrations, plus additional "piggy-back"
registrations, and extend until August 24, 1999. WMX must pay its own counsel
fees in respect of the registration, but is otherwise required to bear only its
pro rata share of underwriting discounts, commissions and expenses. In
addition, until August 24, 1999, WMX may not transfer or otherwise dispose of
certain of the shares of WTI common stock held by it, except to a wholly-owned
subsidiary or in certain permitted transactions (in which event WMX must first
comply with certain rights of first refusal granted to WTI).

WM International Agreements

In connection with the 1990 Merger, an International Development Agreement
was entered into among WMX, WTI, CWM and WMII, which, among other things,
granted WTI the right to acquire an equity interest at a discount from fair
market value in WMX's international waste services operations. The
International Development Agreement was amended and restated in August 1991 in
connection with the acquisition by each of WTI and CWM of a 15% interest in a
Dutch subsidiary of WM International known as Waste Management Europe N.V.
("WME") for a purchase price of $168,974,000. The purchase price was based upon
a 15% discount from 15% of a valuation analysis of WME prepared by an
independent investment banking firm and was paid in WTI's case by delivery to
WME of notes of a WME affiliate acquired from WMI by WTI in exchange for
issuance to WMI of 5,997,303 shares of Common Stock. As a result of a corporate
restructuring completed in March 1992, and concurrently with the second
amendment and restatement of the International Development Agreement, each of
WTI and CWM acquired a 15% equity interest in WM International which now owns
substantially all of WMI's waste services operations located outside of North
America. As a part of such restructuring, the stockholders of WM International
contributed, on a pro rata basis, an additional $200 million to the capital of
WM International. WTI's share of such contribution was $30 million. WTI's
initial investment in WM International's Dutch subsidiary and the additional
investment of $30 million in WM International were approved by directors of WTI
who were not otherwise affiliated with WMX. On April 14, 1992, WM International
completed a public offering of 20% of its ordinary shares outstanding after
such offering, and WTI therefore currently owns a 12% equity interest in WM
International. WM International has succeeded to certain rights and obligations
of WMII under certain agreements described below, and references below to WM
International include WMII and other predecessors or affiliates of WM
International.

The International Development Agreement was amended and restated again in
December 1992 in connection with the Rust Transaction, described below,
primarily to provide for the transfer, from CWM to Rust, of CWM's 12% equity
interest in WM International. Pursuant to the International Development
Agreement, as amended, WTI, WMX and Rust have agreed to vote their WM
International shares so that one designee of WTI (or such greater number as
shall equal the total number of directors multiplied by the percentage of
outstanding WM International shares held by WTI, reduced to the nearest whole
number) shall be elected to the Board of Directors of WM International, so long
as WTI continues to own or has the right to acquire at least 10% of WM
International's outstanding shares (Mr. Rooney has been designated by WTI as
its designee). This agreement also grants WTI an option to maintain beneficial
ownership of WM International's outstanding shares at a level having not less
than 10% of the voting power of outstanding WM International securities.
Pursuant to this agreement, WTI granted to WMX certain rights of first refusal
with respect to its WM International shares, WMX granted to WTI certain
participation rights with respect to a disposition of WM International shares
by WMX, and WM International granted to WTI rights to participation and demand
registrations under the 1933 Act and rights to have WM International facilitate
sales in offerings made outside of the United States. Rust has similar rights
in respect of its equity interest in WM International.

At the time of WM International's initial public offering, WTI, CWM, WMX,
WMII and WM International entered into an International Business Opportunities
Agreement, which includes certain terms

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previously contained in the International Development Agreement and the Amended
Intercorporate Agreement discussed above. See "Business of the Company--
Competition" for a discussion of the International Business Opportunities
Agreement.

WTI, CWM, Rust, WMX and WM International are also parties to a First Amended
and Restated Master License Agreement, which is described under the caption
"Business of the Company--Patents, Trademarks, Licenses and Other Agreements."

Rust Transaction

As stated above under the caption "The Company--Organization of Rust
International Inc.," in December 1992, an Organizational Agreement was entered
into among WTI, CWM and Brand pursuant to which WTI and CWM agreed to organize
Rust and to acquire newly issued shares of Rust in exchange for contributing
certain businesses to Rust (the "Rust Transaction"). On January 1, 1993,
pursuant to the Organizational Agreement, WTI contributed to Rust, in exchange
for 33,216,060 shares of Rust common stock, or approximately 41.6% of the
outstanding capital stock of Rust: (i) 100% of the outstanding common stock of
its two principal engineering, environmental consulting and construction
businesses; (ii) 100% of the common stock of its London-based international
engineering and consulting business; (iii) Disposal Credits in the aggregate
amount of $30 million pursuant to the Second Amended and Restated ADA; and (iv)
an aggregate of $68 million in cash, notes receivable and pre-funded
acquisition costs. At the same time, CWM contributed to Rust, in exchange for
46,682,031 shares of Rust common stock, or approximately 58.4% of the
outstanding capital stock of Rust: (i) 100% of its ownership in Brand, which
amounted to 12,575,870 shares, or 56.2% of the outstanding common stock of
Brand; (ii) 100% of the outstanding capital stock of CWM's hazardous substance
remediation services business; (iii) beneficial ownership of all WM
International ordinary shares owned by CWM, constituting approximately 12% of
the outstanding ordinary shares of WM International, together with all of CWM's
rights attendant to such shares; and (iv) an aggregate of $141 million in
principal amount of indebtedness owed by Brand to CWM. In addition, WTI, CWM,
Rust and various of their affiliates entered into various ancillary agreements
and the parties agreed to cause Rust to repay the outstanding indebtedness owed
to CWM by one of the contributed businesses in the aggregate principal amount
of $75 million.

On January 1, 1993, Brand entered into a definitive merger agreement with
Rust pursuant to which Brand was to be merged into a subsidiary of Rust (the
"Brand Merger"), and shares of Brand (other than those owned by Rust) would be
converted, on a one-for-one basis, into shares of Rust, or, for those Brand
stockholders so electing, the right to receive $18.75 per Brand share in cash.
On May 7, 1993, the Brand Merger was consummated, and Rust is now owned
approximately 40% by WTI, 56% by CWM, and 4% by public stockholders. The
consideration received in the Rust Transaction by each of WTI, CWM and the
public stockholders of Brand was determined by arms-length negotiations among
Special Committees composed of independent members of the respective Boards of
Directors of WTI, CWM and Brand, based upon valuations prepared for the Special
Committees by independent investment banking firms retained by each such
committee.

As a part of the Rust Transaction, WTI, Rust and CWM entered into a Rust
Shareholders' and Registration Rights Agreement (the "Rust Shareholders'
Agreement") pursuant to which WTI and CWM each have certain demand and
participation registration rights and rights of first refusal with respect to
Rust common stock. WTI and CWM also have the right to purchase from Rust such
number of shares of Rust common stock as may be necessary to maintain
beneficial ownership of 22% and 51%, respectively, of the outstanding capital
stock of Rust until the earlier of (a) January 1, 2003, (b) April 30 in the
year following the year in which such option becomes exercisable, unless prior
to such April 30 WTI or CWM, as the case may be, acquires a sufficient number
of shares of Rust common stock to have at least 20% or 50%, respectively, of
the voting power, and (c) the date on which WTI's or CWM's, as the case may be,
ownership becomes less than 22% or 51%, respectively, of the outstanding shares
of Rust as a direct result of transfers by WTI or CWM, as the case may be
(other than to a subsidiary of WTI or CWM). For so long as WTI or

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its subsidiaries own or have the option to acquire at least 20% of the issued
and outstanding shares of Rust common stock, WTI will have the right to
nominate two directors of Rust. Under the Rust Shareholders' Agreement, CWM has
agreed to vote its Rust shares so that WTI's designees shall be elected to the
Board of Directors of Rust (Messrs. Rooney and Koenig have been so designated
by WTI).

WTI, WMX, CWM and Rust have also entered into the Rust Intercorporate
Services Agreement pursuant to which WMX has committed to loan to Rust up to
$350 million, and to provide Rust (at Rust's expense) with all appropriate
insurance coverages and bid, performance and other surety bonds to the extent
reasonably available, all on terms substantially similar to WMX's arrangement
with WTI as described above under the "Master Intercorporate Agreement." Under
the Rust Intercorporate Services Agreement, Rust has also agreed to provide WTI
with certain administrative and benefit services previously managed by one of
the subsidiaries contributed to Rust. Such services are provided on a fully-
allocated cost basis. WMX, WTI and CWM have also agreed that Rust will be the
preferred vendor of architectural, design, engineering, construction and
construction management services (including related procurement services),
environmental consulting and engineering services, hazardous substance
remediation services, and industrial maintenance and other construction
services of the type generally offered by Rust and its subsidiaries to third
parties. During 1993, WTI paid Rust approximately $144.7 million for such
services. The Rust Intercorporate Services Agreement will terminate on December
31, 1997 unless earlier terminated by WMX following the occurrence of certain
events of default.

Also pursuant to the Organizational Agreement, WTI entered into the various
amended and restated agreements described above under "WM International
Agreements." In addition, the ADA between WMI and Resco was amended in
connection with the Rust Transaction as more fully described above under
"Second Amended and Restated Airspace Dedication Agreement."

Environmental Engineering Acquisitions

In January 1992, WTI purchased from CWM all of the outstanding common stock
of Sirrine Environmental Consultants, Inc. ("Sirrine"). The purchase price of
$40 million was based upon a valuation analysis prepared by an independent
investment banking firm and was paid by delivery of 1,362,862 shares of Common
Stock. CWM acquired Sirrine in March 1990 for $8,671,891. At the time of the
sale to WTI, CWM's investment in Sirrine was $18,008,634. In connection with
the transaction, CWM and WTI entered into an Engineering and Consulting
Services Agreement pursuant to which CWM agreed to purchase, at standard rates,
services from WTI with a value of $40 million over the five-year period ending
December 31, 1996. This agreement was terminated in connection with the
contribution of WTI's environmental engineering business to Rust, described
above under the "Rust Transaction". The acquisition of Sirrine was approved by
the directors of WTI who are not otherwise affiliated with WMX. Also in January
1992, WTI acquired the assets and business of the landfill design group of WMI
for $6,308,962, which represented the net book value of such assets. All of
such assets have been transferred to Rust in connection with the Rust
Transaction, including WTI's agreement with WMI under which WMI designated a
WTI subsidiary as its preferred vendor of environmental engineering and
consulting services.

Other Payments

WTI provides services to, and purchases services from, WMX and its affiliated
companies in the ordinary course of business at market rates. During 1991, 1992
and 1993, WTI made payments of (i) approximately $1.9 million, $1.8 million and
$1.5 million, respectively, to WMI for waste transportation services and (ii)
approximately $238,000, $497,000 and $168,000, respectively, to WMX for office
space rental. During 1991, 1992 and 1993 WMI delivered waste for disposal to
certain WTI facilities pursuant to various contractual arrangements, for which
WMI paid disposal fees aggregating approximately $8.2 million, $13.6 million
and $14.7 million, respectively.

In March 1993, WMX agreed to provide a guarantee in respect of WTI's
outstanding indebtedness at one of its trash-to-energy facilities. As
consideration for WMX's credit support, the Company pays WMX an

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annual fee equal to 0.25% of the principal amount of such outstanding
indebtedness. In 1993, WTI paid WMX approximately $135,160 for such credit
support.

OTHER TRANSACTIONS

Stock Option Plan Loans

When an option is exercised by an optionee under the Company's 1992 Stock
Option Plan or the Directors Plan 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 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 the
purchase of stock upon exercise of such options, and to assure itself of the
deductions, the Company has 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 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 Company had one such loan in excess of
$60,000 outstanding to the directors and executive officers of the Company
since January 1, 1993, which was to Mr. Flynn for $176,633, all of which was
repaid to the Company on April 15, 1994. The Company also 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
amounts of such loans from the Company in excess of $60,000 which were
outstanding to the directors and executive officers of the Company since
January 1, 1993 were as follows: Mr. Daley--$85,500; and Mr. Flynn--$593,518.
All of such loans have been repaid, and no such loans were outstanding as of
March 15, 1994.

Equity Purchase Program

Prior to December 1992, the Company maintained an Equity Purchase Program
(the "Program") which was amended by the Board of Directors effective December
12, 1991 to provide that the Stock Option Committee of the Board of Directors
could make no new offers to sell shares of Common Stock (the "Program Shares")
under the Program. Prior to such amendment, certain key executives of WTI were
offered the opportunity to purchase, on a highly leveraged basis, a substantial
equity interest in WTI. The per share purchase price (the "Purchase Price") for
the Program Shares offered to participants selected by the Stock Option
Committee under the Program was determined based upon the average of the fair
market value of the Program Shares for each trading day during a period of 30
trading days preceding the date of an offer. No shares have been awarded under
the Program since prior to 1989.

A participant was required to pay the full Purchase Price for the Program
Shares in cash at the time of the issuance. The Program provided that prior to
the participant's purchase of Program Shares, WTI would loan to the participant
an amount equal to 90% of the total Purchase Price for the Program Shares
against delivery to WTI of a promissory note (the "Note") with a principal
amount equal to the amount of such loan. The cash received from WTI in
connection with such loan, together with the participant's own cash investment
of 10% of the Purchase Price, was used to purchase the Program Shares.
Participants were free to finance their 10% cash investment, but WTI did not
guarantee or have any obligation with respect to any such financing
arrangements.

As of December 31, 1991, Mr. Kehoe had a nonrecourse loan outstanding under
the Program bearing simple interest at the rate of 8.75% in the amount of
$633,518 (including principal and accrued but unpaid interest). As of December
31, 1992, all Program loans had been repaid.

Hampton Lease Agreement

On March 22, 1990, WTI entered into a Lease Agreement with Exeter Oak, under
which WTI leased approximately 78,000 square feet in its headquarters office
building located in Hampton, New Hampshire.

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Exeter Oak is 50%-owned by Mr. Montrone, a director of WTI. The lease agreement
and WTI's option to purchase the building is more fully described under the
caption "Management--Compensation--Compensation Committee Interlocks and
Insider Participation."

Transition Agreement

In connection with the Old Henley Distribution, WTI entered into a number of
agreements, one of which provided for the payment to Mr. Montrone, a director
and former executive officer of WTI, of an annual base compensation for
services rendered to WTI by Mr. Montrone and certain other former executive
officers. This agreement is more fully described under the caption
"Management--Compensation--Compensation Committee Interlocks and Insider
Participation".

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

Under the WTI Charter, WTI is authorized to issue 550,000,000 shares of
capital stock, of which 500,000,000 may be Common Stock and 50,000,000 may be
shares of preferred stock, par value $1.00 per share (the "WTI Preferred
Stock"). No shares of WTI Preferred Stock are outstanding.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share on all
matters voted on by stockholders, including election of directors by classes
for terms of three years, and except as otherwise required by law or provided
in any resolution adopted by the Board of Directors with respect to any series
of WTI Preferred Stock, the holders of such shares exclusively possess all
voting power. The holders of Common Stock have non-cumulative voting rights.
Subject to any preferential rights of any outstanding series of WTI Preferred
Stock designated by the Board of Directors from time to time, the holders of
Common Stock are entitled to such dividends as may be declared from time to
time by the Board of Directors from the funds legally available therefor, and
upon liquidation are entitled to receive pro rata all assets of the Company
available for distribution to such holders. Mellon Bank N.A. is the transfer
agent and registrar for the Common Stock.

WTI PREFERRED STOCK

The Board of Directors is authorized to provide for the issuance of WTI
Preferred Stock, in one or more series, and, to the extent permitted by the
Delaware General Corporation Law ("DGCL"), to fix for each series such voting
powers, designations, preferences and relative, participating, optional and
other special rights, and such qualifications, limitations or restrictions, as
are stated in a resolution adopted by the Board of Directors providing for the
issuance of such series. The Restated Funding Agreement sets forth the terms of
a series of WTI Preferred Stock that could be issued to WMX.

PREEMPTIVE RIGHTS

No holder of any stock of any class of the Company has any preemptive right
to subscribe to any securities of any kind or class.

CERTAIN CHARTER AND BY-LAW PROVISIONS

Classified Board of Directors

The WTI Charter provides that the Board of Directors is divided into three
classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors is elected each year.

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Number of Directors; Removal; Filling Vacancies

The WTI Charter provides that the number of directors will be fixed from time
to time by the Board of Directors or by the affirmative vote of at least 80% of
the voting power of the then outstanding shares of any class or series of
capital stock of the Company entitled to vote generally in the election of
directors (the "WTI Voting Stock"), voting as a class, and provides that
vacancies shall be filled by the affirmative vote of a majority of directors
then in office.

The WTI Charter and the WTI By-Laws provide that directors may be removed
only for cause and only by the affirmative vote of holders of at least 80% of
the WTI Voting Stock, voting as a class.

No Stockholder Action by Written Consent; Special Meetings

The WTI Charter provides that stockholder action can be taken only at an
annual or special meeting of stockholders, and prohibits stockholder action by
written consent in lieu of a meeting.

The WTI Charter and the WTI By-Laws each provide that, subject to the rights
of holders of any series of WTI Preferred Stock, special meetings of
stockholders can only be called pursuant to a resolution adopted by a majority
of the entire Board of Directors. Stockholders are not permitted to call a
special meeting of stockholders or to require that the Board of Directors call
a special meeting of stockholders.

Advance Notice Provisions for Stockholder Proposals and Stockholder
Nominations of Directors

The WTI By-Laws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors or a
committee thereof, of candidates for election as directors (the "Nomination
Procedure") and with regard to certain matters to be brought before an annual
meeting of stockholders of WTI (the "Business Procedure").

The Business Procedure provides that at an annual meeting, subject to any
other applicable requirements, only such business may be conducted as has been
brought before the meeting by, or at the direction of, the Board of Directors
or by a stockholder who has given timely prior written notice, in proper form,
to the Secretary of the Company of such stockholder's intention to bring such
business before the meeting. In all cases, to be timely, notice must be
received by the Company not less than 30 days nor more than 60 days prior to
the meeting (or if fewer than 40 days' notice or prior public disclosure of the
meeting date is given or made to stockholders, not later than the tenth day
following the day on which such notice was mailed or such public disclosure was
made). Under the Business Procedure, to be in proper form, a notice relating to
the conduct of other business at an annual meeting must contain certain
information about such business and about the stockholder who proposes to bring
such business before the meeting, including a brief description of the business
the stockholder proposes to bring before the meeting, the reasons for
conducting such business at such meeting, the name and address as they appear
on WTI's books of the stockholder proposing such business, the class and number
of shares of the Company beneficially owned by such stockholder, and any
material interest of such stockholder in the business so proposed. If the
Chairman or other officer presiding at a meeting determines that such other
business was not properly brought before such meeting in accordance with the
Business Procedure, such business will not be conducted at such meeting.

The Nomination Procedure provides that only persons who are nominated by, or
by a committee appointed by, the Board of Directors or by a stockholder who has
given timely prior written notice, in proper form, to the Secretary of the
Company prior to the meeting at which directors are to be elected, shall be
eligible for election as directors of WTI. In all cases, to be timely, notice
must be received by the Company not less than 30 days nor more than 60 days
prior to the meeting (or if fewer than 40 days' notice or prior public
disclosure of the meeting date is given or made to stockholders, not later than
the tenth day following the day on which such notice was mailed or such public
disclosure was made). Under the Nomination Procedure, to be in proper form, a
notice to the Company from a stockholder who proposes to nominate a

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person at a meeting for election as a director must contain certain information
about the proposed nominee, including age, business and residence addresses,
principal occupation, the class and number of shares of WTI stock beneficially
owned and such other information as would be required to be included in a proxy
statement soliciting proxies for the election of the proposed nominee, and
certain information about the stockholder proposing to nominate that person.
WTI may, under the Nomination Procedure, require any person nominated by the
Board of Directors to furnish the information that would be required to be set
forth in a stockholder's notice of nomination with respect to such nominee. If
the election inspectors determine that a person was not nominated in accordance
with the Nomination Procedure, such person will not be eligible for election as
a director.

Amendment of Certain Provisions of the WTI Charter and the WTI By-Laws

The WTI Charter and the WTI By-Laws contain provisions requiring the
affirmative vote of the holders of at least 80% of the WTI Voting Stock to
amend certain provisions of the WTI Charter and the WTI By-Laws (including the
provisions relating to the number, term, removal and classification of
directors and the calling of special meetings).

General Anti-Takeover Effects

The foregoing provisions and the approximately 55% ownership position of WMX
may impede or prevent takeovers that in some circumstances might be beneficial
to WTI stockholders. Such provisions and ownership position would not impede or
prohibit most takeovers approved by existing directors, and are designed to
enhance or have the effect of enhancing the ability of the Board of Directors,
and ultimately the stockholders, to negotiate with potential acquirers from the
strongest position. They do, however, have the overall effect of making it
virtually impossible without the approval of WMX to acquire and exercise
control over WTI and to remove incumbent officers and directors, thus providing
such officers and directors with enhanced ability to retain their positions.
Even if WMX ceased to own a majority of the Common Stock, such provisions might
also limit opportunities for stockholder participation in certain types of
transactions even though such transactions might be favored by a majority of
the stockholders.

Liability and Indemnification of Officers and Directors

Section 145 of the DGCL empowers corporations to indemnify, subject to the
standards set forth therein, any person in connection with any action, suit or
proceeding brought or threatened by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
as such with respect to another corporation at the request of such corporation.
The DGCL also provides that corporations may purchase indemnification insurance
on behalf of any such director, officer, employee or agent. Article Fourteenth
of the WTI Charter provides for the indemnification by the Company of each
director, officer, employee or agent of the Company to the full extent
permitted by the DGCL.

Section 102(b)(7) of the DGCL permits Delaware corporations to include in
their certificates of incorporation a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty of care as a director. Article
Fourteenth of the WTI Charter contains provisions which eliminate the personal
liability of the officers and directors of WTI in certain circumstances.

WTI's officers and directors are covered by insurance policies providing them
(and their heirs and other legal representatives) with coverage against certain
liabilities arising from any negligent act, omission or breach of duty claimed
against them solely by reason of their being officers or directors of WTI (or
serving in similar positions with other entities at WTI's request), and
providing coverage for WTI against its obligations to provide indemnification
as required by the above described statute and the WTI Charter.

In connection with the 1990 Merger, WMX agreed to continue the
indemnification of WTI's directors, officers, employees and agents for a period
of not less than six years from the merger date and to cause

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directors' and officers' liability insurance (providing the same coverage, or
other coverage no less favorable, as the policies currently maintained with
respect to WMX's directors and officers) to be maintained for the Company's
directors and officers with respect to matters occurring prior to the merger
date.

EXPERTS

The financial statements included in this Prospectus and the schedules
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen & Co., independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports. Reference is made to said
reports to the Stockholders of the Company, which include an explanatory
paragraph with respect to the change in accounting for income taxes and
postretirement benefits other than pensions, effective January 1, 1992, as
discussed in Note 1 to the Consolidated Financial Statements.

ADDITIONAL INFORMATION

The Company has filed a Registration Statement on Form S-1 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 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.

60
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Wheelabrator Technologies Inc.
Report of Independent Public Accountants................................ F-2
Consolidated Statements of Income for each of the three years in the pe-
riod ended
December 31, 1993...................................................... F-3
Consolidated Balance Sheets as of December 31, 1992 and 1993............ F-4
Consolidated Statements of Cash Flows for each of the three years in the
period ended
December 31, 1993...................................................... F-5
Consolidated Statements of Changes in Stockholders' Equity for each of
the three years in the period ended December 31, 1993.................. F-6
Notes to Consolidated Financial Statements.............................. F-7

Significant Subsidiary
Rust International Inc. and Subsidiaries
Report of Independent Public Accountants................................ F-24
Consolidated Statements of Income for the three years ended December 31,
1993................................................................... F-25
Consolidated Balance Sheets as of December 31, 1992 and 1993............ F-26
Consolidated Statements of Stockholders' Equity for the three years
ended December 31, 1993................................................ F-28
Consolidated Statements of Cash Flows for the three years ended December
31, 1993............................................................... F-29
Notes to Consolidated Financial Statements.............................. F-30
</TABLE>

F-1
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of Wheelabrator Technologies Inc.

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

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wheelabrator Technologies Inc.
and subsidiaries as of December 31, 1992 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.

As explained in Note 1 to the financial statements, effective January 1,
1992, the Company changed its method of accounting for income taxes and
postretirement benefits other than pensions.

Arthur Andersen & Co.

New York, New York
March 17, 1994

F-2
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue.................................... $1,173,449 $1,483,054 $1,142,219
Operating expenses......................... 906,226 1,108,780 792,719
Selling and administrative expenses........ 118,441 148,355 107,276
Interest expense........................... 54,635 75,569 64,484
Interest income............................ (38,818) (34,656) (18,278)
Equity in earnings of affiliates........... (13,501) (15,365) (44,809)
Gains from stock transactions of
affiliates................................ -- (47,000) (7,680)
Gains from sale of foreign equity
investments............................... (47,063) -- --
Other income, net.......................... (7,010) (5,705) (4,530)
---------- ---------- ----------
Income before income taxes and cumulative
effects of accounting changes........... 200,539 253,076 253,037
Income tax provision....................... 74,480 76,694 89,935
---------- ---------- ----------
Income before cumulative effects of
accounting changes...................... 126,059 176,382 163,102
Cumulative effects of accounting changes:
Postretirement benefits, net............. -- (29,010) --
Income taxes............................. -- (13,220) --
---------- ---------- ----------
Net income........................... $ 126,059 $ 134,152 $ 163,102
========== ========== ==========
Weighted average common shares outstanding. 172,400 188,200 188,900
========== ========== ==========
Earnings per common share:
Before cumulative effects of accounting
changes................................. $ 0.73 $ 0.94 $ 0.86
Cumulative effects of accounting changes:
Postretirement benefits, net........... -- (0.16) --
Income taxes........................... -- (0.07) --
---------- ---------- ----------
Net income........................... $ 0.73 $ 0.71 $ 0.86
========== ========== ==========
Dividends declared per common share........ $ -- $ 0.04 $ 0.08
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(000'S OMITTED EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1992 1993
ASSETS ---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 291,271 $ 36,719
Receivables, net.......................................... 247,521 188,241
Costs and earnings in excess of billing................... 80,693 25,712
Other current assets...................................... 91,311 84,684
---------- ----------
Total current assets.................................... 710,796 335,356
Property, plant and equipment, net.......................... 1,495,241 1,653,920
Cost in excess of net assets of acquired businesses......... 226,498 205,886
Investments in affiliates................................... 199,188 561,045
Other assets................................................ 365,350 334,071
---------- ----------
Total assets.......................................... $2,997,073 $3,090,278
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current maturities of long-term project debt.............. $ 37,345 $ 33,754
Accounts payable.......................................... 79,268 70,762
Accrued liabilities....................................... 304,247 197,123
Advance payments on contracts............................. 38,472 28,147
---------- ----------
Total current liabilities............................... 459,332 329,786
---------- ----------
Long-term project debt...................................... 857,625 776,858
---------- ----------
Deferred income taxes....................................... 239,248 292,364
---------- ----------
Deferred income............................................. 101,391 106,562
---------- ----------
Other long-term liabilities................................. 300,134 297,870
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $1.00 per share, none issued or
outstanding.............................................. -- --
Common stock, par value $0.01 per share, 186,473,025
shares outstanding in 1992, 188,820,322 shares
outstanding in 1993...................................... 1,865 1,888
Capital in excess of par value.............................. 758,646 874,580
Cumulative translation adjustment........................... (17,785) (33,670)
Treasury stock, 43,127 shares in 1993, at cost.............. -- (717)
Retained earnings........................................... 296,617 444,757
---------- ----------
Total stockholders' equity.............................. 1,039,343 1,286,838
---------- ----------
Total liabilities and stockholders' equity............ $2,997,073 $3,090,278
========== ==========
</TABLE>

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

F-4
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(000'S OMITTED)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Operating Activities:
Income before cumulative effects of
accounting changes......................... $ 126,059 $ 176,382 $ 163,102
Adjustments to reconcile net income to cash
flows from operating activities:
Depreciation and amortization............. 40,346 67,879 75,323
Deferred taxes............................ 5,020 61,604 61,477
Undistributed earnings of affiliates...... (10,902) (15,365) (44,809)
Gains from sale of foreign equity
investments.............................. (47,063) -- --
Gains from stock transactions of
affiliates............................... -- (47,000) (7,680)
Deferred lease expense.................... (6,540) (10,540) (7,349)
Changes in assets and liabilities, net of
effects of acquired and contributed
businesses:
Receivables, net........................ 13,075 (37,981) (25,283)
Costs and earnings in excess of
billings............................... (2,343) (30,601) (9,174)
Other current assets.................... 3,492 (23,001) (22,870)
Accounts payable........................ (7,913) (7,766) (32,008)
Accrued liabilities..................... (8,294) 12,614 (22,666)
Advance payments on contracts........... (46,617) (31,393) 380
Other long-term liabilities............. 34,847 5,317 23,205
Other, net.................................. (2,457) (4,258) (27,267)
--------- --------- ---------
Net cash provided by operating activities. 90,710 115,891 124,381
--------- --------- ---------
Investing Activities:
Capital expenditures........................ (129,844) (148,025) (291,637)
Sale of property, plant and equipment....... 7,619 756 1,682
Investments held by trustees................ 81,455 18,763 9,917
Cash paid for acquisitions, net of acquired
cash....................................... (86,220) (145,521) (14,983)
Sale of investments in foreign affiliates... 154,585 -- --
Other, net.................................. 2,823 4,785 7,524
--------- --------- ---------
Net cash provided by (used for) investing
activities............................... 30,418 (269,242) (287,497)
--------- --------- ---------
Financing Activities:
Additions to long-term project debt......... 33,411 652 --
Repayments of long-term project debt........ (23,782) (129,666) (82,185)
Proceeds from exercise of stock options and
Equity Purchase Program note repayments,
net........................................ 60,067 31,026 7,575
Dividends paid.............................. -- (5,553) (16,826)
Stock repurchase program.................... -- (57,629) --
Other, net.................................. 626 2,315 --
--------- --------- ---------
Net cash provided by (used for) financing
activities............................... 70,322 (158,855) (91,436)
--------- --------- ---------
Increase (decrease) in cash and cash
equivalents.................................. 191,450 (312,206) (254,552)
Cash and cash equivalents at beginning of
period....................................... 412,027 603,477 291,271
--------- --------- ---------
Cash and cash equivalents at end of period.... $ 603,477 $ 291,271 $ 36,719
========= ========= =========
Supplemental disclosure:
Interest paid, net of amounts capitalized... $ 53,367 $ 78,421 $ 62,490
========= ========= =========
Income taxes paid........................... $ 27,356 $ 22,112 $ 85,441
========= ========= =========
Significant noncash investing activities:
Net assets contributed to Rust International
Inc........................................ $ -- $ -- $ 244,278
========= ========= =========
Businesses acquired for common stock........ $ 151,048 $ 85,182 $ 30,972
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(000'S OMITTED)

<TABLE>
<CAPTION>
EQUITY
CAPITAL IN PURCHASE CUMULATIVE
COMMON EXCESS OF PROGRAM TRANSLATION TREASURY RETAINED
STOCK PAR VALUE NOTES ADJUSTMENT STOCK EARNINGS TOTAL
------ ---------- -------- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1990................... $1,645 $515,441 $(37,245) $ 22,314 $ -- $ 43,823 $ 545,978
Net income.............. -- -- -- -- -- 126,059 126,059
Foreign currency
translation............ -- 10,976 -- (2,777) -- -- 8,199
Exercise of stock op-
tions.................. 20 15,764 -- -- -- -- 15,784
Equity Purchase Program. -- -- 32,721 -- -- -- 32,721
Tax benefit from stock
options and Equity
Purchase Program....... -- 11,562 -- -- -- -- 11,562
Common stock issued for
acquisitions........... 32 40,653 -- -- -- -- 40,685
Investment in
Waste Management
International plc...... 120 110,243 -- -- -- -- 110,363
------ -------- -------- -------- ------- -------- ----------
Balance, December 31,
1991................... 1,817 704,639 (4,524) 19,537 -- 169,882 891,351
Net income.............. -- -- -- -- -- 134,152 134,152
Dividends declared...... -- -- -- -- -- (7,417) (7,417)
Foreign currency
translation............ -- -- -- (37,322) -- -- (37,322)
Exercise of stock op-
tions.................. 8 (3,004) -- -- 21,147 -- 18,151
Equity Purchase Program. -- -- 4,524 -- -- -- 4,524
Tax benefit from stock
options and Equity
Purchase Program....... -- 8,351 -- -- -- -- 8,351
Common stock issued for
acquisitions........... 40 85,142 -- -- -- -- 85,182
Stock repurchases....... -- -- -- -- (57,629) -- (57,629)
Treasury shares distrib-
uted for stock split... -- (36,482) -- -- 36,482 -- --
------ -------- -------- -------- ------- -------- ----------
Balance, December 31,
1992................... 1,865 758,646 -- (17,785) -- 296,617 1,039,343
Net income.............. -- -- -- -- -- 163,102 163,102
Dividends declared...... -- -- -- -- -- (14,962) (14,962)
Foreign currency
translation............ -- -- -- (15,885) -- -- (15,885)
Exercise of stock op-
tions.................. 7 4,195 -- -- 3 -- 4,205
Tax benefit from stock
options................ -- 3,370 -- -- -- -- 3,370
Common stock issued for
acquisitions........... 16 30,707 -- -- 249 -- 30,972
Treasury shares from
acquisition adjust-
ments.................. -- -- -- -- (969) -- (969)
Investment in Rust In-
ternational Inc........ -- 77,662 -- -- -- -- 77,662
------ -------- -------- -------- ------- -------- ----------
Balance, December 31,
1993................... $1,888 $874,580 $ -- $(33,670) $ (717) $444,757 $1,286,838
====== ======== ======== ======== ======= ======== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000'S OMITTED IN ALL TABLES, EXCEPT PER SHARE AMOUNTS)

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES

Wheelabrator Technologies Inc. ("Wheelabrator" or the "Company") is a
majority-owned subsidiary of WMX Technologies, Inc. ("WMX"). Wheelabrator is a
multi-faceted environmental services company engaged in trash-to-energy and
independent power facility ownership and operation, providing a comprehensive
range of water and wastewater treatment products and services to municipal and
industrial customers, and supplying air quality control systems for a broad
range of industrial and utility applications.

Principles of Consolidation--The Company's financial statements include the
accounts of all subsidiaries, after elimination of material intercompany
transactions and accounts. Investments in affiliates the Company does not
control are accounted for using the equity method after elimination of material
interaffiliate transactions. Prior to January 1, 1993, the Company consolidated
the financial results of certain businesses contributed to form, in part, Rust
International Inc. ("Rust"). Beginning in 1993, the Company's investment in
Rust has been accounted for using the equity method (see Note 2).

Revenue Recognition--Long-term engineering and construction contract earnings
are recognized on the percentage-of-completion basis. Estimated losses are
recognized in full when identified. All other revenues are recognized when
services are rendered or products are shipped.

Consolidated Statements of Cash Flows--For purposes of the Consolidated
Statements of Cash Flows, all highly liquid instruments purchased with an
original maturity of three months or less and investments with WMX are
considered to be cash equivalents.

Wheelabrator and WMX are parties to a Master Intercorporate Agreement that
provides, among other things, for Wheelabrator to lend excess cash to WMX at
interest rates at least as favorable as those Wheelabrator could otherwise
obtain. Under the terms of this agreement, in the event Wheelabrator requires
short-term cash for the conduct of its business and operations, WMX will make
available to Wheelabrator such amounts as Wheelabrator requires, up to a total
of $100.0 million in excess of amounts loaned by Wheelabrator to WMX. In
addition, a right of set-off exists for amounts owed by either Wheelabrator or
WMX. As such, net amounts invested with WMX pursuant to this agreement are
considered to be highly liquid cash equivalents and are included in cash and
cash equivalents on the Company's consolidated balance sheets. The Company had
net investments with WMX of approximately $222.5 million and $14.9 million, as
of December 31, 1992 and 1993, respectively.

Property, Plant and Equipment--are carried at cost and are generally
depreciated on a straight-line basis using estimated lives that range from 3 to
35 years.

The Company holds options to purchase or lease sites for future trash-to-
energy or other facilities at existing or future WMX landfills. These land
options are classified as property, plant and equipment. The cost attributable
to the option for each utilized site will be amortized on a straight-line basis
over the estimated useful life of the facility upon commencement of operations.

Cost in Excess of Net Assets of Acquired Businesses--is amortized on a
straight-line basis over a maximum of 40 years. The accumulated amortization
balances for 1992 and 1993 were $8.2 million and $10.0 million,

F-7
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
respectively. On an ongoing basis, the Company measures realizability of
goodwill by the ability of the acquired businesses to generate current and
expected future operating income in excess of unamortized goodwill. 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.

Development Agreement--The Company and WMX are parties to an agreement which
provides for the reimbursement by WMX of certain project development expenses
incurred by Wheelabrator, subject to certain limitations. Under this agreement,
Wheelabrator billed WMX $10.0 million and $6.9 million in 1991 and 1993
respectively. An additional $7.6 million of development costs remain billable
under the terms of the agreement, which expires in August 1994.

Disposal Credits--are classified as other assets until applied against the
cost of disposing of ash residue from the Company's trash-to-energy facilities
or other materials such as biosolids at WMX landfills. These credits are
charged to expense as utilized. On January 1, 1993, $30.0 million of the
credits were contributed to Rust as part of the transaction discussed in Note
2. In 1993 the Company utilized $1.9 million of disposal credits and at
December 31, 1993 had approximately $36.7 million of disposal credits
remaining.

Facility Maintenance Accrual--In order to match more consistently
expenditures for major maintenance activities with revenues the Company follows
a policy of accruing for major maintenance expenditures at its trash-to-energy
and independent power facilities. Such accruals are based upon planned
maintenance expenditures and are classified as current or noncurrent
liabilities based on the expected timing of the expenditures.

Income Taxes--are based on pretax financial statement income and include a
deferred tax provision for the effect of temporary differences in the
recognition of income and expense for financial statement and tax reporting
purposes. Deferred income taxes are not provided on undistributed earnings of
affiliates because these earnings are considered to be permanently reinvested.
Further, deferred taxes are not provided on gains from stock transactions of
affiliates because the Company in conjunction with WMX intends to control its
investment in affiliates to maintain the nontaxable status of such gains.
Investment credits have been deferred and are included in income as a reduction
of income tax expenses over the estimated useful lives of the assets that gave
rise to the credits.

Effective January 1, 1992, the Company changed its method of accounting for
income taxes as a result of the adoption of Statement of Financial Accounting
Standards ("FAS") No. 109, Accounting for Income Taxes ("FAS 109"). The
cumulative effect of the change was a charge of approximately $13.2 million, or
$0.07 per share (see Note 3).

Environmental Liabilities--Estimated closure and post-closure monitoring
costs associated with ash residue monofills for which the Company is
responsible include such items as final cap and cover on the site, leachate
management and groundwater monitoring and are recognized in proportion to use
of the permitted capacity of such disposal sites. These accruals for closure
and post-closure costs relate to expenditures to be incurred after a monofill
ceases to accept ash residue. To the extent similar costs are incurred during
the active life of the site, they are expensed as incurred. Preparation costs
associated with these sites and their individual cells are capitalized and
amortized over the respective estimated life of the disposal site or individual
cell.

F-8
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Wheelabrator has instituted procedures to periodically evaluate other
potential environmental exposures. When the Company concludes it is probable
that a liability has been incurred, provision is made in the financial
statements for the Company's best estimate of the liability. Such estimates are
subsequently revised as deemed necessary when additional information becomes
available. While the Company does not anticipate that any such adjustment would
be material to its financial statements, it is reasonably possible that future
technological, regulatory or enforcement developments, results of environmental
studies, or other factors could alter this expectation and necessitate the
recording of additional liabilities, which could be material. At December 31,
1992 and 1993, total environmental accruals, which include closure and post-
closure costs, were approximately $27.0 million and $24.5 million,
respectively.

Postretirement Benefits--Wheelabrator provides certain postretirement
benefits other than pensions primarily to a limited number of former employees.
The majority of Wheelabrator's active employees will not receive postretirement
benefits other than pensions. Effective January 1, 1992, the Company adopted
FAS No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions ("FAS 106"), on the immediate recognition basis. The cumulative effect
of the change was a pretax charge of approximately $44.9 million ($29.0
million, or $0.16 per share after tax) (see Note 6).

Earnings Per Common Share--are calculated using the weighted average number
of shares outstanding for each period, including the effect of common stock
equivalents using the treasury stock method. Common stock equivalents consist
of unexercised stock options and shares pledged under the Company's Equity
Purchase Program (see Note 6).

The Company effected a two-for-one split of its common stock on January 7,
1993, in the form of a dividend of one additional share of common stock for
each share outstanding on December 23, 1992. Earnings per common share and the
number of shares outstanding have been adjusted to give retroactive effect to
the stock split for all periods presented.

Prospective Accounting Changes--The Financial Accounting Standards Board has
issued FAS No. 112, Employers' Accounting for Postemployment Benefits ("FAS
112"), and FAS No. 115, Accounting for Certain Debt and Equity Securities ("FAS
115"). The Company is required to adopt both of these new standards in 1994.
Based upon its analysis to date, the Company does not believe the adoption of
FAS 112 will have a material impact on its financial statements since its
current accounting is substantially in compliance with the new standard. The
Company does not have and does not contemplate acquiring significant
investments of the type covered in FAS 115.

Reclassification--Certain prior period amounts have been reclassified to
conform with the current year presentation.

NOTE 2--CAPITAL TRANSACTIONS, ACQUISITIONS AND DIVESTITURES

Waste Management International--In the third quarter of 1991, Wheelabrator
issued approximately 12.0 million shares of common stock to WMX in exchange for
a 15 percent equity interest in a predecessor of Waste Management International
plc ("WM International"), a subsidiary of WMX. WM International now owns
substantially all of WMX's waste management services operations outside of
North America. The

F-9
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
investment is accounted for using the equity method. In 1992 the shareholders
of WM International provided an additional $200.0 million cash capital
contribution in proportion to their relative ownership percentages.
Wheelabrator's share of the additional capital contribution was $30.0 million.
In April 1992, WM International sold previously unissued ordinary shares in an
initial public offering ("IPO"), thereby reducing Wheelabrator's equity
interest in WM International from 15 percent to 12 percent. Wheelabrator
recognized a $47.0 million nontaxable gain as a result of this transaction. As
of December 31, 1993, WM International was owned approximately 12 percent by
Wheelabrator, 12 percent by Rust, 56 percent by WMX and 20 percent by the
public.

During 1991, 1992 and 1993, respectively, Wheelabrator recorded equity in net
income of WM International of $7.5 million, $15.6 million and $13.8 million.
Wheelabrator's investment in WM International totaled approximately $195.7
million and $194.0 million as of December 31, 1992 and 1993. If valued at the
December 31, 1993 quoted closing price of publicly traded shares, the
calculated value of the Company's investment in WM International would have
exceeded the Company's carrying value by approximately $200.0 million. A
summary of certain financial information for WM International follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1992 1993
---------- ----------
<S> <C> <C>
Current assets...................................... $ 688,869 $ 629,786
Noncurrent assets................................... 2,103,934 2,694,489
Current liabilities................................. 585,701 533,266
Noncurrent liabilities.............................. 429,100 904,007
Minority interest................................... 147,329 270,640
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue.................................. $1,075,070 $1,445,735 $1,411,211
Gross profit............................. 316,946 412,472 402,065
Net income............................... 80,433 120,113 114,246
</TABLE>

Rust International--Pursuant to an agreement with two WMX subsidiaries,
Chemical Waste Management, Inc. ("CWM") and The Brand Companies, Inc.
("Brand"), effective January 1, 1993, Wheelabrator contributed its engineering
and construction business, its environmental and infrastructure consulting
services business and certain other assets to form, in part, Rust, a new
engineering and construction company. CWM contributed its hazardous substances
remediation services group, its 56 percent equity interest in Brand, its 12
percent interest in WM International and certain other assets to Rust. In early
May 1993, Brand was merged into a subsidiary of Rust. Under the terms of the
merger, those Brand stockholders who did not elect to receive $18.75 per Brand
share in cash received shares of Rust common stock for their Brand shares on a
one-for-one basis. The issuance of additional Rust shares to acquire the
balance of Brand shares resulted in the Company recognizing a nontaxable gain
of $7.7 million and reduced Wheelabrator's ownership from approximately 42
percent to approximately 40 percent. CWM currently owns 56 percent of Rust, and
four percent is owned by the public. As a result of the transaction, beginning
in 1993 the Company no longer consolidates the financial results of the
businesses that it contributed. Wheelabrator now records its investment in Rust
using the equity method, which results in a reduction of revenue, operating
expenses and selling and administrative costs compared to prior years, with
Wheelabrator's share of Rust's 1993 net income included in equity in earnings
of affiliates. The transaction has no effect on the Company's 1992 and prior
financial statements.

F-10
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following summary condensed financial statements show the proforma effect
on the Company's consolidated balance sheet as of December 31, 1992 and on its
consolidated statement of income for 1992, as if the Rust transaction,
excluding the merger of Brand, had occurred January 1, 1992 (unaudited):

<TABLE>
<CAPTION>
DECEMBER 31, 1992 RUST PROFORMA AS
AS REPORTED CONTRIBUTION ADJUSTMENTS ADJUSTED
----------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Current assets.......... $ 710,796 $(188,793) $ -- $ 522,003
Property, plant and
equipment, net......... 1,495,241 (72,798) -- 1,422,443
Investments in affili-
ates................... 199,188 (1,021) 321,940 520,107
Other assets............ 591,848 (114,826) -- 477,022
---------- --------- -------- ----------
Total assets.......... $2,997,073 $(377,438) $321,940 $2,941,575
========== ========= ======== ==========
Current liabilities..... $ 459,332 $(109,446) $ -- $ 349,886
Long-term project debt.. 857,625 -- -- 857,625
Other long-term liabili-
ties................... 640,773 (23,714) -- 617,059
Stockholders' equity.... 1,039,343 (244,278) 321,940 1,117,005
---------- --------- -------- ----------
Total liabilities and
stockholders' equity. $2,997,073 $(377,438) $321,940 $2,941,575
========== ========= ======== ==========
Revenue................. $1,483,054 $(554,741) $ -- $ 928,313
Operating expenses...... 1,108,780 (475,166) -- 633,614
Selling and administra-
tive expenses.......... 148,355 (50,435) -- 97,920
Gains from stock trans-
actions of
affiliates(1).......... (47,000) -- (19,538) (66,538)
Other, net.............. 19,843 (609) (13,397) 5,837
---------- --------- -------- ----------
Income before taxes and
accounting changes..... 253,076 (28,531) 32,935 257,480
Income tax provision.... 76,694 (11,260) -- 65,434
---------- --------- -------- ----------
Income before accounting
changes................ $ 176,382 $ (17,271) $ 32,935 $ 192,046
========== ========= ======== ==========
Earnings per common
share before accounting
changes................ $ 0.94 $ 1.02
========== ==========
</TABLE>
- --------
(1) The proforma adjustment to gains from stock transactions of affiliates
reflects the gain recognized by Rust in connection with WM International's
IPO in April 1992. Wheelabrator's total proforma equity in Rust's net
income for 1992 was $32,935.

During 1993 Wheelabrator recorded equity in net income of Rust of $31.3
million. Wheelabrator's investment in Rust totaled approximately $364.9 million
as of December 31, 1993. If valued at the December 31, 1993 quoted closing
price of publicly traded shares, the calculated value of the Company's
investment in Rust would have exceeded the Company's carrying value by
approximately $391.0 million. A summary of 1993 financial information for Rust
follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------
<S> <C>
Current assets.......................................... $ 500,416
Noncurrent assets....................................... 1,138,035
Current liabilities..................................... 249,350
Noncurrent liabilities.................................. 496,897
</TABLE>

F-11
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------
<S> <C>
Revenue................................................. $1,534,465
Gross profit............................................ 284,557
Net income.............................................. 79,964
</TABLE>

During 1993 Wheelabrator paid Rust approximately $144.7 million for
engineering, construction management and other services provided. The terms of
the transactions between the Company and Rust are generally the same as the
terms of comparable transactions with unaffiliated third parties.

Acquisitions--The Company acquired three businesses during 1991 and 17
businesses during 1992 that provide environmental engineering, biosolids
management and various clean air technologies. Nine of the 1991 and 1992
acquisitions serve the air and water quality control markets, while the other
11 were included in the businesses contributed to the formation of Rust.
Wheelabrator paid cash and issued common stock of approximately $37.7 million
and 15.2 million shares, and $115.5 million and 6.8 million shares,
respectively, for the 1991 and 1992 acquisitions. In 1993 the Company acquired
seven businesses engaged in providing water and air quality-related
environmental products and services as well as independent power in exchange
for approximately 1.6 million shares of Wheelabrator common stock and $15.0
million of cash. The Company utilizes the purchase method of accounting, and
the purchase price of the foregoing acquisitions has been allocated to their
respective net assets based upon fair market values. The results of operations
of acquired entities have been included in Wheelabrator's financial statements
from their respective dates of acquisition. The proforma effect of the
acquisitions made during 1991 and 1993 is not material. The following
summarizes the effects of businesses acquired during 1992 had they been
acquired as of January 1, 1991 (unaudited):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1991 1992
------------ ------------
<S> <C> <C>
Revenue, as reported......................... $ 1,173,449 $ 1,483,054
Revenue of purchased businesses for period
prior to acquisition........................ 239,097 122,912
------------ ------------
Proforma revenue............................. $ 1,412,546 $ 1,605,966
============ ============
Net income before accounting changes, as
reported.................................... $ 126,059 $ 176,382
Net income of purchased businesses for period
prior to acquisition........................ 13,712 3,321
Adjustment for interest and amortization of
cost in excess of net assets of acquired
businesses.................................. (7,943) (4,681)
------------ ------------
Proforma net income.......................... $ 131,828 $ 175,022
============ ============
Earnings per share before accounting changes,
as reported................................. $ 0.73 $ 0.94
Effect of purchased businesses for period
prior to acquisition........................ 0.01 (0.02)
------------ ------------
Proforma earnings per share.................. $ 0.74 $ 0.92
============ ============
</TABLE>

Divestitures--In 1991, Wheelabrator sold its equity interests in two foreign
industrial abrasives manufacturers. Total proceeds from the sale of such
interests were approximately $154.6 million, resulting in a combined pretax
gain of approximately $47.1 million. Equity earnings from the divested
interests were not significant to the Company's results of operations.

F-12
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 3--TAXES

Wheelabrator and Koll Real Estate Group, Inc. ("KREG", formerly the Bolsa
Chica Company) are parties to a tax sharing agreement which provides for the
payment of taxes, the cooperation of the parties in realizing certain tax
benefits, and the conduct of tax audits and various related matters for the
periods during which Wheelabrator, KREG, The Henley Group ("Henley") and their
respective affiliates were included in the same consolidated group for federal
income tax purposes. Pursuant to a recapitalization of Henley in 1992, Abex
Inc. ("Abex") has assumed certain of Henley obligations to KREG under a similar
tax sharing agreement.

Wheelabrator is generally responsible for any increase in the income tax
liability (including related interest and penalties) of any consolidated,
combined or unitary tax group which included the Company, Abex, KREG and any of
their predecessors and affiliates for tax periods ending prior to December 31,
1988. However, KREG will indemnify Wheelabrator to the extent that any such
increased tax liability attributable to Abex and KREG affiliates exceeds $50.0
million. The Company's liability for the $50.0 million obligation has been
previously recorded. KREG is generally indemnified by Abex to the extent that
such tax liabilities payable by KREG exceed $25.0 million.

In January 1993, the Internal Revenue Service ("IRS") completed an
examination of Wheelabrator's consolidated federal income tax returns for the
period 1986-1988. In the only material unresolved issue, the IRS proposed a
significant adjustment related to the 1988 sale of a former subsidiary. Abex,
KREG and Wheelabrator disputed the position taken by the IRS in an action filed
before the U.S. Tax Court. In March 1994, Wheelabrator and the IRS filed a
Stipulation of Settlement with the U.S. Tax Court resolving the treatment of
this disputed issue. Subject to the $21.2 million remaining balance of the
$50.0 million tax sharing obligation described above, the Company is
indemnified by KREG and Abex for the full amount of the liability assessed with
regard to this issue. Although the Company is primarily liable for the tax,
plus interest, KREG and Abex have each confirmed to the Company their
respective indemnification obligations.

The Company implemented FAS 109 effective January 1, 1992. Excluding the one-
time charge of approximately $13.2 million, or $0.07 per share, the adoption of
FAS 109 did not materially impact the Company's 1992 operating results. The
adoption of FAS 109 resulted in an increase in deferred income tax assets and
liabilities generally reflecting the impact of the restatement of assets
related to business combinations consummated before the adoption of FAS 109 on
a gross basis rather than on the net-of-tax basis previously used. The charge
resulted primarily from increasing deferred taxes previously discounted, a
method not permitted under FAS 109.

In accordance with FAS 109, during the third quarter of 1993, the Company
recorded a $6.5 million increase in deferred taxes due to the August enactment
of the Omnibus Budget Reconciliation Act of 1993.

A summary of the Company's income tax provision is given below. Income from
foreign sources is not material.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Federal:
Current......................................... $54,862 $ 9,275 $19,125
Deferred........................................ 4,265 48,497 54,780
State:
Current......................................... 14,598 5,815 9,333
Deferred........................................ 755 13,107 6,697
------- ------- -------
Total........................................... $74,480 $76,694 $89,935
======= ======= =======
</TABLE>

F-13
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The principal items accounting for the difference in income taxes computed at
the U.S. statutory rates and as recorded are as follows:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate...................... 34.0% 34.0% 35.0%
State income taxes after federal income tax benefit.... 5.1 4.9 4.1
Equity income.......................................... (2.3) (2.1) (6.2)
Non-deductible expenses................................ 1.3 0.7 1.0
Non-taxable gain from stock transactions of affiliates. -- (6.3) (1.1)
Deferred tax revaluation relating to Omnibus Budget
Reconciliation Act.................................... -- -- 2.6
Other, net............................................. (1.0) (0.9) 0.1
---- ---- ----
Effective tax rate................................... 37.1% 30.3% 35.5%
==== ==== ====
</TABLE>

The principal components of the deferred tax provision for 1991 were the
excess of tax over financial statement depreciation, deferred income and
reserves not deductible until paid. The adoption of FAS 109 required a change
in the method of accounting for income taxes to an asset and liability
approach. The principal items that comprise the 1992 and 1993 deferred tax
(assets) and liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Reserves not deductible until paid.................. $(130,686) $(104,841)
Deferred income..................................... (27,569) (26,948)
Basis difference in investments..................... (30,564) (16,937)
Alternative minimum tax credit carryforwards........ (14,000) (19,000)
State net operating loss carryforwards.............. (10,903) (11,692)
Other............................................... (1,263) (12,335)
Less: Valuation allowance........................... 22,545 20,413
--------- ---------
Subtotal.......................................... (192,440) (171,340)
--------- ---------
Property, plant and equipment....................... 355,260 403,570
Nondeductible prepaid expenses...................... 27,413 14,945
Other............................................... 49,015 45,189
--------- ---------
Subtotal.......................................... 431,688 463,704
--------- ---------
Deferred tax liability............................ $ 239,248 $ 292,364
========= =========
</TABLE>

The Company has approximately $19.0 million of alternative minimum tax credit
carryforwards that may be carried forward indefinitely. Also, various
subsidiaries have state operating loss carryforwards of approximately $200.0
million with expiration dates through the year 2008. Valuation allowances have
been established due to the uncertainty of ultimately realizing the tax benefit
of certain state net operating loss carryforwards and the tax benefits
attributed to basis differences in certain investments. The change in the
valuation allowance relates primarily to the realization of tax benefits due to
the disposition of certain investments.

F-14
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4--CAPITAL STOCK

Common Stock--Wheelabrator is authorized to issue 500.0 million shares of
common stock, par value $0.01 per share. As of December 31, 1993, 188.9 million
shares were issued of which 188.8 million were outstanding. Approximately 104.6
million shares were held by WMX or its subsidiaries.

Under certain circumstances, WMX has options to purchase at fair market value
newly issued shares of Wheelabrator common stock. WMX also has certain
registration rights until August 24, 1999 with respect to certain of the
Wheelabrator common stock it holds.

The Company effected a two-for-one split of its common stock on January 7,
1993, in the form of a dividend of one additional share of common stock for
each share outstanding on December 23, 1992. Share and per share amounts have
been adjusted to reflect the split for all periods. During 1992 the Company
repurchased approximately 4.2 million shares of its common stock for an
aggregate cost of approximately $57.6 million. The Company is authorized to
repurchase up to a total of 8.0 million shares of its common stock through
March 1996 on the open market or in privately negotiated transactions, if
market conditions make it attractive to do so.

During 1992 Wheelabrator declared cash dividends totaling $0.04 per common
share, of which $0.03 per share was paid in 1992 and $0.01 per share was paid
in January 1993. Additionally, during 1993 the Company declared and paid cash
dividends totaling $0.08 per common share.

Preferred Stock--Wheelabrator is authorized to issue 50.0 million shares of
preferred stock, none of which was issued or outstanding at December 31, 1993.

NOTE 5--LONG-TERM PROJECT DEBT AND LEASE COMMITMENTS

Long-term debt related to Wheelabrator's projects is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1992 1993
-------- --------
<S> <C> <C>
Industrial development revenue bonds due 1994 to 2010
at rates of 2.5%-10.5%............................... $782,505 $709,027
Private placement bonds due 1994 to 2008 at rates of
10.64%-13.875%....................................... 36,849 34,121
Project financing from syndicates of commercial banks
due 1994 to 2000 at rates of 1.5% above LIBOR........ 42,636 38,309
Secured notes payable related to coal-handling facili-
ties due 1994 to 2000 at rates of 9%-9.875%.......... 32,980 29,155
-------- --------
894,970 810,612
Less: Current portion................................. 37,345 33,754
-------- --------
Total long-term project debt........................ $857,625 $776,858
======== ========
</TABLE>

The aggregate fair market value of Wheelabrator's long-term debt was
approximately $1,043,000 and $978,400 on December 31, 1992 and 1993,
respectively. The fair value of the Company's long-term debt was determined by
discounting future cash flows at the quoted or estimated current rate
applicable to each type of debt.

At December 31, 1993 long-term debt was collateralized by property, plant and
equipment with a net book value of approximately $894.4 million and
approximately $88.3 million of investments held by trustees.

F-15
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Investments held by trustees typically represent proceeds of long-term debt
related to trash-to-energy and independent power projects. These amounts
generally consist of reserve funds maintained pursuant to project financing
agreement requirements. The investments are held in trust, and use by the
Company is restricted.

Financing for certain trash-to-energy facilities currently operated by the
Company has been provided through sale and leaseback transactions arranged in
previous years. The leases are classified as operating leases, with lease
expense being recognized on a straight-line basis over the base and bargain
renewal periods of each agreement. Timing differences between lease payments
and financial statement lease expense are included in other assets in the
consolidated balance sheets. Gains realized on the sale transactions are
included in deferred income in the consolidated balance sheets and are being
amortized over the terms of the respective leases.

Principal payments on project debt and non-cancelable operating lease
payments for operating and office facilities at December 31, 1993 are due as
follows:

<TABLE>
<CAPTION>
PROJECT OPERATING
DEBT LEASES
-------- ----------
<S> <C> <C>
1994.................................................. $ 33,754 $ 80,046
1995.................................................. 36,317 84,814
1996.................................................. 39,974 83,785
1997.................................................. 43,166 85,704
1998.................................................. 47,255 86,790
Thereafter............................................ 610,146 838,520
-------- ----------
Total............................................... $810,612 $1,259,659
======== ==========
</TABLE>

The Company capitalized net interest expense of $26.9 million, $2.2 million
and $10.0 million during 1991, 1992 and 1993, respectively, in connection with
various projects under construction.

Resco Holdings Inc. ("Resco"), a wholly owned subsidiary of Wheelabrator, and
Allied-Signal Inc. ("Allied Signal") are parties to an agreement which provides
for specific credit support by Allied-Signal for certain of Resco's trash-to-
energy project subsidiaries. Under the agreement, Allied-Signal may require
Resco to refinance, without Allied-Signal credit support, indebtedness of
supported trash-to-energy projects if it is economical (as defined in the
agreement) to do so. Resco and certain of its subsidiaries have agreed to
reimburse Allied-Signal for all amounts which may be paid by it under the
agreement or various related credit support obligations. No support payments
have been made by Allied-Signal as of December 31, 1993.

Resco is also required to maintain a minimum level of tangible net worth
(approximately $549.8 million as of December 31, 1993). As of December 31,
1993, Resco was in compliance with this provision. Resco has agreed not to
declare or pay any cash dividends to the Company at any time Resco's tangible
net worth is less than the required amount. Resco owns substantially all of the
net operating assets of the Company except certain net assets including cash
and investments. The Company has the ability to pay cash dividends using assets
other than those restricted within Resco.

NOTE 6--STOCK AND BENEFIT PLANS

Equity Purchase Program--In 1986, Wheelabrator established the Equity
Purchase Program which authorized the issuance and sale of shares of
Wheelabrator common stock to key corporate managers. The Equity Purchase
Program also provided that Wheelabrator lend participants 90 percent of their
purchase price. All of such loans matured and were repaid with interest during
1992. No additional shares may be issued under the Equity Purchase Program.

F-16
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Stock Option Plans--Wheelabrator's Stock Option Plans provide for the grant
of non-qualified options to purchase shares of the Company's common stock at a
price equal to fair market value at the time of grant.

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

<TABLE>
<CAPTION>
SHARES OPTION PRICE
------ -------------
<S> <C> <C>
January 1, 1991
Outstanding...................................... 6,125 $ 3.87-$ 9.24
Available for future grant....................... 1,548 -- --
------
1991: Granted...................................... 1,556 $11.90-$13.35
Exercised........................................ (1,341) $ 3.87-$13.35
Cancelled........................................ (100) $ 3.87-$13.35
Additional shares reserved for future grant...... 300 -- --
------
December 31, 1991
Outstanding...................................... 6,240 $ 3.87-$13.35
Available for future grant....................... 392 -- --
------
1992: Granted...................................... 1,584 $13.55-$15.75
Exercised........................................ (2,211) $ 3.87-$11.94
Cancelled:
Predecessor plans.............................. (91) $ 7.76-$11.90
Current plans.................................. (58) $15.75
Predecessor plan shares cancelled upon initiation
of 1992 plan.................................... (152) -- --
Additional shares reserved for future grant under
current plans................................... 7,000 -- --
------
December 31, 1992
Outstanding...................................... 5,464 $ 3.87-$15.75
Available for future grant....................... 5,714 -- --
------
1993: Granted...................................... 673 $17.69-$20.65
Exercised........................................ (1,031) $ 3.87-$15.75
Cancelled:
Predecessor plans.............................. (14) $11.90
Current plans.................................. (46) $14.25-$20.65
------
December 31, 1993
Outstanding...................................... 5,046 $ 3.87-$20.65
======
Available for future grant....................... 5,087 -- --
======
Exercisable at end of year....................... 3,163 $ 3.87-$15.75
======
</TABLE>
- --------
Outstanding options generally have a term of seven years from the date of the
grant and expire at various dates through December 17, 2000.

Savings and Retirement Plan--Substantially all employees are participants in
the Wheelabrator Savings and Retirement Plan, which is a qualified defined
contribution plan consisting of a savings account component

F-17
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(the "Savings Account") and a retirement account component (the "Retirement
Account"). Under the terms of the Savings Account, eligible employees of the
Company may elect to contribute a portion of their annual compensation not to
exceed 16 percent. The Company is required to match a minimum of 30 percent of
the first six percent of salary contributed by an employee. Under the terms of
the Retirement Account, eligible employees of the Company receive an annual
contribution equal to a minimum of three percent of their eligible earnings.
Employees vest in Company contributions and the associated earnings in the
Savings Account at 20 percent per year and in the Retirement Account after five
years. Wheelabrator's contributions to such plans during 1991, 1992 and 1993
amounted to approximately $12.9 million, $16.3 million and $15.8 million,
respectively.

Postretirement Benefits Other Than Pensions--The Company provides certain
postretirement benefits other than pensions, which are primarily health care
benefits offered to a limited number of former employees. The majority of the
Company's active employees will not receive postretirement benefits other than
pensions.

The Company implemented FAS 106 on the immediate recognition basis effective
January 1, 1992. FAS 106 required a change from accounting for postretirement
benefits other than pensions from a cash to an accrual basis. Excluding the
one-time pretax charge of approximately $44.9 million ($29.0 million, or $0.16
per share, after tax), the adoption of FAS 106 did not have a significant
effect on earnings for the year ended 1992. The service and interest components
of the net periodic cost of postretirement benefits other than pensions were
$0.2 million and $3.1 million, respectively, in 1992 and $0.1 million and $2.6
million, respectively, in 1993.

The following sets forth the plans' funded status reconciled with amounts
reported in the Company's consolidated balance sheets:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1992 1993
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees............................................. $41,110 $43,113
Fully eligible active plan participants.............. 2,297 623
Other active plan participants....................... 1,798 789
------- -------
Total APBO........................................... 45,205 44,525
Unrecognized:
Prior service cost................................... -- 347
Gain/(loss).......................................... -- (2,658)
------- -------
Accrued postretirement benefit liability............. $45,205 $42,214
======= =======
</TABLE>

For measurement purposes, a 12 percent annual rate of increase in the per
capita cost of covered health care claims was assumed for 1992, decreasing by
0.5 percent annually to 7.5 percent in 2001 and remaining at that level
thereafter. Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1993 by approximately $3.9 million and
increase the aggregate of the service and interest cost components of net
periodic post retirement benefit cost for 1993 by $0.2 million. The weighted
average discount rate used in determining the accumulated post retirement
benefit obligation was eight percent in 1992 and seven percent in 1993 based on
expected payout patterns.

F-18
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 7--ADDITIONAL FINANCIAL INFORMATION

The allowance for doubtful accounts amounted to $14.2 million and $9.3
million as of December 31, 1992 and 1993, respectively.

The following is a summary of inventories, which are valued at the lower of
first-in, first-out cost or market and are included in other current assets:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1992 1993
------- -------
<S> <C> <C>
Raw materials............................................. $ 5,636 $ 5,256
Work in process........................................... 7,944 7,531
Finished goods............................................ 12,371 10,343
------- -------
$25,951 $23,130
======= =======
</TABLE>

Also included in other current assets are spare parts and supplies of $20,875
and $24,422 as of December 31, 1992 and 1993, respectively.

The following is a summary of property, plant and equipment:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1992 1993
---------- ----------
<S> <C> <C>
Land.............................................. $ 55,760 $ 53,403
Land options...................................... 285,807 285,807
Machinery and equipment........................... 990,824 1,076,576
Buildings and improvements........................ 252,969 223,463
Construction-in-progress.......................... 111,595 247,387
Less: accumulated depreciation.................... (201,714) (232,716)
---------- ----------
$1,495,241 $1,653,920
========== ==========
</TABLE>

The following is a summary of accrued liabilities:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1992 1993
-------- --------
<S> <C> <C>
Wages, salaries and benefits........................... $ 59,978 $ 30,493
Tax sharing agreement.................................. 50,000 --
Warranty reserves...................................... 20,729 11,563
Interest and lease expense............................. 56,041 43,793
Insurance and professional............................. 16,569 12,625
Other.................................................. 100,930 98,649
-------- --------
$304,247 $197,123
======== ========
</TABLE>

Certain additional financial data are presented below:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Maintenance and repair expense................... $51,342 $48,106 $48,618
Research and development expense................. 3,891 2,574 4,073
Rent expense..................................... 76,361 88,358 71,442
</TABLE>

F-19
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 8--COMMITMENTS AND CONTINGENCIES

The Company has issued or is a party to approximately 180 bank letters of
credit, performance bonds and other guarantees. Such guarantees (averaging $2.0
million each), are given in the ordinary course of business. Management does
not expect these guarantees will have a material adverse effect on the
financial position or results of operations of the Company.

On February 16, 1994, a Connecticut Superior Court judge issued a decision on
appeals of the Connecticut Department of Environmental Protection's ("DEP")
issuance of a permit to construct the Lisbon, Connecticut trash-to-energy
facility currently being built by Wheelabrator. In the ruling, the judge agreed
with the Company'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. The Company intends to pursue aggressively favorable resolution of this
permit remand through appropriate judicial and regulatory procedures. Although
Wheelabrator 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 the Company 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 the Company's
financial condition and results of operations.

There are various lawsuits and claims pending against Wheelabrator which have
arisen in the normal course of Wheelabrator's business and relate mainly to
matters of product liability, personal injury and property damage. The outcome
of these matters is not presently determinable, but in the opinion of
management, based on the advice of counsel, the ultimate resolution of these
matters will not have a material adverse effect on the financial condition or
results of operations of the Company.

NOTE 9--SEGMENT AND GEOGRAPHIC INFORMATION

During 1991 and 1992 the Company conducted business in two principal industry
segments: Environmental Operations and Environmental and Infrastructure
Engineering Services.

The businesses within the Environmental Operations segment are principally
involved in providing clean energy through trash-to-energy and independent
power facility ownership and operation, providing clean water and wastewater
products and services including municipal water and wastewater treatment
facility operation, biosolids management and industrial water and wastewater
management, and providing clean air quality control systems designed for
industrial and utility applications. The Environmental and Infrastructure
Engineering Services segment provided environmental engineering, architectural,
scientific and photogrammetric services, as well as industrial process design
and engineering project management services. Intersegment revenues were at
prices which approximate market and were not material.

Effective January 1, 1993, Wheelabrator contributed the businesses that
constituted its Environmental and Infrastructure Engineering Services segment
along with certain other assets to form, in part, Rust (see Note 2). As a
result, during 1993 the Company conducted business solely within the
Environmental Operations industry.

F-20
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Wheelabrator has foreign operations, primarily in Canada and Europe. Foreign
assets, results of operations and export revenues are not significant.

<TABLE>
<CAPTION>
ENVIRONMENTAL AND
INFRASTRUCTURE
ENVIRONMENTAL ENGINEERING
OPERATIONS SERVICES TOTAL
------------- ----------------- ----------
<S> <C> <C> <C>
1991
Revenue........................... $ 775,673 $397,776 $1,173,449
Operating expenses................ 540,969 365,257 906,226
Selling and administrative ex-
penses........................... 92,533 25,908 118,441
---------- -------- ----------
Income from operations............ $ 142,171 $ 6,611 $ 148,782
========== ======== ==========
Identifiable assets (at year-end). $2,014,784 $168,914 $2,183,698
========== ======== ==========
Depreciation and amortization ex-
pense............................ $ 35,776 $ 4,570 $ 40,346
========== ======== ==========
Capital expenditures.............. $ 125,119 $ 4,725 $ 129,844
========== ======== ==========
1992
Revenue........................... $ 928,313 $554,741 $1,483,054
Operating expenses................ 636,126 472,654 1,108,780
Selling and administrative ex-
penses........................... 90,567 57,788 148,355
---------- -------- ----------
Income from operations............ $ 201,620 $ 24,299 $ 225,919
========== ======== ==========
Identifiable assets (at year-end). $2,437,368 $318,734 $2,756,102
========== ======== ==========
Depreciation and amortization ex-
penses........................... $ 58,410 $ 9,469 $ 67,879
========== ======== ==========
Capital expenditures.............. $ 100,561 $ 47,464 $ 148,025
========== ======== ==========
</TABLE>
- --------
*Identifiable assets exclude unallocated corporate assets of $560.0 million
and $241.0 million at year-end 1991 and 1992, respectively.

F-21
<PAGE>

WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

NOTE 10--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH FULL YEAR
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
1992
Revenue............... $321,382 $359,268 $381,953 $420,451 $1,483,054
Operating expenses.... 246,739 264,324 282,450 315,267 1,108,780
Net income before cu-
mulative effects of
accounting changes... 26,593 79,214(2) 33,399 37,176 176,382
Net income (loss)..... (15,637)(1) 79,214 33,399 37,176 134,152(1)
Earnings per common
share:
Before cumulative
effects of
accounting changes. 0.14 0.42(2) 0.18 0.20 0.94
Net income (loss)... (0.09)(1) 0.42 0.18 0.20 0.71(1)
Weighted average com-
mon shares
outstanding.......... 186,600 188,600 187,000 188,000 188,200
Market price
High................ 18 5/16 15 15/16 17 1/8 19 1/2 19 1/2
Low................. 14 15/16 13 13 15 5/16 13
1993
Revenue............... $245,525 $279,978 $283,882 $332,834 $1,142,219
Operating expenses.... 171,706 193,643 194,619 232,751 792,719
Net income............ 33,408 49,800(3) 35,734(4) 44,160 163,102
Net income per common
share................ 0.18 0.26(3) 0.19(4) 0.23 0.86
Weighted average com-
mon shares
outstanding.......... 188,300 188,500 188,900 189,700 188,900
Market price
High................ 23 1/2 21 1/4 20 18 1/8 23 1/2
Low................. 18 1/8 17 5/8 14 3/4 14 5/8 14 5/8
</TABLE>
- --------
(1) Reflects cumulative effect of accounting changes. See Note 1.
(2) Includes gain related to WM International IPO. See Note 2.
(3) Includes gain from issuance of stock by equity investee. See Note 2.
(4) Reflects increase in U.S. federal income taxes under the Omnibus Budget
Reconciliation Act of 1993. See Note 3.

F-22
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

F-23
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and the Board of Directors
of Rust International Inc.:

We have audited the accompanying consolidated balance sheets of Rust
International Inc. (a Delaware corporation) and Subsidiaries as of December 31,
1992 and 1993, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1993, which were prepared on the basis set forth in Note 1 to the
consolidated financial statements. 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rust International Inc. and
Subsidiaries as of December 31, 1992 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.

Arthur Andersen & Co.

Chicago, Illinois,
February 4, 1994

F-24
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993

(000'S OMITTED EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
REVENUE.................................... $1,236,979 $1,441,050 $1,534,465
---------- ---------- ----------
Operating expenses......................... $1,066,888 $1,228,749 $1,249,908
Special charges............................ -- 35,200 --
Selling and administrative expenses........ 111,196 145,405 155,753
Gains on issuance of stock by subsidiary
and equity investee....................... (10,711) (47,000) --
Interest expense........................... 5,016 4,069 9,894
Interest income............................ (750) (2,861) (1,724)
Equity in earnings of affiliates........... (12,065) (15,224) (14,183)
Sundry income, net......................... (1,268) (3,801) (3,007)
Minority interest.......................... 9,172 1,576 3,252
---------- ---------- ----------
Income before income taxes............... $ 69,501 $ 94,937 $ 134,572
Provision for income taxes................. 24,818 11,741 54,608
---------- ---------- ----------
NET INCOME................................. $ 44,683 $ 83,196 $ 79,964
========== ========== ==========
AVERAGE SHARES AND EQUIVALENT SHARES OUT-
STANDING DURING THE PERIOD................ 79,898 81,930
========== ==========
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE..................................... $ 1.04 $ .98
========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-25
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 1992 AND 1993

(000'S OMITTED)

ASSETS

<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents................................. $ 1,621 $ --
Accounts receivable, less reserve of $7,246 in 1992
and $11,477 in 1993................................. 244,034 287,330
Due from affiliates.................................. 24,756 13,328
Refundable income taxes.............................. 23,270 18,630
Costs and estimated earnings in excess of billings on
uncompleted contracts............................... 122,762 152,802
Prepaid expenses..................................... 15,849 28,326
---------- ----------
Total Current Assets............................... $ 432,292 $ 500,416
---------- ----------
PROPERTY AND EQUIPMENT, AT COST:
Land................................................. $ 5,696 $ 9,314
Buildings............................................ 42,290 61,448
Vehicles and equipment............................... 289,819 364,485
Leasehold improvements............................... 5,947 4,717
---------- ----------
$ 343,752 $ 439,964
Less--Accumulated depreciation and amortization...... (87,919) (107,170)
---------- ----------
Total Property and Equipment, net.................. $ 255,833 $ 332,794
---------- ----------
OTHER ASSETS:
Intangible assets relating to acquired business, net. $ 227,463 $ 515,714
Investments.......................................... 196,927 228,580
Sundry............................................... 54,980 60,947
---------- ----------
Total Other Assets................................. $ 479,370 $ 805,241
---------- ----------
Total Assets....................................... $1,167,495 $1,638,451
========== ==========
</TABLE>

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

F-26
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 1992 AND 1993

(000'S OMITTED EXCEPT SHARE AMOUNTS)

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
Portion of long-term debt payable within one year.... $ 2,719 $ 2,174
Accounts payable..................................... 77,548 97,695
Accrued expenses
Payroll............................................. 25,764 11,474
Insurance........................................... 14,307 13,566
Other............................................... 36,297 80,862
Billings in excess of costs and estimated earnings on
uncompleted contracts............................... 32,485 43,579
---------- ----------
Total Current Liabilities.......................... $ 189,120 $ 249,350
---------- ----------
DEFERRED ITEMS:
Income taxes......................................... $ 12,637 $ 13,038
Other................................................ 39,288 44,511
---------- ----------
Total Deferred Items............................... $ 51,925 $ 57,549
---------- ----------
LONG-TERM DEBT:
Due to WMX Technologies, Inc......................... $ 75,000 $ 390,291
Other, less portion payable within one year.......... 5,141 48,477
---------- ----------
Total Long-Term Debt............................... $ 80,141 $ 438,768
---------- ----------
MINORITY INTEREST IN SUBSIDIARIES...................... $ 71,913 $ 580
---------- ----------
COMMITMENTS AND CONTINGENCIES.......................... $ -- $ --
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value, 50,000,000 shares au-
thorized, none issued............................... $ -- $ --
Common stock, $.01 par value, 450,000,000 shares au-
thorized, 79,898,091 shares issued and outstanding
in 1992 and 83,089,821 shares issued and outstanding
in 1993............................................. 799 831
Additional paid-in capital........................... 600,503 658,824
Cumulative translation adjustment.................... (25,707) (46,216)
Retained earnings.................................... 198,801 278,765
---------- ----------
Total Stockholders' Equity......................... $ 774,396 $ 892,204
---------- ----------
Total Liabilities and Stockholders' Equity......... $1,167,495 $1,638,451
========== ==========
</TABLE>

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

F-27
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE YEARS ENDED DECEMBER 31, 1993

(000'S OMITTED)

<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
COMMON PAID-IN TRANSLATION RETAINED STOCKHOLDERS'
STOCK CAPITAL ADJUSTMENT EARNINGS EQUITY
------ ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at January 1,
1991..................... $799 $138,762 $ 7,744 $ 70,922 $218,227
Net income for the year... -- -- -- 44,683 44,683
Stockholders' contribu-
tions.................... -- 182,287 -- -- 182,287
Foreign currency transla-
tion adjustment.......... -- -- 1,248 -- 1,248
---- -------- -------- -------- --------
Balance at December 31,
1991..................... $799 $321,049 $ 8,992 $115,605 $446,445
Net income for the year... -- -- -- 83,196 83,196
Stockholders' contribu-
tions.................... -- 279,454 -- -- 279,454
Foreign currency transla-
tion adjustment.......... -- -- (34,699) -- (34,699)
---- -------- -------- -------- --------
Balance at December 31,
1992..................... $799 $600,503 $(25,707) $198,801 $774,396
Net income for the year... -- -- -- 79,964 79,964
Common stock issued upon
exercise of stock
options.................. 1 1,649 -- -- 1,650
Tax benefit of non-quali-
fied stock options
exercised................ -- 301 -- -- 301
Common stock issued in The
Brand Companies, Inc.
merger................... 31 56,371 -- -- 56,402
Foreign currency transla-
tion adjustment.......... -- -- (20,509) -- (20,509)
---- -------- -------- -------- --------
Balance at December 31,
1993..................... $831 $658,824 $(46,216) $278,765 $892,204
==== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-28
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993

(000'S OMITTED)

<TABLE>
<CAPTION>
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Operating Activities
Net income.................................. $ 44,683 $ 83,196 $ 79,964
Adjustments to reconcile net income to net
cash provided by (used for) operating ac-
tivities:
Depreciation and amortization............. 24,951 36,425 52,300
Undistributed earnings of equity
investees................................ (12,065) (15,224) (9,371)
Gains on issuances of stock by subsidiary
and equity investee...................... (9,673) (47,000) --
Loss (gain) on the sale of property and
equipment................................ (194) 30 (298)
Changes in assets and liabilities net of
effects of acquired and divested compa-
nies:
Accounts receivable..................... 59,914 (47,992) (2,614)
Costs and estimated earnings in excess
of billings, net....................... (39,825) (76,350) (26,352)
Prepaid expenses and refundable income
taxes.................................. 3,834 (10,771) (1,183)
Accounts payable and accrued expenses... (39,671) (18,084) (46,345)
Deferred income taxes................... (276) 14,246 11,757
Deferred other items.................... (3,419) 9,175 (11,954)
Minority interest in subsidiary......... 9,172 1,576 5,046
Sundry.................................. (8,357) (12,249) (8,317)
--------- --------- ---------
Net cash provided by (used for) operating ac-
tivities..................................... $ 29,074 $ (83,022) $ 42,633
--------- --------- ---------
Investing Activities
Purchase of property and equipment.......... $ (55,461) $ (86,517) $ (68,136)
Purchase of companies, net of cash acquired. (43,097) (103,894) (285,364)
Sale of other investments, net.............. -- -- 2,616
Additional investment in WM International... (72,750) -- --
Proceeds from sale of property and equip-
ment....................................... 3,457 4,419 9,669
--------- --------- ---------
Net cash used for investing activities........ $(167,851) $(185,992) $(341,215)
--------- --------- ---------
Financing Activities
Capital contributions from stockholders..... $ 182,287 $ 279,454 $ --
Payments on debt............................ (58,591) (11,723) (20,281)
Net borrowings from WMX Technologies, Inc... -- -- 315,291
Proceeds from exercise of stock options,
net........................................ -- -- 1,951
--------- --------- ---------
Net cash provided by financing activities..... $ 123,696 $ 267,731 $ 296,961
--------- --------- ---------
Net decrease in cash.......................... $ (15,081) $ (1,283) $ (1,621)
Cash at beginning of period................. 17,985 2,904 1,621
--------- --------- ---------
Cash at end of period......................... $ 2,904 $ 1,621 $ --
--------- --------- ---------
Supplemental disclosure:
Acquisitions of businesses
Fair value of assets acquired............. $ 82,157 $ 161,094 $ 563,801
Cash paid................................. (38,914) (104,786) (296,067)
--------- --------- ---------
Liabilities assumed....................... $ 43,243 $ 56,308 $ 267,734
========= ========= =========
Interest paid, net of amounts capitalized... $ 5,016 $ 4,069 $ 8,551
========= ========= =========
Income taxes paid (received)................ $ 20,988 $ (10,768) $ 19,654
========= ========= =========
Supplemental schedule of non-cash investing
and financing activities:
Acquisition of subsidiaries in exchange for
common stock............................... $ 26,861 $ 697 $ --
========= ========= =========
Net book value of assets transferred in NSC
Corporation transaction.................... $ -- $ -- $ 34,891
========= ========= =========
Fair market value of stock issued in The
Brand Companies, Inc. merger............... $ -- $ -- $ 56,402
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-29
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Rust International Inc. (the "Company") is a Delaware corporation and a
majority-owned subsidiary of Chemical Waste Management, Inc. ("CWM"), itself a
majority-owned subsidiary of WMX Technologies, Inc. ("WMX"). The Company
operates within a single industry segment providing engineering, construction,
environmental and infrastructure consulting, environmental remediation, and on-
site industrial and related services to commercial, industrial, and government
customers.

The Company was formed January 1, 1993, when CWM and Wheelabrator
Technologies Inc. ("WTI"), another majority-owned subsidiary of WMX,
contributed certain of their businesses and other assets in exchange for all of
the then outstanding shares of the Company's common stock. The transaction was
accounted for as a reorganization of entities under common control, in a manner
similar to a pooling of interests. The accompanying consolidated financial
statements are based on historical cost as if the Company has been in existence
throughout the entire period presented, and the contributed businesses are
included from the date of acquisition by WMX or any controlled subsidiary of
WMX.

NOTE 2. SUMMARY OF ACCOUNTING POLICIES

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 are eliminated.

Foreign Currency Translation--Certain foreign subsidiary and equity investee
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 rate in effect during the period. The resulting translation
adjustments are charged or credited to stockholders' equity.

Revenue Recognition--Revenues from long-term engineering and construction
contracts are generally recognized on the percentage of completion method, as
measured primarily by a ratio of expended costs to anticipated final costs.
Revisions in revenue, costs and profit estimates occurring during the course of
the contracts are reflected from the time the revisions are determined. At the
time a loss on a contract becomes probable, the amount of the estimated loss is
recognized. Billings are based upon specific terms of each contract. All other
revenues are recognized when services are rendered.

Significant Customers--Various departments and agencies of the U.S.
Government accounted for 10.1% of revenues in 1992 and 11.6% in 1993. No single
customer accounted for over 10% of revenue in 1991. Because of the nature of
the Company's business, individual contracts and hence individual customers
may, from time to time, account for over 10% of revenue in a given year. In
addition, contracts with departments and agencies of the U.S. Government are
typically bid for and awarded by the particular department or agency. The
Company does not consider its business to be dependent on any single customer
or group of customers.

Property and Equipment--Property and equipment (including major repairs and
improvements) are capitalized and stated at cost. The cost, less the estimated
salvage value, is depreciated over the estimated useful lives on the straight-
line method as follows: buildings--10 to 30 years; vehicles and equipment--3 to
25 years; leasehold improvements--over the life of the applicable lease. Items
of an ordinary maintenance or repair nature are charged directly to operations.

Intangible Assets--Intangible assets relating to acquired businesses consist
primarily of the cost of purchased businesses in excess of the market value of
net assets acquired. Intangible assets are amortized on

F-30
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
a straight-line basis over a period not exceeding 40 years. The accumulated
amortization of intangible assets amounted to $12,203,000 and $21,457,000 at
December 31, 1992 and 1993, respectively. The provisions charged to costs and
expenses in 1991, 1992 and 1993 amounted to $3,539,000, $5,768,000 and
$10,507,000, 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.

Investments--In August 1991, the Company acquired a 15% fully-diluted
interest in Waste Management International plc ("WM International"). WM
International holds substantially all of the waste management services business
interests of WMX outside of North America. Because WM International was
previously a wholly-owned subsidiary of WMX, the investment was recorded at the
Company's equity in the underlying net assets of WM International for all
periods presented. In December 1991, the stockholders of WM International
agreed to provide an additional $200,000,000 capital contribution in proportion
to their relative ownership percentages. The Company's share of the additional
capital contribution was $30,000,000. Also during 1991, the Company increased
its investment in WM International (with an offsetting increase in additional
paid-in capital), to record its proportionate share of an increase in the
equity of WM International which resulted from an agreement whereby WMX agreed
to reimburse WM International for certain environmental liabilities.

In April 1992, WM International sold previously unissued ordinary shares in
an initial public offering ("IPO"), reducing the Company's equity interest from
15% to 12%. WMX and WTI own 56% and 12%, respectively, of WM International.
Income on this investment ($12,065,000 in 1991; $15,224,000 in 1992; and
$13,709,000 in 1993) is being accounted for under the equity method. If valued
at the December 31, 1993, closing price of publicly traded shares, the
calculated value of the Company's investment in WM International would exceed
the carrying value by approximately $200,000,000. A summary of certain
financial information for WM International follows:

<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1992 1993
---------- ----------
<S> <C> <C>
Current assets...................................... $ 688,869 $ 629,786
Noncurrent assets................................... 2,103,934 2,694,489
Current liabilities................................. 585,701 533,266
Noncurrent liabilities.............................. 429,100 904,007
Minority interest................................... 147,329 270,640
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue.................................. $1,075,070 $1,445,735 $1,411,211
Gross profit............................. 316,946 412,472 402,065
Net income............................... 80,433 120,113 114,246
</TABLE>

See Note 3 for discussion of the Company's investment in NSC Corporation
("NSC").

Disposal Credits--The Company holds certain disposal credits to be applied
against the cost of disposing of nonhazardous solid waste at WMX facilities.
Such credits are classified as other sundry assets.

Fair Value of Financial Instruments--The Company's financial instruments
include certain investments and other sundry assets, along with its
indebtedness to WMX and others. The Company has subordinated

F-31
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
notes payable with a carrying amount of $44,319,000 (see Note 7), and a fair
value of $46,978,000. Fair value was determined based on quoted market prices.
The fair value of all other instruments as well as other current assets and
liabilities approximates their carrying value at December 31, 1993.

Postretirement and Postemployment Benefits--The majority of the Company's
active employees will not receive postretirement benefits other than pensions.
The Company has accounted for such benefits, which are not material, on an
accrual basis in accordance with Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions" as if this standard had been in effect for all periods presented.
Postemployment benefits provided by the Company of the type described in
Statement of Financial Accounting Standards No. 112 "Employers' Accounting for
Postemployment Benefits" are immaterial.

Environmental Liabilities--The Company has significant operations in the
environmental services area, including remediation services involving hazardous
and radioactive substances. Such operations involve the Company with numerous
Federal and state laws and regulations, including the Resource Conservation and
Recovery Act ("RCRA") and the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA").

The Company does not believe that there are currently any material
environmental liabilities which should be recorded or disclosed in its
financial statements. However, it is reasonably possible that technological,
regulatory or enforcement developments, the results of environmental studies or
other factors could alter this belief and necessitate the recording of
liabilities which could be material. The impact of such possible future events
cannot be estimated at the current time.

Gain Recognition on Issuances of Stock by Subsidiary and Equity Investee--It
is the Company's policy to record in income gains from the sale or other
issuance of previously unissued stock by its subsidiary or equity investee.
During 1991, the Company recorded non-taxable gains of $10,711,000 resulting
from the issuance of stock by The Brand Companies, Inc. ("Brand"), a majority
owned subsidiary of the Company, in connection with Brand's acquisitions of
businesses (see Note 5) and the exercise of employee stock options. In 1992,
the Company recognized a non-taxable gain of $47,000,000 in connection with the
WM International IPO. Because the Company and WMX intend to control their
investments in Brand and WM International, respectively, to maintain the non-
taxable status of the gains, deferred income taxes have not been provided.

Pro Forma and Actual Earnings Per Common Share--Pro forma earnings per common
share as shown on the consolidated statement of income are calculated, for 1992
only, by dividing net income for that year by the 79,898,091 shares issued upon
the January 1, 1993 formation of the Company. The effect of outstanding options
is immaterial. Historical 1991 and 1992 earnings per share are not meaningful
because of the significant stockholder contributions during the periods.

Earnings per share for 1993 are computed on the basis of the weighted average
number of common and common equivalent shares outstanding during the year.
Common stock equivalents relate to shares granted for issuance under the
Company's stock option plans. The number of common shares in the 1993 balance
sheet differs from the number used in computing earnings per share. This
difference is due to 97,458 shares issuable under stock options after applying
the treasury stock method and 1,257,073 shares, being the weighted average
effect of shares outstanding during the year.

Reclassifications--Certain amounts in previously issued financial statements
have been reclassified to conform to 1993 presentations.

F-32
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 3. REORGANIZATION

NSC Transaction

On May 3, 1993, the Company transferred its asbestos abatement business to
NSC in exchange for newly issued shares of NSC common stock equivalent to an
approximately 41% ownership interest in NSC, as well as NSC's interest in two
industrial services businesses. For 1992, the asbestos abatement business had
revenues of $144,510,000 and operating income (after operating, selling and
administrative expenses but before special charges) of $4,883,000. This
investment is being accounted for under the equity method. As part of the
transaction, the Company will provide NSC with access to asbestos disposal,
bonding support and a $25,000,000 revolving subordinated working capital credit
facility. 1993 income on this investment was $1,074,000 and the Company
received a dividend of $4,812,000 from NSC. If valued at the December 31, 1993
closing price of publicly traded shares, the calculated value of the Company's
investment in NSC would be below the carrying value by approximately
$16,100,000. In management's opinion, the carrying value is fully realizeable.

Brand Transaction

On May 7, 1993, the stockholders of Brand voted in favor of the previously
announced merger of Brand into a wholly-owned subsidiary of the Company. Under
the provisions of the merger agreement, all shares of Brand common stock (other
than those held by the Company or Brand) were converted on a one-for-one basis
into Company common stock unless the holder thereof elected prior to the merger
to receive $18.75 per Brand share in cash. On May 10, 1993, the Company began
trading on the New York Stock Exchange. As a result of the merger, the Company
is owned approximately 56% by CWM, 40% by WTI and 4% by public stockholders.
The cost of acquiring the Brand shares exchanged for cash was financed through
a $350,000,000 credit facility provided to the Company by WMX.

NOTE 4. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31
-------------------------
1991 1992 1993
------- -------- -------
<S> <C> <C> <C>
Currently payable:
Federal....................................... $16,071 $(12,138) $21,998
State......................................... 3,907 (2,187) 2,759
Foreign....................................... -- -- 1,471
------- -------- -------
$19,978 $(14,325) $26,228
------- -------- -------
Deferred:
Federal....................................... $ 4,098 $ 21,034 $21,844
State......................................... 742 5,032 5,708
Foreign....................................... -- -- 828
------- -------- -------
$ 4,840 $ 26,066 $28,380
------- -------- -------
Total provision............................. $24,818 $ 11,741 $54,608
======= ======== =======
</TABLE>

Income taxes have been provided in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109") as if
the standard had been in effect for all periods presented. Deferred income
taxes result from temporary differences in the recognition of revenue and
expense for tax and financial statement purposes. Deferred income taxes will be
recognized as current liabilities in future years as such taxes become payable.
Deferred income taxes are not provided on undistributed earnings of foreign
affiliates because those earnings are considered to be permanently invested. If
the reinvested earnings were to be remitted, the U.S. income taxes due under
current law would not be material.

F-33
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The reasons for the variance between the statutory federal income tax rate
and the actual tax rate are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER
31
-----------------
1991 1992 1993
---- ----- ----
<S> <C> <C> <C>
Statutory federal income tax rate..................... 34.0% 34.0% 35.0%
State and local taxes, net of federal benefit......... 4.4 1.9 4.1
Amortization of intangible assets relating to acquired
businesses........................................... 1.5 2.0 2.4
Non-taxable gains on issuances of stock by subsidiary
and equity investee.................................. (5.2) (16.9) --
Undistributed earnings of equity investees............ (5.9) (5.5) (3.7)
Non-taxable minority interest......................... 4.2 .2 .9
Other................................................. 2.7 (3.3) 1.9
---- ----- ----
35.7% 12.4% 40.6%
==== ===== ====
</TABLE>

The principal items that comprise the deferred tax (assets) liabilities are
as follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31
------------------
1992 1993
-------- --------
<S> <C> <C>
Long-term contracts.................................. $ (7,279) $ (2,878)
Liabilities not currently deductible................. (22,672) (43,682)
Other................................................ (161) (4,919)
-------- --------
Subtotal........................................... $(30,112) $(51,479)
-------- --------
Property and equipment............................... $ 22,734 $ 39,797
Income not currently taxable......................... 8,015 12,720
Non deductible disposal credits...................... 12,000 12,000
-------- --------
Subtotal........................................... $ 42,749 $ 64,517
-------- --------
Total deferred tax liabilities................... $ 12,637 $ 13,038
======== ========
</TABLE>

In August 1993, the U.S. Congress passed legislation which increased U.S.
Federal income taxes for the Company and its domestic subsidiaries retroactive
to January 1. Under FAS 109, deferred income taxes were adjusted to reflect the
new higher tax rates. As a result of the new legislation, 1993 income tax
expense increased by $1.9 million.

NOTE 5. BUSINESS COMBINATIONS

All businesses acquired by the Company have been accounted for as purchases
and are included in the consolidated financial statements from the date of
acquisition by WMX or any controlled subsidiary of WMX.

During 1991, the Company acquired seven businesses for $43,526,000 in cash
and notes and 1,429,490 shares of Brand's common stock. In March 1991, the
Company exercised an option to acquire an additional 660,806 shares of Brand
for $5,617,000 in cash. During 1992, the Company acquired twenty-one businesses
for $104,786,000 in cash and notes and 34,838 shares of Brand's common stock.
In October 1992, the Company acquired an additional 164,842 shares of Brand. As
of December 31, 1992, the Company owned approximately 56% of Brand. During
1993, the Company acquired fifteen businesses, including the minority interest
in Brand, for $296,067,000 in cash and notes, and approximately 3,069,000
shares of the Company's common stock were issued in connection with the Brand
merger.

F-34
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following summarizes the effect of businesses acquired and accounted for
as purchases in 1991, 1992 and 1993 as if they had been acquired as of January
1 of the preceding year (unaudited):

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue as reported.................... $1,236,979 $1,441,050 $1,534,465
Revenue of purchased businesses for pe-
riod prior to acquisition............. 243,675 345,326 138,564
---------- ---------- ----------
Pro forma revenue...................... $1,480,654 $1,786,376 $1,673,029
========== ========== ==========
Net income as reported................. $ 44,683 $ 83,196 $ 79,964
Net income of purchased businesses for
period prior to acquisition........... 4,262 11,998 741
Adjustment for interest and amortiza-
tion of cost in excess of market value
of net assets acquired................ (5,721) (19,892) (6,341)
---------- ---------- ----------
Pro forma net income................... $ 43,224 $ 75,302 $ 74,364
========== ========== ==========
Earnings per share as reported......... $ 1.04 $ .98
Effect of purchased businesses prior to
acquisition........................... (.10) (.07)
---------- ----------
Pro forma earnings per share........... $ .94 $ .91
========== ==========
</TABLE>

NOTE 6. CONTRACTS IN PROCESS

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

<TABLE>
<CAPTION>
1992 1993
----------- -----------
<S> <C> <C>
Costs and estimated earnings on uncompleted
contracts.................................... $ 3,459,612 $ 3,100,927
Less: Billings on uncompleted contracts....... (3,369,335) (2,991,704)
----------- -----------
Total contracts in process.................. $ 90,277 $ 109,223
=========== ===========
</TABLE>

Contracts in process are included in the consolidated balance sheets under
the following captions:

<TABLE>
<CAPTION>
1992 1993
-------- --------
<S> <C> <C>
Costs and estimated earnings in excess of billings
on uncompleted contracts........................... $122,762 $152,802
Billings in excess of costs and estimated earnings
on uncompleted contracts........................... (32,485) (43,579)
-------- --------
Total contracts in process........................ $ 90,277 $109,223
======== ========
</TABLE>

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

Accounts receivable includes retainage which has been billed, but which is
not due pursuant to contract provisions until completion. Such retainage at
December 31, 1993 is $30,480,403 including $4,447,000 that is expected to be
collected after one year. At December 31, 1992, retainage was $23,276,000.

F-35
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 7. DEBT AND INTEREST EXPENSE

The details relating to debt (including capitalized leases which are
immaterial) as of December 31, 1992 and 1993 are as follows:

<TABLE>
<CAPTION>
1992 1993
------- --------
<S> <C> <C>
Due to WMX-credit facility.............................. $75,000 $240,291
Due to WMX-Term Loans, interest 5.75% and 6%, payable
through 1998........................................... -- 150,000
Subordinated notes payable, interest 7.5% due 2001...... -- 44,319
Installment loans and capitalized leases, interest 5% to
13%, payable through 1999.............................. 7,860 6,332
------- --------
Total debt.............................................. $82,860 $440,942
Less current portion.................................... 2,719 2,174
------- --------
Long-term portion....................................... $80,141 $438,768
======= ========
</TABLE>

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

<TABLE>
<S> <C>
Second year..................... $ 1,527
Third year...................... 986
Fourth year..................... 241,116
Fifth year...................... 150,162
Sixth year and thereafter....... 44,977
--------
$438,768
========
</TABLE>

The Company and WMX have entered into an agreement (see Note 12 ) whereby WMX
has agreed, among other things, to provide the Company with a five-year
committed $350,000,000 credit facility and certain corporate administrative
services, including maintenance of an intercompany advance account system for
the Company to either deposit its excess cash, if any, with WMX or borrow funds
from WMX. Amounts borrowed under the credit facility have an interest rate
equal to WMX's effective 30-day commercial paper rate plus transaction costs.
At the Company's option, any indebtedness may be converted to a term loan due
after five years. Accordingly, all such indebtedness is classified as long-
term. As of December 31, 1993, $50,000,000 of the credit facility was converted
into a 5.75% term loan. The rates of the term loan will generally be equal to
WMX's cost of funds, including transaction costs, for loans of similar
duration, and may be either fixed or floating rates of interest.

During 1993, WMX loaned the Company an additional $100,000,000 which, as of
December 31, 1993, was structured as a 6% five-year term loan.

The Company assumed the subordinated notes as a result of an acquisition in
1993. The Company has the option, in August 1994, to redeem these bonds at 105%
of the principal amount. The premium decreases thereafter through August 2001.

In all periods presented, interest expense on intercompany indebtedness has
been computed based on the average 30-day commercial paper rates applicable for
the period. Interest has been capitalized on significant projects under
development. Interest expense was as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31
----------------------
1991 1992 1993
------ ------ ------
<S> <C> <C> <C>
Interest expense to affiliates.................... $4,417 $2,875 $8,585
Interest expense to third parties................. 607 1,234 1,491
Capitalized interest.............................. (8) (40) (182)
------ ------ ------
$5,016 $4,069 $9,894
====== ====== ======
</TABLE>

F-36
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 8. STOCK OPTIONS

The Company has two Stock Option Plans: the 1993 Stock Option Plan (the
"Employee Plan") and the 1993 Stock Option Plan for Non-Employee Directors (the
"Directors Plan").

Options granted under the Employee Plan are generally exercisable in
cumulative one-third annual installments beginning one year after the date of
grant, and expire if not exercised within seven years from the grant date.
Future options may be granted at a price equal to 100% of the market value on
the date of grant and for a term not to exceed 10 years. 5,000,000 shares of
the Company's common stock have been reserved for issuance upon exercise of
options under the Employee Plan.

Under the Directors Plan, options for 20,000 shares are to be granted at the
time of election to the Board to each person who is not an officer or employee
of the Company or any of its subsidiaries. Options are exercisable in
cumulative one-fifth annual installments beginning six months after the date of
grant and at one year intervals thereafter. 200,000 shares of the Company's
common stock have been reserved for issuance upon exercise of options under the
Directors Plan.

Additionally, 633,023 options outstanding under various Brand stock option
plans were converted into the right to receive Company common stock on a one-
for-one basis upon completion of the Brand merger.

The status of the Plans was as follows:

<TABLE>
<CAPTION>
SHARES OPTION PRICE
--------- -------------
<S> <C> <C>
December 31, 1992
Outstanding................................... 633,023 $ 5.75-$22.50
Available for future grant.................... 5,200,000
1993--
Granted....................................... 1,309,333 $16.76-$20.38
Exercised..................................... (123,072) $ 5.75-$17.38
Cancelled..................................... (260,400) $ 5.75-$22.50
December 31, 1993
Outstanding................................... 1,558,884 $ 5.75-$22.50
Available for future grant.................... 3,900,667
</TABLE>

At December 31, 1993, there were 295 participants in the Company's stock
option plans. At December 31, 1993, options were exercisable with respect to
113,808 shares and outstanding options expire at various dates through
September 15, 2000.

NOTE 9. PENSION AND PROFIT SHARING PLANS

The Company is a participant in the Wheelabrator-Rust Savings and Retirement
Plan which is a qualified defined contribution plan consisting of a savings
account component (the "Savings Account") and a retirement account component
(the "Retirement Account"). Under the terms of the Savings Account, eligible
employees of the Company may elect to contribute a portion of their annual
compensation not to exceed 16%. The Company is required to match 30% of the
first 6% of salary contributed by an employee. Under the terms of the
Retirement Account, eligible employees of the Company receive an annual
contribution equal to a maximum of 3% of their eligible earnings. The terms of
the Retirement Account also provide that designated craft employees receive an
annual contribution equal to a minimum of 2% of their eligible earnings.
Employees vest in Company contributions and the associated earnings in the
Savings Account at 20% per year, in the Retirement Account after five years and
with the craft employees, immediately. Company contributions were $7,825,000,
$10,247,000 and $17,238,000 in 1991, 1992 and 1993, respectively.

F-37
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Prior to January 1, 1993, many of the Company's employees were participants
in plans maintained by their predecessor employers. Such employees no longer
participate in those plans. The accompanying statements of income reflect as
pension expense the amounts attributable to the employees of the Company under
the predecessor plans. Such pension expense was $5,752,000 for 1991 and
$4,511,000 for 1992.

Additionally, the Company contributes to several multi-employer plans in
accordance with various union agreements. Contributions to these multi-employer
plans were $6,963,000 in 1991, $4,462,000 in 1992 and $4,169,000 in 1993.

NOTE 10. LEGAL MATTERS

There are various lawsuits and claims pending against the Company which have
arisen in the normal course of business and relate mainly to contract claims or
matters of personal injury. In connection with the formation of the Company,
CWM and WTI have agreed to indemnify the Company against such claims and suits
for matters which arose prior to January 1, 1993, and which relate to
businesses that each contributed (except for Brand). The outcome of these
matters is not presently determinable, but in the opinion of management, based
on the advice of counsel and the indemnification discussed above, the ultimate
resolution of these matters will not have a material adverse effect on the
financial position or results of operation of the Company.

Brand is one of numerous defendants in approximately 3,200 personal injury
lawsuits related to installation of asbestos, primarily in the Philadelphia,
Pennsylvania area prior to 1973. The extent of Brand's liability, if any, in
these lawsuits or other related actions which may be filed in the future,
cannot be definitively determined at this time. Based on settlements and
dismissals to date, the extent of insurance coverage related to these suits and
discussions with counsel, management believes that the possibility of any
materially adverse financial consequences to the Company as a result of these
actions is remote.

NOTE 11. COMMITMENTS

The Company leases several of its operating and office facilities along with
certain equipment for various terms. Rents charged to costs and expenses in the
consolidated statements of income amount to $29,179,000 for 1991, $35,408,000
for 1992 and $28,958,000 for 1993. These amounts include rents under long-term
and short-term cancelable leases, but are exclusive of leases capitalized for
accounting purposes.

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

<TABLE>
<S> <C>
First year...................... $ 19,492
Second year..................... 17,591
Third year...................... 13,979
Fourth year..................... 12,285
Fifth year...................... 9,861
Sixth year and thereafter....... 29,033
--------
$102,241
========
</TABLE>

The Company has issued or is a party to approximately 250 bank letters of
credit, performance bonds and other direct or indirect guarantees. Such
guarantees (averaging $950,000 each), including those provided

F-38
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
for affiliates, are given in the ordinary course of business. Management does
not expect these guarantees will have a material adverse effect on the
consolidated financial position or results of operations of the Company.

NOTE 12. TRANSACTIONS WITH AFFILIATES

The Company, WMX, CWM and WTI have entered into an Intercorporate Services
Agreement whereby WMX has agreed, among others things, to provide the Company
with a $350,000,000 credit facility (as described in Note 7) certain insurance
and letter of credit and surety bond procurement services and certain corporate
administrative services; CWM has agreed to pay the Company a business
development fee as reimbursement for certain of the Company's business
development expenses; and the Company has agreed to provide certain payroll and
benefits administration services to WTI. The party providing services under the
agreement is to be paid its cost of providing those services. The Company has
also been designated as a preferred provider for services in North America to
WMX, CWM, WTI and their subsidiaries. This agreement expires on December 31,
1997, unless terminated earlier following the occurrence of certain events of
default.

WMX has furnished the services of financial, administrative, legal and
certain other corporate staff personnel to the Company. The Company believes
that these have been provided to the Company on a reasonable basis with charges
for such services approximating their cost to WMX. Such charges were $1,129,000
for 1991, $1,572,000 for 1992 and $1,268,000 for 1993. In addition, the Company
has reimbursed WMX for third party charges incurred by WMX for the benefit of
the Company, such as letter of credit fees, insurance and bonding costs, legal
fees, and office rental charges.

The Company has from time to time provided engineering, construction
management and other services to various subsidiaries or divisions of WMX.
Revenues earned for such services were $143,000,000 in 1991, $125,956,000 in
1992 and $242,671,000 in 1993. The Company has also received transportation and
disposal services from WMX, CWM and certain of their subsidiaries. Charges by
affiliates for such services were $88,035,000 in 1991, $119,100,000 in 1992 and
$47,448,000 in 1993. The terms of these transactions between the Company and
WMX and its affiliates have generally been the same as the terms of comparable
transactions with unaffiliated third parties.

NOTE 13. SPECIAL CHARGES

In 1992, Brand provided a $35,200,000 pretax charge related to certain costs
of reorganizing its asbestos abatement business and closing certain offices, a
writedown of its investment in that business, and certain restructuring costs
related to the formation of the Company.

NOTE 14. GEOGRAPHIC INFORMATION

In addition to its domestic operations, the Company has subsidiaries based
and operating outside of the United States. These foreign operations were
immaterial in 1991 and 1992. The 1993 domestic and foreign operations were as
follows:

<TABLE>
<CAPTION>
UNITED
STATES FOREIGN CONSOLIDATED
---------- -------- ------------
<S> <C> <C> <C>
Revenue.................................. $1,471,010 $ 63,455 $1,534,465
Net income............................... $ 76,330 $ 3,634 $ 79,964
Identifiable assets...................... $1,498,256 $140,195 $1,638,451
</TABLE>

F-39
<PAGE>

RUST INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Following is an analysis of certain items in the consolidated statements of
income by quarter for 1992 and 1993.

<TABLE>
<CAPTION>
GROSS NET EARNINGS
1992 REVENUE PROFIT INCOME PER SHARE
---- ---------- -------- ------- ---------
<S> <C> <C> <C> <C>
First Quarter.......................... $ 346,430 $ 52,178 $13,665 $0.17
Second Quarter......................... 364,741 58,949 61,870 0.78
Third Quarter.......................... 368,133 45,301 7,425 0.09
Fourth Quarter......................... 361,746 31,500 236 0.00
---------- -------- ------- -----
$1,441,050 $187,928 $83,196 $1.04
========== ======== ======= =====
<CAPTION>
GROSS NET EARNINGS
1993 REVENUE PROFIT INCOME PER SHARE
---- ---------- -------- ------- ---------
<S> <C> <C> <C> <C>
First Quarter.......................... $ 351,374 $ 62,404 $16,619 $0.21
Second Quarter......................... 382,189 69,844 21,093 0.26
Third Quarter.......................... 390,338 76,548 20,896 0.25
Fourth Quarter......................... 410,564 75,761 21,356 0.26
---------- -------- ------- -----
$1,534,465 $284,557 $79,964 $0.98
========== ======== ======= =====
</TABLE>

Earnings per share for 1992 are calculated on a pro forma basis by dividing
net income for that year by the 79,898,091 shares issued upon the January 1,
1993 formation of the Company. Historical earnings per share for 1992 are not
meaningful because of the significant stockholder contributions during prior
periods. See Note 2 to Consolidated Financial Statements.

See Note 2 to Consolidated Financial Statements for a discussion of the
$47,000,000 in non-taxable gains recognized in connection with the issuance of
stock by subsidiary and equity investee affecting the 1992 second quarter and
full year, and Note 13 for a discussion of the $35,200,000 in special charges
affecting the 1992 third quarter by $3,750,000 and the 1992 fourth quarter by
$31,450,000. See Note 4 for a discussion of the $1,900,000 additional income
tax expense incurred affecting the 1993 third quarter by $1,500,000 and the
1993 fourth quarter by $400,000.

F-40
<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
incorporated herein by reference.

(b) FINANCIAL STATEMENT SCHEDULES:

(i) The following information included in Item 14 of the registrant's
1993 annual report on Form 10-K and Arthur Andersen & Co.'s report thereon
are hereby incorporated by reference herein:

Wheelabrator Technologies Inc. and Subsidiaries:

Report of Independent Public Accountants on Supplemental Schedules
Schedule II--Amounts Receivable From Officers, Employees and Related
Parties
Schedule V--Property and Equipment
Schedule VI--Accumulated Depreciation and Amortization of Property and
Equipment

(ii) The following information included in Item 14 of Rust International
Inc.'s 1993 annual report on Form 10-K and Arthur Andersen & Co.'s report
thereon are hereby incorporated by reference herein:

Rust International Inc. and Subsidiaries:

Report of Independent Public Accountants on Supplemental Schedules
Schedule II --Amounts Receivable from Officers, Employees and Related
Parties
Schedule IV --Indebtedness to Related Parties--Non Current
Schedule V --Property and Equipment
Schedule VI --Accumulated Depreciation and Amortization of Property and
Equipment
Schedule VIII--Reserves

All other schedules have been omitted since they are not applicable, not
required, or the information is included in the financial statements or notes
thereto.

II-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 THE 26TH DAY OF APRIL, 1994.

WHEELABRATOR TECHNOLOGIES INC.

/s/ Phillip B. Rooney

By _____________________________

Phillip B. Rooney,

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 BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATE INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Phillip B. Rooney
- ------------------------------------
Phillip B. Rooney Director, Chairman of the
Board and Chief Executive
Officer
/s/ John D. Sanford
- ------------------------------------
John D. Sanford Vice President, Treasurer
and Chief Financial Officer
/s/ Richard S. Haak, Jr.
- ------------------------------------
Richard S. Haak, Jr. Controller and Principal
Accounting Officer
/s/ Dean L. Buntrock
- ------------------------------------
Dean L. Buntrock Director
/s/ William M. Daley
- ------------------------------------
William M. Daley Director
April 26, 1994
/s/ Donald F. Flynn
- ------------------------------------
Donald F. Flynn Director
/s/ James E. Koenig
- ------------------------------------
James E. Koenig Director
/s/ Paul M. Montrone
- ------------------------------------
Paul M. Montrone Director
/s/ Manuel Sanchez
- ------------------------------------
Manuel Sanchez Director
/s/ Thomas P. Stafford
- ------------------------------------
Thomas P. Stafford Director
</TABLE>

II-2
<PAGE>

WHEELABRATOR TECHNOLOGIES INC.

EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S> <C>
1. Inapplicable.
2.01 Agreement and Plan of Merger, dated March 30, 1990 and amended as
of July 24, 1990, among the registrant, WMX Technologies, Inc.
("WMX") and WM Sub, Inc. (incorporated by reference to Exhibit
2.01 to the registrant's statement of Form S-4, Reg. No. 33-
36118).
2.02 Rust International Inc. Organizational Agreement, dated as of
December 31, 1992 ("Organizational Agreement"), by and among the
registrant, The Brand Companies, Inc. ("Brand") and Chemical Waste
Management, Inc. ("CWM") (incorporated by reference to Exhibit 7
to Amendment No. 6 to Statement on Schedule 13D filed on January
5, 1993 by WMX, the registrant and CWM relating to securities of
Brand, Commission File No. 1-7327).
3.01 Restated Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 3.01 to the registrant's
1989 annual report on Form 10-K).
3.02 Certificate of Amendment to the registrant's Restated Certificate
of Incorporation dated May 6, 1993 (incorporated by reference to
Exhibit 19 to the registrant's report on Form 10-Q for the quarter
ended March 31, 1993).
3.03 By-Laws of the registrant as amended through November 1, 1990
(incorporated by reference to Exhibit 3.03 to the registrant's
1990 annual report on Form 10-K).
4. None.
5. Opinion of Stephen P. Stanczak, Staff Vice President and Associate
General Counsel of the registrant (incorporated by reference to
Exhibit 5 to the registrant's registration statement on Form S-1,
Reg. No. 33-47575).
6. None.
7. None.
8. None.
9. None.
10.01 Tax Sharing Agreement ("TSA"), dated as of December 15, 1988,
between the registrant and Koll Real Estate Group, Inc. ("KREG")
(incorporated by reference to Exhibit 10.02 to Amendment No. 3 on
Form 8 to KREG's registration statement on Form 10, Commission
File No. 0-17189).
10.02 Amendment to the TSA dated February 14, 1994 (incorporated by
reference to Exhibit 10.02 to the registrant's 1993 annual report
on Form 10-K).
10.03 Master Support Agreement, dated as of February 26, 1986, among
Allied-Signal Inc. ("Allied Signal"), the registrant and Signal
Capital Corporation, as amended and restated as of January 27,
1987, and as further amended and restated as of December 7, 1988,
among Allied-Signal, Wheelabrator Technologies Inc. ("Old WTI"),
the Guaranteeing Subsidiaries referred to therein, the Non-Company
Resco Subsidiaries referred to therein, the registrant and KREG
(incorporated by reference to Exhibit 10.22 to Amendment No. 3 on
Form 8 to KREG's registration statement on Form 10, Commission
File No. 0-17189).
10.04 Assignment, Assumption and Release Agreement, dated as of December
7, 1988, among the registrant, Old WTI, the Old Guaranteeing
Subsidiaries (as defined therein) and Allied-Signal (incorporated
by reference to Exhibit 10.22B to Amendment No. 3 on Form 8 to
KREG's registration statement on Form 10, Commission File No. 0-
17189).
</TABLE>
- --------

* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.

E-1
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S>
10.05 Assignment and Assumption Agreement, dated as of December 7, 1988, among
the registrant, Old WTI and KREG (incorporated by reference to Exhibit
10.18B to KREG's 1988 annual report on Form 10-K, Commission File No.
0-17189).
10.06 Land Option Agreement, dated as of August 12, 1988, between Old WTI and
Waste Management, Inc. ("WMI") (incorporated by reference to Exhibit
10.15 to the registrant's 1988 annual report on Form 10-K).
10.07 Amendment No. 1 to Land Option Agreement, dated as of June 1, 1992,
between Resco Holdings Inc. ("Resco"), as successor by merger to Old
WTI, and WMI (incorporated by reference to Exhibit 19.01 to the
registrant's 1992 annual report on Form 10-K).
10.08 Second Amended and Restated Airspace Dedication Agreement, dated as of
December 13, 1992, between Resco and WMI (incorporated by reference to
Exhibit 19.02 to the registrant's 1992 annual report on Form 10-K).
10.09 Disposal Agreement, dated as of March 1, 1989, between Waste Management
Inc. of Florida and Broward Waste Energy (incorporated by reference to
Exhibit 10.17A to the registrant's 1988 annual report on Form 10-K).
10.10 Guaranty, dated August 2, 1988, from WMX to the registrant and
Wheelabrator Technologies of North America Inc., formerly known as
Wheelabrator Technologies Inc. ("WTNA") (incorporated by reference to
Exhibit 10.19 to the registrant's 1988 annual report on Form 10-K).
10.11 Development Agreement, dated as of August 12, 1988, between Old WTI and
WMI (incorporated by reference to Exhibit 10.21 to the registrant's 1988
annual report on Form 10-K).
10.12 Amendment No. 1 to Development Agreement, dated as of January 15, 1990,
between Old WTI and WMI (incorporated by reference to Exhibit 10.63 to
registrant's registration statement on Form S-4, Reg. No. 33-36118).
10.13 Amendment No. 2 to Development Agreement, dated as of June 1, 1992,
between Resco and WMI (incorporated by reference to Exhibit 19.03 to the
registrant's 1992 annual report on Form 10-K).
10.14 Restricted Unit Plan for Non-Employee Directors of the registrant, as
amended through June 10, 1991 (incorporated by reference to Exhibit
19.03 to the registrant's quarterly report on Form 10-Q for the quarter
ended June 30, 1991).
10.15 Amendment, dated as of December 6, 1991, to the Restricted Unit Plan for
Non-Employee Directors of the registrant (incorporated by reference to
Exhibit 19.05 to the registrant's 1991 annual report on Form 10-K).
10.16 Deferred Director's Fee Plan adopted June 10, 1991 (incorporated by
reference to Exhibit 19.02 to the registrant's quarterly report on Form
10-Q for the quarter ended June 30, 1991).
10.17 Lease Agreement, dated as of September 15, 1987, between The Connecticut
Bank and Trust Company, N.A., as Owner Trustee, lessor, and Wheelabrator
Millbury Inc., lessee (incorporated by reference to Exhibit 10.51 to the
registrant's 1988 annual report on Form 10-K).
10.18 Lease Agreement, dated as of December 30, 1987, as amended and restated
as of April 1, 1988, between The Connecticut Bank and Trust Company,
N.A., as Corporate Owner Trustee, and Donald E. Smith, as Individual
Owner Trustee, lessor, and Signal Shasta Energy Company Inc., lessee
(incorporated by reference to Exhibit 10.52 to the registrant's 1988
annual report on Form 10-K).
</TABLE>

- --------

* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.

E-2
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S> <C>
10.19 Lease Agreement, dated as of September 15, 1988, between The
Connecticut Bank and Trust Company, N.A., lessor, and Baltimore
Refuse Energy Systems Company, Limited Partnership, lessee
(incorporated by reference to Exhibit 10.40 to the registrant's
registration statement on Form S-4, Reg. No. 33-36118).
10.20 Second Amendment and Restatement of Lease Agreement, dated as of
May 1, 1988, between the First National Bank of Boston, as
Corporate Owner Trustee, James E. Mogavero, as Individual Owner
Trustee, lessor, and Bridgeport Resco, lessee (incorporated by
reference to Exhibit 10.41 to registrant's registration statement
on Form S-4, Reg. No. 33-36118).
10.21 Modification Agreement, dated as of August 24, 1989, among the
registrant, Old WTI, WMI, KREG and Resco (incorporated by
reference to Exhibit 28.01 to the registrant's Form 8-K dated
August 24, 1989).
10.22 Assignment, Assumption and Release Agreement, dated December 18,
1989, among KREG, Henley Holdings, Inc., Henley, Henley Support
Co. Two, the registrant and Resco amending the Modification
Agreement (incorporated by reference to Exhibit 10.69 to the
registrant's registration statement on Form S-4, Reg. No. 33-
36118).
10.23 Letter Agreement, dated October 25, 1990, among the registrant,
WMI, Resco, Henley and Henley Support Co. Two amending the
Modification Agreement (incorporated by reference to Exhibit 10.46
to the registrant's 1990 annual report on Form 10-K).
10.24 Letter Agreement, dated November 8, 1991, among the registrant,
Henley, KREG, WMX, WMI, New Henley Holdings Inc. and WTNA,
amending the Modification Agreement (incorporated by reference to
Exhibit 10.23 to the registrant's 1991 annual report on Form 10-
K).
10.25 1988 Stock Plan for Executive Employees of Old WTI and its
subsidiaries ("1988 Stock Plan") (incorporated by reference to
Exhibit 28.1 to Amendment No. 1 to the registrant's registration
statement on Form S-8, Reg. No. 33-31523).
10.26 Amendments, dated as of September 7, 1990, to the 1988 Stock Plan
(incorporated by reference to Exhibit 19.02 to the registrant's
1990 annual report on Form 10-K).
10.27 Amendment, dated as of November 1, 1990, to the 1988 Stock Plan
(incorporated by reference to Exhibit 19.04 to the registrant's
1990 annual report on Form 10-K).
10.28 Amendment, dated as of December 6, 1991, to the 1988 Stock Plan
(incorporated by reference to Exhibit 19.02 to the registrant's
1991 annual report on Form 10-K).
10.29 1986 Stock Plan for Executive Employees of the registrant and its
subsidiaries ("1986 Stock Plan") (incorporated by reference to
Exhibit 28.2 to Amendment No. 1 to the registrant's registration
statement on Form S-8, Reg. No. 33-31523).
10.30 Amendment, dated as of November 1, 1990, to the 1986 Stock Plan
(incorporated by reference to Exhibit 19.03 to the registrant's
1990 annual report on Form 10-K).
10.31 Amendment, dated as of December 6, 1991, to the 1986 Stock Plan
(incorporated by reference to Exhibit 19.01 to the registrant's
1991 annual report on Form 10-K).
10.32 Restated Funding Agreement, dated as of September 7, 1990, among
Resco, the registrant and WMX (incorporated by reference to
Exhibit 10.34 to the registrant's 1990 annual report on Form 10-
K).
10.33 Medical Waste Option Agreement, dated as of September 7, 1990,
between WMI and the registrant (incorporated by reference to
Exhibit 10.36 to the registrant's 1990 annual report on Form 10-
K).
10.34 Amendment No. 1 to Medical Waste Option Agreement, dated as of
June 1, 1992, between WMI and the registrant (incorporated by
reference to Exhibit 19.04 to the registrant's 1992 annual report
on Form 10-K).
</TABLE>

- --------

* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.

E-3
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S> <C>
10.35 Intellectual Property Licensing Agreement, dated as of September
7, 1990, by and among Waste Management International, Inc.
("WMII"), WMI and the registrant (incorporated by reference to
Exhibit 10.37 to the registrant's 1990 annual report on Form 10-
K).
10.36 Amended and Restated Master Intercorporate Agreement, dated as of
November 1, 1993, by and among WMX, CWM and the registrant
(incorporated by reference to Exhibit 10.36 to the registrant's
1993 annual report on Form 10-K).
10.37 Lease and Agreement, dated as of April 1, 1990, between Asset
Title Holding, Inc., lessor, and the registrant, lessee
(incorporated by reference to Exhibit 10.40 to the registrant's
1990 annual report on Form 10-K).
10.38 Wheelabrator Technologies Inc. Corporate Incentive Bonus Plan (as
amended and restated as of March 8, 1993) (incorporated by
reference to Exhibit 10.36 to the registrant's 1992 annual report
on Form 10-K).
10.39 Wheelabrator Technologies Inc. Corporate Incentive Bonus Plan (as
amended and restated as of March 14, 1994) (incorporated by
reference to Exhibit 10.39 to the registrant's 1993 annual report
on Form 10-K).
10.40 Wheelabrator Technologies Inc. Long Term Incentive Plan (as
amended and restated as of March 23, 1994) (incorporated by
reference to Exhibit 10.40 to the registrant's 1993 annual report
on Form 10-K).
10.41 1991 Performance Unit Plan of the registrant (incorporated by
reference to Exhibit 10.48 of the registrant's 1990 annual report
on Form 10-K).
10.42 Retirement Plan for Non-Employee Directors of the registrant
(incorporated by reference to Exhibit 10.32 to the registrant's
1988 annual report on Form 10-K).
10.43 Amendment, dated as of September 7, 1990, to the Retirement Plan
for Non-Employee Directors of the registrant (incorporated by
reference to Exhibit 19.01 to the registrant's 1990 annual report
on Form 10-K).
10.44 Amendment, dated June 10, 1991, to the Retirement Plan for Non-
Employee Directors of the registrant (incorporated by reference to
Exhibit 19.01 to the registrant's quarterly report on Form 10-Q
for the quarter ended June 30, 1991).
10.45 1991 Stock Option Plan for Non-Employee Directors of the
registrant ("1991 Directors Plan") adopted June 10, 1991
(incorporated by reference to Exhibit 19.04 to the registrant's
quarterly report on Form 10-Q for the quarter ended June 30,
1991).
10.46 Amendment to 1991 Directors Plan dated as of December 22, 1993
(incorporated by reference to Exhibit 10.46 to the registrant's
1993 annual report on Form 10-K).
10.47 1992 Stock Option Plan of the registrant (incorporated by
reference to Exhibit 10.45 to the registrant's 1991 annual report
on Form 10-K).
10.48 Rust Intercorporate Services Agreement, dated as of January 1,
1993, by and among the registrant, Rust International Inc.
("Rust"), WMX and CWM (incorporated by reference to Exhibit 10.42
to the registrant's 1992 annual report on Form 10-K).
10.49 Amendment No. 1 to Rust Intercorporate Services Agreement dated as
of August 10, 1993 by and among the registrant, Rust, WMX and CWM
(incorporated by reference to Exhibit 10.49 to the registrant's
1993 annual report on Form 10-K).
10.50 Organizational Agreement (see Exhibit 2.02 hereof).
</TABLE>
- --------

* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.

E-4
<PAGE>

<TABLE>
<CAPTION>
NUMBER AND DESCRIPTION OF EXHIBIT*
----------------------------------
<C> <S> <C>
10.51 Third Amended and Restated International Development Agreement,
dated as of January 1, 1993, among the registrant, WMX, CWM, WMII,
Waste Management International B.V. ("WMIBV"), Waste Management
International plc ("WM International"), Rust, WTI International
Holdings Inc. ("WTI International") and RIH Inc. ("RIH")
(incorporated by reference to Exhibit 19.05 to the registrant's
1992 annual report on Form 10-K).
10.52 First Amended and Restated International Business Opportunities
Agreement ("IBOA"), dated as of January 1, 1993, by and among the
registrant, WMX, CWM, WM International, WMII and Rust
(incorporated by reference to Exhibit 28 to the registrant's
registration statement on Form S-3, Reg. No. 33-59606).
10.53 Amendment Agreement, dated as of January 28, 1994, by and among
the registrant, WMX, CWM, WM International, WMII and Rust amending
the IBOA (incorporated by reference to Exhibit 10.53 to the
registrant's 1993 annual report on Form 10-K).
10.54 Amended and Restated Master Dividend Deed dated December 30, 1992,
by and among the registrant, CWM, WMII, WMX's foreign nominee, WM
International, WMIBV, RIH and WTI International (incorporated by
reference to Exhibit 19.07 to the registrant's 1992 annual report
on Form 10-K).
10.55 Reimbursement Agreement dated March 10, 1993, between WMX and the
registrant (incorporated by reference to Exhibit 10.51 to the
registrant's registration statement on Form
S-1, Reg. No. 33-47575).
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 the registrant (incorporated by reference
to Exhibit 21 to the registrant's 1993 annual report on Form 10-
K).
22. Inapplicable.
23.01 Consent of Arthur Andersen & Co. regarding the registrant.
23.02 Consent of Arthur Andersen & Co. regarding Rust.
23.03 Consent of Stephen P. Stanczak (included in Exhibit 5).
24. None.
25. None.
26. None.
27. None.
28. None.
99 None.
</TABLE>
- --------

* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.

E-5

<PAGE>

EXHIBIT 23.01

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports to the Stockholders of Wheelabrator Technologies Inc. dated March 17,
1994, and to all references to our Firm included or made a part of this Post-
Effective Amendment No. 2 to the Registration Statement on Form S-1 and to the
incorporation by reference of such reports in the registrant's previously filed
Registration Statements on Form S-8 (registration no. 33-31523, 33-13720, 33-
47989 and 33-48837).

Arthur Andersen & Co.

New York, New York,

April 26, 1994

<PAGE>

EXHIBIT 23.02

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports to the Stockholders and the Board of Directors of Rust International
Inc. dated February 4, 1994, and to all references to our Firm included in or
made a part of this Post-Effective Amendment No. 2 to the Registration
Statement on Form S-1 and to the incorporation by reference of such reports in
the registrant's previously filed Registration Statements on Form S-8
(registration nos. 33-31523, 33-13720, 33-47989 and 33-48837).

Arthur Andersen & Co.

Chicago, Illinois,

April 26, 1994